Recently, the National Association of Realtors published survey results on broker’s key challenges. I have listed a few highlights that I think have important ramifications for anyone in housing finance:
• The top three challenges that real estate brokers anticipate in the next two years are:
1. Keeping up with technology
2. Maintaining an adequate inventory
3. Competition from non-traditional firms
• Realtors said they get their business according to the following breakdown:
- 35% of sales come from client referrals
- 30% of sales come from repeat customers
- 10% of sales come from their websites
- 5% of sales come from social media
- 1% of sales come from open houses
- The remaining 19% of their business was from miscellaneous efforts.
So what insights can the mortgage banking industry learn from these results? First, there is no question that both industries face competition from non-traditional firms and significant technological changes. The entries of Amazon, Google and Zillow into the real estate market have transformed the customer’s buying journey. Speed and ease-of-use are now top priorities for all retail organizations.
Further, in NAR’s research on how consumers begin the home-buying process, the large majority of prospects start their search through the internet especially the younger generation. While this is not exactly a surprise, the more interesting shift for Realtors is that the process for selecting an agent resembles the way consumers choose a restaurant by relying on YELP or Open Table reviews. This means it is critical for real estate agents to be rated as experts in their marketplace.
To succeed in today’s business environment, maintaining the status quo isn’t a viable option for lenders and their originators. Companies such as Amazon have redefined the terms of how fast customers want products and services — including purchasing a home! Just ask brick-and-mortar retailers like Kmart, Sears and Macys about how well their strategies worked when facing Amazon.
While everyone knows that technology has dramatically changed how we communicate with each other, I am astonished by the number of salespeople who have failed to adapt their sales strategies accordingly. In a recent training class, I found that 75% of the originators did not use Facebook as part of their selling techniques! Again, even if your lender does not permit an originator having a business page, a personal effort to share your life with referral sources and prospects is a must in today’s world of increased transparency. For originators who don’t believe social media can increase their business relationships, consider these facts:
• Americans LOVE Facebook – 79% of American adult Internet users are using Facebook. (Pew Research Center)
• 76% of Facebook users log in daily
• Facebook’s mobile app is the world’s most popular app, followed by Messenger and Instagram. (All companies that Facebook owns.)
Likewise, let’s look at what generates the average real estate agent’s business. Referral or repeat customers account for 65% of their business. To get a referral and to have customers come back to an agent or originator does not happen by chance when consumers can post about a subpar experience immediately. The customer will not refer their friends and family unless the originator has delivered the unexpected or extraordinary service levels. Average service levels are not enough and meeting expectations doesn’t cut it either. What does?
While I’ve addressed how to “wow” the customer in previous posts, here are a few that I think are of particular importance:
• Communicate in the way the customer wants
• Show them how to avoid pitfalls
• Deliver on all promises, and
• Surprise them!
Even with technological advancements, effective communication skills are at the heart of an originator’s ability to super-service the customer.. Originators should master not only the technology side like social media platforms, but also what words they use since science has found that each individual has a learning style that can be different from that of the salesperson. Being comfortable in your own style and not adjusting to others is fatal flaw today when a decision to select an originator is made in seconds.
Likewise, it is a given that an originator must be knowledgeable about their products and underwriting guidelines. Leading the customer down the wrong path by not knowing the latest changes to the guidelines impacts not just the current customer but limits the opportunity for future referrals. Keeping promises made to customers is also mandatory if originators want to receive a positive review. And finally, surprising the customer in a thoughtful, personalized way makes a positive impression that increases a salesperson’s chance of repeat business.
The NAR survey provides great information for lenders and originators. Are your originators measuring up to what the current marketplace is demanding?