In 1999, I needed a new car.
Not being particularly into cars, I asked a buddy, who was into cars, what kind of car he recommended.
At that time, he said the best buy on the market was a Lexus GS400, and he gave me a detailed list of options and specs I should look for.
I typed all of the specs into a car-buying website that was available at the time, and within minutes I had a half dozen offers with the numbers laid out as clear a bell.
I chose the lowest priced offer and the car showed up at my door a few days later.
It seemed way too good to be true; the entire process took me less than an hour (if that), and DEALERS EVERYWHERE PANICKED!!
Dealers panicked b/c the simplicity and competitiveness of an open internet marketplace threatened the margins they earned by confusing the heck out of buyers.
So, Dealers immediately lobbied for regulations to “protect” consumers by forcing them to buy cars only through dealers – even when shopping online.
In other words, buyers can still shop online, but they still end up negotiating through all of the dealer-nonsense just like they did prior to internet days.
So, now 21 years later, it takes far longer (many more hours if not days) to buy a car, as trips to dealers are again necessary, accompanied by lots of BS’ing and insane amounts of paperwork.
I experienced all of this in January when I bought a new car.
(Interesting sidebar: the Audi I bought in January was both better and cheaper than the Lexus I bought in 1999; a great example of technology driving down prices).
This story is a great example of regulations imposed to ostensibly “protect” consumers but that actually only help the retailers while making things much more difficult for consumers.
I thought of this recently when I was listening to a podcast interview with the leader of a very large mortgage bank.
“GETTING A LOAN’S NOT LIKE BUYING A FRIDGE” … YET
He was making the case that loan officers (and lenders in general) need to offer much more than just loans, and to convince their clients that loans are not just a commodity.
This fosters more loyalty from their clients and allows them to charge slightly higher rates (or allows them to avoid competing only with rates).
He went on to say that “getting a loan will never be as easy or as simple as buying a fridge at Best Buy,” and that loan officers need to both embrace that and convey that to consumers.
Right now, just like with car-buying, obtaining a mortgage is so cumbersome largely b/c there are so many regulations involved.
Many regulations no doubt do protect consumers, but many simply create tremendous amounts of extra work.
What the leader of the mortgage bank missed, however, is the fact that many lenders are working feverishly to make sure getting a mortgage is easier than buying a fridge.
They are using virtual assistants, technology and automated document gathering, to compliantly simplify the process behind the scenes in ways that borrowers don’t even notice.
I agree that lenders do need to offer much more than “just mortgages” to compete, and we at JVM most definitely do, with our rate monitoring, moving assistance, post-close market updates, stellar client experiences and much else (along with low rates).
But, the era of “push button loans” will be upon us sooner rather than later, and that mortgage bank leader will be in for a big surprise if he remains in the camp that believes “getting a mortgage will never be like buying a fridge.”
I might add that technology will make everything, including homebuying, as easy as buying a fridge eventually.
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