This morning, I read an article by Jonathan Berkowitz, an executive at LoanDepot, that very briefly introduces their real estate platform.
This movement of real estate companies becoming mortgage companies and mortgage companies becoming real estate companies is not new. In fact, it’s not even unique to post-recession.
I wasn’t in the business prior to the recession myself, but I know from my research and colleagues that there were multiple examples of mortgage companies “owned by” real estate companies (and potentially vice versa, haven’t heard of that one as much).
What is new, at least from what I can tell, is the term that he used to describe what’s happening in our industry. He referred to it as a “war of convergence.”
Wow, just wow. What an amazingly accurate description.
With companies like Keller Mortgage, LoanDepot, Redfin, Zillow, potentially even Amazon carefully calculating their next moves, some waiting like a predator perched, overlooking us all, it’s becoming more and more clear that there are big changes coming to our industry.
I think the article that Berkowitz wrote does a great job of portraying the direction that our industry is headed and the answer that big companies think will be the solution long term.
However, I don’t agree with it. Not one bit. The fact is, for those of us who do our jobs as loan officers well, we understand that a good loan officer can’t be replaced with a call center, no matter how efficient your systems and processes are, or how cheap your rates are.
I’m not necessarily speaking to LoanDepot’s long-term intentions here, as I have no idea what they are. But the message in Berkowitz’s article is clear: to fight the real estate industry in this battle, scaling is the answer.
That’s the piece that I disagree with. To me, I think the reason why this is happening is all happening is pretty clear.
Why is Zillow in this conversation to begin with? Because they have leads, and lots of them.
Redfin? Same thing.
Keller Mortgage? Real estate agents, if they aren’t buying leads, are pounding the pavement to generate their own leads that they control, which gives them power in their relationship with the mortgage industry.
LoanDepot? I don’t know a ton about them to be honest, but I do have a colleague that was an LO there for a long time and one of the things he always talked about was their vision and execution of a sort of hybrid consumer-direct/retail approach. What does that mean? They have leads.
See the trend here? Those who control the leads, and the data, control everything. So what can we do as local LO’s to fight this?
Well, guys, we need to fight back in the battle for data. Simply put: we need to generate our own leads, so that we stop contributing to companies that are trying to put us out of business. And we need to do it on the same playing field that the best are playing on; search networks.
This may be a futile effort and the mortgage industry as we know it may already be on its way out the door. I can tell you one thing though, I and my clients will be some of the last local LO’s standing, and we’re not going out without a fight.
Are you going to join us?