3 minute read
Bob walks into a Chevrolet dealership to purchase a car for his family of five. The salesman pleasantly greets him and asks him to take a seat. The salesman proceeds to ask Bob a couple of questions about his credit and income to see how much he can qualify for. Five minutes later, Bob is shown the brand-new SS Corvette on the showroom floor.
Sue calls a Realtor about purchasing a new home. Over the phone, the Realtor immediately asks how much Sue makes, her debts and pulls her credit. After three minutes on the phone, the Realtor says, “Great, you qualify for a million-dollar house,” and sends information on 10 expensive homes.
Both of these stories illustrate a significant lack of both salesmanship and true understanding of a customer’s needs. Yet we as originators follow this same path many times and don’t see an issue with it. By slowing down and taking time to talk with the borrower, you can accomplish three things. First, you can feel comfortable that you are placing the borrower in a better situation than they were in prior to a reverse mortgage. By jumping into a sales pitch within three minutes of speaking, how can you be sure that the reverse mortgage is the right solution for the borrower? Second, you will have a better understanding of which HECM product will be the right fit. Fixed or adjustable? Partial or full MIP? And lastly, the borrower will be more confident that they are making the right choice. They will not have second thoughts about selling the home or consider refinancing with a forward mortgage, moving in with the kids or getting a job. If the borrower believes the loan will provide a better situation, it will lessen the chances of fallout after the “yes.”
The need to take your time with a customer is universal, no matter what product you’re selling. A good car salesman will tell you that taking your time with a customer is essential. I spoke with one who told me that his goals are to learn more about their current situation, gain insight into their motivation and needs, and ask if there are any other decision makers. I also spoke with a successful Realtor who emphasized the importance of educating the client about the market and learning about their motivation and needs. The same principals apply to selling reverse mortgage loans.
I have worked with close to a thousand reverse mortgage salespeople in my career and I still struggle to understand why we think pitching the interest rate, fees and qualification amount within the first five minutes of our conversation with the borrower is the right and ethical thing to do. I am currently working with my grandmother and her lawyer to understand if a reverse mortgage is the right choice for her. She has money in the bank currently earning 1.05 percent and we are discussing a reverse mortgage with an APR of more than 7 percent. If I were to shove her into a reverse mortgage just because she qualified, I may be putting her in a worse-off situation. Conversely, if she was cash-flow negative every month, only had a limited savings account and did not realize she was headed for disaster, by shortcutting the process, I may not have helped her realize what her future was going to be like and she may have balked at the reverse mortgage, keeping her on that path to disaster.
Being a salesperson is not a bad thing. Good salespeople make sure their customers are purchasing the right product for them. And along the way, they end up selling more because they help the customer feel confident in their choice. So take your time to talk at length with a potential client. Get to know them and their situation so that you can decide together if this loan is a good fit for them.
