Chapter 36 Part 2 — What’s Your Best Rate? Handy Scripts

Cover of Be the Better Broker by Dustan Woodhouse, Mortgage Broker

An excerpt from Volume 2 of Be the Better Broker.

“What’s your best rate?” Whenever you hear that you have a perfect opportunity to start a conversation. (As long as you don’t answer the question with an actual number. See Chapter 36 Part 1.)

Having a few scripts in mind ensures that you won’t be caught flat-footed. Mix and match, make the language your own, but here are some scripts to set you up as the reliable expert.

What a Broker costs

“I cost you nothing. In fact, working with a Broker should always save you money and perhaps, more importantly, time.

“The overwhelming majority of first-time buyers work with a Broker because they do research and quickly discover the existence of an independent third party who costs nothing to work with. Congrats on doing the research to discover me.

“In many cases your Broker is able to act as an unbiased inter­mediary with your own bank or credit union. In other words, you can have the best of both worlds: an independent advisor aware of all other options, and your mortgage placed with your own lender in the right product for you — not the right product for the lender.

“There are often excellent reasons to have your personal bank­ing with one institution and your mortgage with another. Let’s talk about collateral charges… ”

“The overwhelming majority of first-time buyers work with a Broker because they do more research than most buyers and very quickly discover the existence of an independent third party that costs nothing to work with. Congrats on doing the research to discover me.

“In many cases your Broker is able to act as an unbiased inter­mediary with your own bank or credit union. In other words, you can have the best of both worlds: an independent advisor aware of all other options, and your mortgage placed with your own lender in the right product for you — not the right product for the lender.

“There are often excellent reasons to have your personal bank­ing with one institution and your mortgage with another. Let’s talk about collateral charges… ”

Happy clients are referring clients

“You will not see my face on a bus bench or a billboard.

“My business is built 100 percent on happy clients who refer me to the next set of happy clients.

“My number-one goal is to ensure that you are happy, and a close second is that Mr. and Mrs. Referral Source are happy as well. I am out to work hard for you, but also to work hard to make them look good for recommending me.

“If you are placed in the best possible position with your financing, this is what leads to my next client; your happiness will trigger you to mention me to somebody else at some point. When you hear the word ‘ mortgage,’ I want you to not just think my name — I want you to mention my name.”

The vault

“Although I depend on happy clients talking about me, it is important that you know that I do not talk about you. Not about any of your personal details — financial or otherwise — with anyone but the underwriter. Not with the Realtor, lawyer, appraiser, referral source, not even with the coapplicant.

“That might seem like it goes without saying, but I take it a step further, and I also will not mention your name to anybody. I could have another applicant from the same company, but I will not ask if he knows you, nor if you know him.

“Your privacy is paramount. I am the vault.”

Availability

“My office hours are 8:00 a.m. to 6:00 p.m. weekdays. But my phone is always on, and if you truly have a ‘mortgage emer­gency,’ I will be there for you.

“I will ensure that you are armed with enough information so that you will not need to call me at 10:00 p.m. on a Sunday evening… but if you do feel the need, I will be there for you.

“I do not own golf clubs, or a boat; my hobbies include mort­gages — I am here for you when you need me.”

A–Z vs. A–B

“Within the first five to ten minutes, I touch on a topic that strikes most clients as a bit odd to bring up so soon, and I have yet to meet a client that has had any other banker or Broker do the same.

“While your concern is ‘getting a mortgage’ and ‘the best rate,’ this only represents A–B.

“My concerns for you extend from A–Z.

“In that mix a very important topic is prepayment penalties. I know, we are about to talk about breaking a mortgage that you don’t even have yet. Stick with me though…

“Bank staff, and often our own parents, tend to promote the five-year fixed-rate mortgage as if it is the only ‘safe’ option. However, six out of ten Canadians find out that it is anything but. Statistically speaking, six out of ten clients will break their mortgage early, at an average of 38 months.
“When they do, they trigger a prepayment penalty they had no idea was coming. In a five-year fixed mortgage, eight months in or with eight months left, this penalty often amounts to approximately 4.5 percent of the mortgage balance.

“The average mortgage in BC is $300,000, so this is a ~ $14,000.00 hit.
“Were you in a variable-rate mortgage, the penalty would be closer to 0.45 percent of the balance — ten times smaller: ~ $1,400.00.

“My own office is in the head office of a real estate lawyer’s office, and I can tell you that if you came by here today and stopped the next ten clients who signed and asked if there was any chance they would break their mortgage, all ten would say, ‘No way, not us…’ And six of them would be wrong.

“My concern is about more than just the best rate for you; my concern is the best mortgage product, best lender, and maximum flexibility for you.
“Options, options, options.”

The rate question

“Your concern about the best rate is always the number-one question that clients have. However, it is not only number one on the list, but it is also number 10 on the list, and there are eight other things we are going to discuss before we circle back to it — things that matter, or may matter. Either way, you need to be aware of them:

  1. What’s your best rate?
  2. Prepayment penalty math.
  3. Variable or fixed? If fixed, how many years? 1, 2, 3, 4, 5—never 7 or 10.
  4. Collateral charge discussion.
  5. Secured line of credit?
  6. Unsecured line of credit?
  7. Overcoming thin or bad credit?
  8. Strata property?
  9. Recreational (hotel/condo) property?
  10. What is the best rate factoring in all of these considerations?”

Let’s build the application

“As we have been chatting, I have been taking notes, and I actually have about 50 percent of the application already completed for you.

“I do not send out a link or paper application for you to complete. Instead, I build 99 percent of my applications by telephone. I like the conversational approach; we each get to understand what is important to the other.

“As I mentioned, I am in an office all day every day, and if you want to come see me, I am here for you.

“However, with a few more simple questions, I will have a complete file built that will allow me to give you a firm grasp of the maximum mortgage approval and payment amounts, and potentially lock in rates for you… not that rates are expected to move any time soon.

“If you want to proceed at the end of our round of 20 questions, I will hit send on an email to you titled ‘Client agreement & documents list.’ It will contain the complete list of any and all documents we will need to complete an approval for you. The client agreement is nonbinding and in no way commits you to working exclusively with me nor with any specific lender. It is just a permission slip.”

If confident, ask question number one, which is “Is X____ your first given name?”

Building your database

“Would you be interested in receiving a market update every three to four weeks? It is one with a bit different perspective than you might see in the mainstream media. This is not just another spam rate sheet or infomercial all about all of my amazing mortgage awesomeness. It is purely real estate- and mortgage-market-focused content that I work hard to research and make as interesting as possible.

“Would you like to be included on our email list?

“You can hit unsubscribe at any time, and you will not hurt my feelings. I have the unsubscribe notifications turned off so that I will never know.
“How does all of this sound to you?”

With that rough batch of tidbits, I manage to build applications with 70 percent of first-time callers. And easily 90 percent of all people I ask about the newsletter agree to sign up.