In 2017 success will be determined for many Mortgage Brokers by one single ability:
The ability to communicate clearly, effectively, and strategically.
This was always the cornerstone of any significant success, but this year it will be the cornerstone of even modest success. When a client calls and asks that inevitable question, ‘what’s your best rate?’, the question is now quite complicated to answer, to say the least. Over the past several years, rate quotes were something I reserved, as much as possible, for applicants who had submitted complete documents up front, for whom I had a complete credit report, and ideally an accepted offer or completed appraisal as well. After all, why plant a specific rate in a client’s mind if they are shopping for pre-sale product that will not complete for 12 months? Why plant a rate in a client’s mind without their complete application in hand so that you know for sure they are AAA clients?
A critical time saver, and ultimately a file saver, is not only knowing what information to communicate but when to communicate it. The three phases of client communication in our office are:
1. 40,000-foot view – Early on we communicate to the client (with a completed application) a fundamental math shortcut. ‘Payments are $400.00 per month per $100,000 borrowed with 20% down, $450.00 per month per 100,000 with 19.99% or less down’. This eliminates multiple emails, phone calls, with a vast number of requests to solve payment scenarios all within a very narrow bandwidth. ‘If you want to spend an extra $10,000 you know your payment will go up by $40.00 (or $45.00) per month. Nice and easy to figure out payments on the spot’.
2. 5,000-foot view – The clients are actively shopping; they are out weekends with a Realtor and it is only a matter of time. Now is the time to have the deeper conversation about a HELOC if applicable, different lender types, and most importantly, the fixed vs. variable rate conversation. It is important to set aside your own bias here and explain that for a variable-rate mortgage it is the Bank of Canada that dictates the Prime lending rate (mostly) and that there are eight set dates each year where the rate may change, and that it is unlikely to move by more than 0.25% at any one meeting, and that there are lenders with fixed-payment variable-rate mortgages to insulate the client from payment shock… and to apply some math, such as a 0.25% rate hike on a $300.000 mortgage results in a $36.00 per month payment change. Again, having all of this data compressed into a dozen or so clearly worded sentences is key. There is much to be said for the success of the variable rate and the two-year fixed products over the past ten years. Arguably over the past forty years. Make sure you know how to say it, otherwise you will sound no different from the branch rep peddling the flavor of the week – which is usually five-year fixed, a product wrong for 60% of our clients.
3. Ground level – We have a completion date in sight, within 120 days or less, and now we get into the nitty-gritty of managing the clients through the final steps. We stay in regular contact to keep them on track and remind them why they have chosen the mortgage product and lender that they have and which steps will be happening in what order. We stay in contact with the lawyer’s office, ensuring all lender documents and conditions are met well in advance of the client’s signing, and we let the client know that we are on top of this all the way through.
These are the bite-sized pieces that we break our communication into. Talking about fixed vs variable on the very first call may be the right thing to do, but rarely. Start with the big stuff: how much are the payments; how available are you throughout the process; can you connect the client with the right Realtor, appraiser, law firm, moving company, etc. Start with the high points of the process. And let the clients know that as we move closer to requesting an approval, and funding the file, there will be more detailed conversations.
Having the language to explain that a client with a larger down payment now poses a greater risk to the mortgage investors is important.
Having language to explain to (British Columbian) clients whether or not they should implement the BCHPP will be very important. It is not a winning move in every instance.
It is in these last two points that many a file will be won or lost this spring. And it is these two points that will be the subject of upcoming posts.
This post first appeared in the new NOA Today newsletter, ‘By Brokers, For Brokers’