Pre-Qualification 2.0: Overcoming the First Objection

I just recently posted the Difference Between a Pre-Qualification vs. Pre-Approval, which goes hand-in-hand with the proceeding post in maximizing your Pre-Qualification Process.  The post takes you through the various differences and processes of both a pre-qualification and a pre-approval.

 

Most Loan Officers in our vast mortgage industry view the Pre-Qualification process as a huge burden.  They tend to feel that they are a waste of their time right now for a minimal gain in the future.  In my opinion, that is completely off base.  The Pre-Qualification process is a place for you (as an industry professional) can shine!  However, there is that one obstacle that we have to get over before pursuing how to capitalize on a Pre-Qualification:

 

If you are receiving referrals or have a few different lead sources (internet, telemarketing, pay-per-click, etc) you always want to be the “one and only” contact for that client.  In most cases, that’s not what is happening.  However, instead of throwing in the towel, there are several phrases that you can say in order to overcome the “I already got a pre-qualification letter” objection:

 

1. That is excellent, Mr. ____!  I want to make sure that you were educated on all of your financing options and you completely understand them!   How many loan packages were explained to you? (or) What is your biggest concern with your purchase process?
2. That is absolutely not a problem, and I apologize for not getting back to you sooner!  However, I would love to show you what I can do for you since I have been in the industry for __ years, and I really don’t need to pull your credit to provide you with several options (similar to David Bartels’ White Paper scripts).
3. Great!  Have you already selected a Realtor?  I have a couple of Real Estate Agents that are excellent, and I would love to get them in contact with you.  Have you thought about anybody else to use in the process for your closing or title insurance?
4. I’m glad you were able to get in contact with someone already!  Most Loan Officers today are skipping over the pre-qualification process and going right to a pre-approval letter because it is a contingency letter stating that you have been approved through underwriting.  It gives you and the seller more confidence when you put an offer on your future home.  Typically, I can get this up and running in 24 hours; is it something that you would like to look into?
5. In today’s mortgage market, I am so happy that you were able to get Pre-Qualified!  I’m sure your Loan Officer has told you about how rates are affected by Mortgage Backed Securities and not the 10 Year Treasury, right? (courtesy of Mortgage Market Guide).

 

Now, what happens if the person says “No” or refuses to hear what you have to say?  Don’t panic, and definitely don’t argue with the client.  As the saying goes, “Kill them with kindness”.  After all, even though they didn’t get the pre-qualification from you doesn’t mean that they won’t get the financing through you, right?  Right!!

 

Your primary objective and goal right now should be out-teaching your competition!  Put their information in your drip e-mail campaign, or your follow up calendar.  Let the client know that you will be following up with them to check on their situation.  If you are missing a vital piece of contact information (home address, e-mail, secondary phone), ask for it so you can get them out market reports as they are published.  Ask if there are any reports or information that they would like to see right now.  And most important, stick to the Follow-Up schedule!

 Overcoming that first objection is the first step to maximizing your Pre-Qualification process and enhancing your relationship with your client!

The Difference Between a Pre-Qual and a Pre-Approval

Prior to getting into maximizing the marketing power of a Pre-Qualification, I would briefly like to go over the difference between a Pre-Qualification, and Pre-Approval. Many people (not just clients) use the two terms synonymously when they should not be.

The Pre-Qualification process can be considered a mini-loan process. The loan officer speaks with the client, typically no documents are collected at this time, and credit is run. After the credit check, the loan officer gives a rough estimate as to what can be done with regard to financing percentage, rate, and programs. The file is not run through an underwriting process, but it does meet very general loan criteria such as debt to income ratios for a purchase, etc.

Essentially, the pre-qualification letter is one of the initial pieces of marketing material that you provide to your clients. Most L.O.’s use these letters instead of a Pre-Approval because they are quick and easy to complete. Generally speaking, information used in a pre-qualification is vague. The figures provided (such as loan amount and loan to value ratio) are only rough estimates stating what could possibly be approved through underwriting.

The Pre-Approval process is a more complete than a pre-qualification because it is a conditional approval from underwriting. Similar to the pre-qualification process, the LO speaks with the client, and checks credit status. Loan documents are usually submitted to the LO, and you now have the start to a full loan package. The loan is then run through initial underwriting. When the loan is approved via underwriting, there will be conditions (or stipulations) attached to the loan. This is stated in the content of the letter.

In the same thought, the content within the pre-approval letter gives more buying power to the client and the Realtor because it shows that they have actually been approved for the loan via underwriting. The conditions are plainly stated on the letter with all of the financing terms like financing percentages (loan to value ratio), highest loan amount available to the client when taking taxes and insurance into consideration, type of loan program, term of the loan, etc. Typically, the conditions will range from the appraisal to desk review of purchase. Again, these letters provide a better sense of security to both the buyer and the seller!

You are all probably reading this and saying to yourself that you are now going to be doing pre-approvals instead of pre-qualifications. Here are a two tricks on how you could use both letters and help retain your client and cultivate a solid relationship with a Realtor:

1. Use the Pre-Qualification process as an intro into your relationship with the client as well as the Realtor
2. Use the Pre-Approval as a “courtesy” when they are thinking about putting an offer on a home

Now, how can you start to really maximize your Pre-Qualification letters and process? You’ll have to read the next post for more which will be on Wednesday, January 2, 2008! Have a happy and safe New Year’s Eve!