The Old "Bait & Switch" Is Alive And Well In The Mortgage Business

 


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Just about everyone’s heard of the old “bait & switch”. I’ll bet you could give an example or two of how it’s been tried on you before too, couldn’t you? Even people who think they don’t know what the “bait & switch" is will recognize it when it’s explained. Let me give you an example and tell you how some “not so honest” lenders use it in the mortgage business.

The “bait and switch” basics:

A unscrupulous business owner runs an ad offering his particular product or service at an incredibly low, bargain price. He has no real intention of selling anything at that price. His advertised price is merely the “bait” to entice customers to contact him, to tempt them into picking up the phone or walking in his door.

Once you’ve made contact and he has your undivided attention, the “switch” begins. He’ll tell you why the product advertised is either no longer available or attainable, and why his other, “improved, advanced” and more expensive product or service is a much better deal for you.

And that of course was his plan from the beginning … “bait” you with a bogus price or product, and then “switch” you to higher priced product … hence the name “bait & switch”.

The carpet cleaners bait & switch:

Mr. Carpet Scam advertises a special coupon that offers “3 rooms cleaned for only $9.95”. That’s the “bait”. You call in and an appointment is scheduled. Once he’s there, the “switch” begins, … if you want to pre-condition the carpet, extra $ … spot-cleaning, extra $ … moving furniture, extra $ … stain guard, extra $, and so it goes . . .

By the time he’s done, the bill could be $150+. And the worst part is, even if he didn’t say how much extra the “extras” would be, you agreed to pay for it when you signed his contract before he started the job!

Now don’t get me wrong … my intention here is not to pick on carpet cleaners. Quite the contrary, I want you to understand that the old bait & switch is used even in businesses where you wouldn’t expect it.

Every profession has its good and it’s bad, and the mortgage business is no different.

The mortgage bait & switch:

Here’s the way the old bait & switch works in the mortgage business: Mr. Mortgage Scam checks the daily rate sheet looking for the lowest possible “rate” available on ANY kind of loan program. It doesn’t matter that it’s a rate for a loan program that only 1 out of 1,000 homebuyers would actually qualify for … or WANT, for that mater. What matters is that he can advertise that rate because that rate IS available … to somebody.

Next, they advertise … “(X) PER CENT, THAT’S RIGHT! (X) PERCENT! AVAILABLE RIGHT NOW! BUT YOU BETTER CALL NOW! (X) PER CENT MAY NOT BE AVAILABLE VERY LONG, SO CALL US RIGHT NOW AT 555-555-5555 BEFORE IT’S TOO LATE!” AGAIN, THAT’S (X) PERCENT! CALL US RIGHT NOW AT 555-555-5555!”

The “RATE” is the “BAIT”.

He knows that 99% of the people that call on that ad won’t qualify for the rate he’s advertised. But that doesn’t matter to the kind of people that run these types of ads. All that matters to them is that you pick up the phone and call them.

Once they have you in a conversation, they sympathize with you over the fact that you don’t qualify for the rate advertised . . . and then comes the “switch”. “But I think I can probably get you qualified for (X %) if we get started right now!” And so it goes.

Beware the bait and switch my friend. And remember, if it sounds too good to be true, then it probably is.

A former real estate agent, Michael E. Hart is private real estate investor, author of “Top 10 Tips To Sell Your Home By Owner" along with numerous articles, and a Senior Loan Advisor with Anderson Lending Group in Peachtree City, Ga. He can be contacted at 678-318-3542 or http://InternetLoanCenter.com .

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