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Do we have an epidemic on our hands?

Epidemic

How do we view ourselves? How does the public view us, our profiles, and anything else that they read?

Are we that desperate to 'rope' the consumers business into our back yard per se by such statements as :

"I have the lowest rates"

"We charge no closing costs"

"I will get the best price for your house, guaranteed"

"I am the best and cheapest, I will beat anyone's pricing"

So let's do a reality check here. How much can you feel comfortable when someone mentions free, guarantee, best rates, or freebies when using the services of a lender or a realtor.

spider web

We all know for the most part that creative advertising is what so many dwell on to capture the consumer. But how do they catch you? Is it with misleading info so to catch you in their little web?

What would you rather have someone tell you?

I have the best rates!

I have the best service!

Sure, we all want the best of everything. But let me fill you in on a little secret. Anyone in the real estate industry or in the mortgage industry can usually offer you the same as the next person. The law of averages will be the same with most in most businesses. This is just a fact.

reality Conclusion : The fact is that we are human and we want the cheapest in everything, so we fall for such advertising. So many forget about quality, thinking that quality or the service should come with any price or anything offered. But let's back up some. Those that advertise 'best' of this, 'cheapest' of that, already know this. Hence why they use it against you.

Overall, most advertising that offers such deals are usually misleading. This is my opinion that has been proven over time. After spending 15 years in the mortgage business, I have usually seen it all.

You as the consumer need to read between the lines. Here is a great example of misleading advertising by Matthew Blum. Please read : Craigslist Mortgage Ad's *Beware* Part III (and his series on this)

I want to leave you with one thought to what I am talking about. Here is an example of someone's profile that I read and this was what was in the description. "Receive up to $1,000 at closing in free gifts from the premier real estate agent when you use my services as a buyer or seller." I could give you a handful of examples of this, but the ending result was poor service or higher fees. It's what we call the 'bait and switch' method. Just be careful and don't fall for advertising that sounds free or cheap. Think before you act. Instead, make sure you are dealing with a professional and not a professional advertiser.

The end result? In many cases, you get what you pay for......

UPDATE taken from a comment :

Some of the advertising I see could easily be for used car dealers. If we as an industry want to be looked at by society as a profession, our members are going to have to act in a more professional manner. I don't see any physicians, attorneys, or accountants offering discount deals and rock-bottom prices for their services.

11/24/2007

by Joe Spake

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My response :

JOE..... I totally agree. Not to give car dealers a bad name, but it is what it is. You make a great point, we don't see physicians, attorneys, etc etc., offering discounted deals. Well, I have seen some use coupons, which can be the same. For example.... apply with me now and receive a coupon for a free appraisal. Well, I will just charge you some where else or give you a higher rate. It all depends on what I have built into the deal to begin with. Thanks for your input.

11/24/2007

by Jeff Belonger -- The FHA Expert.com -- New Jersey mortgage -- FHA mortgages

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Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 11/24/2007 03:50 PM

Comments (52)

Mortgage Mess in the Mortgage / Finance Channel

marketing, misleading advertising, reality, mortgages, real estate, fha, fha mortgages, best rates, no closing costs

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52 Comments on Do we have an epidemic on our hands?

NOV

2007

Interesting point. However; you get what you pay for. Generally, cheaper has hidden costs to drive the final cost upward. I find that most of my clients are willing to pay more for good service and professionalism. I make it a point to check to see what my competitors are doing and do what they are afraid to do and charge accordingly.

Hi Jeff,
I am very skeptical of the lowest price and when a person advertises "will beat all competition's prices", etc. For me or my clients, I want someone I can trust to take care of my needs in the best and most professional manner.

Most of the people I meet are savvy to the "bait and switch" but yet I'm still amazed at how many people get lured in to those sale pitches.

I also dislike the "I'm honest and trustworthy" lead ins...if you are honest and trustworthy do you need to say it? Ditto for the "multi-million dollar producer"... I'll stop now Jeff :-)

MICHAEL....... yes, I agree with your statement. But the general public doesn't always know or think this, because they fall for the 'all to fatal' .... I am the cheapest, I am the best, etc etc.... And I also check my competition, with several that offer free or misleading services and or programs. Hey, we can't stop it, but we certainly can make it visible by writing about it.

CYNTHIA..... I usually am skeptical also. But still, so many fall for this type of advertising. What I want to make more consumers aware of are the misleading advertisings.

KRIS..... even some of the savvy people get sucked into the false/misleading advertising. Or even those key phrases such as I guarantee or promise. It's what the consumer wants to hear for added assurance. And with your last statement, I totally agree. How many times do you here someone say, "well, to be honest with you"...

How can the real estate agent give gifts to someone who didn't work with them? That's against the law.

LISA..... they can't. There are certain RESPA laws involved. But people will keep doing it until they are caught and fined. We just need to keep educating the general public about this.

Jeff,

And how about 'the one stop shop'!!! Or the 'bungled bundled services'! Thanks, Fran

Jeff ~ Thank you! Amen! Preach it brother! You are preaching to the choir here! Thank goodness that Active Rain gets out into the "real world" of consumers! This one is getting a fantabulous rating by me!

I thought we were the middle guy between those in the cartoon.. we have to make them play nice together and have them appreciate our introduction of them to each other.

Do we send our referrals to agents offering the highest referral fee? I don't. Ability matters. A track record matters.

"We're the lowest" sounds like desperation to me, and it may to buyers and sellers as well.

One of the benefits of a tough market is that clients do differentiate between us, and no longer see us a commodities. Most are willing now to pay more to get the best.

Very true it's the dark side of discounting. Very well written.

I will look at the craigs list to see what you are talking about. Thanks for the post.

I interview my clients as much as they interview me. I tell them if they are looking for the cheapest Realtor, they have come to the wrong place. I let them know, sometimes it just isn't a good fit. I always have a minimum 1 hour interview with each prospect -- and carefully go over their wants, needs, and expectations -- I also give them a list of questions to ask other agents based on those criteria -- I find most agents who promise to be the cheapest cannot answer those questions in the same way -- I have had several sellers who went with "discount" listing companies tell me they regreted their decision and didn't understand the services (which were not provided).

FRAN.... you already know my opinion on that one. And I would have used that in here, but at the same time, I didn't want to add more to this post. Both of which would have made this longer and would have added another twist, semi off topic of what I was trying to accomplish. If you think about it, bundled services can be classified as hidden advertising... thanks for your feedback.

SARAH.... that's the problem. Most people reading this and commenting will already agree. It would be great to get a consumer or two to chime in and actually say that this has happened to them. Overall, I just want to make the consumer to realize this and to understand it. Thanks for the kind words. It must have worked?? Thanks

RICHARD..... that possibly could be, I didn't look it it from that point of view. But I would classify myself as the reality guy. Thanks

SHARON.... no, not at all.... a track record is very important, unless extremely new. But the thing is, you and I both know that what you had mentioned does sound like desperation. I am just trying to put awareness out there. I would hope more would rather pay a little more to get better. I guess it comes down to matter of opinion. I don't want to think about it as 'transparency'....which could be argued also. Thanks for your feedback.

CHRISTINA...... lol,... the dark side of advertising. That would have been great to have put that in my post. Creative... And thanks for the compliment.

GARY.... yes, please do.... Matt did a good job on this pointing out some stuff that is illegal and misleading. But only people in the industry would know this. thanks & thanks for stopping by.

JOAN.... excellent point in the beginning of your comment. Even though I have been doing this for a long time, I just started doing that more so in the last 6 yrs. I had a client once tell me that I was asking too many questions... lol The other loan officers told her what she wanted to know.

I like your questions list. I do the same once they tell me that they have spoken to someone else. Especially more so when I feel like the other person might be misleading them. I then direct them to ask a few questions and tell them if they get this answer, what to ask next... kind of like a lawyer does when prepping their client. Excellent point.

Overall, thanks for your feedback and input.

Hello Jeff,

I agree these ad's can be confusing for the average consumer and we are all guilty of shopping for the best deal at least once in our life time. But when it comes to a mortgage...cheaper is never better! I personally would have no problem paying premium pricing as long as I was receiving premium service. In our industry you will always get what you paid for and the lure of no closing costs only means you are being charged for it some where else. The average consumer has no clue about these facts and that is where we as profesionals should be educating them.

Ron

So true Jeff,

We are helping people make one of the biggest financial decisions in their life, and our services should not be cheap or free. Unfortunately, the consumer has read so much about avoiding points, junk fees, etc that they will fall for these tactics, thinking they are being savvy shoppers. Giving away a free appraisal does not make us better mortgage brokers/loan officers...but analyzing someone's financial situation and recommending an appropriate solution is what makes us professionals and good service providers. In line with Joan's comment, I tell would be clients that I need to spend some time with them before I can offer a rate quote or GFE.

I wonder what would happen if I put an ad on Craigslist titled "Don't call me if you want to work with the cheapest mortgage broker" LOL

I think the root of the problem is that since the public doesn't know how we are paid, they assume we are overpaid. The public doesn't understand that the majority of agents and LO's work for 100% commission. They don't know that we don't have benefits or pay our own expenses.

I know of at least a dozen or more who claim to be #1. There must be a giant tie for first place.

It is marketing 101....create the interest....set the hook and reel them in.....that type of marketing has so little regard for the clients that when they finish the interview they feel dirty and insulted. More and more clients are looking for substance and are willing to pay a little more for the "comfort factor" only a true professional can create. Nice post Jeff.

Jeff... Nice post.. What do I want.. I want to know you will be honest with my buyer and follow up with them in a timely manner. I don't want any gifts to me.. I want service for my clients..

Interesting post. Thanks for sharing the information. All the best.

RONALD...... yes, many of us are guilty of shopping for the best deal. Just like in some stores, sometimes they would raise the prices and then offer a discount. You need to know and to understand this. And it's easier for you to be in real estate, knowing what goes behind it, to say that you would have no problem in paying for premium pricing as long as you were paying premium serving. So.... define premium pricing? I only say this because it might different in what you think compared to what I think.. and so on and so on.

Overall, we both agree that the average consumer doesn't know or understand this and that we need to educate them. Hence why I wrote this post and will write one once a month. Thanks for your input.

CHERYL........ you hit the nail on the head. That these consumers have read about paying no points, paying for this or for that. And it's not so much reading it all the time, but possibly listening to their parents, friends, or neighbors. Lastly, sometimes from someone else in our industry also. Some loan officers mock another based on the information that was given to the consumer.

I also liked what you said here.... "Giving away a free appraisal does not make us better mortgage brokers/loan officers...but analyzing someone's financial situation and recommending an appropriate solution is what makes us professionals and good service providers." This is so right on the money also. Anyone can make promises, but can they give good and accurate financial advice? Great observation .... and maybe we should try that, in regards to what you said to put on Craig's list. That would be an interesting experiment.

TINA....... I agree with your statement and if you don't mind, I think I will add this in my post. One factual thing, they don't know... not all of them, but many and I know this for a fact when recommending a realtor. They ask if they have to pay them. Thanks for this input.

RANDY...... lol That's funny.... great point. It's like college football and watching a team on national tv that has a 6 -5 record.... but their team scores a touchdown and the cheerleaders hold up their fingers as # 1... great point.

GARY....... I agree that type of marketing hurts the client and doesn't benefit them, for the most part. The consumer doesn't fully know or understand this and the advertiser knows this also. Thanks for the feedback and for the polite compliment.

KAYE..... I can't buy you that new Porsche? Hey, I know what you want and every realtor should be like this. Hence one reason why my business that was dependent on realtors was up and down. The loyalty wasn't there always when I did offer what you mentioned to these realtors. Because many would be lured to realtors that did find lenders who paid them on the side.

BOB & CAROLIN..... thanks for the kind comment and thanks for stopping by.

Interesting point.

Thanks for sharing,

So many great comments here! It all boils down to branding yourself. What do you want to stand for and be known for? Do you want to be a WalMart or a Nordstrom? But, once you've decided you must stick with it. I have seen so many that try to position themselves as a Nordstrom in the real estate industry, but then discount. If you truly are the best, then why are you discounting? If you really do have that depth of experience, knowledge, special training, etc., then are you not worth it?

Give you marketing/branding a lot of thought, plan it carefully, and then stick to it.

Feeding on the bottom of the pond will get you in trouble. And it does no good to go after the bottom feeders for business.

NOV

2007

Jeff: In my experience, very few people actually are true price shoppers. Most people simply don't know of another criteria by which to make a judgment call. This is why when a mortgage broker encounters someone, they always ask..."what are rates these days?"

What criteria should they use to decide which mortgage broker to work with? We both know it is not rates, and that the public should simply expect honesty and trust as a given for someone in our profession.

Jeff, this would be an excellent blog topic for you. I would love to know your ideas. Everyone always claims shopping for a mortgage is the hardest thing in the world. Give them some guides.

Here is what I would personally like if I was choosing a professional: I want open communication, an advocate, someone who is focused on solutions, who has the contacts & knowledge to get the best that is out there for me. Oh yeah, and I don't care about a closing gift. Just give me your all with a good attitude, and professional guidance right to the finish line.

Jeff ~ It worked for sure! Perhaps there is a way that we can solicit the thoughts of consumers without verbally trashing our industry as a whole. That would get some attention! :) Thanks for writing this important blog...

This was probably stated before but people can spot a phony a mile away. Be real, be sincere. My best clients are those who trust me. They wouldn't think of working with anyone else because I have shared my knowledge and myself (and my family sometimes) and they are very comfortable as a result. Honesty and professionalism trumps all else. You cannot fake that.

Hi Jeff: I have a very simple response to all of this. 1) Simply tell the truth. 2) Treat others how you would wish to be treated. Thanks for sharing...

Jeff,

Thanks for your post as it strikes a major nerve with me! These words and phrases (like " no problem", "I guarantee it", "best rate" lowest costs", etc.) seem to ooze from the corner of the mouth of these vultures like slobbers from a ravenous dog! I avoid these words or phases in my dealings as though they are the plague. A true and honest professional doesn't need or want them. To me they are a prime indicator of "tell them what they want to hear." I admit it....."I don't have the best rate, the lowest costs and I am not.... the best there is." I do claim to be competitive and to be among the best there is.

If truth and the appropriate level of expectations don't get the relationship and transaction underway then...just maybe....the deal wasn't meant to be. Don't set yourself up for failure...at the end of the day...the only actions that you can control are yours!

Jeff, great timing! I was just thinking about writing a post about a top-producing agent who wrote in her listing remarks that she was offering $1500 to a buyer if they used her to buy her listing...I thought this was horrible but thought maybe I am over reacting? Thanks for this great discussion!

Jeff, You really write the truth. Thank you for the mention as well. You know I really hate these misleading ad's

Jeff,

This kind of Post makes the entire industry open their Eye's, I am glad you are on our side :0)

Tom Weiss

Hi Jeff, I could not agree with you more. People have this "I have to get the best rate thing" which does not always mean it's the best mortgage or the best costs. All these deals always have a catch, no one works for free!

I have been open and honest with my clients on this. If they are looking for the cheapest realtor I make it clear that I am not their agent.

There is a guy here in Atlanta (I actually think he is in several markets) that uses "The biggest no-brainer in the history of Earth" as his little tagline. Every person that has called his office has agreed that they are the "biggest no-brainer in the history of Earth" after finding out how much more they wanted to charge on the rate for the "free" closing costs...

MARIA.... my pleasure and thanks for stopping by.

WILLIAM..... those are some great points. And I have seen some people get branding and marketing mixed up a little. I did this post about 5 months ago. Marketing & Branding..... Are they one in the same or different? And I even did 2 parts on marketing. Marketing YOURSELF or your COMPANY...... Part 1 of 2
Overall, again, you make some great points and thanks for sharing this.

ERIC...... I agree for the most part. It just depends on what you classify as bottom feeders. There could be two interpretations in my opinion. But you do make a point. thanks

JANET..... I agree & disagree. This is a two-fold. Think about it, it could come down to a loan officer who either baits & switches or misleads. And if the client is asking all the right questions, it doesn't even matter then.

In regards to telling clients what to look for? I have done 1 or 2 blogs on this already. I will need to dig them up. But thanks, I guess I could do another one also. 2 things that you did mention are great things for the consumer to know. Communication and solutions. Another, which I think is a good thing on our side, but wouldn't mean much to the client are the contacts. And this could actually hurt me if the other loan officer tells their client that they could get the better value because their guy will get it for them. I have heard this and then it doesn't happen. So, in my opinion, this can actually get a LO to steal a deal from me also. Overall, you bring up some good points. Thanks for your input.

SARAH..... there could be a way to do that. But there aren't too many clients that chime in on these and participate though. I have had some clients in the past tell me that they followed so many of my blogs before contacting me. But they never said anything in regards to a comment. I'll look into this... thanks.

________........ I agree & disagree. Not everyone can spot a phony a mile away. It's called a great liar/sales person. I could lie all day long and because of my knowledge, make it all sound way to believable. And they would never know until closing.

My advantage is when I am speaking to a consumer who is already speaking to someone and I ask them some questions. Then I ask them if the loan officer went over anything that I stated. If I asked 6 questions and the other loan officer only asked 3 of them, then I use this in my favor and I tell the consumer this. Then I tell the consumer to go back and ask the loan officer these other 3... and then ask the LO why he didn't ask them. I put doubt in their minds. And it usually is true that they should have asked these questions. But yes, honesty and professionalism can't be beat. I was shopped by a consumer once and found out that I was against 4 other people. After he told me that I would be doing the loan for him, I asked him why he picked me. He told me because I didn't sound like a sales person..... PERFECT...

KAREN..... that sounds great, but the public doesn't know what the truth usually is. That's why they call us, seeking 'professionals' to help them. But what you said in regards to treating others the way you want to be treated is a great way to look at it. This sometimes shines through to the consumer.

RON...... I guarantee you that..... lol Ron... I agree. I have even had consumers in the past ask me that I guarantee this and that.... the only thing that I can guarantee you is complete honesty, great service, and that my GFE's are accurate enough to where I don't switch it on you.... that's my guarantee. I have a few stories to tell you next time we talk, in regards to a few people that I use to work with and some of their phrases... lol One is out of the business now.

DIANE....... I originally wanted to write about how many poorly written profiles that I have seen here on Active Rain. Poorly in the sense that I have read so many in the description section talk about guaranteed best rates, lowest rates, no fees, and as I stated, the one realtor who wrote about giving $1,000 at closing to the agent. I go that from an AR profile. But I didn't want to make it about AR profiles and more about the general public.

MATT...... I know you do and so do I.... and you write the truth also. thanks for stopping by.

TOM W. ...... maybe I am not on your side. ;o) Maybe I am on the dark side... lol Hey, I am going ti keep writing more about these types of posts, because the consumer needs to read this.

LEO...... the problem here Leo is that we have many loan officers that give the client what they want upfront and then switch it at the end. And sometimes, just sometimes, you can't beat these jokers. That's why having a realtor that will refer you is one of the best things. Or from previous clients and or friends. The only thing you and I can do is educate the consumer and make them aware, nothing is free. And something mentioned and free usually will end up to be more expensive in the long run.

TERESA...... that gets right to the bottom of things very quickly. And I think it's a great tactic. You can't beat being straight to the point and bare bones honest. thanks for your input.

LANE...... that's a new one... hey, people will use what ever works for them, even if it misleads. And if it does and they make good money from this, they will continue until we can get in front of them and make them aware of this stuff.

JEFF - More of us need to keep working at spreading good straight information and hope that the word gets out to as many people as possible. Your post reminds me to keep doing the best job that I can do,

Thanks.

As usual - great post Jeff.....

Don't you ever wonder how much these crooks are making? And getting away with it? Everyone makes fun of these bait and switch advertisers but damn, they keep advertising so I assume they keep getting business. And the local mortgage broker takes the brunt from the media. At the expense of the big internet and TV lenders who are the cause! hmmmmmmmmmm you got me going now ----------------

I really do not think the general consumer gets this - a member of my family just fell for one of these idiots and it cost them the purchase of a home - they called me too late - because they did not want to "bother me" they now know to bother me - great job Jeff

Jeff - I agree and I think consumers agree that FREE, etc. are just teasers to get their attention. Great discussion you have created. I'll keep reading with interest. PS- sorry I've been MIA - but I'm back now and I can't wait to catch up. Yes, I did get your cards - thanks!

Congratulations on your feature Jeff! I can hardly add anything to the terrific responses here, except to say that I'm not cheap!! ;-) But I'm worth every penny!

btw.. hope you're feeling much better!

NOV

2007

There's not much more I can add either Mr. Belonger, though I am very glad this was featured and only hope people outside our Industry happen upon this post and take heed.

OH, and Randy's comment above was hilarious and so true!

PHILIP...... thanks you very much for those kinds words. And your comment makes me want to even write more about this. thanks

LEWIS....... yes, I do wonder and I have seen some of them and what they make. And you are so correct, that it must be working because they keep advertising. Thanks for the polite compliment.

THESA....... no, they don't. My sisters friend was taken by a 'no cost mortgage' lender, after speaking with me for 1 1/2 years..... and even when they ran into trouble and delayed the settlement for a week to get the extra money, they still didn't call me. Sure, they were probably embarrassed, but their pride was costly. Don't we all say, 'bother us'??? Thanks for the compliment.

CHRISSY...... who are you? ;o) What's sad is that so many know these are teasers, but they still fall for them. Thanks for the kind words and it's good to see you back. Glad that you got my cards....

JENNIFER....... hey, thanks for just stopping by and for the polite compliment. And yes, I am feeling a little better. thanks

JASON...... thanks..... and yes, I loved Randy's comment also....

NOV

2007

Jeff, I missed this. Sorry. I liken it to a person looking for new carpet. When you're not looking for carpet or whatever, the ads mean nothing. However, when you are looking for carpet your eye goes to where you "think" you can get the best deal. So I think it is possibly effective, but I don't do it. As a professional it cheapens the ad but as a consumer, I think it might attract them.

Good one Jeff - thanks for pointing this post out to me.

That is what has happened. Everyone has turned to websites and putting their best on to get noticed and hope they will call and use you.

MISSY..... many of us know that it does attract more people, hence why they will make it look appealing. Anytime you mention savings, discounts, freebies, etc etc.... people will check it out. In regards to mortgages, it's just another way of getting people in the door. That's the bottom line and in many cases what hurts the real estate and mortgage industry.

KEN..... my pleasure and thanks for stopping by.

SUSAN.... exactly and I just write these in hoping that the consumer understands what is behind these so-called ads and such.

DEC

2007

Honesty is still the best and "only" policy if you want to be successful, and have repeat customers. I am always upfront and honest with my clients. Most people know when you are trying to take advantage of them, or not being totally upfront. In the long and short of it, just be honest and be yourself. People will appreciate it.

I have to agree, quality of service is more important. I would rather pay full price and get the right service rather than jump on a deal to be tossed away so they can get the next customer in line.

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