One of the unfortunate realities in the mortgage business is how the traditional work ethic plays out for originators. Americans are indoctrinated early on to work harder and longer to get ahead. They are socialized to believe that when they outwork the standard and make sacrifices — such as health, family, friends and downtime — they will be rewarded in the long run.
Originators are paying the price for that, literally, because it’s costing them quality of life along with thousands of dollars in business. And they don’t even know it.
Right now, the home-purchase market is active and the mortgage industry is in the middle of a refinance boom. Many originators don’t need to know how to get more leads; they’ve got plenty. In fact, they’re often buried to the point they aren’t able to handle them all.
And that’s where they begin leaking money. Not being able to handle all of their leads costs originators a fortune. It’s a side effect of being so busy, which is actually a limiting mindset. More on that in a minute. First, let’s get personal.
Because you’re so busy with closings (whatever “busy” means to you, whether it’s five, 10, 20 or 50 loans per month), you’re chasing conditions and putting out fires. You don’t have time to do the thing that brings in new loans. The cycle — networking, having conversations, asking for business, etc. — is doing what it takes to generate business, so loans come in and then you stop lead generation to service these loans.
The new business you’re not getting by doing the follow-up and weekly file updates is lost because you’re not filling your pipeline. This causes what can be termed the “sales roller coaster,” also known as the “feast-or-famine cycle.” The money you’re losing by not being able to generate new business means you’re probably leaving more on the table than what you’re taking home.
The solution is to hire help, even though originators cite various obstacles to doing that. Let’s explore some of the most damaging hurdles that can be overcome.
One obstacle that prevents originators from hiring help is not knowing how to afford it. They don’t understand that hiring help is not a cost but an investment in resources to do more business. Visually, it’s like handing a stack of $10 bills to a helper so they give you a stack of $100 bills back. Why would you not want to do that?
It takes vision to see the strategy behind writing a small check to cash big ones. A new loan assistant might need $50,000 in annual salary and you might think you don’t have that right now. But you’re not paying $50,000 when you hire that person — you’re paying as you go. They work for a week and you pay for that week.
If you’re not getting back what you need from them, you stop paying. So, you’re not out $50,000; instead, you’re risking maybe $2,000. When you pay for work and find you don’t get a profitable return for that investment, you end the relationship.
If that happens, you shouldn’t say, “Well, that didn’t work.” You just got the wrong help. It also isn’t about judging that person for who they are as a human. They are capable of doing something amazing — they’re just not amazing at helping you. Many originators have a hard time separating a person’s work ethic from the results they produce.
As the old saying goes, if you judge a fish by its ability to climb a tree, that fish is a failure. The reality is, it’s not a bad fish. It just means a fish isn’t designed to climb trees. So, when somebody comes to work with you and doesn’t pan out, you’re not saying they’re a loser. There is simply another opportunity waiting for them that matches their skills.
When you pay for work and find you don’t get a profitable return for that investment, you end the relationship.
You might be ready to hire help but wonder, “What if it doesn’t work out? What if I hire, start paying and go right back to my normal closing rate?” Every successful originator has had a similar mental conversation.
First, if you think you need to plan for your business slowing down, it’s going to slow down. You create what you think.
Say that your normal workload is four loans per month and you’ve doubled it to eight per month. When you think, “Wow, but I’d better prepare to go back down to four because that’s who I am as an originator,” you’re stuck in an old pattern. The real question is, how can you make what you’re doing now your new normal? You’re not going to base your activities on backsliding to four loans. You’re going to base activities on your new number. Your new helper should make sure of it.
Second, nobody likes to think this way, but if you hire and it doesn’t work out, or something catastrophic happens (hello, 2020), you’re not married to that person. You may have a spouse or partner, but your hired helper is not that person.
If business slows and you need to reduce staff, keep who can bring in the most money. It’s not about who has been around the longest but who can most proactively grow the business. Whoever helps bring in the most revenue gets to stay. As long as every team member knows that, the right ones will look to see how they can bring you the highest return. They’ll know that if they aren’t profitable, they’re not going to stay.
When you hire somebody, it’s not your job to make sure they have a job. That’s their responsibility. It also isn’t about you making sure they’re busy enough. It’s their job to help bring in enough loans to ensure they have a job.
As a loan partner or processor, that helper should be speaking to real estate agents, borrowers and title-company representatives. Their job is to ask these people for more business. When they’re doing that, you can close more loans and they get to stay on the team.
Do you want to bear all of the pressure to make sure they stay busy enough? Of course not. That pressure is devastating. Many people don’t want it, so they stop growing their business, keeping it small and manageable. The better solution, however, is to make sure everyone is clear about the responsibility to do the proactive things that bring in more loans. When they do, it secures their position and yours. If they don’t provide that kind of job security, they are not in the right opportunity.
Everybody has gifts and is amazing at something. Give people the opportunity to find out if their gift is in your company. If so, great. If not, let them go so they can find a new opportunity and the thing they’re amazing at. There’s no judgment. Nobody wins if you hold onto somebody who’s not keeping you profitable. Instead, let them go find the thing that’s going to make them happy, profitable and successful.
If you don’t have enough help right now, you’re working harder and longer, feeling crazier and making less money.
Your mindset usually needs an important shift around the differences between expenses and investments. Your team does not cost you money — they make you money.
Let’s say the average payout per loan is about $2,000. If you typically handle five to seven closings per month, a new assistant should give you another five to seven closings (with less sweat and headaches), which is up to $14,000 in additional monthly revenue. This means you’re closing $14,000 beyond what you could do on your own, of which your assistant might get $4,000 and you get $10,000. It’s a no-brainer when you think of it like that.
If you don’t have enough help right now, you’re working harder and longer, feeling crazier and making less money. Instead of paying $4,000 to make $10,000, you’re not only not making that $10,000 but, essentially, you’re paying that amount to work harder.
You are creating more work, more headaches, longer days, more evenings at the office, less time with your family and more details to track. You’re actually paying to suffer. Each month you choose not to invest in help is costing you thousands of dollars just so you can work harder and leave money on the table. It makes no sense.
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Hiring help is a mindset and an incremental investment to help you close more loans. You can have more money, more time and more sanity when you change your mindset. The first step is awareness. What will you choose? ●