So much time and effort goes into brokering mortgage deals and so much time is lost when a deal implodes.
On one hand, the agent loses a deal but on the other hand, if too many deals end up not making it to closing, this can impact the long-term relationship between the brokerage and the lender.
Hence, it is important that your agents and brokers have the training and tools they need to be aware, diligent, and aligned with your lenders. This helps mitigate risks and ultimately increase closure rates.
So, when exactly should due diligence come into play during the process?
- At the application stage, when the agent or broker receives an application and determines that they want to move forward with the deal.
- After a preliminary lender approval has been obtained and it appears that the deal will move forward?
- At the appraisal stage?
- When all final documents have been signed and the deal is about to be submitted to the lender for instruction.
We would say that the correct answer is number 1.
It is a common practice for an agent or broker to obtain approval and then wait until the appraisal is completed to begin underwriting their deal and validating other information.
This means that the customer has now spent money on an appraisal, the lender has spent time reviewing and issuing an approval, and an insurer has most likely entered into the equation. If the deal collapses on the basis of the appraisal – a lot of time and effort has been wasted for everyone.
This is where an Automated Valuation Model (AVM) can come to the rescue.
Incorporating an AVM in your process can help you with multiple things including if the customer is misunderstanding or misrepresenting some aspects of their financial profile.
These are just some of the things that an AVM can validate at the application stage:
- Value – value can both kill a deal and increase the potential of the deal.
- Legal homeowners – it matters if there are other individuals, like a spouse or a parent, on the title. This information is particularly relevant when it comes to refinancing.
- Registered mortgages – often consumers have lines of credit and secondary financing registered against their properties. Catching this at an early stage can be beneficial for all the involved parties.
By validating this information as well as the borrower’s overall income at the application stage and before the deal is submitted to a lender helps identify potential roadblocks and streamline the process.
Here’s a look at the benefits you can expect:
- Better utilization of your time – time saved working on bad deals can be used to facilitate good ones!
- Improve your closure rates.
- Save money – you can save your customer’s money by doing the due diligence first to validate their information versus doing it afterwards. This includes the money spent on the appraisal as well as the fees paid to a lawyer to close the deal. This can also help in boosting the customer’s confidence in your services. So, it’s really a win-win situation!
Purview’s AVM tool can help you support your customers and have a stronger alignment with your lenders. Learn more about our property valuation tools today. Call 1-855-787-8439 or visit www.purview.ca.