One motto of Lending Tree is, “when lenders compete, you win.” Yes, I agree. But that should be expanded to be considered even somewhat accurate. If Lending Tree were my company I’d say, “when experienced, legitimate, local lenders compete, you win.” But then, I’d have just put myself out of business, so I guess I wold not say that if I owned Lending Tree or some other “lead generation” website.
The main problem with these sorts of lead generation websites is that there is a fee paid to the website by the lender and that fee is passed off to the consumer somehow. The fee is paid by the consumer either in fees or by accepting a lower quality loan officer. It is simply a fact that weaker lenders whom are unable to go out and source their own business through excellent reputations and business practices have to turn to a lead generation website. By submitting your information to a lead generation site, you are virtually guaranteeing that you will be working with an inexperienced, low quality, out of state lender. The mortgage market is so stunningly complicated, you have to choose a lender based on experience, as well as cost. I know its enticing to shop solely by price, but that is dangerous in even the easiest of mortgage markets.
When you are putting your name on legal documents and are putting up a deposit to buy a home, you cannot risk working with someone who may not deliver, may change the terms at the last minute, who is not local, and who is not accountable to anyone. That last part is important. If you work with a local lender, who was referred by a Realtor or friend who has used them, the lender has skin in the game and cannot afford to ruin their reputation by not delivering or by over-promising.
Lending Tree says, “Lenders pay us for the chance to compete for your business. You won’t pay a cent for our services.” I hope I have outlined above how this is absolutely false. Losing your deposit, having your terms changed last minute, or being put through delays that cost you money is not a cost free process.
It’s nice to see competition drive the price down, but not if it means using a lender that is unaccountable for mistakes, last minute pricing changes, and lenders who don’t know their product nor your marketplace. Last minute hassles are generated from sources like Lending Tree, just ask a Realtor with more than a few years experience.
Another outlandish claim that Lending Tree makes is, “customers save $293/month on average (savings may vary).” What? That is literally IMPOSSIBLE! Assume even a loan amount of $300,000. A Lending Tree lender would need to offer a lower interest rate by 1.5% to save the consumer $293/month on this loan! That means if the market is around 4.75% for a 30 Year Fixed rate, the Lending Tree lender would have to offer that same mortgage at 3.25%. Come on! Why would anyone even consider this website after seeing such an outlandish claim?
Below is how Lending Tree appeal to mortgage lenders to convince them to sign up and start getting online leads:
•Highest-quality mortgage leads and highest-conversion rates in the online mortgage lead generation industry.
•Awarded “Best in Lead Quality” at the 2008 Online Lead Quality Summit.
•Best-in-class marketing support across all channels
•Experienced, dedicated account management support to help you manage lead quality and lead volume
It goes on and on. My take on this is that if I were a consumer I’d think, “I am NOT a lead, I am a client!” Consumers need to realize what goes on behind the scene to get them to choose a lender, and how they are thought of. I’d rather be thought of as an important client, rather than a “lead”.
Last, it is misunderstood that these sorts of online lead generation websites offer the consumer hundreds of choices. Lending Tree offers only up to 5 options.
Using Lending Tree for a mortgage is like going to McDonald’s and expecting a top grade filet mignon, it will never happen. If you are willing to be subjected to the vagaries and possible mishaps of using lower grade lenders, then by all means consider one of these lead generation websites. The bottom line is that before considering entering your data onto a website like Lending Tree, if you are concerned about quality and execution, consider calling a local lender who is referred by someone you trust.
Your argument lacks merit. There are more than a handful of reputable lenders including major banks that utilize lead companies. Your shortsightedness and snobbish views most likely limit you greatly with regard to growing your business "wide". So the only legitimate way to drive business is how then? How do you market? Oh, you only rely on referrals and ???Business Practices???. Look, I know you are ranting on Lending Tree but you are also saying that no reputable lender engages in purchasing leads/data. I work for a large national publicly traded mortgage banker. The majority of the loan officers in our group have 8 years plus experience. We are reputable and are able to pass significant savings to our customers due to our pricing and volume. With that being said, we also have a marketing strategy and budget.
ReplyDeleteWe have radio and print ads.
SEO/SEM, QR Codes, Social Media and Cellphone
A marketing director who ensures that we are all on message and manages the direction and progress to guide the ship
Referrals
Telemarketing
Direct Mail
Business Development Professionals
and......wait for it....wait for it...We purchase data
The above is how you grow your business wide. Leads are another channel of business that can help boost profits. By adding more volume we are able to keep our pricing competitive and low. We do not bait and switch. We will give you what we offer, period, unless there is a change in circumstance beyond our control.
Your comment at the end of you little rant is especially amusing. Only work with someone that has been referred to you by someone you trust. Of course that is great. But we get clients not only from referrals but from all of the strategies we have implemented, including purchasing leads. We get referrals from our clients that were brought in by purchased leads. Your assumption that all lenders that buy leads sacrifice quality, service, execution and pricing is without merit at best and completely false at worse.
I will agree with you on one point. There are a lot of bait and switch schemes out there and companies like Quicken are known to have a terrible rep. And there are some companies that utilize Lending Tree that may not be up to par. But there are reputable lenders like ourselves that utilize these resources and we are able to give the consumer what is advertised. Just because you do not have the resources or purchasing power does not mean it cannot be done.