What critical real estate education lessons can investors take away from banking and mortgage giant Wells Fargo to keep their businesses sound and growing?
Wells Fargo remains one of the nation’s largest banks today and saw great growth through the last housing boom by making great home loans, offering good interest rates and treating its mortgage broker network well. This helped it blossom into one of the strongest banking institutions and be able to survive while others fell.
However, new more recent moves in the opposite direction raise serious questions about the bank’s future and should act as important real estate education lessons of what not to do for investors.
1. Increasing Fees on Customers
Of course eventually all costs increase but we have also seen how devastating changing rates can be from Netflix. Recently Wells Fargo made the move to end free checking for customers on the east coast. While by the basic math alone it may make sense to offset operation costs with new charges. However, it is also certainly costing them a lot of lost customers who may have ended up depositing more and doing more business with the bank if they had remained the free option while competitors raised fees. Now they are just sending customers to the competition and losing out on tons of referrals and lifetime business.
As a real estate investor it is wise to seek out the most profitable clients and deals but perhaps it is wiser to reward them for their business and encourage more referrals, even if it isn’t a lot right now. Don’t kick them when they are down, they just might win the lottery tomorrow.
2. Burning Partners
Wells Fargo recently ‘proudly’ announced that a third of all borrowers it has been helping with home loans are in California. That’s great for Californians and San Diego real estate investors but a bit of a poke in the eye to loyal partners and customers in other states. This includes Maryland where the Department of Business and Economic Development ironically extended a loan offer to the bank and one MD County gave $100k to the bank to expand local operations.
Don’t burn your partners or those who have helped you grow, you might realize how much you miss them later.
3. Poor Staffing
Wells Fargo has also begun to hire green bankers, fresh out of school that have never paid rent for themselves let alone a utility bill to advise customers on banking, mortgages and investments, meaning they have less financial experience than most of their customers. Cheap help may be great for data entry, janitorial services and making coffee for the boss but certainly does not present well to customers and is unlikely to yield them results they are happy with. So hire better.
We’ll see how it plays out but once you get a bad rep it is hard to turn around, employees become unhappy, money gets tight, more mistakes are made and the downward spiral continues.
Instead consider going all out to treat your customers and partners right and help them as well as hiring well to generate plenty of referrals and create loyal clients.