What is the cost of inaction?

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!

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“The Move Higher”

If you were looking for the “bottom” in the housing market, oops, you missed it. For all those people who waited to get the “best deal” on a home, oops, you missed it. For those who didn’t pull the trigger on getting the lowest possible interest rate on a refinance or purchase mortgage, oops, you missed it! The “bottom” has come and gone. Yes, there will still be isolated instances when you can find a home that will sell for much less than its true market value, but on average, those days are gone.

Now with all of that said, it doesn’t mean that there aren’t wonderful deals out there to be had and that buying a home right now at these prices and these rates isn’t a terrific value, but we have seen the bottom and we are heading in the other direction. Here is why I believe that. Despite all the fears about “shadow inventory”, it appears that those in control of said shadow inventory are doing a fine job releasing those properties back into the market slowly enough not to create an excess supply. In fact, according to the National Association of Realtors® report, “Listed” inventories are 25.3% below last year and that we are at the lowest point of inventory since December of 1999. When you couple this information along with the information that “Buyer Traffic” is up 40% over last year, the buyers have lost the control of this market and the sellers are reaping the rewards of rising home values and properties receiving multiple offers and some closing above asking price.

We also only need to look at the stock and bond markets to see where money is flowing. Now, it is out of bonds and into stocks. Despite all the MBS purchases by the Fed, mortgage interest rates are edging higher. Now this doesn’t mean the stock market can’t pull back, in all likelihood we should expect to see a 5 or 10% correction in the not too distant future, which will help bond prices rally; but this will only be temporary and shallow. Long term, rates are going to rise and that is a contributing factor to this change from a buyer’s market to a seller’s market in a very short period of time.

So let’s look at our opportunities here. One simple observation is to be prepared to make the last meaningful push to find some of the remaining 43% of current mortgage holders that are capable of refinancing and would benefit from doing so to have all their paperwork ready for that market correction as we might get a very short window at lower interest rates. The bigger opportunity in my estimation is to look at those people that purchased homes prior to 2006 and after 2008 that are in a good position to sell their current homes and get into that “Forever Home®”.

We have talked a great deal about encouraging our Realtor® referral partners to work with us and locate idea situations in currently high demand markets for people that would benefit from making a move and have the market appreciate the new home of a higher value instead of the older home at a lower value.

One of the objections we hear is that if we sell our current home we won’t have enough money to buy the next home. In some cases that may be true. However, do we look and see if it may be possible to use other money to get the deal done? How much are your savings earning? How is your portfolio doing? Would you benefit from taking money from your 401k and using that to get in? Even if you had to deal with PMI to get it done, in the long run it may be the best use of that money!

We need to have conversations with our accountants and financial planners. They have these kinds of conversations every day with their clients. Some people would never have given it a thought but might just be the ones that benefit the most! What about those people who have investment properties? With all the possible tax ramifications, is it possible to sell your current home and an existing investment property to help buy that new home? If you have grown tired of being a landlord, now might be the time to sell that investment home and use the money on your “Forever Home®”.

We need to engage and enlighten people to the opportunities that present themselves to us. While not at the bottom, we are a long way from what will be the next “top”. You need to think about it and run some numbers. Once you do, you may find this is a strategy that can reward you, your clients, and your referral partners in a big way! We are going to higher, the opportunities won’t wait.

For questions or comments please go to our website:

Protect Your Prospecting

We are well into March and many of you are seeing a good deal of business. New pre-approvals, clients who have found houses, prospects trying to figure out if and what they can buy, the last of the current wave of refinances, and of course, managing your current pipeline through closing. All of these require time and energy. All of these are important tasks that need to be accomplished in a timely fashion. However, none of them are more important than prospecting.

I have been in the business for thirty years now and I am proud to say I have worked with some of the best in the industry. The one thing that really defines a true professional is the ability to manage their time and activities so that all of their obligations are completed as needed. This includes prospecting. Far too many people get “busy” and forget about being productive. Once opportunities present themselves, you can’t just forget about how those opportunities came to you in the first place. The first victim of your production can’t become your prospecting!

As a coach and mentor, it is my job to keep people focused on all the things they say they want to accomplish and how they are going to get to where they want to go. I have never once had a client come to me and say they want their production to rise and fall like a roller coaster from month to month, but that is exactly what happens to many of them until they learn a very simple system, you need to prospect a minimum of two hours every work day between the hours of 10am and 3pm. Done! There is no more important thing in our business than consistency. When you work for days, weeks, and months to grow a level of trust and confidence in your abilities, you can’t throw it all away just because you get opportunity to do your job. Remember, you have TWO functions as an originator; one is to generate opportunities, the other is to convert those opportunities into closed loans. You need to do BOTH!

A few things you can do to be sure you remain consistent is to schedule your prospecting activities as appointments in your calendar. Ever referral partner, every networking opportunity, everything you do to generate opportunities to do loans and grow the number of referral partners needs to be as important as taking an application, pre-approving a borrower, or preparing a file for submission. You do these things in ADDITION to your prospecting, NOT INSTEAD OF prospecting.

Most of my clients make major improvements to their business and their lives by gaining control of their schedule and their activities. Focus is a key component. Here a few things to thinks about:

1)    Always schedule time in the day to return phone calls and reply to emails. Answering the phone is a distraction that is easily avoided. Just turn it off!
2)    Have a complete list of prospecting activities written out and schedule each week and each month to ensure you are communicating with everyone you need to according to a predetermined plan, not as you happen to think about it.
3)    Guard the hours between 10am and 3pm to be used by only high dollar productive activities. You can replay to email anytime, you can prepare a loan file in the evening. You can print letters and flyers early in the morning. Save the five hours in the middle of the day for important prospecting meetings. You don’t need all five hours to prospect, just two will do!
4)    Set the expectation with everyone as to how you conduct your business. Let people know when you will return phone calls and emails. You can even use ONE of the hours in the middle of the day to do just that if you like, but be proactive, not reactive!

Many people work very hard to earn the trust of potential referral partners to secure an opportunity to serve their clients, only to forget to stay connected with them throughout the process. The old expression, “out of sight, out of mind” is a good reminder that we have an obligation to keep connected with those we want to refer us. Being busy can’t result in less communication it should result in MORE communication. Prevent origination stagnation and the dreaded “roller coaster effect” on your production by keeping focused and scheduled. In our business it isn’t always about how high the big number is at the top of your production cycle as much as it is how big the little number is at the bottom of your production cycle. Sometimes you think you want to raise the roof, when what you really needed to do was to raise the floor! Grow the little numbers and the big numbers will take care of themselves!

Special congratulations to Joel in California and Karl in Arizona who have already secured new listings for their agents and loans for themselves following the “First time home sellers strategy” and having the conversation about “Forever Homes”.

For questions and comments please go to our website: http://www.improvemytomorrowcoaching.com or email me at

Follow up and Follow Through!

As we transition from the winter housing market heading quickly into the spring, the focus needs to be on following the plan. Despite how “busy” you may get, you need to guard against getting sloppy and incomplete. You would be wise to remember that prospecting is not your enemy and that multitasking is a myth.

Every originator needs to have in writing how they generate a contact, and how that contact becomes a closed loan. Not just in your mind; but written down on paper and scheduled to a timeline so that not a single opportunity gets wasted. You need to be very clear on your process and the timeline you follow to meet what I call the “FIVE YESES”. A customer must say “YES” to you five times during the process to go from contact to closed loan. Those five are:

1) Provide contact information
2) Allow you to review credit
3) Supply documentation
4) Enter into application
5) Close the loan

Call the steps whatever you want, juggle them in any way you choose, the fact is, we need to have a plan on how these steps take place and the timing we use to follow up and follow through each step of the way to be sure we don’t waste any opportunities.

The first “YES” that we need is that contact. Doesn’t matter where it comes from or how it came to us, once we generate “Contact Information” we only have two possible outcomes; we follow up and review credit, or we can follow up regularly until the client allows us to review credit or asks us to stop contacting them. There must be a timeline and a schedule by which we do this. We can follow up every day, every three days, or once a week; but there must be a schedule to follow in order to be sure we don’t lose contact with this potential client. Remember, it is important that you have a set system to do this and that you have it written down so it is easy to follow. This can’t be done in your head; it must be a scheduled task that happens consistently!

The same holds true for each of the other steps in the process. You can only keep in touch with that prospect and walk them through the process one step at a time. Each “YES” you collect, is one step closer to closing a loan.

In each and every situation you may run into a situation or circumstance that prohibits someone from moving to that next step. In each case, you need to have a plan and a schedule by which you can resolve the issue and move that client back on the path to that next yes. The critical thing here is being sure you know your own schedule of follow up. Far too many originators lose transactions simply because they forget to follow up with the client. When you have a plan to remain in contact with your prospects or customers, and you share the plan on how they get through the process, you establish an expectation of completion. You gain the client’s acceptance of your process and confirm the expectation of you working together to close a loan.

As we find more and more opportunities, the benefits of having a plan grow. Having a plan and a schedule promotes a higher quality experience for everyone and keeps you focused on being productive instead of just being busy. You also must guard against the number one killer of productivity, the dreaded “Multitasking”. Multitasking is a myth. It doesn’t exist. Well, at least among those who are professional and insist on quality work. The human brain can only focus on one thing at a time. While it can quickly go from task to task, it can only focus on one thing at a time. If you don’t believe me, try reading a book, listening to talk radio, and sending a text, all at the same time. It can’t be done. While all of those can happen at the same time, you can’t focus clearly on all of them at the same time. This can cause mistakes. It is why so many states have passed laws prohibiting distracted driving.

Schedule your outcome. Do one thing at a time, do it perfectly, schedule the next time the next task needs to be done, and then go on to the next thing. You will find you will get more done, it will get done better, and you lose fewer deals because you are focused on the correct outcome! Oh yes, this also includes prospecting. I can’t tell you how many loan originators sacrifice prospecting time as soon as they become “busy”. Huge mistake, your prospecting time is what creates the first opportunity to collect a “yes”. Just like everything else, you need to schedule your prospecting each day. A minimum of two hours between the hours of 10am and 3pm every day is a requirement of the profession. No prospecting, no prospects!

Have a plan, schedule the tasks, do one thing at a time perfectly, then go on to the next item on your schedule! Doing this will help you close more loans in less time and keep you from the dreaded “rollercoaster” of inconsistent closing volumes from month to month.

For questions or comments, please visit our website: http://www.improvemytomorrowcoaching.com