Trigger Leads - Friend or Foe?

Over the past year we've seen a dramatic increase in the number of clients calling us looking for "trigger leads". What is a trigger lead? A trigger lead is created when a prospective borrower has their credit pulled by a bank or brokerage. When this happens it creates a mortgage credit inquiry event to be flagged on the borrower’s credit record. The credit bureaus take note of this inquiry and sell the consumer's information to other banks and brokers as a trigger lead. Basically, they are letting additional lenders know that a consumer is looking for a mortgage. This is often done without a consumer ever knowing that they have become a trigger lead.

When I've brought up the topic of trigger leads to people outside of the industry, the typical reaction is, "How can they do that? Is that even legal?" Yes, it is legal and it has become huge business.

Credit bureaus say that trigger leads allow for competition amongst mortgage professionals. In their eyes, they are helping a consumer by exposing them to different lending institutions and mortgage options. My question is once the consumer goes ahead and fills out the 1003 haven’t they shopped and made their decision?

Isn’t the trigger lead just a cheap way for the credit bureaus to make some extra revenue by pimping out consumer data all under the auspices of letting them get the best loan? Are credit bureaus supposed to be neutral? Does the consumer actually end up getting the best loan? Interestingly, several states are looking into the practice of selling trigger leads with an eye towards restricting the practice.

We at BigMortgageLeads do NOT sell trigger data like many of our competitors. But after our consumer study earlier this year found that many loans close with banks that do not buy our leads we started looking in to the cause of those results. Are trigger leads truly pushing down our clients conversion numbers?

We are excited to get your feedback and see if trigger leads are truly a mortgage brokers friend or foe. Has anyone used them? How do they work? What's the conversion rate? Any feedback would be much appreciated.

Now get out there and close more loans!

Everybody's Working for The Weekend (But you need to be working ON the weekend if you want to be successful)

I was cruising around the web last night when I saw this story and video on leadcritic regarding working leads on the weekends. I just wanted to back up that post with some facts from BigMortgageLeads.

Here are some enlightening stats. (Please note that these are states for non-purchase leads, 100k loan amounts and above).

• Average # of Sales per lead (Mon-Fri) = 2.94 lenders
• Average # of Sales per lead (Sat - Sun) = 1.74 lenders

Digging in to the numbers you can see that the same leads that we sell to 3 lenders during the week are sold to less than 2 lenders on the weekend.

If you're getting leads on the weekend you are facing a lot less competition. Couple this with the fact that most borrowers have more time on the weekends to speak with you and easier access to documents like tax returns and bank statements than they do during the week (when they're at work) and you can see why we've found that our clients who buy leads on the weekend have a much greater success rate than those that don't. The clients we have convinced to go this route have all reported a better contact ratio and greater success getting a hold of consumers on weekends. After five years of selling leads, we know that our most persistent clients - the ones who try reaching customers at different times including the weekends - close the most loans!

Special thanks to LoanBright for bringing up the topic. Am I sensing a possible "Battle of 'The Viral Videos'" brewing between lead providers? If someone can find me a gorilla suit and a hot tub I think we can put LoanBright to shame ...

Now get out there and close more loans!

Additional Survey Details

Thanks to the leadcritic for highlighting the results of our recent survey. It’s fun to see that our inaugural blog post could generate such a great response!

To help clarify some of our numbers I thought it would be helpful if we walked through the methodology behind the data.

Some quick background:

• Results were compiled from a phone survey conducted in June 2007 of 224 mortgage leads from across the country
• Follow up calls were placed between 90 – 100 days after a lead filled out a formThe survey only dealt with non-purchase leads (Refinance, Debt Consolidation, Home Equity and Home Improvement)
• Our leads are sold to a max of 4 lenders. The average lead surveyed was sold 2.6 times
• The goal of the survey was to find out what happened once we sent the data on to our lenders

The leadcritic’s most important question was, “What happened to the 56% [of leads that did not end up closing within 90 days]?” We’ve discussed this a bunch in our office and come up with a few explanations based on customer feedback.

The most common responses from consumers in the 56% were:

• I decided to put it off
• I was just shopping around
• My credit score was too low
• I decided to sell instead

The results tell us that a good portion of the leads are just shopping around to see what’s out there. Additionally, one factor to consider is that these leads were generated in March & April of this year. Like most online lead providers, the majority of our traffic tends to be fair / poor credit grades. If we look back over the past 3-4 months, there are a lot less programs available for sub-prime borrowers than there were in the past. So, it’s pretty easy to see how some people simply didn’t qualify for any programs.

One of the really interesting things about the survey was who ends up closing the 44%. Our historical data shows us that large banks and lenders typically close about 1-2% of the leads. Smaller brokers who are experienced in working online leads can close about 5% of the leads. If that’s the case the numbers don’t seem to add up based on how often we sell the leads. Where do the other leads close? What we found is that even though people fill out a form online, a majority of them will still discuss their loan with friends / family and other lenders when deciding what to do. During our survey we asked people who closed “What bank did you use for your loan?” The two most common answers were Bank of America and Wells Fargo – two lenders who we don’t sell leads to have never sold leads to! Quite simply, even if people fill out a form and receive calls from lenders, they still want to shop around.

It’s more important than ever for brokers to do their best to insure that a lead closes with them and not the competition – whether it’s one of the other brokers who purchased the lead, or the local bank down the street.

The good news is that if every lead you buy has a 44% chance of closing! If you’re only currently closing 4% that means there’s tremendous potential. Make sure you can do everything possible to build a great rapport with the consumer. The opportunity is in front of you with each lead you buy. Make the most of it.

Get out there and close more loans!

What is a Lead?

The most common question we hear from potential buyers is “What can I expect from a lead?”

In effort to better define exactly what to expect in a lead, we recently conducted a comprehensive study of several hundred non-purchase leads in order to figure out just what happens to the people who fill out our forms after they click submit.

The results were as follows:

• 44% of leads closed a loan or were in the process of closing a loan within 90 days of filling out the form
• On average, loans funded for $30,000 more than the amount that the lead entered into our form
• 76% of leads filled out only one form online when shopping for a mortgage
• 52% of the leads could not remember the name of any of the lenders who contacted them after filling out the form
• 61% of leads discussed their loan with friends / family to solicit a reference

What do these numbers tell us? Well, there is A LOT of potential for brokers to close more loans! We know that the best brokers typically close about 5% of their leads (and average brokers close about 2-3%). However, from the survey results we see that there are a huge percentage of people who are closing above and beyond the 5%. Typically these leads will either close with another of the lead buyers, or more likely they will close with their bank or a broker referred by a friend.

It’s important for a lead buyer to do everything they can to get in front of a lead. From the numbers above, we can see that most lead buyers are not doing a good job of leaving an impression on the lead (not even 50% of leads could remember what companies called regarding their loan). We typically recommend that brokers use a lead management system in order to contact their leads quickly and keep themselves in constant contact with each lead. The leads are closing! It is important for the buyers to treat each lead with care. As we see from the numbers, leads typically close for an average of $30k higher than they put in the form. So, don’t leave any lead or any money on the table.

Get out there and close more loans!