In the traditional brick-and-mortar mortgage universe, local mortgage originators trade leads with local real estate brokers all the time, without fear of getting trumped.
But in a centralized mortgage operation, there is the possibility, even the probability of losing a client who needs a real estate agent. This is because these call centers do not have a local presence.
They might recommend the client to a real estate broker, but there is no guaranty that the broker wouldn’t just turn around and feed the client to another originator that he or she closely works with.
And given that many consumers are now looking to see if they qualify for a mortgage first before they go home shopping, the risk to call center originators became greater.
To even the playing field, mortgage technology provider Mortech, Lincoln, Neb., is working with RealXReferral, an Ontario, Calif.-based real estate brokerage network to distribute leads from lender to agent without the lender having to worry about if they are going to keep the borrower.
Don Kracl, the president of Mortech, explained that much of his firm’s business consists of lenders whose source business on the Internet. The risk is after doing a prequalification, the borrower will go to a local Realtor. The Realtor will then recommend using a local lender instead of the Internet originator.
RealXReferral approached Mortech with this concept, he continued, “and it sounded great and we did the integration.”
Bill Yeager, president of RealXReferral, noted that the Internet lender or aggregator is often competing for the lead and thus has a lot of wasted effort if the borrower elects to go elsewhere.
“They go out and meet a Realtor and the first thing the Realtor says is 'Are you talking to a lender?’ The customer goes, 'Yes, I am talking to XYZ Mortgage in Nebraska.’
“The Realtor goes 'Who’s that? I’ve never closed a deal with them. You need to be talking with my friend Bob,’” Yeager recounted.
As a result, the loan officer who worked hard to get this client, possibly in a competitive situation, can be undone by a Realtor in just a few seconds, he continued.
This system ups the conversion rate for these leads from around 2% or 3% up to 10% or 12%.
Yeager explained RealXReferral has approximately 225 real estate firms nationwide under contract with his organization. These firms have a “strong relocation/referral division and know how to work on a program such as this.”
The real estate sales person involved with the program, he continued, “understands the source of that lead and the need to be supportive of it.”
Thus, the program allows lenders to expand their footprint and close more business.
The referral system is integrated into Mortech’s Marksman front-end loan management solutions. A loan officer begins working the prospect. Yeager said early in the process, the loan officer should ask if the borrower is working with a real estate agent. Besides ascertaining this information, it allows the originator to figure out how far along the borrower is in the home buying process.
If they are not working with an agent, the originator can trigger a “broker partner search request” inside of Marksman. A short referral form in Marksman is prefilled with the borrower’s information. Comments can be added regarding the customer’s status as well as where they stand in the pre-approval, Yeager said.
The borrower is assigned to a selected real estate agent and the loan officer is notified. A screen which comes up after the form is submitted recommends the loan officer contact the real estate agent to discuss what the borrower is looking for. They can also discuss how to move the process forward.
The request an agent screen prompt, said Kracl, should help increase the loan officer’s close rate significantly.
At RealXReferral member’s end, the coordinator who works with the company is notified the lead is in the system both by e-mail and by text message on their cell phone (so the process can be started after hours if need be). The coordinator then assigns an agent to work with the customer.
Yeager said one of the things the parties are telling loan officers is not to wait until the full credit approval comes before looking to refer the deal to a real estate agent.
If the borrower’s credit looks good and they are ready to meet an agent, make that referral right away. Because if the loan officer waits, the client is still talking to friends and family and someone is likely to recommend using their real estate broker and we are back to the problem of that agent not knowing who XYZ Mortgage is and taking the buyer to a loan officer he or she works with, he explained.
The real estate agent can also put updates into the system, keeping the loan officer apprised of where the client is in the buying process—still looking, making an offer or going to contract.
These status updates let the loan officer keep in touch with the borrower at those critical moments, he said.
To help measure the success of the program, conversion rate and loan capture rate data is gathered by RealXReferral and shared with clients of both companies.
The mortgage industry has been “riding the refi gravy train for the last few years” and that market is projected by industry experts to dry in 2011, Yeager said. Now these lenders are going “to start sticking their toe in the water on purchase.”
In his experience, these lenders are not tuned up on what needs to be done in the purchase market, the competition wins out. They don’t understand that in a purchase, there are two customers—the Realtor and the borrower. “And which one of those two is going to be able to refer you more business down the road?” he asked rhetorically.
Owen Raun, president of RMC Vanguard Mortgage Corp., Houston, said the company already has gotten three or four deals from the system with one which has closed.
The company lends in 21 states, and echoing Yeager’s point, “a lot of times the Realtor working with our consumer just never heard of us.
“So there is an issue of trust we have to overcome with the Realtor,” Raun said, and in many cases, RMC Vanguard does not have the time to create that trust. For example, the deal which has already been completed took 10 days to find the house and 20 days later it closed.
“If we refer the borrower to the Realtor, the Realtor is going to be less inclined to suggest the consumer use another lender.”
What the system allows for is greater communication between the mortgage broker and real estate agent, and helps them work as a team, he said.
