|Carving Out Your Jumbo Loan Niche
Discussion about flat-fee origination
April 3, 2001
By Dave Czach
Learn seven words to quickly grab the lion's share of the market. What's your hook? How do you attract customers? How do you create "buzz" for yourself? You need
to create a "hook" or phrase to differentiate yourself.
You need to become "known" for something. Have you ever been in an office and overheard a conversation when someone said, "Oh yeah, isn't he the one that .....(something)....?" The person they were talking about was popular for some reason. Perhaps he or she exploited a niche and did it so well that everyone talked about him or her. That's exactly the method behind these powerful words:
"$1,500 Origination Fee Regardless Of Loan Size"
Welcome to the world of flat-fee origination. This niche requires discipline. You offer a par rate plus $1,200 origination fee plus all 3rd party costs. That's it. No more. No less. Ever! At first you may be tempted to tack on an extra fee "here and there." But resist the temptation at all costs. If you stick your neck out and retract your offer, your reputation is history - and so is your market share.
Greed will kill your flat-fee business. I know a couple loan officers who told me "that's a great idea, but why not make it a tiered-fee system?" For example, they proposed an
origination fee of $1,250 for loans under $150,000. An origination fee of $1,800 on loans under $200,000. All other loans are charged an origination fee of $2,500. Then they also suggested "grabbing an extra 1/2 point or so on the back." Do you see any difference between their proposed tiered-fee system and the standard 1% commission? Not much. But what did they really do?
Greed wiped-out their unique marketing position. By eliminating your unique marketing position, you give away your business. You become just another loan officer lost in the crowd. Nothing special. No better than anyone else. No reason for someone to call. And certainly no "WOW factor!"
Belief and time will win. At first, real estate agents, builders and others may not believe you will close a loan without cranking up the fees at the last minute. That's fine. Reassure them that you honor your word and it's in writing on the Good Faith Estimate. Once a few loans have closed and you have proven you honor your flat-fee system, the agents, builders and others will begin talking about you.
Thus ..... BUZZ!