STRATMOR Group: To Win Purchase Business, Lenders Should Engage Borrowers At The Very Beginning Of Their Home Search

Mortgage lenders have an opportunity to incorporate real estate search and research, referral partners and the lender’s financing offers into a single online ecosystem for the convenience of the buyer, according to the just-released April Insights Report from STRATMOR Group. In an article entitled, “What a Doll and Her Dream House Teach Us About the Mortgage Ecosystem,” Senior Partner Garth Graham makes the case for mortgage lenders to move their marketing efforts to the top of the home purchase funnel.

“Lenders have an opportunity to engage in the borrower relationship from the very beginning of the process,” Graham says in the report. “We’re witnessing the confluence of the online real estate and mortgage experience, and this is the real play for lenders who will lead in the purchase money market. The opportunity is to become part of the new way consumers search for, select and buy real estate.” 

Based on STRATMOR’s data, 89 percent of borrowers in Q1 made a relationship-driven choice of lender. Whether it was based on a referral from friends (14 percent) or a real estate agent (20 percent), or an existing relationship with a lender (34 percent) or individual loan officer (18 percent), relationships dominate borrowers’ selection behavior. But that may be changing. 

Graham points to data provided by the National Association of Realtors® (NAR) that shows that 97 percent of all home buyers used the internet to search for new homes. After finding a home, they walked through the property virtually (56 percent) and then drove by to view the home’s exterior (37 percent). He notes data from a Redfin survey that shows two thirds (63 percent) of homebuyers in 2020 made an offer on a property that they hadn’t ever seen in person. 

“Buyers are going to the Internet and that’s where lenders need to be,” Graham says. “You know who gets this? Rocket. Using Barbie^® dolls in its ad for the big football game this year caused some media critics to scratch their heads, but if you were paying attention, you noticed that Rocket Mortgage^® wasn’t the sole focus of the ad. It was Rocket Homes^® and Rocket Mortgage.” 

Graham says the Rocket Homes commercial captured the angst that many home buyers are dealing with. Knowing you can qualify for a loan is not the only step necessary before writing a contract. You must prove it with a nearly iron clad Preapproval, according to Graham. The result is that borrowers may be more effective in getting their offers accepted, and perhaps have a better experience with less anxiety. At the same time, lenders who adopt this strategy will get more leads at a lower cost. 

“The premise of the Rocket commercial, clearly communicated, was that home buyers who have been frustrated by their inability to purchase the homes of their dreams now have a way to effectively compete for homes,” he said. “In a market where the borrower needs to be very well prepared financially before they write their first offer, it makes sense for the lender to be involved earlier in the process.” 

According to Graham, lenders can move into this new space by creating and optimizing a new tech stack for purchase money borrowers, something STRATMOR Group is already working with lenders to accomplish.