What Are They Thinking?

I spent last week in Palm Desert California at Sales Mastery. This annual event gets a large number of originators and managers together to discuss the industry, share ideas, and talk with each other about direction. I go almost every year to connect with friends from around the country and get a feel for what people are thinking. Often more happens outside the event at breaks and after the sessions than what you will see from the platform. This year was not an exception.

As always I am one of the first down at breakfast which opens at 7am pacific time largely because my internal clock remains fixed on east coast time so I have been awake for a few hours by then. I also do it because people know my habit of taking a table in the corner to watch the people file in and see who wants to join me in conversation. As many of the people I know are aware of this, I usually find myself in good conversation. This year was no exception.

One of the many surprises I found was the common thread of recruiting. It seems so many were convinced that the only way to survive was to begin recruiting heavily to fill the void in production resulting from the lack of refinances. In some cases, people were lowering their standards and looking to hire people they never would have hired just a year ago. In one case, there was a company looking to hire every originator that had been let go from the industry, even those who were fired.

I try to understand this logic and it escapes me. Does anyone take the time to look at the costs of on-boarding new people? Does anyone give any thought as to the type of disruption caused by bringing in people who are not likely to fit the culture of the current organization? Has not anyone thought this through? Instead of trying to find new people to bring to the table, why can’t we improve the people we have?

In many cases growing your own people by just one loan a week can fill the void by declining refinances. One more sales call a day by every producing member of the organization can often make all the difference. Just one more sales call a day can often double the opportunities of the average originator. Taking your average originator up just one production level and often they we grow beyond that. It is pretty simple; change the expectation of your average originator from three loans a month and grow them to five loans a month. It is often a minor investment in a “known” individual instead of taking a gamble on an outside person. I am not saying recruiting is bad. I am saying it is often overlooked to set new expectations, invest in training your current people, and improve what you have. I believe you need to do both.

I understand that in some parts of the country applications are down as much as 50% from just six months ago. I get the fact that refinances were a large part of the volume and much of that has gone away. But the fact remains, purchase business has been improving steadily and refinances while down, still represent more than 60% of all loan applications. While purchase business will not replace all the refinance volume, the growth in purchase business has those focused on purchase business setting personal production records. You see, for those that had remained consistent in working the purchase market, they have seen significant growth in their business, even as we approach the winter months. If you are not prepared to make it in a 70% or higher purchase market, you may be in some real trouble!

Some of the thoughts shared were about compensation, margins, compliance, technology, systems, staffing, and what the fields of responsibility for an originator are or should be. I have decided that over the next few weeks to share some of these conversations and hope you all will share your thoughts about each of these areas. It is always good to know what others are thinking. Even if you think they are wrong, it never hurts to listen to a point of view.

So I ask all of you to share your thoughts about what you are thinking. What are your issues or concerns? Please let us know.

mike@IMTcoaching.com or visit our website: http://www.IMTcoaching.com


Business Planning (Part three)

In the first part we spoke about knowing your numbers. In the second part we had to determine where business was coming from and the tasks and activities used to generate these opportunities. Now it’s time to pull it all together by getting ourselves scheduled so that all the things we know we should be doing get done when they should.

Nothing feels better than scheduled success. Putting all the pieces into your work day so you can develop consistent habits often makes all the difference between being overly busy and wonderfully productive.

First we have to take into account what days and what hours you plan on working. Everyone can be different. Nobody has to work Monday through Friday from 9 to 5. Getting clear what hours and days work best for you is the foundation of a great schedule. Working “whenever I get there to whenever I get done” is not acceptable. Clear start and stop times are crucial to developing good work habits and being productive.

Next we must set clear areas of focus for our prospecting. Each and every day should contain a minimum of two hours of prospecting time. Using the “Referral Triangle” we know there are three main areas of where mortgage opportunities come from. Each day should have a focus.

Now we get into the day. The four tasks originators have to be clear on are:
1) Planning and reviewing each day.
2) Prospecting for a minimum of two hours.
3) Processing the information from prospecting.
4) Managing communications. (Phone & email)

This gets broken out into a simple schedule using the 1-3-4 time breakdown. One hour of planning and review. Three hours to deal with communications. And the last four hours are to cover prospecting and processing. Example:

8:30 – 9am Planning
9 – 10am Communications
10 – 11am Prospecting/Processing
11- noon Prospecting/Processing
Noon – 1 Lunch
1 – 2pm Communications
2 – 3pm Prospecting/Processing
3 – 4pm Prospecting/Processing
4 – 5pm Communications
5 – 5:30pm Review & Score the day

This becomes habit very quickly. You will see how it all comes together as you do it more frequently. The important thing to remember is to have all of your tasks broken out. Know how long each task should take. And always remember to schedule the next contact before you move on to the next task. Do it right the first time and things will require much less time than doing them piece meal.

Learn to schedule your communication and contacts with referral partners and your clients on a predetermined schedule. Some people you will speak to more often than others. You will speak to your best referring Realtor® every week, but your best attorney maybe only once a month, and your closed clients only once or twice a year. Having a predetermined plan of contact will ensure you never “forget” a relationship.

Your closed clients need your attention. They are your best source of referrals and repeat business if you just remember to keep in touch. You can set yourself up for scheduled success if you remember to provide a value added proposition to everyone in your database once a month. Merchant of the Month video coupons are a great beginning. The Annual Mortgage Fitness Check-up is an annual event that helps keep you connected in person and opens the door for new referrals. Last but not least is to have some kind of annual event where you can invite everyone to connect and enjoy themselves. Pumpkin Picking around Halloween; Valentine’s Day Party, Planting Flags on Memorial Day or Flag Day; Day at the Ballpark; Night at the Movies; anything you like at any time you like as long as it is not November or December. Everyone has an event or two to attend around those holidays. Have your event when others are not. These fourteen contacts during the year will keep you fresh in their eyes and you focused on getting in front of opportunities.

Your business plan is your map to success. You have to know where you are, you have to know where you want to go, you have to pick the way you plan to travel, and you MUST schedule the trip! Your business plan helps keep you focused on what you say you want to accomplish. Without a plan you are just making a wish!

Make your plan, schedule your success, track your results, and make adjustments along the way. Your plan will make it possible!

Questions or comments: mike@IMTcoaching.com or visit our website at Http://improvemytomorrowcoaching.com

Business Planning (Part 2)

Last week we talked about what our goals were and the mathematics about how we reach that goal. This week we have to talk about what we are going to do and where the business is going to come from.

We start as we always start, by acknowledging the “Referral Triangle®” and map out where our business came from year to date. Each transaction is a result of prospecting from either, Realtor®/Builders, Other Professionals, or Database/Consumer Direct Marketing activities. You might want to make notes as to the type of business, such as refinance or purchase. I say that because if your business was heavy in the refinance area, it is not likely that you will experience that level of refinance activity in 2014. You should be looking to have more of a 70/30 or 80/20 purchase/refinance ratio if not higher. If your refinance estimates are higher than this, you might want to take a closer look to be sure that these numbers are sustainable.

Our year to date numbers will give us a general direction on where our business is currently coming from. You will likely find a few surprises. Some people are sending you more opportunities than you thought, and others are sending you less! It is very important that you are honest with your numbers. Unrealistic expectations can really hurt your annual earning if you aren’t careful!

Now we list each referral partner and activity we plan on executing this coming year and place a value to it. How many opportunities do I expect to get from each person or activity? It may help to look at specific areas for their specific pull through rate. Some activities or referral partners produce better numbers than others. If you have identified any partners or activities that are outside your averages, please be sure to make notes and adjust your totals accordingly.

Having now completed our primary list of estimates, we need to see how close we are at reaching our target numbers. If we are short of our projections, what are we going to do to increase those numbers? Are we going to add new referral partners? If so; how will it happen? Do we have a specific plan in writing that will lead us to the new business we need? Does our plan call for increased referral opportunities from our current people? What makes you think this will happen? Be sure you have a reasonable answer why any current referral partner is now going to increase the number of referrals without a specific reason why that will happen.

If we are going to increase the number of referral partners and/or create new activities by which we grow this area, what specifically are we going to do to generate these new referral partners? Example: Are we going to contact each Realtor® on the other side of each purchase transaction and ask for business? If so, what are you going to do? How is this going to be done? When will this get done? What are your projected growth numbers from having done this? You can just say that you are going to generate 25 more loans a year by growing the number of Realtor® partners; you need a specific plan on how you are going to do it and the likely results!

The same holds true for any new activities you are going to put forward to grow your business. Maybe you are getting more active in your networking group? But what specifically are you going to do in that group that will generate the numbers? You can’t just assume that attending meetings will result in referrals. You will need a specific plan of action as to how you are going to work with these people to generate a specific number of referrals. One of the major flaws of networking groups is the lack of specific action plans to generate the referrals we need. Too much faith is placed on the old “Hope referral system”. I talk to these people every week and “Hope” they remember to refer me! As I have said before, “Hope is NOT a success strategy!”

Business planning is a map. You have many options as to what you can do and where business can come from. Part of having this plan is to set a course of action that you believe will yield the desired results. Without a set of specific tasks and projected results, how will you ever know if where you are is where you are supposed to be? Without the ability to easily identify where your business is coming from and if you are on the path you have selected, you have little chance of reaching your goals in the way that you desire.

Next week we will talk about scheduling tasks and activities. We will look at some simple ways to remain focused and on track. We will also look at a few ways to save some time and improve our opportunities. 2014 is right around the corner. I want you to be ready to hit the ground running. Nobody I know has ever had a great first quarter of the year and had a bad year! The first quarter sets the tone! Be ready! Be prepared! Be Planned!

Questions or comments please email us at: mike@IMTcoaching.com or visit http://improvemytomorrowcoaching.com

It’s Time to Business Plan! (Part one)

October is here and we are into the fourth quarter. Now is the time each year that I work with my private clients to begin their business plans for the coming year. For those who take this seriously, it becomes the road map to new levels of success. For those that don’t, it becomes a laborious task to be thrown together as more to appease the person demanding the exercise or as almost a prayer to the “mortgage gods” in hope that these prayers will be answered. I am not here to tell you that a well thought out business plan guarantees success, or that by not having one you cannot be successful, what I am saying is that I have found that those who take the time to think through and schedule their tasks to achieve their goals have significantly better production numbers on average than those that do not.

So let us look at the fundamentals of what I ask for from my clients for a business plan so that you may choose to take some time and create one for yourself. I have always found it easier to “back out” the numbers and start at the successful conclusion! In other words, what are your income goals for 2014?

Once we know how much you desire to make, we just have to look at what our average transaction yields us in income. This is pretty simple, divide your year to date income by the number of transactions you have closed and were paid for, and you will have your average “transactional value”. Now simply divide the transactional value into the annual income number and you will see the exact number of transactions you will need to close to reach that goal. Pretty simple stuff!

The next thing we need to do is calculate how many loan applications we submitted into processing to close the number of transactions we closed. Once we have this, we divide the number of closed loans by the number of applications submitted into processing and we will now have your “pull through rate”. Once you know your pull through rate, you can easily calculate how many applications you will need to submit into processing. All you do is divide your closed loan number by your pull through rate and round up to the next whole number. Example, you want to close 100 loans. You pull through rate is 85%. You divide 100 by 85% or .85 and you will get 117.647 or rounded up to 118. You will need 118 applications submitted into processing to close 100 loans to reach your goal.

Once that is done we back out the number of credit reports we pulled to get the total number of applications submitted into processing. Once again we repeat the process of dividing the number of applications submitted by the number of credit pulls we did, to determine the number of credit pulls we need to submit the number of loans into processing that it takes to close the number of loans we need to reach our goal. Example, our ratio of credit pulls to applications submitted is 3 to 1. That means that under this example, in order to submit 118 loans into processing, we will need to pull 354 credit reports. Remember, every loan originator has his or her set of mathematical values. It is important that you know specifically what yours are.

We are almost through the first part of planning. All that is left to do in this part is to determine how many referrals we will need to reach our goal by dividing the total number of referrals into the total number of credit reports pulled. For those of you who do not specifically track this number, you can use total number of “leads talked too” to have a fair understanding of the total people you have talked with that led to the number of credit pulls. Either way, we do the same thing; we divide the bigger number into the smaller number to understand the ratio of customer contacts to credit pulls. Let us just say the ratio is 2 to 1 for this example. Then all we would need to do is generate 708 customer contacts to reach our goal of 354 credit pulls needed to reach our goal.

Now the last thing we have to do is determine is the number of days we plan on working in 2014. Everyone has a different level of activity and some people take more time off than others. Let us just say we start with the same 365 days, we don’t work weekends (-104 days), celebrate some holidays (-15), and take three weeks’ vacation (-21), and say we catch a cold (-5), that leaves us 220 work days. Again, everyone has their own math, this is just an example! So if we divide the actual work days, 220, into the number customer contacts, 708, we get 3.2 people a day. These are the numbers we are going to need for the next part of business planning 2014!

In our example, we need to talk to 3.2 people each of the 220 days we intend to work, so we can pull about seven credit reports each week, so we can put about ten applications each month, so we can close 100 loans, to reach our financial goal for 2014!

Next week, Part 2!

Questions or comments please email: mike@imtcoaching.com or visit us on the web at http://improvemytomorrowcoaching.com

Level Up Part 2

So here we are in a government shutdown that neither party will accept responsibility for, and a president that will talk with terrorists and war criminals but not to the very people elected to work with him to run the country. It further complicates things when the very primary services government should provide are now interrupted in a battle over the government trying to take control of even more parts of our daily lives. All of this because the president, budget director, and staff, who can’t seem to write a budget no less try and pass one that has ever received a single vote from any member of congress on any budget they ever submitted. Well, in all fairness there has only been one budget even submitted in the past five years.

At the same time, those federal employees who are “non-essential” are supposed to be on “furlough” are actually on an additional taxpayer funded vacation because they will be paid for all of these days as soon as this situation is resolved. That is not a furlough, it’s a paid vacation. None of this is about ideology. This is about arrogance of elected officials who refuse to do their jobs and expect people to live under laws that they themselves refuse to live under and exempt themselves from.

So that leaves us dealing with a government shutdown and the effects it may have on the mortgage and real estate industry. There are hundreds if not thousands of emails and articles being circulated about what it all means. Here is the issue, STOP EMAILING IT! You want to call someone and talk about it, fine. You want to print it out and bring it to your real estate offices and share it, fine. You want to share these thoughts so that people are aware of what they can and maybe can’t do, then get in front of them and talk about it, just STOP EMAILING!!!

You can’t grow your business and differentiate yourself from others if you are doing the exact same thing as the other guy. In the last 48 hours I have received dozens of emails telling me about how the shutdown affects the mortgage industry. I have seen hundreds of posts on Facebook® and LinkedIn® of the very same material. This does not begin to count what has been blocked by my privacy settings and spam filters. If you want to take your business to the “next level” you have to do the work! The “work” requires knowing the information and sharing the information IN PERSON! Get out of the office and go TALK TO PEOPLE!

For once and for all let’s be very clear. Email is great for documenting a conversation or presentation. Email is a great support tool. Email is something you do to CONFIRM a conversation and document the dialog, not a substitution!!!

Mortgage professionals that want to grow and flourish do it with personal contact. Face to face or over the phone you need personal contact to establish and maintain the connection and trust of a professional relationship. As I have said in the past, you don’t have enough business because you don’t talk to enough people. If you were talking to enough people, you would have more business. Email is not talking.

Now, for those of you that have graduated to using video and are producing and sharing video explanations via email or on social media, you are heading in the right direction. In many situations video will help explain the topic quite well and reduce the number of times you may have to repeat yourself. But again, you also need an element of personal interaction either in person or by phone sharing the fact that you have sent to video by email to them to share with their people. Email only supports a relationship you have established. If you haven’t established a relationship, video with gain attention, but trust is built with personal live contact.

People who move to higher levels establish solid trust relationships through a pattern of personal contact. If you leave all of your communication to electronic communication, you can lose that relationship just like someone who relies on selling price instead of value. Someone with a better price will win in the absence of a superior value! Become that superior value! Communicate in person! Support those contacts with video when possible or a physical note or letter when not.

The government shutdown can be a scary thing to someone trying to buy a home or refinance a property. You must provide information and solutions to your people so they can make an informed decision. Some companies are working to remove conditions like requirements for tax transcripts so people can close without delay, but if someone is looking at a USDA loan, nothing will be done until the people go back to work, and the backlog of loans may be substantial once people get back. You need to prepare everyone for the worst. Look into other possible programs or just be very clear as to the facts. Do all you can do to avoid confusion; be a calming influence and provide accurate information!

People remember people who lead in a crisis. And make no mistake, if you are a first time home buyer trying to close a USDA loan by the end of this month you are indeed in a crisis! Share accurate information. Don’t feed into the drama. Look for other available options. Keep informed and keep in personal touch. Don’t email if you can mail. Don’t mail if you can call. Don’t call if you can visit! This is not just a business, this is extremely personal!

For questions or comments: mike@IMTcoaching.com

Sign up for next week’s Lunch & Learn with Terri Murphy by going to our website: http://www.improvemytomorrowcoaching.com