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Thursday, June 27, 2013

Really? That's all you've got??

"Could use some insight here with what makes one Mortgage Broker better than the next....

Had a client ask me today what I thought differentiates one mortgage broker from the next and, honestly, I didn't have an answer other than the boiler plate response of "integrity, honesty, etc.". Was just curious if I could get some feedback in this group so I could give her good advice. Thanks. D"

I'd be worried about a business that doesn't have a competitive value proposition. If you can't answer the question "Why should I do business with you?" you are in trouble. 

Saying "I give excellent service" is what we call a "claim" - you're saying it, but there is no way to prove it. It's like trying to define "quality". Saying "we have integrity and honesty" is also a claim.  In these cases an unproven claim is worse than nothing at all, because it reinforces the opposite impression in the buyer's mind.  They think "you're bringing it up, so it must be a problem."  So when you say "I'm honest" they think "He's a liar."  When you say "We have excellent service" they think "I'll never get to closing."  Stick with statements that are factual and that you can prove.

Ask me the question! My crib sheet:

As a broker - compared to other brokers - I help you:

1.) make better decisions by evaluating your options completely using my "pre-qualification system", which means you can borrow with confidence 
2.) make sure you get to closing on time by using my "complete application system" which ensures all documentation that could possibly be required is obtained upfront. This also means that you get a better rate, because the lenders know my files are complete, they approve my loans more quickly and offer me better pricing. 3.) get extra value by leveraging my "referral network system" business relationships to choose better vendors offering better prices 

That's for starters!

If you are a true broker, though, you should really leverage your value proposition by searching for financing sources outside of those offered by traditional warehouse/correspondent relationships. If all you offer is agency product, you are at a competitive disadvantage and will compete only on price. As a broker-owner my 2nd biggest job (behind business development) is finding brokered product that no one else has. For instance:

1.) A local bank that offers a special product (I am always surprised to find banks offering high ltv, and low rates, without PMI as well as other niches which they don't advertise - they are their own best kept secrets) 
2.) local life or casualty insurance companies looking for mortgage investments, 
3.) industrial loan associations,
4.) private lenders 

You generally have to work with borrower paid comp on these, but THIS IS THE BROKER BUSINESS MODEL - assembling a suite of products that one lender couldn't possibly assemble.

Finally, national lenders can't be as flexible in building a business around the local needs as a broker can. For instance: 

1.) you are near a military base: "We are the experts in providing financing for servicemembers"
2.) your market has a lot of 1st time buyers/renters: "We are the experts in FHA/HomePossible programs." 
3.) you market has an industrial component: "we have hundreds of programs for self-employed business owners." 

Obviously, these are simply examples, but you should think this through as it applies to you. It should roll off your tongue without having to think about it. 

Imagine going to a bank and asking for a loan for your business; why should I lend you money. It's the same thing with a customer, referral source, business partner: Why should I do business with you?

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