The mortgage switch/renewal market is much larger, and lower stress, than the purchase market.
There’re no high pressure conditions, firm offer craziness, or down payment docs to deal with. No tight timelines, and often little (initial) competition from the existing lenders retention department. Sounds great; renewals, nice work if you can get it.
Although… lenders claim retentions rates as high as 91%.
Clients, aka humans just like you and I, prefer easy, simple, and sure we could save them thousands… but ‘insert excuse to take no action here’.
We’re all as guilty as our clients of missing opportunities to save money, to become more efficient, to be better. Inertia is a killer.
Know that once a payout statement is ordered, usually at the very end of the transaction, a previously dormant lender will often become ultra aggressive – offering the ‘world’ to hang onto a client. In fact I once lost a file in the 11th hour because the existing lender offered the client free chequing for life, as well as a matched rate. I didn’t even get a chance to recover – it was over and done inside that one phone call from the lender – no docs, no lawyer, no hassle.
This leads us to Rule #2 which is…
A Switch/Renewal Best Practice
Maintain your cool by circumventing the 11th hour break-up experience, because yes it is an emotional experience. Getting dumped is a downer. So you need to pre-emptively break up with your client.
Yes, I’m suggesting you dump them before they dump you. But you are going to do so with grace and style, you’re going to be a professional about it.
Write your client a ‘rate-match’ letter, on proper letterhead, outlining market rates available*, clarifying there are indeed a variety of no-cost options to ‘switch’ to a new lender.
This letter is a tool for a client to short-circuit their dance with the current lender. And yes, nine times out of ten it does just this, it triggers the lender to cut to their floor rate and the client renews – over and done with inside an hour from start to finish.
but also no massive time waste for all involved.
The client appreciates what you did for them, if often surprised you did this at all for them in fact. And in turn they refer people to you – because you are so darn kind. And guess what, some of these referrals will be purchasing, others refinancing mid-term, and yes some will be switches that you write this same letter for.
All of them are also future referral sources.
What about the 1 in 10?
Once in a while the lender won’t match the rate, and now it’s ‘game-on’!
You’ve a client willing to work with you, and they’re upset that their own lender won’t work with them. Perfect.
You’ve built trust, there’s gratitude, and there’s a transaction in play that has a much higher chance of success.
Rule # 3
Always filter for success.
Madness you say?
To some, the idea of writing a letter and sending clients back to the competition is just that – madness.
Repeatedly losing clients at the end of a file, after (dozens of) hours of work, is to me the real madness.
Free up hundreds of wasted hours this year, all while building a strong network of grateful and supporting and referral partners by giving something for nothing that costs you nothing. Be generous with the letters, with your minutes, not with your hours.
Focus on files with which you have strong odds of closing, and always be kind and helpful to those around you. This pays long term dividends, and Brokering is a long term game.
Be better than.
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