Are you aware that you can actively convert potential mortgage customers instead of losing them to the competition?
Most customers will inevitably focus on just one figure when determining which mortgage lender to go with – the price. From the customer's perspective, the price is the most important thing, but as an experienced mortgage officer, you know several other factors should shape their decision.
Your interaction with the potential customer should be all about reframing the issue and shifting their focus from the price to what's really important – value and benefits. Let us introduce the long-term strategy of developing a deep and mutually beneficial relationship with prospective homeowners.
To achieve this, you will have to improve the quality of your interaction with them by having deeper and more rewarding conversations that lead them to trust and value you. This is the best way to convert more prospective mortgage customers and get more referrals through word-of-mouth and prevent them from rate shopping with you.
September 2020 Regulatory Compliance Roundup
This is easier said than done. Most mortgage customers will only see you as a means to an end and not attempt to have any kind of relationship with you. You have to change their minds in this regard. You can do so by setting the tone from the very first meeting. Remember, you're the expert with insider knowledge about the industry.
As such, you know exactly which decisions are advisable and which ones aren't. All you have to do is genuinely support and advise them throughout the process, volunteering information that can help them make a more informed decision. When they realize how much value you've given them, they will begin to appreciate the relationship they have with you.
Remember that a home purchase is one of the biggest financial decisions that most people will undertake in their lives. The weight of the decision will weigh heavily on them, and if you can ease the burden, you will earn their trust in the long run.
The inverse relationship between mortgage rates and consumer interest is the strongest force in the industry. When rates fall, interest in securing a mortgage rises. It is important to remember that the origin of the demand is the low rates the mortgage customer has heard about, and as such, that's what they'll primarily be interested in.
Of course, you know better than anyone that the price is only one facet of the mortgage agreement. If you allow the customer to be obsessed with price alone, you'll be sending a lot of business over to the competition.
You need to ensure that your potential mortgage buyer learns to appreciate the mortgage's benefits and overall proposed value. Remember that people are more likely to do business with people they like, so work on building a good relationship with them from the beginning.
How do you gain borrower commitment then?
Reframe the conversation away from rates as they put the customer in a "shopper" mindset. To do so, work on the relationship by avoiding conversations about price, rates, APR in the initial conversations. Instead, focus on increasing their knowledge about the mortgage process, the various aspects of a mortgage and why you're the right person to guide them throughout the entire process.
Set yourself apart by building a foundation based on trust rather than price.
When you allow the borrower to ask questions relating to price, you take a passive role in the conversation. They only ask questions that confirm their own hunches and walk away, having confirmed what they wanted to and avoided anything that would point them in a different direction.
You should instead direct the conversation towards topics that will help them learn more about the process.
The Three Truths of Price
- Many customers will ask you about rates immediately, but you cannot give anyone an exact figure without more information about their financial context. Avoid giving them a figure until you've made some calculations using the information they've provided on their application.
- Despite your best efforts, the rate quote will seem too high, and most borrowers will protest.
- Acknowledge that you simply cannot convert everyone who walks into your office. There will always be someone offering a better rate or better terms that will attract the borrower. Competition is a reality of the business, don't let it get to your head and focus on the people who decide to sign on with you.
To prevent being shopped, you need to shift focus away from price-related conversations in the first interaction. Your priority should be to inform the borrower about the various aspects of the mortgage and help them see the value of a good mortgage beyond the price.
Focus on your relationship with the borrower from the beginning and earn their loyalty so that they want to partner with you as their mortgage loan originator even though they may be able to get a lower rate elsewhere. Once they trust that you have their best interests at heart, sell the mortgage specifics and address how you can compete with those offering better prices.
This will inevitably focus on a bespoke offering with careful consideration of their financial situation.
