Do any of you remember that classic great movie ‘The Good, The Bad, and The Ugly’? It was a 1966 Italian/Spanish spaghetti western starring Clint Eastwood, and the plot revolved around three gunslingers competing to find a fortune in buried Confederate gold amid the violent chaos of gunfights, hangings, American Civil War battles and prison camps!
Last week Howard and I watched the movie (gotta love a young Clint Eastwood!), and I couldn’t help thinking about how the movie and its plot reminded me of the video mystery shops that I watch each week for my new home builder clients!
Look at it this way, your sales people are the ‘gunslingers’ and they are all looking to find the ‘fortune of buried Confederate gold’ (sell a new home, earn a commission) in the ‘violent chaos’ (new home sales) of ‘gunfights, hangings, battles and prison camps’ (finding prospects, mastering a sales technique, closing the deal and contract negotiations). Whew! It can get mighty tough out there for our new home sales people, pardner!
Typically I see new home sales consultants handle these situations in one of three ways: The Good, The Bad, and The Ugly! Let me give you an example: A prospect walks into the sales office for the first time and is greeted by the sales consultant.
The Good: “Hello there! Welcome to Arbor Lakes! My name is Susan and you are???….by the way, did you happen to visit our website”
The Bad: “Hi, I’m Susan. Fill out this registration card and then I will show you the models.”
The Ugly: Sales person is on the phone in her office, eating a Lean Cuisine, and yells out to the prospect: “I’m on the phone; the models are through that door. Let me know if you have questions on your way out.”
Now, you might think I’m kidding. I’m not. I see this type of behavior often when I watch video mystery shops. In many cases, a lot of the Bad and the Ugly behaviors are a result of not having adequate sales training. Other times, it’s just a person in dire need of a career adjustment! The point is, it does happen. So, how do we get ALL of our sales people to turn into ‘The Good’ (Clint Eastwood’s character)? You probably can’t. But you can (and should) identify who on your sales team needs to improve their sales skills and tactics. The best way to do this is to actually ‘see’ what’s going on in your sales offices. This is where video mystery shopping takes the guess work out of the process!
One of my favorite quotes from ‘The Good, The Bad, and The Ugly’ is when Clint’s character says: “You see, in this world there’s two kinds of people, my friend: Those with loaded guns and those who dig. You dig.”
Let’s give our sales people the ‘loaded guns’ they need (sales tools, training and techniques), so they don’t have to dig, you dig?
Debt is Really Just a Bad Habit sounds like such a simple answer to such a difficult problem. Prove it to yourself in three shopping days by following this approach.
On the next three shopping trips, make a note recording if you paid the purchase with a credit card, a debit card, or cash. As soon as practical record the items you bought, the price paid, and how the payment method. Keep recording this information for the three shopping day proof period then summarize the results.
Your summary should have four columns: Item, Price, Payment Method, and Real Price (Cost of Debt). Once the summary is complete, do a tabulation of your shopping activity summarizing the amount purchased by using credit card, debit card, or cash.
When you have the totaled numbers, go to your checking account balance. In today’s world recording of purchases or cash withdrawals from out accounts is real time. Compare the debit card purchases to the amount spent in shopping. Do the same for any money withdrawn from an ATM to use in shopping. If adjusted for the amount that remain in your hands the amounts for cash and debit card purchases should balance to the prior balance and current balance of your account.
There will be no bank balance change for a credit card purchase as this is a Debt incurred purchases not a paid purchase. Somewhere, at some organization you owe money. Compare that debt with available cash in the bank. Is it less then, more than, or the same as the balance in the bank? If the balance is, the same or more you could write a check and eliminate the debt.
We do not take that last step, the step that would keep us out of debt, we say we will wait for the bill from the credit card company to arrive and pay it off then. We do not. We see what the minimum payment is, pay only that as we have a trip planned for the weekend, and need our cash.
A Simple Approach
The simple approach addressing the habit of creating debt-using credit to buy products, is shopping without credit cards for the next three shopping trips of any kind. Grocery shopping, clothes shopping, beauty treatments shopping and do it all with cash or debit cards.
It you cannot shop in cash, debit card approach you have a credit card habit to address. This habit ranks up to the top in a list of hard habits to break, it is in the same category as Stop Smoking; it is as hard for people to do. Both are habits, both are harmful; both can ruin both your health and life in many ways.
You may not have trouble finding a mortgage with bad credit, however the odds are pretty high you paid or will pay more than you need to.
What I mean is you probably COULD have negotiated a lower interest rate, possibly as much as a full 1%!
Why is this?
There are two main reasons…
Failing to Shop Loans
First, most borrowers looking for a mortgage with bad credit simply do not shop enough.
By failing to compare quotes from multiple lenders you fail to let natural competition work.
It’s amazing how many bad credit borrowers accept the first quote they receive.
If you shopped your loan with say 4 different lenders you would be surprised at how much potential room there is to lower your interest rate.
This is because most potential borrowers looking for a mortgage with bad credit simply fail to realize that their potential loan is a hot commodity. Believe it or not, most brokers love to get their hands on loans generated from motivated “bad credit” buyers.
Origination Fee – Very Negotiable
The second reason you’ll pay more for a bad credit mortgage is because you may not understand how the mortgage broker is getting paid.
There is a ton of room for negotiating – just keep repeating that…
Most mortgage brokers get paid on an origination fee. This is simply a charge for their service, which is typically 1%-2% of the loan amount. So on a $150,000 loan they’ll pocket $1500 to $3000 when the deal closes and the loan is funded. This fee is disclosed on your GFE (good faith estimate) so there is nothing secret about this fee. You should know about this long before you go to closing.
Is it negotiable?
Just politely ask the broker to lower the fee to .75% or .5% – how easy is that?
Believe me, if you are shopping your loan between a few different brokers one of them will surely budge and lower their origination fee.
Hidden Premium –
The second way a broker can make money from your loan is a bit more hidden to the borrower – you may not even know you were charged. If you’re a borrower looking for a mortgage with bad credit, don’t worry, you can easily cut this fee right out if you know how. The potential savings avoided can be astounding.
This hidden fee is motivated by pure greed, however, you can use it as a bargaining tool to get the best interest rate.
Remember…to most brokers an uninformed borrower is always welcomed with open arms!