While efforts have been made to sidestep problems caused by the pandemic, including wider implementation of video viewings, now is the perfect time to go even further.
As we utilise data in the mortgage sector to gain more insight into mortgage applicants, there’s opportunity for estate agencies to also use this data to pre-qualify customer enquiries and identify and prioritise those who are eligible to secure a mortgage - the holy grail of any sales-based industry.
The case for innovation
The numbers make a strong case for why innovation is needed to better support customers and enable estate agents. On average, 10-13% of mortgage applicants (according to Trussle data) have adverse credit and a further 10% will struggle to secure a mortgage from a traditional lender.
This means that almost a quarter of estate agents’ potential buyers will fall through at the mortgage application stage. Not only does this mean that resources are unfortunately being spent on customers who won’t qualify for the right mortgage on the houses they’re viewing, but it also increases the risk of chains collapsing.
This issue has been exacerbated by the pandemic, where mortgage lending has been even more restricted, and exposed an inefficiency that the sector cannot continue to ignore. The housing market has seen an imbalance of demand vs supply for years, but with buyer demand on the rise, estate agents need to make the most effective use of their time.
Buying a property can be a complicated process, with homebuyers having to jump through multiple hoops and liaise with a number of different parties. Trying to coordinate these elements through technology can seem daunting, especially where smaller operators might not have the technological ability in-house.
However, innovation in other stages of the home buying process has demonstrated that the mortgage industry, for one, has come a long way in the last few years. Formerly large, slow-moving organisations have become more open to change and are beginning to adopt technology that provides better ways of qualifying applicants and analysing risk and, as a result, provide more certain home financing solutions for its customers.
The adoption of technology we’ve seen in the mortgage space has been a win-win for customers and businesses alike - enabling faster mortgage approvals and real-time visibility of progress throughout the homeowner’s journey.
Partnerships are the key to unlocking efficiencies
FinTech companies, including mortgage brokers, have been at the forefront of connecting new technologies, like detailed credit checks and Open Banking, which has helped to increase customers’ chances of getting a mortgage.
Some digital brokers are now in a position to integrate with estate agents to provide them with the online tools and resources they lack, without the need for any technology investment from the estate agent side. Entering a partnership that both enables and fosters digital innovation offers huge benefits.
With access to tools, such as an online mortgage in principle, which assess a customer’s affordability and credit circumstances, estate agents will be able to pre-qualify whether viewers are eligible for a mortgage before they view the property.
This will instantly give businesses the comfort that potential viewers will be able to secure the right mortgage for the property, making for a more efficient journey for buyer, seller and agent.
This is not about stifling sales and interactions. Instead, it is about empowering estate agent sales teams to have more meaningful and useful conversations by correctly matching customers with suitable properties from the offset. This will save both estate agents and buyers time.
As well as helping to eliminate inefficiencies, there are also big commercial incentives for estate agents willing to adopt digital transformation. Digital partnerships provide a no-cost model to generate revenue, enabling estate agents to earn commission from the mortgage leads they generate through website and in branch referrals.
Another huge advantage of online tools is that they are ‘always on’ and able to capture demand around the clock. According to Trussle data from October 2020, 40% of mortgage enquiries come out of office hours and an online approach ensures that these customers don’t fall through the net.
There are also added benefits when it comes to reporting, as adopting digital innovation provides a comprehensive and easily accessible record of commission income that needs to be disclosed for compliance purposes.
With more consumers turning to digital services, utilising a first-class digital proposition, many estate agents will engage the current generation of first-time and next-time buyers.
It’s a two-way street
It’s not just businesses that will reap the rewards of digital innovation. Customers will also benefit from a greatly improved customer journey.
It’s no secret that many buyers find purchasing a home a stressful phase of their life, filled with questions and uncertainty. But new tools make it possible for us to ensure that customers are viewing properties that fit their needs, are eligible for the home financing to cover it, and are aware of the hidden costs of buying a home.
This will give buyers greater certainty on what they can and can’t afford much earlier on in the process. A smoother customer journey will lead to stronger, lasting customer relationships that could offer a greater chance of repeat business in the future.
As it does for virtually every other industry, the post-Covid world poses many questions for the housing market. The ability to adopt new technology can seem like a barrier, particularly for smaller firms, but changing how the housing market collaborates and utilising existing data can improve the journey for the industry and customers alike.
*Tom Hodgson is Commercial Director at Trussle