“The Numbers Don’t Match Up?”

In a series of reports recently published, a series of numbers just don’t seem to add up. Year over year home purchases are up 2%. Home prices are up more than 6%. Then you hear that the average income for Realtors is down more than 10%. How does that work out?

I have been playing it through my mind over and over again and the only answers I seem to come up with are:

  • Realtors are reducing commissions?
  • Less people are using Realtors?
  • Realtors are making more financial concessions?
  • Realtors are spending more to find opportunities?

Maybe there are more answers than these, and I would like your thoughts on this because it seems like these things really don’t add up. It certainly makes for an interesting set of dialogs to drill down and find out what is the connection or reasons these numbers don’t seem to align.

In other news, Barry Habib of MBS Highway took Diana Olick to task on her report about now being the time to sell your house and rent. Barry does a masterful job of sharing FACTS on housing, not just isolating some pieces of information to make a case that suits Diana’s long standing negative view about home ownership. If you haven’t read or seen the video, you should really look at this piece and share the truth with your clients and referral partners.

Last piece of information, next Wednesday September the 12th, I will be at the Embassy Suites in West Palm Beach Florida for the first “Crossroads Event”. I will spend the morning sharing my view of the changing housing and mortgage industry with local mortgage and real estate professionals. If you would like to attend, you can get more information and register at www.imtcoaching.com and reserve your seat. We are booking this event around the country, and we have just a few open dates left in mid-November and early December if you are interested in hosting this event in your area. For more information, email me mike@IMTcoaching.com for dates and details.

“Huge Weekend Opportunity”

Happy July 5th! With a big holiday on a Wednesday, it isn’t uncommon for people to stretch it out into the weekend. That said, this opens the door for a great deal of real estate activity. Here are a few steps to take in order to maximize your opportunities this weekend!

  • Get out and be visible!
  • Leave documented material at offices!
  • Tell those that are there that you are available to help them if their regular person is unavailable to serve your people!
  • Call from the parking lots before you leave!
  • Get to as many Open Houses as you can!

Many people are off or are taking off, that goes for realtors and mortgage people as well. Get out and get in front of your market, let them know you are working!

Have something in writing in an envelope with each agents name on it to leave at their office so there is something physical for you to direct them too! Talk about the back to school count down and how many days there are left for you to accept a loan application and close before the kids go back to school!

I expect that most of the agents you are trying to get in front of won’t be in the office; it doesn’t matter. It only matters that you were in the office, had some information about an opportunity strategy in an envelope, with their name on it, so you can leave it for them to pick up later! It’s also important that the few other people in the office see that you were there! Let them know you can help them too should they be ready to look or move to make an offer on a property!

Calling from the parking lot before you go to your next stop is critical! Making that call and talking to that person to let them know you were at their office is a really big deal. Even if you get voice mail, leave a nice message about missing them and that you are available should they need you.

Last but not least is to hit every open house you can find and follow through with the open house strategy! Talk to everyone! Pick a key feature of the house or the property so you can write a note to the seller applying for the job of being their next loan officer or to offer a second opinion on their next transaction!

This weekend is a huge opportunity to make new relationships, solidify old relationships, and to generate a few opportunities to do a few deals you never would have seen if you just sat home!

Get up, get out, and connect!

Questions or comments: Mike@IMTcoaching.com

“Wacky Wednesdays”

It’s time to share something that I often do with my clients who have appeared to plateau or get “stuck” in the same activities over and over again. I call it “Wacky Wednesdays”.

We are at the midway point of the year and heading into the summer season. As always, now is a good time to compare our first half numbers to our business plan and see how we are progressing. For those who are on or ahead of projections and enjoying the rhythm of your business, keep doing what you are doing and enjoy the results of a good plan coming together.

For those of you who are short of your projections or not really happy with your business flow, now is the time for a little fun and a few changes. First, take a look at where and why your numbers aren’t matching up. Address each shortfall with logic and with an idea of what you can do to correct that situation if possible. Often it’s just a matter of having a conversation with the referral partner, or looking at the message or how you are following up with the plan.

Schedule time to address all of the issues! If you don’t schedule a task, it won’t get done!

After you have made all the system corrections and had all of the conversations, it’s time for “Wacky Wednesday”! This is a very simple process.

  • Go into imtcoaching.com website and scroll through the “Coaches Playbook” and “Power Partnership” video clips and find a strategy or two you would like to incorporate into your business.
  • Have a discussion with your referral partners or your team to share the strategy and gain support and interest.
  • Schedule an hour or two on Wednesday morning or afternoon to prepare, implement, and use the strategy to create new opportunities.

It’s really just that simple. Just use the tools and schedule your time. It becomes more fun when you have your team and your referral partners to work with and help make a minor change in your work week that could have a major impact on your results!

It has been my experience that it isn’t the big changes in your business that produce the most significant results; it’s the tiny little things that often create the biggest impact. So if you’re not where you want to be, or you aren’t feeling that the business is fun anymore, then you have nothing to lose and everything to gain but committing one or two hours on Wednesday to have some fun, work with your people, and create some new opportunities!

Questions or comments: Mike@IMTcoaching.com

Click here to register for my upcoming free seminar event – CROSSROADS

“Mid-year Check-up”

We began this conversation last week and I wanted to follow up with some of the comments and feedback I got from that post. Many of you had no issues with going back to the business plan and reviewing the numbers, but there were a few questions about “gestation period” and I wanted to address it quickly. When I talk about the gestation period of you loans, I am referring to the period of time from pre-approval to contract, or pre-approval to closing. Either one gives you an idea of the time consumed by the process, and gives you an idea of how many pre-approvals you need in your queue at any given time so you are going to close the number of loans you project to close. Example: If you want to close 8 loans a month, and your gestation period is 90 days, you will need to keep 24 active pre-approvals or more in your queue. If your gestation period is 120 days, you will need to keep 32. Keeping track is critical. You can read more about this in the May 17, 2018 blog post.

I was happy to see a significant number of you who are tracking at or ahead of your targets! Great job, and keep doing what you are doing because it is working! However, there were a few of you who wrote to say that you were behind the numbers and asked for some help getting caught up. So here are a few simple steps to getting back on the numbers.

  • Review your numbers every week! Visits, contact, credit pulls, pre-approvals, contracts, and additions to the database.
  • Drill down on your schedule. Are you prospecting a minimum of two hours every day following your business plan?
  • Who and what are not living up to your projections and find out why? Correct it, complete it, repeat it, or delete it!
  • Check the math. Your ratios from contact to closing may be off and need to be recalculated.
  • Why not Wednesday! Pick something out of the “Coaches Playbook” and do it on Wednesday. Take two hours and implement one new strategy you haven’t used and see what happens. Be committed to working the plan for at least eight to twelve weeks!
  • Review all your pre-approvals you have issued this year and see where they all are. You might have lost track of them, or they might have lost track of you. Some might just be sitting on the sidelines waiting for rates to go back to 3%! Share the cost of waiting with them. Buy now and refinance later if rates do go back, because they may not!
  • WORK the summer while others are on vacation! Opportunities are always available; the summer makes it simple because frustration factors and pressure to timelines go way up! Be the solution!

If you have a specific issue or challenge, please let me know and we are happy to work with you on a strategy or a solution for your specific challenge!

Questions or comments: Mike@IMTcoaching.com

You will not want to miss this upcoming event!  Don’t miss CROSSROADS….

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“Halfway Point”

It’s the middle of June and all of us should have a really solid view of our numbers for the halfway point of the year. It’s one of my biggest pressure points with my clients is to do, project, track, and follow the numbers in your business. Using our business plan from last October to project the work year 2018, we should be once again updating our information and really focusing on the adjustments we need to make to exceed our targets and projections.

The first point is to check our math. Has our basic formula held up? Are our ratios in line with projections?

  • Contacts per day to opportunities?
  • Opportunities to credit?
  • Credit to pre-approval?
  • Pre-approval to contract?
  • Contract to closing?
  • Weekly, monthly, and annual database growth?
  • New referral partner additions?
  • Actual referrals vs projected referrals per partner?

While we projected these numbers back in October, market conditions both nationally and locally may have put outside pressure on your projections and may require you to refocus your activities.

We discuss this now, because we all live in an industry that has a business flow to it and a gestation period attached to an outcome. We need to monitor that cycle because if that shifts, we could be doing everything we should be doing and all the other numbers align, yet your closed business isn’t what you thought. So the math is really important!

As we head full steam into the summer, our business shifts significantly as we deal with those in desperate need to move before school resumes; and those who may be absent from the market because of vacations! If you aren’t planning for is, you will certainly become a victim of it!

You also need to drill down on the fact that depending on your business cycle and your specific market, you may only have 120 days or less to meet the people who will become the client, who will close the transaction, who will get you paid, all by the end of the year! Yup, I said it; the middle of June begins the count down to the income you make by the end of the year!!!

So pick an evening and update your business plan and rerun your numbers. Get really clear and specific about where you are and what adjustments you may need to make. For some of you it will be a real eye opening event!

Questions or comments: Mike@IMTcoaching.com

Don’t miss CrossRoads, my Mortgage Seminar event on Sept. 12, 2018 in West Palm Beach.  See below and register…First 100 to register will get in for FREE!white seminar

“Size Matters”

There has been a great deal of conversation about “price compression” and “shrinking margins” in the industry lately. Companies, managers, and originators are seeing increasing competition from all angles, and generally what happens is the weaker will do more for less in an effort to stay around. We are also facing outside pressures that are pushing competition:

  • Originators who were buying leads and pounding refinances are hitting the streets and competing for purchase business. Since they have no track record in successful purchase business, they focus on price.
  • We also see that many large financial institutions are reducing or eliminating retail sales, forcing even more people out into the street. Once again, no track record, price is all they have.
  • The large internet lenders who spend millions on marketing and TV commercials. Since many agents won’t accept their pre-approvals, they must push price.
  • Mortgage companies themselves are spending time and money growing wide instead of deep, putting pressure on their own people.

The next factor is that many originators have chosen not to do the work in their own business and have resorted to hiring assistants to do the very job they are hired to do. While assistants certainly have a place in loan originations, managers and originators need to focus on scale and value. There is only so much money in origination. The breakup of that money between the company, branch, and originator has to be addressed because you can’t lose money on every deal and make it up in volume! So you must get clear on what is the real value in a loan origination and what part of that goes to the originator?

The next important piece is what “work” is required by the originator or originations team to have earned that money? This varies widely from place to place and even originator to originator. In my book, the originator is responsible for all the tasks needed to take the loan from contact to file fully ready to process; then support any communication from the processing/underwriting/closing/post-closing team if needed. That is what “top commission” is worth in any format. Now, managers and companies may want to reduce that obligation to the originator, or the originator may want to hire help so they can go on and produce more opportunities. That is fine, as long as all of that support is being paid for out of the total commission set for the origination of that file. It can’t work any other way. There is only so much money to be paid out!

 

The other key area is when do we look to get help? To me, a fully commissioned originator needs to be able to close 8 to 10 loans a month for a minimum of six consecutive months before entertaining bringing on help. The reason for this is you need to develop your systems and skills over both time and volume. If you don’t, you have to keep hiring people to cover for a poor system. That is a waste of money and doesn’t provide for a great customer experience. So rule of thumb is 8 to 10 loans a month, then you will hire on one assistant for each additional 5 to 10 loans a month in volume depending on the types of loans you are doing and your market.

Many originations “teams” or overloaded with people. Instead of organizing themselves and perfecting their system and schedules, they just hire more people! In the past, you might have been able to get away with an excessive number of people, but as margins compress, companies are going to have to think about how they spend their money.

Size matters! Your system matters! Your income matters! If you want to hire people so you can generate more opportunities, that’s great! But you have to be real with what your expectations are. Growing your team should mean:

  • A better customer experience
  • A smoother loan process
  • Higher quality loan submissions
  • Increased volume!

So look at your process and the systems you are using. If you have a team working with you, do you meet the monthly volume requirements? If you have grown your team and your loan volume isn’t growing at a minimum of 5 additional closings a month for each team member after the first 8 to 10 for the team leader, then your systems need to be addressed as well as your compensation!

Questions or comments: Mike@IMTcoaching.com

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Questions or comments: Mike@IMTcoaching.com

“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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