Parrots and Loan Officers Part 3 -Rate Shoppers

This is one of the things we all hate the most right?

Nov 22, 2020

DO YOU SUFFER FROM HEAD OF LETTUCE SYNDROME?

Myth # 2 is that we all have to be the best rates and programs or we will not do any business… or lose business we should have gotten.

If you missed yesterdays article about the Myths we are taught as loan officers you should go back right now and check it out.

It’s the one with the Parrot- because we are trained to act like Parrots and just repeat the conventional wisdoms that are taught to us in this business..
https://toporiginatorunderground.substack.com/p/parrots-and-loan-officers-part-1

Part 2- Myth 1- we have to be available 24/7/365
https://toporiginatorunderground.substack.com/p/parrots-and-loanofficers-part-2-time

We all hate being seen as a commodity - Just a simple head of lettuce. Look at the top of this page. There are 2 heads of lettuce- each exactly the same-
If one costs 39 cents and the other 49 cents- the choice is simple right?

THAT IS HOW CONSUMERS VIEW US— BUT THERE ARE WAYS TO HANDLE THIS SO SIT BACK AND PAY ATTENTION

Why Do Rate Shoppers Shop ?

One of the biggest frustrations we all have as loan officers is the constant
bombardment of callers who want to know our rates , points and fees.
So let me start by explaining to you why they ask these questions and
some strategies you can use to deal with them and more importantly
drive prospects to you who will not ask this question .

Whether you realize it or not we are selling money and have become a
commodity very much like the insurance , automobile and other commodity
type businesses. Look around at your newspapers , listen to TV and radio commercials
and open your mail every day and you will see numerous ads for mortgages.
Just the other day I was walking by an H + R Block office and saw a big
ad in their window for mortgages.

If you ever have a chance to drive up I-95
you will see sign after sign offering mortgage loans with some actually having
the rates on them in lights.

So it is no wonder that when a buyer calls you the only question they know
to ask is “What are your rates and fees.” There are numerous scripts and detailed
ways to handle this question , however I would like to devote this article to
attracting buyers who never ask this question to begin with.

While I travel the country speaking and training loan officers I always ask the
question “What do you do for a living?” The common responses are ,
“ I am a loan officer.” “ I lend people money to buy a home” , “ I help people
achieve their dream of homeownership” Etc.
If you were to ask me what I do for a living my response would be “ I help buyers who have had a bankruptcy or other credit issue get into a home with very little money down and low single digit rates.” This illustrates one of the keys to attracting serious clients instead of simply rate shoppers.

The key of course is to pick a niche , and become known as the expert. Take a minute
to think about this.

Suppose you have a toothache and are advised by your dentist to
go to an oral surgeon as soon as possible. Now remember you are in a lot of pain
so you have a problem and need to get it solved immediately. I would guess that
you are expecting to pay more for the services of the oral surgeon than the dentist.

I would also guess that you are not going to call 3 oral surgeons and try to find the one
who charges the least or expect to meet that oral surgeon on Sunday afternoon or Wednesday evening at 8:30 pm.

Instead of being a generalist you must strive to pick an area where people have a problem and
need your help to solve it . Some of these niches could be construction loans, reverse mortgages, alt doc loans and renovation loans..You also maybe able to work with first time buyers who can take advantage of local grant products.

One of the other responses I hear from loan officers is that they provide excellent service and that is what sets them apart from everyone else.

Honestly , people do not know if your service is good or bad until AFTER the transaction closes.

Good service is expected or you should not be in this service related business. Going above and beyond with excellent service and over delivering and under promising are the things that will provide you with referals .

When you go to buy a car and the salesman says we have the highest ratings around for our service department do you really care or are you more focused on the bottom line price of the vehicle ?

Staying with this idea for a moment longer think about what happened when Volkswagon came out with the new BUG or Accura came out with their new SUV . These cars where in such demand that when you went to the dealership the salesman came out with a clipboard and said “You can put your name on the waitng list with a $1000.00 non refundable deposit .

Your car should be in within the next 3 months.
Oh , by the way we cannot guarantee you the color “ Well people did give their deposits and waited for these cars. More importantly there was NO negotiation and people were actually buying these cars for over the list price.

When you are a specialist with the ability to solve someones problem than the price issue disappears.

To illustrate this further with an example from my recent past I will share a story with you that happened with my daughter. She needed to have surgery on her ankles . So like good parents we set out to find the best doctor for the job. What we found was an orthopedic , pediatric , surgeon who’s speciality was ankles.

Did we shop his price? Did we take off work to meet him ? Did we travel an hour and a half each way to his office?
Now I know you are saying this really isn’t a good example because insurance paid for it. Well I am here to tell you that the insurance only covered a small portion because we went out of network and had to pay a considerable sum out of pocket. Even if we had to pay 100% out of pocket there really was no other choice in our minds.

So start by picking your niche , becoming the expert , and letting everyone know about
it. You will soon start getting calls from applicants interested in having you solve their problems instead of rate shoppers who will only waste your time.

WHAT ABOUT THE ON-LINE LENDERS WITH THE BIG AD BUDGETS?

One of the things we all wonder about as originators is how to compete with on-line and other lenders who simply buy the market. There are a number of strategies for dealing with this like positioning yourself as the Obvious Go To Celebrity Originator in your market.

But one of the best ways to deal with rate shoppers is to not deal with them at all.

HUH?
Yes, you read that correctly. If you know that your rates are never going to beat the on-line lenders just stop competing with them. You can do that by using these 3 sentences.
PICK A NICHE
BECOME THE EXPERT
LET EVERYONE KNOW ABOUT IT.

TO PUT IT MORE SIMPLY.
Work with buyers who can’t shop. There are 2 major groups of buyers who simply can’t shop rates and points since they don’t qualify. There is also a third group of buyers who generally won’t shop since they are under a time constraint and will follow the guidance of their attorneys.

The first 2 groups are buyers who have income or credit challenges. There are a number of Non- QM programs now available to these buyers who don’t fit FHA /VA/Fannie Mae guidelines.

THEY WANT A LOAN AND REALIZE THEY DON”T QUALIFY WITH STANDARD PROGRAMS.

There are now programs for buyers with very low scores. Buyers who have had a bankruptcy , foreclosure or short sale. There are also programs for buyers who are self employed or commissioned and have large write offs.

Here’s the formula.
Learn these programs by meeting with your NON QM reps.
Let everyone know about your expertise by writing about it and teaching agents and builders about these programs.
Go to the media because these programs are a great story that will get you exposure on TV , Radio and print publications. You could even place ads for these buyers on-line and off line.

THE THIRD GROUP OF BUYERS WHO DON’T SHOP.
This group of buyers are those that are referred to you by one of their trusted advisors like a CPA , Attorney, or financial planner. One of the best groups of clients I have found are those going thru a divorce.

Generally, when a client is going thru a divorce there is often a home involved and one of the spouses will be leaving the home. The spouse leaving the home may want to buy while the spouse remaining in the home may be legally obligated to refinance and get the other spouse off the mortgage and deed.

These buyers can be referred to you by their attorneys and their agreements often call for the refinance to be done within a certain time frame.

HOW THE BUYER GETS TO YOU IS ALSO IMPORTANT—
If it was from a zillow lead or FB lead well you already know you are in big trouble right?
TAKEAWAY— You want to be seen as the doctor- or lawyer - or CPA who clients look to for expertise and advice and do what they are told after the consultation..
( write that down ok?)
Do you know someone who would benefit from seeing this article?

Dedicated To Increasing Your Production
Brian Sacks

Stay tuned tommorow for Myth # 3
and leave your comments and thoughts below

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