Skip to main content

Freddie Mac PMMS: Long-term rates changed little this week

National Mortgage Professional
Jun 25, 2008

How to increase your business by building client relationshipsDr. Kerry Johnsonrefinance or purchase, real estate agents, certified public accountants Tim was on the verge of bankruptcy. Nobody seemed willing or motivated to refinance or purchase. Still, Tim didn't want to have to start a new career. Real estate agents seemed to spin his wheels. While he was able to meet with certified public accountants and financial advisors, they seemed more willing to receive referrals than to give them. Tim did five loans in June and only three in July—a classic downward spiral. There was not enough business even to keep the doors open. Then he decided to do something about it. He became proactive about sales, instead of reactive, hoping business would just call in. He became a sales-focused Mortgage Broker, instead of one waiting for the phone to ring. This month, Tim put 15 loans in the pipeline. He hired another two sales producers, instead of standard cookie-cutter loan officers waiting for the phone to ring. Tim is on track to originate 180 loans this year, while many other brokers are closing their doors. How did Tim do it? How did he turn his company around from a money loser to a cash cow? When your clients first approached you years ago, they shopped your rates. If you had the lowest cost, you got the business. Often, prospects would even call, ask your rates and fees, and then hang up without even saying thank you. Prospects haven't changed, but you should. According to the University of Connecticut, 87 percent of your clients care more about their relationship with you than your rates and fees. This seems illogical, unless you consider why they bought in the first place. Al was like that. He refinanced my house in 1999 and didn't even so much as dial the phone to say thank you for the business. However, I did get a postcard telling me how much his company has grown. I have refinanced once since then, with another lender. Two years ago, I added 3,500 square feet to my home and did a new first floor with a third lender. I didn't use Al. Why? Did Al do a good job? Yes. Didn't he lower my monthly payment? Yes. Why did I use the competition? Al lost the relationship. He didn't keep in touch. While Al did send a postcard every six months, he made me a transaction instead of a client. What clients want According to the Consumers Union, only 17 percent of consumer purchasing products last year for more than $500 used the previous lender. This means that you have likely lost contact with your clients. Many producers are still waiting for the phone to ring. However, when customers were asked if they would purchase again from the last vendor, 89 percent said yes, if their vendors had bothered to follow up on the relationship. According to Forrester Research, there are three key items your clients want most. 1. They want a working knowledge of the product. Your clients really want to know what they bought, and they want to know about other service and product options. They don't want to become experts. They depend on you for that. They do want to know what they have and what is available. 2. They want you to monitor their purchase or service as if it was your own. You are constantly looking for ways to gain more value. You are privy to the most current products and services on the market. Your clients want the same consideration. 3. They want frequency in a relationship. They want to hear from you at least every three months. I mentioned this to one sales producer who told me he sends a newsletter every quarter. Didn't that make a difference? The answer is: Would you rather hear from a trusted advisor personally or see her name on a sheet of paper every once in a while? How to triple your sales this year Peter, a Mortgage Broker in Atlanta, Ga., has 3,000 clients from business he has refinanced over the past four years. This is a treasure chest in future business. Lately, he has been striking out, calling real estate agents who are also suffering. The problem is they are sometimes rude and often flaky. So Peter started calling his past borrowers. At first, it was awkward. He felt guilty calling borrowers who hadn't heard from him in the past three years. However, he sucked up his call reluctance and did the dialing. Surprisingly, nearly everyone seemed glad to hear from him. They asked about his family and even expressed gratitude for the great job Peter did on their last loan. Peter is now using a three-step process that is earning him an 11 percent closing rate on all past borrower calls. He is closing 11 applications out of every 100 phone calls. Here is his three-part strategy. 1. Catch up: Peter calls the client and catches up on the family. He asks about Johnny's soccer schedule, if dad volunteered this year to be Johnny's coach, and how mom's new job is going. 2. Update: Peter then tells the client where rates are right now and how that will affect the client's home's value. This appraisal estimate is the silver bullet for real estate agents, helping them motivate sellers to list their home. Even when the client doesn't want to sell, he still wants to hear about his home's value and what is likely to happen over the next year. Peter did some research on the client's rate before the phone call. He also knows, ahead of time, if he can save his client money. He asks if the client would like to combine the first and second to save another $500 a month. Most say yes. Even when he can't offer savings, he knows how to follow up with a product his clients can't say no to. The average American household has $17,000 in credit card debt. Peter pitches that for effect. He then asks if the client has more or less than $17,000 in debt to get the conversation started. He then closes by asking, "If you could write off the interest payments on your credit card debt and save 30 percent, would you be interested?" At that point, Peter starts the discussion about a home equity line of credit and/or a second mortgage. Eleven percent of all past borrowers ask to start an application. 3. Referrals: After the questions about loan programs and consolidating debt, Peter asks for referrals. He knows that every client knows 250 friends, relatives and neighbors he could refer. So he expects to get three referrals on every phone call. In fact, 55 percent of all his clients will refer at least five friends. All Peter has to do is ask. He doesn't make the mistake of advertising for referrals, as most loan originators do. He doesn't say: "If you know anybody, please tell them about me." He says: "Who do you know who could benefit from the kind of relationship we have had so far?" Five hundred committed relationships We know that a typical consumer makes a car purchase every five years, leases a car every 3.2 years, refinances their mortgage every seven years, makes a major financial investment every nine months and purchases an insurance product every 10 to18 months. Mortgage Broker David's formula for success is five-two-11—five contacts a day, two appointments a day and 11 closed sales a month. The math is simple. The results are spectacular. David can't hire enough new sales producers to take up the overflow. The ones who will make the outgoing phone calls are hard to find—but the ones who do are now making $200,000 a year, even in a bad economy. Getting to the next level Making your business profitable is all about relationships, rapport and trust. That is easy to agree with. Would you like to get an even better return on your time than Tim and Peter? See your customers face-to-face. David did that. At first, he started the three month call script. He was also shy about forcing himself on those who didn't have a need. Through coaching, David was encouraged to book appointments and get to know his customers better. Then, magic happened. Even those who didn't have a need for a new product on the phone decided to buy when David met face-to-face with them. While David was able to close 11 percent of his past customers on the phone, he closed 36 percent of those he saw face-to-face. His closing rate on referrals was even higher. Why would you see someone in person when you can save time on the phone? Would you rather see your real estate agent face-to-face, or would you be able to gain the same level of trust only on the phone? Would you rather see your lawyer face-to-face on an important case, or is the phone just fine? The answer is obvious. Your closing ratio face-to-face will always be higher than on the phone. Your business has changed. No longer will you be able to stare at the telephone, hoping it will ring. There are strategies you can use to double the business you were able to snare over the last three years. Your business now is all about relationship, rapport and trust. The better you can manage them, the more business you will gain. Dr. Kerry Johnson is an author, frequent speaker at conventions around the world and head of Peak Performance Coaching. He may be reached through his Web site, www.kerryjohnson.com.
Published
Jun 25, 2008
Fannie Mae Extends Multifamily Protections Indefinitely

Fannie Mae announced that its multifamily COVID-19 forbearance program has been extended indefinitely to support multifamily property owners and renters experiencing financial difficulties due to COVID-19.

Industry News
Sep 27, 2021
LoanDepot Lawsuit Alleges Wide-Scale Fraud

‘One of the most egregious wide-scale fraud for profit schemes since the years leading up to the Great Recession,' a recent lawsuit claims.

Industry News
Sep 27, 2021
Federal Regulators Race To Address Cryptocurrency Risks

Cryptocurrency is quickly morphing into a volatile but widely embraced innovation, and federal regulators are racing to address the potential risks to consumers and the market. 

Industry News
Sep 24, 2021
MBA Initiative Seeks To Close Racial Homeownership Gap

Says its advocacy, partnerships & connections will help increase opportunities for minority borrowers

Industry News
Sep 24, 2021
Guaranteed Rate Opens New Branch In Southwestern Michigan

Guaranteed Rate expanded its presence in Southwester Michigan, after opening a new branch in St. Joseph

Industry News
Sep 22, 2021
Chinese Property Giant Evergrande Falters, Threatening U.S. Investors

On Monday, investors across three continents dumped their stocks, mainly out of fear that the world’s two largest governments — the United States and China — would undercut the beginnings of a global economic recovery. 

Industry News
Sep 22, 2021