How lenders can build valuable referral relationships with real estate agents

The ideal real estate agent-lender relationship is symbiotic: the agent earns trust with their borrowers by connecting them with a great lending resource, while the lender receives a steady stream of business from the agent. Simple, right? Unfortunately, this dynamic degrades all too often. Common reasons for a souring relationship include unreliability, lack of communication, failure to set realistic expectations and poor handling of issues during the lending process.

Still, lenders are wise to cultivate rapport with real estate agents. For many, real estate agent referrals are vital to bringing in steady business through changing market cycles. And that’s not just anecdotal—across industries, the success of referral business is well documented. According to a Hubspot study released this year:

  • 92% of consumers trust referrals from people they know
  • Referred customers have a 30% higher conversion rate
  • Referrals account for 65% of a company’s new business on average

The evidence is compelling: if an agent refers a borrower to your lending services, they’ll probably trust that suggestion. Then, once the borrower hears more about your offerings, they’ll most likely become a customer. That’s a powerful lead funnel.

So, what can lenders do to create consistent referrals from real estate agents in their market? To find out, I interviewed Longmont, Colorado agent Mindy Jensen on Maxwell’s Clear to Close podcast to discuss her relationship with John, the lender who transacts her clients’ loans. During this conversation, we delved into the specific, day-to-day habits and actions lenders perform that earn them the coveted title of “go-to lender.”

Communicate, communicate, communicate

Any trusting relationship is based on good, clear communication. The agent-lender connection is no different. Proactive communication is vital to wowing real estate agents and their borrower clients.

And yet, despite the importance of this practice, most lenders fall woefully short. In fact, as we covered in our recent ebook Winning Agent Business, while nearly 80% of agents report valuing efficient communication and responsiveness over all other concerns, most recount calls and emails to lenders go unanswered for days or weeks. That’s unacceptable at any time, but it’s especially deal-breaking in today’s hot market, where homes sell in a record-low 19 days on average

Referring to her go-to lender, Mindy said, “I could text him at 7:00 in the morning, and he’s texting me back before 7:30. I had a go-to lender for 11 years before I met John. He’s no longer my go-to lender because he only works 9:00 to 5:00 Monday through Friday. Well, right now properties are selling on Saturday and Sunday.”

While good communication might seem intuitive, there are a few specific actions lenders can take to differentiate themselves from their peers:

  • Provide open lines of communication. That means handing out your cell phone number, not just your office number to real estate agents and answering text messages. This gives agents increased access to you and sends the message that you’re willing to go above and beyond to get loans closed.
  • Send updates even when there is no update. If you want to be a go-to lender in your market, simply being responsive isn’t good enough. Instead, communicate proactively. Shoot over a quick email or text once a week, even if it’s just to say that things are still progressing as expected.
  • Let agents know when you’ll be unavailable. As a lender, there are times when it might feel like your job bleeds into your personal life. As a top-producing loan officer, though, that’s a part of the gig. If you’re going out of town for a few days and an agent is expecting check-ins regarding a certain loan, for example, let them know exactly when you’ll be out of touch.

You won’t earn a real estate agent’s trust over a week or even a month of good communication. But practiced consistently, proactive communication will build you a reputation that snowballs into a robust referral business. Don’t think of it as one-off acts or spurts of effort meant to impress. Instead, make regular communication a habit you practice day in and day out. Your effort will pay dividends.

Hone your craft

As a lender, you know that most lending institutions actually charge around the same rates. They feature similar loan products and the result for most borrowers is comparable.

Given that parity, where lenders can differentiate themselves most during the mortgage process is in closing quickly, providing a smooth transaction, and simply offering great service. The best lenders put in time to learn from mistakes, anticipate issues, and proactively tackle problems. In other words, great lenders deliver consistently.

“Anybody can be an amazing lender,” Mindy said. “John is giving me what everyone else can give me. All the rates we’re getting right now are within an eighth [point] of each other. That’s what, $20 a month? It’s not really so much about the rates. If you want to partner with an agent out there who’s making deals all the time, you just need to be great.” 

While lending expertise comes with time to some extent, there are still ways to hone your ability to impress agents and borrowers and to get to the closing table faster, with fewer hiccups:

  • Educate your borrowers. Around 20% of millennials report that they don’t understand any step involved in buying a house. When borrowers don’t know what to expect out of the lending process, they’re more likely to take longer and make mistakes in providing needed documentation and information. By offering resources and expertise on what’s to come, you’ll increase the chances of a smooth process and build trust with the borrower.
  • Audit your processes. If you run into certain issues consistently, it’s time to look at how those issues arise. Work with your management team to take note of hold-ups and extraneous touchpoints from loan application to closing and brainstorm fixes. By working on the business rather than in it, you’ll be able to solve recurring problems and create a smoother process for your borrowers.
  • Advocate for updated technology and tools. Ellie Mae’s Borrower Insights Survey found that 50% of borrowers in the past five years chose their lender based on whether they offered an online portal. The ability to apply online has become table stakes, but beyond that functionality, tech-empowered platforms are increasingly vital to lender productivity. If you find yourself lagging behind the competition because you’re still performing rote tasks, consider making a case for upgrading your technology. Digital mortgage platforms like Maxwell help lending teams streamline the lending process, wowing agents and borrowers by closing loans 45% faster than the industry average.

By setting expectations up-front, using your resources wisely, and learning from roadblocks you’ve experienced, you’ll hone your lending process. Real estate agents will quickly recognize your reliability and recommend you to borrowers as a surefire option to close loans seamlessly.

Ask for the referral

Let’s say you’ve done all the hard work of communicating regularly, smoothing out your processes, and making a name for yourself. At this point, you’ll begin to build a reputation among real estate agents in your market. Here, you can let your referral business grow organically—or you can amplify your recognition in the industry.

As a lending professional, you’re your own marketing team. Yes, you work under a company name, but it’s your job to act as an entrepreneur and build a business that brings in and converts leads. That’s why you need to advocate for yourself.

If you have consistent positive interactions with an agent, leverage that rapport by:

  • Asking for a testimonial to post on your social media feed
  • Soliciting a review that will show up for prospects Googling your name
  • Requesting that you be referred in future situations where a lender is needed

If you show up and provide an exceptional experience in your day-to-day job, over time you’ll get noticed. And if you’re awesome at what you do, real estate agents and borrowers will have no issue spreading the word about your service.

“Every time I talk to a new agent, I ask, ‘Hey, do you have a great lender? Because I have a great lender. Would you like me to introduce you to him?’” Mindy said.

Sometimes marketing is complicated. Other times, it’s as simple as asking a few well-connected people to pass on your name. Who knows—maybe you’ll soon have your own Mindy singing your praises to anyone who will listen.

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