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!

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Why a “SHIFT” Can Be Scary!

So many stories, so much data, so much information; how do you dig through it all and know how it impacts you and your market? Well, some things are national in scope, like interest rates, some loan guidelines, some products and programs, and a large number of regulations. The key part remains, what does national news mean to you? In some cases it can really impact your business, while in others it may have no bearing at all. You have to know what to look for and how each of these things impacts your specific market.

More likely than not, national numbers have far less direct pressure on your local markets than you think. In a large part of the country, FNMA loan limits rising have zero to do with the market because most home sales are far below that limit. The change in a state or local bond program could be much more of local interest to these buyers. The results need to be weighed out against your specific location. Knowing the specific local numbers can really help your business, especially when your market runs contrary to the national average or isn’t connected to the information at all.

A good example is a tale of two originators. One in Georgia spent a great deal of time keeping deals together in January that were scheduled to close but couldn’t because they were USDA loans and the government shutdown put a halt on that process. While another in Arizona kept closing loans as if nothing was wrong at all. To some markets the shutdown really hurt business, while in others they really didn’t notice a thing.

The important piece here is to understand that your clients and referral partners often don’t see anything but national numbers. They see information on the internet and a story that is bias toward a specific group or opinion while the local reality is far different. I see this frequently when speaking to groups of real estate and mortgage professionals who believe that the housing market is shifting toward a collapse. That home prices are falling. That we are heading toward another housing bubble. The actual facts don’t support that interpretation. The reality is right now that mortgage purchase applications are UP more than 3% year over year. Housing going into contract in January actually increased and that interest rates are LOWER than they were six months ago and property appreciation is still projected to GROW by 4% or more this year!There are also more listings on the market, homes in default are declining, and foreclosures are still going down. Yes, these are also national numbers, but you can look locally at your own MSA and see how you compare.

For those professionals who are worried about the shift to online lenders and discount brokers, that shift only applies to those who can’t make a case for the VALUE they provide and the quality of the client experience. If you can’t justify your own value, then you have a problem. If you provide a quality client experience, exceptional value, and do it at a fair price, you could actually see your market share GROW as those cut rate providers go broke, get out of the market, or people discover that the “best rate” online came from the best “LIAR” on the internet!

Yes, the industry is changing and there certainly is a “SHIFT” in how and where people get their information. You as a professional are obligated to know the numbers and provide the information on how these things relate to your market. Are more people looking at our business as a transactional based business, yes they are, but it has become that way because professionals in the mortgage and real estate community have forgotten about the quality of the customer experience and the real value that local professionals can bring to the table.

As I have always stated, “The rate isn’t great if the closing is late” and “it’s not a great deal if the deal doesn’t close!”

Understand the fear, address the concerns, provide the local and specific information, and provide value and a great customer experience and you will find that there are always going to people who value an expert and want a professional relationship than want the best rate on the wrong product or a loan that doesn’t close!

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So Why Can’t We Just Do Our Jobs?

Anyone remember loan origination before the internet?

Anyone remember originators that would work the entire file from contact to closing?

Anyone remember originators that would turn over nice clean, complete files into processing?

Anyone remember originators that closed eight, ten, twelve, or more units a month handling paper files without an assistant?

How is it now that many originators think that they are doing five or less units a month, with automated LOS systems and needs an assistant?

Why is it that companies and managers spend money on these assistants in additionto the basic originator compensation?

Why are there so many “teams” of originators and assistants working together who jointly close less collectively than they did when they worked alone?

Technology has made the originator job far easier that it has ever been, so why does everyone need so much help? I’m not quite sure.

As I have stated before, an experienced originator should be able to generate opportunities, process those opportunities, convert those opportunities into clean and clear file submissions, work the files through the process, close the loan, and manage that client into the future, 8 to 10 times a month.

Adding an assistant should be at the expense of that originator, simply speaking, why would or should a company pay for the originator to do more loans? Aren’t they already getting paid? And if you do take on an assistant, shouldn’t production improveby five or more units a month for each assistant you have added to the team? Why wouldn’t it?

When you look at some of the “top producers” in the industry, they really post some big numbers. But what you often don’t see is the team of people and the overhead required to make that happen. Any team or group that can’t sustain a per person closing per month average of at least five to eight units per month has a problem with their systemand not a need for assistants!

So before you think it’s time to grow your business by adding an assistant, here are a few questions you need to ask yourself:

  • Have I closed an average of 8 loans a month or more for the last six months?
  • What am I going to give off to my assistant, or have my assistant and myself do to increase my monthly production by five or more units each month?
  • If I had to pay for this assistant out of my own pocket, would I still be looking to get one?
  • If I have an assistant or assistants already, are we averaging five to eight closed transactions per month for each member of the origination team?

If you have answered no to any of these questions, wouldn’t be better to improve your systembefore committing to an assistant?

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Happy Valentine’s Day

Today is special day for many people, some more than others. For me, it is also my wedding anniversary. 13 years ago, today my wife MJ and I were married at the Aladdin Hotel in Las Vegas at the same chapel that Elvis and Pricilla were married in. It was the last time anyone got married on Valentine’s Day in that chapel as the Aladdin was remodeled and became Planet Hollywood. Oddly enough, none of our children could make the wedding, some didn’t care, and some chose not to, others were caught up in a blizzard that buried the northeast. Of the people who did attend, neither MJ nor I speak to any of them any longer.

These were important people in our lives at the time. People we held very close and were important parts of our daily lives. As fate would have it, we became less important in their lives and so we became disposable. It is a fact of life, relationships change. Very rarely does the intensity of even the best relationships stand the test of time. Our lives revolve around that change. Seeking and exploring, collecting and rejecting, learning and growing, and taking with us all that we have learned from that interaction.

This holds true for our professional relationships as well. Some people will be with us our entire careers while other will come into and out of our lives. Sometimes those relationships are very intense, while others are far more casual. While some of our professional relationships will also generate a personal connection, not all will. While some personal relationships will lead to professional interaction, many won’t. The point is, you need to understand that things will most likely change, and it’s okay when it does.

Evolution is by very definition ongoing. While you may still have friendships and relationships from when you were a child, most of those people from the past are not as critical now as they were then. Some of those people you can’t remember and they don’t remember you! Others, you can still recall for any number of reasons as they you.

The point of this from a professional standpoint is that some of your best relationships today will be gone tomorrow. Some from the past will resurface and come back stronger, and others never will. The key is to understand the evolution. To always being open to finding those who share common values and you enjoy working with. Working with people you don’t like is not a great way to go through life. Also understand that nobody “owes” you a relationship and you have to nurture each relationship to keep showing value or that relationship will go away.

Life is full of personal and professional experiences. Valentine’s Day is a great opportunity to reflect on those people in your life and share that you care. Also think back at how those from five, ten, twenty or more years ago that may or may not be in that group, and all of those who are now, were not back then!

Happy Valentine’s Day!

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The Trend IS Your Friend

Time to really pay attention to a possible trend that could make for a big opportunity for you in the months to come; and that opportunity is REFINANCES!

Yes, I said refinances! If you follow the rate market, you will notice that interest rates are approaching significant levels compared to last year. In fact, if you look back at loans you closed between last March & December (2018), you will see that there might be some refinance opportunities to take advantage of? Clearly you have to be careful of EPOs and your company’s policy regarding any time restrictions you may have with your investors, but those opportunities might be out there for you to take advantage of. I’m not saying that it is time to abandon the purchase business, not by a long shot! The purchase arena is doing quite well for many of us right now and I expect a very solid first half of 2019, but part of your job is to manage these obligations over time and now might just be the time to take a good look!

The other trend we are seeing across the country is the power of explaining the rent vs. own analysis! In most markets across the country renting is not a great value! In fact, the effect cost rate on rent is 100%! No benefit financially, all the money is spent and is GONE! Owning has a number of advantages, the least of which is equity! Some of each payment is paying down principle and building wealth! The ongoing property appreciation is also a huge benefit and depending on your local rates of appreciation, it could be more significant than you ever thought!

February is a time for accumulation and execution of the strategies that push the beginning of the market. Use the tools! Take advantage of the strategies we are sharing. Get out in front of the market as a true mortgage professional and share many of the opportunity generating ideas with your referral partners! The possibility of some bonus refinance activity is great, but the strength of the purchase market building will depend on how you have positioned yourself!

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Seven Simple Things

With a massive cold wave across the country and as some see record braking and life threatening temperatures, here are seven simple things you can do to stay connected with your business.

  1. Keep yourself safe and warm.
  2. Check on your friends and neighbors by phone.
  3. Call your referral partners and see how they are doing.
  4. Call all your clients with preapprovals to be sure they don’t lose the excitement of house hunting, use your tools!
  5. Check on your database to be sure you have all your annual reviews and birthday calls scheduled.
  6. Prepare for your Valentine’s Day or St Patrick’s Day event.
  7. Work on your renter to homeowner plan and connecting with some Realtors, Accountants, Financial Planners, and especially your Insurance Professionals to talk about the tax refund strategy.

Being safe and sound inside your home is a smart thing to do. Connecting with those you care about to be sure they are safe is also something you shouldn’t take for granted. However, just because it’s cold outside doesn’t mean you can be working and connecting; planning and executing! Being safe and productive are not exclusive!

There are plenty of excuses not to work. There are also plenty of reasons to use some of this time to plan, organize, prepare, and to CARE! Care about your people, care about your clients, care about your referral partners, and care that you reel back in any production that may have been delayed because of the weather!

For those of you not living in areas not impacted by these cold temperatures, don’t get lost in the news! Just do the work, execute your plan, and stay connected to your process!

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Team Size

Yes, size matters! So much of our industry has focused on volume that we fail to look into profitability. Posting larger numbers of units closed and sheer magnitude of loan dollar volume seems to consume the industry, at least those in the “Jumbo Tron and blasting music” arena, that we often forget to look and see what those numbers really mean.

Three originators are talking about their production, all doing the same type of business, and one states “I closed 120 units last year!” The next gets all puffed up and says “I closed 200 units last year!” Then the third speaks, almost ashamed and barely above a whisper, “I only closed 75 units last year.”

What wasn’t part of the equation were how many people where part of those closings? We all have processors, underwriters, and closers, so that is a company provided given, but how many total people were involved in acquiring the contact, talking to the client, structuring the loan, taking the application, submitting the application, and working the relationship through closing? When we drill down a little bit, something becomes obvious, numbers may not always be a good way of telling what kind of achiever someone is, and certainly isn’t an indicator of how much NET INCOME they had.

In this case, loan originator #1 has her and two assistants to handle the load. Well, that breaks down to 40 units per team member and a little more than 3 units a month per person.

Originator #2 has him listed as the “Team Leader” and a team of six people that are part of his process. That breaks out to less than 29 units per person annually and less than 2.5 units per person per month!

Originator #3 has a part time assistant that she shares with two other originators. That works out to an average of 56 units per team member or almost 5 units per person per month!

So to me, you have to be very careful about the size of your team and the average closings per person per team member. While there is no set rule on when to hire an additional team member, or if you start by sharing someone, I have always maintained that you should be able to close 8 to 10 loans per month for six consecutive months before thinking about hiring help. You should also plan that wherever you are in the production profile, you should clearly see how that new person was going to improve your production by five units a month.

While each situation is different and we all have different needs and uses for our time, the failure to clearly understand what you do and the experience you provide for your clients and your referral partners is a must! Bigger isn’t always better. Sometimes bigger is just bigger!

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