Benefit to you? Or benefit to the customer? If you benefit, then you are paid well on a closing. If the customer benefits, you do not get paid so well. If you benefit, you need to close less loans in the month. If the customer benefits, you have to work harder and close more. If you benefit, your investors will like doing business with you and you can typically receive better yield spread or rates. If the customer benefits, you have to impress the investor with volume to hedge the less favorable yield spread. As you can tell, the tug-o-war of benefit is an ongoing issue. Many brokers and originators have a difficult time with the ethical issues of drawing the line of benefit to favor both themselves and the customers. The happy compromise is typically a very thin line that requires balance of a Cirque Du Soleil performer to walk it. Bottom line, the benefit should go to the customer. If you are in this business for the long haul, build a reputation now as the mortgage banker who gives good deals. Be the one who clients will refer. Build a lasting relationship based on ethical standards and quality customer service. I have written many articles on tips to provide the customer with a pleasant experience mostly based on personal interaction and amiable service. I have never talked about the monetary aspect of the business. I do not preach how to make a profit or which lender offers the best yield spread, quickest underwrite time, or lowest interest rate. Those are aspects of the industry that you can ascertain as part of your ?OJT? and through the rigor of diligent ?lender-shopping.? These are easily learned and easily executed procedures. However, good loans are fewer and fewer and making a healthy living on a third or a quarter of the typical business of three years ago is now the reality. One must maximize each deal just to pay the bills! Benefit, as I have written about in an article entitled ?The Formula,? (May 2008 Tip of the Month) I define as anything the customer receives in an exchange as a result of the cost of doing business. The customer?s perceived benefit in the transaction is value. If there is no benefit, there is no value. Perhaps, the customer?s greatest perceived value is the benefit you offer of the lowest interest rates and the lowest closing costs. It may also be the friendliest service, frequent contact, or the fact you remembered the family pet?s name. I would be presumptuous to say that money is not the most important aspect of most mortgage transactions today. Everyone who wants a mortgage wants a good deal. The conundrum becomes the level of benefit that you offer and the level of value the customer perceives and is the two balanced to the satisfaction of yourself and the client? There is no perfect science to this dilemma. In fact, you may make some poor decisions and lose some deals as a result of the lack of benefit offered or executed. The interest rate may be too high, the closing costs are exorbitant, or you may not have called the customer frequently enough. So here is my tip to hedge future situations: Talk with authenticity about the expectations of the loan process, the fees and the interest rate, to your prospects during the initial conversation. Set the standard from the beginning. Cover the two major aspects of benefit: cost of doing business, and the business of doing service. The customer will not only respect you for your candor, but will be relieved and feel secure that you are providing quality service during a time when the mortgage industry is highly scrutinized. Everyone is feeling a financial squeeze regardless of the profession they pursue. Unemployment, gas prices, food cost and heat for the house are all some of the issues weighing down on every home owner or potential home owner. How refreshing would it be to have ?the mortgage guy (gal)? be the straight talker when we are bombarded with political smear ads, campaign propaganda and news about Wall Street executives? golden parachutes and their collapsed businesses? Be the shining beacon of ethical business practices, authentic customer service, and quality value-added propositions in a current realm of uncertainty, fear, and financial collapse. Yes, you may not make as much as you had hoped on the recent closing, but the client was happy and that was the compromise necessary to get to the closing table. We all have felt the ?pinch? and had to check for coins in the sofa cushions just to eat lunch. But provide benefit to each customer and as the business becomes plentiful, you should be busy with repeat customers and referrals. Sometimes we take a cut in commission. I suggest not to cut benefit to the customer. Remember, this is a marathon, not a sprint. Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, personal empowerment, customer satisfaction, marketing and sales techniques. Stewart is available for marketing consulting, personal coaching and training sessions. If you have a comment or a question for Stewart, contact him at 651-895-5122 or [email protected]
