The Evolving Role of the MLS in Mortgage Lead Generation

Mortgage Marketing and Lead Generation on the MLS

Lenders Now Using the MLS for Mortgage Lead Generation

In today’s regulation-heavy marketplace, interest rates and mortgage rates continue to increase, and as a result it has become increasingly difficult for buyers to secure a mortgage.

MLS networks, the de facto collaboration platform and standard for real estate agents and their home buyers are now poised to play a much broader role in making these loans more accessible and understood.

Through innovative technology that makes the process of buying and selling a home much more efficient and effective, the MLS now has the potential to address multiple needs for buyers, especially in regards to special financing and affordability. And the lender is a major player and the missing piece to the puzzle. In fact, this creates a huge mortgage marketing opportunity for lenders.

While the MLS is a solid collaboration and research tool for agents, mortgage lenders seldom understand the power the MLS can provide to their business, and thus are missing out on new home finance opportunities.

This article examines how the MLS can be used as a platform for lenders to generate new home finance mortgage marketing leads and opportunities directly within the listing. And, leverage the exposure of more than 115 million MLS property listings containing the lender’s customized rates and products displayed in an affordability calculator.

Unqualified Mortgage Leads – The Root of the Home Financing Problem

Too many home buyers fail to secure a loan before they begin their search

The Federal Savings Bank estimates that more than 1 in 3 mortgage applicants in the U.S are not successful in securing a loan. That translates to nearly 1.6M unsuccessful transactions.

Nearly 100% of first time homebuyers finance their home purchase with a mortgage and 40% of consumers say it was harder than they thought to qualify for a mortgage.

If the home buyer can’t qualify for a loan, everyone loses out. The buyer can’t get the house, the agent can’t close the deal, and the lender loses out on new financing opportunities.

When it comes to attracting more first time buyers, a recent survey sent to 15,000 agents by RatePlug shows that lenders are missing opportunities to provide critical mortgage information earlier in the home search through the MLS. In fact, 80% of real estate agents said they need their lenders to quickly provide research on special financing options on their listings (VA, FHA, Assumable, Zero Down, and other First Time Homebuyer programs) to help facilitate purchases by first time buyers.

Improve Mortgage Marketing and Lead Generation

Formally or informally pre-approve buyers before the home search

Most real estate agents do not require a buyer to be pre-approved before making an offer on a home.  

A study completed at the Keller Center for Research at Baylor University found that prospective home buyers often make emotional and ill-informed decisions about mortgage products once they have actively engaged in purchasing a home. The study says that the buyer is often overwhelmed by the home selection process, which leads to less attention to financing detail after a contract is signed and increases the likelihood of a future home delinquency.

The study, authored by Vanessa Perry, launched the theory of ‘cognitive resource depletion.’ In essence, it shows that buyers make poor decisions regarding the mortgage that best suits their financial situation and needs. According to the National Association of Realtors, a homebuyer will search for a property for an average of 12 weeks before writing a contract, long enough to be confused/indecisive about their home choice to miss key financial details.

Further studies recommend that homebuyers get a formal mortgage pre-approval before starting the search process. This further supports reasons for lenders and agents to use RatePlug’s interactive affordability technology that helps home buyers assess whether or not they can afford (and thus qualify) for a property at the beginning of a house hunt.

For More Mortgage Leads – Get More Exposure

More Exposure for Loan Originators on the MLS

Although not formally recognized as an advertising network, RatePlug’s direct integration into more than 60 MLS networks gives RatePlug connected lenders the ability to connect with more than 800,000 real estate agents – far more than any other advertising platform available. In 2016 alone, RatePlug – the leading mortgage marketing platform – displayed loan originator offers on more than 115 million MLS property listings across the United States.

Unlike advertising or direct mail or Google ads, RatePlug educates buyers about crucial mortgage information at the beginning of their home search while they are browsing properties inside the MLS. As a mortgage marketing platform, RatePlug helps connect buyers with a lender’s specific rates and products. In fact, homebuyers spend up to 6 minutes more viewing an MLS listing featuring RatePlug than one without. For loan officers, research from the National Association of Realtors® shows that 74% of homebuyers use the lender recommended to by their REALTOR®. Most importantly, research also shows that agents using RatePlug sell homes faster, experiencing 14% fewer Days on Market from list to contract date (study data here).

Generating Qualified Mortgage Leads

Using the MLS for Affordability Estimates (and Mortgage Qualification) Improves Lead Quality

Failed financing starts with affordability estimates and then failed mortgage qualification, or the lack thereof. When a consumer has a bigger appetite for a home than their financial situation allows, doesn’t number crunch with an eye towards monthly affordability, and/or doesn’t take advantage of available special financing programs, it is nearly impossible for an agent to serve them properly.

Plus, there are other fees that must be understood as part of the affordability equation. Real estate taxes and assessments will vary from one property to the next and can change the total housing payment by 10 – 40%, depending on the details. Factoring in the potential variance from one property to the next, the lender and the real estate agent must provide the true cost of buying a home, not just the mortgage itself.

RatePlug’s MLS technology addresses these pre-qualification and home financing issues at the earliest stages. RatePlug, currently available in more than 60 MLS networks, connects agents, home buyers, and loan originators on the listing with an interactive “affordability calculator” that shows specific loan products with principal, interest, taxes, and HOA fees, and any private mortgage insurance (PITI) amounts, separated on on a monthly basis for each home they list. In the MLS, this process occurs at the beginning of the search process and helps establish an affordability range for an agent and buyer BEFORE spending time visiting homes.

In addition, lenders and agents can also see special financing opportunities for all listed properties. With RatePlug, agents access real-time properties that qualify for FHA, VA, and USDA programs, as well as the lender’s products and rates.

The buyer gains immediate knowledge of loan options, and can connect with the lender in real-time through links to get amortization schedules, loan breakdowns, etc.

The Mortgage Marketing and Lead Generation Opportunity

Recapturing lost and failed loan applications through homebuyer education

Given the number of failed loan applications referenced earlier in this article by the Federal Savings Bank, there is a clear economic value to all parties (and the lender in particular) if the MLS can increase the number of successful loan applications (and reduce failed transactions) by better qualifying home buyers.

Realistic and interactive affordability calculations (where buyers can model different scenarios) available at the point of “purchase decision” quickly translates to better informed buyers. Better qualified buyers who are actively seeking a new home (not just browsing Zillow on their lunch hour), that understand what they can afford, get approved faster and easier.

For real estate agents, if the use of affordability calculations inside the MLS (and a better understanding of the total cost of the home) could salvage just 20% of those 1.6 million unsuccessful transactions, this would translate to 320,000 more successful home purchases annually. Using NAR’s average home price of $252,800, 20% more successful home loan applications would translate to over $80 billion in transactions, and nearly $5 billion in commission revenues for real estate agents.  

For loan originators, the use of affordability calculations on 20% of salvageable purchases would create $640M in new commissions. This figure is based on the following assumptions:

  • Average mortgage amount $200,000 (with average purchase price of $252,800).
  • Commission Basis Points, 100 BPTS equals 1%
  • Commissions of $2000 for a $200,000 loan.  
  • Therefore, $2000*320,000=$640M US

By accelerating “contact to contract,” keeping home buyers on the MLS listing longer, exposing the lender’s rates and products to more buyers and better qualifying leads, RatePlug shows agents a clear path to closed transactions. As a result, the lender demonstrates why a LO/agent relationship is worth entering.

Improve Mortgage Marketing and Lead Generation by Accelerating Real Estate Transactions on the MLS

In 2016, RatePlug displayed loan originators on more than 115 million MLS property listings and helped accelerate just as many transactions.

Time is money in real estate. The faster lenders can close more loans, the faster an agent can collect a commission check. A MLS (and lender) that uses RatePlug helps accelerate the home buying process.

A study sponsored by RatePlug showed that localized closing calculators have a significant impact on the “list to contract” timeframe. This study analyzed 177,393 real estate transactions from 2011, 2012 and YTD 2013, in 7 major marketplaces in the U.S.

The data compared the total number of days between list date and contract date for both agents that are active with RatePlug and agents who are not active with RatePlug. The data included single family homes, townhomes and condominiums. The result of the study showed a 15% reduction in “list to contract date” for agents using RatePlug.

More than just an affordability calculator, advertising app, or a flyer system– RatePlug’s mortgage marketing technology helps lenders grow new home finance opportunity and close more loans faster.

Mortgage Lead Generation for Brokers and Ancillary Services

While many real estate brokers today offer mortgage, title, home warranty, insurance and other services, MLS networks historically have only served the needs of the “home finding” process.

With RatePlug, brokers now have an easy way to leverage the huge opportunity and exposure provided by the MLS. With RatePlug, brokers can expose customers to their in-house lender and increase mortgage leads, while offering a value-added service to their Agents, helping them realize additional profitability through their mortgage ventures. Brokers can also display their affiliated Lender(s) and/or allow Agents to choose their own lending partners (up to 3) on the listing. By helping brokers promote their ancillary businesses, MLS networks generate greater adoption and usage.

Conclusion

The MLS – probably the most overlooked mortgage marketing vehicle – provides a massive opportunity for loan originators to generate new new home finance opportunities. By playing a more active role in helping agents pre-qualify their clients and increase the likelihood of a successful mortgage application, lenders can significantly increase their revenue potential.

About RatePlug

RatePlug – the leading mortgage marketing platform – connects real estate agents, lenders, and homebuyers – simplifying the property selection process by providing property specific affordability calculations. RatePlug helps lenders supercharge agent relationships, better qualify buyers and close more business with a world-class set of lead generating features on the MLS.

Included at no extra cost as part of an agent’s MLS membership, RatePlug is integrated with more than 60 of the top MLS networks. By using RatePlug, agents and loan originators have closed more transactions 15% faster (on average) using RatePlug’s powerful opportunity generation platform to schedule an open house, list a property, or place a property under contract