Previously, lenders and loan officers (LOs) acted as the gatekeepers of information, supplying buyers with data, trends, reports and research on the housing and financial markets. As a result, this kept buyers largely dependent on their loan officers to guide them through the complicated and confusing process of home buying.
Today, while the process can still be difficult to navigate at times, homebuyers are much savvier and better educated about the market, pricing and offers. This is largely attributable to the wealth of real estate information that is readily available at every homebuyers’ fingertips. With quick, easy access to content and resources that breaks down the homebuying process, as well as dozens of real estate databases (like RedfinÒ and Realtor.comÒ) that empower buyers to find and price their dream home, buyers now find themselves with an advantage before they even walk in the door (or go online) to begin the homebuying process.
In most cases, today’s homebuyer has done their due diligence and will have higher expectations in terms of service. They typically know what community or school district they want to live in, what type of home they want and what they expect to pay at what interest rate. They’ve already researched lenders and are expecting transparency and authenticity when they start talking to a loan officer about a home loan. With this shift in place, it’s critical for loan officers (LOs) to adjust to the realities of this new market dynamic in order to remain successful.
So, how can lenders better support their LOs, arming them with a smart, strategic pricing strategy to help them compete – and succeed — in today’s competitive market?
With buyers doing their homework in advance, loan officers should look beyond how to do the math on a buyer’s mortgage into a more productive conversation about getting the right price on the right home, precisely tailored for each borrower. While good customer service is always a positive and a great online platform may catch a borrower’s eye, pricing is now increasingly important when it comes to winning business.
So, lenders need to take a strategic approach when setting prices for each mortgage by factoring in how prices can differ between states and even communities. It’s not a one-size fits all model anymore – even with a national average for mortgage rates, pricing must vary based on regional markets, and lenders need the ability to look at pricing more in-depth, at a granular level.
Considering this, it’s crucial that lenders and LOs are seen as a trusted partner, bringing more to the table than simple advice and general information that a borrower can easily access themselves through their smartphone. To truly establish trust with the borrower, loan officers need to be positioned as experts with the ability to analyze local offers and rates, understand offer details, including points, fees and monthly payments as well as evaluate market activity at a national and regional level – and then communicate that effectively with their borrowers.
To do that, lenders need to provide loan officers with access to the right tools, including real-time pricing data analytics, supporting the needs of LOs, driving their success and helping keep up with today’s increasingly sophisticated homebuyers.
But, why does pricing matter and how can pricing help drive a loan officer’s success?
Without factoring in real-time pricing data and analytics, lenders often aren’t varying pricing and rates based on regional markets across different states. This creates a significant problem for lenders – due to the lack of market intel and pricing analysis, their branches won’t be able to stay competitive and their loan officers will be left with a margin management problem causing them to either make less by underpricing, or risk losing out on the loan altogether by overpricing.
By adopting a more granular approach to pricing, not only will lenders and their loan officers be armed to win more deals, but buyers stand to realize benefits as well. For example, a loan officer wouldn’t want to price the entire state of California with a single rate based on one borrower’s home purchase in Los Angeles. Instead, a lender’s pricing strategy should take into account different levels of competition, supply and demand in a particular real estate market, the level of price sensitivity and more – all of which helps enable their loan officers to be more effective, successful and competitive in their pricing while also offering the most appropriate rates for each buyer.
Loan officers need extensive pricing technology and comprehensive data, allowing them to build and deepen relationships by equipping the borrower with competitive intelligence when they need it most.
Rather than relying on outdated rate sheets, branches need to support their teams by supplying them with the necessary tools to track constantly-updated pricing data with access to millions of pricing points and competitive analysis in real-time.
Having access to this actionable intelligence, loan officers are positioned to offer the right price for each buyer based on the (exact) area where they are looking to buy. Whether their dream home is in Carmel, Calif. or Carmel, N.J., loan officers should have the ability to quickly and accurately offer competitive rates and prices.
Ultimately, as homebuyers become more informed about rates, home values and more, lenders too must adjust their approach to pricing if they want to remain competitive. By working to position their loan officers as trusted sources for the most up-to-the-minute information, the loan officer-borrower relationship is strengthened, ensuring the LO is the first call the next time that borrower is looking to refinance or needs another loan.
Joe Zeibert is managing director of global mortgage solutions at Nomis Solutions, an industry-leading pricing and profitability management solutions provider, helping build better pricing for bankers and lenders. For more information, visit NomisSolutions.com.