Written By: Karen Deis

Competition is a fact of life…competition for food, jobs, learning, and mates! You have competition from everywhere and right this minute, you are losing loans that you did not know even existed!

Oh, all right, maybe you know they are floating around out there somewhere, but you may never get the chance to even speak to potential clients because you simply don’t have the advertising dollars that are being spent by the big guys to acquire leads.

Since loan originators are trying to get new business from the same customer pool, the key is NOT to fear the competition, but to compete with them through knowledge of their strengths and weaknesses. Exploit their weaknesses. Promote your strengths.

Take Ditech.com for example.

How can you compete against those incessant TV commercials—24 hours per day and on every single channel?

To learn more, I decided to “test” the hype and personally apply
for a loan with Ditech.com. You know the one with $395 in
total closing costs?

Here’s their “secret” to “low” closing costs—higher rates and poor customer service! On January 6, 2004, I was quoted an interest rate of 6.125% and $395 in closing costs. Yes, I could receive a lower rate, but my closing costs would be $4,000. So, no big secret there right?

In addition, before they would even begin the loan application process, I had to agree to give them my credit card number and authorize a $500 charge to my credit card! At this point - they did not even ask me my name!

I asked what the $500 was for and they informed me that it was to lock in the rate. I told them I did not want to lock in the rate. They stated that it was also for the appraisal and title work. I told them all I wanted to do was be pre-qualified at this time and attempted to give them my name (at this point, they still did not ask my name).

They refused to take ANY information unless I gave them my credit card number. I then asked them to send me the paperwork in the mail and I would send a check (for $500) with the completed paperwork, but again, the answer was NO. It’s a credit card up front—or nothing.

Thinking I called a cranky loan officer, I called them back 2 minutes later.

Sorry! Same deal with the next loan originator—however in just 2 minutes, the rate had increased by 1/4%--for exactly the same loan.

As you can see, it’s a clear marketing ploy to get the phones to ring and to hook the consumer into a higher rate by telemarketers on commission. I'm not judging here whether they are "right or wrong". It's the way they chose to conduct their business.

Armed with information like this (by shopping your competition), you can position yourself to address clients’ questions before they are even asked. You can explain how “the other guys” can make the claims they do and how you differ.

Knowledge is Power!

First of all, determine exactly who you think your local and national “perceived” competition is? Notice I said “perceived” because you are looking at it from the prospects point of view. The perceived competition is the one that has the biggest advertising presence in your market area.

Second, armed with some well thought-out questions, do some mystery shopping to learn exactly how they do business—their strengths and weaknesses. It’s important to do this “shopping” yourself to get a true “flavor” for exactly how your competitor operates.

Third, figure out how to sell against them. Focus on their weaknesses and your strengths. Make sure you have a Unique Selling Proposition (USP) of your own that makes you different or better. (See archived article)

Mention your professional area of expertise and experience when speaking with prospects. Offer references, certifications, etc. Include all this information in free reports. Use it in your seminars and print ads. For example:

What’s the point of me telling you this story? Because your marketing cannot be effective unless you know your competition. And the only way you can do it effectively and truthfully is get it straight from the horse’s mouth.

Oh, by the way, the rate lock with Ditech.com was for 30 days and if the rate expired or decreased, I would have to pay another $500 and start all over again.

Your Mystery Shopper,
Karen Deis

(A special thank you to Don Lanman, Integrated Marketing Communications who assisted me with this article. He specializes in mortgage company marketing and advertising and he can be reached at 561-845-1295 or imc4u1@aol.com.)

Copyright, 2004, LoanOfficerMagazine.com

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