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Surging Sydney house prices have forced two brokers to develop new strategies to cope with the radically different pre-approval landscape.
FinVu principal Gerard Hansen told The Adviser that his business is noticing “unbelievable” loan volumes at the moment.
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“These are mainly pre-approvals which are great, but there’s no payday unless the customer buys,” he said.
Mr Hansen said the increase in pre-approved loans meant that his company’s turnaround times had blown out to between four to five days.
To overcome this, FinVu has implemented a number of different strategies to overcome the delay in turnaround times for pre-approvals.
“Depending on how well we know the client, we charge a mandate,” Mr Hansen said. “You may lose some clients this way, but it moves on the tyre kickers.”
“We also do some local research on the proposed property. We review other sales and advise borrowers to look at three scenarios and go slightly higher with cost analysis.”
He said FinVu also attends auctions with borrowers to help guide them through the process and pass on knowledge similar to buyer’s agents.
As a result, FinVu has reduced its turnaround times from four or five days to two days.
The surging property prices have also increased the amount of time that Sydney borrowers are spending in the pre-approved stage, providing another headache for brokers.
Jeremy Fisher, director of 1st Street Home Loans, said his average pre-approval times have increased from between one and two months to between four and five months.
“Fortunately, 1st Street has a mature pipeline with settlements every week so the business hasn't been affected in a monetary sense, but it has meant that our brokers have more clients in progress at any time – up to three times as many – so effective client management and consistent communication is essential,” he said.
Mr Fisher told The Adviser that one way 1st Street manages the problem is by introducing customers directly to real estate agencies and buyer’s agents.
“This way, our clients have priority access to properties for sale and they are also able to view properties that are not advertised or before they are advertised for sale,” he said.
“Market insight is also very important, and we regularly keep clients informed with suburb snapshots and property market updates and overviews.”
[Related: Brisbane broker stresses importance of pre-approvals]
