The housing market is ever-changing, and as the demographics for the potential homebuyer adjust, mortgage professionals must ensure they are adapting as well.
In light of this, MReport talks with Dan Green, CEO of Growella, a Fintech company that provides financial education, about what can be done to help mortgage companies build their consumer division.
Can you speak of some ways that lenders are reaching the millennial generation?
The housing market is not one-size-fits-all. The current generation of homebuyers responds differently than their parents do. Just 10 years ago, most millennials were in high school or college, and they had a front row seat to the housing market downturn. They saw that downturn through the lens of their families and their friends' families. For a lot of people, it was a barrage of negative news. It was on the news every night: home prices are down and homes are in foreclosure; Wall Street is abusing Main Street.
That's had a lasting effect on the millennial homebuyer. I think what happens often is, as much as buying a home is a financial process, it's also an emotional process. For a lot of today's homebuyers, there's that subconscious negativity that's linked to homeownership, and that comes from the last decade.
On the other side of this is that when we're buying a home, it's generally reflecting a positive life change. The catalyst for buying a home can be a new job change, or perhaps somebody has recently married or partnered and there's a new baby, for example. But there's still that negative undercurrent, and I think this is where most will understand the disconnect with millennials.
Millennials don't have the benefit of living through multiple housing cycles the way their parents did. They've only lived through this one, and as they were forming their financial opinions, everything started pretty badly and on a negative note. I would love to see lenders approaching millennials with that background in mind, taking into account that home buying is an emotional process.
First and foremost, lenders should show empathy: put themselves in their audience's position. What's of concern to the homebuyer? What's on their radar? What's preventing them from taking that next step? Let the homebuyer know that they're being heard. Acknowledge what they're feeling and give them permission to have that fear, to be nervous or excited--whatever it is they're feeling. When a person feels like they're being heard, that's when they open themselves up to the next step or to your message. I look at that as basic human nature, and too few lenders are doing this with millennials.
Do you also tailor how that message is delivered, whether it's email marketing, mail campaigns, or something else?
There are many ways to reach your potential audience, and each medium has its own culture. The way you communicate via email may be different than the way you communicate on Instagram or what you do on Pinterest. Again, it comes back to “not one-size-fits-all.” The same applies for marketing, and if you're targeting people who are in their 20s, they likely have a different experience than previous generations. The way that they use email may be different from how their parents use it. That's a marketing push, and it requires serious consideration. It varies by region as well.
Lenders should be aware of that. Most importantly, you need to make sure that you position yourself as an authority. If you come too far down to the level of trying to act cool, your message won’t come across the right way. I think a lot of marketers try too hard to fit in. A lot of mortgage lenders have their own brand, and they should stick to that.
What do you think are the biggest mortgage market needs that you see going on for sales right now?
The biggest needs are probably the same today as they've always been. One of the most important is education. The complexity of mortgages or how complicated housing can be is, for a lot of buyers, confusing. The rules can seem really bizarre.
There's a lot of information available online--and a lot of misinformation—and people get confused. Eventually, if you're planning to buy a house, you move forward notwithstanding the confusion. So a lot of times, you'll see a homebuyer get to the point where they find it just easier to go along with whatever somebody says—their real estate agent, their loan officer, their family member—rather than stopping to ask important, critical questions.
I was a loan officer for a long time, and heard questions like, "How much home can I actually afford?" or, "When should I make a small down payment instead of a large one?" These are important questions that I make sure to ask my clients and that I think that every loan officer should be asking. Every consumer should have the answers to those questions. Mortgages are complex, but it doesn't mean that they can't be made simple for people. When information is made simple, people make better choices for themselves. It's not easy to make complex things simple. It requires time, effort and dedication from the loan officer, from the lender.
Whenever homebuyers have complex information and it's presented to them in a plain, straightforward language, they absorb it really quickly and efficiently. It's not surprising they end up making much better decisions. That's simplicity, right? Lenders can recognize this and should make more effort to educate buyers in ways that are familiar to them. That means no corporate speak and no jargon.
As for marketing, write scannable articles and make videos that are interesting. Use social media to share first-person stories of how people have done this before. Make it human. I think that's the main point. The homebuyer experience is really personal and requires human interaction. Homebuyers can be supported by tech, but it still takes a human to make the experience personal, and the mortgage companies that really get down a personal level are the ones that have wonderful customer experiences. Their customers are happiest with what's going on.
What makes an education site successful in terms of fully reaching the consumer?
There really aren't hundreds of websites that are trying to educate consumers on mortgages. There's hundreds of websites trying to sell consumers on mortgages, and there’s a difference between educating and selling. Oftentimes, this selling happens in a really spammy way. There are only a few mortgage websites that take the educational road and take it seriously by actually putting the homebuyer's needs first.
If you're a homebuyer, it's kind of easy to tell the spammy websites from the ones that are genuinely interested in education. The spammy ones are littered with links. There's not a whole lot of effort put into the design or the flow or the experience of using it. And generally, all of us, in our gut, know it when we see a site that's spammy. The content looks canned and the images are stock, and there's actually a negativity that tends to permeate through the whole site.
The sites that work are the ones that use positivity. It's a better way to earn customers. People are trying to accomplish something. When someone does a search for information about buying a home, they're looking for how to get it done. They're not looking for all the fearful things. The lenders that have websites that do this education piece right, that present the home buying process as “yes you can,” they're flourishing.
All consumers are bombarded all day long with these ads and obstacles and garbage in between them and what they're trying to accomplish. When they see sites that treat them respectfully and give them the information they need cleanly, they reward those sites by going back.
There are probably just a few lenders with educational websites done the right way, but the ones that are doing it well have earned customer trust, which, of course, is really important.