Some time back, a Mortgage Broker friend of mine was frustrated as his business lodged around $20m in Approvals-in-Principles (AIPs) in a year, yet only around $4m resulted in actual settlements. A lot of work for little financial reward given a 20% conversion.
He asked me what I do once a client has been AIP’d and whether I experienced a similar statistic.
My first comment was “we get paid on settlements, not lodgements”. As obvious as that sounds, many brokers focus on the wrong levers.
Naturally the client has to buy a property for the loan to settle, therefore you should implement a diligent follow up process to ensure you’re not working hard for little financial reward.
Here’s what I recommend you do.
Firstly, determine your clients’ hot buttons.
For example, if the client is motivated to move out of home and buy his/her own first home, then the hot button is freedom, new experiences, a sense of achievement, proud home owner, enjoyment of own privacy, and great times entertaining friends on your own terms.
Each time you speak with the client, make reference to some (or all) of their highest value needs (their hot buttons).
Next, ensure you touch base by phone (or email at worse) at least monthly from the date of the AIP.
Remind them each time that the clock is ticking and that once the AIP expires they’ll be subject to new credit policy should there be any chances that reduces their borrowing capacity, which will alter their buying options.
I suggest you ascertain how active they’ve been and ascertain what’s been the issue and why they haven’t yet scored a purchase.
Is it the fact they keep missing out? Or are they time poor and haven’t been actively looking?
Go back to their hot buttons and remind them that delaying their purchase will cost them more than money.
Again making reference to their highest value needs (their hot buttons).
Depending on their cash resources, you may even promote the services of a Buyers Agent to ensure they get off the fence and score a goal much sooner.
Remember, an AIP tends to collect dust with some clients.
Your job is to keep the momentum alive and keep them focused (and motivated) in order for them to strike ASAP.
If you want to create a highly successful and profitable mortgage broking business, contact us.
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