Prospecting With Purpose

Mortgage professionals all need to prospect. We all acknowledge that Prospecting is one of the three things we do as a loan originator along with managing communications and processing the information we generate from prospecting. Far too often originators forget to be clear on about the how what they are doing translates into closed loans. So the discussion this week is about prospecting with purpose.

The first thing we need to be clear about is how does the action I am taking result in either a loan opportunity or a meeting with someone who can refer me? Far too often originators go out prospecting without a clear agenda or focus. They talk to people and then “hope” that the result will be a referral. Well, let me tell you, hope is not a success strategy! If what you are doing doesn’t have a clear and measurable path to a loan opportunity or an appointment with a referral partner, then you need to sit down and figure it out or find something else to do!

Second, we have to put ourselves in a position to offer an actionable activity as a response. Be specific as to what you want to discuss and how by working with you or referring you, they will benefit. Let’s face it, if the customer or referral partner doesn’t see a direct benefit from working with, or referring you, what is their motivation to do so? You must be the SOLUTION to their challenge, not a SOURCE of their problem!

Third, make connections to a larger group or network whenever possible. Have one Realtor® that has experienced success with you share their story with others. Get a testimonial in writing, get a recommendation from them on LinkedIn®, and have them share the success with others they know! Let the customer do the same thing. Always ask if they are on Facebook®, LinkedIn®, or Angie’s List®. Get them to share their experience with the group. Once you have these, you can use them as examples to open up conversations and break down barriers to initial conversations! Video testimonials work great as well! Connect with accountants, financial planners, and insurance professionals to provide meaningful information to the public so all of you can compound all of your relationships to provide opportunities for each other. Right now is a good time to put together a seminar on the changes in the tax code for 2013 and what people need to be doing in the fourth quarter to reduce their tax liability. Create the discussion and provide solutions!

Fourth, follow up a great experience with an appointment. Once you have closed your loan you follow-up that closing with a personal note to the agent on the other side and call them a week or so later to secure a meeting. Same holds true for your buyer. Follow-up after closing and be sure they have completed the follow-up survey and are clear about first payment instructions. Many times this will avoid confusion and reward you with an instant referral.

Last but not least we need to track all of our efforts and see if the contacts, credit pulls, applications, and closed loans we are getting are worth the investment of prospecting time we are giving it. Each day requires specific focused prospecting. Each day we need to “win the day” by generating new contacts, new credit pulls, new referral partner meetings, and new opportunities. We must have a built-in set of measurable. We must set proper expectations of our efforts. We must be clear on what outcome we expect. And above all we must remain consistent in our efforts so that any opportunities we might have obtained from our actions have a chance to develop. Never begin or end any prospecting activities without a clear timeline for success. So many people make a first visit or have an initial conversation and then never follow up that effort. It may take three or more visits to secure the attention of someone, but most people stop at one. How sad.

Every action needs a clear purpose. Each activity needs a specific call to action and a set of measurable by which to gage the success or failure of the attempt. If you aren’t clear on how working with you is a benefit, then you are no different than anyone else doing loans. That is not acceptable. The ability to grow loan volume is often just as simple as having a clear plan and being consistent with it, tracking results, and making adjustments as needed to get the results you desire.

Many companies and originators are seeing lower loan volumes since rates began to climb in May. While rates have recovered a bit, it isn’t likely we will see 3.25% on the 30 year fixed anytime soon. While refinances have declined, purchase business has not grown fast enough yet to fill that void. Everyone needs to commit to working a little harder and a bit smarter to gain that one opportunity a day that will yield two more credit pulls each week that can result in just one more loan. One opportunity a day by every originator can make all the difference.

Have a clear purpose to your prospecting so you and your company can prosper and grow while others struggle and decline. Now is a time for action. Remember, HOPE is NOT a success strategy!

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What, no taper?

So while all the experts and all the major Wall Street firms were convinced that the meeting of the Federal Reserve was sure to culminate in the beginning of tapering anywhere between ten and twenty billion a month from the current bond and note purchases; today we got nothing. Everything stays the way it was and the markets decided to go into rally mode. While it remains to be seen exactly how much or how long the party will give us, rates are going to be lower, at least for now.

Does this mean we are headed back to 3%? NO! Not going to happen. But we are going to see price improvement for the short term and you need to take advantage of the situation while you can. So here is what you can do.

#1: Keep an eye on the markets and don’t over promise. You are where you are and there are no guarantees that anything will get any better than you have right now.
#2: Call all of your pre-approvals and let them know what the current situation is and what they are now good to go for.
#3: Check your database one last time for any interest only or ARM loans that are out there and see if the time has come to either sell or refinance.
#4: Remember the first rule, 100% of the truth 100% of the time. Your professional integrity is all you have. Rates will come and go, but if you lose your credibility, it’s gone!

Sooner or later the Federal Reserve will take the cookies away from the punch bowl. Then they will take the punch bowl as well. Rates will go back up but keep in mind that we are still well below the levels we saw at the peak of the housing market. Money will remain cheap by long term standards for quite some time. The question is, will you have a plan to make the adjustments as rates rise?

The story not being covered is the slow but steady improvement in home sales. New construction and resale numbers are encouraging. They are growing, just not too quickly and that may just be a blessing. We don’t need prices to overheat. We don’t need a frenzy of activity. What we need is for the consumer to see the benefits in buying that new home, or making the move to sell and buy that forever home! Make no mistake, rates and prices are going to rise and why not get in before they do?
We all need to get out of the office and talk to the people. We need to be visible with our Realtors®, financial planners, accountants, and the general public sharing the news. Email blasts won’t do it. And while I like the phone as much as the next guy, just put it away and get out and talk to the people. Don’t make an appointment. Just go visit! Be sure to bring an article or blog post with you so you have something to leave them in case they aren’t there or are busy. Leave it in an envelope with a note. Just get in front of your referral partners and follow up!

We approach the fourth quarter and we need to be active. Accountants and financial planners are working on the last of their people needing to get their taxes done before the extension expires in the middle of October. They also have to draw the contrast between the tax code of 2012 and 2013. Now is the time to talk with these professionals and ask them how they think these changes will most affect their clients? What strategies will they recommend? Will it make sense to put together a seminar for all of your joint clients and share some thoughts? Could they provide you with some important information you can share with your people? What clients might they have that could use your help?

We are approaching the fourth quarter and everyone needs to finish strong. One more call each day, one more opportunity each week. How can we discover that one opportunity by making that little extra effort? How would your personal production look if you found that one extra deal each week? How would your branch look if you all found that one extra deal each week? How would your company look if you all found that one more deal each week? Do the math. Could that one extra call each day make your year? Could it save someone’s job? Could it save the branch or even the company?

It’s not how you start the race but how you finish. One more call may do it all!

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Learning the Levels

The levels of production in mortgage loan originations are fairly straight forward but very misunderstood. As an industry we don’t do a very good job of understanding production levels and certainly have a very poor understanding of what each level of production looks like, and are likely often comparing production levels of people who have very different ideas and concepts of what the job is, and what work is to be done.

Nobody lives in a vacuum. Originators often have processors, underwriters, openers, closers, assistants, and any number of other people engaged in how their loan production comes about and gets translated into closed transaction. As we transition out of the great refinance boom, many companies, branches, and teams are looking at how they operate and the best way for them to move forward. This will be the first in a series of posts looking at how different people operate and what is working and what is not in different markets.

This week we are going to look at loan origination production levels. I will talk about this one first because I really believe that if we all faced the simple reality of the numbers we could understand our place in the industry and then figure out how best to move to that next level of proficiency, whatever that might be. But first we have to establish and understanding of what different production levels look like.

For most originators, closed loans never reach five loans a month. Actually, more than two-thirds of those who originate loans close fewer than forty transactions per year. It is very likely that each month about five to ten percent of those who are licensed and state that they are working as loan originators don’t manage to close a single loan each month! That number is almost the same as the number of loan originators that close ten or more loan per month. Can you imagine? If you drew a Bell Curve, the peak of the curve would be just past three!

Far to often the focus of all the education and trainings are built around very unrealistic expectations. Those doing most of the speaking are those who have built big teams of people or who have grown to huge production numbers that are likely not “teachable”. Let’s be honest here, those that claim to have closed in excess of a thousand transactions last year are not remotely living in the same world as the originator doing in a month what those people claim to do in a day. For the largest segment of the loan origination world, how do I get to five loans a month is the real question, not how do I do a thousand?
The simple levels of loan production consist of what you can do by yourself with the support of a processing team that you turn a completed file over too. No assistants, no marketing people, just what can I originate by myself so that the loan flows smoothly and the clients and referral partners are happy? In my experience, that answer should be ten. Loan originators should be able to prospect, manage communications, and prepare complete files to hand over to their processor without any help until they reach about ten transactions per month.

Now we all know that most of the originators are very “busy” closing slightly more than three loans a month, how do they get to ten without any additional help? The answer is found but knowing how your individual process works and then learning the art of repetition. How do I do this perfectly? How do I set the proper expectations for my referral partners and my clients? How do I put together a perfect submission and go on to the next file? The answer is to write it down and always be aware of what is next! Connect the all the dots from first contact to closing so you always know what is next to do and when it is time to do it. Once you have your workflow set to a timeline, you now have the making of a system.

The difference between someone that does less than four loans a month to one that does five or more is far less than you think. It is being prepared to set proper expectations, set time frames for specific actions to be completed, knowing when and what to do next, and most important, never forget that prospecting is a part of every conversation or action! When you learn these things, you will see production grow; you will spend less time on each file, and generate new loan opportunities along the way!

The levels of production are very basic at the beginning. Learn how to do one loan perfectly and then repeat the process. Babe Ruth couldn’t teach anyone how to hit home runs. Nolan Ryan couldn’t teach someone how to throw a baseball 100mph. A mortgage professional doesn’t go out and close a thousand loans a year. In fact no individual does or can. But you can take the first step and learn how to do one loan perfectly. When you do, get to two and then three a month. Each as perfect a file submission as the one before it. As you do this you will learn to make adjustments and develop efficiencies. Your monthly production will grow past three, and four, then five and more.

You can’t get to the next level without perfecting the one you are on. The good news is that it gets easier as you go. No kidding. I often tell my clients that closing ten loans a month is much easier than closing three! They will all tell you the same thing; it is! Don’t worry about closing ten plus loans just yet. Learn to take it in steps. Nobody gets to ten without going through four, five, and six! As you grow your volume, your systems will show you how to go forward! What you do at three won’t always work for you at five. What works at six may not function at nine, don’t worry, just adjust! Most originators never see five loans a month. But if they do, there is about a one in three chance that they will reach and exceed ten!

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May I Ask Your Opinion

Loan originators are gearing up for the final push heading into the fourth quarter of the year. We have just about 90 days to get loans into the pipeline that we plan on closing in 2013. While purchase business remains about 60% of all mortgage loan applications, the thoughts on how to become more involved in purchase business seems to dominate the conversation. For those already engaged in a fair amount of purchase loan volume, the path is much easier because you already have inroads with those people controlling purchase loan business. For those who were heavily involved with refinance business, the path is going to be more difficult.

One of the concepts I share with my clients is to master the phrase “May I ask your opinion.” These five words may be the most powerful five words any loan originator can possess. Regardless of whom you are approaching, leading the conversation with these words helps open a dialog about the very thing you will need to know to earn a chance at their potential purchase loan referrals. This can be done by just asking. Instead of asking for referrals, you simply ask their opinion. People like to express their opinion. It becomes much more likely to have a meaningful conversation when you ask someone for their opinion rather than to ask them for referrals.

When you ask for an opinion you are asking advice and counsel. When you ask for referrals from people you hardly know or had any experience with, it almost like asking a stranger for a favor you haven’t earned. People offer their opinions freely, their referrals are much harder to get. When you are gathering opinions you are looking to find their challenges with the current work environment. You can ask a Realtor® what their opinion is about what it would take to improve the housing market in their specific area. You can ask an accountant about what they think is the most significant changes to the tax code for home owners and higher income people. You can ask a financial planner if they think real estate is a featured part of someone’s financial plan.

When you ask opinions like this, you will not only get answers, but you will find out specific thoughts about how you can become a part of their business by offering solutions to any of their concerns. Example, the Realtor® states that housing inventories are low and they could use more listings. You can then talk to them about the “Forever Home Strategy” or the “First Time Home Seller Strategy”. The accountant points out the changes in the tax code that reduce the number of deductions or exemptions in the new tax code, you can share with them a strategy where they can use real estate to generate deductions or reduce expenses through owning real estate. For those financial planners using real estate as a part of a total financial plan, you can share their concepts and thoughts with others to expand the role of real estate and as a result, improve the number of opportunities you see.

Become a solutions provider. Have people share with you what the issues are they are facing and help them solve those issues with your plan! A true professional has a plan. Asking people for their opinion helps you engage in conversations that put you in a position to solve the issues they are facing. When you can do this, referrals follow!

We don’t sell mortgage loans. We provide solutions that result in mortgage opportunities. Ask for their opinion and have them tell you what they need you to do to earn their business and their referrals.

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