Cracking the data code to enlist reverse mortgage referral partners

Reverse mortgage professionals are often defined in their success by the referral partnerships they maintain. Whether it’s a reliable source of potential borrowers through community engagements and senior-focused groups, estate attorneys, financial advisors and more, reverse mortgage professionals often get dynamic and creative when it comes to establishing fruitful partnerships that can lead to new business.

One potential avenue for business that has yet to really take off in a widespread fashion for reverse mortgage professionals is licensed real estate agents. Connecting with such partners is arguably most relevant to reverse mortgage loan originators seeking Home Equity Conversion Mortgage (HECM) for Purchase (H4P) business, where a borrower can use a reverse mortgage to purchase a new home.

H4P business over the past several years, however, has been lacking in comparison with traditional HECM loans. One potential path forward, however, could be in the general approach a reverse mortgage professional could take in cultivating purchase business by letting the product category “speak for itself,” according to a recent webinar hosted by Jon McCue, director of client relations at Reverse Market Insight (RMI). This also applies to seeking out financial planners.

‘Social proof theory’ and reverse mortgage sales

A discussion of psychological and social phenomena is rather atypical for a reverse mortgage presentation but has potential relevance to professionals in the industry because of how it’s used in sales. Specifically, social proof theory is employed by sellers to appeal to new customers through the actions or recommendations of others. This is according to McCue.

“We humans follow the crowd,” McCue says. “If we see a bunch of people walking one way, we’re probably going to walk that way just to see what it’s about. If we see a lot of people are purchasing something or we hear a bunch of hype, we get really curious and interested. There are so many different types of things where if everyone’s doing it, [someone] must think [that they] must be wanting to do it, too.”

Jon McCue

Other forms of social proof theory in sales can come in the form of expert endorsements or customer testimonials, two things seen often in the reverse mortgage space. Recent additions to social proof theory in business broadly and reverse mortgages specifically comes in the form of online reviews not posted on a provider’s website. Search engine Google’s business listings allow users to submit reviews for any business, including a reverse mortgage business, to offer their thoughts to potential prospective customers.

“Right there on your website, you want people to understand those other folks that you’ve worked with like working with you, and that they found benefit in what you’re selling them,” McCue says. “There’s a reason you’re [putting those on your own website].”

RMI has crafted its own product which pulls regional data so that a customer can see how many people in their own local communities have availed themselves of a reverse mortgage as another way that reverse mortgage professionals can employ social proof theory as a way to appeal to potential customers.

Social proof as an appeal to referral partners, real estate agents

Social proof can work in attempts to appeal to borrowers, but it also has applications when a reverse mortgage professional is trying to appeal to referral partners, McCue says. Financial planners have been a major focus of much of the reverse mortgage industry in terms of the kinds of professionals sought out as ideal referral partners, and through social proof theory, referral partners who have been difficult to persuade in the past may become more receptive to collaboration if a professional can cite the right sources.

When appealing to real estate agents as potential partners, the desire is natural due to home price appreciation being one of the major driving forces of reverse mortgage business in 2021 according to data from the U.S. Department of Housing and Urban Development. Real estate agents may become more receptive to reverse mortgage referrals depending on the kind of data that is shown to them, McCue says.

“What we’ve found with [real estate agents] is that basically showing them the overall popularity of the HECM program really helps them understand that this is a widely accepted program and helps lower their walls, and allows them to really listen,” he explains.

Neighborhood usage data has been persuasive, he says, and could help to open the eyes of certain potential partners about how reverse mortgages are actively being used by borrowers and to what degree they’re prevalent in a given community.

“There’s so much skepticism around this program, regardless of whether that is a borrower or a referral partner,” McCue says. “People have certain opinions and ideas that may or may not be true about this program, and we have to help them understand that this is something that people are already getting benefit from. This along with knowledge about the program is one of those things that can really help move the conversation along.”

Types of referral partners the industry is interested in

When asked about the kinds of referral partners that RMI clients seem most interested in attracting, McCue says that real estate agents and financial planners are usually at the top of the list but that preference could depend on individual factors or circumstances.

“I would say that I get a mixture of people,” he says. “I certainly have those clients that already have [real estate agent] relationships, because maybe they’re coming from, or are already heavily involved in the forward world. They already have those relationships built. So for those people, yes, absolutely. There are some clients of mine that are industry leaders in H4P. Even in this crazy market for 2021.”

A key factor of preference between types of referral partnerships comes from the comfort level of the originator, he explains. It’s possible some people may have gotten into the reverse mortgage business in the first place to get away from having to deal with the real estate side of the equation, while others may have differing levels of comfort surrounding the details regarding how a reverse mortgage could fit into a comprehensive financial or retirement plan.

“Some people are more comfortable having that conversation than others are,” McCue says. “But I still have people [seeking] both.”

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