“Gestation Period of your Deal”

Happy birthday to my son David who is 40 today!

Loan officers are notoriously bad at knowing their real time numbers. Ask any originator how many deals they have and they will likely give you a number that is more than twice the number of loans they are closing in that given month. The perception of what is likely to close is distorted by the total number of people that particular originator is working with in all stages of their pipeline, not just those likely to close in that given month. These inaccuracies are a challenge for the originator and their managers to get a real handle on real time business. It also leads to the dreaded “roller coaster syndrome” where production peaks and valleys from month to month.

One of the ways I teach my clients to deal with this is to have a way to accurately measure their productivity and given them advanced warning of a poor production month on the horizon. You can do anything about a weak closing month you are currently in. It’s also difficult to resolve poor numbers over the next thirty days coming. But what if there was a way to see weak numbers that were two and three months out, far enough into the distance that you had a reasonable chance to engage in some activities to fill that future void? The good news is, by creating a simple set of measurable that you can track, you can set yourself up for success!

It’s called “The Gestation Period of your Deal”. The reason for “YOUR” is that all originators and markets are different. Each needs to be calculated and monitored because it can also change due to outside factors like time of the year, weather, and other market conditions. However, over time, you will find this will accurately become your “canary in the coal mine” to warn you about a pending slump in you productivity.

Here is how it works. We use some very simple math and easy information to track. First, we look at the last 25 or so loans you have closed and measure the time from pre-approval to closing. How many days was it? This number will vary, but it will give you an indication of your market and what the timeline looks like from start to finish. Again, full pre-approval to closing are the numbers you want. There will be outliers in the mix, but they are always likely to exist so don’t worry about them for now, they tend to average out.

Once you know the number of days, you have your Gestation Period for you in your market. Why is this important? Let me show you!

If you want to close EIGHT loans a month and your Gestation Period is 60 days, you will need SIXTEEN pre-approvals out looking at all times! If the period is 90 days you will need 24! Just plug in your targeted number of closings and calculate your time frame and you have a real way to forecast your productivity in advance!

So if you are looking for balance in your business, trying to avoid productivity peaks and valleys, or you are a manager that really wants to tune your projections and be able to assist your people before it log jams or production falls off, working with your team can really help!

Understanding the gestation period of your deals and tracking your pre-approvals is something you can do today that will help improve your tomorrow!

Questions or comments: Mike@IMTcoaching.com

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“Activities over time equal outcome”

Sometimes people fail because they don’t know what they should do.

Sometimes people fail because they won’t do what they know they should do.

Sometimes people fail because they stop doing what they are doing before they get the result.

In my professional career I know these three things to be true. I have seen it thousands of times all across the country. I have these listed in the order in which most originators will tell you they aren’t achieving the numbers they would like to be reaching. I am not convinced that they are correct.

People will accept poor performance rather than be fully committed to excellence. I know this because most originators don’t have a clear vision of what excellence is!

So this week I wanted to start an ongoing conversation about what an excellent experience is, how it’s delivered, and what that experience is worth to a customer. You see, if your business is fully automated, electronic, impersonal, and focused on lead to commission; you are going to have to prepare for increased competition and lower margins. In other words, many more deals for far less money. You will be replaced by technology and someone in a call center who will work cheaper than you will.

We are granted an opportunity now in our market to see a number of conditions all coming together that will become a significant turning point in our industry. The weaker originators who live on high commissions and low volume are soon to be a thing of the past. The internet and automation will make them extinct in a few short years. In my estimation, by 2020 the almost 70% of the loan originators in this country that close less than four units a month will either be gone, or working as an assistant for someone running a larger team of people, or in a call center.

Those originators who have built or are building relationships with all kinds of people and providing value to those people will be the ones that lead the teams and make the money. The cautionary tale here is that if you fail to manage the relationship, provide exceptional ongoing value to your people, and make the mortgage process as seamless and swift as possible, you may find yourself on the outside looking in!

I am not trying to put anyone in fear of loss. I am trying to share with you now an opportunity to gain. Look at our industry and see what is going on. Understand that the best will survive at the expense of the weak. Just like in nature, you adapt, evolve, or you die! I want to share with you how to adapt and evolve because those who wish to ignore the present will have no future. It’s your activities over time that generates your outcome! You have to know what to do, commit to doing what you should do and keep driving the process long enough to succeed, or know why you didn’t.

Prepare for the next generation of loan origination. Lead generation is not going to be enough. Building and maintaining relationships with exception value and a great consumer experience will be the benchmark for those that will be the next generation of loan professionals! Are you ready? Do you have your plan?

Questions or comments: Mike@IMTcoaching.com

Check out my site at http://imtcoaching.com for more information and helpful programs for your Loan Origination business.

“Power Preapprovals”

Everyone in our industry deals with preapprovals. We all know that all preapprovals are NOT the same! The range of tasks completed an information reviewed is vast, yet everybody uses the same words. So how do you create POWER in your preapproval? How does what you do make your borrower look better than any other borrower? What makes your borrower’s offer BETTER?

First, you must be able to articulate what you do and how you have done it. If you don’t, you haven’t created any differentiation. So explain your preapproval process clearly.

Second, once you are clear as to why your preapproval is better than your competition because of the work you have done, share with the BUYER’S Agent how by having your preapproval it makes this client’s offer stronger than other offers.

Third, create the tools to help the borrower and their agent share the POWER of that preapproval with the Listing Agent and their SELLER! If your message isn’t delivered, it doesn’t matter how good a job you have done!

So how do we do all of this and make sure the message is conveyed properly? USE VIDEO! Yes, a short video of 30 to 60 seconds explaining YOUR preapproval process and WHY this process is different from other preapprovals helps set you apart!

You know many online lenders don’t do what you do. Many out of state lenders don know the market like you do. Many call center lenders can’t close as quickly as you do. All of these are powerful tools that make your client a better buyer and their offer stronger than other buyers who haven’t gone through your process!

Also, think about doing an individual video for each pre-approval in support of that specific client! How much more committed can you get than that, personally standing up for your buyer and your process? This takes the standard preapproval and helps push it into a Power Preapproval”!

Sometimes it’s just one small thing that makes a big difference. Sometimes the details, the tiniest of details, can win the day for you, your referral partner, and most importantly, the client!

What makes you different?

What makes your process better?

What makes your client a stronger buyer?

When you give those answers in a different way, you create the space between you and everyone else. So why not make your preapproval more powerful by sharing all of these answers and using a format that will get you noticed!

“Power Preapprovals” something you can do today that will help improve your tomorrow!

For other strategies that will help grow your business, take advantage of our spring “Access” special that you can see on the website: www.IMTcoaching.com

Questions or comments: Mike@IMTcoaching.com

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“Beware the April Fool!”

Okay everyone, time to really pay attention! April has the making for a very volatile month. It is very important that you be paying attention to all the different things that are going on and will make an impact on the rate markets.

This week we deal with the “Jobs Report” and all that goes along with it. In addition to jobless claims, we also find out the unemployment rate and hourly earnings. This will be a key factor on the inflation front. We all know that mortgage rates aren’t a fan of inflation!

Next week we have both the CPI and PPI data, along with the Michigan Consumer Sentiment and the FOMC minutes. Again; this is more data that the markets will look at and make choices about direction and volatility.

We are also facing the further reduction in bond purchases this month, and given past history, that reduction on the buyer’s side of the equation will pressure the rate market.

As a mortgage professional, it’s really important that you track these events and understand what they mean for the rate markets and your clients! You can’t afford not to know! Your clients will hear only pieces of information from the media, and sometimes confusion will cause drama and panic!

You can’t be caught off guard and not be prepared. Locate public sources of dependable information so you have the facts to share with your people. Remember, your referral partners need this information as well.

If your clients start to panic, it is important to walk them away from the edge! Do NOT be dismissive of your client’s fears. Resolve the issues with facts and actual impacts of a changing market. People panic with rising rates but fail to work all the way through the actual costs of rates rising. So do the math with them!

Use calming words like “I hear you”, and “I understand your concerns”. People want to be heard! NEVER us words like “Don’t worry about it” or “It’s no big deal”.

You will find that working through the issues with patience and professionalism will help you work your clients and referral partners off the edge and realize that we are still in a great home buying market and in most cases; we are still a long, long way from even the forty year average of 8.26% on 30 year loans.

  • Get the facts!
  • Listen to the challenges.
  • Offer reliable information.
  • Work through the math.
  • Put everything into context!
  • Share the cost of waiting in your market!

Nobody likes higher rates and volatility. But rates are likely to go higher still over time and so will the price of housing! So act like a professional and an expert. Only a fool would ignore the possibilities of a market reaction to all the information coming in April!

Also, for specific strategies and support, take advantage of our Spring Access Special for only $19.99 per month! Go to the website for more information: www.IMTcoaching.com

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Questions or comments: Mike@IMTcoaching.com

“You get 100% of what you DON’T ask for!”

I just returned from a few trainings in Texas. It was nice to start the spring training season with originators in the great state of Texas. As with all trainings, it’s about sharing solutions and connecting the dots to the desired result. I always start by asking a series of questions about what the specific group I am talking with that day is experiencing, and where they are facing challenges. This past week was no different, but some of the answers were.

So many people were concerned by the fact that mortgage rates were rising. They almost all had bought into the belief that higher rates meant less business. While the main stream media may have the general public buying into that nonsense, Steve Harney of KCM put out a great post about how that it simply isn’t so. In fact, Steve’s chart shows that the last six times rates have moved up 1% or more in a year, housing prices went UP from 2% to 13% during the same time frame.

This is really important information, and mortgage professionals should be connected to solid sources of information. Steve Harney and The KCM Crew, do a great job. You should all be connected and following on Facebook®!

The other questions all seemed to center around generating new opportunities without buying leads. I shared that I never have my clients buy leads; I teach them how to generate opportunities from their day to day activities.

Start with the basics:

  • Collect 9s and 10s from everyone!
  • Connect with the listing agent on all of your deals.
  • Contact the seller on all of your purchase contracts.
  • Talk to the neighbors around each open house.
  • Engage the seller on each open house.
  • Connect with all your Realtors® by phone not email.
  • Talk to your database in person twice a year!

I know what you are thinking, most of these aren’t going to work, or that you already do a few of these things, but you need to do all of these things every time! You see, it isn’t about the deals you don’t get, it’s about the ones you do! Are you going to get all the sellers on your purchase contracts? Of course not; but you can get 3% on average. Now that doesn’t sound like a lot, but do the math. One thirty second phone call and stamp costs you fifty cents! What is the return in your market?

The neighbors around the open house and the seller of that home can result in as much as a 20% hit rate and possible listing opportunities for your agent. Is it worth spending the time and energy to do the work? You do the math!

We don’t build a real database and the people that do, often don’t engage personally with their closed clients. Why not? Statistically, one out of every 8 people is moving this year. How many of those will you get? How many of those in your database know someone moving? Will you get that referral? Not if you don’t ask!

You get 100% of what you don’t ask for! If you aren’t asking, you aren’t getting! You don’t need more leads; you need to convert the opportunities that are presented to you every day!

For strategies and solutions, visit www.IMTcoaching.com and take a look. If you are interested, we are running a Spring Special to get you ACCESS for just $19.99 per month! Just use the coupon code SPRING2018 at checkout and do something today that improves your tomorrow!

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Questions or comments: Mike@IMTcoaching.com

“Comes in like a Lion!”

Welcome to March, last month of the first quarter. You already have a great idea how your first quarter is going to close out, and how you are tracking your targets of your business plan. You certainly have a really strong idea of your closed units and volume, are we ahead, behind, tracking on course? All questions you need to be aware of! Go back and review your business plan and be sure you are in control of your business.

The old adage “March comes in like a lion and goes out like a lamb” is in reference to the weather. The cold winter begins to transition into the spring, where things are more comfortable and enjoyable. That reminds me a little bit of our entire client process. When we are first contacted by a new client, there is a flurry of activity that drives us to the pre-approval. Once the client becomes pre-approved, it almost seems like most originators relax and become almost too comfortable with the fact that this client will find a house and use them for the financing.

The problem is, that many of the clients that loan officers pre-approve, gone on to close loans with other lenders! In fact, I have seen as much as 30% to 50% of some originator’s pre-approvals actually close with other lenders! Just think of that! An originator does all the work of pre-approving the client, only to not close the deal? At these numbers, how does that loss of business change their lives? Not only in lost income, but in lost referrals and referral partners? The true costs can be staggering!

I have spent some time actually working with managers calling people who were pre-approved but didn’t close with their originator. The results were pretty interesting. While some people wouldn’t tell us if they indeed actually closed a deal, those that would share with us the information had a pretty common response: “I didn’t think it mattered who I used?” and “I just used the lender the Realtor® said I should use” was the most common answers.

So imagine what would happen to those numbers if we kept personally connected to our pre-approvals AND our referral partners to be sure the client knew that it does matter who they use? The lesson is, you can’t stop communicating with your client once you have them pre-approved, there is too much to lose not to stay connected! And by connected I mean personally connected, not just a series of boiler plate emails from a CRM, but real live personal contact! It’s certainly within your ability to call each one of your pre-approvals by phone every Thursday to ask if they have been looking at property or if they are scheduled to see property in the coming weekend.

Since my average client has between 20 and 30 pre-approvals out looking at any one time, larger teams have team transaction coordinators making those calls, but those calls take less than an hour to make. One hour a week of effort to secure the people you lose to indifference? Is it worth the time? You bet it is. In fact, when managers and originators track their losses and follow-up regularly with their pre-approvals, we have seen dramatic reductions in those people who close with other lenders or use a different Realtor® than the one they were using! Imagine that? More closed units for you, and more returned transactions to the agent you work with because YOU stayed committed to keeping connected?

As we head toward spring you need to stay on top of your numbers. You also need to track the way in which you keep connected to your pre-approvals. You can spend a great deal of time and money to attract opportunity, only to lose it because you didn’t keep connected. So be a LION through the entire process. Protect your pre-approvals right through the entire process and beyond! Managers, track your originators and follow their numbers. You may be very surprised at what you find!

Tracking your numbers, something that you can do today that helps improve your tomorrow!

Questions or comments: Mike@IMTcoaching.com

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“Rising Rates Require Reassurance”

For those of us who have been around a while, rising rates are something we have learned to deal with. For those who are in the business a while, we have been through these kinds of shifts before. We had a similar drop in February of last year. In fact, we are only about 1/8% higher in rate year over year. While a 350+ basis point drop isn’t fun to deal with, from September of 2016 to December 2016 we had a more than 400 basis point drop in MBS markets. Certainly looking back to May of 2014 and April of 2013 you can see even more drama in the MBS markets. The key here is to not panic and reassure people that the world isn’t coming to an end. Yes we are not in the 3% range any longer, but neither are we at 17%!

The interest rate markets can certainly become an emotional roller coaster. We are dealing with a number of factors, any one of which could move the markets, when put together, can really cause some significant pressure! Let’s look at a few things we can share with our clients and referral partners.

  • Higher rates aren’t all bad. Much of recorded history shows us that more “normal” 30 year rates are between 6% & 8% than between 3% & 4%. So 5% certainly isn’t the end of the world, more likely the beginning of the next chapter.
  • The Federal Reserve reducing MBS purchases are also putting pressure on the supply and demand of both MBS & US Treasuries. In October 2017 the Fed reduced MBS purchase by 4 billion dollars a month. In January they reduced to 8 billion less. In April they will reduce by 12 billion, and so on until they get to a reduction of $20 billion dollars LESS then what they were buying just a year before!
  • The new tax plan puts more money into the economy and brings more investment by companies and higher wages and bonuses. This could also help push rates higher a little to correct for possible inflation.
  • A weaker dollar can also put pressure on rates as foreign have to deal with the currency exchange rates as well as yield.
  • Shorter transaction turn times mean shorter rate locks. Shorter rate locks save money!

So yes, higher rates are an issue, just not as big an issue as some would have you believe! The housing market is still very strong. New household formations are still higher than new homes being built. In fact, about 80% of new households are renters! That pressure on rentals will certainly help keep home ownership as a truly exceptional investment. Renters spend money on time. Owners generate equity over time, leveraging their down payment over a much larger asset.

Take the time to pull up charts and graphs to show people what is happening. Share with them a long term view. Share how rising rates are something to watch, but they don’t preclude a still great investment! In fact, have your people to ask their parents and grandparents what the interest rate was on their first mortgage? I will bet you that many had rates higher and much higher than they are today. It’s also likely that rates will continue higher into the future, so today’s higher rate is tomorrow’s great deal! Share with them how your system of pre-approval helps speed the process to 30 days or less! Shorter turn times equal shorter rate locks!

Buying a house can be a very emotional process. Dealing with money and loans can be unsettling as well. As a mortgage professional, it is up to you to provide solid information so your client can feel comfortable with the choices they make. While the rates today are not at all-time lows; they still represent a great value on the big scale of history. Be certain you are clear and accurate with the information. Show them how rates translate into payments. While we don’t control the markets, we do control how we react to the market. Professional and steady; clear and informative!

Questions or comments: Mike@IMTcoaching.com

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