Feed your loan origination business

By: Sarah Volling for CBInsight

Mortgage lending productivity decreased in 2014. With refinance subsiding and purchase loans taking over, community banks are looking at ways to expand market share in order to see loan officer productivity (number of closed loans per employee) rise. This year we have provided a variety of tools including our Millennial Marketing Guide, ideas on reaching the investor market, and, this month, the results of our Realtor® survey. The real estate community is a fantastic catalyst as well as an essential market whenever purchase-lending dominates the market. They are every community banks’ secret weapon for increasing market share.

Some background. More than 1,099,102 individuals, the ranks of which have swelled by more than 10% since 2012, are now members of the National Association of Realtors® (NARs). While not a direct market for community banks, Realtors® can — and do — strengthen origination efforts. They are a catalyst, spending more time with homebuyers than any other party, they also have more influence on the entire real estate transaction than anyone else. Nurture relationships with real estate agents, and expect to see a steady supply of new loans rolling in. Sounds simple — most things do — though most things are often harder in practice. For a better understanding of what it takes to create relationships with real estate agents, we conducted a survey early this month. While responses are still coming in, the preliminary results are enlightening. Three themes are consistent in their responses:

Theme one – network. How community banks can establish or expand their Realtor® network is certainly up for debate. One fact, however, remains unwavering. Community banks must meet agents where they spend most of their time, and Realtors® must meet their potential homebuyers where they spend most of their time. We are in an all-digital age. Mortgages are trending to all-digital, and both Millennials and Baby Boomers are heading to the web daily. With 63% of real estate agents we surveyed using Facebook to connect with homebuyers and many expanding into other online outlets such as LinkedIn and Twitter, this is where community banks must also be. Connecting with Realtors® at the source is the first way to work with them to ‘catalyze’ originations.

Theme two – communicate. Real estate agents have the same goal as community banks — close the loan, and hand the customers the keys. This directly ties into the most profound reoccurring theme we saw in our survey. Across the board, communication ranked highest on why Realtors® would recommend a community bank to a customer and encourage them to keep coming back. While not always easy when times are stressful or a loan seems stuck in the origination cycle, the more proactive community banks are with their customers as the loan moves through the process, the better. Real estate agents also acknowledged that in this highly regulated industry, many factors can impact a loan’s ability to close on time. However, they want banks to be proactive with their communication as delays or red flags arise. For community banks, having systems in place that automatically notify customers as the loan moves through the process can save time across the board. By proactively sharing both good news and bad news, customers and Realtors® alike will feel at-ease.

Theme three – create loyalty. Once a community banks establishes their network of Realtors®, it’s important to maintain those relationships to keep agents coming back time and again. It’s worth noting that more than half of the Realtors® we surveyed said they’d recommended no more than one new community bank to their homebuyers in the past six months. Realtors® are loyal. Keep them happy, and they will keep coming back to you. As long as community banks stay proactive with their communication and treat Realtors® as peers, they will most certainly see their business flourish.

While there is no perfect formula for nurturing real estate agents, our survey does provide a glimpse into what makes them tick. By establishing a network of Realtors®, providing transparency and proactively communicating, the real estate community becomes an effective origination catalyst. The housing market is sure to get hotter; the absolute best way to increase productivity, reduce your cost-to-close, and build long-term, sustainable origination business is through relationships with those that influence the real estate financing decision. Not one has more influence than real estate agents. Start building those relationships today.