As published in Scotsman Guide's Residential Edition, July 2005.
In the past five years, I have met thousands of lenders and mortgage brokers at various trade shows and educational forums. Almost all of them recall numerous horror stories in which appraisers have “cost them loans.”
Occasionally, I run into lenders who have discovered how to turn appraisers into their greatest allies. You see, these lenders have figured out that appraisers are not merely evaluators of real estate. When managed properly, appraisers and appraisal-related technology can be useful business partners. They can eliminate time wasted on deals that won’t close, solidify marginal deals and expedite solid deals.
On average, nearly 30 percent of “qualified” leads back out after credit is run, disclosures are signed and the appraisal is ordered. Frequently, the cause of these cancellations can be traced back not only to value issues but also to delays in the appraisal process. In many instances, I have seen this cancellation rate reduced to as low as 10 percent, which results in a 20-percent net increase in closed loans.
To better your closing ratio, it helps to:
Prequalify your borrower’s property collateral (estimated value).
Lock out your competition by getting your borrower to commit.
Let’s look at each of these three key points.
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