A lot of brokers will occasionally deal with a non-prime client, but to build a business based solely on that model takes a different skill set than dealing with just prime. Here, Melissa Kim talks to Canada's most successful alternative brokers and asks them for their top tips when dealing in this niche market
Tip 1: Know what your client needs versus wants
There's nothing wrong with trying to please your client. However, you're the broker here, and when dealing specifically with alternative lending, you're supposed to know what's best. Your client, on the other hand, may not, according to Barb Wetmore of AK Mortgage Mill in Barrie, Ont.
"It's important to really find out if the client has paid their mortgage because half the time they come and want a better rate or to pay off something, when in actual fact they're just about to lose their house," she said.
Wetmore stresses the importance of asking your clients the right questions to understand where their portfolio is so you know precisely how to help them. In other words, know what your clients needs, even if they are not quite sure what they are looking for.
Wetmore advises, "Rather than send a client away and say 'No, you can't do that,' we try to get him or her something that's going to make him or her reasonably happy and put him or her back on the right track."
Tip 2: Respect your lender
Although it's important to keep your clients happy, do remember that it's not all about the client. Forget about your relationship with your lender and its priorities and you might not be in business for long, according to Wetmore.
"We need to understand that [lenders] can't do every deal. We can't put together all the deals because a lender still has to be secure in the deal they're doing," she said. "I know some brokers who will try to talk the lender into deals that will make their client happy, but sometimes the deals just can't be done."
There's an old 'hand-biting' adage that could go here, but we're sure you get the picture.
Tip 3: Present a thorough application
If you don't put together a thorough application, not only will your client most likely end up in the wrong deal, but your lender is going to be miffed when things do not add up later on.
To avoid this scenario, Morgan Vaughan of MorCan Financial in Concord, Ont. recommends asking the client every question about his or her financial background and getting as much documentation as possible upfront. He warns that many brokers will take a client's word for something without documentation. It's not that the client is trying to mislead, but more that he or she does not know how to properly answer the question.
"A lot of people are afraid to ask questions or they don't know the right questions to ask and it creates delays and problems and such when you're trying to get a mortgage approved," said Vaughan. "I'll ask for a couple years of financial statements upfront, that type of stuff. Ask a history of how much they've made versus what they show, and questions like that."
Tip 4: Find a mentor
As competitive as the alternative mortgage business is, it's not always every person for themselves. Barb Wetmore and Morgan Vaughan both recommend finding a mentor. Having someone else looking out for you will make your job less daunting, especially when you are first starting out.
"I think a lot of people tend to waste a lot of time on a deal that maybe never was going to go anywhere because they don't know and vice versa," said Vaughan. "If you ask maybe there is a mentor in your brokerage or something that you can work with for a period of time. I think there are a lot of experienced guys who are happy to do that for new agents."
Wetmore especially emphasizes the importance of finding a mentor if you are doing business from within your home where another alt-lending broker may not be as accessible.
"It's a good idea to pick somebody that's been in the business for awhile, run the deals by them or send them some questions so that you know exactly how to do this kind of lending because it's difficult," she said.
Tip 5: Treat your client
Just because some clients that need alternative lending may not have verifiable income, it does not mean that they are not giving you verifiable business. Show them that they are just as important as any other client. In fact, show all of your clients that you are personable and worthwhile to do business with by treating them every once in awhile.
Mario LePage of Multi Prets in Gatineau, Que. holds two annual get-togethers - one in the spring for clients and one in the fall for agents. In the spring he rents out a screen in a movie theatre and provides popcorn and refreshments for about 350 people. In the fall he hosts a barbecue where he makes sure that there is wine and beer for everyone.
"The more careful you are in taking care of your customer and your underwriter, the more success will be very fast," said LePage. "The customer realizes that they are very important to me and they like that."
Treating your client in such ways outside of actually helping them with alternative lending is often a successful encouragement to have them refer you to new customers.
Next page: Tips #6 to #10
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