In the final part of his two-part series, one leading broker explains the buydown component of his renewal conversion process.
In the final part of his two-part series, one leading broker explains the buydown component of his renewal conversion process.
If you haven’t yet read part one, click here.
Act 2: Pursuing a bigger slice of the pie (the pie I baked)
It has become hard to ignore the constant chatter around rate buy-downs, with one lender in particular offering a stellar product recently voted Mortgage of the Year by Canadian Mortgage Trends. Taking a page from that playbook, here is a game plan I am currently in the early stages of working. It is not meant for the first-time-caller. It is purely intended for existing clients who fit a specific profile largely dictated by the specific lender that supports my ability to offer a rate typically 0.20 per cent below anything the client’s current lender can approach.
Core criteria:
• Existing client (application already built = time saved)
• Trust and rapport already established
• Owner-occupied properties only
• Maximum two properties on the application
• Currently with a chartered bank or credit union. (Creates an IRD conversation)
• No BFS stated income
• Legals and appraisal NOT guaranteed to be covered (Collateral)
There is a detailed conversation to ensure that this product is the right fit, and thus far my clientele maintains a 90 per cent pro-variable rate selection.
#pb#
This creates a transaction that typically consumes no more than 90 minutes of our time in the office from start to finish, and not much more of the client's time either.
With a potential savings of $999.60 per 100K of mortgage balance over the term, it has gone over very well thus far.
The temptation to offer the same thing to said client's friends, family members, coworkers, etc. (should they be referred) is actually quite low, about 40bps too low in fact.
As we all know, starting a file from scratch is significantly more work. There is trust to be built, an application to be built, assisting the client with adapting to your process around documents required and documents to be signed.
It is simply too much to be done for half the commission in the full service manner in which I like to work. I find that a brand new transaction will typically consume seven hours of time overall.
Perhaps more importantly the goal with this program is to add value and reward loyal clients for their decision to work with us two, three, four, or five years ago.
Clients come away with a superior rate, unbeatable in fact, and in turn we earn a degree of compensation. A win/win.
This is one proposal as to how to approach a market segment in which brokers currently have very little to lose, and so much to gain.
Dustan Woodhouse is a B.C.-based broker with DLC.
