Why not beat the banks at their own game?

Why not beat the banks at their own game?

Why not beat the banks at their own game? It may go against conventional wisdom, but one of the most successful brokers in the industry suggests using the bank’s preapprovals against them by sending your clients there first and then beating them on rate.

“Very simple solution - just do not do preapprovals for your customers. We no longer do them,” Jim Tourloukis of Verico Advent Mortgages wrote on MortgageBrokerNews.ca. “We tell clients to go to their bank for a pre-app and when they buy to give us a call. Nine out of ten times they come back for our rates. Very simple.”

Tourloukis’ comment was written in response to a broker who uses a similar tactic – at least with longstanding clients.

“Unfortunately you do have to issue preapproval letters but any time you put a rate on a piece of paper you are a sitting duck. I don’t know how to avoid that because many customers and Realtors want to see the preapprovals,” George Christopoulos of the Mortgage Centre told MortgageBrokerNews.ca last week. “The only way around it is if you build a relationship with your client where you say, this is today, ‘this is the highest you’ll pay but if the rate changes when you have an actual deal we’ll lower it for you.’”

While Tourloukis’s ploy may work in the current rate environment, one broker points out it may not be so easy in the event of a rate hike.

However, for the time being the tactic has worked.

“In a rising rate environment we would lose these potential clients; if we ever get to this situation again (a rising rate environment), I might change my mind and start to do pre approvals,” Tourloukis wrote. “However, at this stage, we are far too busy to spend time on pre-apps. The funding ratios on these are far too low to spend time.”
  • Bob 2015-03-17 11:44:02 AM
    Whats stopping the client going back to the bank and they'll match the rate and throw in other banking sweetners to entice the client to stay. There's more profitiability for the banks on other cross sell products than mortgages
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  • Bonnie 2015-03-17 11:54:26 AM
    I suggest building a solid trusted relationship with the clients and they will not go to the bank at all. Why give your client to the bank?
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  • Jim Tourloukis, Advent 2015-03-17 12:15:19 PM
    The client WILL go to the bank as they should. Do you not shop around when you purchase a car? Heck, many people drive around for hours to save .03 cents a litre on gas. Surely you expect clients to shop around for their biggest purchase. As such, we choose not to waste our time on pre-apps. We actually tell the clients to shop around and to 'call us last' once they are done their shopping. We do this for 'real deals' as well. If we offer a better value proposition, we win. If not, then we have only wasted 7 minutes of our time. Do you lose some clients under this approach? Of course. However, this approach allows me and my 2 assistants to funnel through 750 funded deals a year. It works.
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