This season, the phone will be ringing at lender offices across the land. No matter how the phone call was generatedthrough direct mail, the phone book, a referral or telemarketing responsethe conversation will begin something like, "What is your rate on a ... "
Meanwhile, loan officers across the country will be attending sales seminars. These trainers (some who have originated mortgages, some who have not) will emphatically teach that price does not matter. The question remains: If price does not matter, why does every conversation begin with the price question?
Let's get one thing straight: Price does matter. Relationships matter as well, but price is definitely one heck of a factor. One of the reasons for the whole B/C movement is the fact that many originators are ducking out of price competition into an area where price is not as important as a sense of urgency. Unfortunately, as B/C loans become more standardized, they too are becoming subject to price competitionalbeit not as sharp as conforming mortgages.
Does this mean that every originator must have the lowest rate on everything in order to sell? Obviously not, because there are hundreds of loan programs, loan sources and mortgage brokers. No matter how low you quote, someone is likely to quote something lower. It does mean that you must be prepared to answer the price question. If you don't have an appropriate answer to the question, you can generate all of the leads in the world but you will still starve at the end of the month.
So, what is the appropriate answer? There is no appropriate answer because you have no idea at this juncture what the prospect needs. You must first uncover these needs before you can move any further. You will do this by asking the prospect a series of questions. We do not have enough time in this column to cover the questions that might follow a price inquiry (if you are interested in delving into the subject more fully, e-mail me at [email protected] and we will provide you a complimentary copy of questions to ask rate shoppers from "My Complete Mortgage Marketing Kit.")
While there is not enough time to cover the thousands of questions that are possible, we can investigate one important need that all of your prospects have: the need to deal with someone they have confidence in. This is why personal referrals are so much easier to sell. Personal referrals start with some measure of confidence, and you can build upon this confidence from this juncture.
Typically, when the prospect begins with the price question, we do nothing to instill confidence. As a matter of fact, a poor telephone response will do exactly the opposite. It is said that a prospect decides to do business with us based upon whether they like us, and they make this decision within seconds or minutes after the conversation starts. How much confidence is instilled when we reply, "Uhhhh, my rates are not yet in today, and uhhhh, can I call you back later when I uhhhh, have some rates?"
What should we say? First of all, the prospect doesn't care what your rates areeven though price is very important. This doesn't make sense until you try to remember what the rate is on your car loan or car lease. How many of you reading this article know your rate on your car loan or lease? How many of you know your payment? Of course, we are much more likely to know the payment. Ninety percent of your customers do not remember the rate on their mortgage 30 days after they close. To find out, they would have to look in their closing papers, which they are likely to have lost anyway.
Theoretically, they should be asking what your payment is on a mortgage, but this sounds ludicrous on the phone: "What is your payment on a mortgage?" However, it is not ludicrous to ask them what kind of payment they are looking for and what they can afford. Are they looking for the lowest possible payment? Do they want a payment that will not change? Are they interested in a payment that will help build up equity?
Of course, it is not wise to start blurting out questions in response to their price inquiry. We must first set the stage by building the basis of a relationship and gaining their interest. So, start with a few basic questions such as how they were referred to you. Find out how strong the referral is. Without rapport, it is unlikely that they will dig deep and start to realize their true motivation for picking up the phone and calling.
The last thing you want to do is sell a solution before you have uncovered this motivation. Too many times, we stand ready to sell our best and hottest program before we know whether it will help our prospects fulfill their long-term goals. The payment questions represent only one aspect of this investigation. Asking the right questions will help you discover many other avenues that are just as important.
Dave Hershman is a leading author and top speaker for the mortgage industry with six books, including two best sellers for the Mortgage Bankers Association of America. His mortgage school is the only comprehensive advanced curriculum in the industry. For a schedule of classes, free marketing samples, speaking information and articles by Dave, visit www.originationpro.com or call (800) 581-5678.