Shopping Revisited

If there is one maxim that potential homebuyers have heard over and over it is that they should shop for a mortgage. People grow up learning how to shop "the American way" which is to compare the prices of almost identical goods. The problem is that mortgage shopping is completely different than shopping for, say, a DVD player.

Because of my visibility in the industry, I hear lots of stories from homebuyers telling about their success and failures. I also get calls from wanna-be homebuyers who are seeking a mortgage and think that I might be a good lender for them. In these cases I have a front-row seat in seeing their shopping practices. Some are heart-warming but others are really discouraging.

The best calls come from people who have read my book. After 250 pages, they think that they have gotten to know me and can accurately assess what I might be like to do business with. I agree. They know my dedication to educating my clients and helping them make good decisions. I think that is the essence of my job and it is a pleasure to deal with people who feel that is what they need.

But I get calls from people who have an entirely different take on the process. One last week was so striking that I feel it would be instructive to explore what happened. I want to say that I am not sorry about not "converting" them to clients because we did not have a good fit. I try hard to avoid unpleasantness at my stage in life.

I received an application from first time homebuyers through my website. I followed up with a phone call to the wife, as requested. I immediately discovered that there was a language issue as English was not her primary language. That was OK because I do a lot of loans for immigrants to this country.

It made me wonder though, because her husband's name suggested that he was a native English-speaker. I think that he and I might have done a more effective job communicating, with her tagging along, so to speak. Yet they obviously did not have that conception. I speak a bit of French and when in Paris I would not think of sending my wife, who has trouble with "Merci," on a shopping mission alone. See what I mean?

I asked if she were interested in getting pre-approved for a loan. She said, "No, we have already been pre-approved with three other lenders." So I asked, "Why did you call me?" Of course, she thought I might have a better deal. Now, I expect that homebuyers will call several lenders, but it is unnatural and I think unwise for applicants to go through the pre-approval process with any lender other than the one they intend to use. It proves nothing and shows a lack of respect for the lender who, at that point, is working for free.

I ascertained that in her shopping quest she believed that the quotes she might receive would not be valid unless she applied, at which point they wouldn't lie to her. I don't agree with that. Liars don't suddenly change just because you applied. If anything, they probably are emboldened. She filled out my application to induce me to give her a quote. Well, I was unwilling to play that game. Once she had a number from me, she'd hang up and continue on her mysterious quest.

I felt a little sorry for someone who was so far off track so I tried to educate her about the process. I finally got her to agree that she thought that they ought to do business with me. I shouldn't have wasted my time because, at that point, she asked about my fee and told her it would be 1 point of the loan amount, about $4,000. She said she did need to discuss that with her husband but I did get her commitment that she would call me back that afternoon.

Well, as you might expect, I did not hear back from her. Had I not tracked her down, she probably never would have called back. I called her the next day, got voicemail, and finally send her an e-mail message reminding her of her commitment to calling me back. Shortly thereafter, I got an e-mail back saying that her husband thought my 1 point fee was "too high."

Now, I know that my fee is reasonable, if anything a little lower than other reputable brokers. So where did they get the idea that it was too much? I suspect that the other lenders she called, all banks, quoted her a "no-point loan." So the borrowers jumped to the conclusion that it would cost them an extra $4,000 to do business with me Of course, that is far from the truth but they didn't understand. So that costly demon "Not Bothering to Get Educated" claimed another victim.

Whatever, I was glad to see them go, but I feel sorry because they'll never get better advice than they'd have gotten from me. But then again, I don't think that were interested in advice.

Be very careful out there.