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Scotsman Guide Residential Edition |
ScotsmanGuide.com | February 2018 38
Rates and fees have always been the basic differentiators among residen- tial mortgage originators. Although the bottom line is still the bottom
line, and rates and fees are still relevant, they are
no longer quite as important a differentiator as
they used to be.
Originators need to find new ways to elevate their profiles and connect with real estate
professionals. One of the most promising ways
to increase connections is through the use of
Niche loans represent a valuable untapped
resource. Although the volume of conventional loan transactions is significantly higher than
transactions using niche financing, nearly every
real estate agent has a story about losing a deal
that could have been saved with a little ingenuity and access to alternative-lending solutions.
This is where resourceful originators can shine.
Given the current state of the marketplace and
the buzz of renovation activity, for example, niche
products like construction and renovation loans
might be exactly what homebuyers are looking
for — and what real estate agents need to close
the deal. In fact, home remodeling hit an all-time
high in the first quarter of 2017, according to Metrostudy’s national Activity Index report, increasing
4. 5 percent over the previous year’s numbers.
In a press release about the report, Mark
Boud, chief economist at Metrostudy, said
that “With housing affordability an issue in
many markets across the country, millennials
will be more inclined to purchase older, more
affordable existing homes that will necessitate
renovations.” In today’s competitive real estate
environment, renovation loans can be a particularly effective and popular niche solution — a
true win-win-win for real estate agents, buyers
and the mortgage originators who have access
to these products.
With renovation loans, buyers can turn prop-
erties that are imperfect or in need of repairs
into the exact homes they want — and roll all
renovation costs into a single mortgage loan.
This eliminates the need for borrowers to tap
into personal savings and gives buyers the ability to build equity before moving in.
With access to renovation loans, real estate
agents can capitalize on expanded professional opportunities while simultaneously doing
their part to help revitalize the communities
they serve. An originator with access to renovation loans can help the Realtors they work with
appeal to more homebuyers and cut down on
their time spent showing houses. Ultimately, by
closing on properties that may have previously seemed unsellable, agents give their clients
more options and opportunities and increase
their own profitability in the process.
That value proposition is a strong one. It gives
mortgage originators an opportunity to garner
the attention of more real estate agents, solidify relationships with existing Realtors and
strengthen their reputation in the community,
all in one decisive move.
Realtors are identified as the primary source of financing information by 45 percent of homebuyers, according to a recent MortgageSAT survey
by the Stratmor Group, proving that agents are
still a primary conduit to potential borrowers.
Building a relationship with a real estate agent
as a referral source begins with establishing trust
and adding value to their business.
Originators can do this by offering different
types of loan products that meet the needs of
the agent’s clients, but it goes beyond that.
Originators must help real estate professionals
understand how they can use various types of
niche lending products to their competitive
advantage, and show Realtors how these loans
can ultimately help them list and sell more
At a time when the number of active homebuyers in the marketplace exceeds the supply
of move-in quality properties for sale, helping
agents better understand renovation lending, for example, and how they can use it is
“Every real estate agent
has a story about losing
a deal that could have
been saved with a little
ingenuity and access to