I always knew it was a fact, but I chose to leave it somewhere deep in the dark recesses of my mind in places I don’t like to shine the light on very often.
And then my friend Brian Brady did it. He brought up the words fiduciary relationship.
And now the light is bright in what used to be a deep, dark corner of my mind.
If you are a loan officer, you are essentially a one man entity. You are in the customer service business and the relationship is between you and your customer – no one else.
If you actually have a boss, chances are that he doesn’t really care about anything except for you producing loans. If you think he does, go ahead and try not producing for a while.
Most likely, you are a 100% commission employee who doesn’t get paid unless you actually fund a loan. If you do get a base salary, it is likely just enough for your employer to cover their minimum wage liability because your company has figured out that this is the best way to reduce their exposure to the minimum wage laws — and I wouldn’t count on a raise anytime soon.
Which means that you absolutely, positively have no responsibility for company loyalty, teamwork, company stability or company goals.
You are responsible for getting your customer the best deal possible on their mortgage and charging them enough to make a living at it.
I have went over the different types of loan officers and some of the ways that loan officers are paid before. Both of these are important, but in today’s competitive, transparent market that Zillow’s mortgage marketplace is helping to create, they probably take a backseat to one other topic:
Do you as a loan officer have access to direct investor pricing?
If you do, congratulations. You are probably in the best situation that you can be in. Whatever the big investors are paying on any given day, you are aware of any “holdbacks” that your company is taking and you can be competitive with the other loan officers in a transparent marketplace.
If you don’t have access to direct investor pricing, you are at a disadvantage to those loan officers who do – possibly a severe disadvantage.
Consider these two rate sheets. Guess which one is the one where loan officers have access to direct investor pricing?
Now consider these top Zillow Mortgage Marketplace lenders:
The only way that John, Greg, Robert, John or Kat is able to have this much success on Zillow’s mortgage marketplace is to have the best service at the best price for any given mortgage product. Secondary marketing managers also call this best ex (short for best execution).
I have never talked with any of these loan officers, but I wouldn’t be surprised if many of the top lenders on Zillow don’t have direct access to investor pricing… and if they don’t, they are at a minimum leaving tens or even hundreds of thousands of dollars on the table that they could either keep for themselves or pass on to their clients in savings.
In simple terms, secondary marketing departments across the US are “making” money from loan officers and customers and can easily be cut out if the loan officer knows where to look.
People are used to shopping around for the best deal. People on Zillows mortgage marketplace shop for mortgage deals. People on Nextag shop for the best deal on a bigscreen TV. People shop for car insurance rates.
Shouldn’t you shop around for somewhere that you can get direct access to investor pricing?
Michael Dell did it with computers and he was called a revolutionary and built a company out of it.
You as a loan officer have the chance to find a place to work that provides direct access to investor pricing and become locally known as the loan officer with the best rates because you “go direct”.
Give great service and have direct investor pricing and you can make a living on Zillow’s mortgage marketplace because in their transparent marketplace, you will shine like a bright star if you have those two things.
Or you could choose to leave the light off in that deep, dark corner of your mind and choose not to think about it. Heck, I did this for years.
But if you ever need to borrow a flashlight to look around a little when it seems to you that all of the lights are turned off, call me.
You can borrow mine.
Note: This was originally published on Zillow’s Mortgages Unzipped — but I figured I would try to help as many people as I could understand the concept of direct investor pricing, so re-posted it here.