The key to winning purchase business in 2022 remains as it was last year, the year before that, and the year before that – building and maintaining relationships with real estate agents. But in the most competitive purchase market in years, they’ll have to scrap, leverage social media and add a personal touch.
According to three loan originators speaking at a policy summit hosted by the National Association of Hispanic Real Estate Professionals in Washington D.C. on Tuesday, LOs should focus on making inroads with real estate agents now, or else they will struggle to find their footing in a purchase market for years to come.
“I think it’ll be a broken record but Realtors, Realtors, Realtors,” emphasized Rafael Montano, an LO at Rocket Mortgage. “You have to understand that they’re part of the transaction and you have to leverage them.”
Montano added that the connection is key and that many LOs who have only been on the refi side may not understand that there is an additional person in the transaction. “The agent is crucial,” he added.
The Mortgage Bankers Association’s forecasts that this year, purchase mortgage originations will grow by 9% to $1.73 trillion, while refinances will plummet by 62% to $860 billion from $2.26 trillion in 2021. An MBA report from early March found that the refi share of applications has dipped below 50% for the first time since June 2019. And rate lock activity in February suggests the mix is quickly becoming two-thirds purchase.
Christopher Medellin, vice president regional manager at loanDepot, said that LOs whose business mainly consisted of refis in 2020 and 2021 are now feeling the shift of the market.
“You’re really feeling it right now, you’re feeling it big time,” Medellin said. “You’re feeling price compression and you’re probably getting shopped more than you’ve ever been shopped.”
Rickey Green, community lending manager at Prosperity Home Mortgage, LLC, said that LOs can build a relationship with agents by adding value to an agent’s service. Green recommends that LOs to send real estate agents information on a weekly basis about what’s going on in the mortgage industry.
By doing so, “agents will send you business because you’re providing value to their business,” he said.
Other recommendations from the panel for how LOs can find footing in a purchase market is by building their own brand.
Medellin pointed out that while most consumers start their home shopping journey on their phone, borrowers still want to feel a personal touch.
“Start building your brand in your local marketplace, so that customers know that you’re in a specific marketplace,” Medellin noted. “Build a digital brand using TikTok, Facebook, Youtube, and Instagram.”
Medellin also added that on average it takes about 176 days from when a customer finds an LO to funding a loan and that it is vital for LOs to invest into a customer relationship management platform (CRM) to follow up with customers during this journey.
“When you’re building campaigns throughout that incubation period and have your customers know that you’re here for them, it’s the best bet for growth,” he said.
Another piece of advice is for LOs to educate themselves on certain products and become experts in them.
“You can’t be great at everything, but you can be really, really good at a few things,” said Green. “I’m really good at conventional loans, I’m just OK with jumbo products. This is my niche and I think you network and try to get with those centers of influence that drive what you’re good at and your business will thrive.”
“Don’t try to be a jack of all trades, really focus on what you’re good at,” Green said.