How to handle tough real estate agents when doing FHA
We’ve all heard plenty about dealing with tough times. I’d like to share with you some of the tips I’ve learned when dealing with tough real estate agents. Many loan officers (LOs) have not learned the skills necessary to effectively deal with agents, but if you want to develop a purchase-based referral business, it’s critical that you learn these skills and learn them well. The fact that far too many LOs are new and inexperienced with Federal Housing Administration (FHA) loans doesn’t help agents (especially the experienced ones) to have confidence in those LOs processing FHA loans for their buyers.
A great many LOs I speak to across the country have very negative attitudes regarding real estate agents. Why is this true? I attribute it to the pain they may have experienced when they’ve been the brunt of harassing phone calls from irate and belligerent agents who want to know why the deal isn’t clear to close yet when after all, you got the file a whole week ago! Personally, I’ve been fortunate to enjoy great relationships with real estate agents throughout my career; however, it hasn’t been without that above-mentioned variety of pain. However, in business (and life in general), when you encounter difficult people, you have to train yourself not to respond emotionally, but rather, to seek understanding. Just as men and women are different, and a lack of respect or understanding of those differences will almost guarantee hurt feelings, miscommunication and misunderstandings, so too is the case with real estate agents and LOs. Learning to understand and respect those differences will facilitate more pleasant interchanges and smoother transactions.
Experience has taught me that it’s much more empowering to get creative and discover ways to make the outcome positive, rather than to respond in kind and make the situation worse. Listening is an important part of our job, and a critical skill that comes in handy when you are basically being attacked by an agent. The first thing you need to do is listen carefully and ferret out what their concern is (and ignore the fact that your heart rate has increased to over 600 beats per minute, your upper lip is quivering and you feel like you’re breathing through a straw). Once again, a skill that is important in marriage comes in very handy here: “Mirror” and “validate.” That is, repeat back to them (calmly) what you understand their concern to be, ask if you understand correctly, and when you have, validate that it makes sense that they might feel this way. Validating their concern instead of doing what comes naturally (i.e., spewing justifications, furiously defending or flippantly blowing off their concerns) is a very important part of disarming an agent who is on the offensive. Once they feel heard rather than attacked or disrespected, they will be far more likely to be in a frame of mind to listen to you and your suggestions as to how you can help them with their concerns. The concern often boils down to something like this: “I’m afraid the deal won’t close, and I won’t be able to make my car payment, and I will be embarrassed in front of my client because the deal fell through!”
Now, why is it that agents sometimes act in unprofessional ways toward LOs? It could be due to the fact that we don’t return phone calls promptly. It could be because we regularly fail to actually get the loan “pre-approved” before we put our name on the pre-approval letter, causing deals to fall through, time and money wasted, and hopes dashed. Or, maybe it’s the fact that we don’t give agents updates on the loan status, or that we tell them everything is going well with the loan, when in fact, it’s not. Then again, is it possible they don’t have good feelings about LOs because they’re watching a slew of their clients foreclosing thanks to the 80/20s we put them in. Hmmm … seems the possibilities are endless.
The sad fact is, the negative experiences agents have had with our industry have branded LOs as a pretty inept and less-than-trustworthy bunch. Now, this is good news for all you readers, since you certainly do not run a mortgage practice like the one I just described. You are punctilious about returning phone calls and in a timely fashion. You do get the loan approved, provide regular updates, tell agents the true status of their loan, and above all, of course, you put people in good loans. The thing is … there is no way for that irate agent on the other end of the phone to know that. You’re the exception to the rule. And if they knew that, they might not be treating you so poorly. So, it’s your job to strongly communicate your uniqueness and instill confidence in the agents you work with that you do, in fact, know what you’re doing, and then back up your words with action. Their behavior may not be pretty, but it may well be justified, and when you as an LO respond calmly yet assertively, the whole tenor of the relationship can shift. You might even find yourself with a future referral source. They want nothing more than to have justifiable confidence in you, and when they have it, they will convey this confidence to their seller.
How do you handle a situation where you have a tough FHA loan, and the selling agent has a call in to you for an update on the loan? It depends if the loan has been underwritten or not. If the loan has been not been underwritten, many LOs will buckle and tell the agent what they want to hear. But understand this: That could be a big, regrettable mistake. The truth, and your credibility, is of utmost importance.
A common exchange I have had in similar situations might go something like this:
Me: Hi John, this is Jeff Mifsud. I’m calling you back regarding the loan for the buyers of your Peachtree property. I just want to discuss this file with you: It’s a tougher FHA file and we are preparing to submit it for underwriting within five to seven business days. (Always add two days to whatever you think it will actually be submitted as a cushion. It’s always better to under promise and over deliver than the other way around!)
Agent (raising his voice): What? What do you mean it isn’t in underwriting yet? You’ve had the loan for several days now!
Me: I know that’s frustrating, John, and that’s why I’m calling. I want you to know that we have been working on it ever since we received it. What is your concern, John?
Agent (losing patience as his volume increases and irritation escalates): My concern? Well, Jeff, I need the deal closed! My seller is extremely upset and nervous that it won’t close. As it is, we’ve had two deals fall apart already!
Me: I see. You’ve had two deals fall through, so your seller is understandably nervous that this one won’t close either. That makes perfect sense, and I really understand that concern and the tough position you’re in with your seller.
Agent (calming down and lowering his volume): You better believe it’s a tough position.
Me (assure him you’re both on the same team): I get that, believe me. We’re both in tough positions with our clients and there’s a lot of pressure on both of us to get this deal closed. I like happy customers and getting paid every bit as much as you do, believe me! But the fact is that all I can do is my honest best. Just as you cannot guarantee outcomes for your client, neither can I.
Agent (now calm and disarmed): I guess that’s true.
Me: Look, John, what I can tell you is this: I have taken a lot of time putting this loan together, and because it’s a tougher file, it’s really important that we take the time necessary to properly package the loan. It’s my experience that many LOs submit their tough FHA loans too early and get loans denied unnecessarily, because the loan wasn’t packaged well. Trust me when I tell you that I also wish this loan was already out of underwriting! But I do feel strongly that we can get it approved if we submit it correctly. I wouldn’t have taken this loan and wasted anyone’s time if I didn’t think we could get it approved. As I said, I cannot make any guarantees of approval. Explain the situation to your seller just as I’ve explained it to you. If you think it’d help for me to speak to the seller directly, please feel free to give them my mobile number.
Agent (now positive and upbeat): Thanks a lot Jeff, I appreciate it. I’ll try to explain this situation to my sellers, and I really hope to hear good news within the next week. Let me know if you need anything and please do keep me updated.
Me: Thanks John. You got it.
You see from this exchange how simple communication skills can change the outcome. Instead of establishing a combative relationship, one of allies was formed.
• Listen for the agent’s concern (and try to ignore the fight or flight response going on in your body!)
• Repeat the concern, as you understand it, back to the agent as many times as you need to until an understanding is reached.
• Reassure the agent that you are in the same boat and are on the same team: You’re both working with clients with the intent to help them achieve their goals; you both want ++Above all, stay cool. Practice your trade with integrity, and in time, your actions will speak for themselves. But in the meantime, your words and demeanor need to do the talking.
Practice these skills in your business and in your personal relationships, and watch how those relationships, your outcomes and your mood improve!
Jeff Mifsud founded Southfield, Mich.-based Mortgage Seminars LLC in 2004, has been an FHA originator for 12 years, is a contributor to LoanToolbox.com and is a former FHA underwriter. Jeff may be reached at (877) 342-9100.
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