APRIL 2011 |
www.opp.org.uk WORDS | Kevin Macadam
BUSINESS
MORTGAGE MATTERS | 43 Cash comes fi rst
In the current economic climate, it would be very foolish for any developer or agent who convinces a client to go ahead on an overseas property purchase to assume that the deal will get fi nanced quickly or easily. Our mortgage columnist Kevin Macadam looks at a few of the regular pitfalls along the way, and suggests how to avoid them...
T
o buy or not to buy? That is the question, with my sincere apologies to Shakespeare! This month I want to address how to overcome objections from your clients, increase your sales and maximise the time you spend with quality clients by asking the right questions about how they intend to fi nance their property purchase, and in doing so prevent any future problems for you down the line. We are often approached by clients who have bought properties off plan and are now in need of fi nance to complete their purchase as the development comes to completion. For every one client we help there must be two that we can’t help. The main reason we are unable to help
is that they do not meet the lenders criteria. However what is disappointing is that after talking through their circumstances they had been sold the property on the promise of guaranteed fi nance on completion and in a number of cases they would never have qualifi ed for fi nance in the fi rst place. This of course leaves the client
unhappy as they have no way of completing on the property and refl ects badly on the company that sold them the property and in general gets our industry a bad reputation. We have even seen circumstances where
the client has been encouraged to raise the fi nance for their deposit against their UK property via a secured loan with the developer making the payments for them. This is particularly risky for the client
because if the developer were to go bust then the client would lose their deposit as well as still have to pay for the loan and have no property to show for it. Other developers and agents seem
happy to let the client sort their own fi nances out and by doing so they lose
control of the sales process. If the client is declined by their own bank then it is very unlikely that they are likely to shop around elsewhere and will end up either not contacting the agent to tell them or tell them they couldn’t get the money.
The developers and agents we work
with at Overseas Mortgage Broker overcome these issues by having a good understanding of how fi nance can aid their sale and allow them to retain control over the client and the sales process. We can let a client know the best option for raising their fi nance be it via an overseas mortgage or via a further advance on their existing mortgage. What’s more because our
introducers refer the clients to us they are ensuring the client gets independent advice from a third party which clients always prefer. If you are interested in fi nding out more about how fi nance can increase your sales then contact us. We are in a position to be able to tell the client whether based on current market conditions they would qualify for fi nance on a development if it was available for delivery today. Against the backdrop of the current
scarcity of bank fi nance, we can hopefully address clients fears by letting them know if they qualify under the current bank criteria. If they don’t qualify now we can tell them what they will need to do to qualify in the future.
If, for instance, the client is self employed and is showing little net profi t then we can tell them what their accounts will need to show to meet the banks requirements.
This will prevent them receiving a nasty shock two years down the line and ensures the client is well informed.
Safe as houses | Your clients may well want to buy property from you, but have they got their money sorted?
And it will also remove a potential sales objection that could stop the client agreeing to proceed with paying their initial deposit.
Even clients who are cash buyers can benefi t from talking to an overseas fi nance specialist. Although arranging fi nance will not necessarily be uppermost in their thoughts, if you were to ask them whether they would be interested in being shown a way that they could own two properties instead of one for the same initial outlay then all of a sudden you have their attention and potentially two sales. My advice is early in the sales process,
ask the client, “How do you propose to fi nance your property purchase?” If you do this in the right way at the right time, you will be able to identify how they are going to pay for their property and decide how you can introduce the subject of fi nance to them to cement your sale instead of potentially losing control of the client.
Kevin Macadam is managing director of Overseas Mortgage Broker, which specialises in helping international property agents and developers provide their clients with funding solutions around the world. For more information go to
www.overseasmortgagebroker.co.uk
Now what is that other Shakespeare quote “Neither a lender or a borrower be.............”
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