Quicker, Better and Cheaper
By Charlie Elliott, MAI, SRA

Recently, I had the opportunity to attend a mortgage trade conference that was sponsored by one of the suppliers of mortgage connectivity system software. The conference was attended by representatives of many of the nation’s major banks and mortgage companies, as well as a number of national closing service vendors.

I don’t know about you, but I like attending conventions and conferences for a number of reasons. In addition to the formal educational opportunities, for my time and money, there are usually other advantages to attending such conferences as well. These include the value of networking and the opportunities to learn from the other attendees. What is it about a competitor, which makes him or her willing to give way trade secrets in the hotel bar after a day in the classroom and a couple beers? Perhaps, it is that all parties believe that they are willing to give up certain trade information in exchange for other information more valuable to them. Whatever the case, I enjoy such events and usually do my share of networking with vendors, customers and competitors as well.

As is often the case, I left from my recent conference armed with a lot of information and ideas. I can hear my staff now. “Charlie is making a lot of changes and giving us a lot of new things to do; he must have just returned from some conference or convention.”

At this particular conference there were the typical ideas and techniques that I made note of. There was one concept, however, that outweighed and overshadowed all of the others, and thus is the focal point of this column. The phrase, which many of us may refer to as a catch phrase, is “quicker, better and cheaper.” The term seemed routine the first time I heard it used by one of the speakers. It was not until I heard it used by two other people within the space of a few hours that I began to examine its real meaning. Now this is not to be confused with “cheaper, quicker and better” or any other order of these words. “Quicker” was always first; “better” always came second, and “cheaper” was always last. As nearly as I could tell, none of these people had heard the other make the statement, since it was used in different locations by people who were not in the room where I first heard the phrase. Was it mental telepathy?

Changing gears for the time being and moving on to another issue, prior to the conference I had decided to survey a few lenders who make closing-service buying decisions. I sometimes use this technique as a tool for gathering information to take back to the office to use in evaluating and improving the services that my company offer.

Since my business is appraisals, I ask three different people what they looked for when purchasing appraisals. The first person I asked, immediately responded by asking, “Do you mean now?” I replied, “Yes, now.” He proceeded to say, “First is fast turnaround time; second, we look for quality; and third, we look at price.” The next two individuals surveyed, offered very similar answers using almost exactly the same three terms in the same order.”

Then it hit me, the catch phrase “quicker, better and cheaper,” used by three people earlier, was conveying an almost identical message as that of my survey. Was this an accident? I think not. Needless to say, my confidence factor of my survey was very high.

Below its surface, what does the message, “quicker, better and cheaper” actually mean? Why were so many people sending me the same message? If I hadn’t known better, I would have thought it some sort of concerted attempt to throw a monkey wrench into my survey. After giving further thought to the matter, it is my conclusion that it was a very, very, strong message as to the current state of the lending market, and for that matter, the appraisal market.

While absorbing this information, I had the opportunity to discuss related issues with other lenders. It became abundantly clear that they were feeling a volume-down, costs-up, profits-down squeeze, not felt in a number of years. They were feeling a squeeze from their customers demanding a faster, better and cheaper product.

Why is this? First, it comes on the heels of a market where sheer volume, has stretched the resources of the lending industry so thin that customers wanting to finance or refinance homes at near-historically low rates, were forced to stand in line and wait for loans, contend with less than the best quality service and, in some cases, pay higher-than-normal vendor fees just to achieve a closing. Now that the market has cooled off and mortgage companies are looking for business, customers realize that they are in the driver’s seat and are putting one lender against another for more attractive packages. At a time when a new automobile can be purchased and financed in three or four hours, customers object to waiting 30 to 45 days to purchase or refinance a home.

Furthermore, today’s customers expect better quality service. They have gotten use to transactions on the Internet, where shipping occurs the day of purchase and tracking numbers provide a tool to stay on top of the transaction until their package is delivered at their door within two or three days. Finally, they expect their money’s worth. The total cost associated with the sale and purchase of a home (selling and buying) including Realtor fees, lender fees, attorney fees, taxes, appraisals, etc., can exceed 9% of the sales price in today’s market. Said another way the entire cost associated with acquiring a $300,000 home could exceed $25,000.

Internet savvy customers, especially younger ones are becoming more sophisticated. They should not be underestimated and those of us expecting to be competitive in our market must offer services “faster, better and cheaper.”