Construction Loans. We all hate them but here is the real truth and why you need to say "YES.
You need to know enough to "talk the talk." In my 18 years of originating, I learned early on that many borrowers start out looking at new construction and then realize the time and money that is associated with the process. They end up buying an existing home or a home with "Builder Financing." Fortunately I didn't turn them away from the initial phone call, if I had I would have lost hundreds of clients over the years.
My recommendation is to build a relationship with a local banker that you can hand these borrowers off to if in fact they are "one of the few" that actually follow through and apply for a "true" construction loan. Meet with that banker periodically and learn their process so you are able to explain it to your clients. You are the professional and they want to hear all your expertise and your knowledge. Your buzz words of permits, draws, site inspections, and contracts will ensure your clients that they are working with a real pro.
I was reminded of this "hand holding" sales technique when a new client of mine asked if we could remove the "construction loans" option from our loan software questionnaire for his company's platform. He said "they rarely do them and really don't want to target them." I explained that we could remove that option, then went on to explain my approach and why its important not to deter new business that quickly. He agreed and thanked me for this sales tip and was going to share it with his team. Borrowers change their direction and minds much like a toddler walking through a candy store with 25 cents.