With the rise of interest rates and the drying-up of the refinance market, it makes sense to transition your business to the purchase money market. After all, home purchase loans will become the bulk of your broker transactions and it is only prudent to be prepared to capture these leads. Of course, you will always have the occasional debt consolidation, or divorce cash-out refinance, even some b-paper subprime loans. But, the majority of your coming business will be in the purchase market and you must make efforts to get out there or you will not survive. The days of the ringing phone and order taking are over. One of the questions I get asked over and over again, is how to best approach realtor offices. Aren’t they the ones with purchase loans? They hold the key, right? Yes, they do. But, why should they just “give” you loans? What’s in it for them? How many times have you called a realtor and they’ve said the following: “We’re already working with someone.” “We don’t give our business away.” “We don’t know you.” “Why should we work with you?” “We don’t want your free donuts!” They’re saying this because they’ve already been raked over the coals by about 200 other loan officers. They’re sick of empty promises and loans that don’t close. They’re afraid to lose their commission. They don’t want to take the risk of dealing with you. And…yes, it’s true…your donuts weren’t very good. ;-) If you want to attract realtors, you’ve got to catch them when they are least expecting it. You can’t do this with blind cold-calling. They’re sales people too, and their guard is up the instant you call. They’ve got other calls, and they don’t want to deal with you. To them, you’re a nobody. Don’t despair. Here are some of the best unconventional ways I’ve found to approach real estate agents and the difference in their attitude is amazing! * Business networking groups such as BNI (Business Networking International) and Leads Club. These are groups that allow only one person from each profession. So there is one lawyer, one appraiser, one realtor, one loan officer, etc. And they all trade business with each other. The groups are set up this way to encourage member participation. But, finding an active BNI group that has an L.O. position open is rare. People rarely give this spot up, and for good reason. It means they are getting leads and it works! It is worth your effort to call all the local chapters and put your name on the list. If the person leaves they have to replace them. Or if enough people show interest, they will start-up a new group. And you want to be the first to take advantage of it. * You can always try starting your own weekly networking group and approach referral partners with the incentive of generating referrals through the group. This is a harder thing to do than joining a structured environment like BNI, but may be worth considering if there is no other choice. You have to pitch this the right way, and get all the other professions set-up first before you approach the real estate agent. This way, you’ve got something to offer. * One technique I found that always worked was to give the realtor potential leads. As many of you know, I stopped buying Internet leads a long time ago and started generating my own leads through my lead site at http://www.findthelowestrate.com When I call a realtor and I tell them I am looking for a business partner to work with that I can refer business to, their ears immediately perk-up. Now, you are not just another loan officer with your hand-out, but a long-term partner with a proven lead generation system. Forget the donuts. Bring leads instead. They taste better too. * Give free seminars. Realtors are always looking for ways to educate their buyers. If you have the skills to present the mortgage industry in a nutshell, you can offer to host a free workshop for buyers. The key to getting this to work is to host it at the realtor’s office, so it looks like it’s from them and they can take credit for it. Your goal shouldn’t be to generate loans this first time, but rather to “prove” yourself and show some goodwill. There are always new realtors coming into the office, so you want to make yourself known. Eventually, there will be someone who isn’t working with anyone at the moment, or someone who is ready to change loan officers. You want to be this person! * Show up at open houses. Open houses are always fun. See if they have already have a L.O. on site. If not, this is your perfect chance to introduce yourself. Ask how many people they got today and how many were pre-qualified. I always used to carry an extra table, chair, laptop, sign and rate sheets in my car to be ready to set-up shop in a moments notice. It cost them nothing and may lead to a qualified buyer. Yes, it’s ballsy, but worth a shot! * I once knew a mortgage company that used to give away free advertising to realtors. They helped promote the properties the realtor was selling, by hosting the home flyers in their lobby. While potential borrowers were waiting, they had something to look through. It was a big selling point to attract real estate agents. You could also do cross mailings, lawn sign exchanges, newspaper co-ops, etc. Again, you are working long-term with realtors, not just asking for free loans. These are just some of the best ideas I’ve used to help generate more purchase loans. I hope they help you get out there and connect. Realtors are a tricky bunch, but once you are in their good favor, they can be a steady stream of new business. Don’t give-up. Use my techniques and may your next loan be a closer.
الثلاثاء، 8 أبريل 2008
Traits And Skills Every Top Producer Needs To Be Successful In The Mortgage Business
When I was a branch manager, there were always certain traits and skills I looked for before deciding to hire someone. After years of experience, and learning things the hard way, I know what it takes to be successful. Not everyone is cut out to be a loan officer. The mortgage business is like no other, and it takes a certain type of person to be successful in this industry. Here are some of the top traits and skills I believe every loan officer must have in order to be successful. If you want to become a top producer… 1. You need to like the mortgage lifestyle. It needs to be more than just a “job” for you in order to put up with the demands on your time, life and family. 2. You need to be a motivated self-starter. You will either succeed or fail almost entirely based on your own individual efforts and no one else’s. If you are afraid to take the initiative, maybe this isn’t the right career for you. 3. You need to be a hard-worker and be willing to go the extra mile. Selling and closing a mortgage loan is NOT easy work or fast money. 4. You need to be smart worker. You are paid for results, not the amount of hours you put in. Organization, efficiency and productivity are the key words in this business. And a loan officer is only as good as his last loan. If you don’t systematize your business and outsource non-essential tasks, your time will be quickly eaten-up, making you less effective. Hence the reason why I invented my worksheets at http://www.loanclosingsystem.com 5. You need to enjoy solving "people’s problems". As the refinance boom and the easy loans have dried-up, you need to look at other ways you can originate business. Creative financing and thinking outside the box, will get you loans that others leave behind. Interest-only loans, debt consolidation, cash-out divorce loans, reverse mortgages, etc. are all alternative loans you need to be considering if you are to stay in this business for the long term. 6. You must have people skills and be able to interact with customers from all walks of life and economic situations. 7. You must be a good listener. The more you “hear” the customer, the less pushy “selling” you will have to do. Find out what is truly motivating them and offer them something that truly solves their problem, you’ll be more likely to get the sale. 8. You need to be emotionally stable and mature. You can’t play games or mess around with people’s financial situations if you are to maintain the trust and confidence of the other person. You also need to maintain your own sense of balance and fairness. 9. You need to know your product line inside and out. Knowing one lender is not enough, you must know at least 15 to 20 lenders, from A-paper to B-paper and beyond. How else are you going to be able to sell a customer something if you don’t know what you’re selling? 10. You need to be convinced of your product’s value. It should be easy to be enthusiastic about your product when you know you are truly helping somebody. 11. You need to be flexible and agile. The mortgage industry changes everyday in technology as well as fundamental ways of doing business. You must be willing to adapt to whatever is thrown at you. 12. You must be a constant learner. Even after many years originating loans, I still learn something new everyday. That’s why I love the industry so much! It’s an on-going education. 13. You have to persevere and never, ever give-up! Relentless perseverance is the only way you will succeed. When something doesn’t work, try doing something else! You can’t take rejection personally. If someone says “no”, it doesn’t mean they don’t like you. After all, they don’t even know you. These are the traits and skills I teach my loan officers, and I would encourage you to print out this list and look for it before you decide to hire someone else. Remember, by emulating the qualities of top producers, you are more likely to become a top producer yourself.
Thoughts To Steer By On Your Way To Success In The Mortgage Business, From One Loan Officer To Another
What sets one loan officer apart from another? And how do some people become “top producers” in their office, while others slowly squeak by? Surely, we all have the same amount of time, resources, and intelligence (debatable?!) available to us. So why do some loan officers fail, while others succeed? Here are some points to remember which will help ensure your success… Take control. Stay on top of things and be sure monitor your loans as they progress on their way to the closing table. Always be aware of what stage a file is in during process. Don’t trust anyone else with your commission check. Stay aware of any problems that arise, and work with your processor to fix them. If you can help speed things up, please do—but not at the expense of making new sales! In my office, Nancy and I have a communications system in place (namely, my mortgage closing system). I religiously write down every detail of a file and go far beyond just the 1003. Questions I ask include: “When are your taxes due?” (Useful for estimating accurate escrows). “Will you both be available to sign closing documents in the next 30 days?” (Useful for scheduling purposes, I want to know ahead of time if any vacations or expected trips are planned). “Do you need a set amount of money as cash-out at the closing table or will you take whatever is left over?” (Customers don’t understand that escrows can change, and they might be expecting a higher amount as cash-out than they actually receive). And of course, the catchall question: “Is there anything else, financially, legally or otherwise, that I should know about that may affect your loan?” (Use this to disarm any landmines that may pop-up). Remember to always put the customers needs first, ahead of yours. Empathize with the customer and let them know how hard you will work for them. Gain their trust early on, and the amount of referrals you will receive will be immeasurable. Never let a detail slip by. Remember to ask all the important questions upfront. And, always, always, always, fill out the 1003 loan application completely and fully! There are no shortcuts to success. Learn everything you can from the other, more experienced loan officers in your company and don’t be afraid to ask questions. I always ask my wholesale reps, attorneys, and appraisers questions. I want to know as much as I can about every facet of this business. And I know, that with each day as my knowledge increases, my job becomes easier, and the more sales I will make. You will too! Never repeat the same mistake twice. When something goes wrong on a loan, ask yourself “Why?”, then try to brainstorm ways to tackle this hurdle so it doesn’t happen again. No loan closes as quickly as you think it will. By ironing out as many bumps as you can, it makes your next loan that much more streamlined and straightforward. At the end of every loan we close, Nancy and I make a list of what went right, what went wrong, and why. We write down how we can improve the process and make things better. Taking 5 minutes after the closing to do this will pay many dividends to you in the future. Stay focused on why you are in this business. Is it to help people? Do you enjoy the daily challenge of earning your own income? What is it that drives you to be successful? What goals do you have? What is your long-term plan? For me, when I first started out, I was only earning about 10% commission on every loan I closed. That’s right, a measly, 10% on each one! Peanuts, you say??!!! But, I had a plan…and I knew that once I learned the mortgage business from the inside, I could move on to bigger and better things. (Not to mention, fatter commission checks!). I sacrificed two years of my life to learn the ropes, with the prospect of earning, much, much, more in the future. Isn’t that what people do when they go to college? (I did that too, by the way!). Remember this, no matter what your current firm is paying you now, there is always another mortgage company out there that will PAY YOU MORE! Do an online search for “mortgage net branch”, and you will find dozens of companies that will double or even triple your current commission check. Good sales people are hard-to-find and are always in demand. If you leave one job, don’t worry. You can easily find another. But, make sure you leave on your own terms--and more importantly--at a time of your choosing. These are just a few of the things that I have helped me become successful. I know that when I hand a borrower’s file over to Nancy, she will take excellent care of the loan. And because I do my job as a loan officer as thoroughly as I can (by filling out everything on my worksheets), it makes her job that much easier. As you can see, there are many different ways to become successful in this industry. Believe in yourself and what you are doing; put the customer’s needs first and ask the important questions upfront; and stay focused on what you want to get out of your business. If you only did these three things alone, you’d go far as a loan officer! Now go get ‘em!
7 Tips For Increasing Your Sales With A Guarantee
People are more likely to buy your product or service if you make their decision as easy as possible Based on the techniques of hypnosis and Neuro-linguistic Programming, you want them to picture in their mind what it will be like in the future after they have bought it. It may be difficult for them to do that if there is too much risk involved so your marketing task is to remov the risk. The way you do that is through some sort of guarantee. Most potential buyers will be a bit skeptical of buying whatever you sell and a guarantee removes a significant part of their risk. People want to know that you will "put your money where your mouth is." If you have confidence in your own product or service, this will help your customers feel at ease, leading to more sales. For this reason, the concept of "risk reversal" is crucial. If you can't stand behind your offer with a guarantee of some sort, people are likely to purchase from someone who does. So make sure you don't help the competition by missing out this part of your offer. Some people are too scared to offer a guarantee as they worry that people will take them up on it. The reality is that some will but, provided you deliver good quality and don't make unjustified claims, you will win more business by having the guarantee than you will lose in this way. Here are 7 ways you can get the best results from your guarantee. 1. Promote the value of your guarantee: Specify the details as though it is another product that adds value to your offer. Spell it out in plain, simple English. Make sure it is "no questions asked" to help put your customers at ease. 2. Make it personal, if possible: It's useful to help people see that there is a person behind the guarantee. So consider making it a "personal pledge" or a "personal promise" written to the buyer. 3. Longer is better: The longer the guarantee period, the more comfortable the buyer will feel - and longer guarantees typically lead to fewer refunds. In the extreme version, people only pay after they have tried it out to their satisfaction. 4. More is better: A guarantee that offers 'more than your money back' is very appealing. Let your customers keep something even if they decide to return the product. This helps them see the purchase from you as totally risk-free - because you're the one with all the risk. 5. Be creative: Think about what the customer really wants and consider offering guaranteed results rather than offering money-back. For example, a computer repair shop that will fix your machine even if it takes 5 trips back to the shop will really stand out from the crowd. No "or your money back" needed! 6. Make it prompt: When a customer asks for a refund, make sure it is prompt and courteous. Consider them a priority as it's better to refund the money than to have an unsatisfied customer. 7. Work on reducing refunds: Whatever you do, there are always likely to be some people who will ask for refunds. It is a simple fact that customers change their minds or were just looking for something else. Take the chance to get some feedback and see if you need to make changes. A good guarantee can provide a high level of comfort to your prospective customer that will make it easier for them to see the potential of working with you. So it's well worth making it part of your marketing package.
7 Tips For Increasing Your Sales With A Guarantee
People are more likely to buy your product or service if you make their decision as easy as possible Based on the techniques of hypnosis and Neuro-linguistic Programming, you want them to picture in their mind what it will be like in the future after they have bought it. It may be difficult for them to do that if there is too much risk involved so your marketing task is to remov the risk. The way you do that is through some sort of guarantee. Most potential buyers will be a bit skeptical of buying whatever you sell and a guarantee removes a significant part of their risk. People want to know that you will "put your money where your mouth is." If you have confidence in your own product or service, this will help your customers feel at ease, leading to more sales. For this reason, the concept of "risk reversal" is crucial. If you can't stand behind your offer with a guarantee of some sort, people are likely to purchase from someone who does. So make sure you don't help the competition by missing out this part of your offer. Some people are too scared to offer a guarantee as they worry that people will take them up on it. The reality is that some will but, provided you deliver good quality and don't make unjustified claims, you will win more business by having the guarantee than you will lose in this way. Here are 7 ways you can get the best results from your guarantee. 1. Promote the value of your guarantee: Specify the details as though it is another product that adds value to your offer. Spell it out in plain, simple English. Make sure it is "no questions asked" to help put your customers at ease. 2. Make it personal, if possible: It's useful to help people see that there is a person behind the guarantee. So consider making it a "personal pledge" or a "personal promise" written to the buyer. 3. Longer is better: The longer the guarantee period, the more comfortable the buyer will feel - and longer guarantees typically lead to fewer refunds. In the extreme version, people only pay after they have tried it out to their satisfaction. 4. More is better: A guarantee that offers 'more than your money back' is very appealing. Let your customers keep something even if they decide to return the product. This helps them see the purchase from you as totally risk-free - because you're the one with all the risk. 5. Be creative: Think about what the customer really wants and consider offering guaranteed results rather than offering money-back. For example, a computer repair shop that will fix your machine even if it takes 5 trips back to the shop will really stand out from the crowd. No "or your money back" needed! 6. Make it prompt: When a customer asks for a refund, make sure it is prompt and courteous. Consider them a priority as it's better to refund the money than to have an unsatisfied customer. 7. Work on reducing refunds: Whatever you do, there are always likely to be some people who will ask for refunds. It is a simple fact that customers change their minds or were just looking for something else. Take the chance to get some feedback and see if you need to make changes. A good guarantee can provide a high level of comfort to your prospective customer that will make it easier for them to see the potential of working with you. So it's well worth making it part of your marketing package.
How to More Effectively Convert Your Accounts Receivable into Cash
Converting accounts receivable into cash is a critical process in the development of a healthy cash flow. While booking a receivable is accomplished by a simple accounting transaction, the process of maintaining and collecting payments from your customers requires a steadfast commitment to a systematic process of Accounts Receivable Management. To more effectively convert accounts receivable into cash it's essential that the credit and collection process be highly efficient in order for you to shorten the accounts receivable cycle time. The accounts receivable cycle starts with a sale (credit sales) which in turn creates a receivable (monies due your company), and then, ultimately converts into cash. The length of time that it takes your company to complete this cycle, from sale to accounts receivable to cash, is the collection period. The shorter the collection period, the less time cash (capital) is tied up in the business process, and thus the better for your company's cash flow. Try to limit outstanding accounts receivable to no more than 10 to 15 days beyond your credit terms. If your credit terms are net 30 days, then the collection period should not extend beyond 45 days. Keep in mind that average collection periods do vary because of industry standards, company policies, or financial conditions of the customer. Comparing your company's actual days of collection to the average days of collection within your industry is a wise business practice. Benchmarking your actual days of collection to that of your target days of collection (no more than 10-15 days over credit terms) is also advisable. Your company's average collection period is calculated by using an Average Collection Period Ratio. The ratio is referred to as an Activity Ratio; it measures how quickly your company converts non-cash assets to cash assets. Average Collection Period (ACP): ACP = Accounts Receivable / (Credit Sales/365)) A high Average Collection Period implies that your company may be too liberal in extending credit to your customers and too lax in the collection process. A low number of days in your collection period could imply that your credit and collection policies are too restrictive. This restrictive position may be repressing your sales. Accounts Receivable Turnover Ratio (ART) is an accounting measure used to quantify your company's effectiveness in extending credit, as well as, collecting its debts. This ART Ratio is considered a Liquidity Ratio; it measures the availability of cash to pay debt. Accounts Receivable Turnover (ART): ART = Net Credit Sales / Average Accounts Receivable A high Accounts Receivable Turnover Ratio implies that, either your company operates on a cash basis, or that its extension of credit and collection of accounts receivable is efficient. A low ART Ratio implies that your company should re-assess its credit policies in order to ensure the timely collection of monies due from the accounts receivable ledger. A key requirement for effective Sales and Accounts Receivables management is the ability to intelligently and efficiently manage your entire credit and collection process. Greater insight into a customer's financial strength, credit history, and trends in payment patterns is paramount in reducing your exposure to bad debt. While a comprehensive collection process greatly improves your cash flow, your ability to penetrate new markets and to develop a broader customer base hinges on the ability to quickly and easily make well informed credit decisions and, to set appropriate lines of credit. Your ability to quickly convert your accounts receivable into cash is possible if you execute well- defined collection strategies. Credit Process: The initial requirement of an effective credit management process is to have each company that you plan to do business with, complete and sign an Application for Credit form. Your Application for Credit form should include, the "terms and conditions of sale," space for the prospective customer to provide information on company background, a list of principal owners with their percent of ownership, three to five trade credit references, and the name of their bank(s). It is important to personally review with the prospective customer their projected product purchases - in both dollars and in units. This review helps to initially assess the amount of credit necessary to purchase the projected products. This review also helps to determine inventory requirements based on a projected sales forecast Collection Process: An efficient and effective collection management process includes well defined policies and procedures that facilitate a more expedient, sale–to-cash cycle. The collection procedures require "attention to detail" and should include: • Billing: Preparation, recording, and delivery of invoices as soon as the product/service is delivered or installed. • Statements: Preparation, recording, and delivery of follow-up statements that indicate aging of outstanding balances. • Accounts Receivable Aging Schedule: Preparation and distribution of an Aging Schedule that lists all of the customer accounts that have outstanding balances. These outstanding balances are then categorized into 4 categories of time: 1 to 30 days, 30 to 60 days, 60 to 90 days, and over 90 days. • Telephone Calls: Placement of courteous and professional telephone follow-up calls to customers with past due, outstanding balances for the purpose of establishing a date of payment. • Collection Letters: Preparation, recording, and delivery of collection letters with an urgent message that demands payment and provides details of the action that will be taken if payment is not received by a certain date. • Recording Payments: Posting of the amount of payment to the appropriate customer account. If possible, it is advisable that the person performing the collection duties not be involved with the posting of payments. • Deposits of Collected Funds: Preparation of the deposit ticket, along with accompanying funds, should be deposited in the bank on a timely basis. Factoring as an Option Very simply, factoring is short-term financing that is obtained by selling or transferring your Accounts Receivable to a third party - at a discount - in exchange for immediate cash. In most cases, the third party, a factoring company, audits your accounts receivable to determine their collect-ability. If the factoring company feels that your receivables are bona fide then, they will offer to purchase the current ones at a discount. A factoring company may also, under the right circumstances, purchase your future receivables at discount off the face value of the receivables. The percentage discount depends upon the age of the receivables, how complex the collection process will be, and how collectible they are. Once the factoring company collects a particular receivable, they will pay you the remaining balance of that receivable's face value, less their fee. Fees vary widely from one factoring company to another. So, it is recommended that you do your due diligence before engaging the services of any particular company. Factoring fees are not insignificant when compared to the amount of interest you might pay to a commercial lender. For this reason alone, you should view factoring only as a short-term solution rather than a regular outlet for collecting your receivables. Many businesses, that need an immediate infusion of cash in order to survive and/or to bridge their cash flow gap, could benefit from the process of factoring accounts receivable. Since failing businesses regularly turn to factoring as a last resort, factoring may be viewed by many people as a negative. Although factoring may be a great way to generate cash quickly, you should consider the perception that factoring may convey to your customers and to others in your industry. Your good judgment here should dictate if your company could benefit from the quick cash flow that factoring provides, or whether or not it would be just adding to your company's financial burdens. Shortening the accounts receivable cycle time generates the healthy cash flow that is required to sustain your company's growth and prosperity. Copyright 2008 Terry H. Hill: Terry H. Hill is the founder and managing partner of Legacy Associates, Inc, a business consulting and advisory services firm. A veteran chief executive, Terry works directly with business owners of privately held companies on the issues and challenges that they face in each stage of their business life cycle. To find out how he can help you take your business to the next level, visit his site at http://www.legacyai.com
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