Don't Buy Internet Mortgage Leads - Generate Them Yourself!

In the December 2006 edition of "Broker" magazine, editor Brad Finkelstein began his column with this title - The Future is Online. He noted that at the final session of the 2006 MBA annual convention, three speakers gave a presentation entitled "The New Reality of Customer Acquisition and Retention. Interestingly, not one of the three speakers came from the mortgage industry. No, the three speakers were from Microsoft, Yahoo and Google.

The message these three speakers delivered was simple. It was this - in order to obtain customers more energy needs to be spent with online marketing methods. Well, that's not really a surprise now, is it? I mean, unless you've been living in a ditch somewhere, isn't it obvious that the Internet is where most mortgage leads are now generated?

Internet mortgage leads for sale! How many times have you heard that over the past 5 years or so? Why? Why are there so many companies selling the Internet leads? Before the Internet, was there anyone selling direct mail leads? No. Why? Because direct mail isn't hard. Anyone can start a direct mail campaign. How about telemarketing leads? As far as I can remember, we've always had companies that sold telemarketing leads. That's because setting up a telemarketing room has a much higher barrier of entry. You need to hire telemarketers, buy lists, develop scripts. Not so easy.

Same with Internet leads. There is a steep learning curve in developing these leads. The companies that want to sell you Internet leads have quite simply, just figured it out. They learned how to drive traffic (web surfers) to their sites and then figured out how to get those surfers to fill out an online application. These companies couldn't originate a loan to save their lives. But they got interested parties to fill out an online app. And originators throughout the country eagerly lined up to buy those leads. $30, $60, $85, I've seen as high as $120 paid for those leads!

Think about this for just a second. And allow me to make a couple of assumptions based upon my years of experience in this area. Half of the leads you buy will be people that cannot be helped. Whether it's loan to value, credit, lack of income, whatever, I think you would agree that half cannot be helped at this point. (Although better LO's will retain those leads and put them in the marketing "que", keeping in touch with them so that they can help them some time in the future).

So let's assume you're a strong closer and are able to close 3 of the 5 good leads. So for every 10 leads, you spend somewhere between $300 to as much $1,250 to close 3 loans. That means your "cost of acquisition" per loan lies between $100 to over $400. Now you have to know your average commission amount to see if this strategy is worth it. And it may be.

One BIG problem. In the real world, closing ratios are closer to only 1 or 2 out of 10. So now, your "cost of acquisition" can be as high as $1,250! I sure hope you are getting a pretty high split!

Here's the point. You simply MUST learn how to generate your own leads from the Internet. Look at it this way. Peggy White, GM of Yahoo Finance said that 54% of future mortgage borrowers do their research online. To me, that's low. Why? Because kids that have grown up with the Internet have not yet started buying homes. But that day is coming... and soon.

The Internet went mainstream in the mid to late 1990's. New technologies become commonplace within 10 years. Look at the PC. I bough my first one in 1991. By 2001, you couldn't live without one. Part of the reason for this is that teenagers are often "first users"of new tech toys. Over the next 10 years they grow up, get jobs and start buying things. And they use them. You have a teenager - say 16 years old in 1998. Now he's 26. Within the next few years, he's buying a house. You think he's going to be comfortable researching mortgages online? You bet. So it may be 54% now but that figure is going to rise every single year from here on in and within a few years it will be close to 100%.

Will you be ready? You can be ready now. I am going to show you how to gain a presence online, how to get people to inquire online for your services, how to use Internet technologies to take applications, how to automatically stay in touch with your prospects and clients... did I miss something? Bookmark this site, put it in your favorites, del.icio.us it (you'll learn), whatever, but keep coming back... I have SO much to share with you!