The 6 Things Highly Efficient Originators Do!

This time of year we all see the reports of all the organizations and magazines that “rank” originators based on dollar closed performance or units closed. While this may bring some interest in the mortgage community, it often is nothing more than a list of names and numbers that lack real specific information. Example, you never know if this originator really did originate these loans or was it a series of “Team Members” or “Assistants” that were the ones that did a great deal of the work? You also never know the quality of the client and referral partner experience for all of these closed loans, and many people who have closed, may have never once met or spoke to the originator taking credit for the closed loan.

I don’t have an issue with teams or production partners, I have coached some of the most successful teams in the industry and really believe in that model, but to the average originator who closes less than 40 units a year and feels like they are working all the time, it’s very important to not ignore that the differences between average results and exceptional results is very small, and that some of the people they see on these lists take home less money, sometimes a LOT less money, than you think they do after all their expenses.

So over the next few weeks I am going to walk through my list of what I see are the six things that really stand out as the items that the really efficient originators address in their business that help make them out perform their competitors, but also provide a quality experience for their clients and referral partners. It is also an important point, that the standard I use for efficiency is 6 to 10 closed units per month average per member of the origination team. That includes everyone involved with:

  • Prospecting
  • Marketing
  • Consulting
  • Product and program determination
  • Communicating
  • Qualifying
  • Loan application
  • Set-up
  • File submission
  • Pipeline management
  • Clearing origination conditions
  • Closing preparation
  • Final review
  • Closing coordination
  • Post-closing communications
  • Database maintenance

Obviously we look at actual loan processing, underwriting, title, wiring, and some closing issues as “company” responsibilities, but it’s the originator that is obligated to oversee all of these and take responsibility for them.

The six areas that I plan on addressing over the next few weeks will be:

  1. The Business Plan
  2. The Complete process from prospecting to post closing
  3. Work schedule
  4. Plan execution and service delivery
  5. Tracking results against our projections
  6. Making the needed adjustments

When I look at the people in the industry that I admire and those that I have worked with and helped reach their higher potential, I see the importance in addressing all of these issues. I walk through these step by step and share with you the standards that I see help provide clarity, quality, performance, and profitability to originators, those who build production teams, and those managers who want to bring out the best in their people!

Questions or comments: Mike@IMTcoaching.com

Are You Worth More Than $11.35 an Hour?

When you are involved with as many loan originators as I am, you hear all kinds of stories and concepts about how to generate loan opportunities. I think over the last few years, so many people have focused on lead generation that they haven’t spent too much time looking at conversion rates and profitability. A big issue was the issue of paying for leads. So I asked a number of originators to share some insights as to how they track their investment in buying leads and what the total return on that investment was, and how profitable it may or may not have been. The answers were pretty interesting.

  • The number one most interesting item was that mostof the originators don’t track their cost/hour investments in purchasing leads.
  • As a total percentage of their marketing budget in time and money, they don’t draw a comparison between purchasing leads and other opportunity generating investments.
  • Last but not least, they don’t work the math to show their effective income rate per hour of the work needed to generate each application that closes.

I believe that the mortgage business doesn’t do a very good job at working through the numbers. In one specific case, a loan originator with a significant investment in time, money, and effort; the math was very interesting to work through. It also opened the door to another whole area of discussion that we will follow-up in the future, what “power” do you give up when you are in pursuit of those leads?

After working through the math, this loan originator saw that the net income after expenses on all the other areas used to generate opportunities, her net hourly rate for just generating the lead that closes was almost four times the hourly rate that was found on the leads that were purchased. In fact, the net income per hour prospecting and working the purchased leads netted $11.35 per hour invested!

Now this is just one set of numbers, but I believe that they do share a story. The story is that the work needed to obtain the opportunity can vary widely across the board. The time it takes to work each lead and convert it into a transaction is something that becomes really important to measure.

As we all know, the math used to calculate how “well” someone is doing in our industry can vary widely. Units closed and dollar volumes can be just the tip of the real story if you don’t dig down to see the entire story. We all know people that have greatly inflated numbers or have huge teams of people funneling up that volume, or at what cost?

Purchasing leads isn’t a bad thing by itself. Large production teams are not a bad thing by itself. Marketing agreements, desk rentals, joint advertising, and other opportunity generating techniques are not bad things by themselves; it’s just vitally important that you know the true cost in time, effort, and assets and compare!

This loan originator discovered that making $11.35 an hour to work the leads to the point of a genuine loan opportunity wasn’t worth the effort. Others may feel differently, but you really need to drill down and know the math to be sure you are happy with the money you are netting for the work you are doing!

Questions or comments: Mike@IMTcoaching.com

First Quarter Review

It’s the middle of March and now is the time to do our first quarter review. Now is the time to pull out the business plan and compare projections with the results. It’s always important to calculate our results as percentage of business as compared to same percentages quarter to quarter. Since all four quarters of the year are never the same, we need to look back and see what the total percentage of closed business or opportunities as compared to the entire year and quarter to quarter. Most of my originators average between 9% and 18% of their total closed business in the first quarter. So get clear when comparing numbers that you check your actual math.

All the indications are that we are going to see a really robust spring market. I am seeing that my clients are carrying about 30% more pre-approvals than the same time last year. We are also seeing higher numbers of listings entering the market in many areas, so that bodes well for higher numbers of transactions. Just be certain to stay well connected to those you pre-approve, and monitor your conversion rates. We don’t want to leak away transactions we are already invested in. Those weekly calls are important!

Interest rates are also very friendly to us at the moment. Remember, last year at this time rates headed higher. Paying attention to an improved rate market can lead you to more total transactions, both purchases AND refinances!

This time of the year it’s a good business to work with some of our Realtor® referral partners on using the “Forever Home Strategy” to generate new listing opportunities.

Last but not least, we need to remember to prospect from the process. There are all kinds of prospecting opportunities from the loan process. Realtors®, Accountants, Financial Planners, Attorneys, Insurance professionals, and all kinds of other opportunities right inside each file you close.

Now is the time to update your numbers and look at the information carefully. We are heading into the spring with many favorable conditions for the housing market. So update, communicate, and don’t  PROCRASTINATE! Opportunities are plentiful to those that Just do the WORK!

Questions or comments: Mike@IMTcoaching.com

Common Misconceptions

When you coach a wide variety of people you can hear a great deal of perspectives. People believe what they believe because that is what they know, not always what is true. The world is full of people who have always believed what they believe and have never had cause or reason to challenge those beliefs. However, many people have never reasoned out their positions one way or the other and are often spending time questioning them or abandoning their beliefs for something that appears more popular.

In our profession we are subject to constant pressure of outside influences. Market conditions change so we must adjust to them, but often we never question the adjustments we are making. Are the adjustments we are making really the correct ones to make? In many cases what has worked before will work again. In other situations, we must explore new solutions to old problems. However, we often don’t think about old solutions to new problems!

With the world full now of algorithms to solve every problem, the quality of the customer experience is now left to an artificial and programed response instead of a person communicating with a person. Just like the incredibly frustrating phone trees when you call many companies that try to electronically answer your question in a number of ways until you either hang up, or have to wait for a live person to answer and they have to ask all the same questions all over again to figure out that THEY now have to transfer you to yet another person to help you and you have to answer all these questions all over again!

Technology and speed are not bad for customer service, but its the failed integration of technology and personal attention that causes a great deal of modern frustration. So let’s have a look at a few things that can help mitigate some of the customer service nightmares and provide guidance to our customers and referral partners on how to have a great customer service experience by integrating our technology and our personal connection to our customers.

The number one misconception in our industry is that we must be available 24/7/365. Since that isn’t even remotely possible, why do we even try? Clients and referral partners will understand and appreciate knowing exactly how you handle calls and messages; and when they can expect a response. When you use a combination of voicemail, email, text, video and old fashion phone calls, you can provide a great experience for most everyone in your market and have a life at the same time.

The next biggest challenge seems to be lead generation. Everyone seems fixated about generating or gathering leads. I actually have to laugh at this because there is an entire multibillion dollar industry thats sole purpose is to sell leads to people that won’t spend a few minutes a day to generate them themselves! The belief is that the more leads you generate, the more money you make. Um,NO! The more deals you CLOSE the more money you make! So why is it that so few people in our industry have even the slightest idea of what their actual conversion rates are, and how to improve them?

The last misconception of the day is the actual VALUE of each referral partner and the COST in time, money, and effort that each referral partner takes. So much of the time I see people investing 30%, 40%, 50%, or more of their time, money, and effort into a referral source or area of business that produces less closed revenue than the percentage of the revenue invested in it.WHY? There needs to be a direct connection between effort and outcome!

So what are your challenges? What do you want to talk about? What are the areas of business that you want to discuss? Please let us know!

Questions or comments: Mike@IMTcoaching.com