What's the secret?
Gene is in the middle of delivering doughnuts to an office of 20 real estate agents. As he makes the rounds, they seem to ignore him. A few say "hello" and "thanks for the service." But he will be lucky to get any referrals. One real estate agent just walks by, takes the chocolate covered one with sprinkles and smiles as if he gets the same service at home. Gene has been doing this so long that the home sellers seem to take him for granted. And maybe they should. There are even more brokers out there waiting for the chance for doughnut duty.
On the face of it, marketing through real estate agents seems like a good idea - until you notice that when you do something for free, they also treat you like a free service. Arizona mortgage broker Gigi Kisil-Morgan of Morgan Capital said she has made every mistake possible in an attempt to gain their business. "The worst part is falling into the trap of competing with the title reps and appraisers for [real estate agent] business," she said. "Everyone is trying to one up each other. Pretty soon, they start to call you to sit at their open houses and even pick up their laundry. Yeah, they will use you if you let them. It all boils down to trust and respect."
Broker Michael Kingsley agrees and has even gone so far as to sponsor local real estate agent association events. But the bang for the buck has never been there. He believes that if you want to make money on real estate agent referrals, you need to be seen as a partner. He believes you need to gain their trust first. But what techniques work and which will spin your wheels? Another question is: How far must you go to add value to the relationship?
One broker in Colorado wanted to gain more referrals from real estate agents. He hired me as a speaker, inviting real estate agents to hear how to increase their sales. He was able to persuade wholesaler Fran van Schaak to help fund the meeting. Two-hundred people attended. The presentation was on marketing to the affluent. Always game for free training and lunch, the real estate agents arrived late and ate enough food to feed Burundi. Yet measured by the laughter and note taking, they seemed to enjoy the event. But the broker did something inexcusable at the end of the meeting. After thanking the group for coming, he stood up and asked who in the crowd would be willing to give him at least one piece of business in the next three months. Many hands went into the air as he noted who he would invite back to the next event. As he cruised the byways and highways of Real Estate Agent Land a week later, he took the real estate agent attendees to task on their Easter Seals-like pledge. "Business is up 40 percent in the last three months," he said, smiling as if he found a cure for his golf slice.
Still another top mortgage originator believes in value-added prospecting. "For Sale By Owners [FSBOs] are the key," said Jane Schelstrate. "I get the listings of FSBOs in an area and call the sellers. They will be moving in a few weeks and I want to do their next loan. But I also want to gain more referrals from [real estate agents] in the process. As I talk to the sellers, I mention that I also know a [real estate agent] who can help them in their next purchase and [ask if I can] make an introduction. It works like a charm."
Like Jane, mortgage brokers need to monitor the situation to make sure the referrals are a two-way street, not solely an exercise in unilateral patience. Another mortgage broker in Southern California ran a telemarketing phone bank for real estate agents. The phone bank would make 150 cold calls per person in an evening hoping to snare that "move once every eight years" home seller/buyer. It worked for the real estate agent. But often, that was the only person who benefited. He stopped the practice when more than a few of the agents placed mortgages with competitors.
The bottom line is trust. It always has been and always will be what will drive real estate agent referrals. Tactics and practices to add value are always a good way to make real estate agent introductions. But real estate agents who get something for nothing are and will be your biggest frustration. Kisil-Morgan related one experience recently of a real estate agent who bought a house for a client for more than it was worth. When the appraisal came in under the purchase price, the real estate agent blamed Kisil-Morgan instead of considering that the property may not hold the value the client was looking for. In the end, the real estate agent found an appraiser who would establish the magic number in an unethical attempt to secure her commission. The irony is that real estate agents often feel the same lack of trust about originators. They sometimes complain that they want to refer more business to the mortgage originator, but they could lose the client if the rep makes mistakes or charges unexpected hidden fees. They also mention mortgage broker predatory lending practices they hear so much about. Will that happen to their clients?
Trust is a pipeline - it flows both ways. It is filled with relationship and rapport. It is also stirred with a lot of patience and altruism. People are people, and we tend to give referrals to those we like. And we like those we trust. One lesson learned from the mortgage brokers who have seen the worst: Build relationships with those to whom the relationship is important. Commission is important. But when you find a real estate agent who cares more about it than the client, you will be disappointed. You cant make a request larger than the relationship you have taken the time to build.
Dr. Kerry Johnson, MBA is a best-selling author and frequent speaker at mortgage conferences around the world and the founder of the Peak Performance Coaching program. He can be reached at (800) 883-8787 or e-mail [email protected]