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   ARTICLE   |   From Scotsman Guide Residential Edition   |   January 2007

Don’t Hold Your Cards Too Close

Take the unconventional step of talking rates with your clients from the beginning

I love my morning cup of coffee. Every morning I stop at the same local coffee shop and pick up a large coffee with cream. What makes it particularly enjoyable is that they know me there and often  start making my order before I get to the counter. I go to this shop even though I pass several less-expensive shops and chains each day.

Maybe we should sell mortgages more like cups of coffee. This goes completely against what we are taught in our loan-officer training classes and seminars. We are repeatedly taught that mortgages are not a commodity. Or are they?

Twenty years ago, the average customer was not familiar with — and was even intimidated by — the loan process. Rates and costs were difficult to come by without first applying for a mortgage. Back then, we originators held most of the cards.

Today, the average customer is more comfortable with the mortgage process. Getting information about current interest rates and costs couldn’t be much easier. Most customers do research before they contact a lender and submit an application.

According to a June 2006 Forrester Research study, more than 1 million people apply for mortgages every month after researching online. What is the one thing they want most from their online research? You guessed it — rates and fees. Just the items our seminars tell us not to give away.

Online consumers are least interested in the “loan comparison” and “rent vs. buy” calculators. Although this finding pertains to online mortgage consumers, I think it can be applied to all mortgage customers. Buyers want facts, not persuasion.

The report also found that only 37 percent of the mortgage applicants who participated in the study actually applied online or submitted a lead form online. That means more than 60 percent went offline and personally contacted a lender to complete the transaction.

Therefore, many potential clients who call you to ask about rates likely have already done their homework and have a pretty good idea of the current rates. It may be time to rethink the classic approach that says brokers should never quote rates.

Another conclusion in the study was that mortgage customers who can find and access rate information online are more likely to apply over the Internet. So is it possible that some originators actually lose opportunities by trying to hold rate information close to their chests? I think so.

Let’s go back to my favorite coffee shop. I know their “rates” — what my cup of coffee will cost. I also know what the other coffee vendors and chains charge. I know I can buy my coffee for less elsewhere, but I don’t.

If they sold coffee like we sell mortgages, they would have tried to learn if I qualified to be a customer before displaying the menu. They would have asked me for more information so they could find the right coffee for me. Then they would have created a report comparing a double espresso macchiato to a mocha to show me the benefits of each.

In reality, if faced with this type of scenario, I would simply go elsewhere. I like my coffee shop because the coffee is good and the people are friendly. They get my order right each time and they remember me.

Don’t you want to make sure that customers coming to your mortgage shop have the same type of experience? You should consider having the tools in place to calculate rates and costs automatically so each originator in your company quotes similar pricing. Think about telling your customers what the rates, points and closing costs would be for their loan upfront.

Let them know, of course, that the information you are quoting is an estimate and that it will depend on them having adequate credit scores and other qualifying information. No matter what, try to educate them so they can make the best decision for their situation.

Make sure their experience with you is a good one. Sometimes you may even want to buy them a cup of coffee.


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