What's the bastion to build your mortgage business around?

How a high street coffeehouse chain can show the way for brokers

What's the bastion to build your mortgage business around?

At the recent NACLB conference for commercial loan brokers in Las Vegas, Dalton Elliott (pictured), director of sales and customer experience at Lima One Capital, gave the welcoming remarks.

A big part of his speech centered around customer experience and the errors of focusing on price as a differentiator.

“Somebody is going to beat you on that sooner or later, (and if it’s) product features, somebody’s just going to copy that and get neck and neck with you. Customer experience is the one bastion that you can really build around your business,” he said.

To illustrate the point, he joked about the lengths he was prepared to go to get his favorite hot beverage during his daily commute.

“I drive the opposite way from my office to go to Starbucks and I pay an ungodly amount of money for a cup of coffee,” he said.

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The seemingly tenuous connection between a high street coffeehouse chain and the brokerage business is totally relevant, in his view.

“Somebody might be cheaper than you; they may have a little more leverage, but your clients are not going to care up to a certain point because they know they trust and enjoy that experience the same way as the Starbucks example I used during the speech,” he told MPA.

One of Elliott’s maxims, and one of his recurring themes at conference speeches, is that undercutting the competition on price does not pay in the long run.

“I focus all my time on product and price. What does my customer’s journey look like when they go to my website? What value are we driving for the client in that ecosystem before they actually talk to anybody?” he questioned. 

Elliott admitted he learned some very important lessons through trial and error at Lima One Capital, a lender specializing in residential real estate investor deals. “When we designed our first website many years ago, we really didn’t think of it as this pre-live person ecosystem (the first introduction for somebody before they get in touch with a company).”

He recognized that adding value had not been a major consideration at the time, and that the website, while useful for newer clients who were happy to try out all the toolbox resources, hadn’t been geared for more experienced investors – meaning an important client base was not being adequately catered for.

“We took a different approach when we launched our new website about a year ago. If you don’t focus on the customer experience side of the fence, it doesn’t matter if you’re the cheapest,” he insisted.

“We’ve tried to impress upon the mortgage broker community that you are not different from us in that regard. You may be doing a loan of mine, but everybody who’s left and right of you is going to have access to the same products, the same pricing, the same leverage.

“If you hang your hat on that, you’re just going to get beat; you’re not going to have that long term relationship. But if you create an end-to-end flow system for your clients which is painless and streamlined, they’re hearing the appropriate messaging and updates at the optimal time.”

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Hindsight may be 20 20, but as far as Elliott is concerned, the key is to be proactive. The results at Lima One Capital speak for themselves, he pointed out. “When I got here in June 2015, we were doing a couple of million a month and we had 14 people. Now we have 250,” he said.

The South Carolina-based firm specializes in rental rehab and new multifamily construction nationwide, supplementing its portfolio with a large inside sales team in Greenville which works with retail clients and a sales division that works exclusively with mortgage brokers.

During the lead up to the start of the COVID pandemic, fix and flip to rehab loan accounted for the bulk of the company’s revenue. But to Elliott’s surprise, round about June 2020, rental “was on fire”, leaping ahead of every other product line.

As the country – and the rest of the world – slowly emerges from the pandemic, he was asked about the US mortgage industry’s wider prospects.

“We’re not going to know until probably the tail end of next year which way it’s going to fall. I think sentiment throughout the industry is bullish in that some markets will have some correction, maybe 5% here and there.”

He cited the home shortage crisis, estimated to be as many as 6.8 million units short, as a dominant factor, noting that the deficit would “take years to cover”.

That would probably help keep home prices steady for the year ahead, he added.

Either way, brokers could help keep their pipelines busy as long as they applied some basic, golden rules – a timely reminder of Elliott’s recurring customer service theme.

“You have to be overly communicative and transparent with your clients and your lenders. Being upfront about everything on a deal and keeping the client abreast of every change from an underwriting perspective (is crucial),” he said.

“(The industry) is an incredibly collegial environment. Even though we are all fighting each other tooth and nail sun up and sun down, we can still hit the town at night whenever we’re at a conference together and have a blast.”