Greg's Sales Tip of the Week
Ten Things You Must Master to Become an
Expert in the Mortgage Industry (Part 2 of 3)
Regarding the absurd situation of someone selling mortgages and never owning a home, I listen with amusement when someone tells me that they can be effective without being a homeowner. If I were a real estate agent trying to convince someone to purchase a home, why would I send this person to someone who can’t convince themselves to purchase? A vital aspect of sales is empathy, and you can’t empathize with prospects who have experienced something you never have experienced. Perhaps you can sell real estate as a commodity, vying for the lowest bid, but you are never getting off the treadmill in this way.
2. Learn the three economic reasons to own a home. It is truly amazing to me that both loan officers and real estate agents are not experts calculating and explaining the economic benefits of homeownership; leverage, rental equivalency and inflation protection. The first chapter of my Book of Home Finance is dedicated to these concepts because they are the basis of our whole industry. It is why the industry is called the American Dream. Not mastering this is akin to selling with your hands tied behind your back. Imagine teaching Realtors these concepts, instead of pushing products. Believe it or not, real estate agents are not taught these concepts in real estate school. What a way to differentiate yourself by teaching them the most important concepts they will ever learn.
3. Learn the economics of your rate sheet. This is another way you can distinguish a bit player from an expert. We try to make loan officers competent by teaching them how to read rate sheets. But do they know why one program costs more than another? Do they understand spreads? Most loan officers are reduced to general statements such as ”It costs more because of risk.” It is not always because of risk. And sometimes this statement sounds and is ridiculous. I always have a great time giving examples of this in class while I get loan officers to understand the relationships of pricing. One of my first seminars to real estate agents was titled “Everything a Realtor Should Know about the Secondary Market.” Do you think I had a hard time convincing them I was an expert when everyone else was delivering rate sheets and doughnuts?
4. Learn important economic concepts of real estate finance. We are not selling a bunch of loan programs. We are selling financial instruments. We need to understand how these instruments can be used to achieve financial goals. Concepts like the efficacy of different levels of prepayment and debt consolidation come to mind at this juncture. How can you call yourself a trusted advisor without mastering these? Our goal is not merely to give people what they want, but to help fill their short-term and long-term needs. Note this requires more than knowledge of loan programs. A loan officer learns programs. An expert learns how to utilize these programs to help their clients achieve their short and long term economic goals.
5. Learn how to compare loan programs based upon future scenarios. This includes ARMs vs. fixed, points vs. no points, one loan vs. two loans, negative amortization and more. For example, do you know the three major scenarios to describe the possible future patterns of interest rates and what they mean? You need to understand the historical case, the worst case and FIAR case scenarios and how to work them into comparisons for your clients.
6. Learn how to underwrite as well as process a loan. This includes the intricacies of taxes and self-employment. I laugh at trainers advising loan officers to call upon CPAs, knowing full well that when the CPA starts talking about intricate tax returns the loan officer is completely lost. You don’t have a right to call on CPAs unless you are an expert in tax return analysis. To this end, I don’t think you should just learn how to read a tax return, I think you should take a tax preparation course.
A loan officer should not just learn how to process, they need to learn how to underwrite. How can you take control of service levels if every time you send a loan to an underwriter it is as if you have sent it into a black hole? You should know more than the underwriter knows with the goal of underwriting each file before it ever goes to the underwriter. That includes reviewing the appraisal.
Dave Hershman , www.mymortgagecommunity.com
|
The Daily Communicator