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Industry Commentary

More to Lead than Name, Rate & SS#

Answers to some basic questions can turn lead into loan


April 8, 2004

OK, you've researched seven different mortgage loan lead companies. You've compared the cost per lead, freshness, and exclusivity. You've even talked to other originators about the reputation of some of these lead providers. After making your choice, the prospects start rolling in. Now what?

The conversation with your lead prospect will likely begin something like this: "What is your rate?"

Meanwhile, loan officers across the land will be taught 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 definitely is 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 that price is not as important as a sense of urgency. Unfortunately, as subprime loans become more standardized, they are more subject to price competition -- albeit not quite as competitive as conforming mortgages.

Does this mean that every originator has to have the lowest price on every program in order to sell? Obviously not -- because there are hundreds of loan products, 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 there is no appropriate answer to the question -- you can buy all the leads in the world -- you will still starve at the end of the month.

What is the appropriate answer to the question? 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 that are designed to uncover these needs. To do that, you must develop rapport before you ask the technical questions such as "what is your credit score." If you put them on the defensive -- trying to get to their needs -- you will only hear what they want.

One important need that all of your prospects have is the need to deal with someone in which they have confidence. 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. In sports terms, we are starting out on second base. But even the best networker will still spend some time working with prospects they do not know.

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 of when the conversation starts. How much confidence do you think that we instill when we reply, 'Uhhhh, my rates are not in yet today and uhhhh can,' or maybe, 'I'll 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 are -- even 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. Do you know your rate on your car loan or lease? 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.

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?). It is not ludicrous to ask them what kind of payment they are looking for and what kind of payment they can afford. The quicker you make this transition, the more successful you will be in selling over the phone.

You need answers to these questions:

  • Are they looking for the lowest possible payment?

  • Are they looking for a payment that will not change?

  • Are they looking for a payment that will help build equity?

Of course, it isn't 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 support for desiring to answer our questions. So start with a few basic questions such as how they have gotten you or your company's name. Without rapport, it is unlikely that they will dig deep and start to realize their true motivation for picking up the phone and talking to you.

The last thing you want to do is to be ready to 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 fill their long term needs. The payment questions represent only one aspect of this investigation. The list of questions will help you discover many other avenues that are just as important.

Dave Hershman is a mortgage industry author and speaker -- with 8 books and hundreds of articles to his credit. He also heads OriginationPro.com Mortgage School. You can email Dave at [email protected].

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