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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   November 2007

You Scratch My Back...

It’s not necessarily counterintuitive to refer borrowers to other brokers

Mortgage brokers serve as connectors, linking borrowers seeking a loan with lenders or investors willing to finance it. In order to really make an impression on borrowers, you can take this process to the next level. Help them with their other financing needs by referring them elsewhere when their requests are outside your realm of expertise.

Brokers too often focus on whether they can monetize each referral, latching onto that fraction of a point they might see for facilitating an introduction. This approach can be self-defeating, slowing the entire loan process and creating a weighty daisy chain that lenders often shy away from.

Instead, consider the approach in which generalists refer to a specialist or where specialists in one area of finance refer their clients to specialists in another area. Providing this courtesy to borrowers can be a great way to create future business.

Enlightened and experienced brokers recognize the basic networking value of providing a referral. They take a more long-term outlook by looking at every contact as an opportunity, not necessarily for this transaction, or even with this prospect, but for subsequent opportunities with other prospects.  People who rely on this outlook to build their reputation generally find that it works.

Gather facts so that you can meet borrowers’ needs to the best of your ability. When they ask for a referral, find out specifically what they are seeking.

Once you give them information about someone who can meet their needs, you may have to take the borrowers by the hand. An ingrained shyness, a fear of rejection and laziness can all keep people from picking up the phone to reach out to the referral.

Because you have made the time commitment to offer a referral and now have the opportunity to impress your clients with your expertise, take the next step. Make a conference call to the referral and make a live introduction right now. If the two parties don’t connect over the phone, send an e-mail. Be sure to follow up.

If there is no time pressure, but if the person with whom you’re speaking presents a viable business opportunity for you, be upfront if a name does not come to mind. Say that you’d like to think about it some more or ask your colleagues. Collect their contact information and then get back to them. This can be the hard part.

Proceed with caution, of course. Referrals can be a delicate matter. Only give out names if you actually trust the source. Providing a referral does not simply involve giving out random names that you can’t stand behind. Giving a good recommendation for a broker or lender is like being that person who provides a well-thought-out recommendation for a dining establishment rather than being the person who passes out restaurant fliers on city sidewalks.

Although the sources for successful referrals are often forgotten, sources for unsuccessful referrals seem to be remembered forever. There are risks involved in extending this service -- specifically, the loss of credibility. Conversely, offering good information allows you to demonstrate that you know your stuff. This certainly benefits your reputation.

The capability to offer referrals comes only after substantial relationship building or after you’ve built a solid referral base. Referrals generally depend on two elements -- being remembered by the individual making the query and having the recommendation reciprocated. Properly handled, referrals can serve as potent sources of business from borrowers as well as from brokers and lenders who will probably return the favor for you.


 


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