A recent study found that 21% of people who bought a home this year regretted their choice of lenders – even buyers who said they had a good experience. So how can mortgage pros address the problem?
A recent study by J.D. Power found that 21% of customers who purchased a home in 2016 regretted their choice of lender. Surprisingly, even customers who rated their overall satisfaction as high said later that they regretted their choice.
So if customers were satisfied, why did they regret their choice? What are lenders doing wrong? MPA sat down with Craig Watson, director of J.D. Power’s mortgage practice, to get some insight into the reasoning behind the numbers.
“This is the first year we’ve used that wording in the questionnaire. Not really having a previous benchmark, we didn’t know how it would shake out,” Watson said. “We got the obvious answers you would expect – things go wrong, it takes too long, people aren’t friendly and I don’t trust them – but then there’s a portion of folks who said they regretted it, but when you look at their satisfaction score, they weren’t unhappy. They didn’t go, ‘Wow, that was the worst experience of my life. I wish I hadn’t done that.’ That really got my wheels turning: why was that?”
Part of the answer, Watson said, seemed to be that many customers – especially those unfamiliar with the mortgage process – may have expected a different experience than what they got.
“Satisfaction is a function of the experience, but also the expectations. I use an analogy of shopping at different stores,” he said. “If I go to Walmart, I have a certain set of expectations about what I’m going to get, versus if I go to Nordstrom or I go to Target.
“If I go to a lender, and I choose them primarily based on the rate, or maybe a special deal they’re giving me, I can be happy with that choice because I got a really good deal. They didn’t do a bad job. They got me through the process,” he said. “…That said, I think there’s some degree of what I would call a grass-is-greener, buyer’s remorse tendency. They say, ‘I got what I wanted, but all things being equal if I could get the same rate somewhere else, I might have chosen to go with what looked to be a better provider.’”
Another problem, Watson said, was simple lack of education on the part of the customer.
“The other thing we noticed a lot of among those folks is that there’s probably not a full understanding of what they’d gotten themselves into,” he said. “They felt like there was some degree of pressure. What you see is that the folks who were expressing regret, all the basics of service are taken care of. Their loan officers are calling them back in a timely manner, they’re giving proactive communication, they’re closing on time. What’s missing or tends not to be met is completely understanding the choice they made.”
Many customers reported that they felt pressured into choosing a specific loan product.
“It’s not a nefarious or evil thing, but there was the sense of not having any other options,” Watson said. “And that’s where I think the regret is coming in for those customers. It’s a little more nuanced than just, ‘I didn’t have a good experience.’ Maybe there’s a sense of, ‘I really didn’t have a choice.’”
So how do mortgage professionals keep customers happy? The key, Watson said, is remembering that homebuyers aren’t necessarily familiar with the ins and outs of the process, and making allowances for that.
“Speaking in the language of mortgage lenders tends to confuse most customers,” he said. “You go to most mortgage websites – they tend to use terms that customers don’t use.
“…Take the extra steps to reaffirm that the customer really understands their choices. It’s really an alignment of product and solution,” he added. “The point is not to be able to say, ‘I’ve got a portfolio of 100 different options.’
The customer sets the goals and objectives and priorities. How do you align a solution for them? You say, ‘These are your needs. This is the product that best fits your needs, and here’s why. There are two other options, and you can pick those – but they might not work as well.’”
Taking the extra time to make sure the customer really understands what’s being offered, Watson said, was the key to making sure that customer doesn’t regret his choice later – and to increasing the odds he will send business your way later.
“In the end, what really matters is that when they sign that paperwork and walk away, they’re confidence they’ve made the right decision,” he said.
So if customers were satisfied, why did they regret their choice? What are lenders doing wrong? MPA sat down with Craig Watson, director of J.D. Power’s mortgage practice, to get some insight into the reasoning behind the numbers.
“This is the first year we’ve used that wording in the questionnaire. Not really having a previous benchmark, we didn’t know how it would shake out,” Watson said. “We got the obvious answers you would expect – things go wrong, it takes too long, people aren’t friendly and I don’t trust them – but then there’s a portion of folks who said they regretted it, but when you look at their satisfaction score, they weren’t unhappy. They didn’t go, ‘Wow, that was the worst experience of my life. I wish I hadn’t done that.’ That really got my wheels turning: why was that?”
Part of the answer, Watson said, seemed to be that many customers – especially those unfamiliar with the mortgage process – may have expected a different experience than what they got.
“Satisfaction is a function of the experience, but also the expectations. I use an analogy of shopping at different stores,” he said. “If I go to Walmart, I have a certain set of expectations about what I’m going to get, versus if I go to Nordstrom or I go to Target.
“If I go to a lender, and I choose them primarily based on the rate, or maybe a special deal they’re giving me, I can be happy with that choice because I got a really good deal. They didn’t do a bad job. They got me through the process,” he said. “…That said, I think there’s some degree of what I would call a grass-is-greener, buyer’s remorse tendency. They say, ‘I got what I wanted, but all things being equal if I could get the same rate somewhere else, I might have chosen to go with what looked to be a better provider.’”
Another problem, Watson said, was simple lack of education on the part of the customer.
“The other thing we noticed a lot of among those folks is that there’s probably not a full understanding of what they’d gotten themselves into,” he said. “They felt like there was some degree of pressure. What you see is that the folks who were expressing regret, all the basics of service are taken care of. Their loan officers are calling them back in a timely manner, they’re giving proactive communication, they’re closing on time. What’s missing or tends not to be met is completely understanding the choice they made.”
Many customers reported that they felt pressured into choosing a specific loan product.
“It’s not a nefarious or evil thing, but there was the sense of not having any other options,” Watson said. “And that’s where I think the regret is coming in for those customers. It’s a little more nuanced than just, ‘I didn’t have a good experience.’ Maybe there’s a sense of, ‘I really didn’t have a choice.’”
So how do mortgage professionals keep customers happy? The key, Watson said, is remembering that homebuyers aren’t necessarily familiar with the ins and outs of the process, and making allowances for that.
“Speaking in the language of mortgage lenders tends to confuse most customers,” he said. “You go to most mortgage websites – they tend to use terms that customers don’t use.
“…Take the extra steps to reaffirm that the customer really understands their choices. It’s really an alignment of product and solution,” he added. “The point is not to be able to say, ‘I’ve got a portfolio of 100 different options.’
The customer sets the goals and objectives and priorities. How do you align a solution for them? You say, ‘These are your needs. This is the product that best fits your needs, and here’s why. There are two other options, and you can pick those – but they might not work as well.’”
Taking the extra time to make sure the customer really understands what’s being offered, Watson said, was the key to making sure that customer doesn’t regret his choice later – and to increasing the odds he will send business your way later.
“In the end, what really matters is that when they sign that paperwork and walk away, they’re confidence they’ve made the right decision,” he said.
