The refinance period is over, how is your business going to survive? You should pose this question to yourself now if you haven’t already. Not because there aren’t plenty of refinances in our environment, but rather because the time to plan is in advance of the event and not after it has already happened. Many loan originators get caught on their heels and have a very difficult time rapidly transitioning into new markets. About two and a half years ago loan officers didn’t position themselves accordingly through database management and customer retention to take advantage of this refinance boom. Only the originators who had planned ahead were able to jump on the opportunity and fill their pipeline immediately once refinance mania hit. The planning that needs to be done now entails positioning yourself to take advantage of a market that is without refinances.
Simply pose this question to yourself…what if interest rates went up one full percent over the next 60 to 90 days? What would happen to your existing pipeline? How many of the loans that are in that pipeline would be wiped out if in fact rates were at 7.5 percent? How are you going to compensate for that falloff in your pipeline to make sure that you can continue to maintain the lifestyle that you have become accustomed to over the last 24 to 36 months? Make no mistake about it: there will be business available when refinances go away. It’s just that the business will be wearing a different face and you will need to identify it quicker than your competitors.
The purchase business will always be important in a non-refinance boom. The typical sources of purchase business are real estate agents, financial planners, CPAs and other types of affinity partners. Many loan officers have been successful in dealing with the Internet and leads that are created for potential buyers through that venue. Others have flourished in constructing a very efficient for-sale-by-owner campaign. Whatever plan you choose to put into place, you will need to get very specific in your plan of attack.
Let’s first examine a campaign to develop affinity partner relationships with accountants, financial planners and real estate agents. The most effective way to develop a relationship with these types of sources is to have a compelling unique selling proposition (USP) which is why someone would want to do business with you. You need to understand that your unique selling proposition is and always will be in direct accordance with how you feel about yourself The higher the level of confidence you have in yourself, the more profound your USP will be. Therefore, it is of the utmost importance that you start to build your confidence and one of the best ways to do this is to make sure that you are a master of your craft. You must understand the nuances of being a great loan officer, embrace and become an expert on the essential components of lending, know your guidelines and start studying them now if you have not already, and make sure that you know how to put together every single type of a loan that could be run across your desk whether it be subprime paper through “A” paper, first time homebuyer and super jumbo loans.
Jane Floyd, an originator at Diversified Home Mortgage, Tampa, Fla. said that her unique selling proposition with real estate agents, accountants and financial planners is the fact that she will get any loan done and will never commit to doing a loan that she cannot do. She knows exactly what it takes to make loans happen but there’s more to it that we need to understand that something more profound occurs here. The more that you know about your trade, the more confident that you are going to be in yourself. A unique selling proposition is all about selling your product. What is it that makes you unique?
Remember, there is an inverse to this USP. Why would the referral source want to put their trusted client in your hands? Why if they are a real estate agent would they want to put their paycheck in your hands? The reason is because they have faith in you because they know that you are the best person for the job. You need to be able to look across the desk at any of these people and tell them exactly that—that they can trust you and that you are the best person to handle that loan.
The action plan is simply this: Make sure that you are blocking out two hours of time each week for the next 90 days to study this business of which you are apart. Remember that you are in the money business and that the more you know about money, the more you are able to help people, the more they are able to trust you, the better off you will be.
If you want to launch a campaign that exposes you to leads of potential purchasers through some type of direct marketing vehicle such as the Internet or the purchase of leads from other sources, you need to be well scripted. Nine times out of 10 that someone engages in dialogue with you for the first time it’s done verbally with no visual aid whatsoever. They have nothing else to judge you by in making their decision as to whom they want to work with other than the words that come out of your mouth. It is critically important that our presentation skills are at a high level. Many loan officers fail to evolve in their presentation skills and therefore don’t put themselves into a position to where they can take advantage of a down market.
Remember, in a down market your conversion ratio from lead to close loan is critical. In addition to that, it is very important that you start to bring more values to these relationships. In a non-refinance market, if you are doing fewer loans, you will need to have bigger margins to make up for that downfall.
The only way that you are going to be able to justify making more money per loan is if you truly take the time to be a financial consultant that specializes in mortgages, that brings more value to that client and saves them more money than they would be able to save if they were to work with someone else. Make sure that you are putting yourself in a position to where you have all the tools necessary to be a financial consultant that specializes in mortgages. Tap into the wealth of resources that are offered within your industry that will expose you to these opportunities. There are many products available in the marketplace that can help you be a better-trusted advisor.
If it is a for sale by owner (FSBO) campaign that you want to launch, keep in mind some very important points. Your target market in this case is an individual who is trying to save money or they wouldn’t be trying to sell their home on their own. Their perception is that they don’t need a real estate agent or anyone else to give them advice especially if it is going to cost them anything. It is for this reason that your campaign must expose them to their lack of knowledge. You need to pose questions in your marketing material to make them realize that this isn’t as easy a process as they thought it would be and you need to offer a significant amount of value that will cause them to look at you as a viable resource that they should be utilizing.
One of the things that I have offered in my FSBO campaign is access to escrow officers and title companies for the purposes of selling their home. Listing brochures and sign boxes that you can put on their front lawn, and call captures 800 services also work very effectively. These should all be apart of your marketing package when trying to forge a relationship with a seller who is trying to sell on their own.
In addition, you should make sure that you impress upon them the importance of your pre-qualifying every single buyer that comes through their home. It is from this exposure to potential buyers that you can then turn around and align them with real estate agents. This referring of potential buyers to real estate agents could be greatly helpful in forging relationships with new Realtors; ones that you will need in this down market.
Remember, the time is now to think one step ahead. If you are conducting your business without one eye on the future, when the future gets here, you won’t be ready for it.
By Tim Braheem