Are Originators Looking in the Right Places in the Hunt for New Business?

One of my favorite memories of childhood is my first Easter egg hunt — in no small part due to the mountain of jellybeans that ensued. Looking back, the “hunt” was more of a “gather,” with plastic eggs strewn across the lawn more or less in plain sight, but far be it from me to complain! It wasn’t until a couple years later that the hiding places got more challenging, and the activity became more of a true hunt. That transition is a pretty good picture of the state of the mortgage industry right now — from an LO’s perspective anyway. Originators could barely take a step in 2020-21 without tripping over a loan, but lately, those loans have become a lot harder to come by. Our question this month: Now that the “hunt” is on, are LOs looking in the right places for new business?

The Hunt is On

Whenever a refinance cycle ends and a purchase cycle begins in the mortgage industry, lenders dust off their old playbooks and originators dust off their old rolodexes (or I suppose in 2022, they search their old emails and contact lists), both with the same question on their minds: “How can we reengage our referral partners and drum up enough purchase business to stay afloat?”

The problem for many loan officers is that while they were busy gathering loans into their overflowing “baskets,” they didn’t exactly have time to nurture referral partner relationships. So now, instead of getting a warm reception when they reach out to real estate partners, many are getting more of a “Where have you been?” attitude.

Rebuilding these relationships is a worthy pursuit, but this is not that article. Instead, I want to give you some alternate strategies and challenge you to think a little differently.

The role of the real estate agent is changing. They’re not going away, don’t get me wrong, but they are no longer the first step in the process for homebuyers. According to the 2021 NAR Home Buyer and Seller Generational Trends report, 54 percent of Millennials, who represent the largest block of first-time buyers, looked online as their first action in the homebuying process — either for properties or general information about the process. Only 16 percent contacted a real estate professional first. Lenders who have been asking, “Are we using the right bait to lure Realtors^®?” might do well to start asking, “Are we fishing in the right pond?”

Diagnosis

There are two major misconceptions that originators have in the hunt for new business:

1. They are beholden to realtor partners for purchase borrowers. The old model was that real estate professional was the trusted guide, the curator of properties, and the gatekeeper to the world of financing. With more and more technology available and becoming available (i.e., Zillow and Redfin property searches, 3D walk-throughs, video tours, drone footage of the neighborhood), the model is changing. Now, when it comes to financing, whoever gets the borrower’s attention first wins. Rocket^® gets it —they are all over the place with ads.

Reality check: Granted, individual loan officers are at a serious disadvantage when up against a Goliath-sized marketing budget of someone like Rocket, but with the right marketing focus, aimed with precision, originators can do a lot with limited funds. This is also an opportunity for lenders to step up and support their LOs with targeted investment in brand awareness across platforms like Google, Facebook, Instagram, Twitter and TikTok.

The bottom line: If you sit back and wait for the borrower to funnel through your real estate partner, they’ve certainly already seen a bunch of financing ads, likely already used some other lender’s online calculator, and maybe even spoke to a loan officer. That’s not an ideal place to start.

2. Testimonials from 2020-21 will fill their pipeline with loans in 2022. Most LO’s idea of brand promotion is getting their borrower testimonials pushed out to every known hosted page that will display them. They believe that much of their business (and potential future business) will result from borrowers stumbling upon their rave reviews and calling them up — the same way you might search for a new blender on Amazon, read reviews, then settle upon a highly-rated one.

Reality check: People shop for blenders and houses very differently. House-shopping is a much bigger investment, both financially and emotionally, so people tend to go to trusted advisors like friends, family, real estate professionals, and financial advisors as a first financing step, not the internet. By the numbers, 89 percent of borrowers in Q1 made a relationship-driven choice of lender while just two percent chose based on positive online reviews.

The bottom line: A little over half of borrowers read at least one online review before making a final decision on their lender — in other words, they read reviews to confirm their choice, not to curate lenders. So, reviews are still important, particularly ones on Facebook, Google, Zillow, Yelp and your own corporate lender page. Those are the ones that show up consistently on first-page Google search results. Just don’t count on them for filling the top of your funnel.

Prescription

We’ve covered in great detail the wrong places to look for new business. So, what are the right places to look? Here are three great places to start…Happy Hunting!

1. Photo Ops. Try to get a picture with every purchase borrower possible. That way, you can re-post the picture and tag them every (or maybe every other) anniversary of their home purchase, a great way to stay on the radar of their friends and family (e.g., Facebook) without seeming overtly sales-y.
2. Tune-Up Your “Delight Machine.” Pay close attention, through a detailed customer experience survey like the one STRATMOR offers, to exactly what takes your customers from just “satisfied” to “raving fans.” Do a thorough diagnosis, tighten the screws, and do more and more of what creates delight.
3. Mine Your Portfolio. LOs often make the mistake of thinking that mining their old customers means emailing them and asking for referrals. The best performers know that subtlety is their friend. A phone call or email to share some interesting news, an opinion on the economy, or just to let them know you’re thinking of them (mention some shared personal interest, perhaps), will go much further than a direct ask for business. It’s like any relationship — the foundation is based on what you can give. Generosity is a gift that people love to reciprocate.

How can you learn more about creating a better customer experience and about how the customer experience impacts your company?

Find out more about STRATMOR Group’s CX services and how transparency into the loan process can help your company. Contact Mike Seminari at mike.seminari@stratmorgroup.com.

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