Mortgage Broker Special Q & A with Graham Wilson

Graham Wilson of Tracker Hub and Options Mortgage Centre was kind enough to ask questions we’ve been asked in the past week from mortgage brokers.

The content of the show/interview is for debate and discussion purposes only for mortgage intermediaries and not advice or recommendations within the regs.

I wanted to get your insight and views on down-valuing. Obviously, this is nothing new of course, often it could be when the report surveyors are returning in is much lower than expected figures. Sometimes it may be down to the estate agent overvaluing. Maybe it could be unrealistic expectations of the seller. We have seen over the past year Coronavirus risk to prices cited sometimes in these areas.

The actual question Graham was, “What can a mortgage broker do, if anything, to try and mitigate against the issues and educate clients at the onset of the instruction and perhaps open up greater public awareness, how to avoid this issue?”

Yes, and it depends on what you’re talking about really.

Whether you are talking about moving or you are talking about remortgage?

I had a look at this question and funny enough, I’ll give you two live examples.

One of which was just yesterday. I was looking at a re-mortgage potentially. It was a product transfer with Virgin. Now Virgin valued the property using the HPI calculation. So on the Virgin mortgage system, as a broker, you will see the actual HPI valuation and it said £147,000.

Now the client said, “I don’t know how realistic that is Graham, what are your thoughts?”

We thought it might be £145,000 and this was the crux. It moved them from 75% loan to value, for the sake of 2000 English pounds, to over 75% if it got down-valued.

So you have got the safety of knowing if you did a PT with Virgin, they can have the 75% because the HPI is 147. Clients think it’s 145. If it’s 145, I was looking at somewhere like Halifax for instance.

But then if it down-valued, literally rates at 2.84 versus 1.79 for the sake of £2000.

So that was a close one. But I think the realistic side is, to answer the question, is to be realistic with the client and set realistic expectations.

I did a Zoom meeting with the clients and I shared my screen with them and I was showing them my research on the basis that if it did down-value from 147 to 145, it would go to 2.84 – then it is not worth re-mortgaging then for the Halifax.

If it got valued at 147 with Halifax, it would get valued at 1.79.

Then his partner said she didn’t want the heartache of actually dealing with a down-valuation and the upset that it causes having to do more paperwork and this, that, and the other. I thought to myself….you forget that sometimes don’t you as a broker, the financial, the emotional, not just the financial impact but the emotional impact of how things can affect customers.

So I use net house prices quite a bit. Just have a look in the area about what sold in the last couple of years.

Often estate agents price to get it on the market with them as you know yourself, not priced really to sell. I’ve seen it overvalued before at £10,000+ before and you know as soon as they get it on the market within two weeks they will tell the client, “Now it’s overpriced. Let’s put it back down by five grand …..”, but they’ve already signed them into a contract by then.

So there’s a few things.

If it’s a remortgage, I always look at the house prices get a judgment from the HPI because I know all the other lenders are using similar HPI models anyway.

If they are looking to sell and buy, then again set realistic expectations. We’ve got good connections with estate agents locally who don’t purposely overvalue, they value to sell not to list.

Make friends with the local agent, not only that you can get referrals from them as well and work together. If a down valuation happens you just need to put the right foot forward to say to a client if this was to happen this would be the repercussions for your mortgage.

I think just build that in really and the clients then are clearly in the picture – forearmed is forewarned.

I think from that point clients know if there’s a down valuation and they have to get a slightly higher rate, they can still stomach the move. But in saying that even if you had a terrible interest rate or a worse interest rate than what it would have been had it been a better valuation, maybe stretch the term a little bit. And in two years’ time, if you had a two-year fixed rate put it back when we’re away from COVID.

Just today I have had a down valuation by £50,000. I was talking to you before we started recording and that’s down to surveyors. Whether or not they are being a lot more cautious now with the pandemic ……? Maybe that is the case, but some people think that they are the King of the Castle and of course their house is the best house on the street but sadly the best house doesn’t always correlate when it comes to the valuation.

We had a couple of queries this week, Graham about choosing a network.

What is your advice for brokers when considering which network to join from the off and especially what would your advice be when they are leaving one network for another?

Won’t put you on the spot, but if you feel comfortable enough saying which network you are with, why you picked them, and what should a broker do generally when considering joining one or moving from one?

It is a massive decision now to move networks as it is a lot of upheaval for companies and obviously it can affect cash flow.

If you fall out of bed with one network and think I’m going to jump ship to another one it’s not as easy as that.

You’ve got de-registering with lenders, registering with the new ones and all that carry on and that’s enough to kill the business.

So if you are thinking right, do I go DA or do I go AR? I don’t mind telling you my brokerage firm is an appointed rep. We’re actually with the Tenet network.

I think every network has the good and the bad we are blessed in one sense with Tenet because we’ve got good strength in the market – we are whole of market. We’re very well supported financially by them as well. They’ve got a good back book has Tenet.

I think that’s one thing to look at – how are the networks funded if you are looking at either going DA or AR, especially obviously AR.

We felt more supported being an AR rather than being DA from the actual FCA itself or even being the DA under Tenet.

I think there are a few things to look at.

One is the financial stability of the network.

Two, is are they whole of market? Are you a tied agent? What can you offer to your clients?

Three is technology. You and I talk about technology a lot as well.

There’s good tech, there’s bad tech. Sometimes there’s no tech!

Talk with your network, see what CRM’s are out there at the minute and what they’re using. Are they making it so you have to use them and their technology? Can you still use yours?

These networks now are more leaning towards unified technologies as well.

Do your research with it, make sure that it fits the bill, and don’t jump in with the first party that you speak to.

You’ve got to do your research on all of them because there’s good, bad, and ugly, but they are mostly good.

The networks that I have spoken to through Tracker Hub, I speak to quite a lot, and the brokers that I speak to as well are under different networks. They all seem very well supported.

I’d also ask about turnover because as your business grows are they willing to renegotiate on network costings as well?

Tenet is very good at that plain and simple with the talks. Acquisition as well.

When you come to wanting to sell the business. Would the network potentially look at acquisition?

You can read more about key considerations when choosing a network here: https://themortgagebrokerclub.co.uk/broker-tools/networks/

This has probably been the most common issue. So we’ve had to merge the questions together. Developing referral partnerships and working with introducers.

Quite a few people have reached out to us looking for advice on how to do it in practice. So where did you start Graham? You and many others have been very successful at doing this and building businesses based on your introducer partnerships.

For people who are struggling with that for whatever reason, or especially people who are new and are looking to grow it…

• Who do you reach out to?
• What kind of people and then how do you actually do it?
• What’s the reason for that because my view is, just applying common sense is they’re either not referring business on so why would they start doing it for you? Or, surely they’re already referring business on so why should they switch to you?

I’m sure you must have had to overcome those hurdles in the past.

You probably saw in my last interview/show when I was talking about when I became a broker back in 2011 you leave an employed role to then go self-employed and next month you do not have an income.

If you’re not earning that’s as brutal as self-employment gets isn’t it?

If you don’t work, and we don’t write business, we don’t get paid. So it was a big worry but I thought to myself, right well the only way to do it now is to have a look for introducers.

What we forget is, even at this point now, if I was to become a broker for the first time I would still know people and I’ve got friends. You wouldn’t believe it but I’ve got friends!

So you start with your friends and your family. Then you work backwards with your clients.

Now, when you’re talking about introducing business, people forget you’ve got great customers and they know your service.

So my first tip is to start with your customer base first and luckily enough on the Tracker Hub system we have a refer a friend feature. (Learn more about Tracker Hub here)

It’s GDPR compliant. You create yourself a unique link. Every time you want to refer a friend you can refer.

We are getting around about 8 to 10 referrals each week for refer a friend from past customers. They pick their incentive. They can have £50, or £50 donated to Trinity Hospice, whatever it would be. So that is my first tip. Start with your customer base your friends and your family.

Then what you want to do is when you start reaching out to the solicitor side, the accountants, estate agents, and admittedly estate agents do get hammered, you’ve got to be different.

I’ll tell you what I did to get into one of my estate agents. You will laugh. On Amazon, you can order yourself a massive box of jaffa cakes. And it was huge. It was absolutely massive. I ordered a hundred Jaffa cakes. It was something cheap like £20 or something. It looked like I had paid a fortune. I ordered a big box of jaffa cakes and I sent it to the director of this estate agents.

I wrote, “half-moon, full moon, you decide. But if you think you can do business with me give me a call.”

Well, absolutely funny as, a big box of jaffa cakes turns up at this estate agents office. Anyway, they rang me up. He said I have to talk to the bloke who sent me a hundred jaffa cakes.

Then another one I sent Lion bars, oh you can buy a big Toblerone’s, big massive Toblerone’s ridiculously gigantic.

I sent that to them as well and they are cost-effective.

My advice is to be different.

I know someone who said, he would give you a year’s supply of tea. Oh, for me. If I play this out, I think it’s 12 little boxes. That sounds amazing. If I said to you I’m going to give you a year’s supply of tea, you are like wow! That is mega! And then.. well just imagine 12 boxes of tea. 12 small little boxes of tea. A year’s supply sounds great in principle and then in practice it is literally 12 small boxes!

I did the same with accountants. I think more than likely it’s just being a bit different actually. Thinking outside the box.

Also educating the introducers.

You said, why if they’re not referring now then why would they change?

I think it’s educating why they need to refer to you and the benefits. Sell the benefits of you to them.

As an example Tracker Hub users can say to introducers “the great thing about introducing business to me would then be you get to know where the cases are up to because I’ve got the Tracker Hub system.

So they refer in, you get to update everything. So they get real-time updates. They get great service.

We try our best on every occasion. If they want a revenue share we can do that as well.

Before, you know, it, even from the very first lead 90% of the time, they’ll get a taste for it. But you’re quite right. Introducers and customer referrals we live and breathe. We don’t pay for advertising.

How would you keep up to date with the knowledge and make sure brokers are up to date and your brokers Graham in your organisation, how do you make sure they’re up to date?

We’ve seen quite a lot this week coming in about a sea change in terms of the percentage of say vanilla versus non-vanilla cases..

I would say I’ve had a lot of non-vanilla actually. The bulk over this pandemic, especially with furlough and the confusion that that has caused along with self-employed people taking the government grants and then lenders muddying the waters with lenders saying “you can accept it.” “We can’t accept it.”, etc the confusion that this has caused in the marketplace has made it look like chocolate rather than vanilla!

I know you have an outstanding level of knowledge in these areas but how do you keep on top of it? I understand how you gain knowledge because that’s experience. But how would you keep on top of it with so much changing?

How do you do it with the responsibilities you have?

A lot of it is experience from day one of being a broker I wouldn’t have known any of that, but from day two I think you soon realise that your biggest equipment is the fact find.

Fact find the client, put everything on paper that’s unique about the case and what they want and then give yourself time to breathe go on to Knowledge Bank, you know Nicola Firth’s system is absolutely spot-on. It is brilliant. (learn more about the Knowledge Bank system here)

Knowledge Bank I use daily. My team uses it. That’s one way that you can obviously keep on top of it. There are some bits missing because lenders sometimes have not updated it. But for that, you can just ring the lender. You get a good idea of who to ring. So Knowledge Bank is one.

Two speak to other brokers. Don’t be ashamed to speak to another broker. Anybody can contact me directly as well. You can message me. I have no issues with that.

I think everybody just needs to work together. But as far as keeping your knowledge up to date you can’t know everything.

I mean, I think Nicola first said there are like 84,000 million trillion criteria changes in this world that we’ve got for financial services well you cannot know all that, for sure.

I mean, I can’t even remember what I had for breakfast this morning! Never mind what Natwest have just changed their criteria to.

Also, I’ll tell you what I do use a lot, the broker chats. I use the broker chats quite a bit when you go to lenders as well that’s good. I think if you’ve got a basic knowledge of a bit of everything, then you have a good understanding of where you could potentially place it.

The most critical area though is to get your fact find right.

Give yourself enough breathing space to do your research.

I’ll be honest with you I quite like the non-vanilla cases because they’re a challenge and I’m up for a challenge.

A fair few people have got in touch to ask: Graham should we go DA or stay AR?

Well, it depends on your reasons for why you are thinking about going DA.

I think you’ve got great control and more control over your business, but then again there’s a lot more responsibility.

The AR is a bit more of a handhold, isn’t it? You really are on your own when DA. If the FCA come down on you you’ve got no backing and no defence.

I particularly favour the AR. It’s not the right answer. It isn’t the wrong answer.

I do like a bit more of the hand-hold. I think it is a wicked world out there with criteria and regulation changing on a regular basis.

I mean we’ve had an update today that’s got six more changes and being DA I don’t know whether you can work as quick as that as you can under an AR perspective.

Last question, Graham, how are things going with Tracker Hub? I know you’ve got the new release that everyone’s working very hard on. What can brokers look forward to with this? That’s my own question!

Brilliant question. The best question you’ve asked so far! Thank you.

So 2.0 was launched 15^th February and we are now phasing in the movement of all the tracker 1.0 users onto 2.0, but as you can appreciate there are thousands of leads that go through Tracker Hub now which is ace. Migrating them across is a little bit of a headache but we’re doing it in such a way that we don’t want to miss anything.

New people are straight onto the 2.0 system they’re using it. The business directory is booming.

People are sending business securely between each other. Introducers are giving great feedback about the introducer dashboard, which is brilliant.

The refer a friend has been given an overhaul and that’s cool.

The biggest features, now there are two.

Feedback as you’ve seen has been updated. It looks a bit more like Facebook messenger if you will. That’s cool.

Then the last one is being able to link up within the business on the actual platform itself. So you might have an equity release specialist and IFA, whoever, and you need to upload documentation. You can now share docs with each other on the Tracker Hub system. No more emailing documents it is all safe on the Tracker Hub system.

It’s like fight club. Whatever happens in Tracker Hub stays in Tracker Hub!

But it’s going well thanks.

(Learn more about Tracker Hub here and benefit from a FREE 30-ay and no-obligation trial here)