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.
