Just about everyone’s heard of the old “bait & switch”. I’ll bet you could probably give an example or two of how it’s been tried on you before too, couldn’t you? Even those who think they don’t know what it 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:
An 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 his product or service at the price advertised however. His advertised price is merely the “bait” to entice customers to contact him, to tempt you into picking up the phone or walking in his door.
Once you’ve made contact and the scammer has your undivided attention, the “switch” and sale’s pitch begins. He’ll tell you why the product or service they 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 in with a bogus price or product, and then “switch” you to higher priced service or product … hence the name “bait & switch”.
The carpet cleaners bait & switch:
Mr. Carpet Scammer 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 to the contrary, I want you to understand that the old bait & switch is used even in businesses where you wouldn’t expect it.
Understand that 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 Scammer 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 So Called “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 people that run these types of ads. All that matters to him is that you pick up the phone and call HIM and HE gets the opportunity to talk to you before anyone else does.
Once they has you in a conversation, they’ll sympathize with you over the fact that you don’t qualify for that rate and then (as was their plan from the beginning) … 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.
Michael E. Hart is a Senior Loan Advisor with Anderson Lending Group in Peachtree City, Ga. and author of “Top 10 Tips To Sell Your Home By Owner”. Mr. Hart is a private real estate investor and a former real estate agent. He can be reached at 678-318-3542 or http://InternetLoanCenter.com.
