For years I have been training loan officers to be less dependent upon purchased leads by compiling their sphere of influence, keeping in touch with their sphere and delivering value to their sphere. Many who go through my advanced school, OriginationPro Mortgage School, come in with a database of 500 and leave with the knowledge that it should be 3,000. And these are loan officers with up to thirty years experience.

Of course, I have also trained “in-side” sales forces that focus solely upon incoming leads. Part of these classes center around creating more opportunities from these leads through referrals. And part of it is purely sales training--in other words, getting more conversions.

In general, I have not been the ideal partner for a lead-company. And many have contacted us because of our reach in the industry. For example, close to 200,000 receive my OriginationPro Update which is a free weekly newsletter with complete updates on the markets and industry (if you are interested in receiving this free newsletter, email me at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ). But time and time again, I would ask these companies about the most important types of leads. And time and time again I was told that loan officers would not purchase them. In my opinion, what is the most important lead? It is a purchase lead as opposed to a lead for a refinance transaction.

Why is a purchase lead not as attractive? A good refinance lead can be closed in a matter of a few weeks. For example, if someone needs a debt consolidation loan because they are drowning in debt they need to act quickly. Even if they don’t “need” to act quickly, there is no time impediment to closing someone quickly when they have a need for a lower payment, a new loan type or cash.

With a purchase lead it is more of a long-term process. The vast majority of purchase leads do not have the same sense of urgency. The exceptions would be for someone who is relocating or a major event such as a divorce or marriage. But the majority of leads—including those who visit model homes according to the National Association of Home Builders—are just shopping. Even when they decide to purchase—it may take several months to find the right home. People shop for homes for a “hobby.” They don’t do the same with mortgages.

So it is easy to see why loan officers prefer refinance leads to purchase leads. They see the need for a paycheck. And they want their paycheck now. Of course, if you take a longer-term view of this picture you will see that the long-term wait is worth it for purchase leads. Now you have something of value to offer referral partners—especially Realtors. And you are building up a farm system of potential clients—clients that can refer other prospects to you even if they don’t purchase a home. Even if they don’t purchase they may certainly decide to refinance when their adjustable adjusts!

It is also easy to see why I decided to listen to HouseValues.com when they asked me about becoming their National Spokesperson for the mortgage industry. This is because HouseValues has been the leading provider of purchase leads to the real estate industry for almost a decade. Though their offerings to the mortgage industry are more recent and they provide traditional refinance leads, they are still clearly focused on the purchase side.

And it is more than the offering of purchase leads It is the understanding of these leads that is important. Which is the reason for this article. HouseValues recently undertook a study of their leads by Real IQ, an independent national market research firm. In this study, Real IQ analyzed over 100,000 leads generated over a nine-month period. The findings of this research?

• 22.0% of the leads provided secured a mortgage within 12 months of the time the lead was provided;
• 55.0% of the leads that secured a mortgage did so within three months.
• 88.0% of the leads that secured a mortgage did so with six months.

What is the importance of this data? Well, it is important to know that HouseValue leads are leads of real value. But more important to the industry and something that can be extrapolated to more than this particular situation---

“These findings also demonstrate the importance of following up and working leads,” said Ian Morris, chief executive officer for HouseValues. “In fact, lenders and brokers who put leads on the backburner after the first 30 days are missing out on a lot of potential business.”

If you realize how attractive refinance leads are because they close so quickly, you can now realize why the industry misses out on opportunities. We see mortgages as a quick, one-shot deal. Time and time again surveys have shown that customers do not go back to their original loan officer because there was no follow-up. Ian Morris sees it because his company deals with loan officers (and real estate agents) all the time who are not interested in anything but a quick paycheck. I see it because those who come to my three-day advanced school are tired of this treadmill model in which you “sell and close the transaction” and “sell and close the transaction,” instead of building a long-term base.

Now for the reality. Half of the transactions are happening outside of 90 days. My guess is that 80% of them happen outside of 30 days. And most loan officers give up after 30 or 60 days. They are too busy chasing the next potential paycheck. If you want to make more money, you will need to open your eyes wider and take a longer-term view. This means setting up contact management systems. HouseVaues is so focused on helping in this regard because their clients’ success makes them more successful, they have actually private-labeled a lead management system, MML360, the access to which comes with their leads. One of my favorite sayings is that you can’t keep in touch with sticky notes.

Purchasing a lead is not enough. Conversion sales skills are not enough. You need a long-term system to both keep in touch and deliver value. In other words, coming back to what I teach, these prospects become part of your long-term sphere of influence. And if you work them in the right way they can help you get off the treadmill and onto a foundation of success.

Dave

Dave Hershman is the leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School, the most advanced comprehensive curriculum in the industry, and is a top industry speaker. For more articles by Dave, free marketing materials and a schedule of classes, visit www.originationpro.com, email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or call 1-800-581-5678. Also visit Dave’s virtual coaching and success site, www. mymortgagecommunity.com.