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Are You Losing Business to Competitors You Don't Even Know About?
Written By: Karen Deis, Editor
Did you know that your past customers - clients who you have done a good job for - people who trust you - are being lured away even as you read this? A more startling fact is that some of your "phantom" competitors are not even in the mortgage business.
Here are some examples:
Real estate companies who own their own
mortgage company:
They are getting wiser! It used to be that RealtorsTM would "suggest" that HOME BUYERS use the in-house mortgage company. Now, when a home is listed for sale, HOME SELLERS are being directed to use the on-site loan officer. After all, these people are the MOST likely candidates to purchase another home and need a mortgage. It makes sense to introduce them to a loan officer (who works for a real estate company) early in the process. Your clients are being solicited for a mortgage at the listing presentation.
Car Dealers:
Because of name recognition, constant radio and TV advertising expenses supplemented by money from the big automakers, car dealers have a huge amount of media exposure. They are familiar with financing and the next big thing for them is to provide 2nd mortgages or refinance home loans for cash to purchase a car. They make more money doing a mortgage then they would on an auto loan.
Financial Planners:
Not all financial planners are equal - some work for major companies that provide mortgage financing. My husband has an American Express retirement account. He recently received a letter from his financial advisor that they could provide a 1st and 2nd mortgage to obtain cash for investment purposes. The rate was 1/4% below the going rate and a flat $1,000 in closing costs. Within the last 6 months, he has received 8 marketing letters.
Home Improvement Stores:
My brother-in-law is a financial planner for PrimeAmerica (which also offers mortgages). They have setup mobile storefronts in the kitchen and bath remodeling centers at Menard's stores. The initial marketing effort was to originate 2nd mortgages, but an interesting thing happened. They close 3 refinances per week and it had nothing to do with interest rates - and everything to do with people imagining a new kitchen or bathroom addition. Interest rates are not an issue.
Airlines: 
If you accumulate frequent flyer miles - you know what I am talking about. I have miles with Northwest airlines and recently received a letter that if I buy, sell AND finance a home with LendingTree.com and use their real estate partners, 100,000 miles will be awarded to my account. That's enough for a family of 4 to fly anywhere in the continental United States, absolutely free.
Credit Card Companies:
MNBA has teamed up with GMAC Mortgage to offer an incentive to use their credit cards. For every $2,500 spent on the credit card, $25 is applied towards the principal balance of a GMAC mortgage loan. The ads claim that if you own a small business and spend $5,000 per month, it will decrease your principal balance by almost $17,000 over a 30 year time period.
My point is that unless you begin to market to your clients - immediately AFTER the closing of their loans (and continue to market to them) you have a good chance of losing your past clients to companies that are sneaking behind your back and dangling irresistible incentives to take out a mortgage with them instead of you.
Kelly McGuinness, United Mortgage of Connecticut, says the best way to "defend" yourself is to constantly remind your past customers that, "...if a deal sounds too good to be true, it probably is." She reminds her clients that if they even THINK about going to another mortgage company, to check with her FIRST for a second opinion. (See a previous article about "Second Opinion Marketing Program".)
At least you have a chance to sell against not only the competition that you DO know, but also against the competitors you DON'T know!
Read this issue's article on building your database and the vital information that you should have access to at the click of a mouse.
At least you will have a fighting chance to KEEP the clients you already have.
Copyright, 2004, LoanOfficerMagazine.com
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