Appraiser's Perspective: Sharpening your tools for the recoveryCharlie W. Elliott Jr., MAI, SRAMortgage appraisal recovery
To say that we humans, as a whole, are creatures of habit would
be an understatement. Many, if not most, of us find a comfortable
routine and stick with it, come what may. We are this way to a
fault, in some cases, where we just ride the horse we are on until
it runs out of steam and collapses right under us. We very often do
not pause to refresh or retool until we find ourselves lying flat
on the ground.
It is something like not changing the oil or tires in our
automobile until we have driven it so far that we are down to its
last mile before we pause to repair and refurbish. We don't pay
enough attention to the conditions around us, whether we are on our
horse or in our car. We drive directly into storms, hardly prepared
to react to the harsh conditions that we encounter until it is too
late. Although it can be, failing to attend to details on our
automobile is usually not fatal, but it takes a toll on us that
slows us down, and we get behind schedule. We can sometimes get
behind schedule in ways that make it impossible for us to regain
our previous position.
Since this is a lending industry column, perhaps you are saying
to yourself that it is time to get to the point, so here it goes.
The point is that many in our industry are beginning to experience
a slowdown in our business, much the same way that we envision our
horse or car after heading full throttle down the road, only to
find that we need to stop and regroup if we are to accomplish our
professional objectives.
Due to the cyclical nature of our business, we will always
experience business cycles that necessitate our re-evaluation and
redirection as to how we manage our businesses. Many of us are
drawn into the business by the potential for making large amounts
of money. Those of us who have been in the business for a few years
realize that yes, there is big money in the lending business, but
it is a business, not a job. For the same reason that we can make
big money, we must constantly re-evaluate the market to maximize
our potential. Unfortunately, some of us treat our business more
like a nine-to-five job much of the time, expecting to make good
money by simply showing up to work. Obviously, this is not the case
in a profession dominated by the necessity to produce, control
expenses and capitalize on the various forms of incentive
compensation, which we are familiar with in our industry. In the
past, much of this responsibility has been on the heads of
companies or the managers of offices. As we all know, things are
different today. Most of us run our own small corporations as CEOs,
even if we have no employees (besides ourselves). We are
responsible for our own bottom line, in many cases, which includes
not only generating our own revenue, but also monitoring our own
expenses.
As a former university business school instructor, a
20-year-plus small-business owner and manager and one familiar with
the lending industry, I have some observations on our industry's
period of economic transition.
We are not currently experiencing a depression, or even a severe
recession, in my opinion, but a cyclical slowdown. We are
experiencing a softening in many sub-segments of the lending
business; however, many aspects of our business remain robust. I
would prefer to call it, like I just said, a period of economic
transition. Therefore, there are many opportunities for those who
can see them and for those willing to adjust. I am not saying that
it is a time when we should expect to become wealthy, but I do
suggest that it is a time when we can experience economic success,
which far exceeds that of most of our competitors. It is a time
when we can expect not only to prosper, but to also be prepared to
take full advantage of the next boom in our business after most of
our competitors have fallen by the wayside.
Given the current climate for our business, I offer the
following suggestions to those who want to turn what could be a bad
situation into a relatively good one.
• Trade in your old budget for a new one. Due to the fact
things are slower, we have more time to focus on the efficiency
offered by the products and services that we purchase. We must look
carefully at the returns we get on our business investments. I
suggest we focus on items such as advertising, insurance,
transportation, rent, supplies and technology, and fire those that
are not producing. We are basically in the business of selling, and
large budgets are oftentimes unnecessary.
• Re-evaluate the use of your time. Steer clear of those
projects and distractions that suck up a lot of time and produce
less. Seek out high-quality clients and toss out the
high-maintenance ones who produce small paychecks. Update your
prospecting plan to include those methods that do not cost a lot
and that show the most promise.
• Update your product line. Kick to the curb those products
that are in low demand, produce low margins, require a lot of your
time or, in general, contribute less to the bottom line.
• Check your energy level. If you are not already doing so,
cut back on the sweets and the alcohol consumption and exercise at
least a half an hour per day. Although it is OK if you have one,
you don't need a gym. A good brisk walk for a couple miles early in
the morning works best for me. I find that I can do some of my best
reflecting early in the morning, while things are quiet and before
my competitors are awake.
• Spend the first 30 minutes of each day planning your
strategy. Don't do it after you normally go to work, but before you
go to work. You may need to go to bed a bit earlier to work it all
in, but I find that that I am clearer of mind earlier in the
morning.
In conclusion, when business slows down, it is a good time to
sharpen our tools and regroup. It can be, and is often, a blessing.
When things are busy, we sometimes fail to monitor those assets,
systems and theories that produce the most return for our
investment.
Charlie W. Elliott Jr., MAI, SRA is president of Elliott
& Company Appraisers, a national real estate appraisal company.
He can be reached at (800) 854-5889,
[email protected] or
through the company's Web site at www.appraisalsanywhere.com.
Previous columns he has written for The Mortgage Press can be seen
on the Elliott & Company Web site.
