When Smart Fails - Don't Be the 1 Out of 1000

Real Estate Technology with Content, coding, marketing, host.

I remember my parents telling me, "they need you more than you need them" about a particular episode in my younger life. Here is a little insight to my personality, business method and ideals based on that same factor. I love my loyal clients and they love me. Even my new clients are always referring business to me. My desire is to be the best provider of mortgage services with the highest possible integrity there is available. Sometimes something just doesn't fit - like a Tinker ToysTinker Toy and a Lincoln Log: they just are not made for each other.

This is transparency - not that fakey crud you hear people calling transparency. This may also be somewhat of a constructive vent ... a rant if you must. You may also file this under the topic of a lesson in "Intelligent Negotitating" or "Foolish Follies of the Free Mouthed Morons". Sure, some will say, "Ken, do you really want your prospective customers reading this in a public blog?"

A.B.S.O.L.U.T.E.L.Y. - in fact it may save some a lot of time and embarassment down the road. It will also tell them I am extremely confident that my pricing is better than the market. Then it will tell them not to be a jerk. But that's only 1 out of 1000.

Rates are very low right now. I mean very VERY low. There is an old customer of ours who has always been talked about around the office. He has done two or three loans with us and every one is like pulling teeth. Oddly the loan officer who used to handle his loans is no longer with us and between you and I he did pretty well in commissions on the guy. Let's call it "PITA costs".

So this particular person calls last week and asks for the LO. I explain he has left to go back to school but I will be happy to help him. I recognized his name as a repeat client and priced his loan extremely low. I mean much MUCH lower than he can get from any other lender without a lot of begging, pleading and maybe some lying. In fact I sent him a Good Faith Estimate with fees less than 1/2 of what they would normally be. Not only that but I quoted him a PAR interest rate at 4.375% on a fixed 15 loan. No discount points. Nothing rolled into the refi - just a straight up 4.375% rate.

I didn't hear from him for a few days and the rate went back up to 4.49% so I emailed him to let him know. His response? "Your fees are very high."

So I'm not worth 1/2 of my normal pay?

Negotiating is one thing. Being insulting is another. There are certain points in the negotiation when I stop communicating, withdraw any former offers and really don't care if the other party just goes away. This is one of those instances. Now what I am not telling you is something you really need to read - all 3 of you who actually do so. I also recently received a buy-back letter where this guy cost me $1460.57 for paying off a loan early. In Georgia we are not allowed to charge a prepayment penalty so we generally have other ways to work around it. The hiccup comes when the borrower either refinances or otherwise pays off a loan early either through selling or just paying off the loan with cash. Most people, 999 out of 1000, do not know brokers have to do this - we have to "buy back" the loan fees from the funding lender.

Needless to say I can only do business like that about once every ten years!

And now the point: The things we say have an impact and an effect. I have worked with real estate investors for years and years and years and ... you get the point. The old seasoned veterans are generally as cool as a cucumber and have realistic expectations as well. The new ones are generally maleable and interested in learning - it's the wise brains who have done 3 to 15 deals who are the most arrogant, stubborn and foolish of the lot. I love it when people say, "I've done 10 deals - I know what to expect!!!"

Really? I passed 3000 a few months back :)

In the end this guy missed his chance at a 4.375% no discount loan with closing costs about 1/2 of what they would normally be. No, I will not still honor this deal - instead I will refer him to someone else. Maybe you. I offered, he insulted, I am no longer offering. In fact, there is now a note in our system in the event another LO picks up a call or email from him to refer him back to me - although I know my staff. He lost his chance. Maybe I lost mine, too. Then again who needs disrespect and arrogance even in times like these?

Another BLAH BLAH BLAH from Ken Cook

TWITTER TUESDAY RADIO Don't forget to listen in to Jason Crouch and me on Tuesday's at NOON EASTERN at http://blogtalkradio.com/jckc for one of BTR's consistently most popular radio talk shows on Social Networking on the network!

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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!


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Donna Yates
BHGRE - Metro Brokers - Blue Ridge, GA
Blue Ridge Mountains

I echo Lenn's comment.  I wonder how it got this way, what makes some consumers treat mortgage and real estate professionals with such arrogance?  I am dedicated to my profession and work long hours for my clients, if they can't appreciate that, I really don't need them even in this market. 

Feb 12, 2009 10:41 AM #6
Kelly Young
The Platinum Group Realtors - Colorado Springs, CO
Colorado Springs Real Estate ~ 719-226-0126

Ken, I like the fact that you are clear about what you offer; it is a win/win deal for everyone and you are willing to walk away from someone versus just be about money. To me that is an incredible character statement.

Feb 12, 2009 11:01 AM #7
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Ken.. I can give him 3.5% with no fees. You only cut your fees in half?  Oh, wait... I can offer lower fees and a lower rate, but he wouldn't close with that.  When your margin is thin and someone beats it out?  99% of the time, it's a bait and switch.

Now, maybe this other loan officer has less fees and or a lower rate, because he listened to President Obama and congress, that they are trying to lower the rates to 4% in the stimulus bill.... 

Overall, awesome blog.  I love those shoppers that know it all, because the other loan officer made them believe that their promise is worth the paper that it's promised on. Great job here.

jeff belonger

Feb 12, 2009 11:43 AM #8
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Ken -- From my experience with consumers, they inherently do not understand, nor trust mortgage people, as there seems to be no transparency, no way to account for how they make their money, etc., and that affects even good, reputable mortgage folks.  There is no excuse for rudeness.  I feel that two intelligent adults should be able to have a rational, open, transparent exchange of facts, and let the chips fall where they may, all in the name of professionalism. 

If we all did that (no matter what field), the hostilities, insults and the like would fade somewhat and I think everyone would benefit.

Feb 12, 2009 12:34 PM #9
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Ken - You are my freaking hero, end of story.  I'll stop back...

Feb 12, 2009 12:39 PM #10
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Ken - Simply put, this is one more reason that you and I are friends.  I handle my real estate business in the same manner that you handle your mortgage business.  Great rant!  I guess I should include a plug for the show on my posts, too!

Feb 12, 2009 12:56 PM #11
Jennifer Walker-Derby
Re/Max Westside - Marietta, GA
Real Estate Extraordinaire

you can't make everyone happy but you can make your own life easier.  Sounds like it was meant to be

Feb 12, 2009 01:02 PM #12
James R. Venney
Gibraltar Private Bank & Trust - Coral Gables, FL

Ken - I might be the only one to digress slightly here but I feel it is our responsibility to help re-educate the borrowing public that getting a mortgage is about advice before price.  There will always be someone out there that will do the deal for less than you.  Typically it's someone who has little expertise and nothing more to offer than "I have the lowest rates" which we all know is a claim that no one can make, especially in an environment where there are multiple rate sheets just about everyday.

Some in our industry turned mortgages into commodities and through their actions and advertising trained home-owners to shop almost exclusively on price which is one of the reasons that we are in the situation we are in.  Perhaps that client just needs to be re-educated on the new reality of the mortgage landscape.  

While not the technical definition a mortgage in a sense is a financial instrument which demands serious consideration beyond just price.  Your client needs to know that price is important but it is certainly not paramount.

Great post....food for thought.


Feb 12, 2009 01:55 PM #13
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

@ James R. Venney - "...advice before price."  Your entire comment is exactly right in my opinion. And the three words I put in quotation marks before that I made this a very third sentence behind the second one that encompass not why smart fails, but why wise wins.  Every once in awhile a post and comment on a blog will restore my faith in this industry, this is one of those once in awhiles.

Feb 12, 2009 03:35 PM #14
Barbara Delaney
Park Place REALTORS, Inc. - Roanoke, VA

Dear Ken,

Excellent post!  Sometimes, you lose, even when you give the best deal possible upfront.

Sometimes, you lose because you give the best deal possible upfront.

Sometimes, it is better to lose!


Feb 12, 2009 05:52 PM #15
Bruce & Mary Smith
Savannah Lakes Homes - McCormick, SC
REALTORS, Savannah Lakes Village McCormick SC

Great post!  Someone above said that consumers do not trust mortgage people.  I think there is an inherent mistrust in our country right now!  Wonder why?

Feb 12, 2009 10:30 PM #16
Tere Rottink
CoastalVa Realty Inc - Virginia Beach, VA

I like how you tell your story.  There are some people that I prefer not to work with, even in desperate times. 

Feb 12, 2009 10:41 PM #17
Karen Luke
South Metro Property Management, LLC - McDonough, GA
Henry County Real Estate

You will probably come across more and more of those who insult as the year goes on.

Feb 13, 2009 12:55 AM #18
Robin Scott
Robin Scott, REALTOR® - Austin, TX
Broker, CRS, ABR, SRS, REALTOR® - Austin Texas

Sometimes you have to fire the client. You will probably look back and be glad you did.

Feb 13, 2009 12:55 AM #19
James Wexler
wexzilla.com - Scottsdale, AZ

this is a very strange and not particluary good strange time we are experiencing, people expect better quality and service at a much deeper (or free) price

Feb 13, 2009 01:14 AM #20
Brian Opperud
Hot Realty Leads - Phoenix, AZ

I've found that the people you try to help the most (give the biggest discounts or extra service) tend to demand more, offer less, and treat you the worst.  I don't understand it, but the farther you go to help a customer the more likely they won't respect you for it.  Some people just aren't worth doing biz with.  Just my $ .02

Feb 13, 2009 03:12 AM #21
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Ken: The haredest part for anyone to do is to define their business and stick to it. We all want to help everyone within reason. The sooner we define our business and stick to our guns, the more successful we will all be. I wish you well!



Feb 13, 2009 06:41 AM #22
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Oops! I didn't expect this to be read - much less featured ...

Gina - he didn't actually say we are friends did he? lol

Lenn - exactly. That's why I am secretly hoping he calls me again.

Elizabeth - you can push me pretty far and I'll still work with you. I mean, not you personally. You know what I mean :)

Donna - agreed. I also don't like it when I hear a loan officer talking about how stupid an agent is or when I hear a agent talking about how "my lender" would do it. If we all just do out jobs and do them with high ethics it is seen even by the people outside. We have to stick together even if we don't know each other. Our clients talk whether we are agents or loan officers and they tell us what the other said about us. I know, I've owned a mortgage company and a real estate company. Yee haw! Did you get any of that huge hail up there?

Kelly - well thank you. My character has improved with time - and practice.

Jeff - I know, right? So much for that idea! I guess he wanted me to do the loan for free and pay his mortgage payments for him. Stupid me.

Chris - the funny thing is mortgage brokers are forced by federal law to be transparent ... banks and direct lenders not so. And yes, no matter what industry we are in the good are always pulled down by the evil. Look at Ronald Reagan and Rod Blagojevich both were politicians. Police officers, military commanders, movie stars and bar tenders. We all have to carry the weight of the foolish.

Sardi - I'm just a sophisticated rednerd. Stop it.

Crouch - you mean you're not plugging the second most popular (at least at one time) Social Networking show on BlogTalkRadio?

Jennifer - ditto. Exactly.

James - I don't think you are digressing. In fact this guy is a multi-property client and I'm pretty sure has attended at least one of my seminars. Education beats legislation every time.

Barbara - who lost? :) I'm still busy helping clients who have a clue! Him? Not so much.

Bruce & Mary - Hmmm, I wonder :)

Tere - thanks!

Karen - maybe. Too bad for them.

Robin - let me look back. Yep. Glad!

James - now that is the truth. Well put.

Brian - if the guy was not a repeat client I would have played the negotiation game.

Paul - thanks, back at you!

Feb 13, 2009 07:58 AM #23
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Dude - That might be the best profile picture I've seen.  I wouldn't exactly say I haven't been plugging the show.  :-)

Feb 13, 2009 09:25 AM #24
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I don't work with people I don't like.  Just a little rule I have... applies to clients, vendors... everyone. 

Feb 13, 2009 03:17 PM #25
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