Dear djcamacho,
This is a difficult question to answer because business relationships
offer little scope for objective analysis. Everyone is measuring with a
different instrument. The recipe for success depends on who's doing the
cooking. Still, I think it is possible to agree on a set of broad criteria
to which lenders should adhere in order to sway realtors in their favor,
or at least to maximize their odds of doing so. To find out what these
criteria might be, I sat down earlier today with two friends of mine
who have relevant expertise.
The three of us -- Arvind, a professor of marketing at a local business
school; Matt, a real-estate broker; and me, a technical writer -- sat
around a table and discussed your question for something like an hour
and a half. I took notes during our conversation, which I have rendered
below in a compressed and somewhat stylized version. I don't pretend that
this is the final word on the subject, but I believe that my friends are
bright and thoughtful individuals whose expert opinion deserves serious
consideration. I hope our discussion will give you a fresh perspective
and renewed motivation.
Me: The question I want you guys to help me answer is this: how do
residential lenders develop good relationships with realtors? And there's
a sequel: what do realtors want to know about lenders they recommend to
their clients?
Arvind: I think you got those in reverse order. If a realtor has a
good relationship with a lender, of course he's going to recommend that
lender to clients. The second thing you asked is actually the precursor:
what makes a realtor initiate a relationship with a lender?
Me: Fine, let's reverse the order. First: how does a lender attract the
attention of a realtor? Second: once a lender has formed a relationship,
how does he maintain it and make it fruitful? In other words, how does he
develop the relationship so that it's central to the realtor's thinking?
Matt: I'm not sure about that last part, but I'll tell you what grabs
my attention. Rates.
Me: Why do you care about the rates?
Matt: Because my buyers need a good rate to make the purchase. If I point
them to a good deal, they're more likely to make a purchase through me.
Me: So rates are a good attention-grabber. How can we generalize that?
Arvind: Competitiveness. The lender must offer a competitive product
and have a generally competitive aura. It's one of the three desired
qualities of the lender.
Me: Sounds like you have it all figured out.
Arvind: These qualities are not specific to residential housing
lenders. They are the chief virtues of any financial-service provider.
Matt: Let me guess the second quality. Honest? Reliable?
Arvind: Both of these fall under the general category of trust. A lender
with good rates might be a shark or a fly-by-night operation, so it's not
enough to be competitive. A lender must be trustworthy. Not in preference
to the competitive edge, though, because this is largely a numbers
game. Competitive first, trustworthy second. A rational home buyer, and by
extension a broker who caters to buyers, will look for someone who appears
to be, as Matt says, honest and reliable. Trustworthy means that you
believe what they say, that the deal doesn't have any sneaky small print,
that the business will still be there tomorrow under the same management
and not resold to some unknown people. Solid. Dependable. In a word --
Matt: Trustworthy. You're right. I like trustworthy lenders.
Me: We have two desired qualities so far. How many were there again?
Matt: Lots.
Arvind: True, but you want to adopt some core principles to shape
your thinking. I think most of the desirable qualities that don't
fall under competitiveness or trustworthiness are ones that deal with
responsiveness. A lender must be responsive.
Matt: I'm responsive. I talk to my clients, I listen when they're talking. The
lines of communication are always open.
Me: And you want that from a lender as well, right?
Matt: Absolutely. I don't agree with Arvind's choice of terminology
-- I think of it as, I don't know, openness -- but he's got the right
idea. I'm looking for someone who puts his cards on the table. Someone
who answers questions when you ask them.
Me: And this is something you can tell at the start of a relationship?
Arvind: He thinks he can tell. He instinctively decides whether someone
is sufficiently open for his liking.
Matt: Yeah, it's instinctive. It's also accurate. You know how a
salesman comes up at, say, the car dealership or the shoe store? And
when he just starts talking, you know immediately whether this is someone
you can have a conversation with? Or if he's just in love with the sound
of his own voice, or just talks out of habit or something? It's easy to
tell a fake communicator. Speech is not necessarily communication. I know
immediately when someone's going to be open with me or if he's going to
yammer endlessly and tell lies and hide important stuff and so on.
Me: So we have these three desired qualities of the lender: competitive,
trustworthy, and responsive. Sounds reasonable. I guess the difficult
part is how to convince a realtor that you, the lender, are these things,
that you have these qualities.
Arvind: You can address these needs actively, and you should if you
want to be successful. Then you have the passive indicators, over which
you have less control. These are the facts that are known about you.
Me: Let's start with the passive indicators. What are those in this
case? What publicly known facts, which perhaps the lender would want to
cultivate, demonstrate the desired qualities we just described?
Matt: Well, I want to know if you have a history of working in this
industry. I'm not really interested in guys who take some correspondence
course and, I don't know, land themselves a franchise or raise capital
from their rich relatives or something and suddenly they think they're
lenders.
Me: What if you're just starting out as a lender so you have no
history? It doesn't mean you suck.
Matt: Yeah, it doesn't really work that way. I was exaggerating. Almost
all lenders start at the bottom of the ladder, the same way brokers do,
and they work their way up to a leadership position or spin off into
a new branch or something. Anyway, a lender is usually a whole firm,
not just one guy.
Me: I think you're telling me that the desired qualities of a lender
are shown by, um, what do we call this -- good credentials?
Arvind: Longevity.
Matt: That's it. How long have they been around? I don't like to deal
with novices. Experience counts for a hell of a lot.
Me: Longevity is a passive indicator of the desired qualities. What
else? There must be more.
Matt: You get references, word of mouth, stuff like that.
Arvind: The lender needs quality clientele, in other words.
Matt: Yes! Quality by association.
Me: Clientele? Existing clientele, you mean?
Arvind: Yes. That's a powerful indicator of a lender's strength. If a
lender does business with the sorts of buyers whom the realtor covets,
or if the lender has done prior deals with another leading realtor in the
area, then other realtors will also want to work with that lender. This
is not something you can advertise explicitly, but it's an important part
of the underground marketing campaign. There are no ad-agency budgets for
this. The word about your clientele gets around by informal means. You
can amplify it by inducing existing clients to recommend you.
Me: That doesn't sound so passive.
Arvind: The line gets blurred. But there's definitely the passive fact
of having attractive clientele that goes in your favor.
Me: Longevity and clientele. What other passive indicators are there?
Matt: What about the name of the firm? And the color of their signage? Do
they buy ads in the Penny-Saver or someplace more up-market?
Me: These are superficial considerations.
Matt: Maybe they are, but they're important. I know that an awkward name
or, say, a bad color scheme will put me off anything. Image is important,
even if it's false. But often it's not. I find that if a business really
has its act together, it will show in their look.
Arvind: We call that the aesthetic presence of a firm. It's very powerful
psychologically, and it's not purely superficial. Strong aesthetics are
the hallmark of a competent firm. A good company will have put together
an attractive website, commissioned a professional logo design, and so on.
Me: But sometimes the appearance is a lie, right?
Matt: No kidding.
Arvind: Sometimes. You should think of aesthetic presence as a passive
indicator that's necessary but not sufficient. A top firm will always
have a spiffy outward appearance. It's no guarantee of good service or
effective product, but you want to look for it.
Me: This is not just any product. It's residential lending.
Matt: It's a service and a product. The product is money! Okay, it's
mostly a service.
Arvind: That's a valuable insight. The dollar bills, the money part
of a loan, that's interchangeable. What the lender provides is mostly
service. It's the job of discussing a loan, structuring a loan, eventually
delivering the loan.
Me: It sounds like we're talking about the active indicators now.
Arvind: Active measures, that's right. We had those passive indicators,
which are to some extent out of your control, or they're historic, or
you just set them up and wait. But what can you do from day to day as
a way of proving that you have the desired qualities?
Me: You tell me.
Matt: I'll tell you. Maybe this is too simplistic and obvious, but I
have to hear about a lender and keep hearing about them for a while. They
need to maintain mindshare in the marketplace.
Me: Ads?
Matt: Advertising really works. It's an ongoing process. The lenders I
deal with are guys who are known. They make a name for themselves and
they keep their name out there. I get calendars and mugs from them,
I see their faces on bus-stop benches. They're everywhere.
Me: I'm guessing you need to be a major firm to sustain that kind of
ad campaign.
Arvind: Not necessarily. You do have to advertise periodically. Bursting
onto the scene from time to time is a better way to achieve mindshare than
maintaining a broad, static presence. You really want to hammer away at
the marketplace. That's why we speak of advertising and marketing having
impact, not force. Think of an impact wrench. Whack. Whack.
Me: I get it. Periodic advertising.
Matt: Ads are still ads. Everyone knows they're kind of fake. They
grab your attention, but the guy has to give you something substantial
to keep it going.
Arvind: Testimonials are the most significant means of informal
marketing. I brought this up earlier. You want good word of mouth, and
you can do more than just provide the good service. People should want
to talk about you because they perceive a need to spread the word.
Me: Be more specific.
Matt: I can give you an example. If I discuss lending with my clients,
there's one guy I often talk about. His operation is nothing fancy -- he's
over at the credit union -- but he does this one thing where he goes and
talks to home buyers about their needs. I mean, he goes there in person.
Me: House calls?
Matt: Yeah, he goes to your house or he goes to your workplace and meets
with you over the lunch hour, or at a nearby cafe or something. I mean
he doesn't do this all the time, he's only out there about twice a week,
but it's unusual in his profession and it makes me talk about the guy,
about him and the credit union. Most guys just sit in their office and
answer the phone all day. This guy, he goes out and hits the pavement
occasionally. It makes me think about him.
Me: There must be a thousand tactics like that.
Arvind: There are, but you don't want to get too wacky. The point is that
doing business slightly differently, offering your service or packaging
your product in a way that's somewhat out of the ordinary, makes people
talk about you. That's how you get the word of mouth before other guys who
offer the same product. That's how you encourage testimonial, informal,
underground advertising.
Me: What else? What other active measures can you take?
Arvind: We talked earlier about responsiveness as a desired quality. To
achieve a reputation for that quality, you have to practice it.
Matt: Yeah. Walk the walk.
Me: Be responsive? That's it?
Matt: It's not that simple. Some guys have a real talent for listening,
and they practice it. And they're friendly. The guy in the back office
crunching the numbers, who cares if he's a nice guy? But the people you
talk to, they need to be personable.
Arvind: They need strong powers of communication.
Matt: Talk well, dress well. And they need to back it up. I mean, talking
is fine, but responsiveness or openness is also about doing. Some lenders
have their five standard mortgages, it's like going into a McDonald's
or something, and that's it. I mean, that's the essential nature of the
money, of the calculations behind it, but you don't have to be blatant
about it. Buyers want someone who, you know, cocks an ear at them and
listens to them talk about their dream home and their money situation
and then delivers a proposal that seems totally custom. So lenders have
to be flexible. Seem flexible, anyway. It's the same thing.
Me: Because the money's all the same, right?
Matt: Mostly.
Arvind: Don't you hate it when you get change at the store and it's
all wrinkled, filthy bills?
Me: I hate that. I love crisp dollar bills.
Arvind: It's the same thing here. You have a loan with a certain
downpayment, a certain interest rate, a certain period. It's a few
numbers, and they're identical or comparable to what you can get
elsewhere. The difference is in the service, the packaging.
Matt: It's the face you put on it! Lenders have to give good face.
Me: Oh? It's not just Ben Franklin's face that counts?
Matt: No, baby, no.
Arvind: Good face. That's what I call a fine marketing principle.
After transcribing our discussion, I also combed through the web for some
really good advice on finding a lender. This is advice directed at home
buyers, but a realtor will naturally be interested in the same criteria.
Look for financial stability and a reputation for customer
satisfaction. Be sure to choose a company that gives helpful
advice and that makes you feel comfortable.
A mortgage lender that has the authority to approve and process
your loan locally is preferable, since it will be easier for
you to monitor the status of your application and ask questions.
Plus, it's beneficial when the mortgage lender knows home values
and conditions in the local area.
Buying a Home Info: Choosing the right Lender
http://www.buying-a-home-info.com/choosing_a_lender.htm
If you have someone who is willing to work with you and
explain how the process works, you should be fine. Figuring
out your finances to afford that special place can ease your
worries. Choosing a mortgage lender that will provide personalized
financing options will help. [...]
Next, phone the lenders on your list and ask about interest rates,
points, fees, commitments, escrow terms/closing requirements and
loan servicing. If you get poor or incomplete answers, cross that
lender off your list. Remember rates change on a daily basis. The
Internet is a good source of mortgage lending information,
however, read the fine print. Make sure there are no hidden costs.
Hutch News: How to choose a mortgage lender
http://www.hutchnews.com/howto/page24.html
Rick Badawi, president and CEO of American Mortgage Decisions,
recommends a local lender.
"Consumers can meet the person and have their papers in hand. It's
a time saving. You want to get things done as fast as possible,"
he says. "It's really nice to have face-to-face meetings, and
it's more convenient."
The mortgage lender you choose should be experienced.
"You want people who have been in the mortgage business and have
done a variety of deals," says Badawi.
Set up appointments with several companies, and get a feel for
what it will be like working with them. How a company addresses
your needs is absolutely crucial.
"You've got to find a lender who can handle all sorts of credit
and property options," adds Badawi. You'll need someone you
can trust; someone who is versatile and can find a loan that is
tailor-made to fit your individual needs, says Chabut.
Lansing State Journal: How to: Choose a mortgage lender
http://www.lsj.com/yourguide/howto/howto_mtglender.html
It has been an interesting challenge to address this question on your
behalf. If you find fault with my answer, do let me know through a
Clarification Request so that I have a chance to fully meet your needs
before you assign a rating.
Regards,
leapinglizard |
