The age-old question, “What if I spend money training my people to do better and they leave me and work someplace else?” is followed by the statement “What if you don’t train your people and they stay?”
The cost of inaction is staggering but impossible to truly calculate. My clients often ask me “What if I do what you tell me to and it doesn’t work?” and the answer again becomes, “What if you don’t do what I say and it does?”
For months now we have talked about the shift in mortgage loans from refinances to purchases. Many had worried that 2013 was going to be a challenge because as rates came off their bottoms and refinances were going to fade, what were they going to do to generate the transactions they needed to survive? The answer has always been the same, when rates go up, purchase business fills the gap as people will move and improve instead of refinance and renovate.
Purchase traffic is up over 40% over this time last year. While refinancing is still viable for many out there who have yet to do so, the slight bump up in rates and the approaching “spring market” has seen an abnormally high amount of buyer traffic and huge numbers of preapprovals. With this large amount of activity, it is very important that you maintain contact with each and every preapproval to be certain they are looking at properties and that you remain the solution to their mortgage needs. It is also important to set the expectation as to what they can afford and the real range they need to be looking at. The cost of not setting the proper expectations and not following up with your people can be enormous!
Here are a few things you can do to be sure you are maximizing your pull through rate with those preapprovals and at the same time keep your people committed to you and the process:
1) Be certain to check with them weekly to see that they are actually looking for property. They can’t find what they aren’t looking for.
2) Remind them that we are now in a seller’s market and not a buyer’s market. Prices and rates are going up and there are more people looking.
3) Have them committed to your process by collecting ALL important documentation before they start looking and to keep saving new documentation like pay stubs and bank statements as they are available, and yes, all pages, even the blank ones!
The cost of inaction is high amongst loan originators that aren’t working closely with their Realtor® referral partners in marketing listings and canvassing those neighborhoods that are seeing quick turnover of properties and multiple offer situations. Failing to be involved will result in the loss of numerous opportunities. Just last week, one of my teams went out and knocked on 28 doors in one community. They spoke to seven people, three of which were interested in the possibility of selling their homes. Nothing listed yet, but that is a high degree of interest. These people had not had a single thought about the possibility of selling until someone spoke to them about it. Failure to ask will result in failure to receive!
The last part of this becomes the simple math of the situation. While each market is different, you just need to follow the theory here and insert your specific area numbers. If a couple is looking for a home at say $200,000. They wait and look for the last “bargain” home that they are likely not going to find. While they continue to look for what they are not likely to find, houses come and go and more and more properties sell, creating new values. As this happens, you see prices start to rise. If only a 5% increase creates a $10,000 hike in values. Not really hard to see happen in this kind of market. Add to this a rise in interest rates of just .25% to .50% in rates and the math paints a real stark picture, tens of thousands in added costs. In fact, people may miss the opportunity to buy a home at all because they can no longer afford the down payment or the new higher monthly payment.
We don’t want to spread fear but we do want to inform our people as to what can happen without setting proper expectations. Get the information out and into the hands of the people who can act on it. The end of the first quarter is upon us already! How are you doing compared to your plan? This can be a big year for you if you keep engaged and keep in touch!
For questions or comments please contact us at: