• Not having a system for clients who aren’t ready yet.

The normal process for a Broker is to try and find people at the point at which they are about to get a home loan, they are focussed on timing and think short term. In an ideal world, when you speak to someone they tell you they were just about to get their loans organised — great timing.

If it’s a referral from a real estate agent you are relying on them to create that trust for you quickly but genuine trust doesn’t happen that way, it takes time and by repeatedly providing value. Also, the borrower probably hasn’t built up trust with the real estate agent yet, either, so the value of a recommendation from them isn’t as strong as it would be from an old and trusted friend.

We can assume that a typical real estate agent might be in front of a few home sellers and many buyers in their home opens in any given month. If it was all about timing, you could expect to do loans for all of these people, the agent would just need to tell them about you.

As I spoke about in the chapter on the Psychology of Attraction, you don’t have any proximity, familiarity or reciprocity working in your favour. You haven’t educated this person to put themselves into a position of being predisposed toward trusting you.

One example of this is the practice employed by some major real estate agencies who own their own Mortgage Broking companies. They collect names and numbers of people visiting home opens and then pass them onto the broking company to call. The timing is perfect — a good proportion of these people are very likely about to get a new loan, so the results should be a very high conversion rate. But from what I’ve seen, the conversion rates are extremely low. The person went into that home open with no allegiance whatsoever to the selling real estate firm, so nor do they have any allegiance to the Mortgage Broking firm branded to that real estate agency.

So good timing on its own is not enough. The barrier is that the borrower is only hearing about you right when they are about to get their loan and you haven’t had a chance to build trust with them yet, and they probably have another Broker or lender they know better. The best you can hope for is a ‘second opinion approach’, which will have a lower hit rate because not as many people want to immediately go through the process of applying for a home loan all over again, even if it does save them money. It also relies on their previous Broker having done a poor job.

The other problem with this focus on finding borrowers who are ready right now is not having a system for keeping in touch with people that might want a loan in the future, but aren’t in the market right now, which may be most of the people you speak to.

I believe a better approach is to find people who have any potential to become borrowers as early as possible.This is more of a ‘long-tail’ marketing approach where you take the time and have the necessary marketing systems in place to position yourself as a home loan authority so that when these people are ready to borrow, the trust has been built. The alternative of trying to find borrowers right when they are acting is that very often you are too late and they have loyalties elsewhere or are already applying through another Broker or lender.