ENGAGE THE SELF-DIRECTED BUYER

The real estate industry is hitting an inflection point with more consumers using online tools during the home buying process. This is being driven by a variety of changes, including increasing comfort among all ages with shopping online for expensive items and investments, more millennial homebuyers who have a preference for self-serve apps when making purchases and also improvements in technology itself.

For mortgage brokers, these self-directed buyers shouldn’t be viewed as a lost cause. Despite wanting to do as much of the legwork as possible online and on their own, these homebuyers will still need professional help before they can finalize their loans. Finding and engaging these potential clients is not always easy — but it is worthwhile.

Although more of the home buying process is moving online, it is unlikely to go as far as certain industries, like travel, that are almost fully automated. Buying a home remains the single-largest investment most people will make in their lifetime, and there are a considerable number of steps and details to manage. New hybrid models are emerging that make it easy for homebuyers to use technology where they are comfortable and to access the expertise of agents when they need help facilitating the process. All of this is enabling the age of the self-directed buyer. 

These emerging self-service websites are set up as one-stop shops to help homebuyers find a home, obtain a mortgage, complete a purchase and find ancillary services such as movers and home-repair experts. Real estate agents are often still engaged for part of the process and will continue to be critical contacts for originations, but mortgage originators need to develop strategies to court buyers that are using agents more selectively, or potentially not at all.

Adapt and invest

Following in the footsteps of many financial-service products, mortgages are an element of real estate that is increasingly being initiated, if not completed, online. To be truly successful, originators need to do more than simply have a website with an online application form. They need to court buyers differently. People seeking a home can search for properties online, get all of the information they need on the actual home, identify whether it is a fit for what they’re looking for and even fall in love with the home online. 

That’s the easy part for the buyers. Once they’ve found a home they’d like to make an offer on, they need to determine what they qualify for in terms of a loan. This can be more complicated and is where many mortgage-originator websites fall short in meeting self-directed buyers’ needs.

The prequalification process must be incorporated online, just like with an insurance policy or auto-loan quote. If an originator doesn’t offer this capability, he or she is at a competitive disadvantage. Beyond the quote and prequalification, originators also need a business-to-consumer portal that facilitates electronic document exchanges on the front end and integrates with loan-origination systems on the back end.

This is not an insubstantial investment. In the last couple of years, lenders have been focused on compliance in terms of efforts and monetary investment, and that has consumed a considerable piece of the technology pie. This is a challenging situation, but it is time now to transition to accelerating investment in the future when looking at resources that can be applied to technology. Don’t let tech budgets be synonymous with compliance budgets.

Tactics vs. strategy

Relationships are still critical, but the historical one-dimensional approach to winning business from who you know will limit growth. It’s often said that originations are a relationship business, but the industry’s perspective needs to shift to defining itself as a lead-generation business. 

Relationships are only one tactic for finding leads, and a good one at that. Lenders need to pursue a strategy involving a broad set of tactics, however. This includes everything from outbound calling to increasing visibility online. Consumers have grown accustomed to getting more choice, reducing the influence of relationships and increasing the importance of delivering value. This includes the product (best rate and most money) and the experience (easy online process and quick back-office turnaround time).

Embrace the future

Self-directed homebuyers expect more technology and rely less on relationships. This isn’t an incredible prognostication; it is the environment that exists today. In the context of an industry that has hardly changed in decades, these recent shifts may seem sudden, but they are manageable with the appropriate focus.

To be effective today, mortgage originators must have a self-service model. That requires an investment in technology and, perhaps more importantly, a willingness to shake up the status quo of how business is done. Developing a hybrid approach that combines the expertise of an office and/or call center with a strong website and state-of-the-art mobile apps is absolutely critical. 

Lenders don’t have to do- it alone in developing a strategy to cater to self-directed buyers. Seek out the advice of industry peers. Nearly every facet of real estate is being revamped to serve this audience. Consider going directly to the source as well. For example, creating consumer focus groups to assess buyers’ needs and desired experiences can help direct innovation that will propel growth.

It is important to point out that not everything has changed. This is an evolution. We’re not seeing a complete move from mortgage-originator discussions to online-only transactions. Just like the continued need for human interaction with a real estate agent at some point in the process — like seeing a property in person — buyers typically still need some support that requires human intervention on the originator side.

The origination business has always been fundamentally about commitment to customer service, which means listening to consumers. This has not changed, but what the consumer is asking for has evolved. Real estate as a whole is finally engaging the self-directed buyer, and successful originators will follow suit. 

By John Vella