Quicker, better and cheaperCharlie Elliott, MAI, SRAproduct innovation, conference attendance, customer expectations
Recently, I had the opportunity to attend a mortgage trade
conference that was sponsored by one of the suppliers of mortgage
connectivity system software. The conference was attended by
representatives of many of the nation's major banks and mortgage
companies, as well as a number of national closing service vendors.
I don't know about you, but I like attending conventions and
conferences for a number of reasons. In addition to the formal
educational opportunities, for my time and money, there are usually
other advantages to attending such conferences as well. These
include the value of networking and the opportunities to learn from
the other attendees. What is it about a competitor that makes him
or her willing to give way trade secrets in the hotel bar after a
day in the classroom and a couple of beers? Perhaps it is that all
parties believe that they are willing to give up certain trade
information in exchange for other information more valuable to
them. Whatever the case, I enjoy such events and usually do my
share of networking with vendors, customers and competitors as
well. As is often the case, I left from my recent conference armed
with a lot of information and ideas. I can hear my staff now:
"Charlie is making a lot of changes and giving us a lot of new
things to do; he must have just returned from some conference or
convention."
At this particular conference there were the typical ideas and
techniques that I made note of. There was one concept, however,
that overshadowed all of the others, and thus is the focal point of
this column. The phrase, which many of us may refer to as a catch
phrase, is "quicker, better and cheaper." The term seemed routine
the first time I heard it used by one of the speakers. It was not
until I heard it used by two other people within the space of a few
hours that I began to examine its real meaning. Now this is not to
be confused with "cheaper, quicker and better" or any other order
of these words. "Quicker" was always first; "better" always came
second, and "cheaper" was always last. As far as I could tell, none
of these people had heard the others use the same statement. Was it
mental telepathy?
Changing gears for the time being and moving on to another
issue, prior to the conference I had decided to survey a few
lenders who make closing-service buying decisions. I sometimes use
this technique as a tool for gathering information to take back to
the office to use in evaluating and improving the services that my
company offers. Since my business is appraisals, I ask three
different people what they looked for when purchasing
appraisals.
The first person I asked immediately responded by asking, "Do
you mean now?" I replied, "Yes, now."
He proceeded to say, "First is fast turnaround time; second, we
look for quality; and third, we look at price."
The next two individuals offered very similar answers using
almost exactly the same three terms in the same order. Then it hit
me: the catch phrase "quicker, better and cheaper," used by three
people earlier, was conveying an almost identical message as my
survey. Was this an accident? I think not. Needless to say, my
level of confidence in my survey was very high.
Below its surface, what does the phrase "quicker, better and
cheaper" actually mean? Why were so many people sending me the same
message? If I hadn't known better, I would have thought it some
sort of concerted attempt to throw a monkey wrench into my survey.
After giving further thought to the matter, it is my conclusion
that it was a very, very, strong message as to the current state of
the lending market and for that matter, the appraisal market. While
absorbing this information, I had the opportunity to discuss
related issues with other lenders. It became abundantly clear that
they were feeling a volume-down, costs-up, profits-down squeeze not
felt in a number of years. They were feeling a squeeze from their
customers demanding a faster, better and cheaper product.
Why is this? First, it comes on the heels of a market where
sheer volume has stretched the resources of the lending industry so
thin that customers wanting to finance or refinance homes at
near-historically low rates, were forced to stand in line and wait
for loans, contend with less than the best quality service and, in
some cases, pay higher-than-normal vendor fees just to achieve a
closing. Now that the market has cooled off and mortgage companies
are looking for business, customers realize that they are in the
drivers seat and are pitting one lender against another for more
attractive packages. At a time when a new automobile can be
purchased and financed in three or four hours, customers object to
waiting 30-45 days to purchase or refinance a home.
Furthermore, today's customers expect better quality service.
They have gotten used to transactions on the Internet, where
shipping occurs the day of purchase and tracking numbers provide a
tool to stay on top of the transaction until their package is
delivered at their door within two or three days. Finally, they
expect their money's worth. The total cost associated with the sale
and purchase of a home (selling and buying) including real estate
agent fees, lender fees, attorney fees, taxes, appraisals, etc.,
can exceed nine percent of the sales price in today's market. Said
another way, the entire cost associated with acquiring a $300,000
home could exceed $25,000.
Internet savvy customers, especially younger ones, are becoming
more sophisticated. They should not be underestimated and those of
us expecting to be competitive in our market must offer services
"quicker, better and cheaper."
Charlie W. Elliott Jr., MAI, SRA, is president of Elliott &
Company Appraisers, a national real estate appraisal company. He
may be reached at (800) 854-5889, by e-mail at
[email protected] or through the company's Web site at www.appraisalsanywhere.com.
