We had a conversation about the rising interest rate market and how to educate and inform your clients and referral partners. Many of you have taken the information and done a great job sharing and informing. You will see that in the long run, it pays to be a resource and a trusted advisor when it comes to important information.
One of the strategies I have been sharing with my clients is on how to position what you do and how you do it as a system of value! We often talk about rates as if they were static. They are not. We also talk about rates as if they were all the same, they are not. We also have to combat the price shopper who saw a rate on the internet that is either, old, non-existent, not a product they are eligible to use, or a just plain LIE!
We need to have perspective and share one of my favorite sayings: “The rate isn’t great if the closing is late!” or, “There is no great rate on a loan you can’t close!” Either way, information is the only path. So a simple solution is to educate on speed. Why is speed important? Because it gives you options, leverage, and negotiating power! It can also save your client money!
I have long advocated doing a full document pre-approval on all clients before they begin the process so they are as strong a potential buyer as can be. Sometimes your client or your referral partner can get an offer accepted over others, just on the strength of the pre-approval! It happens on a regular basis for many of my clients that their offer was accepted even though it wasn’t the highest offer, but the surest offer!
In addition to that leverage, we also can share the benefit of speed to both the buyer and the seller. Looking at some rates sheets from various markets, we have a very real cost in the term of a rate lock. Originators and managers are very aware of the cost of these rate locks, but do we share this information with our clients and referral partners? But what if we did? What if there was a way to show that speed can save everyone money? The answer lies within the cost of time! In our case, the days we need to lock the loan in time to close!
We always have to balance the rate on the yield curve to the cost and to the amount of time you need that rate locked for! There can be a wide range of pricing in the same rate over different time frames. Generally, the longer you need to hold the rate and cost, the more expensive it can be. In today’s volatile market, awareness is really important. The cost of time is real. Your ability to close quickly can save your client, and even the seller real money on their loan pricing!
So work with your clients and their Realtors® to share the importance of time! Clearly your market conditions and terms of the transaction have a great deal to do with how quickly you can close! Inspections, Appraisals, Title, HOA documents and approvals, and other factors are all part of the equation, but nailing down to how quickly YOU can get your process completed can clearly set you apart from your competition!
Using the “Rate lock strategy” is something you can do today that will improve your tomorrow!
Questions or comments: Mike@IMTcoaching.com
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