If we’ve learned anything from 2022 and 2023, it is that they are not 2020 and 2021. Volumes and margins have dropped, as have profits. The number of lenders and originators have dropped as well. And those originators, whether they are brokers, IMB loan officers (LOs) or bank and credit union LOs, have had to adapt to a changed environment where they not only can’t sit at their desk waiting for the phone to ring but must go out and actively look for new business.
Where can LOs find the elusive purchase borrower? Many lenders have originators who are looking for leads in unconventional places. LOs are making the rounds at remodeling shows, as often builders may know of someone in need of financing before anyone else. There are LOs teaching classes at local community colleges and high schools to put their name in front of future home buyers. Originators are contacting human resource staff at local companies as many times they will know of someone who has been recently hired and is searching for a home.
Currently, real estate agents are in a good position to offer advice for loan officers. Bob Ravasio from Coldwell Banker in Northern California points out that originators need to focus on the future market. “Buyers need to think long term. Don’t bail out because rates are high now, because of course it won’t last forever. You can probably find a house now at a lower price than you will be able to a year or 18 months from now. If someone has a house on the market at this time of year, with the holidays approaching, and with conditions the way they are, you can bet they are a real seller. And they are probably happy to negotiate with you!
“And don’t forget rates will come down again,” Bob said. “When they do, your previous client can refi at a lower rate. And when their payment goes down, maybe a lot, it’s like getting a raise! I always tell my clients that we bought our first house, and our mortgage was 12 percent… I was thrilled I wasn’t paying 15 percent! We refinanced our loan every year for the next three years and it turned out to be a great investment.
“When rates fall there will probably be another frenzy to get in, and prices will get bid up. And if someone bought a home now, they will already be in the house when that happens and reducing their payments though refinancing.”
Chicago’s Josh Berngard, a top agent in Illinois, believes that leads are critical. “Over the past 16 years on this side of being a realtor I have learned the importance of treating a loan officer as a partner. I have also learned that I need a loan officer with good follow up skills, and with a system in place that I always learn about. I will tell a loan officer, ‘I want to know your system. How do you keep in contact with the leads I give you? How often do you contact them? Do you handle leads differently during the process of securing a loan?’ And those leads I give a loan officer, how do you learn that they are not ready today but with your help can be ready in 12-36 months?
“Referrals and leads are precious now. My first time working together with a prospective originator will not be with one of my leads, said Josh. “I have been burned too many times by lenders that could not get a deal done for a client and as a result lost those clients for the future when they did buy. So, if you’re an originator and like my track record and want to work together, it will need to be one of your leads so I can show you my system and how I work!”
Jenn Pfeiffer with Corcoran Icon Properties in Marin County shares that the competition for the attention of real estate agents is intense. “I have never seen so many loan officers at broker’s open houses, cozying up to agents and asking for (or, in some cases, making an attempt at) business.
“The loan officers I refer my business to have demonstrated that they are not merely transactional. They sit down with my clients and educate them on the best products for their situation. They return calls and communicate throughout the transaction, keeping me updated. I have had a few that have gone radio silent in the past, so I have written them off (even when I know their rates are so good, my stomach turns thinking about having to do a deal with them).
“So now that loan officers are hungry again and wanting to meet, here is how I would want them to approach me,” Jenn writes. “Call me and tell me how they are navigating the home insurance situation that we are experiencing in California. Back it up with success stories. Have five to ten insurers in your back pocket that I don’t know about and share their info.
“Be realistic about the buy down rates. How can it help my clients? Sure, there are savings up front, but what happens in three years? Be able to answer that question with authority. Share with me real life examples of monthly costs. Sit down and educated me. Ask me, ‘What price range do you normally work in?’ and I will meet you to review what issues many of your clients are facing. I’ll sit down and do the numbers with you and then they will provide a sheet for me to have at my open houses detailing various options.
“Talk to me about your client intake interview. How do you uncover that they may be eligible for certain types of financing? Teacher loans? Doctor loans? VA loans? And if it’s VA, sell it! Don’t couch it with, ‘Well, it might not get accepted….’ Every offer with a VA loan that’s been done in my office has gotten accepted because people were happy that a Vet is able to get back from the service they gave to our country.
“The lenders I use are super smart, savvy, and they educated me all the time.” Jenn continues “They explain the differences between owner-occupied and investor products. They open my eyes to new products. They are pragmatic and will tell my clients that they can’t beat X’s products right now, so they should go with them. They continue to be informative, educational (but not pedantic) and a collaborator.”
What can be done in terms of looking ahead to 2024? Chet Gohd has the unique perspective of being an experienced loan originator as well as making the transition to a real estate agent in the Oakland/Berkeley and Walnut Creek areas in Northern California, and he weighed in with a few thoughts about how he approached the end of the year.
“During my career as a top producing loan officer, by the time we got to November, I was typically burnt out from a busy, hectic year. I knew there wasn’t going to be much business for November and December, but I had to stay busy. I focused 100 percent of my time on arranging sit down meetings with potential buyers and new realtors to help them understand the mortgage process, products and preapprove them. Then I’d have a stack of buyers in the pipeline for the following year without caring when they might take the leap into home ownership. This is how I spent my time constructively.
“I’d also take a week or two to myself to recharge my batteries as I would never know what the following year was going to entail.”
Things are indeed slow currently heading into the autumn and winter months, and with rates where they are, we can expect business to stay slow. Yet many lenders and originators that STRATMOR works with are spending this time to train themselves on products, familiarize themselves their company’s software, stay in touch with previous clients, and continue to improve as subject matter experts for future clients.
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