Pricing and service: Both are important, but the relationship between the two has some conflicting values. Navigating the right path between these two pillars of the mortgage business is what sets loan originators apart and what gives the best originators a competitive advantage.
Simple analogies can explain the basic differences between the two, while complex business plans and strategies are needed to set the tone for small and large businesses that provide mortgages to consumers.
Specialty versus warehouse
When a specialty store goes the extra mile with customer service, it provides the right product, the right fit, and the best service possible. This could be a tailored suit made to specifications or a local ethnic restaurant that cooks an authentic meal for regular customers. These
stores offer a more personal experience because they take the time to know their customers’ likes and dislikes.
On the other end of the spectrum you find warehouse stores, discount outlets, and cafeteria-style restaurants. These places provide the same products to every customer who comes through the door, and they do it at a discount. Is it the perfect product for everyone? No, it’s a one-size-fits-most
philosophy. This system may work well for some products, services and consumers, but it’s simply not feasible — or doesn’t fit within a good business model — for other products.
When it comes to mortgage origination you can find both models: Some companies compete on price alone, but end up sacrificing service, while others have chosen to provide high-quality service, which comes with a higher price. Finding the right balance isn’t always easy, but it’s necessary
if you want to have a successful business with highly satisfied customers.
Mortgages are labor-intensive products, especially when the process is done correctly. All homebuyers come with unique circumstances, every home has its own challenges, and every loan scenario requires special attention. Originators often must work to help homebuyers see the unique value
propositions and service levels they bring to the process. In this age of instant gratification, you have to show buyers that it’s not just about providing the lowest rate, but also about providing a high level of personalized service to make certain the job is done right.
Just as a tailor takes precise measurements to ensure a suit or a dress fits just right, an originator must ask specific questions about a homeowner’s past credit, future goals, current plans and household finances. Only after all the measurements have been taken and all the questions asked and
answered can the originator create a tailored plan for a homebuyer that provides the perfect mortgage package for that customer’s particular set of needs.
“ A balance that works for you and your company
must be found between service and price. ”
Even after this initial package is set, the originator’s job is to continue providing a high level of service throughout the process. You must ensure that your homebuyers always know what to expect next as they move through the process, and make sure every piece of paper gets processed on
Providing tailor-made service also means telling the truth to potential buyers, even when it’s difficult. Sometimes telling potential buyers they can’t get a particular low rate or should wait to buy a home until they clear up issues on their credit reports will lose you their business.
These buyers may go elsewhere for their loans, but many will soon realize your words of advice were correct. In the long run, clients will appreciate your candor more than the canned sales pitch of a loan officer who puts them into an untenable mortgage.
Achieving the goal
In the mortgage industry, as with any service-intensive product, a balance that works for you and your company must be found between service and price. How many loans can originators and their teams handle at one time without sacrificing service? How many underwriters need to be on staff to manage the loan processing schedule without
becoming roadblocks to productivity?
Finding the right balance will help you maximize customer service, staff time and the bottom line. When your company is out of balance, administrative costs can skyrocket and homebuyers can exit the process as dissatisfied customers.
Ultimately it’s up to originators to choose a company that best embodies the level of service they prefer. For homebuyers, it comes down to finding an originator who fits their needs and gets them into the home of their dreams.
Originators who can explain their values and the high level of service they can provide to help homebuyers achieve their goals can compete on more than just the lowest rate. They compete on the advantages of good service: personal treatment, honesty and the ability to guide clients through
the entire process of making the largest purchase of their lives.
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Mortgage originators who are only willing to compete on price will do so at the cost of their business. Buyers who become dissatisfied with the lack of service provided will refuse to provide referrals, or other businesses that offer even lower rates will move in, undercutting your only
Originators who compete on service, however, will build a list of loyal clients who provide strong, qualified referrals for years to come. Satisfied homebuyers typically provide referrals because the originator took the time to ask the questions needed to put them — or their friends,
family or co-workers — into the right home with the mortgage package that fit their specific needs.
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