Close 20% more loans by better utilizing your appraiser.

Close 20% more loans by better utilizing your appraiser.
By Brian Blanchard, Chief Operations Officer, PROvalUSA.com

Over the last 5 years, I have met with thousands of lenders and mortgage brokers at various tradeshows and educational forums. Almost every one of them recalls numerous horror stories in which appraisers have "cost them loans".

Occasionally, I run into lenders who have discovered how to turn appraisers into their greatest allies. You see, what these lenders have figured out, that the others have not, is that appraisers are not just evaluators of real estate. In fact, when managed properly, appraisers and appraisal related technology become extremely useful business partners that can: eliminate time wasted on deals that won't close, solidify marginal deals, and expedite solid deals.

On average, nearly 30% of "qualified" leads back out after credit is run, disclosures are signed, and the appraisal is ordered. Frequently, the cause of these cancellations can be traced back not only to value issues, but time delays associated with the appraisal process. In many instances, I have seen this cancellation rate reduced to as low as 10% resulting in a 20% net increase to throughput.

By implementing 3 key points, you can be on your way to a better close ratio:
1) Pre-Qualify your borrower's property collateral (estimated value)
2) Lock out your competition by getting your borrower to commit
3) Follow Through

Pre-Qualify Property Collateral
Every lender in the industry pre-qualifies the borrower by running their credit history. However, relatively few currently pre-qualify the property collateral. When the borrower's estimate of value turns out to be different from reality, you lose. By finding this out at the beginning of the game rather than at the end, you have time to restructure the loan package (you win).

Thanks to today's appraisal related technology (AVM's, Automated Comp Checks, and Data Reports), lenders can pre-qualify the borrower's property collateral in seconds. This frees appraisers of the manually intensive and time consuming process of checking comps &/or any legal issues of doing so. An added benefit of pre-qualifying the borrower's property collateral is an increase in responsiveness from the appraiser.
Lock Out Your Competition
Today's borrowers are more aware of the loan options available to them. Many have found multiple lenders offering very similar products. Therefore, competing on rates alone is often a losing battle. Successful lenders must get their borrower to commit. This can be accomplished if the lender's appraiser contacts the borrower within 24 hours or less from the time the appraisal is ordered. This task is more easily accomplished than you might think if the appraiser is approached and engaged properly. When lenders get the borrower to pay for the appraisal at the door, combined with a quick inspection by the appraiser, competition lock out is almost assured.

Follow through
Like most lenders I have met, appraisers are human, and while they usually have the best of intentions, today's fast paced environment sometimes causes things to slip through the cracks. In this regard, it is not enough to ask the appraiser to set an inspection appointment with the borrower within 24 hours of ordering the appraisal. It is possible to maintain, or even outsource, a structured follow-through plan to consistently achieve the desired results.

In future blogs for this series, we will explore in greater detail each of the key points touched on above with the intent of helping to improve your close ratio.

Brian Blanchard is the Chief Operations Officer of PROvalUSA.com, the source for residential appraisals nationwide. The St. Peters, Missouri based company provides appraisal management with a modern twist. Since its creation in 2000, PROvalUSA.com continues to attract lenders to its unique open approach to appraisal management. For more information about PROvalUSA.com, visit http://www.provalusa.com/ActiveRain/ or call (866)243-7723 ext. 201.

The comments in this blog are solely the opinion of Brian Blanchard and are not necessarily representative of PROvalUSA.com's position on any particular topic.