Last week, I surveyed the top 50 mortgage sales executives on how effective their originators were at marketing to realtors and expanding their referral base. The results were eye-opening.
The majority of survey participants rated their originators less than 5 on a scale of 1 to 10 (with 10 being the highest). I simultaneously surveyed leading realtors on originator outreach and got a similar result. What does this mean for the industry as we shift to a more traditional purchase money market in which originators must rely on referrals from real estate agents to generate loan volume?
After record-high mortgage volume in 2020, the reality is that creating loan demand will be much harder this year and many originators will not be able to survive. One mortgage executive recently confided that when he asked an originator how many referral sources the individual had, the producer responded, “30 or more.” But upon further review, the originator only actually did business with five realtors. While the originator may have thought that knowing 30 or more realtors was sufficient, that is not the same as getting business from them!
What’s Behind Low Referral Numbers?
Some managers believe the problem stems from an originator’s lack of self-awareness. Others contend that their originators don’t have the confidence to carry out the activities necessary to increase referrals. And still others blame it on originators’ “call reluctance,” as if this were a disease without a cure.
I haven’t even mentioned how emotionally draining it must be for originators who are unable or unwilling to sell and get referral sources — their primary responsibility as producers!
The High Cost of Failure to Prospect
Branch managers are often tasked with trying to remedy what I consider to be an impossible situation: Changing the behavior of someone who is not matched for the role of origination. No amount of training or coaching can transform what in essence is a poor hiring decision.
When producers fail to prospect for referral sources, lenders must buy leads, adjust sales strategies or pay up for the originators who can sell and already have a large book of real estate agents who they actually do business with.
This last strategy is expensive especially when the competition is also paying up to recruit a limited number of top producers. It is no wonder that this has led to compensation sagas hoping to offset lackluster results from originators who can’t or won’t market to realtors.
None of this is new in mortgage banking. But I believe that we’ve reached a tipping point in the marketplace and that senior executives, managers and originators must address these issues before it’s too late.