Residential Magazine

Knock Down Goliath

Local mortgage companies can compete with the big boys of the industry

By Ryan Kelley

Even before the COVID-19 outbreak made meeting in person tricky, the mortgage market had been steadily moving toward a virtual model. If mortgage companies didn’t already have a website and app to close their loans, they were sunk even before the shutdowns.

People have been increasingly shopping online for everything from clothes to cars, so it made sense that they would shop for their mortgage there as well. The mortgage originators who saw this trend coming and planned ahead were safe. Those that didn’t, couldn’t adapt quickly enough.

This has allowed the big boys more access to local markets, and it has made the competition fierce and strange, with new competitors fighting for every loan instead of the local rivals that mortgage companies had competed with for years. Seeing the big money swoop into local radio and TV advertising, as well as new offices popping up in more cities, has been unnerving to say the least. There are ways to fight this, however.

Name recognition

The first competitive edge that local mortgage originators hold is familiarity. Even if a borrower hasn’t used your company previously, there is likely an awareness of your brand if you’ve put in the work to build it properly.

This means having solid and distinctive radio, TV, print and web advertising that clearly shows your company for what it is — a local business that is part of the community. The originators that are deeply involved in their local communities stand a much better chance of slaying the dragons that are the national mortgage companies. Whether or not a company gives back, especially locally, will always be important to consumers when selecting a company to work with.

This kind of advertising isn’t cheap, but it is a lifeline in bad times and a brand-building machine in good times. Putting your company’s logo and information out there is the best way to combat the big banks, even if you can’t spend the same amount. These dollars need to be deployed properly. You can have the lowest rates or best service in town, but if no one knows you are there, what is the point?

Making deals with local TV and radio stations to sponsor segments and shows also helps to get your name repeated over the airwaves. This can help keep you top of mind when it comes time to buy a house. If you have a radio or TV sales representative, ask them to show you all of the options. Live commercials, recorded commercials, sponsorships and even brief name mentions are all effective. It’s all about reaching an audience and staying top of mind.

Web advertising is crucial here as well, but it has to be deployed by a professional or a team of pros. Many companies have spent money on paid search ads only to see their competitors outspend them and take their business. This is where search engine optimization, or SEO, is key for local originators.

It is a far cheaper alternative that lets local borrowers find you. Today, everyone is on their phone nonstop. Web advertising is huge in terms of reaching the folks who can’t seem to put their phone down. Something to remember when investing in web ads is that the potential client is going to click directly through to your website. Your website and online app need to be strong, fast and convenient.

The originators that are deeply involved in the local communities stand a much better chance of slaying the dragons that are the national mortgage companies.

Prior relationships

The second competitive edge to mine is referrals. These can come from past clients, Realtors, builders, appraisers, contractors or anyone else who knows how you do business and can tell potential clients about their great experiences working with you.

Have you developed positive relationships with the third parties you use? Have you made the process easy on your Realtors? Do they feel confident referring business to you? Did you provide great service to your borrowers? Past clients are massively important. They are not only a potential source of new mortgages as they refinance or buy new homes — they are walking, talking testimonials to what a great job you did for them (if you did a great job, that is).

Originators can help build these relationships by staying on top of it. Take your referral partners and past clients out to a ballgame. Buy them dinner. Send them a birthday card. Write them thank-you cards. Give them a call if you see rates drop.

Keep your company top of mind for these people and they will reward you with repeat business and recommendations. Ignoring past clients is a sure way to let newer, out-of-town originators come in and steal business from you. Don’t let anyone tell you that borrowers don’t refinance after they make the initial purchase of their home. This just means they aren’t calling you, because the numbers show that the majority of borrowers refinance at least once.

Boutique experience

Originators have to prove themselves and offer a reason for return business. This is where the third competitive edge — customer service — comes in. If you can show that your lending platform offers a boutique experience that can’t be found anywhere else, you can really emphasize that personal service.

Although it may not be possible now due to the coronavirus crisis, meet face to face with your clients when it’s safe again. Show them that you care. Go meet with them in their homes or offices. Show up at the closing.

Communication throughout the process and properly setting expectations are key. Make the client comfortable with you so that when they want to refinance, they call you first. In a fast-food world, this type of service is unexpected and often deeply appreciated.

Remember, it can’t just be window dressing. Superior service goes beyond smiles, phone calls and coffee at the appointment. It’s about putting in the work to make sure that your client is satisfied all the way through the loan process.

Although many mortgage companies choose to sit on surplus cash for lean times, building constantly is the only way to truly survive the rough patches.

Continuous growth

The fourth way to compete with the big companies is to build. Although many mortgage companies choose to sit on surplus cash for lean times, building constantly is the only way to truly survive the rough patches. When other mortgage companies are shedding jobs, pick up these talented loan processers and underwriters.

Make your turn times faster than the big boys and use that in your ads. If you are delegated with a specialty product such as U.S. Department of Veterans Affairs loans, build that business. Make your office the landing spot for these loans in your town and let people know that you can close them faster than anyone else.

Control the process as much as you can. If there is a way to bring processing, underwriting, closing, post-closing or anything else in the mortgage chain in-house, or at least to a place where you have more influence on it, do it. Get those turn times down and get a reputation for closing quickly and efficiently. Take care of your employees — if they’re happy, they’ll make your clients happy.

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Branding, referrals, customer service and growth — that’s how you beat the big guys. Do all of the little things and you can compete with the mortgage industry giants. Let that stuff slide, however, and you’ll be out of business. ●


  • Ryan Kelley

    Ryan Kelley is the founder of The Home Loan Expert LLC. In less than a decade, Kelley has gone from selling mortgages door to door to his neighbors to running one of the fastest-growing mortgage banks in America. Kelley rose to prominence with hard work and dedication, along with pioneering new techniques to get mortgages closed faster than anyone else in the business. With the addition of Hero.Loan, the rapidly expanding Veterans Affairs loan product, his company is growing every day.

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