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Solid real estate agent relationships are the cornerstone of any professional loan originator's business plan. While the mortgage industry has done an excellent job at consumer direct marketing, home buyers still consider the real estate agent the "gatekeeper of the transaction" and even rely on them for advice on financing. This is especially true in the first-time home buyer market.
The value, however, of each individual agent relationship has waned in the past 6-7 years. When I first started originating, each agent in my "Rolodex" averaged three transactions annually. An originator looking to close 100 purchase loans annually needed to be marketing to about 30-35 agents.
Fifteen years ago, the primary method of marketing was to show up at the agent's office and "panhandle" for business. Successful transactions begat baskets of flowers to the agent, followed up by visits with hopes of being introduced to "office mates". Three things changed that model:
- Lower margins in real estate brokerages left owner-brokers seeking affiliated business relationships. Originators found the "in-house mortgage guy" greeting them at the reception desk and escorting them back to the agent's desk. That guided visit served as a deterrent to visiting originators and a reminder to the agent of the responsibility to their employing broker.
- The early-decade real estate boom swelled the ranks of real estate agents and loan originators offering customers far more "friends in the biz" than they had before. This commoditized our business and caused home buyers to "shop" better. With greater "hidden" competition, the professional loan originator found the move-up buyer less loyal even after all the personal marketing he did.
- Technology moved real estate agents out of the office and into their homes. No longer could an originator show up at an office right after a sales meeting, to meet agents, because there were far fewer sales meetings. Voice mail made floor time extinct.
Today, originators have an extraordinary opportunity to work with large numbers of real estate agents. The internet expanded our reach and reduced our marketing costs to near zero. Today, a simple GOOGLE search can tell you who the active real estate agents are in a micro market, along with contact information. The value of that agent relationship, however, is severly diminished. In addition to Affiliated Business Arrangements, listing agents are requiring a "mirrored" pre-approval with a lender of their choice, often at the behest of the seller.
The value of a real estate agent relationship is about half of what it was ten years ago. Each agent relationship can be expected to produce about 1.5 transactions annually. The loan originator then must be marketing to about 75 agents to produce 100 purchase loans annually.
Today, it's never been easier to earn that business.
Our ranks have contracted and only the knowledgable originators are surviving. That badge of honor, worn properly, is a magnet to real estate agents. The internet has expanded our reach so that we can find, communicate with, and remain in a "top of mind status" with real estate agents all over the country. Here are some ideas that have worked for me these past 18 months:
- Get rich in niches. Agents will identify you with your area of expertise just like we do with lenders. California agents know me as the VA expert. Specific knowledge has allowed me to market that expertise with testimonials from customers and agents.
- Touch those agents weekly with a good e-mail marketing program; I use Contant Contact. It is important for you to be able to track "opens" to discover who really pays attention to your content. Follow up calls, to the agents who "open" your e-mails blasts, have a higher probability of converting. You can "prune' the list by deleting agents who have left your last five e-mails unread. Use content from the Mortgage Rate Watch , MBS Commentary, or MND newsletter as your weekly newsletter (if you can't write). Properly cited, with a link back to the article, a truncated introduction can be used as content. The important thing is to find agents who appreciate your emails.
- Don't forget the old postcard mailer. I mail agents a cheap yellow postcard, with my name, phone number and URL, about every 5-6 weeks. Timed to deliver on a Thursday, that postcard has prompted many agents to call me on a Friday to ask if I'll be available to pre-qualify a buyer over the weekend.
- Use webinars and teleseminars as tools to educate agents about new loan programs or guideline changes. I host one monthly using Lenders Insight. I schedule them in the evening so that I can get agents' full attention. Whether you have three agents or thirty on the call is immaterial; you'll get the reputation as the "educating originator".
- Call them. Set aside two hours daily to call ten agents to see of they need anyone pre-qualified. This will keep you in front of your 70-100 "targeted agents" every two weeks. Consistently done, you'll be contacting them more often than their "favorite originator" and position yourself to earn the business.
Our industry funded $4 trillion at the height of the boom (2003) with only 35% purchase business. 2009 origination volume is expected to be about $2.3 trillion with about 70% of that attributed to purchase business. As interest rates rise, expect that percentage to rise. While the volume has dropped 40% from the high, the number of qualified originators has been cut by two thirds.
There's a whole lot of business for all of us. Come get it.