STRATMOR Group: To Win Purchase Business, Lenders Should Engage Borrowers at the Very Beginning of their Home Search
An ecosystem that makes the home purchase easier for the consumer creates an opportunity for lenders to be involved from the start
April 21, 2022 – GREENWOOD VILLAGE, Colo., – Mortgage lenders have an opportunity to incorporate real estate search and research, referral partners and the lender’s financing offers into a single online ecosystem for the convenience of the buyer, according to the just-released April Insights Report from STRATMOR Group. In an article entitled, “What a Doll and Her Dream House Teach Us About the Mortgage Ecosystem,” Senior Partner Garth Graham makes the case for mortgage lenders to move their marketing efforts to the top of the home purchase funnel.
“Lenders have an opportunity to engage in the borrower relationship from the very beginning of the process,” Graham says in the report. “We’re witnessing the confluence of the online real estate and mortgage experience, and this is the real play for lenders who will lead in the purchase money market. The opportunity is to become part of the new way consumers search for, select and buy real estate.”
Based on STRATMOR’s data, 89 percent of borrowers in Q1 made a relationship-driven choice of lender. Whether it was based on a referral from friends (14 percent) or a real estate agent (20 percent), or an existing relationship with a lender (34 percent) or individual loan officer (18 percent), relationships dominate borrowers’ selection behavior. But that may be changing.
Graham points to data provided by the National Association of Realtors® (NAR) that shows that 97 percent of all home buyers used the internet to search for new homes. After finding a home, they walked through the property virtually (56 percent) and then drove by to view the home’s exterior (37 percent). He notes data from a Redfin survey that shows two thirds (63 percent) of homebuyers in 2020 made an offer on a property that they hadn’t ever seen in person.
“Buyers are going to the Internet and that’s where lenders need to be,” Graham says. “You know who gets this? Rocket. Using Barbie® dolls in its ad for the big football game this year caused some media critics to scratch their heads, but if you were paying attention, you noticed that Rocket Mortgage® wasn’t the sole focus of the ad. It was Rocket Homes® and Rocket Mortgage.”
Graham says the Rocket Homes commercial captured the angst that many home buyers are dealing with. Knowing you can qualify for a loan is not the only step necessary before writing a contract. You must prove it with a nearly iron clad Preapproval, according to Graham. The result is that borrowers may be more effective in getting their offers accepted, and perhaps have a better experience with less anxiety. At the same time, lenders who adopt this strategy will get more leads at a lower cost.
“The premise of the Rocket commercial, clearly communicated, was that home buyers who have been frustrated by their inability to purchase the homes of their dreams now have a way to effectively compete for homes,” he said. “In a market where the borrower needs to be very well prepared financially before they write their first offer, it makes sense for the lender to be involved earlier in the process.”
According to Graham, lenders can move into this new space by creating and optimizing a new tech stack for purchase money borrowers, something STRATMOR Group is already working with lenders to accomplish.
Find the entire article in this month’s Insights Report.
In a second article, “Are Originators Looking in the Right Places for New Business?”, STRATMOR Group’s CX Director Mike Seminari discusses the two major misconceptions that originators have in the hunt for new business and suggests three places in which originators should look to find customers. “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,” says Seminari. “The problem for many loan officers is that they haven’t had 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.” Don’t miss Seminari’s suggestions for originators in the April 2022 edition of STRATMOR’s Insights Report.
About STRATMOR Group
STRATMOR Group is a leading mortgage industry advisory firm that provides a range of programs and services designed to counsel lender CEOs and senior executives. STRATMOR serves more than 250 companies annually, providing strategies that increase growth and improve profitability in sales, marketing, technology, operations and mergers and acquisitions. The company leverages comprehensive, propriety data and key insights gained through extensive experience in the mortgage industry. STRATMOR is well known for its financial models and its collaboration with the Mortgage Bankers Association in the PGR: MBA and STRATMOR Peer Group Roundtables Program. Find out more about STRATMOR on its website at www.stratmorgroup.com.