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Thursday, December 14, 2017

From the onset of Thanksgiving, two major calendric shifts take place; the year begins to come to an end and the shopping season commences. It seems like with each passing year the start dates for “Black-Friday” and “Cyber-Monday” sales get earlier and earlier. Hopefully for all those bargain-hunters, the discounts continue to get bigger and bigger, as well. In the consumer/retail market the last forty days or so, of the calendar year, typically drives a majority of a retailer’s profits for the year (hence the term “Black” Friday), and buyers rely on that to procure significant savings. On Thanksgiving one of my children asked me whether the markdowns would be greater on Black-Friday or Cyber-Monday, and whether someone should wait for even bigger discounts before year end. Of course, no one know the answer to that and retailers use such tactics of uncertainty to get someone to commit to a purchase sooner than later expecting to “miss out” on the current big mark-downs. Countdown clocks, timers, alerts, warnings, etc are rampant to pressure a would-be buyer to commit now rather than wait for a better deal that may or may not happen later.

I recently had two experiences that really highlighted this phenomenon. Over the past few weeks I have been demoing a robust software program that has many advanced add-on and customizable features. The “out-of-box” basic-system alone is steep enough to cause most mortgage organizations to pass on this technology, let alone their enhancements. The technology is not industry-specific and would require a great deal of further in-house programing and customization which I was considering to undertake. In mid-October, the sales rep who I have been dealing with for months began to pressure me for a decision and commitment. His premise was that by October 31st the price of the software is set to increase significantly. When his numerous pressure tactics didn’t sway me, his manager started to chime in with some incentives to “get a deal done before month end … for your benefit.”

I believe that I am a good judge of character, and for the first time I began to feel that it was more about “the sale” than the service, and got very turned-off by the turn of events. Their tag-team efforts went on for a few more days and even topped off with more aggressive “final” offers on November 1st and 2nd, past the deadline, as “a courtesy.” I wasn’t swayed. Well, wouldn’t you know … there was a software conference that this company participated in where they unveiled a new upgraded system, which was significantly more robust, and more discounted than what I was being offered for their basic-model. Needless to say, I was turned-off by the entire experience. More than that, I very much took to heart what a consumer or client must think when they are being overly pressured to make a decision “before its too late.” Thankfully, I never conduct business that way, but it’s a shame to see it still happens everywhere.

One of my senior loan officers called me last week with another unique scenario that speaks to this topic as well. He had a client with him that came highly recommended by another bank representative. (Yes, the client was referred to us by their own bank). They had an application in with this large commercial bank, but was afraid that the approval and closing would not happen “on time” causing them to be severely penalized, and jeopardize their contract deposit. They were in contract to buy a house and there was “no mortgage-contingency” in the agreement. This meant, they would be required to buy the house “all cash” or lose their $40,000 contract deposit. When I asked why they agreed to such a restriction, their response was that their real estate agent said if they didn’t present the offer in such a manner “they would lose the house.” Strike one. They got their pre-approval from their bank, but the process was not moving forward in a timely manner. Their banker obligated them to lock-in the rates immediately upon application, and collected the $2,000 lock-in fee, “before they would lose the rates.” Strike two. While I was distraught to hear the pressure tactics that this woman experienced, I was excited by the opportunity to deliver, and be the hero. But there was a twist. My associate went through all of their paperwork and determined that they are not really qualified to get this mortgage… let alone any mortgage, based on their documentation. When he called the referring banker to find out how they were qualified there, he was told that the pre-qualification and underwriting are two different things, and it hasn’t gotten that far yet to make a determination. Strike three. Regrettably, we determined in 60 minutes what hadn’t yet happened at this bank for over three weeks. Needless to say, we had to turn them away empty-handedly. Unfortunately, we recently found out that their loan was turned down by the bank. I wish the story had a better ending, but it doesn’t. Pressure tactics are unfortunately a very methodical and calculated method being used by many organizations trying to “make a sale.” I am not sure there is an easy way to prevent it from happening. Advanced research, suitable referrals, and “feeling comfortable” are a few ways one can attempt to avoid the “act now, before…” schemes out there! Shout out to the Amazon driver who will be bringing me all of my many black-Friday and cyber-Monday sale purchases! (Just kidding… Good luck to us all!)

By Shmuel Shayowitz

 Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]