Mortgage Leads Becoming More Productive (The Internet is taking over virtually every aspect of business and just about everything else.)
People no longer have to wait for business hours in respective time zones to conduct business, or purchase items; even mortgages.
One of the biggest businesses over the last half century has been mortgages. In order to sell or originate more loans, companies must advertise or offer their rates. They are now wondering what they ever did before the Internet.
The September 20, 2006 article, “Nearly one-fourth of online mortgage shoppers borrow within a year,” posted on inman.com, explains how more mortgage leads have been generated over the Internet, which has also lead to an increase in mortgage originations.
“Real estate and mortgage lead generator HouseValues Inc. is touting the results of a study that found 22 percent of consumers who submitted mortgage loan requests at the company's Web site took out a mortgage within 12 months.”
However, there is no evidence to indicate what percentages of these originated loans were produced through companies that purchased the leads from HouseValues Inc.
“The study, conducted by consulting firm Real IQ, looked at 100,000 mortgage leads generated between June 2005 to February 2006. The leads constituted a percentage of the loan requests submitted to HouseValues during the time period and were selected at random, said Matt Heinz, HouseValues' senior director of marketing.”
A lead is a willing potential mortgage borrower who has provided their contact information in order to have an agent or broker contact him or her with rates and terms offered by their company. The goal for both parties is to originate the loan.
Before the study’s results were released, most mortgage companies expected a high single digit percentage conversion rate of originations from leads. But 22 percent is amazing. There is now new skepticism that companies with single digit conversion rates are not managing and tracking their leads well enough.
“Those who ‘put leads on the backburner after the first 30 days are missing out on a lot of potential business,’ HouseValues Chief Executive Officer Ian Morris said in a press release.”
The fact is that leads sometimes are not managed for several months, sometimes years. How can you do business with a person who requested information about a loan to purchase his or her property in April and you do not call them until September.
Internet or online mortgage leads go directly into the computer database and alert the lender when a new lead has arrived. Each lender will receive his or her leads with a filed date, so no lead will be ignored, thus largely contributing to higher conversion rates.
“Although a 22 percent follow through rate sounds impressive, the U.S. Census Bureau has found that about 7 percent of residents of owner-occupied homes move in a given year and would presumably be seeking a mortgage. And if 22 percent of those making loan requests at HouseValues closed a deal within 12 months, what happened to the 78 percent who did not?”
But the reality is that many of these leads are people who just want a quick quote to have an idea of what the current rates are. They never really intended to take out a loan, or at least not in the near future.
“‘We see on the real estate side, sometimes even a year isn't long enough to make a decision,’ Heinz said. ‘We hear stories, where (clients tell us) they received a lead two years ago, put them in the (lead management) system, and kept communicating with them, sending them their newsletters, and two years later they call and say ‘I'm ready to list my house, and I want you to list it.’”
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