ORLANDO—Credit unions can build successful, mutually beneficial relationships with Realtors and real estate agents, provided they understand a few things about the market, the process, and misunderstandings on both sides, according to one person.
Deborah Jones, regional sales director with the CUSO CU Realty, told NACUSO’s annual conference here that the opportunity for credit unions in working with Realtors comes in two forms: non members in the consideration phase, and members in the consideration phase. In other words, those members and non-members looking to purchase a home.
Deborah Jones speaking to NACUSO meeting.
Jones said when meeting with a credit union she is often surprised to hear what CUs want is for the Realtor to bring them referrals from the community. “Credit unions only average about a 14% pull-through rate; the real huge opportunity is with their own members,” said Jones.
Jones said that members and consumers are buying homes every eight to nine years. “So you need to be marketing this consistently,” added Jones, who advised that a lot of credit unions have a “mortgage” button on their website that needs to be changed to read “real estate services.”
Looking at broader trends in real estate and home purchases, Jones cited research showing that when it comes to home shopping, 55% of buyers turn to the Internet first, 15% turn to agents (a figure that has declined), and just 6% went to their financial institution.
“The role of Realtors is changing,” observed Jones. “They no longer hold the keys to the castle. They no longer have the MLS data available only to them.”
For home shoppers, or those just considering a home purchase, the next step is to walk through a home or do a drive-by, followed by finding an agent. “The Realtor still has a very strong role in the transaction even though the buyer doesn’t make them the first point of contact,” said Jones.
The Holy Grail
That “first point of contact” is the Holy Grail of the real estate buying process, noted Jones.
“If you are the fist point of contact you really have the ability to direct that buyer on the lender they use,” said Jones. “Realtors know this too, and also want to be the first point of contact. They know they’ve moved down in the chain, so they are looking for new lead sources, too.”
And that’s where credit unions and their CUSOs can play a role, something numerous other major home lenders have built strategies around, as well. Jones pointed to players such as Wells Fargo and Chase, the latter with the message that it can “help every step of the way.”
“The Chase program is ‘My New Home,’ not 'My New Loan,'” which is interesting,” observed Jones. “And then there is Zillow, which spends millions on marketing, knowing if they can capture the consumer at the first step of the home search they will likely stay with them. Everyone understands the importance of being at the front of the line.”
Other trends credit unions should be watching to build relationships with Realtors include, according to Jones:
When Buyers Engage with Realtors. “One of the things we know is the lifecycle (from consideration to closing) is about 18 months,” said Jones, who broke that 18 months down into four stages: discovery, research, selection and closing. It’s in the selection process where buyers determine their lending options, said Jones.
“The Research phase is where I want to focus. This phase lasts about 12 weeks. It’s the first three weeks when consumers are searching on their own without a live agent. For us as credit unions and CUSOs, our opportunity is sometime toward the end of the discovery phase and in that first three weeks.”
How Buyers Find Realtors.
- 48% referral
- 16% agent marketing
- 12% used agent previously (interesting, said Jones, because 62% of buyers in 2013 were not first-time buyers)
- 10% Internet
- 5% open house
Realtors Influence on Lenders.
- Sixty percent of Realtors recommend one or more lenders, said Jones, and of those 58% of the 60% used one of lenders recommended to them. “That’s 35% of 100 buyers,” said Jones. “The number-one reason buyers do not use a recommendation? They already had a relationship with a lender.”
In building a case for working with Realtors, Jones acknowledged “It’s not easy.” She cited CU concerns that Realtors are demanding, can provide poor service to the member, and that leads won’t be sent back to the credit union; lack of knowledge about credit unions.
The flip side, said Jones, is that when CUs are asked the advantages of working with Realtors, 41% say “great value-added resource” and an equal number said Realtors can be great referrals.
“Credit unions are looking to strengthen the PFI status,” said Jones. “If your member has a purchase mortgage with you, they typically have four to six more relationships, too.”
One stumbling block to building better relationships with Realtors, Jones acknowledged, is that a “lot of Realtors still don’t know credit unions do mortgages, and often if they do know, they still think of CUs as mom and pop shops.”
But once that’s addressed, credit unions need to understand what Realtors want.
“All Realtors want is to get paid,” said Jones. “They want the process to go smoothly and quickly. If that happens, they are more likely to come back to you.”
To build a relationship with Realtors, credit unions have two options:
1. Build a program of its own. To do that, said Jones:
- Embrace change and decide it’s something you will make a concerted effort to do.
- Develop and document your vision. This is where you decide that yes, we will do this on our own.
- Put together a task force, including all major stakeholders: mortgage, marketing, training, branch ops.
- Focus on four key areas: Realtors and Realtor relationships; training and employee engagement; marketing and member awareness; processes.
“Realtor relationships are not indirect lending; you don’t want a relationship with everyone, you don’t have enough business to go around,” said Jones. “Keep in mind the referral to the Realtor has to happen way before application for a loan. Realtors need to go through training. They need to know how you operate, and they also need to know your expectations.”
2. Align with a business partner.
“Make sure that partner aligns with your growth goals,” advised Jones. “Make sure they automate and manage all processes for you, including agent selection, training, maintenance, measurement, lead tracking and reporting. They should also provide staff training, deliver strategic reporting, and offer account management and ongoing support. This latter item is really important."