Seriously, you have to work with Realtors. But I figured the title would be catchy.
Over the years, I have received numerous questions from other mortgage brokers as to how to become a top producing mortgage originator. My spam folder is filled with "proven systems" to becoming a mortgage broker millionaire. I am not aware of any systems that can turn chumps into millionaires overnight, but I have learned somethings over the past couple of years that seem to be pretty common among top producing LOs.
First, I am an active mortgage broker. I consider myself a top producer in that this year I should close about $30-35 million in a year when most mortgage brokers are struggling to do one deal a month. There are brokers who close more, but I think my volume puts me solidly in the top .01% of all brokers. You can take it for what it is worth. I don't visit Realtor offices, I don't buy leads, and I don't consistently blog. However, I get to drink plenty of coffee because I am closing loans.
This post might be a little long, but I am going to share with you secrets (more like common sense) that results in more production. I probably could package this up and sell it in seminars, but I like helping others. Am I the only one who wonders why these seminar gurus are never active originators? I am also in the midst of my annual business planning cycle for 2009, so I figured it would be a good time to put this down on paper while I am thinking about it for my own personal benefit.
So how do you become a top mortgage broker?
Entreprenuer, Not Employee: Top producing mortgage originators are entrepreneurs. They just happen to work for someone else. Your employer is just a conduit for you to run your own business. Think of yourself as a subsidiary. Every top producing originator I know thinks of themselves as a business. Everything they do is about how to improve their business and revenue (income).
Success Breeds Success: If you hang out with the water cooler whiners complaining about the "leads are weak" then you are going to fail. I only hang out with other top producers and I seek to do the things they do that make them successful. I can't stand the negativity of the whiners. Yeah, the market sucks. Lenders are closing. Clients are rate shopping. However, there are still plenty of us closing tens of millions in loans. What is your excuse?
Complete an Annual Business Plan: Every year I sit down and work up a business plan. A business plan is not saying "I want to close $40 million this year." A business plan is putting together an actual plan of action that lays out your goals, but also evaluates the current market conditions and lays out your overall strategic plan and tactics to accomplish your goals. I write my business plan as if I am presenting it to investors. Since I have to determine how I am going to spend my money each year, I need to know why I am spending it on certain initiatives and how their execution is going to help me reach my goals. My business plans can be up to 20 pages in length to give you an idea. Since my wife and I have joint accounts, I guess you could say she is an investor. She reads my business plan thoroughly!
It Takes Money to Make Money: I spent $20k on marketing last year. You have to invest in yourself to build your personal brand whether it is advertising or education. Don't be afraid to spend money to grow your business. Always check the Return on Investment and never be afraid to try new things. You should try to spend about 10% of your revenue (remember, you are a business).
Be a Professional and Expert: Sounds simple enough. Mortgages are confusing and your clients depend on you to know your stuff. You should be constantly learning about new products, programs and guidelines. If you didn't receive calls from clients regarding the new housing bill and its impact, you need to hit the books. The goal is to have your clients call and ask "How do I structure my financing", not "What's my rate?"
Don't Work for Free: Figure out what you want to work for and charge it. Grow a pair. Too many originators allow themselves to work for free out of desperation. Experience will teach you that the easy deals are never easy and if you don't charge what you deserve, you will be bitter. Do not waste too much time dealing with rate shoppers. If a client continues to nickel and dime you, let them go and move on. Most businesses will tell you that 20% of their customers produce 80% of their revenue. You need to focus your efforts on the 20%. Drop the unprofitable customers and let them drive some other chump out of business.
Don't be Greedy: If you are ashamed to share with your client the fees you are charging, then you are charging too much. You will also be losing deals to cheaper brokers like me.
Ask for Referrals: Referrals are the best source of business. Your clients need to know that is how you survive. Always let your clients know that you appreciate them spreading the word. The goal is to become a purely referral driven machine.
Stay in Touch: Almost a quarter of my business is repeat business now. The beauty of the mortgage business is that if you are good, you can be your client's lender for life. The borrowers I did deals for three and four years ago are now moving up. I am the first person they call. You need to send correspondence to your clients at a minimum each quarter. Better yet, monthly. I don't care if it is newsletters or birthday cards. I do both. Here is a free marketing tip: When you take the loan application, be sure to jot down birthdays. Go to Starbucks and buy about $200 worth of $5 gift cards. On your client's birthday, send them the Starbucks gift card with a handwritten birthday note.
Work for Great Companies: Find a company that allows you to work as an entrepreneur and grow your business. Stay away from companies that stifle your growth and treat you like an employee. This is why most top originators DO NOT WORK FOR LARGE BANKS. You also want to be at a company that puts your client's first. Companies that give you padded rate sheets, tie you to a cubicle, or feeds you leads are usually not the places that have your client's interest at heart.
Go to Your Closings: I try to go to every purchase closing I can. For the life of me, I can't figure out what originators don't go to their closings. When things go smoothly, you have two Realtors and sometimes two attorneys who could be potential referral sources. Not to mention, your clients are happy to see you there. This also protects your reputation. If a Realtor, Attorney, or Title Co does something that causes problems with the financing, you are there to prevent them from attempting to throw you under the bus.
Your Reptuation is Everything: All you have in this business is your name. Protect it at all cost. I paid to close a deal once because of a wholesalers screw up. I could have legitimately passed the cost on to my client, but they probably wouldn't have understood. I chose to protect my reputation instead of my wallet. I have received five deals from that client that have more than exceeded the money I paid to close his deal. To this day, he doesn't know I what I did...
Save Your Money: Too many mortgage originators got a taste of the good life during the boom. One month of making $20 or $30k does not make you a "baller". Put your money away for a rainy day, so when business gets a little slow you can survive.
Find a Niche: Every top producer I know has a niche that generates business. It might be locking up one or two realtor offices. I could be working with relocation companies. It could be developers. It could be construction loans. Mine is young professionals. Again, you are a business and you have to figure out what your position is in the market place. You can't be all things to all people.
Partner with Realtors: Too many mortgage originators chase after Realtors with donuts and rate sheets. Here is the reality. Eighty percent of Realtors have no business and probably only close a handful of transactions per year. Any decent mortgage originator knows more than that 80% of the Realtors. Yeah, I said that and I stand behind it. Think about it, a bottom of the barrel mortgage originator might close 15 loans per year. That is about 12 more transactions than the typical Realtor. Not bashing the Realtors, but trying to put things in perspective for the mortgage originator.
You probably aren't going to get the time of day with top producing Realtors either. They already have their favorite mortgage originator. Focus your energy on the young, up and coming Realtors. You usually will meet them at the closings. However, you will quickly learn to spot the super star rookies. These are the ones you want to partner with because you can grow your business TOGETHER.
Focus on Purchases: During the refi boom, too many loan officers forgot about purchase business. People are always buying homes. Refinances come and go. Every top producer I know focuses on purchase business. They use refinances as bonuses.
In summary, it takes a lot of hard work to becoming a top producer. There is no easy fix. However, the beauty of the mortgage business is that the longer you do it, the easier it gets for top producers if you have been doing what you were supposed to be doing all along.
I actually had more to share, but I figure I need to get back to work...I hope this helps someone.
Russ
www.smartmortgageadvice.com
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