In 2011 when we were in the broker channel, we sent almost all of our loans to a single lender (a major bank) b/c their rates and service were so good.
But then in an effort to increase profits, the lender laid off staff and cut services.
Service levels then became so bad that we and many other brokers stopped sending them loans.
So they cut staff and services even more, and then more loan officers stopped sending them loans.
And so they cut further, until nobody sent them loans and they closed the entire wholesale lending division.
I thought of this recently when reading a blog about all of the mortgage industry lay-offs taking place.
The blogger, a 40-year industry vet who has seen numerous cycles come and go, said: “you can’t cut your way to prosperity.”
RECORD MONTH IN DOWN MARKET
Many lenders are experiencing volume drops by as much as 50% from this time last year, but we had our all-time record month in May.
The reason is that we not only didn’t cut staff or services, we increased them to be more competitive than ever in a shrinking market.
And – it clearly worked.
Our turn times are better. Our rates are much lower. And – our Digital Marketing Offering is far more powerful than ever (ask us about it if you’re in need of digital marketing!).
In any case this blog is just a reminder that you can’t cut your way to prosperity.
Minimizing unnecessary expenses is of course essential, but maintaining (and improving) service levels in an ultracompetitive market is imperative!
Jay Voorhees at (925) 855-4491 Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646
