What Are Consumers Thinking?

You'd think that someone with an MBA in Marketing, with forty years of business experience, who had written a couple of books, who had dealt with over 4,000 clients would begin to understand what consumers are thinking. But many times I don't have a clue!

Yes, I have dealt successfully with 4,000 clients and they tell me I was able to meet or exceed their expectations. That said, in my career I have received calls from another couple of thousand potential clients but was unsuccessful in converting them into clients. I always wonder what happens to them. When they wandered off, did they ever find what they were looking for?

The question is not what I am willing to do for them or what I can do for them. I think it is in what they expect to get and how they go about finding it. It is in this area that I find the most interesting conflicts between hope and reality. For example, I got an e-mail from someone asking, "Could you please tell me what interest rate you can offer and your fee respective to the following?" and she listed good FICO scores and that they could document their income.

Now that's the kind of borrowers I normally deal with so I know that I can help her get a great deal. I'd like to develop a relationship with her. But it doesn't sound as if she will let me. How you would you like to be working at Nordstrom and someone calls and asks, "How much are your suits?" I mean, I don't even know how to answer her question. Most lenders have 8 page rate sheets with 10 or 20 programs with a dozen pricing alternatives for each program. Which one does she want?

She doesn't know this but she wants to cut out the most important part of the process. The way I, and I think other most serious professionals go through this process, is we sit down with the clients and determine their goals. Then we look at the program that is most suited to helping them meet those goals. It's a two-step process that requires going through step one first. It's like shopping for clothes. At some point you need to go to the store and see what they have.

I think that many borrowers don't conceive of getting a loan as a process. To them, they are buying a thing, every lender offers the same thing, and they want to know what the price is. Most big lenders set up call centers, 800 numbers, and hundreds of low-paid people in cubicles to talk with people like that who call in. I hear the success rate of those operations is pretty low, like under ten percent. With such a low success rate, the lenders aren't willing to invest much. It's not that they couldn't, it's just that with some many borrowers having lousy shopping practices, it's just easier to have a low cost operation with a low success rate.

I'm sure that some other folks just get exhausted with the process and go with the last person they talk with. I think that they are overwhelmed and conclude that the marginal effort at making one more call is not going to marginally improve their position.

What I do know for sure from the feedback that I have gotten is that a significant number of borrowers who start out that way end up being dissatisfied with their experience with the mortgage industry. They think they are doing the right thing, but end up being disappointed when the dust settles.

One such problem is that any shopping process that does not have a mechanism for weeding out the liars is fundamentally flawed. If they talk with enough lenders, they will meet a liar and he will quote lower rates than those offered by the truth-tellers. That accounts for the common complaint, "He quoted us a great rate but when we went to sign documents the rate was a lot higher than he promised us." Who do you want to blame for that? I think it's the shopper's fault.

So I would like to hear from anyone who has gotten a mortgage. Tell me about your shopping strategy and how successful you think it was. If you were successful, why was that? If you are embarrassed about being unsuccessful, I want to know even more because in learning about your strategy, I will gain insight into how to help others. Please e-mail you comments to me at randyj AT loan-wolf.com.

I'd also like to know the magic phrase that finally makes them say, "Sounds fine. I'd like to apply."