Build vs Depletion

For those that have followed this post for years, here is a reminder of something I have shared before. For those recent followers, here is an important concept that you need to be aware of and how to tie it into what is my ongoing reminder about tracking your numbers.

As we head forward into the spring buying season it becomes more and more important to track and follow your numbers. Just like we compared our first quarter numbers year over year, and how they measured up as a percentage of our total business, we also have the second quarter well under way!

If we are accurately measuring our contacts, credit pulls, pre-approvals, and gustation periods of our borrowers; we need to understand the “BUILD” in the number of pre-approvals in our pipeline. Spring is the time we are likely to see the biggest build in those numbers, and Easter weekend is generally the time that the real spring buying season begins in earnest!

As we are tracking our numbers we must pay strict attention to our pre-approved borrowers so we don’t “leak” any of those people away to other originators! Preventing leakage is just as important if not more important than generating the new contact in the first place! So keep those weekly tracking calls at the top of your Thursday priority list!

The other part of this model is to understand that the longer you continue to grow your pre-approval pipeline over the number of new contracts, the longer the wave of productivity in your buyer’s market will continue! Pushing that wave further and further into the summer will result in a longer buying season for you and your referral partners! Once the number of pre-approvals falls below the number of new contracts, you have begun your “DEPLETION CYCLE” which signals the end of your peak buying season.

Pushing that cycle as far as possible can result in a serious number of “extra” transactions for you to close! For example, if your average monthly number of loans is 3-5 units a month, and your “peak” number is 8-10 units, pushing that wave, even for just one more month is an extra 5 or more units! That is like getting an extra month of production  FREE!

Tracking your business and following your momentum is an important tool in improved production. Those extra few deals also bring a few extra sets of contacts and future referrals! It’s important that we look at our business like a business. Tracking your numbers and understanding your business flow and conversion rates are a part of making the most out of each and every opportunity!

Questions or comments: Mike@IMTcoaching.com

Part Three of the Six Efficiencies

I want to start out this week’s post by thanking all of you for the kind words and comments about the last couple of posts. It has been real fun for me to have the interaction with you and get to share some time with a few of you who are not clients, but followers of the posts. It’s always good to connect and share thoughts and ideas. This week we are going to talk about items four through six of the six efficiencies.

Item number four is your plan execution and service delivery. This is likely the place where it all comes down to really specific personalities, markets, and business make-up. This is where you have to drill down and understand your value to the client. What do you do? How do you do it? Do you connect through paper or in person? Is it email or text? Do you just pick up the phone and call? Will there be a face to face encounter? Having a great plan won’t yield the desired results if you can’t effectively communicate with your people!

Each step in your process has to incorporate the bigger picture of your overall connection plan. Database systems are nice, but a series of “canned” emails will not keep you connected to your client or referral partner as well as using all forms of communication will. In fact, email is the WORST way to stay connected. People are programmed to ignore email. People dump and block dozens, hundreds, maybe even thousands of emails a day, why run the risk that your ability to connect and communicate with your client and referral partners gets lost in that mix? What if you got into the habit of only using email to confirm or document some other form of communication? Use email as a support tool and not an engagement tool.

Item number five is so simple and effective it’s hard to believe I have to bring it up, but most originators don’t ever track results other than to see how many units they closed or their past dollar volume. This is the type of “rear view mirror” habit that helps support the “roller coaster” production that most originators fall victim to! Tracking your business by closed units and dollar volume after the fact only tells you where you have been and nothing to help you plan and project the future!

When you did your business plan, you set projections for referrals from all the potential sources of business. You list people and areas you were focusing your efforts on to attract the opportunities you needed to reach the performance targets you set for yourself and your referral partners. To not set aside time every month in the middle of the month to not only look at the prior months closings, but to look at new credit pulls, new referrals, size of your pre-approval pipeline, gestation period of those pre-approvals into closed loans, and the tracking of inbound referrals from all sources to be sure you are tracking the course you set is like leaving your map on the kitchen table when you head out on a trip! You need to schedule the time to track your results.

Number six follows all the others because you can’t make adjustments if you don’t do the first five things, and doing the first five things without making adjustments is a huge potential loss of time and money! Let’s be honest, sometimes we get things wrong! Sometimes things we thought would work don’t go as planned. Sometimes referral partners don’t refer as we thought. The other side to that coin is that sometimes things work BETTER than we thought, or that we find more opportunities and referrals than we ever thought possible!

The key is to look at the results and see what adjustments may need to take place. Sometimes the plan you have is fine and its outside forces like weather that get in the way. Sometimes things happen slower or faster than anticipated. And sometimes it all comes together! Being prepared to review the information and to make, or not to make, adjustments can really impact your bottom line. And remember, it isn’t always about the number of referrals, closings, or dollars closed that matters, it is also the balance of investments in time and money to be sure it is all worth the effort!

I hope you found this mini-series helpful. I look forward to your questions and comments: Mike@IMTcoaching.co

Part Two of the 6 Efficiencies

In the March 28thpost I set the stage for the things I see that help originators optimize performance and enhance the customer experience. This week we will touch on the key points of items 1 through 3 on that list. Keep in mind, that all of these are gone into in great detail on the website: www.IMTcoaching.com

The first item to conquer is the plan! The biggest failure amongst those who don’t achieve what they want is because they have failed to take the time to create the business plan they intend to follow that takes them to that specific destination. And let’s not ever call it “goal setting”. Goal setting is like a New Year’s resolution, everyone talks a good game and less than 1% really stick to the plan and get the job done!

The creation of a written plan is essential to map your way to your destination; and success is a journey to a specific destination! Your business plan should be done in OCTOBER so you can take the time to incorporate all the tools, technology, and training you need to implement the systems you plan on bringing to the table in the coming year. The business plan is also the accountability partner and the adjustment tool you refer to on a monthly basis to track your results and make needed adjustments.

Step two of the six requires that you commit to paper ALL the details involved in your business. What specific tasks is part of your prospecting plan to attract opportunities? What do you do? When do you do it? What is the cost in time, effort, and dollars?

Once you have your prospecting efforts all mapped out, you have to clearly lay out the loan process experience from the time the customer makes first contact, to the specific details of your post-closing strategy. Every call, card, email, text, communication, alert, follow-up, warning, and contact needs to be identified, scheduled, implemented, and checked against your time line to be sure the quality of the experience remains in place over the test of time. The quality of that customer experience is the life blood of your future business and becomes your force of attraction for repeat business and future referrals! It is the very VALUE of your relationship with that client that keeps them connected to you!

Step three is critical if you are ever going to consistently perform at a high level without running the risk of becoming consumed by your business and risking “melting down” or as some would call it, “burn out”. This key step is the very success structure most people envy, but few achieve. The reason is, it’s too easy to ditch the structure and not see an instant penalty for aborting the process.

More and more we live in a less defined world. Everything is becoming 24/7/365 and people just except it as a fact. That’s too bad! For people to think they must be a slave to their business is just flat out wrong! You are a loan originator, not a trauma surgeon! Although, even trauma surgeons have days off and go on vacation and disconnect from their business! There are no mortgage emergencies! Nobody dies in our business! While some people may think they do, it’s not true!

By focusing yourself to your time, tasks, and schedule, you can use the tools you have already learned to become a great success in the mortgage industry. Face it, if you managed your class schedule in high school, you can become a great originator. Once you see the magic of your life when you schedule your own success, you will never go back to being reactive. It’s about your system working all the time, not you! Frequent and scheduled vacations help relieve stress, provide an opportunity to enjoy the rewards of your efforts, and keep you connected to the real reason you go to work!

Next week, items four through six! As always, questions or comments: Mike@IMTcoaoching.com

 

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