So the refinance business is going away.
You have a ton of clients who are pre-approved, but because of the lack of listing inventory, they are not able to find a home to buy.
And, “Start calling on real estate agents” has again become the “new” marketing strategy.
However, there is another, lucrative niche to consider – new-construction lending.
Breaking into this niche is not easy. Builders have their own mortgage companies. Or, they have their own preferred list of lenders. They have a line of credit, and the bank may require them to convert a certain percentage of their construction loans into end mortgages by encouraging their customers to sign an end loan with the bank. But, once you do get your hammer (I mean foot) in the door, your business, income and prestige will soar. You will be one of the few and elite loan officers in the new-construction field.
First things first! Before you even think about getting into this niche market, know your loan programs, inside and out.
Find a loan program that offers an interest rate float-down option for your customers. Learn how underwriters will handle increased loan amounts due to allowance overages created by the customer. Do you need to find a lender that will provide interim construction financing for your clients? What are your competitors offering? Can you provide lot loans? Just like any other types of mortgage loans that you originate, new-construction lending requires you to become a student of their rules and regs. Enough said.
Look in any real estate magazine or newspaper ad, or listen to radio commercials, social media. You will see numerous ads for homebuyer’s seminars. But, have you ever seen a seminar for people who are planning to build a new home? I would bet my first-born child that you have not!
There are many components of putting together a seminar like this. This article will help you find and attract interested clients; tell you what to say in your advertising, and provide the basic content for your new-construction seminar.
Finding Seminar Attendees
Finding people who would be interested in attending a seminar about building a new home is fairly easy. Here are some suggestions:
- Ask your title company rep to provide you with the names and addresses of people who have purchased lots in various subdivisions – but have not yet built a home. Many people purchase lots in hopes of building one or two years down the road.
- Place a seminar ad in your local real estate magazine and new construction section of your newspaper.
- Place a sign advertising your seminar at the entrances of subdivisions.
- Send a letter and copy of your new-construction seminar ad to all of your local builders, asking them to recommend the seminar to their clients.
- Send a letter and copy of the seminar ad to real estate agents who specialize in selling new construction.
- Send a seminar notice to everyone in your database – including clients who have been pre-approved by you, but have not yet purchased a home.
- Place a 30-second commercial on your local talk radio show.
The Marketing Piece
The ad for the seminar that you place in the local real estate magazine should be full page. This will also serve as the “flyer” that you will be sending to builders, RealtorsTM and customers. Post on social media pages. Market to real estate agents and their clients.
The headline for the seminar might be: “New-Construction Seminar: Avoid the mistakes people make when building a new home!”
- Include date (Hold your seminar on a Tuesday and only for a maximum of 90 minutes)
- Show location (Hold in neutral location such as the title company or library)
- Offer a FREE credit report when they attend the seminar.
TOPICS TO BE COVERED
- How to purchase a lot
- How you can use the lot you already own as a down payment
- Working with a builder
- How to include building cost overages into your mortgage
- When to lock in your interest rate
- Mistakes people make when building a new home
The Content
Your seminar should be no more than 90 minutes in length, including a panel discussion with your chosen builders and a Q & A session.
- Stay away from discussing different types of end mortgages. Discuss, instead, different types of construction loans, the draw process – or what happens if the builder provides the construction loan.
- Discuss how clients can lock in an interest rate now – and float down to a lesser rate if lower at the time the home is completed.
- Talk about how clients should get approved for a MAXIMUM loan amount to include contract allowances.
- Give an illustration of how lot equity can be used towards the down payment.
- Discuss how to purchase a lot now – and build later.
BUILDERS’ PANEL DISCUSSION
- Script the builders ahead of time. Each one of them should be given only 10 minutes. They can ONLY discuss “mistakes” they have seen people make while in the building process. Each has to have a different story, so find out what it is and make them stick to it.
- Do not allow questions DURING your presentation. At the end, builders should be available as a “panel” and each one answer questions from the attendees. Of course, you are the financing expert. Don’t let the builders answer questions about financing.
- If clients want a free copy of their credit report, provide them with an authorization form, and request contact information and social security numbers. Ask them to turn the information into you that evening as they leave, and mail out the FREE credit report the next day.
- To entice the builders to be there and NOT just give a mini commercial for their company, ask them to email you pictures of new homes they have built. They can also include floor plans. You can then combine the pictures and floor plans into a “revolving” PowerPoint presentation, to be shown at the beginning and end of your seminar.
- Give a copy of each builder’s brochures to each attendee.
- Give them a mortgage application package.
One of the main reasons people don’t build is because of all the horror stories they have heard about financing, not being in control of the interest rate, and basically the fear of the unknown. They have many friends who have purchased an existing home, but probably know very few who have gone through the new-construction process.
You are holding this seminar to dispel their fears, set you up as their expert, and promote your builders.
Be consistent and continue holding seminars every two months. By the way, change your panel of builders, too.
