PERSON OF THE WEEK: With multitudes of real estate and mortgage data now available online, today’s home buyers are more savvy and better-informed than ever. So what does this mean for mortgage loan officers (LOs)? How has this changed their role?
Furthermore, what data should LOs employ today in order to get the best results?
To find out, MortgageOrb recently interviewed Joe Zeibert, managing director of global mortgage solutions at Nomis Solutions, offering pricing and profitability management solutions to bankers and lenders.
Q: How have borrower needs, approaches and behaviors shifted over the last decade – and the last year?
Zeibert: In the past, lenders and LOs held all the key information (data, trends, reports and research on the housing and financial markets) that buyers needed in order to purchase a home. This made borrowers depend on LOs to support them throughout the challenging process of buying a home.
However, today’s borrowers are smarter than ever before. And while buying a home is still a sometimes-complicated process, home buyers now have access to far more information about the market, pricing and offers available to them.
Think about it this way – a quick, easy deep dive into the world wide web results in a wealth of real estate and mortgage information – breaking down the mortgage process and suppling buyers with real estate databases – that’s readily available to anyone with an internet connection.
This information supports buyers in finding their dream home, location, price and more, and helps them know exactly what they are looking for before they even really start the home buying process. So, the bottom line is that borrowers have more access to information that was previously only held by LOs, and the mortgage industry’s rapid adoption of technology that simplifies and breaks down the mortgage and home buying process has armed borrowers with higher expectations in terms of service.
Nowadays, borrowers will most likely already know where they want to live, have researched lenders and are expecting genuine guidance when they begin conversations about a home loan with their LO. With this shift in borrower expectations, it’s important for lenders and LOs to be equipped with innovative technology that can help them meets their customers’ demands and ultimately stay competitive and successful in today’s market.
Q: What are the competitive advantages better data analysis/strategies can offer to LOs?
Zeibert: Now that homebuyers are doing more of the homework, LOs need to change their advice and strategy in order to have a more productive conversation to get the right price on the right home for each individual borrower. The data tends to back this up, with one recent study suggesting that with the near record low interest rates and high-volume market, it’s critical for lenders to leverage better, modern data and analytics tools to increase operationally efficiency.
This means relying on data analysis and shifting strategies to help LOs find strategic, competitive advantages and build better relationships with borrowers. LOs should lean on data to establish connections with their borrowers, setting prices for each mortgage by factoring in pricing variations regionally and having the ability to look at pricing at a deeper, more granular level.
Without relying on data to fuel their strategies and using real-time pricing data and analytics, lenders often aren’t varying their pricing and rates based on regional markets across different states. This creates a significant problem for them (and thus, their LOs). Due to the lack of market intel and pricing analysis, their branches won’t be able to stay competitive and their LOs will be left with a margin management problem, causing them to either make less by underpricing, or risk losing out on the loan altogether by overpricing.
With a data-fueled approach to pricing, LOs can vary pricing and rates based on regional intelligence across different states and even communities. Having access to in-depth market intel and pricing analysis, branches can stay competitive and LOs can avoid a margin management problem, helping them close more deals while nearly eliminating the risk of under or overpricing.
Adopting this strategy also helps branches analyze varying levels of competition, supply and demand for specific real estate markets, price sensitivity and more. This enables their LOs to be more productive, successful and competitive in their pricing while also offering the best rates for each buyer.
Q: Why is pricing data so important and how does it help LOs be more successful? Why is it key to have market Intel, competitive Intel and margin management work together?
Zeibert: Lenders and LOs need to be seen as a trusted partner, but in order to do that they need to have all the right factors covered. Combining market intelligence, competitive intelligence and margin management, these three working together allows them to offer more for their borrowers than any general information that they could look up themselves.
LOs need to be (and be seen) as the experts, analyzing local offers and rates, understanding offer details, including points, fees and monthly payments as well as evaluating activity in the market at a national and regional level – and then communicating that effectively to their borrowers.
Better pricing strategy can help them do this. Pricing is more important now than ever before because lenders are competing more than ever before, and while everyone thinks they have margins, many lenders still aren’t winning.
As they start losing market share, it becomes even more evident that branches need to support their LOs because to gain market share, LOs need the ability to look at pricing ZIP code by ZIP code. Knowing that detail level of pricing data and analysis helps them price loans fairly to stay ahead of the competition.
Pricing is a crucial component for understanding borrowers, and they can’t be treated as all the same. Having a dynamic pricing approach means recognizing those ground game differences. For example, LOs shouldn’t be pricing rural California the same way they are pricing San Francisco. Besides the fact that there are different types of properties in those areas, those borrowers also have different needs.
That’s why lenders need to provide their LOs with access to the right tools, including real-time pricing data analytics. Bottomline, access to the right technology like platforms that can provide real, actionable pricing intelligence will help them keep up with today’s increasingly sophisticated homebuyers, look like a rock star to their customers and drive their success.