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The Tale of Two Lenders – Who Really Pays the Cost of Co-Marketing?

The Tale of Two Lenders - Who Really Pays the Cost of Co-Marketing?

We were approached last year by an extremely successful leader of a large team of real estate agents – together they close dozens of transactions every MONTH!

The leader asked me if we were willing to co-market for online leads to the tune of about $20,000 per month, as that is what his current lender was paying.

He was looking to switch lenders b/c he wanted better service and many of JVM’s value props.

Knowing who the current lender was and having access to all funded loan data for every agent and Realtor (via a data provider we pay for), we were able to easily check to see how many loans that lender was funding with that team.

It turned out that it was only a few loans per month – and the reason was obvious. The lender had (and still has) notoriously high rates b/c they are forced to increase them to offset the costs of co-marketing.

As a result, very few borrowers stick with the lender.

This was an extreme case of course, but the irony is that when lenders pay for co-marketing like that, they have to charge higher rates to cover the cost and they then end up converting a much smaller percentage of referrals into actual transactions.

So, who really pays for co-marketing?

Borrowers do every time with higher rates.

Lenders simply do not make enough money to cover the cost of co-marketing without jacking up rates b/c our profit margins are too thin.

And, in this day and age when online rate comparisons are easier than ever and borrowers are more discerning than ever, high rates just don’t sell.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167