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Cheap Leads: Loan Officer Referral Gifts


The major mortgage companies understand the importance of giving loan officer referral gifts. You may be wondering if this strategy is right for if you're an independent broker or run a small business. Some loan officers see gifts as giving off a bad impression and transactional. But as we’ll see below, there are ways for mortgage loan officers to make gifts look and feel authentic.


Cheap leads


Market turbulence means that we'll have to try new tactics and innovate as loan officers. So let’s take a deep dive into the world of loan officer referral gifts.


4 Reasons to give a gift as a loan officer or mortgage broker

Why is gifting worth the cost? Consider gifts as small investments of "goodwill". These investments will pay off over time by building relationships.


1. Persuasion and influence

Are you familiar with Caldini's principle of reciprocity? There isn't a successful high-level salesperson on the planet who isn't aware of it. Reciprocity is actually considered the first principle of influence. It taps into the human compulsion to feel obliged to give back to others what they have received first.

Here’s an example validated by experimental data. Waiters who bring along a mint, cookie, or candy when dropping off drinks see their tips increase by around 3%. The best part? People reciprocating often aren't aware of the fact that they're inflating their tip.

Reciprocity is a universal human phenomenon. So it goes without saying that it plays out the same way in the mortgage business. By giving a gift, you’re strengthening your relationship with your referral partners.


2. Recurring referral potential

You're working with referral partners caught up in hectic times. Whirlwinds of their lives. Closing a new home, inspections, coordinating tasks, etc. It all adds up. It's no surprise that most clients or realtors forget their loan officer's name after closing.

When you give a thoughtful gift that stays in their home, your name is now part of the scenery. That makes them much more likely to remember your name when it's time to make a referral.


3. It makes referral partners feel appreciated

It's very easy for referral partners (clients, real estate agents, etc.) to feel like "cogs" in a pipeline. When a gift is the final interaction they have with a loan officer, this paints the slate a positive color. Their final impression will be one of being a valued, treasured partner. This impression will be what they take into an online review, referral, or decision to use you again in the future.


4. A gift opens the doors for you to ask for a review

Now let’s tie in reciprocity and making the referral partner feel appreciated. What do you think the odds are of a new home buyer leaving you a positive review online after they received a gift? Note that getting lots of reviews is a great way to boost your local mortgage business SEO.


Hands holding a gift


Important: Check regulations and your governing body’s code of ethics

Yes, it's legal for a settlement service provider to give gifts. Make sure you're up to speed with the provisions of the Real Estate Settlement Procedures Act (RESPA). RESPA Section 8 prohibits specific kickbacks for business referrals. Understanding RESPA is a whole topic unto itself. So it’s best to have a lawyer look over your gift-giving strategy.

In addition to following all RESPA requirements, make sure you're also following all anti-kickback laws that apply at the local level for business interactions.

The same concept applies if you do business in the Canadian market. It's important to know that Canada also has its own version of RESPA for kickback and referral fees. It never hurts to have a lawyer look over your gift-giving strategy to make sure you're in the clear.


Choose who to give your mortgage closing gifts to as part of your larger strategy

Any business has a finite budget. It's important you focus on a few partners to gift to. Here's who should be considered:

  • Realtors: This can help with recurring referrals. Many new home buyers forget to get prequalified. So being friendly with realtors is a good way to get a first step in the door.
  • Homebuyers: If you're operating on a slim budget, narrow down your pool. Big accounts get priority. Next, buyers who move often should be on the list.
  • House flippers and real estate investors: A borrower like this can generate steady recurring income.
  • Investors: These clients are great for frequent, easy refinance closings.
  • Other lenders: Stay friendly with out-of-state peers that send you referrals. Your competitors won't even see those leads whipping past them.

Make sure you have the right technology to identify valuable leads for your client gift list. Don't assume that you'll "remember" which accounts get gifts. This is where having a tight automated system for pipeline management can make or break your lead-engagement strategy.


How often are gifts from loan officers necessary?

The truth is, there is no right answer. It depends on the recipient.

With real estate brokers, you don't want to give something for ever X referral. That'll seem transactional. If you know something personal about the real estat professional, lean on that. For example, if they are football fans, time a referral gift around the superbowl. Otherwise stick to major holidays.

It's different for large recurring clients like house flippers and investors. Here, you might choose to be more transactional. There's nothing wrong with sending a gift after every close.


Should you add your branding or name to the gift?

Effective gifts are never "salesy." Know the difference between giving a classy gift and giving a promotional item. A promotional item is something that will land in the trash.

When you print your name on a gift, the recipient assumes you had the item produced on a mass scale to give away. It's the opposite with a classy, thoughtful gift. The recipient assumes you bought it just for them. Which one do you think is more memorable?

Instead of printing your name on the gift, try this. Attach your business card, contact information, and a thoughtful handwritten letter. You’ll be top of mind when it comes to the next referral. No one goes looking for a Big pen. They remember names. Besides, they can always search you online when the time for a referral comes.


Digital vs physical: Which type of gift is appropriate for loan officers?

Psychological research shows that experiences bring more immediate happiness when compared to possessions. Spa gift cards, restaurant gift cards, and tickets to events are all suitable gifts for loan originators. But, you have to be realistic about your budget.


Other considerations for your closing gifts

All classic housewarming gifts can double as closing gifts. Some great gift ideas for clients a gift basket with cheeses, a bottle of wine, and other foods.

For high-end clients, consider a fancy coffee maker, a large-screen television, or a "smart home" system. Just make sure the gift isn't "nothing." Buy an orchid from the local Home Depot if that's all you can do.


thank you gift


Buying local items vs generic

Veer away from generic gifts if possible. If you're going for high-end items, you'll probably need to get those from major manufacturers. But go local and quaint if you're putting together a gift basket. If a client is relocating to the area for the first time, consider a basket full of locally made products to "welcome" them.


Include a heartfelt “thank you” note with the gift

Take time to put pen to paper to write out a heartfelt "thank you" note. The goal is to let your referral partner know how happy you are for the business they sent your way. As we previously mentioned, this is also a great time to ask for an online review.


Try to pick a gift that’ll act as a regular reminder

Finally, do your best to choose a gift that will stay in the house to serve as a constant reminder of you. A nice pen, travel bag, kitchen knife, or any other product of value that won't get thrown away is golden. Useful is more important than expensive when it comes to making sure they think of you often.


Final thoughts on how to give gifts as a loan originator

Keep things ethical and legal by becoming familiar with kickback laws. You'll then be free to use your creativity to pick gifts that will "wow" clients. Always keep in mind that these gifts are intended to build influence whenever you feel tempted to "go cheap" with mass-produced promotional items instead of hand-selected treasures.