Chinese investors aren’t likely to cool on U.S. property investments

The economic turmoil in China had a hand in causing the U.S. stock market to plunge in recent days as jittery investors fled to the safety of U.S. Treasuries.

But the slowdown in the world’s second-largest economy won’t necessarily cool a recent red-hot trend in Chinese investment in real estate in large U.S. cities, analysts say.

China’s sudden move to devalue its currency in response to flagging exports will make properties in the U.S. more expensive, analyst told Scotsman Guide News. But a slowing Chinese economy could also make stable U.S. property assets even more attractive.

“Chinese investors may have a slightly more difficult time buying U.S [commercial real estate] due to currency movements, but there is some growth here and yield, which will be attractive,” said Jim Costello, senior vice president for Real Capital Analytics.

“Other investment options are less attractive in China, though, and investors may find U.S. CRE [commercial real estate] more attractive in that regard and buy more of it. Which one dominates? Hard to say.”

Chinese investment rose rapidly after the recession, as state-owned enterprises, Chinese banks, insurance companies and wealthy private investors invested in homes and undervalued commercial real estate in major coastal gateway cities like New York City, Los Angeles and San Francisco.

China is now the second largest investor in U.S. real estate after only Canada, according to Deloitte. Direct Chinese investment in U.S. real estate and hospitality totaled $3.04 billion in 2014, up from $2.2 billion in 2013, with private investors accounting for more than three quarters of the deals, according to the Rhodium Group, which tracks deals totaling more than $500,000 in investment. This excludes potentially thousands of other deals involving Chinese investors.

Chinese investors have traditionally looked to invest in California and Hawaii, but some of the biggest commercial deals have come along the East Coast. Chinese investors bought into the $5.5 billion sale of the former Atlantic Yards in Brooklyn. This past October a Chinese insurance company purchased the Manhattan landmark Waldorf Astoria for $1.95 billion.

On the residential side, Chinese investors have been most active in big cities with well-established Chinese communities, particularly along the California coast. About three quarters of the buyers pay with cash and less than half use the properties as a permanent residences, a 2014 study by the National Association of Realtors reveals.

Cash flows into home purchases

It is not clear if the devalued currency and the rapid drop in the Chinese stock market will translate into less cash flowing into U.S. neighborhoods, said John Burns of the Irvine, Calif.-based John Burns Real Estate Consulting.

“We have seen the dollar get a lot stronger in the last few years against just about every currency, except China, particularly the South American countries and Russia,” he said. “We have seen declining buying activity from all of those buyers. I am assuming the same from China, but the devaluation that has occurred thus far is a lot less than has occurred from these other countries. It is a matter of how much more expensive U.S. real estate investment becomes in their currency.”

Burns said the impact is also hard to forecast because the financing sources of a typical Chinese investor aren’t well known.

“They are buying with cash, but I don’t know if they are borrowing back home,” Burns said. “In the analogy I remember from the late 1980s, the Japanese were buying a lot of U.S. real estate with cash. We found out later that they were borrowing a lot of money in Japan. We frankly don’t know.”

Others, though, don’t believe the market turmoil in China will hurt investment in the U.S., and could potentially spur on more interest in safe U.S. assets. Miami has seen strong Chinese investment in condominiums. Developers travel overseas and pitch to buyers directly, said Alan Lips, a partner with Gerson Preston Robinson, a Miami-based accounting firm that structures deals involving foreign investors.

“They are going to feel uncomfortable and less safe keeping their money in China, and they are going to look for the opportunity to take it out and put it in places where they are comfortable,” Lips said. Lips said people with money locked in China may have to pull back, but others could be even more active in foreign investment if the stock market and housing market crashes in China.

“There are many who already have their money out,” he said. “For those, this has no impact on them whatsoever other than [proving] their plan of not keeping their money in China.”

Reference Scottsman Guide

Jonathan Burdick-Executive Vice President – Sales/Lending

Capstone Mortgage

6900 East Camelback Road, Suite 570

Scottsdale, Arizona 85251

480-336-2828 Extension 115 (Office)

480-326-1982 (Mobile)

480-696-7607 (Fax)

NMLS# 1045837 /MBL# BK0926018

Realtor “Do’s and Don’ts”-Jonathan Burdick Exec VP Capstone Mortgage Arizona

Realtor “Do’s and Don’ts”

We’ve previously explored the “Do’s and Don’ts” for homebuyers, and uncovered some vital tips that can help or hinder the home buying process. In today’s special edition, we examine hints for Realtors, whose actions during purchases are just as critical. As always, the “Do’s” contain very real helpful points to avoid closing delays, while the “Don’ts” offer a good natured look at some real life situations that complicate or delay closings.

Do:	Make sure to communicate all contract amendments, including seller contributions, to the lender immediately.
Don’t:	Add $5000 in seller paid costs to the terms, then wait until two days before closing to mention it to the lender.
Do:	Ask the lender about any potential property condition concerns before writing the sales offer.
Don’t:	List 18 defective items in an amendment, stipulate the repairs be completed before closing, then forward to the lender once closing documents are produced.
Do:	Discuss the terms of the loan with the loan officer in case your client has a simple question.
Don’t:	Explain to your buyer that you “know for a fact” that their rate is too high, because your brother-in-law is a lender and told you so.
Do:	Reach a consensus with your client and the lender regarding realistic closing and loan commitment dates.
Don’t:	Agree to a 30 day closing, then spend 3 weeks negotiating the home inspection, telling lender to “hold off on the appraisal until we sort this out.”
Do:	Give the lender contact information for the settlement agent to ensure accurate and timely Good Faith Estimates.
Don’t:	Send the loan officer an accepted contract with 4 week close, mentioning “we’ll figure out the title company next week.”
Do:	Specify any personal items included in the sale are at “no contributing value” to the transaction.
Don’t:	Add “antique pool table included for additional $2500” to the sales contract.
Do:	Advise your client on the importance of home inspections, and mediate any condition concerns.
Don’t:	Write amendment for seller to pay an additional $5000 of buyer’s closing costs “due to damaged electrical wiring and interior mold.”
Do:	Obtain expert opinions when septic, well, or foundation issues need to be addressed.
Don’t:	Ask the lender to “call your appraiser, and tell him to not mention those big cracks in the basement.”
Do:	Consider recommending lenders you’ve received great service from.
Don’t:	Ask a lender to pay $1000/mn toward “marketing” to join your list of 5 “preferred lenders.”
Do:	Realize that TILA lending changes will greatly impact closings’ timing starting in October.
Don’t:	Tell your client “any loan should close in 3 weeks, if the lender is any good.” Reference Mortgage News Daily Jonathan Burdick-Executive Vice President – Sales/Lending Capstone Mortgage 6900 East Camelback Road, Suite 570 Scottsdale, Arizona 85251 480-336-2828 Extension 115 (Office) 480-326-1982 (Mobile) 480-696-7607 (Fax) NMLS# 1045837 /MBL# BK0926018

Mortgage Rate Losing Streak Loses Steam

Mortgage Rate Losing Streak Loses Steam

Mortgage rateswere just barely higher today, greatly decreasing the momentum in a now 3-day losing streak.  The timing of these movements is important as it relates to Freddie Mac’s widely disseminated mortgage rate report.  Freddie’s weekly rate report is gospel, and indeed it’s very accurate given the limitations of its methodology.  Sometimes those limitations come to the surface and create confusion.

For instance, Freddie is reporting mortgage rates at the lowest levels since May.  The catch is that Freddie’s data never includes Thursday or Friday rate sheets, and rarely captures Wednesday movement.  That matters because Thursday and Friday of last week were the actual 3-month lows (as we discussed last week).  That means that this week’s Freddie survey is being measured against rates that are higher than they should be.  In other words, the bar was set low in terms of how much rates would need to improve to claim 3-month lows.

The timing issues were further compounded by the fact that Monday of this week saw even lower rates, and most of the folks Freddie surveys get their responses in by Monday or Tuesday.  Since then, rates have risen quickly.  They’re appreciably higher than those Thu-Mon rates (for some lenders, as much as .125% higher).  Whereas conventional 30yr fixed quotes were edging toward 3.75% at their lowest recent levels, they’re now closer to 4.0% for many lenders.  This is more in line with the first few days of last week, meaning the most accurate way to discuss rates today, is to say they’re unchanged from early last week, and much higher than Thursday-Monday’s offerings.

Today’s Best-Execution Rates

• 30YR FIXED – 3.875 – 4.0
  
• FHA/VA – 3.75%
• 15 YEAR FIXED – 3.125 – 3.25%
• 5 YEAR ARMS –  2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

• 2015 began with a strong move to the lowest rates seen since May 2013.  The catalyst was Europe and the introduction of European quantitative easing.  Investors bet heavily the move lower in European rates and domestic rates benefited as well.  But with those bets finally drying up in April and with the Fed seemingly intent on hiking rates in the US, May and June saw a sharp move back toward higher rates.  The implicit fear is that global interest rates set a long term low in April, and have now begun a major move higher.
• July said “not so fast” to that potential “big bounce.”  Some of the data began to suggest the Fed is still a bit too early in talking about raising rates in 2015–particularly, a lack of wage growth or any promising signs of inflation.  But Fed proponents maintain that low inflation is a byproduct of temporary trends in the value of the dollar and the price of oil, and that once these factors  level-off, inflation will ultimately return.  That side of the argument suggests that inflation could increase too quickly if the Fed hasn’t already begun normalizing interest rates.

• With all of the above in mind, locking made far more sense for the entirety of May and June, and we were not shy about saying so.  The second half of July saw that conversation shift toward one where multiple outcomes could once again be entertained.  In other words, we went from “duck and cover!” to “let’s see where this is going…”
• Bottom line, locking is always the safest bet and it was the only bet from late April through early July.  Since then, there’s been room for other points of view.  We should know a lot more about how valid those points of view are as August and September progress.

Reference Mortgage News Daily

Jonathan Burdick-Executive Vice President – Sales/Lending

Capstone Mortgage

6900 East Camelback Road, Suite 570

Scottsdale, Arizona 85251

480-336-2828 Extension 115 (Office)

480-326-1982 (Mobile)

480-696-7607 (Fax)

NMLS# 1045837 /MBL# BK0926018

Mortgage Rates Little-Helped by Market Turmoil

Mortgage Rates Little-Helped by Market Turmoil

Aug 24 2015

Mortgage rates did manage to move lower again today.  And that move does bring them to the best levels in more than 3 months.  But apart from that, the day was a bit of a let-down.  Here’s why.

Mortgage rates are primarily dictated by the prices of Mortgage-Backed-Securities (MBS), a type of bond that’s similar to US Treasuries in many ways.  When economic data is bad or if financial markets are panicking, investors often buy bonds because they offer a safe haven relative to equities (stocks).  More buyers result in higher prices and lower rates.  It’s not a 1:1 relationship, but over certain time frames, this is why we often see stocks and bond yields falling together.  Investors are selling stocks and buying bonds (which makes yields fall).

Since mid July, bonds (aka “rates”) have already been improving rather nicely.  I’ve commented over the past few days that the willingness of rates to keep improving depended on an ever-larger supply of global market drama.  While this morning delivered (and thus kept mortgage rates moving lower), it also found its limit (stock selling bounced).  After global equities markets bounced, so did bonds, and many mortgage lenders recalled rate sheets for a mid-day reprice (they raised rates).

The net effect is still positive–just not nearly as positive as you might expect when you see the news about how much stocks lost today.  The silver lining is that today’s modest improvement solidifies 3.875% as the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios.  Given that further improvements will continue to require a bigger, nastier supply of global financial drama, no one could argue with locking rates right now.  That said, it’s also true that no one could argue that more drama is possible.

Loan Originator Perspective

“What a crazy day in both bond and equity markets. Global contagion was the watch word of the day, as stocks around the world logged severe losses. Domestic bond markets benefited early this morning, but by noon the gains were a distant memory and pricing worsened for most lenders. It’s a scary time for all markets, and increased volatility often means secondary desks are reticent to pass along gains to rate sheets. There may be some opportunity for floaters with nerves of steel to profit here, but I hesitate to recommend anything other than locking, since rates are still near their best levels since May.” –Ted Rood, Senior Originator

“Lenders were quite conservative with passing along this mornings gains with MBS. If you missed the opportunity to lock in ahead of the reprices for the worse that were reported, I would float overnight to see if the rates rally will continue. We have nice support just overhead on the 10 year note around 2.04. If Asia sells off again tonight, we could see a repeat of what happened this morning. If you do float, be prepared to lock early tomorrow incase we get a repeat of today.” –Victor Burek, Churchill Mortgage

“Mortgage Rates improved, slightly, today. I strongly suggest locking and it is because I believe you have the opportunity take advantage of both possible outcomes. Mortgage Rates are the lowest they’ve been in 3+ months, so locking ensures you’ve captured that. If today was a pre-cursor as to what comes next…rates won’t get slightly better they have the potential to get significantly better over the next few weeks. If they do in fact improve drastically, you’ll be able to float down or renegotiate your rate. Its a rare opportunity.” –Brent Borcherding, brentborcherding.com

“I think it is now safe to say we are in a down trend for rates and possibly at the lower end of that trend for the time being. In other words if you have been floating and are closing soon pat your self on the back and lock in. If you just went into contract and have 30+ days to close you can carefully float but do not go on vacation and throw caution to the wind for things can turn around quickly.” –Manny Gomes, Branch Manager Norcom Mortgage

Today’s Best-Execution Rates

• 30YR FIXED – 3.875
  
• FHA/VA – 3.75%
• 15 YEAR FIXED – 3.125 – 3.25%
• 5 YEAR ARMS –  2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

• 2015 began with a strong move to the lowest rates seen since May 2013.  The catalyst was Europe and the introduction of European quantitative easing.  Investors bet heavily the move lower in European rates and domestic rates benefited as well.  But with those bets finally drying up in April and with the Fed seemingly intent on hiking rates in the US, May and June saw a sharp move back toward higher rates.  The implicit fear is that global interest rates set a long term low in April, and have now begun a major move higher.
• July said “not so fast” to that potential “big bounce.”  Some of the data began to suggest the Fed is still a bit too early in talking about raising rates in 2015–particularly, a lack of wage growth or any promising signs of inflation.  But Fed proponents maintain that low inflation is a byproduct of temporary trends in the value of the dollar and the price of oil, and that once these factors  level-off, inflation will ultimately return.  That side of the argument suggests that inflation could increase too quickly if the Fed hasn’t already begun normalizing interest rates.

• With all of the above in mind, locking made far more sense for the entirety of May and June, and we were not shy about saying so.  The second half of July saw that conversation shift toward one where multiple outcomes could once again be entertained.  In other words, we went from “duck and cover!” to “let’s see where this is going…”
• Bottom line, locking is always the safest bet and it was the only bet from late April through early July.  Since then, there’s been room for other points of view.  We should know a lot more about how valid those points of view are as August and September progress.
• As always, please keep in mind that the rates discussed generally refer to what we’ve termed ‘best-execution‘ (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also ‘bang-for-the-buck.’  Generally speaking, our best-execution rate tends to connote no origination or discount points–though this can vary–and tends to predict Freddie Mac’s weekly survey with high accuracy.  It’s safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie’s once-a-week polling method). 

Reference Matthew Graham

Jonathan Burdick

Executive Vice President – Sales/Lending

Capstone Mortgage

6900 East Camelback Road, Suite 570

Scottsdale, Arizona 85251

480-336-2828 Extension 115 (Office)

480-326-1982 (Mobile)

480-696-7607 (Fax)

NMLS# 1045837 /MBL# BK0926018

Rude Awakening for Global Markets; Big Swings Everywhere

Rude Awakening for Global Markets; Big Swings Everywhere

Aug 24 2015

You know how that Monday morning alarm clock can be the most- well… ‘alarming’ of the week?  It’s not that different for the opening bells of various financial markets.  This week’s rude awakening began in China, where the same old story continues to play out (weaker growth outlook, big drop in stocks, and further currency devaluation). This set the frantic tone for the day.

The rest of the world was already beginning to take notice in overnight and futures trading.  Germany was particularly hard-hit as it has a closer trade relationship with China, and is already in the process of bouncing back from Europe’s QE honeymoon.

Overnight Treasury trading was strong, and it became even stronger as domestic stocks opened for the day.   10yr yields ultimately hit 1.905 and Fannie 3.5s were as high as 104-20.

As with many massive, intraday moves in one direction, we’ve since seen a massive intraday move in another direction.  MOST of the 10yr and MBS gains are GONE.  Negative reprices are likely heading into the afternoon.

Reference Market News Daily

Jonathan Burdick

Executive Vice President – Sales/Lending

Capstone Mortgage

6900 East Camelback Road, Suite 570

Scottsdale, Arizona 85251

480-336-2828 Extension 115 (Office)

480-326-1982 (Mobile)

480-696-7607 (Fax)

NMLS# 1045837 /MBL# BK0926018

Sparse Listings Continue to Drive Home Prices

Aug 11 2015

There was an uptick in national existing home sales in the second quarter of 2015 of 6.6 percent the National Association of Realtors® (NAR) said on Tuesday.  The increase in sales coupled with an insufficient supply of homes drove home prices almost universally higher across major metropolitan areas.

The uptick in transactions brought the seasonally adjusted rate of existing home sales to 5.30 million in the second quarter from 4.97 million in the first quarter.  Sales were also 8.5 percent higher than the rate of 4.89 million in the second quarter of 2014.

The national median existing single-family home price in the second quarter was $229,400, up 8.2 percent (from $212,000) year-over-year.  In the first quarter the rate of increase year-over-year was 7.1 percent.

Ninety-three percent or 163 of the 176 metropolitan statistical areas (MSAs) tracked by NAR saw price increases during the second quarter when compared to the same period in 2014.  The remaining 13 areas or 7 percent saw price declines.  During the first quarter of 2015 85 percent of markets posted increases.

Price gains were in the double digits during the second quarter in 19 percent or 34 of the MSAs.  While the big increases were more prevalent than a year earlier when 11 percent had growth in excess of 9 percent there was a significant decline from the 51 areas with hikes of that size in Q1.

At the end of the second quarter, there were 2.30 million existing homes available for sale, slightly above the 2.29 million homes for sale at the end of the second quarter in 2014. The average supply during the second quarter was 5.1 months – down from 5.5 months a year ago.

Lawrence Yun, NAR chief economist, says the housing market has shifted into a higher gear in recent months. “Steady rent increases, the slow rise in mortgage rates and stronger local job markets fueled demand throughout most of the country this spring,” he said. “While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas.”

Adds Yun, “With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership – especially in higher-priced markets.”

The most expensive housing market in the second quarter was San Jose where the median existing single-family price was $980,000.  Earlier in the week Frank Nothaft, Senior Economist at CoreLogic had noted that homes available for sale in San Jose represented only a one month supply and that most of the homes sold there in June were on the market for less than 10 days.  The remaining top five most expensive markets were San Francisco, $841,600; Anaheim-Santa Ana, $685,700; Honolulu, $698,600; and San Diego, $547,800.

At the other end of the spectrum were Cumberland, Maryland, where the median single-family home price was $82,400; Youngstown, $85,000; Rockford ($94,700) and Decatur ($96,000), Illinois; and Elmira, New York, $98,300.

Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $217,400 in the second quarter, up 3.1 percent from the second quarter of 2014 ($210,800). Fifty metro areas (82 percent) showed gains in their median condo price from a year ago; 11 areas had declines.

“The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth,” says Yun. “In the meantime, inequality is growing in America because the downward trend in the homeownership rate means these equity gains are going to fewer households.”

Even though the national family median income ticked up slightly (to $66,637) in the second quarter from a year ago, rising home prices weighed on affordability.  To purchase a single-family home at the national median price, a buyer making a 5 percent downpayment would need an income of $49,195, a 10 percent downpayment would require an income of $46,605, and $41,427 would be needed for a 20 percent downpayment.

NAR President Chris Polychron says Realtors are reporting strong competition and limited days on market for available homes – especially at the entry-level price range. “Buyers should work with their Realtor to deploy a negotiation strategy that helps their offer stand out,” he said. “If a bidding war occurs, it’s important for the buyer to stay patient and only counteroffer up to what he or she can comfortably afford. It’s better to walk away and wait for the right home instead of being in a situation where one has purchased a home above their means.

Existing-home sales in the Northeast increased 10.3 percent in the second quarter and are 8.6 percent higher than a year earlier.  The median existing single-family home price was $269,300, up 5.2 percent on an annual basis.

In the Midwest, sales jumped 13.4 percent quarter-over-quarter and 12.7 year-over-year. The median existing price increased 8.7 percent to $182,000 from the same quarter a year ago.

While sales moved 1.1 percent in the South, NAR’s report indicated both a rise and a fall; we are unsure which is correct.  It is clear that sales were up 6.3 percent from a year earlier.  The median existing single-family home price was $202,900, up 8.7 percent.

In the West, existing-home sales climbed 8.1 percent in the second quarter and were above sales in the second quarter of 2014 by an identical amount. The median existing single-family home price in the West increased to $325,200, up 9.6 percent from the second quarter of 2014.

Contact Jonathan Burdick, Executive Vice President Capstone Mortgage Company

480-336-2828-Jburdick@Capstone-Mortgage.com

BK # 0922946

NMLS 1045837

Hiring of new Digital Marketing Director at Capstone Mortgage Company-Sarita Patel

Capstone Mortgage Company  Hired Digital Marketing Director To Assist With Continued Growth

Hiring of new Digital Marketing Director at Capstone Mortgage Company.

• (1888PressRelease)
•  Capstone Mortgage Company, Arizona mortgage brokerage founded in 2010, has experienced continued growth throughout 2014. While providing conventional, FHA, VA and USDA residential mortgages in the states of Arizona, the mortgage company has seen a high increase in closed loan volume from 2010 to 2014.

  Capstone Mortgage Company looks forward to continued growth in 2015 and will be making a concerted effort towards branding, specifically in the digital realm. As part of their growth they are currently getting a complete website makeover and have recently hired a Director of Digital Marketing.

  In May 2015, Capstone Mortgage Company brought Sarita Patel on board as Director of Digital Marketing. Sarita Patel had been consulting with various companies on their digital presence after getting her first experience in the field of Digital Marketing. The Director of Digital Marketing position will be responsible for overseeing all digital advertising campaigns, managing all social media networks, managing press inquiries, overseeing a company blog, producing newsletters, running online contests, producing video blogs, and handling any other digitally-related tasks that may arise.

  Both President Bobby Barnes & Tyler Stone as well as Executive Vice President Sales and Lending Jonathan Burdick weighed on the new hiring. Jonathan Burdick commented, “We believe there is a huge opportunity for our mortgage company to grow our customer base through social media and digital marketing. The truth of the matter is in this day and age the internet is a powerful tool, consumers whom have had a good experience with a company are eager to provide a positive review for them, and consumers that have had a poor experience with a company are even more eager to share that experience with others.” Bobby Barnes added, “At Capstone Mortgage Company we made a conscious business decision to be strictly a customer service driven organization, as a result our customers are out on social media, and on consumer websites providing us with positive reviews. Sarita is going to help spread those positive reviews through social media and digital marketing platforms, and build a grass roots marketing campaign.”

  About Capstone Mortgage Company:
  Tyler Stone founded Capstone Mortgage Company (NMLS # 1003551 BK # 0922946) in 2010. The company is a certified mortgage broker in Arizona. Initially making loans to investors purchasing distressed residential real estate to either ‘fix and flip’ or ‘fix and rent’. As Tyler began to see the real estate market improving and the growing demand for mortgage loans to home owners, he partnered with Bobby Barnes and Jonathan Burdick to round out the team.

  For more information, please visit http://www.capstone-mortgage.com

• Equal Housing Opportunity
• MLS # 1045837

Marketing Mayhem

Don’t interrupt clients with your messages; engage them instead

One of the biggest errors that mortgage companies make is mishandling marketing campaigns while pursuing new customers or keeping in touch with current customers. People are getting tired of constant marketing, but there is a course of action that provides tangible results when putting together marketing campaigns to attract customers.

Whether you are a retail, wholesale or correspondent lender, or a mortgage broker or insurance provider, the way you market can determine whether you secure new clients or lose them. The overriding factor that leads to success in marketing today is understanding the difference between interruption marketing and engagement marketing.

Historical perspective

To understand the differences between the two methods, you must first look at mortgage history to get a perspective on how interruption marketing became so prevalent in the first place. In the ‘80s, mortgage professionals visited Realtors and other referral sources looking to mass-market to as many clients as possible.

Loan originators distributed marketing flyers at the offices of real estate agents, financial planners and other professionals who dealt with mortgage consumers on a regular basis. They would drop them into individual mail slots or leave them on every desk in the office. At times, it seemed originators were almost doing the job of postal carriers, and just hoping that someone would read their flyers and see some value in them. In sales, however, hope is not a good thing.

Then, in the ‘90s, the industry advanced to using the new technology of the day, and started to do fax-blitz campaigns. Although the delivery method had changed, the tactics had not. This was, again, mass-marketing sent out just hoping to hit a target audience. Fast-forward to today, and the Internet has become the delivery method of choice, with e-mail blitzes or drip campaigns.

All of these variations on a theme represent interruption marketing at its best and also at its worst, because clients are never taken into consideration with any of these methods of marketing. Even with the current Internet-based strategies, originators are assuming their clients are doing nothing important and it is OK to constantly bombard them with their company’s materials and message, without ever considering that they may not like that approach. This creates what is known as “ad blindness,” and that can damage your company’s brand or identity.

Engaging interactions

If you consider the major challenges faced in selling today, the biggest issue is often that five-letter word: “price.” Why do so many people face this problem so often? The first reason is the constant use of mass-marketing, which treats clients as if they were a commodity. Second, many originators do nothing in their marketing to truly delineate why they are unique; how they stand out against the rest of the people in the industry who use the same mass-marketing approach.

If you are looking for a quick hit and a transactional-style of marketing, then interruption marketing is the path to take.

On the other hand, engagement marketing offers long-term opportunities for developing a loyal customer base. With a well-crafted marketing campaign, you can identify yourself to your customers and influence them positively toward your company brand. Determine what you bring to the table that identifies your value proposition, and then your marketing campaign can be authentic and informative while delivering that message.

It also is important to have your customers help you craft your messages. Do this by gauging how much they like your marketing campaign through sales efforts as well as interactions with your field staff. The key question to answer is: “What value are your customers really willing to pay for?”

Once you establish a strong, clean and clear marketing theme, it is imperative to implement it steadily, but not too often. Overwhelming customers with too much information is detrimental in the long run. Two messages per month that offer value and substance to help your customers is a good amount of effective marketing that won’t dilute your company brand.

The real question that engagement marketing forces originators to ask is: “Whom are you sending your messages to, versus how many are you sending them to?” Consumers today are fairly tired of mass-marketing, and many carry that personal agitation over to their business feelings as well.

No one really likes being called at home in the evening after a long day at work, and no one likes spam in their email. If your company gets associated with spam messages, your reputation will suffer. Engagement marketing attempts to involve consumers in a dialogue about topics that concern them, not constantly interrupt them with high-pressure sales messages.

•  •  •

To present the best possible marketing campaign in today’s mortgage industry, be different. When consumers perceive you as being the same as everyone else, you create a negative marketing image, diminish your brand identity and lose the loyalty of your customers. Be unique and deliver a substantive message of value and you will increase your client base with a steady hand and a great marketing campaign.

 Reference Dennis Black, CEO, Dennis Black and Associates