The End of the Mortgage Broker Era (PART II)

Home Builder with CSR

In PART I, I discussed how I  believe that and pricing engine sites like it have begun the demise of the mortgage broker. Now I want to discuss how new sites in our industry are changing the whole landscape of the business.

Fairclosingcosts.comis a new site that does for all the ancillary real estate businesses what Lendingtree did for the mortgage business. Borrowers, buyers, and sellers can now go online and compare title companies, escrow companies, termite companies, etc... on price. They can enter the specifics of their transaction (usually just the price and location matter) and the site will spit up a list of vendors and what they charge. This site is a bit different than Lendingtree in that it does not sell leads. Vendors pay a minimal annual fee and get to be listed alongside their competition.This seems much more fair and even to me than some other sites I know of (for vendors and consumers).

When I was a kid back in the seventies and eighties (I'm that old) I do not remember any pharmaceutical ads on TV. Now, that's all I see. Soon, title companies and escrow companies will have to appeal directly to the consumer too. Gone, I believe, are the days when the agents and brokers get to pick. I hope that I am wrong on this one but that seems to be the direction things are moving in. I prefer to work with the same clients. It streamlines the process. I know how my clients (agents and brokers) work and what they like and I so do that.

The new model will have the consumers picking whom you get to work with. They will most likely pick based on price, not on skill. Agents and brokers may have to now sell their favorite escrow officer or title agent to the client or they may get stuck working with the lowest bidder (and we all know that the lowest bidder is usually the worst choice).

It looks like I may be made a commoditity once again. Viagra or Levitra? Zocor or Lipitor? CF Escrow or XYZ Escrow.

In order to adapt, I, too, must start to market to the public. I still will count on my agent and broker network because they all know the level of service that I offer, but I am going to have to shift my marketing focus away from them and towards the public, just like Pfizer did.

In the end, it all works out. The consumer gets the benefit of lower prices as competition seems to do that and the agents and brokers gets to meet new people and that's always fun.

Change usually scares me, as I think it does most people. Especially when it affects their jobs. In this rapidly changing industry, I am just learning to roll with the punches and move on.

My only fear is that the government will start to overregulate the industry again. Usually added government regulation equals added cost to the consumer but I'll save that discussion for PART III.