It’s uncommon for a commercial mortgage company or private equity operation — or any financial institution, for that matter — to make an attempt at constructing a social media presence. Sure, these companies have websites where you can learn about them, but they tend to have a limited presence on the various forms of social media, such as Instagram or Twitter, nor do they typically offer an app.

There are exceptions to this, of course, including real estate titan Blackstone, which has a robust social media presence. The company’s Instagram site offers everything from president Jon Gray explaining quarterly financial results to a visit from The Good Dog Foundation, which provides therapy dogs for various social services.

Fintech companies that deal directly with the public tend to be better plugged into the social media universe, with many institutions possessing social media brand identities with unique perspectives. A few noteworthy names include Klarna, the Swedish-based online shopping site, and Fundrise, the online real estate crowdfunding platform. These businesses have marketed themselves as tech companies that are growing their presence and profits through digital brands and social identities.

Digital opportunities

In this digitally obsessive age, it is important for a financial institution to build a social media brand that is not only recognizable among industry cliques and partners but also by the public. Appealing to digitally savvy millennials and members of Generation Z through social media should be part of any brand strategy in today’s world.

Showcasing a brand’s personality on Instagram allows potential clients to meet a commercial mortgage broker organically and discover their brand holistically before deciding to transact. Consumer product companies are striving to meet the consumer where it is most convenient for them. It is apparent that such reasoning is also behind the content on Blackstone’s social media accounts, for example.

This type of digital exposure only makes sense. If someone is looking to invest in a home, would they not cross-reference the Realtor, the contractor or the interior designer they plan to hire? Millennials are coming of age to spend and invest significantly. To reach this audience, even companies that don’t specialize in consumer goods should start thinking about their digital marketing strategies and customer funnel, which is the visualization of the steps a person takes from becoming aware of a product or service to becoming a paying customer.

Social media platforms have created a variety of opportunities for anyone in the real estate and mortgage industries, including loan originators, to connect with their audiences and build brand recognition. Moreover, social media has become an essential tool for brands to express their points of view and connect with others on a global scale.

A successful Instagram presence highlights the potential for all businesses to leverage social media and reach larger audiences in new markets. By combining stunning imagery, a strong brand aesthetic, unique copy and financial expertise, it is possible to establish your institution as a leading player in the commercial mortgage industry while also gaining recognition among everyday social media users.

Follow the leaders

Commercial mortgage companies can find inspiration from many other industries and disciplines. To attract a wider audience, they can look at successful leaders in industries such as sports, technology, medicine, fashion and retail to identify the common qualities that make them successful.

These qualities can be distilled into a set of principles or values that can be applied across different contexts and fields. For example, successful sports leaders often display qualities such as resilience, determination and teamwork. These can be translated into broad concepts such as grit, perseverance and collaboration in the world of finance.

Similarly, successful business leaders often exhibit traits such as innovation, agility and adaptability, which can be translated into principles such as creativity, flexibility and experimentation. By extracting these underlying principles and values, commercial mortgage companies can create messaging and content that resonates with an expanded audience, even if these people may not be directly interested in the organization’s core product or service.

Instagram can be more than pretty pictures and entertaining videos. As the world becomes increasingly connected, people are looking for new ways to improve themselves and learn new skills. By featuring general industry information, financial terminology, case studies and more, mortgage brokers can create an engaging and informative platform that appeals not only to financial companies but also to students and aspiring professionals, which can be critical to the recruiting process.

Learning experience

Educational content serves as a valuable resource for individuals looking to learn more about the mortgage industry and how it works. Guides and case studies help demystify complex financial concepts and make them more accessible to a wider audience. This content can be both informative and engaging, with visually appealing graphics that help bring it to life.

Lightbox, which provides a variety of data to commercial real estate clients, also offers blogs on everything from understanding the capital markets to the best Instagram accounts in commercial real estate. At the Instagram account for Hines (the global real estate investment, development and management firm), you can follow progress on the newest construction projects and learn about the success of the employee denim clothing drive. Other prominent commercial real estate companies — including Cushman & Wakefield, JLL and Newmark — follow much the same pattern.

Moving forward, social media will continue to shape the way that businesses interact with their clients and referral partners, and how they build their online communities. While there are tangible risks associated with social media, such as the spread of misinformation and the potential for negative feedback, the benefits of using these channels are too great to ignore. As such, it is essential for commercial mortgage companies to embrace social media and develop strategies that effectively leverage an engaged audience with tremendous purchase potential. ●

The post Modernize Your Marketing Efforts appeared first on Scotsman Guide.

To simplify it, you face two main struggles: You are either trying to get more business or you’re working to service existing business. As an entrepreneur, or rather an intrapreneur (someone who behaves like an entrepreneur while working within a large organization), you are always looking to do more tomorrow than you did today.

“Being able to reach out to one of your past clients or prospects when you know they’re in the market for a mortgage is a huge competitive advantage.”

Whether you’re listening to an industry podcast, attending a mortgage conference, hiring a coach or reading a trade publication, you’re trying to find the “golden nuggets” of information that will help take your business to the next level. After you’ve reached a certain point, it’s less about the money and more about the challenge to reach the next level.

To put it mildly, the mortgage industry has been challenging over the past year, which is why it’s more important than ever to take control over your business. You need to be proactive rather than floundering between emails and phone calls while putting out fires all day.

It’s not the one big event you host or the number of real estate agents you sponsor for Zillow’s co-marketing program that make the biggest impact in growing your business. Instead, it’s the small golden nuggets that you pick up and implement into your business that will help you consistently grow.

Mutual clients

You look at tax returns every single day, but how often do you look forward to looking at them? Too many originators think that reviewing all these tax returns is a waste of time. There are loan originators out there who get a majority of their business by building relationships with accountants and other financial advisers.

In many cases, the client didn’t prepare their taxes themselves and the accountant’s information was on page two of the return doing nothing. Create a spreadsheet of these tax professionals and share it with your front-end processor and other staff.

After adding these names to your customer relationship management platform, personally call them after the closing to introduce yourself. Let them know how you and your team successfully helped a mutual client with their loan closing. Offer to be a resource for any of their other clients who may need help. Also let them know that you’ll be reminding the client to provide their accountant with a copy of the closing disclosure during tax time.

You can easily buy a list of local tax professionals and try to solicit business from them, but the conversion rate is low in these cold-call conversations. Besides, buying lists and mailing out postcards costs money. Calling the tax preparers for existing clients removes the cold-call aspect and is an approach that’s completely free.

In the conversation, mention your expertise in niches like nonqualified mortgage (non-QM) programs. These are alternative loans that cannot be sold to Fannie Mae, Freddie Mac or the federal government. They are often used by self-employed individuals whose actual income may differ from the numbers that appear on their tax returns.

Repeat business

It’s always useful to find technology tools that can make your operation more efficient. One of these tools is Homebot, a service with a strong open rate that can help you stay in front of your past client database. Homebot reinforces the idea that it’s not just about the transaction when it comes to a home. It’s about the relationship before, during and after that allows you to provide value to your clients.

Homebot’s monthly digest sends an email with up-to-date information regarding a client’s home value and equity position, along with opportunities to leverage equity for things like home repairs and college expenses. This tool will be a huge asset once mortgage rates come down because it will remind clients that you are available to help them refinance and save money.

It’s amazing how many past clients whom you helped to purchase a home don’t realize that you can also do their refinancing. Think of all the commissions you could generate if your past clients came back when it’s time to refinance. It’s your job to remind them that you’re still there for them.

One of the best parts of the Homebot system is your ability to use the activity feed to see how many people are interacting with the platform. If you want to really take it to the next level, you can customize the platform by creating personalized videos that appear during different interactions.

For example, there’s an introductory video that you can create to welcome your clients to the system, another where you explain refinancing once your client shows interest based on their interactions, and many more. It’s a great way to keep branding yourself after closing, and to capture more business through referrals and refinance opportunities.

Timely insights

Another service, MonitorBase (a borrower engagement platform), offers a variety of tools to help you build business with your current database. One the more effective tools within this service is a predictive alert, which sends you an email when anyone in your database places a mortgage inquiry on their credit report.

Being able to reach out to one of your past clients or prospects when you know they’re in the market for a mortgage is a huge competitive advantage. But you need to handle it with finesse. Although this type of monitoring occurs all the time, people are wary of being watched and react poorly if they feel they are being spied upon. Just think of all of the prequalified credit card offers you constantly receive in the mail.

Another MonitorBase tool is a “credit migration” alert that tells you when a prospect with subpar credit sees their score improve. It will let you know when their score increases enough to meet specific loan program requirements. Originators often forget clients who need to work on their credit scores. This is a great way to understand when these past prospects have improved their credit so you can call them with good news.

There are other analytical tools available, such as alerts for when someone is likely to buy or sell a property. Each of these tools use your existing database to mine for opportunities, and there’s likely more prospects right in front of you than you ever thought, but it’s up to you to pick up the phone and turn the opportunity into business.

Another way to do this is to compile a list of your preferred real estate agents, including any new agents you’d like to establish a relationship with. Then create a private group on WhatsApp or Facebook Messenger that serves as a meeting place for real estate masterminds, and invite them to join.

As a result of today’s market shift, real estate agents (just like mortgage originators) are seeking ways to expand their businesses. By creating a platform for them to share their successes, exchange ideas and aid one another, you’re offering immediate value. You might even look to take it offline and organize a happy hour meetup.

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Younger originators enter this business with a very competitive mindset. Being competitive is great, but what you might realize over time is that you are your only competition. You can give someone all of the “secret sauce,” but implementing these steps and putting your own spin on things are the keys to success. ●

The post The Smallest Steps Can Create the Biggest Gains appeared first on Scotsman Guide.

There are plenty of reasons why mortgage originators should get back to the basics of prospecting and making phone calls. But how do you do it? Here are some tips for making the most of this fundamental strategy.

Establish rapport

While technology has made it easier than ever to connect with potential clients, there’s still no substitute for the power of personal connections. When you pick up the phone and call a prospect, you’re able to establish a rapport that’s simply not possible through email, social media or even video marketing.

Originators often miss the mark because they haven’t discovered that the purpose of email, social media and video marketing is to amplify their phone work, not replace it. Making phone calls allows you to engage with prospects on a more personal level and to build relationships that can lead to long-term success. When you take the time to listen to a prospect’s needs and concerns, you’re able to tailor your approach and offer solutions that are specific to their situation.

In addition, making phone calls can also help you stand out from the competition. While many originators rely on digital marketing and other strategies to reach potential clients, a well-timed phone call can make a much stronger impression and set you apart from the rest.

Identify an objective

When you are ready to get back to the basics of prospecting over the phone, there are a few things you can do to improve your results. Before you start making calls, it’s important to set clear sights on what you hope to achieve. Whether you’re looking to schedule appointments, collect contact information or simply establish a connection, having a clear objective in mind will help you stay focused and motivated.

For instance, you can have a goal to get four referrals today by calling actively producing real estate agents whom you’ve worked with in the past two years — but not in the past two months. If you assume these referrals have a 25% close rate, four referrals per day equals one closing per day. That’s how the originators who close roughly 25 loans per month do it.

Develop your own script or use a proven script. While you don’t want to come across as robotic, having a script of what you want to say and ask can help you stay on point. You’ll avoid getting sidetracked by tangents or distractions. Your script should be flexible enough to allow for personalized conversations but structured enough to keep you on message.

It’s best to block out time for outbound prospecting calls. Thousands of originators have drastically increased their number of closings and income simply by prospecting for eight hours each week. Mornings (e.g., from 9 to 11 a.m. Monday through Thursday) are usually the best time to do it and make sure it actually gets done.

Don’t get so busy building the farm that you forget to milk the cows. Setting up a sales funnel or creating social media content tends to be more fun and sexy. You might also have some fires to put out. Each of these things may be a good use of your time after you do your two hours of phone prospecting, which will move the needle for you the most.

Actively listen

One of the most important skills for successful phone prospecting is active listening. When you take the time to really hear what your prospect is saying, you’ll be better equipped to respond to their needs and concerns, thus building a stronger relationship in the process.

When you pick up the phone, always have a call to action. It’s most important to remember the purpose of the call. It’s not about “getting your name out there” or “touching base with people.”

If you’re calling a real estate agent, the purpose of the call is to get referrals. If you’re talking with a prospective borrower, the purpose is to get a commitment to do business together. Whatever you ask for is what you’ll get, and if you ask for nothing, that’s exactly what you’ll get.

Finally, don’t forget the importance of follow-up. Whether it’s scheduling another call or sending a personalized email, taking the time to follow up with these prospective clients and business partners can help you establish trust and build momentum.

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While there’s no denying the power of digital marketing and other modern strategies for reaching potential clients, nothing brings in more loans than the basics of phone prospecting in the mortgage industry.

By focusing on the creation of personal connections and taking the time to listen, mortgage originators can establish strong relationships that can lead to long-term success. When you’re ready to improve your prospecting efforts, become brilliant at the basics and start making some phone calls today. ●

The post Nothing Beats the Personal Touch appeared first on Scotsman Guide.

Here’s the sequence of a good sales conversation: who, what, where, why and when. It’s the basics of Journalism 101, although you’ll provide the how. Diving into the rationale behind this sequence, you will realize how effective it can be to win with today’s challenging, rate-sensitive borrower.

“Motivation drives every decision a borrower makes. Understand the ‘why’ and you can achieve success on almost every call with a prospect.”

Initial details

Today in the mortgage industry, you get leads from a variety of sources. It could be the consumer who is calling you directly. A lead may have come from an inquiry on your website. You could be calling your past database of clients. Many times, a Realtor will reach out to let you know that a prospect needs financing.

Your first and most essential job is to remember with whom you are interacting. If the borrower starts the conversation by asking about rates or programs, and did not provide their name, your job is to immediately seek three key pieces of information: the borrower’s name and what they prefer to be called, their phone number in case the call drops, and an e-mail address to reach them with a follow-up of the discussion.

This may be housekeeping, but it’s important housekeeping. Phone calls drop. Borrowers may confuse you with another loan officer. By writing down their name and obtaining a couple of ways to reach them, you’ve already started the sales call on the right foot.

Now that you know with whom you are interacting, use their name three times during your conversation to personalize the call. Do it at the beginning, the middle and the end as you summarize the call to secure the business.

Basic intent

The “what” portion of the conversation is extremely important. Ask the borrower about their intent behind the inquiry: Is it to purchase a new property? Is it to refinance and consolidate bills? This is extremely relevant early in a new year when people have overloaded their credit cards with extra debt due to the holidays.

What are they trying to accomplish by pursuing this mortgage? For many borrowers, they may not know all that a new mortgage can do for them. It is your job to educate them to the possibilities of what debt restructuring really means.

It often makes sense to consolidate not only credit card debt but other expenses such as car payments or medical bills. The new mortgage may have a higher rate than the old mortgage, but the borrower may be eliminating debt on credit cards or other bills that charge a double-digit interest rate.

Whenever you do a cost analysis, the X factor is their current debt with the mortgage and all bills compared to the Y factor with the new payment under a single mortgage. If the differential is to your advantage as a lender that can consolidate their debt, request that they act immediately. If the new mortgage payment is close to the current one, plus all outstanding bills, having only one payment is many times seen as advantageous. It prevents the debt from rising on high-cost credit cards and other bills.

Useful observations

Now you’ll start to analyze the “where.” You’ll want to look at the property that the borrower is looking to purchase, or you’ll evaluate their current property on a refinance transaction to restructure debt. With the address, you can pull up the property on your search engine of choice and look at the home while you are speaking with the borrower. This gives you instant credibility in the borrower’s mind that you are using quality technology as well as offering your evaluation.

When you can actually see the property, you can praise the homeowner for the pending purchase or discuss the neighborhood where they wish to move. You can also make observations regarding their current property to make the borrower feel good about their home.

In addition, if you see the property has room for improvement, such as a pool or a backyard entertainment area, share that observation. You can show the borrower how they may utilize their extra funds on a refinance to enhance the value of their home. This is where you stand out from other originators. You’re having a discussion with the borrower and showing them options they may not have considered.

Motivating factor

The next step is by far the most critical part of the discussion with the borrower. Understanding why someone wants to transact is the key to a successful phone conversation. Nobody makes the effort to call a lender or inquire online without a reason why.

If they are purchasing a property, find out if their family is growing and they need more space. Maybe their kids have gone away to college and they are downsizing. They could be transferring to a job in a new area. Combine that with the “where” and you now start to develop a picture in your mind about why they want to buy a particular property or why they’re seeking to improve their current residence.

The “why” reveals a critical element to be used in your conversation summary: motivation. You will control the call if you understand the borrower’s motivation.

If someone is consolidating debt to eliminate bills and a higher interest rate, you’ll understand their reasoning. You may be offering a mortgage with a 2% higher interest rate than what they have now, but they’ll save money overall if they are, for instance, eliminating volatile interest rates on credit card payments. If the motivation is to pay off a car or buy a new car for a family member, use that example when you summarize and close. Focus on the motivation rather than the rate or the product.

Many originators fail to understand the borrower’s motivation. You are empathizing with the borrower and gaining clarity on their purpose. Motivation drives every decision a borrower makes. Understand the “why” and you can achieve success on almost every call with a prospect.

Essential timing

The final portion of the discussion is based on the concept of when they want to make the decision. On a purchase transaction, your job is to understand when they want to get a preapproval prior to making an offer and, equally important, when they want to move into the property.

Timing is an essential factor to separate why a borrower should use you versus a competitor that may not be able to deliver in the time frame the borrower seeks. Once you understand the timing, you can also develop trust with the Realtor by delivering financing on time.

On a refinance, understand when the borrower needs the funds and why they need it in that time frame. By understanding these components, you can summarize and close.

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During this conversation, take careful notes. Now all you need to do is tell the borrower, “Let’s go ahead and review our discussion and let me show you why I should be your loan officer for this transaction.” At this stage, your goal is to recap their situation.

Create a sense of urgency to act. Rates are volatile. Borrowers are anxious. Every day is uncertain. If you follow this conversational sequence and ask the right questions, you’ll understand your borrower and their reasoning, giving you an advantage in securing the transaction. ●

The post The Winning Pitch appeared first on Scotsman Guide.

Even in these difficult times, mortgage originators can continue to set themselves apart while motivating themselves to win business. Here are some of the valuable ways originators can make a difference in today’s market.

“It’s OK to be a generalist when times are generally good or, in the case of the past two years, great. In difficult times like these, it pays to be an expert in niche products.”

Niche expertise

It’s OK to be a generalist when times are generally good or, in the case of the past two years, great. In difficult times like these, it pays to be an expert in niche products such as renovation loans, reverse mortgages, manufactured housing or condominiums.

When you’ve mastered a product, you can then be a resource to your clients and business partners. It separates you from the originator who says, “I know how to learn enough to be dangerous when one of these loans comes across my desk.”

It also helps you focus your marketing efforts on the referral sources that can generate business. These might include, for example, contractors whose customers need a renovation loan or financial planners with reverse mortgage prospects. If there’s a silver lining to these slower times, it’s that you probably have more time to master a product now than you did when refinance business was booming.

Let’s delve into condos. Why? Well, they’re everywhere. Also, not every lender is good at them. And finally, there are ways to connect with condos (and not everyone knows them). Visit Zillow and pull up all the listings within 10 to 20 miles of your home or office. Then compare the listings against condo projects that Fannie Mae, Freddie Mac and the U.S. Department of Veterans Affairs have already approved. Right off the bat, you’ll know which projects you can easily finance and which ones will have problems. For condos on approved lists, you can typically offer maximum financing with no paperwork required. That’s right: You can skip the dreaded paperwork and avoid dealing with homeowners associations (HOAs).

Not everyone realizes these lists exist or knows how to access them. The U.S. Department of Housing and Urban Development (HUD) list, which has more than 15,000 condo projects on it, is public information and can be found on the HUD website. Fannie and Freddie don’t make their lists public, but an originator can get an approved lender to pull them. Fannie’s list includes about 13,000 approved projects. These lists are hidden gems but, unbelievably, many originators (and more than a few lenders) don’t use them. Instead, they do a lot of extra work on condos.

Once you know which condos are on the approved list, you have something valuable to share with listing agents. You can tell them that you can eliminate most of the back and forth with HOAs, and that you can close deals quickly while providing maximum financing. That’s a message that they’ll listen to and remember. Does it get you a loan that week? Probably not. But you’ve made new Realtor contacts and established yourself as an expert — not by saying it but by delivering useful information. And they’ll remember you if they run into any condo financing issues.

Valuable training

All too often, brokers and loan officers tend to take a transactional approach with their business partners. What they’re missing and not taking advantage of are the resources that lenders and mortgage insurance companies can offer.

These include in-person and on-demand training sessions on products, underwriting, sales skills, marketing and list development. Some of these are business-to-business trainings for mortgage professionals while others are of the business-to-consumer variety for clients and prospects.

They also have marketing materials that can be effective to leave with consumers and intermediaries. For example, a client who just bought a new home might be interested in attending a webinar on how to be a smart first-time homeowner. Meanwhile, a financial planner or lawyer might appreciate material on reverse mortgages.

When your pipeline isn’t exploding, why not take advantage of programs that might make you better at your job? Likewise, many lenders hire seasoned account executives, many of whom have been in the business for 20 or 30 years. Ask them for help or ideas.

It is in their interest to help you do more business. For example, some account executives can offer tips for specializing in condos. Other account executives have similar insights into other products and markets. Without giving away all the ingredients in the “secret sauce,” they can also share, at a very high level, what is working or not working for other brokers.

Real accomplishments

In these days of working from home, many originators no longer go to the office. As a loan officer or independent mortgage broker, you might be very much on your own. This is great when business is booming, but it can be much more challenging when it’s not.

When you’re sitting there by yourself, it helps to have a plan and a daily goal. It could be a set number of calls, emails, visits or submissions. The point is, you need something that keeps you on task and gives you a sense of accomplishment, because you’re most likely not going have an application or a funding every single day. But doing the right things every day and keeping track in some tangible form will serve you well over time.

This may sound a bit outdated in this digital age, but having a paper copy somehow makes this more real. It’s just too easy to close your laptop and hide things that you’ve tracked on a computer screen. Print something out — a to-do list or call-list targets. Print it out so it practically stares at you. It gives you a sense of accomplishment when you cross something off that list.

If you’re not a paper person, find your own tracking system. Maybe you throw a dart at a dartboard. There’s an originator out there who knocks over action figures on his desk after he accomplishes a task, and at the end of the day, if they all get knocked over, he had a good day.

You need something that stares at you, that keeps you on task and makes you feel that sense of accomplishment. Attitude is everything. You’re in it for the long game. So, do what you need to do to win. ●

The post Don’t Let Down Times Keep You Down appeared first on Scotsman Guide.

Many mortgage professionals could benefit from a shift in perspective. It’s not about getting creative with your marketing; it’s about creating stronger ease of use and a great user experience for your prospects. Mortgage originators have a golden opportunity for staying ahead of the curve: QR code marketing.

A brief history

QR codes emerged in the U.S. in the early 2010s as smartphones gained popularity, but they were initially difficult to use and required downloading an app in order to read them. This lack of user friendliness limited their use and popularity.

In 2017, Apple’s iOS 11 update added native QR code scanning in the camera app. Android phones quickly followed suit. Despite this increase in accessibility, QR codes remained a relatively boutique technology until 2020.

During the COVID-19 pandemic, QR codes made a comeback. Because smartphones can easily scan QR codes, it became possible to have touchless, germ-free interactions.

For mortgage professionals, a massive benefit of QR code marketing is the ability to create a luxe digital experience during a physical transaction. In a world that requires 24/7 digital access, it is essential to find ways to digitize your physical sales experience for higher conversions and success rates.

From physical to digital

QR codes can be placed on anything in the physical world, such as flyers, business cards, meeting agendas and even for-sale signs. You can use them on printable newsletters, mailers and open house materials. You can put them on your office door and on your name tag at events. Your ability to use a QR code is only limited by your ability to place it somewhere.

QR codes allow you to create a curated, customized client journey that can help prospects with their purchase decisions. As an example, QR codes can be used to get people interested in a property. For instance, you might include a QR code on a mailer so that when the recipient scans it, they get a virtual tour of the home. In a newsletter, publish a QR code that gives prospects access to free training sessions on credit repair so they can qualify for their first house.

When inboxes are overloaded with emails from more companies than users can track or count, reaching people in the physical world and offering a different path to a thoughtful digital experience is something users will appreciate and notice. Instead of getting lost in a sea of emails that are never opened, QR codes give you the ability to interact with your prospects in a powerful, intentional way.

Give power to users

One of the best parts about QR code marketing is that it puts the power in the hands of your prospects. It’s not pushy; it’s a choice.

So often, our inundated inboxes and social media feeds can feel overwhelming. QR codes invite your prospects to have a conversation with you, when and how they consent to it. This develops a less stressful, more personalized experience and conversation, which can lead to more success.

Another way to successfully utilize QR codes to expand your network is to create a code for your business cards, or to place one on your name tag at networking events. Instead of a new contact having to transfer your information from a card to their phone, they can simply scan the QR code and automatically download your contact information to their device.

While still in physical conversation with them, have them send you a quick text. Now you have each other’s contact information in one simple process. This allows you to network faster, more efficiently and in a way that creates more ease in the relationship.

QR codes are so effective in the broader marketplace that companies are now using them in commercials. In the mortgage industry, however, QR code marketing is still underutilized. Millennials and Generation Z are the current and up-and-coming buyer groups in the market. These consumers prefer digital experiences, creating a huge opportunity for technology like QR codes.

Tailor QR for you

QR codes are like shortcuts for connections, conversions and closings. The way that you use your QR code dictates how your prospect feels about you and their user experience.

There’s a lot of information to give to a prospective client. Some mortgage companies have found success by using QR codes that lead to LinkTree, a customizable landing page that includes your contact information and multiple important links.

This is useful because it allows mortgage professionals to create simple, easy-to-use digital experiences for their prospects that keep all vital information in one place. You can use this for all kinds of lead-generation experiences, such as free trainings, listing-pertinent information and even sales materials.

To get started, decide which methods of prospect generation have worked for you most successfully. These might include free trainings, mortgage calculators or virtual open houses. Once you know what your top methods are, you can begin strategizing and deciding where to put the QR codes that lead to these prospect- generating content pieces. Take the time to develop a digital client journey that will best support your unique business and prospects. ●

The post This Underutilized Digital Tool Can Set You Apart appeared first on Scotsman Guide.

What are some of the advantages of multigenerational housing? Well, when a family chooses multigenerational housing, they can provide comfort to aging parents, delay costly nursing home care or help a young family care for children while offsetting child care costs.

Being open to multigenerational housing can answer needs for a variety of family situations. Maybe it’s a relative who needs a home while attending an out-of-state college or a distant relation staying for a few months while visiting from another country.

This option also is a good way to help adult children avoid paying high rents while they save toward a downpayment on a future home purchase. Snow-bird retirees who live for part of the year in multigenerational housing are able to maximize their independence while maintaining precious connections to their family.

Multigenerational housing does not need to be a permanent arrangement, but it can be one if it suits the needs of the families involved. Mortgage originators should not only mention this as an option but offer creative financing that could make this a possibility.

Emerging trend

To this point, why aren’t trusted housing advisers openly suggesting this to their clients? The idea that an adult child must vacate the family nest and fly out on their own is misguided. For example, the Pew Research Center last year reported that nearly four in 10 men between the ages of 25 to 29 live with older relatives.

This way of life in the U.S. has grown sharply over the past five decades with no signs of peaking. Pew reported in 2016 that 20% of the country lives in multigenerational households. That’s nearly the same share as in 1950, when 21% of Americans lived in multigenerational homes. The difference is that in 1950 these living arrangements included 32.2 million people. In 2016, 64 million Americans lived in multigenerational households. Some of this can be attributed to growing racial and ethnic diversity in the country, but it’s not the sole reason.

The reasons why this make sense are as numerous as family living arrangements. For instance, a family could be modifying their home to accommodate an older generation. The payoffs can be peace of mind coupled with strong bonds between children and grandparents.

Early on, grandparents can help with after-school child care, allowing their kids to pursue career goals. Later on, the grandparents can have a place to stay without the worry of home maintenance. They are free to enjoy their senior years as they see fit in a safe environment. A home renovation mortgage can provide financing in these cases.

Evolving families

Maybe a job situation is the impetus for generations living together. Let’s say a woman is an only child and her father passes away, leaving behind an elderly mom. Then the woman’s husband gets a new job and they move across the country, leaving the woman in a bind. How does she care for her mom in her later years while living so far away?

The answer may be for the mom to move in with the couple. They can sell each of their homes and pool equity together to buy a new house with a mother-in-law suite in a new state. No one is left behind and the elderly mother is able to begin her independent retirement years surrounded by family with few property responsibilities. Purchase programs for existing homes or newly built construction can be attractive for borrowers like this family.

 With home prices as high as they are, many young couples are choosing to start married life living with one of their parents. They’re doing this in order to save as much as they can toward a downpayment for a home. This is usually a short-term situation, but with the ongoing housing shortage, these stays can shift from a matter of months to a few years. Patiently waiting for the right house at the right price, they may even start their own family.

Three generations deep, there will come a day in the near future for these young couples to move out, but as long as the arrangement is amicable, they’ll save for that first-time home purchase. They’ll be in need of a mortgage adviser to help them when that time comes.

Financial incentive

Although providing care (either child care or elder care) is a driving reason for multigenerational housing, financial reasons also are huge factors in making this choice. If two can live as cheaply as one, then what’s the payoff for adding a few more to the mix? Multigenerational living arrangements can be the difference between living in poverty and not.

Multigenerational housing is one way for people to escape paying rent to a landlord or making payments to an assisted-living facility. Imagine how much equity a family can build if they’re using the extra money that would have gone to a rental or care facility to pay off the mortgage on the family’s primary home.

Oftentimes, multigenerational families will need extra space. And that’s where an accessory dwelling unit (ADU) may make sense. An ADU is a small dwelling that is either attached to a typical single-family home or a separate unit located on the same grounds. More cities and counties are allowing this type of construction to deal with housing shortages. ADUs can be financed with a cash-out refinance, renovation refi or a construction-to-permanent loan option to make this dream a reality.

A close cousin of multigenerational housing is Fannie Mae’s Family Opportunity Mortgage. This loan product allows clients to get a mortgage for their elderly parents or a disabled adult child. Your clients qualify for the mortgage, but the loved ones occupy the home.

Many families who are on the threshold of sending a child to college find that on- and off-campus housing can be more costly than the tuition bill. Smart spending could come in the form of an owner-occupied small home purchase where the college student is the occupant but the parents are on the mortgage note.

Qualified borrowers can leverage standard purchase or refinance options across Fannie Mae, Freddie Mac and Federal Housing Administration products. The college student attends the university as a commuter and once graduation has commenced — provided the market has grown and the home was maintained — there should be a nice return on investment once the property is sold. There can be roommates to generate rental income, too, if that’s a plan the parents and student want to explore.

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Mortgage professionals should be mindful of the changing needs of their clients. Once the loan closes, you owe it to your borrowers to periodically check on them and make sure the home still fits. If there is a change in circumstances, you can calm their stress by offering lending solutions that help them maximize the equity they’ve built so they can refinance, make modifications and continue enjoying the comfort of their home.

 If a move is needed to accommodate their family changes, you have the opportunity as their trusted mortgage adviser to reassure them with existing home and new construction purchase options. It’s almost like you’re a member of their family. ●

The post Under One Roof appeared first on Scotsman Guide.

As a homebuyer, is it better to sit out 2023, or is it safe to enter the market and start looking? As a seller, is the more prudent decision to wait for price appreciation to return to positive territory?

Mortgage originators, along with the general public, have access to one of the deepest treasure troves of information to answer these questions. They can then start to formulate opinions to see whether any historical trends can be applied to this post-pandemic marketplace. The source? The Federal Reserve.

Historical perspective

When looking at the Federal Reserve’s historic timeline of census and federal housing data, there are a few charts that often are overlooked. Yes, one can see average home prices listed over time, but the data can be converted to see the year-over-year percentage change in housing prices. This view can provide a rich new perspective to the housing story.

 When analyzing the data through this lens, it can be seen that there have been only three extended time periods in the past 50 years where national home sales prices have declined in value. The first time was during a recession in the early 1990s.

The second time was in 2008-09 during the Great Recession. This was the result of the subprime mortgage crisis and subsequent bank bailout. This time period represented the most dramatic price drop for the U.S. housing market in the past half century, as sales prices dropped by 8.5% from mid-2008 to mid-2009. For mortgage originators who weren’t in the business back then, that was when (imaginary) one-armed accordion players were receiving adjustable-rate mortgages with only a credit score and no requirement to disclose income.

The last time national housing prices dropped was in 2018 and 2019. Wait, what? Did anyone even realize there was a nationwide price decline a few years ago? The significant boom-bust-boom cycle of the economy from late 2019 through 2020 must have erased all memories of that.

Resumed reduction

Before exploring this thought further, it’s worth looking at the year-over-year percentage change in mortgage rates over the past 50 years. This is different from looking at simple mortgage rates over time, as it focuses on how much mortgage rates changed compared to the prior year.

Freddie Mac data shows that just before a recession, interest rates initially rise. On the back end of the recession, however, they are lower than when the recession started. For instance, before the Great Recession, interest rates on a 30-year fixed mortgage rose from 5.53% on June 30, 2005, to 6.78% one year later on June 29, 2006. Then the crash came. Before the recession had officially ended, rates had dropped to 4.78% on April 2, 2009, lower than before the economic turmoil started.

 But this doesn’t answer the question about why national home prices declined in late 2018 and all of 2019. Deeper exploration shows that rates went higher in late 2017 and 2018. This was a reaction by the mortgage-backed securities market to the Federal Reserve cleaning out its balance sheet and putting the brakes on purchasing Freddie Mac, Fannie Mae and Federal Housing Administration loans.

As a result, 30-year fixed mortgage rates went from 3.78% on Sept. 14, 2017, to 4.94% on Nov. 15, 2018. The forward effect into 2019 was that the number of homes sold nationally dropped by nearly 12%. During this time, the Federal Reserve also was starting to pull money out of the economy. Starting in 2016 and running through July 2019, the federal funds rate rose significantly. This is starting to sound like the Fed’s actions of 2022, isn’t it?

Unprecedented increase

Rewind back to early 2020, as one can surmise, the COVID-19 pandemic forced the Fed to reverse its actions and save the economy from collapse. In 2020 and 2021, the Federal Reserve reopened its balance sheets and started to buy mortgage- backed securities (MBS) at levels never seen before — and pumped money into the economy at a pace not seen since World War II. This action, along with the federal funds rate returning to near zero, was arguably the reason why the MBS market reacted and produced the lowest fixed mortgage rates in the history of the U.S. in 2021.

Fast forward to 2023, and with the pandemic seemingly in the rearview mirror, the Fed is getting back to work in slowing economic expansion (i.e., the pandemic-fueled economic burst, which is arguably is what caused this historic period of inflation). In the opening months of 2023, is the economy back in the era of the subprime loan crisis and bank meltdown, or is it more in line with pre-pandemic policy?

At no time ever in the past 50 years have interest rates ever increased at such a fast pace (when looking at the year-over-year percentage change). At the start of 2023, rates were more than double what they were a year earlier, which has never happened before. That’s why there’s so much angst, so many questions and so few answers about today’s housing market.

Appreciated insight

It’s natural to wonder whether the country will adopt today’s rates as the new normal without an implosion of home prices. Will this year’s home price correction be on par with the 8.5% decline of the 2008-09 subprime crisis? Will it be closer to the pullback of 1.9% in 2019?

Take a breath and remember the discussion of the pre-pandemic economy. The Federal Reserve is seemingly trying to get the U.S. back in that lane. For mortgage originators, the bottom line is to be a resource to both new and old clients. Have an opinion and base it on historical data, then proactively communicate your opinion. In times of uncertainty, consumers are looking for guidance. Referral partners are looking for the same.

As more economic data becomes available, it’s OK to change the forecast. With all of the supercomputers the National Weather Service has to forecast the weather, they are only able to predict seven days out, and even that is not always correct.

The question remains, where will home prices drop to in 2023? Obviously, no one knows for certain. But you can generate an opinion using available data and offer these insights to your clients and referral partners. They’ll appreciate the perspective. ●

The post Everybody Wants the Answer to This Question appeared first on Scotsman Guide.

Sometimes, they’re correct. After all, a mortgage lender can sell a loan on the secondary market without the consent of the broker or the borrower. And while the loan’s interest rate and terms may remain consistent, the borrower’s experience sometimes spans only a few months before the baton is passed to another lender or servicer.

Ask borrowers for sob stories about the loan process, however, and the opportunities for differentiation come through loud and clear. There will be talk of incompetent brokers, hidden fees, and lenders that are unfamiliar with certain types of businesses or ignorant of rural enterprises. The bottom line is that the limits of rates and terms are exposed, creating plentiful opportunities for quality brokers and lenders to stand out.

Lending niche

Banks can be a prime example. As an institution with rural businesses as its clientele, one bank’s specialty niche was clear. But the lender spent much of its early years fighting against being branded as such. The company avoided typecasting its brand and chose instead to paint a picture of lending widely to nationwide borrowers of many varieties.

The result? The bank’s generic image gave borrowers, brokers and agents little reason to seek out its services or tap the team’s deep knowledge of rural enterprise. The irony is the bank had already identified and honed its niche. All that was left was the marketing lift. A few years ago, company leadership finally embraced their rural specialty. As the COVID-19 pandemic hit and the world began flailing with unpredictability, the bank’s public image became narrow and precise: It was focused on rural America.

The precision paid off and the bank became a top performer. Mortgage brokers searching their mental Rolodexes for competitively priced funding for rural employers and entrepreneurs finally had a go-to lender for such requests.

For a broker, a niche can be a specific customer base, such as California restaurants or New Jersey infrastructure projects. It also could be more akin to a value proposition, such as low closing costs or white-glove service. A mortgage lender might specialize in efficiency (e.g., Rocket Mortgage) or high-touch night and weekend availability for prequalification letters in a competitive market. In today’s options-laden marketplace, the key isn’t to be all things to all people. It’s to be something stellar for someone specific.

Focused marketing

Parallels can be drawn from the insurance industry. Although the claims process may vary widely, one wouldn’t know it when consulting side-by-side charts of premiums, deductibles and coverage areas. Faced with seemingly symmetrical options, a customer’s final decision might come down to their emotional attachment to a gecko, a duck or an apron-clad Flo.

What can mortgage brokers and lenders learn from the insurance space? That brand-building efforts are essential. Consider the astounding volume of advertising purchased by some of the country’s best-known insurance carriers. Geico spent $2.1 billion on advertising in 2021 while Progressive dished out $1.9 billion. These insurers are well aware that competing on price and coverage isn’t enough to win market share. Brand awareness is key, while gaining it requires significant investment in a commoditized space.

Consider for a moment how deeply each of the major insurance companies’ value propositions have seeped into your own consciousness. What do you know about Geico? Probably that 15 minutes could save you 15% or more (savings). How about State Farm? Like a good neighbor, State Farm is there (reliability). Progressive?

Now that’s progressive (efficiency).

Did you notice something? While each of these attributes — savings, reliability and efficiency — likely are on the list of any insurance shopper, each brand homed in on a single one. Are they all things to all people? No. Instead, each company targeted a single differentiator, then proclaimed their finely tuned message with volume, repetition and creativity.

Being contrarian

Once a mortgage company has identified a niche, it’s time to publicize it. But in these difficult economic times, one might be thinking, “Hold on. In a recession, advertising is the first expense to go. Right?” Right and wrong. When brands tighten budgets, marketing is indeed among the first expenses to be cut. And that’s when market share is up for grabs.

To explain, consider the 1929 breakfast table. That year, two brands (Kellogg’s and Post) competed for cereal domination. In 1930, with the Great Depression raging, Post made the predictable move to rein in ad spending. Kellogg’s, on the other hand, seized the opportunity to saturate the abandoned space with marketing efforts. Three years later, the depression remained, yet the profit margin for Kellogg’s had grown by 30%.

Think this correlation was a fluke? Fast forward 70 years. In the wake of the 9/11 terrorist attacks on American soil, the economy was trembling and brands of all kinds were once again trimming their marketing efforts. With consumers tightening their discretionary spending, automakers were among the hardest hit.

Yet General Motors bucked convention and leaned into its roots as a company that had survived two world wars and the Great Depression. It blanketed the airwaves and newspaper pages with ads declaring interest-free financing and a bold declaration: “Keep America Rolling.” Other automakers were forced to follow suit, with Ford pledging to do its part to “move America forward.” The incentive-laden business of selling cars has never been the same since.

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What direction the U.S. economy will take in the next 12 to 24 months is anyone’s guess. But one thing is certain: Brands that avoid catering to a specific clientele with a stellar product will fail while those that embrace a niche and invest in the required publicity efforts will grow. A company’s customers, employees and future market share may hinge on realizing the importance of a simple concept: Find your niche. ●

The post Finding Your Niche appeared first on Scotsman Guide.

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