Well, I have this great stretch of land for sale over yonder that you can turn-around and sell for extreme profits. Speaking of which, I have this great e-book that you can download for $5.95 and it will pave the path to riches beyond your wildest dreams. Or, we can just deal with reality.
I'm not sure about others here, but I'm darn sure about myself. I don't work for a Non-Profit Organization, I don't have that luxury. In fact, we strive to actually profit off of the services we provide and time we put in at my respective firm. Yeah, I know, crazy concept.
The statement has been posed before, "I want the lowest rate and no fees, what can you do for me?" Well, I can inform & educate you to the best of my ability, but if you want a loan for free, call somebody else.
It's probably been discussed, debated, denounced, dissected and displayed how we make money on my side of the business...Financing To Buy or Refinance A Home. If you've missed it, let me clue you in on how we try to pay our bills.
As a Mortgage Broker here in Pennsylvania, I make money two ways. Either I charge a fee on the Good Faith Estimate I provide you, which itemizes all costs of the transaction and/or I get paid by the investor to charge a certain rate. It turns out that what I make tends to be a % of whatever loan amount I'm financing. Sometimes, that's 2% to my firm, sometimes 4%, sometimes it's only 1% or a flat fee. Everything in commission based services is negotiable, but my time is not. It's the only thing I have going for me in this great big world. I've been granted time....just not sure how much. I'm not the cheapest around and I will never, ever, strive to be that. I'm not the most expensive, I'm darn sure not to strive to be that either. What is my time worth? As much as yours I guess. I work hard, I work smart. You probably work hard and smart as well, we should be paid accordingly.
I don't blame consumers for the often mentioned question of No Point/Lowest Rate Mortgages. Well, I don't blame them alone. I want the best deal as well in whatever transaction I enter. It's what they've been taught. Is it the smartest question they can ask, heck no. As a matter of fact, when I field the phone call and that is the question, I know it is typically not the 'Smart' consumer who starts with that question. Typically, it is just the opposite. Yet, that's what they've been taught. 1, 2, 3, Jump! Pavlovian dogs to a sometimes distorted way of borrowing money to buy or refinance their home.
My Point Mr. & Mrs. Consumer is simply this. Not only ask the why's you have the right to know, ask the how's as well. Let us educate your wants, fulfill your needs, & understand the process thru & thru. Do I have the lowest rate, yeah, sometimes I indeed do. Do I have the lowest fees, nope, but I'm fair and full of disclosure. Surprises should be saved for Birthdays.
Jason, I know I've heard many times in my 27 years. What I've learned of people way smarter then me are we are either in one of 2 markets
Market 1 is the rate market. We can never be the lowest. We can't always figure out how the next lowest LO is acutally going to provide that without the bait ans switch routine. We only win when are loose!
Market 2 in the information market. Discuss the bond market, how it affects rates, what reports are schueduled for release and how they might impact the market. Provide fancy spread sheets with loan options and how they perform over time. (the rate people sell the loan based upon a picture in time). People don't own a mortgage for a slice of time but over a period of time. Discuss total savings over one option over annother. Many times they won't undrestand what you are talking about and will feal intimidated in asking what are the rate and costs. Kind of like going to a highly recommended brain surgeon and asking him if you can get a "deal". You can learn about all this stuff at mortgage market guide, mortgage coach and certified scripts.
Good luck.
Dave Kosmecki - AmStar Mortgage
http://www.americanstar.com
If that were true, you would all identically make the same amount.
As Jason knows - as I bring it up often.........TERMINOLOGY is a bigger issue than one in the industry can imagine.
Some use it as a fear factor (Brokers), and others assume 'everyone' knows what I'm talking about". The FACT is.....MOST CONSUMERS DO NOT KNOW. Oh, you can play with your own mind and say the consumer has a computer, of course they understand...blah, blah.....
Do NOT take the consumer input as a negative....if they are 'going after the best deal.' They are in Fact.....using whatever terminology they have learned....to question you .........because this is a BIG decision in their lives , and they want to at LEAST sound 'smart".
I suggest you work from the angle I presented.
Jason,
If David's comment was "very long and extended" I'm not sure I should get involved. As you know I'm a man of a few to many words. If that's not bad enough, I also sell books.
"I want the lowest rate and no fees, what can you do for me?" That's an easy question, I'd respond with the lowest rate, where the current YSP covers my points and fees. I'd also give them two more "Good Faith Estimates" and accompanying "Truth In Lending" forms.
Personal I always give at least two normally three and sometimes four disclosure sets. (Or, at least I have since we started doing them on computer.) I normally included the extremes, highest rate lowest cost and lowest rate highest cost, and one in between! I always included what the client asks for and what I recommend. Since I don't believe the client should ever pay more points than necessary to qualify that's normally the highest rate lowest cost option.
I make the same money on all three options, these are my lowest fees! They may not be the lowest the client will see, before closing any way! But, I can deliver and I max out the third party estimates and included 25 days pre-paid interest. I don't want to get to closing and surprise the client, when the real numbers show up! The third party fees are what they are, I can't change them and neither can my competitors! It's better to be trust worthy than the biggest prevaricator.
I explain locking loans, if we float the rate I always honor the cost, most people don't have that much extra funds, even less today with rising reserve requirements.
If I agree to a lock period and we go over for any reason but the client causing it, I eat the loss. My LO's set their own rates, but I'm the final arbitrator of what's fair. We're always fair. We never raise our fees in an improving market, if the client wants to float it's his money if the market improves he saves, and his cost go up if it gets worst. The only time we ever charge more is in the case of major lies from the client. If I go on after finding I've been lied to, I charge ½ point for each major lie!
Charge a fair fee. Don't gouge. But, compete on integrity not rates! It drives the other brokers crazy.
Only 423 words.
Bill
William J Archambault Jr
The Real Estate Investment Institute
http://www.reii.org
"Charge a fair fee. Don't gouge. But, compete on integrity not rates! It drives the other brokers crazy."
Interesting William.
Jason, you will have to interperate this for me. I'm a 'Title Guy'. The more I talk to Mortgage brokers, I think the less I learn. OUCH !!
Jason.... I thought this was excellently written. Well-done...... short and to the point. I use the same as you do, that I am never the lowest. One main reason is that I will always answer your calls, messages, and e-mails... I will always be there for you.... so many won't when they offer the best... reason. It usually turns out to be in the middle or the worst and I have about 10 clients a year that can say this honestly, after going through this.
With what Bill said... I do the same, I always give at least 2 different scenarios, showing different rates and or costs. I usually shoot for 3 scenarios. And after asking the clients goals, they can usually make the correct decision when I ARM them with information. Educating them.... not just selling them like so many do. Telling the client what they want to hear. Again, great job....
Bill A. So, how many words was that? lol
Jason,
I have seen good mortgage people and some I think would over charge their own mother! You are right, we are in business for profit! I think the biggest problem is that they talk to friends and family and then think they can get the same deal! Oh, well did your friend have 3 late payments to get that rate? What was his score? Oh and did he have a BK 2 years ago? Oh, and has he been to 14 different lenders to find the best rate? As a Realtor, we get, the house down the street is not as nice as ours so we can ask for $10,000 more right? WRONG-O!
Let us educate your wants, fulfill your needs, & (help you) understand the process thru & thru. ~ Love this! Use this in your marketing and you will be able to have pay days and not worry about the bills!
Oh and 'Title Guy" what have you learned from the Realtors?
There is a company out there that charges less and provides less, much less. I would refer you however; I am only authorized to refer you to companies with integrity and that abide by excellent ethics. There are few with the former and even fewer with the later, that don't charge about the same as I do. Call me when you decide. You will know its me, I'm the one that answers the phone. Have a great day.
I am so excited you are going to be a Guest Writer on my new site.
Sincerely,
William and TheRealEstateTextBook
Jeff, 163 including the question.
Jason though David's 208 was very long.
I'm afraid that I'll get told to stay on the left coast. On the other hand Brian wouldn't dare accuse me of using to many words.
By the way I have a program to count the words, personaly I have to take my shoes off to go over 10.
Bill
Jeff,
Awesome points! Your clients would never go to work for free - so why can they expect others to do the same? Especially when you are assisting with one of (if not THE) largest purchase in their lifetime. And let's put it in perspective -- even when we recieve horrible service at a restaurant - we (well - some of us) - still leave a tip - we leave the minimum - but we leave them a tip (and we are talking 10% - 15% for someone we will never see again!). Why would you balk at paying a fee for someone that is providing you a service that could define your financial situation for the next 30 or 40 years?
Jason, Great point, people should be educated that Mortgage Brokers do not work for free, I would like to see what George Souto have to say here in this great blog. Keep the good blog ! :)
and congratz for your featured blog !
Ok, I hope I don't miss anybody along the way:
Tom - In some cases, I wouldn't be surprised if that was indeed the case.
Rob - Heck of a point and a really appropriate angle to work from. Too often we, including me, take it for granted.
Bill A - You could have a 789 word comment and its contribution would still reign true. "Compete on integrity, not rates." You are a wise soul...
Rob - I will try to simplify things the next time we speak. I should be making it easier to understand, not harder.
Melissa - Thank you and I liked and agreed with Dave's comment as well.
Jeff - Mucho Grazie amigo, sounds like we have similiar perspectives in working with a client.
Charlene - You hit some very good points. Thanks for the added insight.
Leo - Sounds like I'm competing with you and Tom.....Great:-)
Chuck - I have and then I get a nasty invoice in the mail. Micoletti, is that you?
William Johnson - Well said! I am excited that you even asked me, I hope I can add something of value. Thanks.
Bill A - Lol, I cite my previous comment to any insight you add, regardless of the brevity or lack there of.
Deirdre - "Why would you balk at paying a fee for someone that is providing you a service that could define your financial situation for the next 30 or 40 years?" That is one of the lines of the night, excellent! The price should be fair, the service should be spectacular, and the process should be as smooth as possible. Good insight Deirdre!
Ray - My guess is George Souto would have a lot to say and add...he provides good insight and knowledge about the business. Thank you for nice words.
I hope/trust I didn't miss anybody....
Congratulations on your Star, Jason! I don't try to be an expert in mortgages but to know which ones are experts to send my clients along to -- sounds like you are in! I also believe in not using jargon. For my very first contract, I was helping a young couple buy a house. Her Grandmother, a retired real estate broker, sat in with them while I explained EVERYTHING. They had no idea this was my first, just that I was new. Grandma smiled and shook my hand afterwards and told me I'd do very well. I've always figured a big part of my job is to translate legalese and jargon into something real people understand.
Live long and prosper.
Finding the "Wants versus Needs" (thks Ann Guy) of a consumer will serve all of us well.
"I WANT a 5% interest rate and no fees"
NO........that's not why you called....
"I NEED a loan"..
.....or drill down even further... "I Need a roof over my head".
Start from the lowest common denominator and work up.
People are truly looking for financing. That is their need. Work on their needs while jointly meeting your own.
Geez. I hear this all the time on radio ads, "NO CLOSING COSTS", "NO CLOSING COSTS". That is a VERY misleading statement, but no one enforces the law with radio ads.
I bet a dollar to a donut that when one of their buyers get a GFE, there will be closing costs, OR it is reflected in the rate/pts., etc.
They rely on the public not knowing what they are talking about and wanting something for nothing.
Of course, it all depends on what a CLOSING COST is. Folks don't know the difference between a closing cost, a prepaid item or a lender fee.
I try to educate my clients in all aspects of the home purchasing process. When I call a lender on behalf of my client I want answers. Can you get my guy a loan, even though he had some late payments 9 months ago? I don't want to hear that there are problems a week later, after looking at a credit report to I want to know if you can get the loan to close and the terms. I want the best possible rate that you have to offer, I want a reasonable origination fee or I'm going next door to your competition. I don't believe the "no closing cost" ads and I don't want you to work for free. I want you to treat me and my client like you would your best friend.
I think we tend to forget how confusing the terminology of our business can be to the uninfomed and inexperienced purchasers. The most common misconception of young buyers, is that all lenders are created equal and charging the same for a FHA loan or a VA loan. I have recently seen Conventional Loans that cost less than Govt. Loans. Good Post, thanks!
Realtor, Columbus Ga
The client who shops 10 lenders and goes with the lowest bidder, often ends up going with the biggest liar.
or a greenhorn
Jason,
There are always people that come and say that same phrase to me...
the issue is that they're loving comparing me to the newspaper (old rates) without anyone offering a prequalification
I always reduce the dollars and sense to PAYMENT... it is common sense that people think rates and points are the most important thing...
the problem comes when it makes MORE sense to pay points and they won't hear it...or when they want 3/4 lower rate and NO points so it ends up costing ME.
Jason,
great post. Believe it or not, their next question is "First I have to sell my house, can you do it for a total of 3%?"
Jason,
Well done. Experience tells us that a borrower who wants something for free is pretty much trying to find someone he can bully into whittling down the lender's compensation to nothing. And usually he is more trouble than you care to handle. This type often qualifies to be referred to someone else.
And then there was the guy who sent me a spreadsheet....
Listed every single item on 10 different GFEs and wanted me to match them line per line.... rate too.
He was too savvy to buy fom me.... LOL
Sadly my worst clients have been the ones that got me to work for free, yes i have closed loans for small to no fees at all but i started to think lawyers charge a fee and so doctors so why would you want us to work for free it just doesn't make any sense.
The more I read this post, the more I understand the 'frustration'. But (always a but?) I do think the consumer is not nearly a savvy as one may think, and they are just speaking to you as the info they either find on the net, or info given to them from other Brokers. Human nature. I could be totally wrong.
As an example, I've seen people that LOVE a house.... have the financing.... but want to LOW-BALL based on either their lack of understanding or their Realtor's input. THEN THEY 'LOSE' THE HOUSE BECAUSE SOMEONE PAID WAS WAS LISTED. And question why.
The key is what do they NEED. And of course want.
Education to the client is SO key. The presentation of that education is the DOUBLE KEY. Don't take a silly request as a negative..... we all need to find that right response/words to ... 1) Not make the caller/client feel stupid and 2) Educate the person based on asking what they REALLY need.
Excellent blog Jason.
To All - I really fell behind here and I am going to try my hardest to address everyone individually. I hope to do so as soon as I can...
Jason,
Great post to generate so many thoughtful comments!
Personally, the cheapest loan I (N)ever got was the one where the mortgage broker left me sitting at the closing table with a promise the loan package was in the fax machine.
Guess how I refer to them when speaking with clients shopping for cheap loans? Let's say, not well.
Ok, I'm back...
Sarah - Great first deal! Very well done!! Live Long & Prosper Indeed!!!
Rob - You would you ladies man:-)
Neal - You and me both. Thanks.
Rob - Well put, I could learn a lot from you & your perspective.
Lenn - Yep, the bottom line on the Good Faith Estimate are the settlement costs, taking everything into consideration. I am not a big fan of the "No Closing Costs" adds, they are misleading.
Bryant - I hear you there, but busy is good.
Steven - Thanks my friend, I knew you'd get this:-)
Klaus - Seems like you would be a pleasure to work with, thanks.
Ed - Very true in both cases.
Joe - Thanks for the mention in your post and at your meeting.
Tom - LOL @ greenhorn...
Jeff - I do believe that is a Texas Saying.
David - I love the rate section in the newspaper, often times it is nothing more than the Liar's Page.
Jennifer - Thanks > As far as your second sentence, my thoughts are....Next!
Esko - Do you mind if I refer them to you:-) JK.
Tom - Been there, done that myself.
Thomas - We are all professionals, this is a job, that entails getting paid. Agreed.
Rob - I think you are getting it, couldn't agree more on the education...
Christy - I don't offer it, but it does exist! It's called a Grant:-0
Cynthia - I think we can all relate to that.
Bob & Carolyn - Thank you very much!
Gita - Thank you as well, stick to your guns & your worth.
Mike - There has been some great commentary here, thank you for your contribution.
you rock, this is the best description I have yet to read on the the no cost, no fee, free loans being offered all over the place. Would they give away their services for free? I doubt it.
thanks for this.
I try to give two scenarios. 1 a fair retail rate and then 2 a wholesale rate bought down with discount points. Depending on how long they plan to stay in the property will determine if they should pay points or take the retail rate.
Does it cost for professional help? Sure it does. You get what you pay for. When I am sick or hurt I go see a Doctor. I don't say well If I go to the walk in clinic down the street he will only charge this. Please understand that if you provide a product that people need at a price that people can afford and provide the best possible service. You will stay in business.
Dianne - That is a fact, unless of course somebody would like to pay my bills and give me spending money:-)
Kate - Thanks for the compliment!
Phillip - I am deeply ashamed:-)
Shaun - Nicely put amigo!
Jason I agree with you and the loan officer and/or broker that claims that they will take care of the customer hardly ever does. Real estate financing is not a non-profit business venture , we can make a profit and give a customer a great at the same time.
I like your opinions you don't beat around the bush.........
Eddy
Funny, I read this post today, because just the other day I was talking to a loan officer, who was working with a client of mine. The buyer used the exact same words and said he was shopping and his score was in low 600s and wanted 100 percent financing, and he had no money to put down .
Good morning Gita,
Be careful with that one, I obviously don't know the specifics but it sounds like that buyer should be more concerned with actually qualifying for 100% financing. Again, I don't see a thing wrong with shopping, yet I always get concerned and want to make sure that people get educated about the process. Let me know if there is ever anything I can do to help. Have a good day Gita!
Unfortunatey in this market many banks are offering these kinds of loans. NO TITLE FEES..impossible everyone or someone has to pay for the title search, no company does this for free, so where are they getting you?
Phyllis Pafumi
In many cases rate shoppers and fee shoppers are looking for one thing. A reason to trust us. THey disquise this with the questions they are taught to ask. What are your rates? and I don't want to pay points! If we try and slow down to build that trust and actually build it, these objevtikons give way to an open and honest realtiosshoip. Given the wonderful press and the grandstanding by the government, is there any wonder that they have legitimate fear?
Do little things that build trust. Speak with them, send them advice, put it in writing, ovffer to meet with them to qualify them without taking an application right away.
All that said, there is a segment that will always insist on the lowest price and the highest level of service. Send them to your competition. We need to understand our own value proposition before we can expect our client to.
Phyllis - Very rarely do I get beaten by a bank, it does happen though. Everybody is making money somehow, it's a matter of educating the consumer of how it affects their pockets.
John - Excellent point and nicely worded. Enough said.