Awareness of Expectations

As mortgage professionals one of the most critical parts of being the “person in the profession” is to use your knowledge to provide information and manage expectations. There are many ways to do this, but being aware of just a few small things can often make all the difference between a great experience and a total train wreck of a transaction. It is up to the mortgage professional to be aware of a client and the referral partner’s expectations as early as possible and to manage these expectations through the filter of communication.

Since all markets and clients, as well as their transactions are different, I will have to speak in general terms but you will quickly be able to adapt these to your situation. There are three basic rules I like to have people follow in order to help set the stage.

• Always ask the client to explain to you what their specific goals are for this transaction. If there is more than one client, get all of them to tell you!
• Get really clear as to the client’s priorities in case they can’t have 100% of what they want.
• Keep everyone on the same page by keeping communication open with all the players on the same team.

A mortgage professional that adapts a proactive position of information and communication tends to avoid issues down the road. Dealing with a false reality in the very beginning may be an issue, but it will be a smaller issue than trying to deal with it once a transaction has begun and as you get close to closing! It is always better to risk losing a deal to someone who will promise the world and not be able to deliver on false promises than to be the one fighting at closing because things didn’t go as promised. There are enough issues that can complicate any transaction without dealing with the ones you can easily identify up front! NOBODYis going to get a 3.25% rate on a 30 year fixed with a $5K lender credit with a 580 credit score and 100% financing!

The facts of every transaction can vary, but the internet is full of generic information that usually won’t apply 100% of the time to all people. You will find that explaining things clearly as the “WHY”things are the way they are will be helpful. It is important to remain calm and explain clearly.

When you are clear about expectations it is always good to compare reality to the emotion of the situation. People get very emotional about interest rates and closing costs. If you take the time and “range base” payments, you will see that those painful moves in rates during the transaction are comfortable to deal with because the client has been prepared for the payments inside the range you set forward.

The same thing holds true for closing costs. It costs what it costs! Get really clear as to everything they can expect and be sure to be accurate in your numbers while explaining what control your client may have on the actual numbers.

Last but not least, keep everyone on the same page that is on the same team. If you have two borrowers and a buyer’s agent, be sure you set the stage for all of them by connecting them on notifications. If you have a phone call or text message with any one of the parties, be sure you confirm by email or video to all parties your answer or explanation. This can save a huge amount of time and trouble if someone misremembers a conversation along the way!

The market is changing and the industry as a whole is evolving. As mortgage professionals, we need to use our expertise to guide people to a successful conclusion. We must remember that we are ultimately responsible for setting the proper expectations and providing the path for a successful transaction while setting the foundation for a long term relationship!

Questions or comments: Mike@IMTcoaching.com

“The Balance of your Business”

October is Business Planning Month here at IMT Coaching and we continue that focus with looking deeply into where our business is coming from and comparing it to the reality of where purchase opportunities come from and how much time you spend prospecting and maintaining the relationships.

Like everything else, you should really know your numbers. I break it down for you in the “Business Planning Workbook 2019” which is on the home page of the website (www.IMTCoaching.com). Using the model of the “Referral Triangle”, you really need to understand the mechanics of all your purchase opportunities and how they get leveraged out to the other areas of your triangle. For the purposes of this post, we are going to leave everything in the major groups. Realtor®/Builder – Other Professional – Database, you will break it down further into the actual people and activities in your personal plan later.

So we look at the three sides and determine:

• Who are the people or tasks involved?
• What percentage of my time do I commit to this area?
• What percentage of my budget does this consume?
• What percentage of my closed business does it represent?
• Do the efforts equal the outcomes?

The next questions have to deal with direction of focus. Where are we prospecting for opportunities and are they a realistic representation of the opportunities available? Generically speaking, each side of the “Referral Triangle” controls about an equal share of opportunity in the market. While newer people tend to rely heavily on the “Realtor/Builder” leg of the triangle to start, it’s less than a third of all purchase opportunities available. Many originators never allow their business models to mature and so they keep having repeat performances of their first years in the business.

This is a time of the year to look hard at what we are doing and understand that first we need to understand the triangle and then grow it! Building your business into a mature mortgage practice takes some time and some planning, but is really worth it in the long run, especially in light of all the new tools designed to replace the originator with an algorithm! You have to keep putting the person in the profession by constantly personally connecting with your people! You also need to be aware that your job is to grow your database and nurture it with value so you can benefit from the referrals and repeat opportunities it will generate.

Keeping your efforts and outcomes in balance is an important factor that even the best sometimes forget. While it is true that if you master any one area of the market you can achieve great results; you also open the door to losing your entire practice to someone or something that can work cheaper, faster, or just replace you! Remember, diversification and personal connection can’t be bought, it has to be earned!

Questions or comments: Mike@IMTcoaching.com

 

Nothing Functions in a Bubble

 

Industry wide we are seeing some real panic with originators about rising interest rates. Many of these originators haven’t ever been through a rising rate market and I dare say, never dealt with double digit rates for sure. The reality is nothing functions in a bubble. Everything is connected in one way or another. As professionals, you have to be prepared for the conversation with your clients andyour referral partners to have an understanding of what and the possible whythe rising rates are notas big an issue as one would believe them to be.

First, I think it’s important to have perspective. Mortgage rates over the last forty years have ranged between a high in October 1981 of about 18.5% for a 30-year fixed, and a low in November of 2012 of about 3.25%, the real average has been slightly above 8%. While everyone likes lower rates, higher rates aren’t all that high given the history, and looking at other factors, we can actually make the case that these higher rates are a sign of better things to come!

While customers may complain that their payments are now more than they were when they first started looking, we have a really good grip on whythey are climbing.

• The FED has now completed its plan of reducing MBS purchases.
• The stronger economy doesn’t require lower rates to spur activity.
• A rising stock market pushes rates higher to compete.

So, we can explain the “why”, but we need to explain howthe higher payments pale in comparison of the better economic climate. You do this by showing the rise in payments against:

• Personal income up almost 3% year to date.
• The net income gains due to the new tax plan.
• Rents in most parts of the country are rising faster than the cost of the monthly payments.

People don’t live in a bubble. Unless they choose otherwise, they are going to either rent something or own something. Only you can take the national numbers and bring them down to the local level!

So, take your average transactional value property and put it through the math.

• How much has the cost of that home gone up this year?
• How much would that higher payment be per month?
• If they are selling a home or renting, what is the payment differential?
• What is the net monthly cost of the higher rate?
• How much has the rent gone up year over year?
• How much higher is their net take home pay each month?
• Does the math change their perspective?

If you also ask the question, do you think rates are going higher or lower in the months and years to come? What about property prices? Most experts expect rates to continue higher into 2019 and property to continue to appreciate about 5% annually. What would that same house look like with higher mortgage rates and 5% appreciation? What would the cost of waiting be? Is it worth the gamble?

Nobody lives in a bubble. In one way or another, everything is connected. Higher costs are a fact of life in some areas. Did you see the new phone that costs $1,600!!!

So, calm down and get your facts in order. Get the real local numbers and be prepared to share the information that impacts your market and your borrowers. Also remember to keep your pre-approved clients informed. Don’t call them every day in a panic, but during your weekly follow-up call, be sure to advise them how much rates have moved and how that changes their payments or purchasing power.

 

Questions or comments: Mike@IMTcoaching.com

Book Club

One of the things I get a great deal of satisfaction from is sharing and receiving good books. My choices tend to be business books, but also have been known to read many biographies and historical depictions of world events. I have friends as well as clients who will send me books to read on a fairly regular basis and offer an opinion on. I think reading is vital to everyone and physical books are preferred over a reader or audio versions. I cherish the feel of a book and the ability to mark it up and make notes. As a pure business booster, sharing books with referral partners and clients is one of the best value propositions I can think of.

This leads me to the concept I put together with some friends that was a special form of book club. We did it with 12 people but you can work with more or less depending on the type of books you want to read and how committed the people in the club are to reading. If you can muster up six participants in your first attempt, you might find it easier to get started than 12, but 12 is ideal and you will soon see why.

So my group contained 12 people. We first all proposed a list of books we thought would be good for the group to read. Everyone sent their list to the group leader (known as #1) and they then selected one book on each list that would be read and a color highlighter to use to highlight important features of the books.

The leader of the group then assigned numbers 2 through 12 to the rest of the group, along with the book they had to buy and read for their first book. Because we had 12 in the group, the timeline was to read the book was one month. They also would give you the mailing address of the next number on the list so you could mail your book to the next number once you were done, or by the end of the month.

Everyone now knew their first book to buy, the color highlighter they had to use, and to whom they would be mailing their highlighted book to once they were finished. Now came the time to buy your book and begin reading and highlighting the passages you found important. By the beginning of the next month you should have received a new book that had already been read and highlighted. You were to read the book, taking notice to highlight any passages you felt important that weren’t already highlighted by a previous reader. If you agreed that a highlighted passage was important, you would simple place a small “dot” in your color highlighter in the margin. If you didn’t think it important, you did nothing. At the end of the month you mail this book along and receive your next book, now highlighted by tworeaders. This goes on month after month following the same procedure.

By the end of the year, you get your original book BACK, this time; it has been read by eleven and highlighted by all of them! You can now reread your book and see what others agreed with you in highlighting. You also see what other people may have highlighted that you may have missed! In any case, you will have read twelve books that year!

Reading books is vanishing from our culture at an alarming rate. Many adults don’t manage to read even a single book in a year! If you want to expand your mind, learn how to relax and share thoughts without getting into a conflict or running the risk of being “unfriended” or even “bullied”, try book club and expand your thoughts and the group of people who can help you improve the way you think and approach your life and your business.

Questions or comments: Mike@IMTcoaching.com