By David Williams, Vice President, RightStart Mortgage
Chances are that back in school, you or someone you knew took a class because they heard it was an “easy A” Maybe it was a class with a teacher known for being an easy grader, or the subject really wasn’t that hard. Either way, the “easy A” was a simple, harmless way to boost one’s GPA.
Most salespeople are the same. We’re even taught to go after the low hanging fruit, because, well, it's right in front of us. But just as the student who takes too many academic shortcuts, constantly going after the easy-A in the mortgage business can have adverse consequences as well.
Right now, the easy-A for mortgage professionals
is refinancing. While there are still hurdles to overcome, a mortgage refinance is usually far less difficult and time consuming than helping someone buy a home. In fact, if a purchase loan was college calculus, a loan refinancing would be high school algebra.
When a loan officer is faced with two customers, one a former client looking to refinance and the other a first-time buyer, the instinct is to go for the “easy A” and prioritize the refinancing client first. But is this always the smartest decision?
Right now, I see a lot of first-time buyers choosing to work with lenders because they think they will get the service and counseling they need, only to be placed on a shelf when the loan officer gets a refinancing lead. And I get it; refinancing borrowers need to lock in rates ASAP. But right now, buyers need all the service they can get—especially in California, where so many struggle with affordability and low inventory.
On the flip side, if you provide great service to a first-time buyer, you could win up to three different ways—client referrals, Realtor referrals, and repeat business when your buyer moves up into their second home.
Mortgage professionals should keep in mind that there's only so much life left in the refinance market. I know we’ve been hearing this for a long time, but it’s reasonable to assume that rates will go up sometime in the not-to-distant future. In the meantime, many of your competitors are gaining valuable experience and building a reputation in their market for focusing on buyers.
I’m not saying we should all start ignoring our refinancing customers. We owe it to all
our clients to provide the best service we can. But in a mortgage environment that is beneficial for both buyers and homeowners—which is what California has right now—it’s a good idea to think strategically about priorities and where our focus ought to be.
If you are working with several first-time buyers, and you get a refinance lead, would it would be better to hand it to a colleague capable of providing the same great service you would? Maybe that sounds like sales heresy—but if you are able to keep your commitments and deliver excellent service to current clients, and your refinancing client is happy, it may actually be the better solution.
Hey, we all want good grades, at least in the eyes of borrowers. Whether handling a refinance or a purchase loan, the key is to make every client feel like they are your only client. If you do that, there’s no exam you won’t be able to ace.