Competition in Real Estate

I recently had a conversation with a friend and loan officer I trust, Mark Day from Aspen Home Loans. I was asking how things were going in the loan marketplace from his perspective with a recent rate hike, and I commented something that was short-sighted, which was "It's probably not a good time to get into the mortgage business, right?"

Mark's insight was that it wasn't any easier to get into the business during the "refi" boom either. Sure there were a lot of loans being refinanced (and new loans being created), but there was also a huge influx of new loan officers as people started doing loans to meet the demand. I know that I knew lots of people who quit what they were doing to start working in the mortgage business.

What this does of course, is move a lot of the refinance business away from experienced, knowledgeable people to "newbies that you know". Of course, what happens to many of these new mortgage consultants is that after they *help* process loans for people that they know, they then found themselves in an oversaturated marketplace and didn't have the customer base to support themselves. Add a slight interest rate hike, and incrementally, the market makes it harder and harder for these new people to survive.

So when rates increase and there are fewer refinances, there is a shakeout of the newer loan officers who weren't able to establish a clientele, provide better service or in some way differentiate themselves or remain competitive. Basically, there is no free lunch, and the refinance boom was able to benefit some, for a time, but to really make it in mortgages, you've got to be in it for the long haul, earn a reputation, provide outstanding service, make good and honest money by offering a good service.