I just had a client call and say he had an accepted offer on a new home, and renting his old one out.  I knew the guidelines changed a few months ago for FHA, increasing the reserve requirements in that situation.  I covered that with him, and we still had a green light.

Upon closer inspection of the new guidelines, it turns out that without 25% of DOCUMENTED equity in the house that they are vacating, lenders will not consider any income from their existing home.  That means the buyer had to qualify with both homes counted against him.

When I called my wholesalers to confirm, they agreed that those were the current guidelines, and told me that the process of "documenting" the equity is a HUGE pain in the @ss.  Should be as simple as an appraisal of the old...but we all know what should be and what is don't always align well.

So, a simple caveat here.  Buyers renting current to buy a new one may not be as simple as a downpayment and good credit on the new purchase.

As I said in my previous post "Are you a Giver?", most of us live an die by referral.  We all love to get them, and say we give them at every chance, but is that actually true?

Here's a dialog that I have with as many people as I can... "Hey Sam, on a scale of one to ten, please rate your CPA/Financial Planner/Attorney/etc.  If the answer is less than a 7, I refer them to one of the professionals that I have worked with.

If the answer is 8 or higher, I ask to get contact information for that person.  Again, the dialog goes like this: "Hey George, it's great that your CPA is a 9.  In fact, I'm always interested in meeting the best people in their profession, and I'd love to be able to refer my other clients. Do you mind if I call them and use your name as a reference?"

The CPA will be happy to hear from me: "Hi, my name is Bob, and I'd like to refer you clients....is that OK?"  They will appreciate their client endorsing them to me, and I have added a quality referral partner to my network.

When is this appropriate?  Every day!  Need a reason to call your clients?  "Hey Paul, I was looking for a great plumber to refer to my clients.  Do you happen to know one who is excellent?"

If the answer is no, tell them you'll call them back when you find one, just so they know.

If the answer is yes, you've made your client feel good by helping you, gained a potential referral partner, and most importantly, found someone who can serve your client at a high level.

Take this everyday, work it, and let me know how you and your business grow.

In the real estate and lending business, we all work for referrals.  My business over the past 12 years has been built entirely by referral. I appreciate them, work hard for them, and like to think that I deserve them. 

I used to get this all the time, let me know if it sounds familiar: "Hey Bob, good news!  I was talking to a friend of mine and they said they really want to refinance/buy a new home.  I told them you were the best, and gave them your card."  To be truthful, the people call no more than 50% of the time.  What opportunities are lost?  How much money? How many clients end up working with less qualified, or less scrupulous mortgage advisors? 

I have made it a point to educate my best referral sources.  People with the best hearts, who want the best for their friends and family members.  Now, I ask them to "sing my praises" and ask permission for me to call them.  If I can call them, I can ensure at least one contact between us.  It's infinitely more effective than me waiting and hoping that they call me.

So here's my question to you...do you refer people the right way?  Do you get permission to give their contact info to the people who can serve them?  Here's what I say:

"Say George, do you have an excellent realtor that you are working with?" Ususally, the answer is "Well, I get listings emailed to me by someone (they usually can't remember the name BTW). 

I say "Listen, Lisa is one of the best realtors I've ever come across. With your permission, I'll have her call you within the next 24 hours.  What is the best number for them to reach you?"

Can you see the difference in value between this and "Here's Lisa's card, give her a call."?  It's night and day, and the only way to refer someone you really WANT to get the business.  So, are you giving referrals the right way?  Shouldn't you be?

I think everyone can agree that the real estate landscape looks different today than it did two years ago. 

In 2007 there were an estimated 14,000 mortgage professionals practicing in the state of Massachusetts.  In 2008, the number of licensees was estimated around 6500.  Today, the number stands under 2000.  While I recognize that some of these people may have gone to banks, which don't require licenses be held, there has still been a massive exodus from the business.

This question is primarily directed towards realtors.  Are you loyal to your lenders?  Do you work to switch every borrower to your mortgage professional?   If not, you're missing a huge opportunity.   I worked diligently to make my realtors look better,  and do more business in less time.  Any lender who's been able to weather the storm most likely has similar values.

The most successful and lasting relationships are ones which are mutually beneficial.   While that statement may seem obvious, many people seem to miss that point.  Don't let your lender lose deals to Internet mortgage companies.  There's a strong likelihood that you'll lose the deal to because the company doesn't know the local market,  the newest guidelines or the newly implemented state laws.

Stand by your lender, and they'll stand by you.

It's a funny thing.  I've been in the mortgage business for 12 years now.  When I started, I visited realtors offices four days a week.  I spent time with them, asked questions, and offered my services.    I built a successful business that was consistent and predictable.

 As the years pass, I lose sight of the very actions that created my  business in the first place.   I stop visiting my realtors, stop calling past clients, and then wonder why my business is not as consistent as it used to be.

  Then coincidently, as happened last week, I go out and see some people.  All of a sudden, I have new buyer prospects, new appointments with realtors, and renewed enthusiasm.

  My point is this; do people still know you're in the business?  Do people know you're serious about what you do?  The more you can gently and casually remind people what business you're in, the better you'll be.  I make it a point to have updated mortgage information in my e-mail signatures, which consistently creates opportunities for me. 

 I met a mortgage professional with 15 years experience recently.  I wanted to reach out to him a week later,  could not find his contact information online anywhere.  He simply does not exist on the Internet.    When I finally did reach him sometime later, I was dismayed to hear that he has left the business.  Apparently, being invisible on the Internet does have an impact on people's business.

  Make sure people can find you.  Make sure they know what you do.  It can make all the difference.

I made a new friend today through active rain...Jackie Peraza.  We had a great meeting, and hopefully will be able to enrich each others businesses.  Jackie wrote a post Won't you be my neighbor? that was thanking the Active Rain community for their warmth and hospitality.  It got me to thinking...

We, as a society, lack a sense of community. This may be one reason that we have such rabid loyalties to our sports team.  I am a season ticket holder for the Red Sox.  There is no scarier place to be for a Yankees fan then Fenway on game night.  We are the Hatfields and McCoys.  We dislike the Yankees players, and the Yankees fans.  They dislike us.  Why is that?  I think it is because it is a chance to belong to a family.  It's a chance to be part a a group with common interests.  We need that as humans, and we have lost this in our neighborhoods in large part.

I grew up in CT.  There were 58 houses in the neighborhood, and I knew the families in every one of those houses.  We still refer to the homes by the names of owners who haven't lived there in 20 years.  That is because we no longer know who lives there.  It's sad.

I have lived in the same house with my wife and 3 kids for 6 years now.  I couldn't tell you the name of the people who live DIRECTLY across the street from us.  That was until 2.5 months ago when my wife passed away.  Then, people I had never met reached out to me, to offer food support, even money.  It was shocking.  Having been where I have in the past few months, I write this to encourage each and every person who reads this...reach out to someone you don't know well yet.

Try to foster a sense of "old fashioned" community with people around you.  Say hello when you get home at night instead of pulling into the garage and closing the door behind you.  Be hospitable.  Be kind.  You never know how you might impact someone with your thought.

Arrange a block party, or a cocktail party at your home.  It won't cost much, and it might even boost your business.  I know it will boost your sense of belonging and connection to others.

Are you being seen?

John Keil wrote a blog awhile ago (Right place right time) about being in a realtors office, and getting a couple of loans out of it.  That got me to thinking.  Initially, my new business was built exactly that way.  I visited realtors offices, trying to build and develop relationships with them to get some leads.  While tedious at times, it worked.  I built a business that has grown into a very solid income stream from realtors and past clients.  Over the course of 9 years however, I have gotten lax with that aspect of my lead generation.

When I realize that, I get my butt back on the street and go see my realtors and past clients.  Invariably, I get business out of it every time.  It's not only about meeting new realtors, but rather about reminding my realtor friends and referral partners that I'm still alive and in business.  I say that only partially tongue in cheek.

No one stays up at night wondering how to send you business.  If you aren't there, consistently asking for it, you're not likely to get it.  I've seen it with great friends, family, etc.  Out of sight, out of mind exists even in the strongest of relationships.  Go see your people!

I live this on the other side as well. As the owner of my office, all the wholesalers and AE's want to get my business.  If they try to schedule meetings, I blow them off or stall.  I'm a pretty busy guy.  However, if they are consistently stopping in to see if they can help with any loans, they almost always leave with a deal.  I may just not think of them for that particular scenario, or loan.

An AE came by last week.  In passing he mentioned his strong ALT-A program.  He was right, and will get 4-5 more loans from me every month now.  I didn't know they did any ALT-A business, let alone having a great program spread.  Was it his fault or mine?  If he didn't tell me...it was his, and it cost him!  What are you missing out on?

Go see your people.  Lenders, go see realtors and closing attoneys. Realtors, go see your lenders!  They have business to give...are you asking?  Everone should go see their past clients once in a while.  Face to face...it's the best way to sell!

Yes, I am a lender.  In fact I have been for almost 9 years now.  I know lots of other lenders who bitch and moan about realtors.  Admittedly, from time to time, I'm among them.  However, purchase business is without question, the best way to add new relationships into the fold.

Not only do we meet a new, paying client, but also a professional on the other side with whom we may be able to forge a mutually profitable relationship.  A decent realtor should be able to send a deal a month to his or her lender.  A great realtor will be able to send much more.

If we as lenders have 10 decent realtors who all send a deal a month, we can make a very nice 6 figure income.  Also, with 10 good realtors, we should have enough self-generated to send at least one referral back to each of our supporting realtors.

It's a simple dynamic that we all need to remember.  We work better together than we can apart.

This is related to my earlier post Are you being seen?  Mark Brinitzer asked about realtors having less opportunity to refer business out, and that promted this post.

I have heard this too many times from too many realtors.  I know that since the internet has changed the world, the power in real estate has shifted to the buyer from the realtor.  Consumers have more power and knowledge than ever before.

However, in my opinion, realtors not "being able" to refer buyers to us lenders is BS!  It seems to me that there are a couple of simple explanations for this.

1) They may not recognize the opportunities as they present themselves.  This is our (lenders) fault.  We need to educate realtors on how to refer us.  They need to be trained (sorry realtors).

2) They are afraid of "rocking the boat".  Many realtors are so happy to have a live buyer, that they don't want to scare him/her off by offering an opinion about the lender.

3) They don't believe that we are different than the internet lender that has done the preapproval in the first place.  This too is our fault.  If we can't communicate our value to a realtor, how can we expect them to know what it is.  Know what makes you different, and tell everyone.

4) They just don't "get" the referral dynamic.  They don't realize, or haven't experienced a good lender who can and does refer business back to them so they get paid.  A lender worth working with should have at least 6-10 deals a year that he/she can refer out.  If they don't understand, teach them!

I have plenty of realtors who refer buyers to me.  Both people who have no lender affiliation, and those who are already preapproved, but my realtor convinces them to call me for "a second opinion".  You can have these relationships also, but it takes consistent work on our part, and some benefit (i.e. genuinely better service) to the realtor.  Make them look better and they'll send you more work.

It's amazing how this happens.  You make a realtor look better, and miraculaously enough, they "see/find" more opportunities to send clients.  Try it, you'll see.

John Keil wrote a blog (Right place right time) about being in a realtors office, and getting a couple of loans out of it.  That got me to thinking.  Initially, my new business was built exactly that way.  I visited realtors offices, trying to build and develop relationships with them to get some leads.  While tedious at times, it worked.  I built a business that has grown into a very solid income stream from realtors and past clients.  Over the course of 9 years however, I have gotten lax with that aspect of my lead generation.

When I realize that, I get my butt back on the street and go see my realtors and past clients.  Invariably, I get business out of it every time.  It's not only about meeting new realtors, but rather about reminding my realtor friends and referral partners that I'm still alive and in business.  I say that only partially tongue in cheek.

No one stays up at night wondering how to send you business.  If you aren't there, consistently asking for it, you're not likely to get it.  I've seen it with great friends, family, etc.  Out of sight, out of mind exists even in the strongest of relationships.  Go see your people!

I live this on the other side as well. As the owner of my office, all the wholesalers and AE's want to get my business.  If they try to schedule meetings, I blow them off or stall.  I'm a pretty busy guy.  However, if they are consistently stopping in to see if they can help with any loans, they almost always leave with a deal.  I may just not think of them for that particular scenario, or loan.

An AE came by last week.  In passing he mentioned his strong ALT-A program.  He was right, and will get 4-5 more loans from me every month now.  I didn't know they did any ALT-A business, let alone having a great program spread.  Was it his fault or mine?  If he didn't tell me...it was his, and it cost him!  What are you missing out on?

Go see your people.  Lenders, go see realtors and closing attoneys. Realtors, go see your lenders!  They have business to give...are you asking?  Everone should go see their past clients once in a while.  Face to face...it's the best way to sell!