There’s always something to howl about.
Well-written piece by Mark Gimein in Slate this morning asks an interesting and important question:
In ordinary circumstances, the people and institutions you deal with reinforce social norms. They say it’s not OK to lie. But what happens when the structures and institutions break down and start telling you the opposite?
The answers it portends are unsettling.
This is my column for this week from the Arizona Republic (permanent link). The lender in the story? Brian Brady, America’s #1 Mortgage Broker.
The challenge for Realtors and lenders in the future: How do you sell to consumers who don’t want to be sold?
We represented a cute couple in the purchase of their first home late last year. That much is not news: First time home-buyers are the bread and butter of the real estate business. What was interesting to me was how internet-focused they were.
The husband, Michael, is an internet adept, but his wife, Danielle, is a true wizard. Her primary interface to the commercial world is the world wide web.
They found me on the internet, of course, and I referred them to a lender that I know through the nets.
Consider this: There are 30,000 Realtors in Phoenix, and at least that many lenders. All of them are advertising at a furious pace — newspapers, real estate magazines, supermarket shopping carts, bus benches, billboards, radio, TV — plus balloons, free pens and scratch pads and coffee mugs, refrigerator magnets, flower seeds, recipe cards and Halloween pumpkins.
Real estate professionals spent millions of dollars trying to get Michael and Danielle’s attention, and all of that money was wasted. They are not paying attention to advertising.
To the contrary, if Danielle cannot completely research a product or service on-line, she won’t have anything to do with it. They never once went into the home they were buying without a digital camera. I watched Danielle crane around in impossible contortions so she could read and write down the model and serial numbers from the washer and dryer so she could research them on-line.
Looking forward, nothing changes as fast as we expect it to. But looking backward, the world seems always to be changing like dreams. Danielle is immune to advertising. She recycles her junk mail unread. She doesn’t want to be pitched, she doesn’t want to be sold, she doesn’t want to be wheedled or needled or cajoled. She doesn’t want to be closed on.
All those old school gimmicks still work — on some Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Loan originators are taught to develop REALTOR relationships. While development of those referral relationships is important, I’ve seen originators waste time and money on unprofitable “partnerships”. This initial article, in my new series about REALTOR marketing, will explore how to quantify the referral relationship to more efficiently understand how to focus your efforts.
Why prospect REALTORS?
Well, that’s where the money is, right? REALTORs deal with buyers who need financing for homes. Their clients have means, motive and opportunity to generate fee income within 60 days. What can be expected of such a relationship? If it’s a good relationship, the originator can expect three loans annually, from the average, full-time REALTOR.
Three loans each year. Did you hear that?
Move up REALTORS are perhaps the least productive for an originator to target. Most of their clients show up with a pre-approval letter (or lending relationship) in hand. The REALTOR who overzealously recommends you runs the risk of “steering” accusations. A successful real estate agent, who works this market, is probably closing 15-20 sides annually. Half of them will be listings so there are only 10 loans available to you. Half will have their own financing so you’ve got a shot at five. Throw in a couple of new home purchases and your number drops to three…IF…everything goes well. The expected value of the move-up REALTOR relationship is about $9,000 GCI annually. Assuming a 70% commission split, that number drops to $6,000. Remember that number when asked about “co-op advertising”, Padres tickets, or joint seminars.
Mega-agent teams can be a great source of loans for you until they get into the mortgage business. The deteriorating profitability, of a full-service brokerage, forces broker-owners and team leaders to explore ancillary services as an alternative income stream. I can’t say that I blame them, either. Control of the customer experience combined with the added revenue make affiliated business agreements attractive to REALTORS who consistently produce. While you may feel that you “hit the motherlode” when you connect with the mega-agent, keep in mind that you’re “security” can be short-lived.
Where then, can an originator target her referral marketing efforts?
1- Read more
New home sales are at a 17-year low? Dan Green posts an excellent example of how the news media distorts and misrepresents the news.
Technorati Tags: blogging, real estate, real estate marketing
As If The Mortgage Lending World Didn’t Have Enough Bad News…
I wrote about LendingTree’s practice of giving their customers information out to multiple lenders back in March of 2007. Now we find out that their nefarious plot went much further than just that.
LendingTree has told its customers that former employees helped unauthorized mortgage lenders hack into its systems and steal customer information from 2006 to 2008.
The incident reveals just how aggressive the mortgage loan business was during the height of the housing boom, and also raises fears for consumers who share their information with companies that help them shop around for the best deal. And it highlights what experts say is an often overlooked source of data theft — the inside job.
According to a letter sent to customers recently, former LendingTree LLC employees shared “confidential passwords” with lenders, who in turn used the login information to “access LendingTree’s customer loan request forms.”
The forms contained critical personal data, including names, addresses, Social Security numbers, income and employment information. The company said the lenders did not use the information to commit identity theft or fraud, but simply to “market their own mortgage loans to … customers.” (read the rest of the story here)
Hat tip to Bob Sullivan over at the Red Tape Chronicles.
I can’t say that I am surprised at all, really.
Until today, I thought Richard Riccelli had the best job description among our contributors: “Marketing Provocateur.”
Loan Officer Chris Johnson offers plausible competition with “New Market Survival Enthusiast.”
Chris Johnson calls the tiny town of Westerville, Ohio, home — a challenge for a loan officer. A prolific weblogger and an incipient father, Chris is a tireless advocate of continuous self-improvement.
Chris and I have been dancing with each other for months. Time will tell, but I think he’s joining us now because he wants to deliver unto us a deep and difficult-to-master marketing philosophy: Get behind the mule and plow! Sounds like a BloodhoundBlog message to me.
At the same time, I am pruning our Frequent Contributors roster by a few names, folks who haven’t had as much time for us lately: Lani Anglin, Bill Leider and Galen Ward. We’ve never retired a contributor account, so it could be they’ll rejoin us in future.
Our recent additions have all been very big dogs, so it will be interesting to see if Chris can out-howl them. Nothing like a big challenge to bring forth big results.
Technorati Tags: blogging, real estate, real estate marketing
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Originator: I’m being paid $7, 000 from the lender because you chose a rate of 6%
Client: Got it. Cool, thanks for saving me money
Originator: If you chose a rate of 5.5%, YOU would have to pay me my $7,000
Happy Client: Understood. I’m down. Let’s roll with the 6% option.
Originator: You realize that if you negotiated better, I might have done it for less? It would have depended upon the demand for my services.
Confused Client: I’m sure I could have gone to Zillow and gotten a better price but I was impressed with your execution– I think it’ll save me a lot of money. Your blogging efforts convinced me that I need to be in relationship with you.
Originator: I just want you to affirm that I’m worth every single penny of my fee. I’m not a discount mortgage broker; I’M A PROFESSIONAL. You’ll also notice that I didn’t opt to put an anonymous rate search widget, like this or this, on my website.
Irritated Client: Understood. I trust you.
Originator: Transparency is great, isn’t it? You made the right choice.
Frustrated Client: You’re so smart. You’re so strong. You’re the best choice for me.
Originator: In the interest of transparency, should I drop my trousers to prove it?
Lost Client: Good bye.
My admiration for what Zillow has given the lending community is clear. I love that they’ve created a virtual Bourse for mortgages because I think like a trader. If my pipeline dries up, I’ll be in there, slogging it away. There’s a difference between playing by their rules, on THEIR platform, and adopting that “shopping technology” on my platform.
I’m virile but I don’t walk on the beach, in a Speedo, to prove it. Maybe that makes me deceitful, maybe it just makes me…
…smart.
This is my column for this week from the Arizona Republic (permanent link):
Zillow.com’s Mortgage Marketplace brings anonymous apples-to-apples mortgage rate quotes to consumers, free consumer leads to lenders
Wouldn’t it be great if you could get a broad array of mortgage quotes without having to make dozens of phone calls? And what if you could make a true apples-to-apples comparison among quotes? Better still, what if you could remain anonymous, making yourself known to the lender only when you are ready to do business?
Seattle-based real estate start-up Zillow.com last week released its long-anticipated mortgage lending product, called the Mortgage Marketplace, and it offers all those features and more.
Unlike Zillow’s “Zestimates,” the loan quotes are generated by real people, working lenders. Zillow will basically be acting as a hands-off intermediary between borrowers and loan originators.
Consumers using Zillow’s new Mortgage Marketplace will be able to anonymously solicit bids for loans from participating lenders. The consumer will fill out a detailed form disclosing all pertinent financial details.
The form will be submitted anonymously to participating lenders, who will, in their turn, produce estimated loan quotes, submitting them, through Zillow, to the consumer. The consumer will then have the choice to make direct contact with particular lenders to decide whom to do business with.
To a very large degree, the information asymmetry between lender and borrower will be done away with, since the loan quote will detail every fee associated with the loan. Moreover, Zillow will be implementing a reputation-management system whereby borrowers will be able to rate lenders on their performance.
In return, the lenders will receive Zillow’s mortgage leads at no cost.
What’s in it for Zillow.com? When you fill out a form requesting a loan quote, Zillow will be writing “cookies” to your local browser. They won’t be storing your financial details on their own servers, but they will be able to access those cookies in the future to target specific ads at you according to your demographic characteristics. Zillow will also be selling access to these cookies to other ad-supported sites.
So, just as with free-TV, in exchange for looking at advertising, you will get free anonymous Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Remember Marty Ummell? She’s the lady that sued Mike Little, a REALTOR with RE/MAX in Carlsbad, CA. Her attorney ripped a page from the ambulance attorney play book and accused Mr. Little of misrepresentation, breach of fiduciary responsibility, and fraud.
From the New York Times, back in January:
Ms. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.
Real estate lawyers and brokers say the case, which goes to trial in the north county division of San Diego Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase.
I poked a bit of fun at this frivolous law suit, with my satirical post. In the comment thread, I had learned more about the plaintiff:
FWIW, the Ummels put down $900,000 on this home and borrowed $300,000. I’m guessing they didn’t need a full appraisal (1004) but had a drive-by w/o interior inspection (2075); that report requires no valuation but proof that the property is standing. Pure conjecture on my part.
I would think that a couple that has owned property(ies) in the Bay Area, for an extended period of time, who has $900,000 to invest in a home, and holds in a family trust, is sophisticated enough to forfeit the “ignorance” defense.
Of course, the accusation was extremely watered down by the time it went in front of a jury, last week. Fraud and misrespresentation were thrown out and only the charge of “breach of fiduciary duty” stood. The jury ate lunch, did a quick crossword puzzle, and ruled for the defendant (within 2 hours).
Marty Ummel is “devastated” while Mike Little is essentially out of business. From the same Voice of San Diego article:
The Ummels contended their agent had misrepresented a reasonable value to pay for their house and had breached his fiduciary duty to them, acting to protect his commission instead of Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Wahington Mutual was put out of the wholesale business and Barry Bonds was retired from baseball.
At least Washington Mutual acknowledged their demise.
Wa- Who? Didn’t he play for The Pirates?
We have 14 entries on the short list this week, out of a long long list of 96 posts. I’ve already decided on the winner of the Odysseus Medal, so I’m not linking that way. This week’s Short List is all Zillow Mortgage Marketplace posts, all of them written by lenders. If you’re not interested, you’re just not interested, but I can’t imagine how you wouldn’t be.
Four of the Short List contestants wrote two posts each, so I’m going to count a vote for either as a vot for that person. If one of them wins, I’ll split the People’s Choice Award between both posts.
Vote for the People’s Choice Award here. You can use the voting interface to see each nominated post, so comparison is easy.
Ahem: Please don’t spam all your friends to come and vote for you. First, what we’re interested in is what is popular among people who would have been voting anyway. And second, I’ll eliminate you for cheating. Don’t say you weren’t warned.
Voting runs through to 12 Noon MST Monday. I’ll announce the winners of this week’s awards soon thereafter.
Here is this week’s short-list of Odysseus Medal nominees:
< ?PHP
$AltEntries = array (
"Brian Brady -- Zillow Mortgage Bourse Zillow Mortgage Bourse: How To Acquire Long-Term Clients”,
“Brian Brady — Zillow Mortgage Marketplace Zillow Mortgage Marketplace: One Way Transparency Like A Bad Online Dating Site“,
“Dan Melson — Zillow\’s New Mortgage Quote Forum Zillow’s New Mortgage Quote Forum“,
“Gina Gardner — Zillow Mortgage Reflects National Trends Dog Eat Dog: Zillow Mortgage Reflects National Trends in Selling“,
“Jeff Corbett — Zillows Mortgage Community Zillows Mortgage Community. The Consumer is Ready, But is The Mortgage Professional?“,
“Jeff Corbett — Zillows Mortgage Community, On The Cusp Zillows Mortgage Community, On The Cusp of an Anonymous Transparent Credit and Personal Information eXchange Between Mortgage Professionals and Consumer, to Create a Highly Trusted Mortgage Transaction Community“,
“Morgan Brown — Zillow Mortgage Launches Zillow Mortgage Launches – How do you rate?“,
“Rhonda Porter — Zillow Launches On-Line Mortgage Quotes Zillow Launches On-Line Mortgage Rate Quotes“,
“Rhonda Porter — Zillows On Line Mortgage Leads Zillow’s On Line Mortgage Leads: Is It For You?“,
“Todd Carpenter — I have a war to fight I don’t have Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
I might have been hasty in my original assessment of the Zillow Mortgage Bourse. I sometimes suffer from TB; true believer disease. I’m one of the few guys in the mortgage business that actually wants to see the cost of loan acquisition, for the consumer, dramatically reduced. I have never seen my role as a middle-man. I see myself as part financial adviser and part trader.
Permit me a digression:
I have always considered yield spread premium to be the borrower’s money. I have aggressively used it in serial no-cost refinances, throughout the late 90’s and early part of this decade. Critics, don’t bring up the issue of churning. I assure you that every transaction I funded has a tangible net benefit to the borrower.
When a borrower gets “into my web”, by closing a loan transaction, I conduct periodic mortgage reviews. Jillayne Schlicke once commented that the periodic review is just an excuse to “sell a refinance”. My response is a bawld one: “Well, Duh!“. We should ALWAYS be looking for an excuse to refinance the borrower’s loan…IF…there is a tangible net benefit to the borrower AND I get paid. Call that the way of the trader. Traders look for opportunities to profit off market fluctuations.
I digressed but I wanted to give you some background. My initial concerns about The Zillow Mortgage Bourse were two-fold:
1- Customers don’t know what they don’t know. I pontificated that the customers would be EXTREMELY difficult, focusing on price rather than suitability. I found the data byte, on the loan request form that distinguishes the client’s intent. This is the real Web 2.0 offering of the Zillow Mortgage Bourse.
2- I felt that consumers could game the system, waste originators’ time, and damage our reputations if they didn’t get exactly what they wanted when they wanted it. I also thought they would “steal” the advice we offer, and engage in a perpetual RFP process until they found the lowest price. That happened often in securities brokerage Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Zillow Mortgage MarketPlace rang the opening bell and loan requests came flying in the door. I was pleasantly flabbergasted! It’s no secret that I’m a Zillow-phile; I believe they are leading the way to transparent loan and real estate transactions.
I’m tenuous, however, about spending too much time there. My comments at BusinessWeek:
Brian Brady, managing director at San Diego’s World Wide Credit, a national lender and broker, said he signed up for the Zillow mortgage marketplace a few weeks ago and has mixed feelings about it.
Advice Needed?
He said it has the potential to be a great tool for both consumers and lenders. But he’s concerned that borrowers will be seeking quotes without first getting advice from mortgage professionals about the loan that best fits their needs.
He’s also concerned about the kinds of leads the site might generate.
“Zillow is going in the right direction, in that the consumer gets to rate us as [loan] originators,” Brady said. “I certainly wish it were a mutual rating system because customers need to be rated, too.”
Take a second look at my final comment. Consumers should be rated, too. The challenge for quality originators, today, is time. With so many loan applications that are unable to be funded, we have to be judicious about where we spend our time. My concern is that I’m shooting craps with loaded dice when I engage in anonymous quoting; I have little upside. If I deliver a great quote, I am rewarded with an opportunity to “sell” a new customer. If the customer is disingenuous about her information, I am accused of delivering a “phony quote” and am rated poorly, within the community.
Wade Young expands upon my concern on Lenderama:
When I pull the actual credit, I’m not going to be able to make good on what the Zillow consumer will most definitely consider to be a “promise” made by me via my rate quote. The lady gives me one star (undeservedly, of course), and I move on to other things.
Wade is more concerned about the Read more
Back in the 19th century, when the stodgy New York Stock Exchange was already ensconced in the lap of luxury, the traders who would one day form the American Stock Exchange were stuck out in the rain.
Literally. Stock brokerages that couldn’t afford a seat on the NYSE instead rented offices on either side of Broad Street near Exchange Place. Clerks hanging out of windows would communicate bid and ask prices by hand signals to the traders working outside on Broad Street. Rain, sleet or snow, the traders effected their exchanges.
Last Summer I poked fun at Zillow.com’s CEO Rich Barton for a vision he had of a 19th century marketplace. This is Barton’s quote:
“I see an old-style marketplace formed, a city market like Pike Place Market. I actually dug up an old photo — Pike Place Market at the turn of the last century. People were gesticulating. People were buying things. People were gossiping. Negotiations were happening. Big billboards were advertising things above the marketplace. That’s the picture I have in my head.”
Give the man his due. I’m thinking Zillow’s Mortgage Marketplace is more like Broad Street than the Pike Place Market, but it definitely is a true bourse — the maximum flow of information between buyers and sellers with the minimum of friction — or even overhead!
I wrote last month that Zillow.com is leading us toward the realization of Capitalism’s promise. Everything we claim as a defect of Capitalism is in fact the confluence of two other systemic defects:
First, a small few people want to behave badly, which fact permits other sleazy people to malign honest traders who are themselves innocent of all wrong-doing.
And second, physical impediments to the flow of information prevent the overwhelming majority of overwhelmingly honest people from distinguishing the innocents from the crooks.
Software systems like Ebay and Zillow’s Mortgage Marketplace mitigate the second defect, leaving the bad actors fewer and fewer places to hide.
The Mortgage Marketplace is a small thing, so far, and, as with everything in the RE.net world, it looks much larger to us than it really is. But consumers — and lenders! — have Read more
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Zillow Mortgage announced its Mortgage Marketplace today with the ceremony of the opening bell on the NYSE. I applaud them for bringing transparency and reputation management to an industry that needs both.
Originators, who have been around the block, understand my title; I’ll wait and bring the best offer, last.
