Mortgage Brokers Today

Yesterday we covered issues that lenders are concerned about. Today we’ll talk about what’s on the minds of mortgage planners.

Three high-volume planners shared their thoughts at CAAMP’s lender panel on November 23.

The panel featured:

• Vince Gaetano of Monster Mortgage
• Peter Kinch of Dominion Lending
• Tom Hogg of The Mortgage Centre

Here’s what they said… (CMT comments in italics.)

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On balancing relationships with lenders and clients:

• Lenders have been talking a lot about what they want from brokers.  Peter Kinch hinted that brokers’ interests may be getting overlooked in the process. He said, “A lot of brokers underestimate the value they bring to the lender.”  Kinch felt that brokers should strive to get to a point where their value add is so key to lenders that lenders “won’t be able to live without us.”
• "You have two customers - one is the borrower and one is the lender." – Kinch
  
  (The audience seemed to find it funny that lenders were being referred to as the “customer” when brokers are the ones sending them the business. We have all the respect in the world for our lenders, but let’s keep things in perspective. As long as the broker originates good mortgages and doesn’t waste the lender’s time, only the customer should be the “customer.”)

On brokers’ value proposition:

• Vince Gaetano says it’s easier for homeowners to create long-term relationships with a mortgage planner, versus someone at a branch that continually “changes seats.”
  
  (Generally speaking, banks will probably never challenge the breadth of mortgage advice provided by a dedicated mortgage planner. The question is, will consumers realize this, and what value will they place on it?)
  
• Brokers who compete on rate will “live by the sword and die by the sword” says Kinch.  With so much competition (from branches and other brokers), it’s vital to re-examine your value proposition as a broker.
• Homeowners want more than the best rate. Gaetano said, “If you have the best rate, you should have all the business.” But that’s not happening,” he says. The people with the best rates have only a slice of market share in our industry.

On branch mortgage specialists:

• It’s not fair to be critical of bank branches, Tom Hogg told the crowd.  Bank reps are rarely allowed to become true specialists. Instead, “They are required to know a little bit about a lot of things.”  (Bank accounts, mortgages, investments, etc.)  By contrast, he says mortgage planners can focus on becoming experts on their specific subject area.

On advice to new brokers:

• “I wouldn’t want to begin building my business today,” says Hogg. New brokers today have a lot of “anxieties.”
• Gaetano says brokers must ensure the experience for first-time buyers is good, or they won’t come back.
• Consumers don’t want buzzwords or elaborate explanations, says Gaetano. Their attention is best kept when the planner is able to break down and simplify difficult concepts.
• Clients “want to look you in the eye and know you bleed like they do…that you had a 12% mortgage (too).” If you “humanize the transaction,” people will continue to come back. - Hogg.
• Become an authority.  “When people see you as an authoritative source, it changes things dramatically.” It creates credibility. - Kinch
• Customers want to make sure “you know what you’re doing…They want to trust you unequivocally,” says Hogg.
• Kinch said brokers need the right priorities. “If I talk to a person and their first question is ‘What’s your commission split?'’…the conversation ends there.” Kinch says: “The first question should be: ‘What kind of training do you provide?”
• Gaetano agreed, saying: “Hook up with a firm that’s going to give you a lot of training.”
  
  (Never underestimate the advantage of high-quality training. It remains with you throughout your career. Truth be told, it’s too easy to screw up in this business if you learn on the job…and when errors cost the client money or leave a bad taste in his mouth, you’ve failed.  Instead of being eager to sell, be eager to learn.)

On ideas for growing your business:

• Hogg says, identify and focus on one client at a time who can provide you referrals.
  
  (This is deceptively simple, but true. The best advertising comes from your existing customers. According to Maritz Research, only 1 out of 10 clients come to brokers due to advertising.)
  
• Creating a niche has been the foundation of Peter Kinch’s success.  (His specialty is income property financing.)  He says, “Focus on trying to become the absolute expert in a particular niche.” The more education you provide, the less rate will be the focal point.
• Kinch suggests using the media to your advantage. “Learn something and write about it.”  But he warns:  Never write from the angle of self-promotion, or it becomes advertising instead of an editorial.

On threats to the broker industry:

• Hogg was concerned about the increasing intensity of branch price competition.  He also said that brokers can no longer take advantage of a lender’s time and resources. For example, he told the audience that brokers must get away from things like “holding three commitments until closing.”
  
  (We should all know there is a price to pay when you don’t place clients in the right product from the beginning. Odds are, today’s professionals and lender pressure will soon make “3-commitment brokers” a vestige of yesteryear.)