One of the most common struggles that most originators face when dealing with the consumer is what we refer to as “the shopper”.  Especially today in the “EBay Era” which reminds me of the old days in Mexico when you would go to the marketplace and barter with the local merchants.  The picture you see is one of the most important power point slides we used in teaching originators how to maximize conversions and profit while reducing stress. For years every seminar was touting you need to be in the advice business not the price business and everyone wanted to jump on that band wagon but no one really had a strategy to do it. All of the best sales and marketing guru’s out there said that education based marketing is far more powerful than just selling. Chet Holmes the author of the Ultimate Sales Machine states “you will attract way more buyers if you are offering to teach them something of value to them than you ever will attract by simply trying to sell them your product or service”. To take that a step further the earlier you’re involved with the client the much more valuable they become to you. At Majestic we found them to be much more loyal, refer many more people, and generated a higher profit with much less stress in the transaction. When we first figured it out that this is the arena we wanted to be in we had to determine “the hook” to get them to now agree that they should involve a mortgage person when homeownership was just a flicker of light in their goals. I still remember the most powerful flyer we used that had a headline that stated “If you just need a mortgage DON’T CALL US!” The message that sent to the consumer that the mortgage takes a little more planning than just applying and getting approved, it was much more strategic. Which product, points or no points, how much down, do I use MI or an 80-10-10. Today we created the Path2Buy program to give originators the biggest reason to get involved early with the consumer, more specifically the most valuable home buyer, and the renter who has never owned before, what we refer to as the P4. Today it is more important than ever to get involved early with the consumer. With this Generation Y renter, trust needs to be built first before the relationship can go any further. Let’s take a detailed look at the slide. As I referenced earlier seminar leaders were saying you need to be in the advice business not the price business, the dilemma was here, when did you get involved with the consumer?  If you got involved from the contract date afterward, what we call the commodity zone, what does the customer need here, a mortgage, not advice! Even if you want to be in the advice business the consumer only needs a mortgage then. That’s why you get a call at 9:00 on a Saturday night from your best Realtor for an emergency pre-qual. This makes most originators hate doing business with Realtors; you’re treated like a vendor. If you don’t stop and do the pre-qual they call one of the other 3 cards they use. I’ve always taught if you truly are partners the originator needs to be involved at first inquiry, way before its even time to write a contract. The other thing that happens when you get the chance to do the mortgage in the commodity zone is the consumer is not of sound mind and body. They’re thinking about school enrollment, home inspections, movers, and which color paint to use for the kids bedrooms. They’re mind is not ready for advice, that’s why they are in shopping mode treating the mortgage as a commodity. Education based selling is crucial in today’s day and age especially for the knowledge thirsty generation Y’er that will analyze long before it comes time to write the contract. Always remember they are in search of an expert in the mortgage business that they can trust to handle the single largest financial transaction of their life.

The question that keeps coming up today is do I meet face to face with my customers or do I want to do business online? I think I have found the best answer from the book The 7 levels of Communication by Michael Maher (which I highly recommend ).

Maher says that if you’re just providing information, as you see in what he calls the informational zone, it’s fine to communicate electronically, with direct mail, or advertising. When you want to be in the influential zone, handwritten notes, phone calls, events and seminars, or 1:1 meetings create much more influence. The highest impact is a 1:1 meeting.

When we first set out on the journey of the path2buy, one of the things that we discovered was how much further our certified coaches get with a face to face meeting, especially when it was designed to do what we call “set your meter”. A custom evaluation showing exactly where the renter is with their ability to buy, not necessarily their will to buy. This meeting is designed to get them on the path2buy a home, not to jam it down their throat with logical arguments like “look what a great time it is to buy a home” or “look at how low rates are” .The gen Y’er knows those tricks and takes a deaf ear to those tactics of old. In my research I also found, that after mortgage melt down the consumer didn’t know who to trust anymore. They were skittish about talking to mortgage people due to the mess that they’ve just seen. I created a training system on what I call T.E. L. L. this stands for Trust, Empathy, Logic, and Long term thinking. The order here is critical. When you meet face to face the amount of time it takes to establish trust is lightning fast when you compare it to trying to do this online. Seeing your office, shaking your hand, and seeing your smile goes a long way towards establishing trust. Demonstrating your empathy also relieves the stress almost immediately, you show you care and understand their situation.

Often times people ask me, why do I think this is happening so much today. My answer is that we are so connected today. Social media, smart phones, the internet blogs, emails, you name it. Just because we have so much technology, facebook accounts, or email on a smart phone, doesn’t mean we should replace that with the good old fashioned phone call. I think this is where most of us fail. Just think about it. If someone calls you up and wishes you happy birthday do you value that more than the 274 posts on your facebook account saying happy-b-day?? Folks if this was all about the internet why have concerts not had any setbacks? Prices have gone up and events are sold out. Can’t you just listen to U2 on your ipod?

The mortgage is the single largest financial transaction of their young life, and you think they want to do that over the internet? Remember when it comes to family, money, or a home, don’t take it lightly. The relationship is always stronger when you build trust face to face.

Here you see a picture that I saved from a Majestic Mortgage sales meeting back in October 1995, 16 plus years ago. Isn’t it interesting how some things, which represent the core of any business, stand the test of time?

In my example, leads led to what we called sits or “consultations”, which led to apps, which led to closings, which led to money which eventually turned into referrals or future business from that same customer. The lesson that I was teaching then was the one with the most leads would win the game.

I learned this lesson early when I began my journey as an entrepreneur. I spent sometime researching why companies fail. It ultimately came down to lack of leads. Now it’s a little different if you’re a restaurant because the time frame is so short between the time your prospect goes from lead to a customer. I still remember spending some time with a commercial guru in site selection for food chains. We were driving by a location in Lake County Illinois, and he said see that location right there, it will fail. I thought no way this will fail it was a McDonalds. Sure enough 2 years later it closed and re-opened in a different location with better ingress and egress and still exists today at that same location. Eventually the old location was torn down and sold as a vacant site. Why did it fail, lack of leads! What he was saying is that old location will fail because of poor access, what is commonly referred to as ingress and egress. What’s the parallel to other businesses? The location determines how many chances they get to perform. Less traffic created less chances or as I call it less leads.

Let’s now look at the mortgage business or for that matter the real estate business, they both had the same situation. Back in what I call the roaring 2000’s, leads were in abundance. On the refinance side, rates went from 7 to 6 and then to 5. Folks were taking out equity loans, refinancing for cash out, plenty of leads that led to plenty of dollars. On the purchase side people were buying second homes, moving up into bigger homes, buying there first home, again plenty of leads led to plenty of dollars.

Too many companies were relying on the economy as their marketing plan. Fast-forward to today and lack of a marketing plan is the Achilles heal for both the real estate and the mortgage business. The mortgage business has a little advantage because it has the ability to take their existing customers and refinance them, the real estate business does not have this luxury. They must survive on strictly purchase business. When I took my 90 day sabbatical back in late 2010. I spent a great deal of time dissecting both of these markets.

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I’ve made a decision to rekindle this blog. I’m not quite sure where this got away from us but we have tried other sites and this appears to be the most effective. We are going to start out with 2 posts a month and are going to be directing these toward salespeople with a slant towards the mortgage business. many of these tips will be able to be applied to any business. so stay tuned.

We will post these like a paycheck on the 1st and the 15th. Please share your comments as well and get one of our RSS feeds so you get immediate content when published.

Thanks again.

Tom

Do you want to know why? 

Someone asked me the other day, “Tom how many originators do you think won’t make the same amount of money in 2011 as they did in 2010?”  I thought about it for a minute and said MOST WON’T. But the reason isn’t because of the buzz in the market place regarding LO compensation changes on April 1^st with the Dodd Frank Bill; it’s because they don’t know how to build a list. Let me explain further of what I mean.

If we look back at 2010, nationwide, most companies had a very unhealthy refi to purchase ratio, some as high as 90% refi. As I’ve said countless times over the years one of 2 things will happen in any refinance market, “either we will refinance the world at 4%” or rates will move up that it won’t make any sense to refinance. We have seen the latter come true over the last few months. I want to point out here that this is way different than any other aftermath of a refi boom. This time we just can’t turn on the faucet go call on Realtors and focus our attention towards purchases….why…because that market is struggling.

There are a tremendous amount of consumers on the side lines. Some for the right reasons but some still have this feeling of uncertainty.  When I asked myself why is this rearing its ugly head today? Here’s what I found, I don’t think any originator ever HAD to go build a list (some refer to this as prospecting) in over 17 years! Let’s think about it.  In 1994 rates were at 9% on a 30 year fixed rate. 1995 rates dropped to 7.5%. The days of the fashionable ARM’s and balloons 7/23 and 5/25’s. The early 2000’s had a drop to 6%. The mad rush with everyone buying houses in the early 2000’s the boom years for purchases, and now the recent drop to the 4% range for 30 year fixed last year. Over all 17 years there was either a steady supply of refinances, a conversion of adjustable to fixed, or a boom time for all purchases.  Today it’s a whole new ball game. The single largest reason the originator is not going to make their goal will be their lack of ability to build a list. What we call in our path2buy coaching program, step 1 in the 3 step process. What we teach is a step by step approach from list building to sale.

Let’s look deeper into list building. Let’s take our common theme of a renter who has never owned before. What are we going to do to generate this type of prospect? We teach the 3 ways of doing this, consumer direct, database, and lead sources. Let me give you a few examples of each. Consumer Direct – here is where we take the consumer video of the 7 and a half reasons of why the real estate market is stagnant, and build a campaign around requesting that video. Whether that is a mailer, a seminar, cold calls, lunch & learns, or just good old fashioned advertising, the call to action is always the same, request the video. The database is going to be used here for more of what we call “who do you know”. Reaching out to your existing clients and seeing if they know of any what we call P4’s, the renter who has never owned before. Then the third way to build your list is through lead sources. Some might refer to this as just Realtors or what the internet marketers call affiliates. In their world this is where you cross over into another’s list and gain some monetary benefit through an affiliate commission. In our world that would be a RESPA violation. Lead sources allowing you access to their list is being done because whether they have a vested interest in their consumer purchasing a home like a Realtor or might just be a value add. The originator, who doesn’t know how to build a list have done nothing wrong, there just wasn’t enough time or maybe better said, wasn’t needed to prosper. In retrospect if they had it all to do again they might have done it exactly the way they did over the years. In 2011 it is crucial for success to learn this lost art of prospecting. Thanks again.

To watch some of the path2buy videos go to pathtobuy.com

Many of our clients have been asking that I link all three Path 2 Buy videos into one.  Here you go.

Included are the 7 1/2 reasons of why the real estate market is stagnant, what the originator and the Realtor can do about it, and a brief description of what the Path 2 Buy Program includes.

After watching please post your comments.

Happy New Year and together we can make 2011 the best year ever!

Why is it that some folks feel as though they have earned the right not to go out and engage with their customer? This seems ludicrous. Whether your excuse is “been there done that”,” “I hire people to do that”, “I’m way beyond that”, or your just scared to get back in the field and re-engage. You need to rethink those thoughts.

The business world is changing every day, faster than ever, and you as the leader of your organization need to get a “real time” pulse on what’s happening with your customer. I’ve also found over the years that the leader who is not engaged becomes a manager who manages from a defensive position. Getting sold a bill of goods as to why things aren’t working right, why sales are down, why we can’t convert, the software is too slow, and on and on. When the manager gets real time information they can react offensively and get the whole company either on track or on a different track altogether.

I want to site two situations that are great case studies for this.

The first is a company called Mariano’s Market Fresh a grocery chain with three stores in Chicagoland. A new store is coming to my area in May 2011 and I thought I would drive about 30 minutes to see what the experience would look like. I was blown away. My wife and I could not believe the quality of the store and the selection that it offered. We spent almost an hour IN A GROCERY STORE! I can’t think of a time that has ever happened to me in the past. As we proceeded to check out I engaged with the cashier and said “What a pleasant experience it has been, this is our first time here” and she replied “you should tell the owner, he’s bagging groceries on the next register over.”  WOW, did he need to be doing that? Based on the size and the success of the store, I know he didn’t NEED to be doing that. His engagement made that a better store.

The second is my friend Jimmy John. Jimmy has over1400 franchises now and I knew him when he had less than 50. I recently saw one of his newsletters and he talked about sales dollars per student per week on his college campus stores, similar to the Good To Great reference of Walgreens. What Jimmy found is that some of his franchises wanted to expand their markets wide instead of deep.  What Jimmy advised was in order to increase the dollar per student per week ratio they needed to expand at that campus instead of going outside the territory, solid advice from Jimmy.  Jimmy and I talked recently and he mentioned that he personally visited over 60 stores nationwide over a 4 week period.  Another hands on experience by the majority shareholder of a billion dollar company.

The moral of the story is this. Make sure you know what your customer is experiencing first hand. Get out in the street where the rubber meets the road even if you are the owner. You will find out some things about your company both good and bad. Savor the good and get rid of the bad…..offensively!

I’ve been getting several calls and inquiries asking, “What’s going on with your blog? You used to post weekly, why haven’t you posted?” Let me tell you what’s going on here at Majestic Consulting. Over the past couple of months I’ve been working on a project that is near and dear to most of you. Why is the renter not moving in today’s perfect environment for ownership? Not only have I found out why I but have committed to creating a product for the mortgage and real estate industry that will revolutionize the mindset of how to handle this renter. I have a huge concern that mortgage companies, and their salespeople, are relying heavily on the refinance business and we all know that this will come to an end….again. We don’t know when but it will happen. As I say, one of two things will happen; we will either refinance the world by getting everyone a safe 4%, or rates will move up and it won’t make sense for the consumer to refinance.

Our program should launch early December so stay tuned for the details. Now if you could do us a favor and read the 7½ reasons and post a comment, especially if we are right on target in your market.

The following post is what I call: 7½ reasons of why the renter is on the sidelines.

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The media is at it again. More Mis-information. Instead of talking about it, I’ve decided for you to see for yourself!

People who don’t understand the path to purchase for a homebuyer are missing a big opportunity. And by opportunity, I mean “sales”.

The first step is “Should I buy a house?” There is no particular property in mind at this point. The individual is mulling options: rent or own. I think we can all agree that owning a home is a far better, long-term investment, but we need to get people to look past the current housing situation. Let’s look out 30 years, home values should go up and even if they don’t the numbers still point to ownership.

The next stop on the path to purchase is “When should I buy a house?” Just as home values will increase, prices and mortgage rates will follow suit. So, buying a home now is a fantastic investment! read more…