Five “old-fashioned” ideas and strategies to reconsider.
Well, here we are—January 2018 and the beginning of a new year. We made it through a rather trying 12 months with the market slowing down about 10 to 15 percent from 2015. Interest rates are still good, but not great. New housing starts, while not going gangbusters, are still steady. Real estate is moving, although not at a record pace. Most would argue that the economy remains fairly strong.
If there is a common theme I hear from the companies I work with now it is that 2018 is going to be a “back to basics” type of year. While we can all agree that grounding ourselves on the fundamentals of the business is a solid strategy, few loan originators actually know what “back to basics” means. Most estimates report that about half of the current mortgage originators have been in this business less than five years. These people never went through basic training; they started out when the market was on fire and learned as they went along while making mistakes and making money. The other half of the loan originators in business today have been removed from the basics for so long, many can’t even remember what those basics are. And so, here we are today. We have a two trillion dollar market opportunity waiting for us this year and many aren’t even sure how to attack it.
I remember my dad listening to a record he had called “Everything old is new again.” I don’t know who sang it; I don’t even remember any of the words except the title and chorus. This could be the theme for 2018 in the mortgage business. There are so many fundamental, tried-and-true ideas that have always worked. These are old ideas used by originators in the 70’s, 80’s, 90’s which are still available today. These concepts are timeless and have formed the core of thousands of successful people’s careers. Here are some old ideas to consider new again:
A 40-hour workweek. Times were when you worked for your money and this meant putting in a full eight hour day (or more) every day. Over the past few years, many loan originators have grown complacent and lazy. Some originators are part-time. Others who contend that they are working full-time now come into work at 9:30 a.m. and leave before 5 p.m. Try calling any mortgage shop on any Friday afternoon at 3 p.m. and ask to speak to a loan officer. Good luck.
“Old-fashioned hard work never hurt anybody,” my father used to say. He was right. He raised a family of seven on old-fashioned hard work, and we never wanted for anything. Are there things you are wanting? Do you want to make more money? Do you want to buy a new car this year or have better things for your family? If so, are you working as hard as you can, putting in a full eight hour day every day to achieve those goals? This business is as tight and competitive as I have ever seen it, and those who will survive and thrive in this new year will be the ones who out-work their competition every day.
Sales calls. When I started in this business in 1983, a loan officer was expected to be out in the field making calls at least 50 percent of the time. If you showed up in the office you’d better have a loan application you were working on or the boss would toss you right back out there. This was a sales profession, and that meant your primary job was to get in front of people and sell. Our objective was to bring back one new loan application every day. “Do that,” my boss would say, “and you’ll make all the money you could ever spend.”
Today, many lenders spend most of their time in the office: “hanging around,” pushing paper, and gazing into a computer screen. We are losing our edge. We are losing the excitement and the energy we joined this industry to experience. Many originators have morphed from mortgage salespeople into loan technicians. Phone calls have replaced face-to-face visits, and e-mail has replaced personal phone calls. We have removed ourselves from the customer.
Are you ready to reverse that trend? There are dozens, if not hundreds of loans that will be made in your market this week: first mortgages, second mortgages, home equity loans, investment property loans, second home loans, vacation home loans, debt consolidation loans, refinance loans, ARM conversion loans and more. Who is going to make them? You are, if you are one of the loan originators making sales calls and contacts and asking for the business. If you are reading this magazine in your office right now, look up. Do you see a line of people standing outside your door waiting to talk with you about a mortgage loan? People are not coming to you, you still have to go out to find them.
Industry affiliations. It used to be that lenders were all actively involved in their industry organizations. It was required that we all join the local Association of Realtors and Builders Associations. Many LOs also got involved in community and charitable organizations like Kiwanis, Rotary, and Chamber of Commerce as well as the Mortgage Bankers or Mortgage Brokers Associations. Doing so allowed us to mix and mingle with other people who shared our career path. This was also a great forum for sharing ideas, introductions and those coveted leads we were all looking for.
Today, many loan originators are not involved in industry affiliations of any kind. I recently spoke to a group of about 80 loan originators and asked how many of them were members of their local Realtor Association. I counted about five hands. This confirms the fact that most lenders are disconnected from the opportunities by virtue of being disconnected from the business network.
Look toward top producers in your market. “They seem to know everybody!” you might say in admiration. How do you think they got that way? They did so by belonging to organizations, by attending meetings, functions, golf outings, dinners, charity drives, and other industry and community events. Do you want to be known in your community? You’ll have to get connected to the people who can connect you to the people who want what you have to sell.
Follow up. I remember reading a book that claimed most sales are made by the salesperson who does nothing more than follow up. The book’s research went on to say that more than 60 percent of salespeople never follow up on a lead and of the 40 percent who do, they usually follow up only once. If they don’t hear back or get a positive answer, they drop it and move on.
The best and most successful originators I know today are demons at follow-up. They follow up on people who attend their seminars. They follow up with rate shoppers. They follow up with pre-approval loan applications. They follow up with real estate agents they meet. Once they get a lead, they are relentless in pursuing it. “I’ll follow up until they buy or die!” one gregarious superstar told me.
We know that this market is competitive. We know that there are hundreds, if not thousands, of originators in your city clamoring for loans today. Take advantage of their weakness. The statistics say that most won’t follow up. Be the one who does follow up and continues to do so. Your chances of landing the loan and the customer are improved every time you do.
Building relationships. A single loan may be worth $1,000 to you. A relationship with a strong referral partner may be worth $100,000 over many years. So many lenders are looking for loans, not relationships. They engage in all sorts of nonsense that may enable them to secure a transaction and a one-time commission, but not a client or a relationship. This ineffective “Do you have anything for me today?” approach has left many worried and wondering where their next deal will come from. While they may thrive in a low interest rate refinance market, they are hurting big time right now.
The mortgage business has always been, and thankfully will always be, a people business and a business of relationships. Most of the seminars I deliver are for clients I have known and stayed in touch with for years. These relationships are priceless to me and I appreciate every one. Highly successful loan originators will tell you the same thing. Most of the loans they write are the result of priceless relationships they worked hard to establish over the years with real estate agents, builders, financial planners, accountants and other lenders.
If you are truly in this game for the long run, then you must build a foundation of relationships that will sustain you through the years. Once you’ve done that, adding new relationship partners each year will keep you going strong. As an “assignment,” take a clean sheet of paper and write numbers one through 10. Then, set out on a mission this year to fill in every space with the name of a key person you meet who you wish to become a relationship-for-life ally in your business.
By Doug Smith