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Answering The Magic Question

The more you focus on the commission “split,” the more you have turned your job into a commodity.

Dave Hershman headshot
Dave Hershman
Two loan officers discuss the "magic question" of rates.

I really find it amusing to find managers complaining that they can’t hire loan officers because they get stuck focusing on the “magic” question. What is this magic question? Here it is…

What is your split (or your commission plan)?

Why is this so amusing to me? Because it is the managers of this industry that have the responsibility to help loan officers conquer their own “magic” question—

What is your rate on a 30-year fixed mortgage?

If we are going to be able to help our loan officers succeed, should we not be setting an example by not getting stuck on such a “standard” question? You know this question will come from loan officers looking for a company. You should have a plan of attack.  Here is my advice…

First, if you are getting this magic question from all of your candidates, this is a bad sign that your recruiting plan is producing the wrong candidates to begin with. In my mortgage school I teach loan officers that their goal is to set up a business model that has their prospects calling in and asking—

“You are the expert, what should I do with regarding to purchasing a home and financing it.”  Or “I just purchased a home and John said I should call you and find out what to do.”

The business model that produces strong personal referrals puts you in a position to succeed by not having to start with the magic question as often. That is the whole goal of the model—to have to deal with the question of rate 20% of the time instead of 80% of the time. Your recruitment plan should have the same goal. 

On the other hand, every plan no matter how efficient will still produce the magic question a certain percentage of the time. So you still need to be able to handle the question when it comes. You must have a plan of attack for the question you know is coming.

Rate Doesn’t Matter

I tell loan officers that their customers do not care about the rate. They care about their monthly payment (yes, they are related). Most of their customers do not know what a reduction of .125% in rate will do to their payment, especially after taxes. So, the quicker the conversation converts to payment (or something else that may be important to them), the more successful they will be. Similarly, the quicker the manager converts the conversation from the “split” to the important issue, the more successful they will be. What is really important to a loan officer is how much they will earn. Yes, the split does affect this but so do several other factors, including operational, technical and marketing support. My first questions back to them might be—

  • How much would you like to earn annually?
  • How much did you earn last year?
  • Why did you not earn what you would like?
  • What factors do you feel could positively affect you to earn more money—aside from changing your compensation program?

As you can see, we are broadening the focus with this line of questioning. This will also enable you to move to other factors that may be important to them. These factors might include meeting their long-term goals such as advancement or retirement. 

The more you focus on the commission “split,” the more you have turned your job into a commodity they can shop. Just as a mortgage should not be shopped like orange juice, a job certainly should be the result of many, many important factors.

Refer back to your recruitment package. How much would it be worth for them to work for you? How much value do you add? You must be able to quantify this value. If you do not, you will not be distinguishing your opportunity and you will be selling against everyone else, which is not a pleasant place to be. 

This article was originally published in the NMP Magazine September 2021 issue.
Dave Hershman headshot
Dave Hershman

Dave Hershman is an author for the mortgage industry with eight books and several hundred articles to his credit. He is also senior vice president of sales for Weichert Financial Services, head of OriginationPro Mortgage School and a top industry speaker.

Published on
Sep 20, 2021
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