[This 3-part blog series explores the 6 Steps to Creating a Successful Borrower Pipeline, Enact’s latest LO eBook. In today’s blog post, we’re covering the importance of knowing yourself and your target audience. Want the full eBook and to get a competitive edge in today’s market? Download the eBook today!]
To every puzzle, there’s a solution. Sometimes the solution is glaring. Sometimes it’s not. When interest rates rise and home prices become less affordable, finding quality borrower leads and maintaining a full pipeline of business becomes the puzzle to solve.
When faced with such a predicament, you have two choices. You can continue using tactics that worked in years past. Or you can learn how to solve the challenging market we’re facing today…
That’s why we want to share with you some steps you can take to replenish your pipeline with motivated buyers and turn the odds in your favor. After all, your skills and product expertise are what homebuyers need. And right now, they’ll need it more than ever.
First, you should take a step back and think about how well you know yourself, especially as it relates to how you’re doing business. Then, you’ll want to think critically about the way you engage with and understand your target audience(s).
Step 1: Know Thyself
When it comes to their pipelines, most loan officers are reluctant to take their feet off the gas pedal for even a second. That’s especially true in tough markets, in which every deal feels so important.
Yet sometimes you need take a step back before you can move forward. If you really want to keep your pipeline full, you need to think strategically.
A great way to discover more about yourself so you can better help your customers is to do a SWOT analysis—an assessment of your Strengths, Weaknesses, Opportunities and Threats. And even if you’ve heard about this or done this before, it’s great to get a refresher and check in with yourself, especially because you, your business, and/or processes may have changed!
Try an Exercise!
You can do a SWOT Analysis on a piece of paper. Separate it into four sections, and on top of each corresponding section, write the following questions:
- What are my strengths? What do my clients like about me?
- What are my weaknesses or areas in which I could improve?
- What opportunities do I have to increase sales?
- What threats do I face? (Hint: This could be knowledge/experience gaps, market areas, borrower segments.)
Start filling in the boxes. Chose no more than three responses for each category. When doing so, be as honest with yourself as possible.
Next, find two clients and two business partners and ask them what they think your strengths and weaknesses are. You can ask a colleague or your manager for their feedback, too. Write down what they say.
Finally, evaluate your findings. Be sure to cross out anything that is beyond your control. Then, focus on your strengths and your opportunities, and consider working on your weaknesses until they become opportunities.
Once you’re done, post your SWOT analysis in your office, so you can be reminded of what to focus on. Be sure to revise it as you make progress toward your goals or as market dynamics change.
Remember, you are the one who can help yourself achieve your goals, meet your business needs and find success. Plus, it’s great to get to know yourself and figure out what drives you inside and outside of the work you do. Your borrowers will notice, and your relationships will be stronger for it.
Step 2: Identify your Audience
The next step is to align your self-evaluation with who you are trying to reach. Remember, you can’t target everyone and do it all. Otherwise, it’s like trying to solve a puzzle with the wrong pieces. Instead, focus on one audience and stick with them.
Let’s Break it Down
We can assume that every potential lead falls into one of four buckets:
- Unknowns, or people you don’t know and who don’t know you
- Why Nots, or people you know but haven’t done business with (yet!)
- Past Customers (self-explanatory)
- Referrals, or people you know through family, friends, or network connections
For optimal results, your messaging needs to be different for each bucket. Let’s go through each of them.
You can’t do business with people who don’t know who you are. Therefore, you need to introduce yourself to as many Unknowns as you can, either virtually or in person.
Each time you make a connection with someone, try to answer the following questions:
- Is now a good time for them to buy or refinance?
- Can they buy or refi?
- Why should they use YOU, especially if they just met you?
To answer these questions for Unknowns, you must have a handle on the local market and the different programs someone could potentially qualify for, and you need to make your message relevant to each individual.
Perhaps you met someone through a friend or your network, but you don’t know them well. They probably don’t know you well either – let alone what sets you apart from other people they know in the mortgage business.
The same three questions you would ask Unknowns applies to Why Nots as well. However, the key to creating opportunities with Why Nots is staying top of mind, so they don’t forget who you are.
Just because a Past Customer chose to work with you once doesn’t mean they’ll do it again. In fact, the average customer retention rate for mortgage lenders is only 20%!
There are many reasons for this. One is that people don’t get mortgages very often, so your past clients can easily forget about you over time. That’s why the key to generating more business from Past Customers (besides providing excellent customer service) is to stay in touch with them on a regular basis, so they remember you.
If every transaction is viewed as a crossword puzzle, getting a Referral is like having the puzzle halfway filled in. But that doesn’t make it an easy win. For all you know, the Referral could be talking to other loan officers. You get to decide how to make this Referral a win!
Tip! To generate more referrals, talk to local real estate brokerages and offer to speak at their weekly sales meetings about ways first-time buyers can overcome their down payment hurdles, such as new MI products and affordable home loan program.
Know How Borrowers Behave
Now let’s dig deeper into this puzzle. Within each audience are people with different backgrounds, experiences, and behaviors that you’ll need to keep in mind. Below are some key ones.
About 26% of all homebuyers are first-time buyers. The good part about working with first-time homebuyers is that there are many resources dedicated solely to them. They include HomeReady® and Home Possible®, down payment assistance programs, and first-time homebuyer loan programs offered by various state housing finance authorities. In fact, Enact has programs devoted specifically to this group.
It’s useful to know that most first-time homebuyers use mortgage insurance when getting a loan. Mortgage insurance enables buyers to put as little as 3% down on a home and protects lenders from a portion or so of the loss in case of default.
Mortgage insurance comes in various forms. Enact MI offers several types of mortgage insurance products that allow lenders and borrowers flexibility in how they pay for MI.
Tip! When marketing to first-time homebuyers, pay attention to how they like to communicate. Gen Xers usually prefer succinct messaging via phone or email. For Baby Boomers, a mix of communications—phone, email and in person—works best.
Millennials, those born between 1981 and 1996, now make up 54% of overall home-purchase applications—by far the biggest generational segment. They have more disposable income than other buyer segments, too.
By the way, the term “Millennial”—much like “Boomer”—can be loaded, so it’s wise not to use the word “Millennial” in your marketing.
At the same time, Millennials face unique challenges breaking into the housing market. In addition to tight inventory and rising interest rates, many Millennials have significant college debt. Understanding these challenges and how you can help Millennials overcome them are key when marketing to this segment.
Tip! Create educational infographics, short blog posts and videos aimed at younger borrowers that dispel the common 20% down payment myth. Let them know there are options that allow a down payment as low as 3% that can help them get a foot in the door and start building equity.
Not all first-time buyers are Millennials. Some people wait until their 40s or later to buy a home. That’s especially true in a tough housing market when interest rates and home prices are both relatively high.
This is also applicable for the group younger than a millennial: Gen Z. They’re now starting to enter the housing market making up about 4% of overall home-purchase applications.
There are many reasons why existing homeowners renovate their home or “move up,” even in a struggling market. For example, more Americans than ever are working from home or taking care of aging parents and could use a home office or an additional bedroom. Plus, many homeowners are sitting on a substantial amount of home equity, which they can tap to make home improvements or make a sizeable down payment on a new home.
Tip! Because Upgraders are not “new” to the mortgage process and typically have more family obligations, they appreciate a smooth loan experience.
Eventually, Upgraders tend to become Downsizers when their children leave home. In recent years, the average home seller has gotten older and has lived in their home for 10 years before selling.
Tip! Compared to Millennials and GenXers, these buyers are more likely to prefer communicating by phone, email, and in person rather than by text message or through social media.
Try an Exercise!
List out your target audiences. Break them down into sources, then select your target audience. Once you choose your target audience, start networking with those who know your audience well.
Download the full version of our LO eBook today – it’s a valuable resource to help you more effectively understand and work with your borrowers. Building your pipeline may not be as challenging as you might think if you choose to implement the steps we’ve outlined.
Want to learn more?
You can always access our blog for great content to help your prospective borrowers. Our dedication to helping borrowers achieve the dream of homeownership doesn’t stop here — we offer training resources to help you work with your customers to your max potential.
And, if you want to learn more about our LO eBook or need extra insight, you can always contact your Enact Sales Rep for more info too. They’ll be happy to help you meet your business needs, answer questions, and point you in the right direction.
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