WHAT’S YOUR CLOSING RATIO? REAL ESTATE AGENTS? MORTGAGE BROKERS AND LOAN OFFICERS?
Dang! Here we go again!
George Bush and the United States Congress are changing things again. And you better believe that the U.S. economy is going to get worse. First the congress bails out most every bank by allowing them to continue to borrow money at ultra cheap rates from the “federal reserve window”. (You need to google that!) And then the government bails out Bear Sterns, then J. P. Morgan, then allows Countrywide to do a sweet deal with Bank of America. I’m getting kind of tired of all of this……… but we should have know. Big banks
I want you to keep your powder dry! But keep a good aim at the target!
The mortgage crisis is about to get worse and it’s going to start on October 2, 2008 and last until at least June 2009. How do you handle this if you are a real estate agent, real estate broker, mortgage broker, or mortgage lender? Well, the key is that you’ve got to have pre-qualified prospects. People who are ready for the service that you offer!
Think about this for a moment……
I went to an all you can eat lobster fest last night. If was a fundraiser, so I felt OK with paying the $100 each for all five of us to attend. I ate like a crazed fool as did my kids! Two hours after we started, we were finished and fully stuffed!! I do mean FULLY stuffed. I didn’t want ice cream or the german chocolate cake which was complimentary….it just wouldn’t fit in my tummy!!! 
Now as we were all walking to my truck, if YOU had walke up to us with a great deal on “All We Can Eat Crabs” at a restarant in the city which lasted until midnight……do you think we would accept your offer? Of course not! We were all STUFFED TO THE GILLS! We wouldn’t have paid any amount of money to eat more food after we were finished cracking all those lobsters!!! We had no capacity for more food. Your offer was useless to us.
And so it is during this mortgage crisis. If you don’t concentrate on finding people who haven’t eaten yet, you’ll never survive!!! Now the real question is how do you go about doing this?
First there are lots of ways to help yourself during this mortgage and financial crisis. Here are three of them….
- Get more customers – hard to do in a worldwide economic crisis
- Sell more to your current customers that walk into the store every day…..but no one’s coming in the door – this may be tough as well
- Close more of the current present potential customers you speak with…. THIS IS REALISTIC!
Now that I have your attention, I’ve got to ask you…..what is your closing ratio? Heck, some of you may ask “what IS a closing ratio”?
A closing ration is a the number of people you talk to divided by the number of actual sales made.
- example: I spoke with 30 mortgage brokers yesterday and closed three of them on the purchase of the leads that I sell. That’s a 10% closing ratio.
Why is knowing your closing ratio important? Because now you can make projections in your business plan which will enable you to actually compute how many contacts you’ll need to make to earn the income that you want (or need).
For intance, if you’re a mortgage broker and you want to earn a minimum of $200,000 by the end of 2008, you can actually compute how many contacts you need to speak with to get to that level of income. And YES, you can use that calculator you have to compute more than just PITI !!!
Here we go with the calculations…..
You know that if you speak with 100 qualified prospects you’ll get a 1003 from 10 of them. Those 100 prospects need to be ready to do busines with someone who offers them great service, competetive rate and a smooth closing. (By the way, don’t deal with rate shopping – being the lowest rate provider WILL NOT get you to $200,000 by 12-31-2008.)
So for every 100 people, you get a 1003 from 10. You need to be willing to do the tough work to find the homebuyers that are actually ready to buy NOW. That’s a major piece of this puzzle. You can never underestimate the value of a potential homeowner who is ready to get a mortgage NOW.
Of the 10 apps, 2 will close. That’s a 2% closing ratio. You spoke with 100 good potential clients and closed 2. Now if you get 1 point per loan and each loan is $200,000, then you’ve earned $4000.00 BEFORE expenses. Since you’re not the type of mortgage broker that meets people in the local coffee shop, so you’ve got office rent, internet, a mortgage processor, a sophisticated phone system, and other accoutrements of the business. So that $4000.00 may sound good to the average Joe, but it doesn’t even allow you to be able to pay your monthly expenses.
In order to earn $200,000 by the end of the year, you need to earn $33,333 per month this month and every month until the end of the year!!! Lets just make it a round number and aim for $40,000 per month! You’ve got to increase your $4000 to $40,000! That means increasing everything by a factor of 10.
- example: $4000 x 10 = $40,000 per month
- 100 good potential borrowers x10 = 1000 good potential borrowers per month
- Number of applications written based on 1000 potential borrowers ……. 100
- 2% Closing ratio can stay the same (for now) equals 20
- $200,000 average loan amount can stay the same (for now)
- Of the 100 apps you close 20 with $2000 revenue each for $40,000 monthly revenue
- This is all a game……you MUST work these numbers to be able to increase your revenue.
So that is how you increase your income in not just the mortgage business, but any business. Find out your closing ratio and use that percentage to “back into” how much money you want to earn.
Don’t deviate from what you’ve read above. I’m sure you’ve NEVER had someone break it down to you like this. But this is essentially the same formula Bank of America uses in their marketing plans.
Sounds easy, but it’s not for most people because you’re tied up doing the tasks that are unimportant and doing other “busy work” so you can FEEL like they’re in business.
Get free complimentary leads to call this month to get your 1000 great propects. Send me a message and I’ll call!
Carpe Diem!
THE EIGHT OPTIONS EACH HOMEOWNER HAS WHEN FACED WITH FORECLOSURE
Here are the 8 options that every homeowner in foreclosure has available to them…
I’ll discuss each one in the upcoming days so stay tuned….
1. The homeowner can renegotiate the mortgage with the
lender and add the missed payments to the total mortgage balance.
2. The homeowner can reinstate the loan. (ay off the back payments and attorney fees)
3. The homeowner can redeem the loan and make a full payoff.
4. Give a deed in lieu of foreclosure to the lender and move out of the property.
5. They can seek legal delay with an attorney.
6. File bankruptcy with or without an attorney.
7. Sell the property at retail price or at a discount.
8. Do nothing and lose the property.
PRINT THE LIST AND MEMORIZE IT – This list ALONE is a great resource for the person who is in jeopardy of losing their home. At least now you know your options. Many lawyers won’t even tell you all of your options. At least now you know what techniques are available to you when you are in danger of losing your house.
Please also be aware that I’m not a lawyer and nothing herein is alleged, or intended to be legal advice. So don’t go out and try any technique that I might show you without the guidance of a trained attorney.
Be aware that even the most knowledgeable among us need an attorney from time to time when faced with tough situations. Foreclosue is DEFINITELY one of those tough life situations that merits the wise counsel of an attorney. Remember, the person who represents himself has a fool for a client.
If you need to stop foreclosure, be sure to ask for help. There are people who will help you. Don’t keep your situation a secret until the day before the foreclosure auction.
I’ll discuss some specifics on how to renegotiate your mortgage with the
lender and add the missed payments to the total mortgage balance.
No out of pocket costs to you!
Stay tuned!
Need to check the value of your Home?
Check http://www.zillow.com to check the value. Just enter your home address or the address of any home and you’ll get a very accurate value that is similar to an appraisal.
I hope this helps someone in forclosure.
That’s it for today!
Talk to you soon!
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