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Take a trip up Main Street in any big city and you will notice a few interesting things …
Look at the gas stations that have been there for years. There is probably one on each of the four corners on the major intersection right?
Now look at their signs. They are all different and one of the them is usually significantly cheaper than the other three. Once you have filled up your tank, keep driving.
You will see a Wal-Mart and a Costco if you live in a city with any sort of density. Not far away, usually a mile or so up the road, you will see a store that sells upscale jewelry, upscale clothing, upscale appliances, etc.
You might wonder how they are all able to stay in business, but if you keep reading, you quickly see that price is only an issue for a very small minority of the general public.
Not everyone will make their decision just based on price. Furthermore, if you are always the lowest or best priced company out there, you should watch out because no one can sustain that for long. There are actually some who automatically pay the highest price because they feel price is associated with expertise and quality.
This has everything to do with your own mortgage business.
In my own town of Baltimore, you can drive up York Road and see a mall full of cars shopping at Tiffany's, Burberry and Nordstrom. Drive three miles down the road, and you will see Dollar General and Wal-Mart, along with a Men’s Warehouse and other discount stores. All of them are busy and all of them are doing business.
I mention all of this because of all of the noise over the Consumer Financial Protection Bureau’s Rate Checker and some of the new companies that are trying to eliminate loan officers and have "robotic" online originations. That's fine … why waste energy and time debating it?
None of us will ever have the best rate and we don't need to!
If you know me at all, then you realize that being successful has nothing to do with rates and points. It's all about expertise and marketing. It's all about "Picking a niche, which equals becoming the expert … letting everyone know about it!"
When you are the expert in a niche and can solve a problem, the question of rates disappears.
Here are some niches you can explore:
1. First-time buyers and grant programs available locally.
2. Construction perm loans.
3. Reverse mortgages.
4. Couples who are divorcing.
5. Unapproved condos.
6. Self-employed borrowers (new bank statement programs).
7. And my favorite … the 7.3 million Boomerang Buyers who are now eligible for a mortgage.
My clients rarely even ask me about my rates and points. They want to know what their payment will be and how much cash they will need at closing … that's it! Yes, I realize that sounds easy, but let me give you a real-life example.
I regularly mail to apartment complexes with a systematic way of generating new deals. I also mail directly to renters who I know are eligible and have had a bankruptcy or foreclosure, and are now in the position to buy a home.
One of the clients who came from this mailing was ready to buy, and I pre-approved her. I then called an agent in an office I had no relationship with and turned my buyer over to one of the top agents in that office whom I had never met or spoken to before. That agent has already sent me two new deals—both conventional 20 percent down with 800 credit scores!
Did you follow that recipe? I gave the agent what she wanted, a pre-approved buyer who was ready to buy, and used that to build our relationship. That works much better than a dozen donuts … right?
My niche, and the one that will be exploding this year is buyers who have had a bankruptcy or other credit issue. Some have had a foreclosure three to four years ago or more. They are now eligible for a mortgage, but don’t realize it!
As an industry, we have even given them a name, “Boomerang Buyers,” and the last estimate was that there are close to 7.3 million of them who are now eligible to buy. Are you talking to these potential buyers? Didn't think so! But they are ready and willing to get back in the market! Stop worrying about pricing so much and start worrying about marketing and the niche you will become the expert in.
Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,900 transactions. He has trained tens of thousands of loan officers and company owners over the past 31 years on how to close more loans, make more money and still have a life. You can view the “Top Originator Secrets Show” on Mortgage News Network. He may be reached by phone at (443) 324-8424 or e-mail LoanOfficerTips@gmail.com.
This article originally appeared in the May 2016 print edition of National Mortgage Professional Magazine.