Overcoming "Your Fees And Closing Costs Are Too High"
Rob Lawrence, Chief Mortgage Warrior Of
Battlecall.com
One of the most common objections a loan officer hears is "Your fees are too
high!". All too often, customers become fixated on price and closing costs
alone, as the determining factor in making their decision. But price is just one
small thing to consider when shopping for a mortgage.
Here are some of
the best responses/methods I've used to overcome the "price"
hurdle.
1. The first time you hear a price objection from a customer,
ask them which will cost them more&paying too much in closing costs or paying
too much in interest over the life of the loan? Then show them the raw numbers.
They will almost always choose to pay the closing costs themselves. A higher
interest rate will cost them ten-fold or more.
2. When you have an
objection to price, what you want to do is re-focus the customer on the value of
what you're offering. What is the net end result they will receive once the loan
goes through? Is it a lower monthly payment? Is it a cut in interest rate? Is it
a cash-out? Whatever their motivation, be sure to re-emphasize their own
personal goals to them. And do it over and over again. Some customers get so
scared with big numbers, they can't see the forest through the trees. Does this
deal meet your needs? Will it help you to achieve your goal? You have to be
alert and listen for clues into their motivation.
3. Explain to the
customer what a "no closing cost" loan truly is. No loan is done for free, and
outside third parties always have to be paid regardless of who does the loan.
What I tell the customer is either you pay for these things upfront, and get a
lower interest rate, or the bank will pay for these things, and raise the
offered rate slightly. This means no out-of-pocket cost for the customer, but
over the life of their loan, they will pay many times this price in interest!
When they see the numbers in black and white, they almost always elect to pay
the closing costs upfront, to get a lower rate over the long term. It just makes
common "cents".
4. Ok. The customer is dead set against paying any
closing costs. And those Ditech commercials have gotten to them! Lol. There are
two ways to approach this. Ask them this, "Would you like to roll the closing
costs into the loan amount, or would you prefer to roll these costs into the
interest rate?" (Meaning that you as the broker will end up paying these costs
out of your YSP commission). By asking these two questions, customers will
invariably want to know more. Here is your chance again to further educate them,
and set yourself apart as a "trusted advisor" and a true professional.
5.
No matter what your price is, the customer will always think they can get a
better deal elsewhere. So tell them to go find it, then come back to you once
they are done shopping! When I say this, I usually hear silence on the other end
of the phone. I tell them that I am very serious about getting them the best
deal I can for their situation, and I am respecting their time, and hope they
would respect mine as well. Reverse psychology is a powerful tool. Try
it!
6. Ask questions, and keep asking questions until you can get the
customer to open up. I create trust with the customer because I ask so many
upfront questions before just providing a rate and a "price". I want to learn as
much as I can about their situation, so I can help them get the best deal we can
find. I ask questions that other loan officers don't bother with, or aren't even
aware of. What happens is that over the course of the conversation, the tone
"flips" and instead of me selling me, they are selling themselves on going with
me. The most common response I get is, "Well no one else asked me all these
questions that you are". My response, "Well mr. customer, how do you know you
are getting the lowest rate possible?" Again, dead silence. This gets them to
think. (By the way, you can see some of the actual detailed questions I ask at
http://www.loanclosingsystem.com ). The more you can get the customer to talk,
the less you have to "sell".
7. Explain to the customer that in most
cases, depending on the loan, you can always refinance/change to another loan
later once the customer is settled. Sometimes, loans present a tough scenario.
Someone with bad credit can't expect to get the lowest rate out there. Those low
rates aren't for them, but THEY THINK THEY ARE! Bad credit people need to be
educated on the process. And the more you can explain and guide them through
things, the more likely they are to trust you. I always try to focus the
customer on the end result. Remind them that a small sacrifice now, will mean a
brighter and better future tomorrow.
8. Go through the Good Faith
Estimate GFE, line-by-line with the customer, and explain what the mandatory
third party fees are, as well as your own in-house fees. Third party fees are
things such as the appraisal, title work, any state stamp taxes, etc. If the
other guys aren't putting all the numbers out there in black and white, then
they aren't telling them the whole truth. You can even have the customer fax the
other estimates over to you to have a look at. In the end, by being upfront you
will win more deals.
These are some of the tactics I've used to make me
more successful in the mortgage industry. What methods have you used? How do you
make price the last issue on the customer's mind?
Overcoming the price
objection is one of the most common tasks that you as a loan officer will have
to master before becoming a top producer. But always remember that no matter the
customer, price and value are always the bottom line.
Got an opinion? We want to hear from you. Post your thoughts or comments here in our Mortgage Warrior Forum. Come join the conversation and say hello...onward mortgage warrior!
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