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7 Jun

Rate and Terms of a Mortgage Are Both Important


Posted by: Kimberly Walker

Here’s a story you can share with your clients who only want to talk about rate.

Omer Quenneville loves to tell the story of the two clients who bought identical condos in the same building – and especially loves to remind the client who didn’t listen just how wrong he was.
“Do I love saying ‘I told you so’?  Of course I do!” laughs the Toronto Centum broker, who wants brokers to understand that you will never lose a client if you build a relationship based on education – and not on just rate. “That is the first mistake if you make it all about rate – the client should understand that they are selling their soul if their decision is based on one-tenth of one percent.”
Quenneville’s cautionary tale involves two clients who were interested in condos in the same building – one on the sixth floor and one on the seventh.
“It was three years ago, and they both had me as their agent,” he told “I explained that with a variable mortgage you have more options with only a few basis points difference, and who cares if the rate goes up because there will not be any penalties involved compared to a fixed.
“Well, the one client listened and the other didn’t (both had loans from the same bank). Fast forward to 2013, and they each want out of their mortgages two years early. Well, the client who listened to me only had to pay a small discharge penalty and went on to use his equity to buy two more condos in the U.S. The other,” Quenneville chuckles, “would have ended up paying between $13,000 in penalties. So instead he’s had to stick it out for another year and a half in his condo. And yes, I said ‘I told you so!’”
Angela Calla, a broker with Dominion Lending Services and host of The Mortgage Show, agrees that there will always be clients who want to listen and learn, and those who will always want to go their own way.
“Communication is the most important thing in this business,” says Calla. “When the clients aren’t communicating, you are going to lose them. Some will want to do it themselves, and to those we wish them the best of luck – they will live and learn. Others will do their researching on the web, using rate sites, but will also want to understand the business.”
She, like Quenneville, finds the best broker advocates are those who have been burned by making a bad deal in the past.
“First-time homebuyers are usually fixated on the rate, and it is difficult to explain to them the benefits of variable, fixed and penalties,” she says. “But those who have been burned in the past? They are our best advocates. No one sings our praises louder than the client who has paid out a big penalty to get out of a fixed mortgage early.”
But Calla won’t say “I told you so.”
“Let’s move forward, let’s not make the same mistake again,” is what Calla tells her clients who have been burned in the past. “But not ‘I told you so.’”
Like Calla, Quenneville stresses the need to educate and take the time with clients to explain all the options available, and what is in their best interest; but he does admonish brokers for being too volume-focused.
“If you don’t take the time with a client, if you are more about volume than quality, then you will get burned by that client down the road,” he says. “The volume takes care of itself when you take care of the client.”