The last ten to fifteen years everyone and their brother has been working to “get outside the box.” Well, it worked. Nobody is in the box any longer. As a person who has always found it more appealing to go in the opposite direction of the crowd, I am here to say; get back in the box! Old fashioned fundamentals work. The so called, “blocking and tackling” of commissioned sales works! Yes, new technology has made it easier and provides more ways to connect with your clients and referral partners, but often that technology causes huge amounts of waste, mostly your time. If you lack discipline and structure, you can get lost using the very tools that were supposed to help improve your productivity.
Let me give you a quick example of what I am talking about. Fifteen years ago I had to limit the number of phone numbers on my business card because I found instead of helping the client, it caused them to dial four or five numbers and leave four or five messages, just NOT to talk with me. The sad part is, not only did my clients find it frustrating not to reach me after making all of those calls I had to listen to the same message over and over just to return what should have been one call. This now holds true for email, texting, social media, and all of our auto-responders! Imagine the frustration of a client trying to reach you using all of these wonderful devices, only to have you in a meeting with another client or referral partner! Instant access becomes instant frustration! You will also have to have a set time and strategy to use these new social media outlets. Set a specific amount of time to spend in each area and stick to it. I have already seen clients spend HOURS on keeping people updated, not the best use of time.
We need to make it simple and easy for our clients to work with us. How about one phone number and one email address? What about leaving our message to explain WHEN we will return their call and give them OPTIONS as to what works best for THEM? Wow, no more phone tag! Specific appointments at specific times to communicate with you, that is really old school! Same holds true for when you first speak with someone. Imagine if you just shared how and when you return communications? Something simple like: “call in before three and I call back before five and call after three and I will call back before ten o’clock the next morning?” A simple message like: “today is Monday the fourth and I have meetings and appointments scheduled throughout the day. I will be returning calls today between 9am and 10am, 1pm and 2pm, and again between 5pm and 6pm. Please leave your name, contact number, and which one of those times work best for you and I will be happy to call you back then. If one of those times does not work for you, please leave me three times tomorrow that will work and I will be happy to schedule a call with you then. Simple!
Simple solutions and fundamentals will get you where you need to go. People do business with people they know, like, and trust. More than 60% of people do business with the first person they talk too that appears to be skilled and competent in the area of need. Knowing the math is important. It tells us that each one of us has a ratio of opportunities to closed transactions we need to track and improve! Focus on generating opportunities and transactions will follow.
In the mortgage and real estate industry, the focus needs to be getting in front of opportunities and then following up with them until they close. People close deals every day in your market that you didn’t do and it has nothing to do with the fact they didn’t like you. It has everything to do with the fact they didn’t know they were supposed to use you! I call it the “Raffle theory”. Each transaction is like a raffle. In a raffle, there is a known prize (the deal) and a set number of available tickets (the number of people that have a chance of doing the deal). Unlike a lottery where nobody has to win each drawing or any number of people can split the winning prize, in a raffle, you know the odds based on the number of tickets outstanding. Old school theory is to go out and collect tickets! Every action needs to include the question: “Who do you know that I need to speak with?” This question leads to raffle tickets; the more tickets, the better your odds of winning; no tickets and you can’t win. Plain and simple, you got to be in it to win it!
Realtors® and mortgage professionals need to do a better job sharing opportunities. While some do a great job working together on those clients that are looking to purchase a house, they almost always do little to nothing together to work with the client that is selling a house. In fact, I feel it is far more important for mortgage professionals to work with the Realtors® listings than their buyers! Here is why: Knowing if the current mortgage can be assumed on your listing. Finding out if a seller qualifies for their next loan early saves time. If there are credit challenges with a seller, you have time to correct. If you could save that seller up to 3.25% on their next loan, would that be a good idea for the client and a bonus to everyone? Since the seller that has just listed may not have begun the loan process yet, getting in front of them first improves the lenders chances of getting the deal and keeping the Realtor® in the best possible position to negotiate. If the listing can’t buy the next home, you can keep them from entering into a contract to sell and forcing them into the street!
Realtors® and lenders also need to work in step with the potential buyers they come across. Qualifying for a loan requires more patience and documentation than ever before. While those that are qualified will find plenty of money available, the price they pay to borrow can range as much as 3.25% of the loan amount based on the program they choose and their credit scores. Now it takes as much as 25% down and a 740 or higher middle score to find the best rates. Getting people to a qualified and licensed professional is your best chance of avoiding big challenges down the road. Do you know what your lender looks at before they issue an approval? Do you verify each approval letter with the person that signed it to determine what work they have done? If not, why not? How many people need to get sued because they didn’t do proper due diligence? Why not know before you start that you have the best possible chance to get the deal done? Nobody gets paid when deals don’t close! Why take a chance on potential loss of a client and a damaged reputation when you can do a little due diligence in the beginning to avoid potential known challenges?
Working together, Realtors® and lenders can help provide exceptional value for their clients and take much of the turmoil out of the purchase process. Careful and clear explanations on how the process works should be done as early in the process as possible. Realtors® need to know more about a property listing so they can make a fair determination of financeable value. Financeable value is not market value. Financeable value is the specific terms and conditions a typical borrower may expect when trying to obtain a purchase money mortgage.
No longer is the value of any property the price someone is willing to pay. Well, it is if they are paying CASH! If the property will require a mortgage loan, the terms and conditions in which the property can be financed will have a direct bearing on the real value of the property. Example, two identical condominiums are for sale, one right across the street from the other. Every aspect of the condos is the same except one resides in a complex with a large number of investor units, and the other complex is all owner occupied properties. One of these properties can be financed by conventional means and the other can’t. Clearly the condo that has a larger variety of financing possibilities and more favorable terms is clearly a more marketable property and will command a higher price.
Realtors® and lenders need to keep each other informed as to market conditions and advise each other as to any conditions that may cause a challenge during the process. Like anything else, the time to fix a problem is before it becomes a problem. It is up to the professionals to keep each other informed so they each can keep the clients informed.
A comprehensive strategy needs to be in place so that Realtors® and lenders can work together to improve the quality of service for the client. Sharing a strategy can help provide a specific plan of action for the following:
1) Working with buyers
2) Working with sellers
3) Finding FSBOs
4) Expired listings
5) Help us pick your new neighbor
6) Social media – Twitter®, Facebook®, Craigslist®, etc.
8) Current and closed client events and communication
Each one of these areas needs a special plan and a series of scheduled tasks that will help generate opportunities. Let’s take a look at some things we need to be aware of so we can construct a strategy that will lead us to opportunity!
Having a clear understanding of what goes into a loan approval can help the Realtor® know the quality of the offer. The more work done before the approval is written, the better the borrower. If your lender can’t explain the approval process so it is clear and specific, it may be time to find a new lender or be certain you qualify every offer by sharing the fact that the approval being used has not been clearly verified. Also, rising interest rates costs a borrower some buying power. As rates go up, the amount of money a borrower qualifies for goes down. Both lenders and Realtors® need to speak to an approved borrower on a weekly basis to be sure that they have looked at property, or are scheduled to look at property. Failure to do so means that client may buy a home with a different Realtor® or use a different lender!
We all know that working with a seller is more than just sticking a sign in the ground. Realtors® need to know everything there is to know about the property being sold and be certain that the property is as financeable as it is marketable! Just like the property, the sellers themselves need to be sure that they have done everything they can to be the best possible borrowers they can. Why wouldn’t you talk to a lender as soon as you go to sell your property to find out if there is anything you need to do to become a better borrower? With credit standards and guidelines changing almost on a daily basis, why wouldn’t you talk to an expert early? Time can be your friend or your enemy, the earlier you get started, the better chance you have of saving real money. Did you know that current risk based pricing models have the best rates at 75% LTV with a credit score over 740?
We all know that selling a home is a process. Why not accept all available help? Do you have a lender that will work with you on the following items?
1) A professional third party endorsement letter to the seller.
2) A home finance guide detailing finance options for the property.
3) An “Open House” strategy to find buyers and new listings.
4) Shared technology to provide information and track interest.
5) A client retention system to keep in front of closed clients.
If you don’t have one, would you like to know where you can get one?
Thousands of Realtors® and mortgage professionals have left the industry over the past few years and more will leave this year. Licensing requirements and compensation issues are working to reduce those in the mortgage industry; the lack of activity in the real estate market has already reduced the number of full time Realtors®. Those that remain need to do more to get more. We all need to establish new standards of expectation. We need to find our way “back in the box” to provide the personal service and exceptional value to our customers that will generate ongoing opportunities.
Now is the greatest time in history to be involved in real estate. History shows us that the greatest increases in market share have occurred in so called “bust cycles”. Housing prices may not be at an all time low, but home affordability for the average qualified buyer is either at or near all time numbers. The cost of buying and owning a home over time is going DOWN! Even with interest rates starting to rise, opportunity is still exceptional for those looking to take advantage of them. Do you have a plan? Do you have a referral partner? If not, why not? I believe you always need to be going in the opposite direction of the crowd if you want to find an advantage. The crowd has gone away from face to face communication and fundamental business plans and strategies that have always been the core of successful sales people. Get back in the box and find your opportunities!