Realtors are the bread and butter for the vast majority of mortgage originators. And the partnership makes sense: real estate professionals help people find property, so they’re already in contact with the people who need mortgage loans. Realtors are especially important in the current market conditions, where purchase business is far surpassing any other type of transaction.
But realtors aren’t the be-all end all of referral partnerships.
In fact, Mark Maimon, Vice President and Team Lead at Freedom Mortgage, wishes that he hadn’t focused so much on real estate agents throughout his career.
“I’m not saying that going after real estate agents isn’t helpful, but first of all it’s what every originator is doing. Everyone’s so realtor-focused, and what they don’t realize is that one of the challenges is that realtors don’t get paid unless your transaction closes, and until your transaction closes, so they’re heavily dependent on you and that stirs up all sorts of emotions for them during a transaction: paranoia, speed, all those things that make it a heightened transaction,” Maimon said.
Maimon’s team does a lot of training with major real estate brokerages New York and L.A., and he says that realtors are always talking to a number of other mortgage professionals to see if they can do any better, making it very difficult to build loyalty and make the relationships worth the headaches, late night calls and everything that goes along with them.
“Real estate agents, who I love and have been my bread and butter and helped me achieve a certain level of financial freedom, they’re very fickle on average, as an industry,” he said.
If you think about it, diversification is advised in just about every industry there is. There are other sectors that originators can find clients, and because they don’t always produce a steady stream of mortgage-ready clients, they can be underused. When working with realtors, the payoff is pretty immediate because they have clients who are almost always ready and willing to purchase a home, whereas there can be much more of a time investment in working with other referral partners. Getting to clients early in the process and working with credit repair companies or financial advisors, for example, can require a lot of legwork upfront without seeing any reward for months down the line.
When you do create a good relationship with a financial advisor, however, they can sometimes create transactions for you that don’t even involve the sale or purchase of a property. They advise people on debt consolidation or a cash out refinance or another scenario for financial planning purposes, that wouldn’t know exist for clients who aren’t already in your database and if you’re not engaged with a particular segment of a community.
Joshua Jablonski, private mortgage banker at Wells Fargo, says that a lot of originators waste time chasing real estate professions without thinking about the kinds of realtors they’re pursuing, or the quality of those relationships. This is particularly true in very lucrative markets.
“You can really have 10 very solid, successful, real estate relationships that make your career for you, you don’t have to have a thousand. And I think a lot of guys spend so much time chasing unknown business with so many people that they really just don’t capture what’s right in front of them and solidify the relationships that they have that are hyper-producing,” Jablonski said. “If you’ve got 10 of them that send you seven, eight, nine million dollars a year, that’s a pretty good year already.”
What you want are the handful of realtors who will stand up for you, who recognize the value in what you do, trust your opinion and competency, and who will defend you when their clients are (sometimes unjustly) unsatisfied.
“What I wish I would do better—and this is still a work in progress—is to really cater to and work closely with the ones who, number one, have enough business to warrant it and number two, the ones who are willing to have a severe case of loyalty, as we call it.”
Many real estate firms will have a policy where they refer several mortgage professionals to clients, which Maimon calls “the worst thing ever.”
“If you have somebody you really trust, you don’t need three names, and you don’t want three names. You want one person who you know every single time you’re going to do it right. So inherently, the real estate community has been trained, and by no fault of their own, that they need to have 10 mortgage people in their rolodex, whereas they really don’t if they have the right mortgage people working on their transactions,” he said.
Be the right mortgage person for the best realtors in your area, and you don’t need to pursue all of the rest.