This past weekend, I saw a commercial from a local Credit Union. There was nothing unique about the commercial, it was your regular run of the mill here we are and come shop with us. The commercial was talking about the convenience of doing business with the Credit Union. The commercial mentioned the many locations in the general area and then they went in for the kill. They introduced their new service and new location for that service: REAL ESTATE.
While it makes sense that a business expand into the sensible extension of the services they are already offering. For the organization, this is GREAT business. Generating revenue from many sources. Heck, I wish I was generating revenue like that.
Yet, is this good business for the customer? Yes and No!
Credit Unions have their depositors believing they are part owners of the Credit Union. They do this by offering token “dividends”, special “members only” services and other contributions. The truth is this is a business and with or without your approval. Business is done based on what the business and its board members agree must be done. Remember, the board members are usually the ones with the most at stake with the Credit Union than the average depositor.
Before I continue I should in full disclosure say the following: I AM NOT A MEMBER OF ANY CREDIT UNION. I was in the past but I am NOT a member now. Reason I left the Credit Union is that I moved to another state and needed the services of a local banking institution.
While it is great for the organization to expand its services, the problem that when a member of the Credit Union buys a home they use the new REAL ESTATE SERVICE to broker the deal from finding a home to the initial offer to the financing and finally to the closing. While it may be convenient for the member of the Credit Union it is also too convenient.
It makes no sense why any individual would want to have their home mortgage where they do their banking. This applies to the automobile dealerships, why would anyone want to finance their new car at the dealership. Of course, the salesman will tell you they will get you a “good deal” because they work with their financiers “all the time”. It is no lie, but, they also fail to admit something else, the reward or incentives (paid to the dealership and trickle down to the salesman) for using the service to finance customers.
When someone arrives pre-approved (from the bank or credit union) the salesman will service you enough to the pre-approved limit. When a customer walks in cold, the entire interaction becomes a shark feeding frenzy. Things like “undercoating”, “rustproofing”, other accessories and services added to the final price. As the price increases, the amount financed increases, thus the reward or incentive to the dealership increases.
When it comes to other transactions like the real estate service offered by a credit union how does it compare? It does not! It does not compare because they are using the same transaction model as the auto dealership. This model works for them and it will work for about any other situation that calls for a financing situation (think home furnishings).
Still not convinced? Do you go to your Pastor to ask for their advice on how to repair a faulty O2 sensor? No! You go to your Pastor for spiritual advice. Do you go to your Dentist for advice on which roofing shingles are best for your Mid-Century Modern. NO!
So, why go and have the Credit Union to act as your Real Estate Agent?