Guiding the first-time homebuyer will create clients for life

_{By | 01/09/2010 8:00:00 PM | 0 comments}

Sharon Vander Duim – Mortgage Broker, Dominion Lending Centres, Bowmanville, Ont.

CMP: How does a broker’s approach with a first-time homebuyer differ from a broker dealing with someone with home-buying experience?
I think you really need to take your time to understand what you’re doing for a customer. A lot of people will listen to their friends and families who don’t have the proper information. Brokers need to make sure their customers make an educated buying decision by taking time to explain the process and quelling their fears - walk them through the transaction from start to finish and after the transaction closes.

CMP: What are some of the problems brokers face when dealing with first-time home-buyers?
Sometimes customers try to purchase too high – it’s the home they want but they really can’t afford it. Or they lack the down payment. The client jumps ahead and gets overexcited and gets emotionally attached to the property before doing the financing part. The others will over-think the situation and analyze it too much because they’re too afraid and then wait too long.

CMP: What tips can you offer brokers to get first-timers through the process?
Take the time with them and be available. Put the details in writing so that they understand what they’ve got. Meet with them about all the closing costs to prevent unwelcome surprises. Have a complete file upfront so you’re not stressing out clients at the end of the deal. Walk them through the process and be there for them for any type of question they’ve got about their house.

CMP: How would you recommend a new broker who’s trying to cater exclusively to first-timers go about doing so?
Advertise through social media such as Facebook where the young people are doing their business. Young people are their own community, they talk and they refer. Hit the clients in that age group where they operate.

Sometimes people don’t look at a realistic price ranges. Clients build pricing fixations in their mind by setting a cap on what they want to spend, but by educating clients and telling them what they can really qualify for and afford you can offer them a wider range of options. I really think that buyer education is key.

Meet them face to face. Put the numbers into plain and simple language so they can be read and understood. Be there for them as soon as any questions arise.

Keep in contact with the client and provide an annual checkup on their mortgage product because their lifestyle will change over time. Update your client’s information and remain a part of their financial plan. Taking out a mortgage today and not talking or reviewing with the client for five years is a thing of the past; you really need to service your client and stay in touch with them because their needs are changing constantly.

Make sure you emphasize that you’re a specialist in that area. Offer seminars or information sessions. Put them on your mailing list. There are all kinds of marketing information you can send them. I love first-time homebuyers and you get a lot of referrals for their friends.

 

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Bob Donaldson - Mortgage Associate, Invis, Medicine Hat, Alta.

I think the broker has to explain a lot more and help the client understand a lot more to get past the myths of loans and mortgages into the real truths of loans and mortgages. Constant communication and letting the client know that they’re not on their own versus a third- or fourth-time homebuyer kind who likes to do their own thing and get it over with. The first-time homebuyer likes to have a lot of communication with their broker.

I would go back to the myths. Explaining to them what the truths are about the mortgages and how your credit works, how things affect your credit. You have to start from the beginning, explaining to them their credit reports, their assets and their liabilities. Sometimes they’ll come in thinking they can get a mortgage with just a smile and a handshake.

Give as much information as possible in the most clear and concise way. Give them tips, give them websites. I have a blog myself to help first-time homebuyers, so they can read the blog, get some tips then from there, they can give me a call. I have an e-letter as well. Keep yourself in front of them all the time, even after they’ve bought their place, always keep in contact.

Be out there in the community; don’t hang out in your office. Go out to the barbecues, the community events and the parades. Be available for these new homebuyers. Send out some newsletters to the condos and apartment buildings around town and offer first-time homebuyer seminars.

Their credit might not be as established as the banks would like. The banks like a high credit rating but they like to see trade lines, which are your credit cards and things like that. Sometimes a client comes with a beautiful credit score but they only have one credit card and they’ve only had it for six months. The banks want to see some stability there for credit. Additionally, with all these new rules implemented in April, they have to qualify at a higher rate than what they’re actually going to be getting. Someone could be getting a 3.75 per cent rate but they’ve got to qualify at almost six per cent and that can be a challenge too with the debt ratios.

Communication. Listen to the consumer, listen to their concerns. If a broker comes in thinking they know everything and can settle them down, it might not be very effective. The best thing to do is just to close your mouth and listen to the concerns of the buyer. After they’ve talked, you can talk your way through the process. Everyone is different, so it’s a matter of hearing them and dealing with their issues one-on one.

Followup is a beautiful tool. Constantly keep in contact, call the client or send a “thinking of you” card on the anniversary of their mortgage. By the time they get that five times in a row, the fifth year they’re going to be calling you. Keep in contact with your articles or your blogs and even send a birthday card.

Teaming up with a Realtor who deals with a lot of first-time homebuyers is helpful. You can do open houses with these Realtors where you can pre-qualify people coming through. If you’re in a team, that helps out a little bit more too, especially with referrals. And, of course, find a way into the magazines and newspapers so your name is constantly out there.

 

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Lou Salveno – President VERICO The Financial Forum Ltd., Vaughan, Ontario

Essentially, from my perspective, when I’m dealing with a first-time buyer I like to walk them through the entire process, from beginning to end, the whole real estate/mortgage cycle. Generally what we do is start with an inquiry with the client.

Personally, I like dealing with first-time homebuyers. The first-time buyer will generally be more excited to be approved and are generally more willing to listen to your advice because they’re unspoiled. You don’t have to teach an old dog new tricks. They understand that you’re a professional and you’re trying to guide them in the right direction for the greater good of the deal and for the greater good of themselves and their future.

Just know your products, know your lenders and know, not just the mortgage process, but the entire closing process. Because your clients, especially first-time buyers, are going to rely on you more than anybody else in the transaction to guide them. You, as the mortgage broker, are the go-to guy for all the advice that’s required. The lawyer is obviously very knowledgeable, as would be a real estate agent, but I think the mortgage broker has to be the quarterback of the transaction.

He would have to put himself out in the market as somebody who is knowledgeable in that market and who, again, is not selling them a mortgage so much as being able to provide the client with a service and that service is: “I’m going to be your liaison between your lender, your lawyer and your real estate agent. I’m going to walk you through this entire mortgage cycle.” It’s not about the best rate, it’s about the best professional advice and courtesy you can provide the client.

There could be credit problems, there could be income problems and there could be down-payment problems. Those are the three branches that I see and everything else is leaves of those branches; they’re kind of variations of those issues.

In my case it’s a little easier because we have so many years of experience and we’ve assisted thousands of first-time buyers over the years. For somebody who’s new to the market, basically, ease their fears by explaining to them all of the benefits that are available to first-time buyers and all of the information and data that’s available to help them understand the process. Once you’re in the circle it’s not as difficult to buy a house as it is when you’re outside of the circle.

Treat them well and gain their respect. Make yourself the go-to person for all of their financial advice. So when they’re looking for anything to do with financing, be it a loan or any type of investment in the future they will know that you’re the guy to call. You have to create an ongoing marketing plan, you have to touch base with your clients on an ongoing basis whether it be electronically or by written material, or by telephone or in-person meeting. You have to keep in contact with your client, that’s a must.

·         A large proportion of first-time homebuyers research terms and conditions (84 per cent), compare the costs of different interest rate scenarios (71 per cent) and check for competitive interest rates (65 per cent).

·         First-time buyers consult a great deal with various third parties and mortgage professionals prior to obtaining their mortgage.  They consult with mortgage lenders (59 per cent), family and friends (58 per cent), mortgage brokers (48 per cent) and real estate agents (44 per cent) for advice. 

·         More than three-quarters of first-time buyers reported they received advice on mortgage terms and conditions, as well as whether to take a variable- or fixed-interest rate. 

·         First-time buyers also report that mortgage brokers and mortgage lenders are more influential to their mortgage purchases.

·         Ninety per cent of first-timers feel that they made their mortgage decision with a good understanding of the mortgage options available to them,

·         Eighty-five per cent said they had a good understanding of how much mortgage they could afford before buying, and 75 per cent feel that the process of getting their mortgage was easy and straightforward.

·         Just under half (46 per cent) of first-time buyers took out their mortgage with the institution they were dealing with at the time while 58 per cent of repeat buyers did not change lenders when obtaining their most recent mortgage.

·         Almost 90 per cent used the Internet to search for information on mortgage options.

 

 

·         First-time home-buying men (44 per cent) are more likely than women (28 per cent) to consider a fixed-rate mortgage

·         Sixteen per cent of first-time home-buying men, compared to only eight per cent of women reported that they have been caught up in a bidding war

·         Seventy per cent of men say they are more likely to consider offering more for a home based on its location, compared to 57 per cent of women

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