'Locking out' your competition by involving your appraiser early in the loan process can prove wise
Brian Blanchard, chief operations office, PROvalUSA.com
As published in Scotsman Guide's Residential Edition, September 2005.
In previous Scotsman Guide articles, I touched on three key points to improve your closing ratio:
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Prequalify your borrower’s property collateral (estimated value);
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Lock out your competition by getting your borrower to commit;
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Follow through. This month’s article will focus on the second point, locking out your competition.
Industrywide, nearly one out of three loan applicants cancels after the appraisal has been ordered and you and your firm have invested significant time. Unrealistic estimated values and heightened competition fueled by educated shopping are the primary reasons for this high cancellation rate. JupiterResearch, a research advisory organization for online businesses, estimates that about $34 billion in mortgages will be originated online this year and more than $70 billion per year by 2009. Most of these online consumers are drawn to lender-referral services, where they can compare rates and apply with multiple lenders. These Web sites turn traditional consumers into educated shoppers who find multiple lenders offering similar products.
Therefore, competing on rates alone is often a losing battle. Successful lenders also compete through service and get their borrowers to commit sooner. Consider two or more lenders working the same loan with similar loan packages. Not surprisingly, the one whose appraiser sets an inspection first is the one who closes the loan.
The appraiser collects a fee from the borrowers, which locks them into the lender that the appraiser represents. This interaction is often the first face-to-face contact the borrowers have in their transaction. In today’s environment of long-distance and Internet-based lending, this contact personalizes the borrowing experience.
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