What You Need to Know in the New World of Information Parity

In the past, mortgage origination was an arena where the lender had all the information and the customer did not. As an example, interest rates were not easily obtained or understood and underwriting criteria was a complete mystery. In short, lenders and their sales staff had Aces and the borrower had Kings. Not a winning hand by any means for anyone who wanted to borrow money. Today, the roles have reversed and information is becoming closer to parity. What does this mean for future mortgage sales teams?

Economic theory can shed light on this issue. Historically, economic theory was based on the assumption that the parties to any transaction were fully informed players making rational decisions in their own self-interest. This was not called into question until 1967 when University of California professor George Akerlof took aim in debunking this premise. What Akerlof found was that when the seller has the information and the buyer does not, the two parties have what he called “asymmetry in available information” which translates into people viewing the sales world as innately unfair, slimy, slick and sleazy and anyone who is part of it as dishonest.

In a practical sense, what really makes buyers mad is when sellers know that a product is not the best for the customer — even detrimental — and they still sell it to people. When something bad occurs, the customer becomes disillusioned with the provider and their industry. From GM to Countrywide, companies that have experienced the wrath of the customer find recovery difficult at best. Some companies and industries never recover from such a loss of confidence and credibility. Looking at the recent confidence numbers by consumers regarding banking, the future of mortgage origination is definitely troubling.

Similar to other industries, the mortgage industry has had the benefit of asymmetric information for a long time. Many originators and managers may even want the information imbalance to continue, but consumer’s instant access to online information has permanently changed the equation. While borrowers don’t have complete information parity, the situation is moving in that direction — whether senior managers recognize it or not. What this means is that individual originators must have more sophisticated selling skills to sell to today’s customers because a value sell is more important than ever.

In Daniel Pink’s excellent book, To Sell is Human, he discusses that the sales strategy of “always be closing” (ABC) — a cornerstone of sales philosophy favored by an older generation of sales professionals — is as outdated as electric typewriters and Rolodex cards. Pink further argues that the day of organizations having only their sales staff perform the selling functions has been replaced by a requirement that every position must see themselves as a sales person for their company. From the processor and underwriter to the admin person, all employees are required to perform some selling function in their interaction with the customer. To have this happen, companies must select individuals for all positions who are not only willing to perform this function but willing to learn how to perform it effectively. There is no room for employees who take on a one-dimensional role that does not include selling for their company.

Are you hiring candidates who are matched to have positive interactions with your customers? In a world where information parity is becoming symmetrical, the lack of right talent in all positions is a ticket to irrelevance. It is time to get serious about your talent selection.