I’m frustrated and annoyed…
I just ended a sales call with a new and smallish mortgage broker with the same story I hear from many mortgage brokers across USA and Canada over and over again, and it goes something like this…
(Keep in mind this is the shortened version to avoid 10 pages of writing that you probably wouldn’t want to read…)
Me: Hey John (Fake Name), how’s it going what brought you on our call today?
John: Well, I want to grow my business and get more qualified leads.
Me: I see John, what’ve you tried before?
John: Well… worked with this other agency and they ran some Facebook ads for us and even provided us with an automation drip campaign with SMS, Email, and even voicemail drop.
Me: Ahh, cool, we do something similar but it sounds like you’re all taken care of. Why do you need our help?
John: The issue is we got a lot of leads! I mean a lot and they were super cheap too like $10 – $15 per lead but the lead qualification sucks. I mean I didn’t even close 1 application from like 200 leads.
Me: I see I hear that a lot…
John: Ya we’ve even bought another course that promised better quality leads and guaranteed appointments but it was the same thing.
On and on…
But this is what I’m so pissed and frustrated about. On average I literally talk to at least 10 – 15 mortgage brokers with the same story.
I literally came across another agency’s website claiming they can generate high-quality leads with a FICO score of 640+ and even guarantee appointments.
But what they don’t tell you is at WHAT COST! And most importantly their process… which is secretive.
I mean, I can guarantee appointments and high-quality leads as long as you’re willing to pay the price for them.
To be honest, with the expectation of refinancing leads that heavily depends on the current market and rates. Getting leads in the mortgage space isn’t hard at all, in fact, they come pretty cheaply in abundance.
I mean think about it, who wouldn’t want to buy a house? Everybody does…
The issue with mortgage leads is always quality and not quantity and based on our experience it comes down to 2 factors.
- Whether they have a good credit score (but some lenders are willing to work with a bad credit score).
- Whether they have the down payment, which is, in my opinion, the more important qualifier, because credit score can be repaired for the most part but saving up for a down payment is much harder. I guess that’s why getting a VA loan lead is so attractive.
Another can be having a stable and consistent income source.
Here is the truth…
I would say 90% of all digital mortgage marketing out will usually come down to some kind of Facebook ads and most of them are generally the same exact thing that most agencies run. They all come from one or two online courses from the so-called gurus.
How do I know this?
I’m guilty of this as well, I’m in most of these courses and I have personally used these funnels or strategies to generate leads for my clients using Facebook ads.
Did the funnels work? Did I help my client ROI?
Well.. kind of.
Some of the funnels didn’t work but others worked actually really well and we got a lot of leads for our clients. But the issue is, some of our clients had great ROI from these leads while others complained about lead quality.
Why is that?
It’s simple really but no one thinks about it.
Here are the 3 main reasons:
- When these “courses” are new there are only a few people using these funnels and they work great because they’re new but as time goes on and more people join these courses and everyone starts to use them with the same exact offer, copy, ads, and landing pages they become less effective. This is called ad/offer fatigue.
- Second, some products/services such as refinancing are heavily market-driven and seasonal. Just like you’re not like going to look for a lawn care company in the winter. With mortgage refinance, if everyone has really low rates already, then fewer and fewer people will be interested in refinancing and the cost per acquisition naturally goes up. Simple demand and supply issue.
But someone who is not in the mortgage industry won’t know that, and if they don’t carefully check the feedbacks of other students in the group they won’t know the funnel is “currently” not working. So, they go sell it with 100% confidence that it will get their client results, runes the campaign, and nothing happens. This is because no amount of marketing guineas can change market demand.
- The third reason, and probably the primary reason for why these copy and paste funnels/strategies rarely work. Causes all the suffering, and hundreds of mortgage having a bad experience and complaining about the bad lead quality are bad “marketing to business model fit”.
Let me explain.
Because everyone uses the same ads, creatives, verbiage, and funnels then we will all attract the same type of people/leads. And since most of these courses use verbiage such as “first-time homebuyers”, “minimum down”, “FHA programs”, “have been previously rejected before”, etc…
And guess what type of people/leads you will attract?
The low credit score, zero down, looking for first-time buyer grant type of buyers.
Granted if great at closing these types of leads and know exactly have to convert them then you just found yourself a gold mind but if you’re aren’t used to working with these types of homebuyers then you’ll be complaining about lead quality.
A good example of this is one of our clients who run mid 8 figure mortgage brokerage typically deal with W2 higher-income engineers and tech people because they’re located in a tech-centered city with Apple, Tesla, Google, Facebook engineers, and executive who has an annual income of 200k- 300k have difficult working with the first-time buyer and FHA home buyer who don’t have a 680 FICO score and above.
So, no matter how many first-time buyers, an FHA loan lead we generate them, they won’t be able to convert them and end up being frustrated with “low lead quality”
On the flip end, we have another client whose exclusive leads deal with FHA home buyers and first-time buyers who have a lower credit score and do complete fine converting them because they have a sale system and process set up to deal with these types of leads.
This is what I mean by marketing to business model fit.
Are you looking for quality or quantity?
I can tell you that while most mortgage brokers one that’s the A leads, there is plenty of brokers who does extremely well with the so-called lower quality leads.
If you want quantity then do you have an aggressive and robust sales/follow-up system to keep on calling these leads? If no then don’t use these ads and funnels.
If you want quality then be realistic and expect to pay a lot more for an appointment with a high credit score and great income buyer because it’s simple math. There are more people with lower credit scores than there are people with excellent credit scores and high income thus it will cost you more to find one.
Can you laser target higher-quality leads? Yes absolutely but not through Facebook, YouTube, or even Google Search ads. The whole idea of social media or search engines is broad and scale.
And if you think that you can rely on Facebook or Google AI magic or some kind of look-like targeting magic to only get high-quality leads with a credit score of 680 + at low cost, well good luck with that.
We spend 6 figures monthly in the mortgage industry and have yet to see an audience or look like the audience that only produces a high credit score lead.
What we are able to do is use a combination of the right creatives, right market positioning, right copies, right channel, and right filtering system to attract the right leads and reduce the wrong leads.
But this will definitely drive up the cost per acquisition.
The truth is anyone can guarantee a high-quality appointment with a 640 + credit score, as long as you’re willing to pay for them. This may not be something you like to hear but it’s the truth.
So how much should you pay for a high-quality lead or appointment that will actually convert?
This will depend on many factors, your and your team’s ability to sell, the current market, how competitive is your market, your requirement, and your offer.
For example, if you’re looking for only people with a 640 + credit score then it may take 4 leads to get 1 qualified lead, and if each lead costs you $25 then a qualified lead or appointment will cost you $100.
But typically most leads on Facebook will be between $10 – $60 and on Google PPC it will cost between $60 – $120 depending on your offer and how you write your ad/creatives.
From there you may get a 30% lead to qualify lead ratio meaning if you’re generating leads at $50 then a qualified lead may cost you $150. Again this will highly depend on how you define a qualified lead.
Our numbers are based on a FICO score of 640+ with the ability to be able to pay at least $5,000 in down payment and are willing to get on a call with your or your team.
Keep in mind that this is not a closed application, this only gives you a chance to talk to someone who can potentially be a closed application. From our experience, a qualified applicant can cost anyway between $800 on the low end to $2,500 on the high end.
Again this will depend on the product, the loan size, and your market.