BLOG VIEW: Though there's little doubt that the mortgage industry is on its way to recovery, there are still serious pitfalls affecting mortgage brokers. Too often, the sense that the market is on an upswing can lead to brokers becoming careless in running their business.
Even if a broker is following all of the rules, there's still more he can do to build his brokerage. From educating clients on topics such as what a surety bond is to expanding the lender network, it's vital to always be on the lookout for ways to improve.
Whether a mortgage broker is looking for new strategies or just wants some reminders of what not to do, what follows are five mistakes every broker should avoid.
1. Failing To Build An Online Presence
The days when brokers could simply rely on word of mouth and other referrals to build their business are over. In today's world, business success, especially for locally focused businesses like mortgage brokering, demands a robust online marketing strategy to grow.
Fortunately, there are many great online resources available with tips for mortgage brokers. This is an area where creativity can really pay off. Finding the right combination of content creation, social media presence, participation in online forums and other types of online outreach is a method that can really set a broker apart from his competitors.
All of this is particularly true for local businesses like mortgage brokerages, where it's best to focus on showing up in local search results. This means listing the business in directories, encouraging reviews and using the brokerage's online presence to build better customer relationships. Fail in any of these, and the business will suffer.
2. Allowing Clients To Over-BorrowÂ
We all know what caused the 2008 financial crisis; a big part of it was lenders who allowed their clients to borrow more than they could handle. These dubious lending practices are still influential today, though avoiding them is more important than ever.
That's because since that time, the online landscape has changed so much that these and other questionable practices can come back to haunt a brokerage. There are more forums wherein customers can air grievances against a company, and the search engine results a broker wants and needs to drive customers to his business may be impacted by any such negative reviews.
3. Focusing On Short-Term Success
In the past, too many mortgage brokers have focused on their own short-term financial success – to the detriment of the long-term financial stability of their clients. As mentioned, encouraging risky practices places a broker's interests ahead of the client's when, in fact, it should be the other way around.
What should be clear by now is that the post-2008 regulations, coupled with the influence of search engine rankings, mean that the long-term success of a broker's business and the success of a client are becoming more and more intertwined.
Techniques such as checking in with clients and encouraging them to leave reviews on relevant online forums can help turn hard work into business success. Email marketing services can make this even easier by walking a broker through the process and by automating as many steps as possible.
4. Using Surety Bonds Improperly
All mortgage brokers who have a surety bond were required to obtain it in order to become licensed. However, there's more to these bonds than a simple ‘purchase and forget’ mentality suggests.
First, a bond can be integrated into a broker's advertising. This is because it functions as a type of insurance for customers. For a broker to point out that he is bonded is akin to telling his customers that he is protected.
Beyond surety bonds, brokers can look into how to protect their business with an employee dishonesty bond. These bonds, unlike surety bonds, actually protect the business from any dishonest acts on the part of an employee. This could mean anything from theft of company property to embezzlement of company funds. A good surety bond agency should offer both types of bonds.
Knowing more about surety bonds can mean getting more bang for the buck and serving customers better.
5. Failing To Track Client Information
Beside the basic, legally mandated record keeping, brokers are doubtlessly well aware of the need to track clients in order to help in implementing some of the strategies mentioned above. For example, keeping tabs on client demographics makes it much easier to decide where to put marketing resources in order to best target future prospects.
In addition, tracking information for later use in email marketing campaigns will make those campaigns more personal and effective. Remember, being a broker means being a trusted source of help and information. Being more personal can go a long way toward improving service in this area of the business.
Eric Halsey is a historian by training who has been interested in U.S. small businesses since working at the House Committee on Small Business in 2006. Coming from a family with a history of working on industry policy, Halsey has a particular interest in the surety bonding industry with a focus on construction and shares his knowledge for JW Surety Bonds.