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Purchases and Refis: the 70/30 Approach

When it comes to balancing purchases and refinances in your mortgage business, what’s the sweet spot? For me, it’s 70% purchases and 30% refis. 

Even in 2020, when rates were dirt low, I didn’t try to pull my refinances down to 30%; I just tried to up my game on my purchases. If I hear people say they’re 95% purchase, I don’t see that as impressive. You just left 25% of your business—$200k or $300k—on the table. That’s not cool. 

Let’s say I’m at 60/40 (60% purchase and 40% refi). In this case, we’re doing great on the refi; we just need to step up our game on the purchase. Don’t stop doing the refi. Get the right team members in place, and work more efficiently. 

Now let’s say you overshoot it, and you’re at 75% purchase and 25% refi. So you double down on the refinances. It starts to be this stairstep kind of thing. I call it the stairway to heaven. You never go down or hold back. You just elevate the one that’s below where it should be and keep climbing. 

I sat down recently with my dear friend, Steve Kyles, for a conversation about the 70/30 and shifting our perspective on our loan officer goals. 

Add to Your Team So You Can Help Everybody

If you’re turning down refis, because you’re just “too busy,” you’re not only leaving money on the table; you’re leaving a lot of families stranded. Instead of them being in your team’s capable hands, you’re going to let some unscrupulous person “help” them. And you’re keeping your own family from the income you could have earned.

I’m not talking about working more loan officer hours. I’m saying it’s time to hire another person. Or more than one person. Yet, when I tell people they need to hire, a lot of folks are hesitant. Why wouldn’t we hire somebody or delegate out something we’re already not doing? Because we’re scared. If I hire somebody, I’m responsible for them, we think. We would rather not take that risk. We’re afraid last month was lucky. The fear of “what if” paralyzes you instead of the possibility of “what could be.” 

Yes, you’re going to have bad hires. Maybe one in four won’t work out. Two months ago, I encouraged Steve to hire two more loan officers, and he did. One worked out, and one didn’t. That’s just how it goes. We don’t give people a job; we give them an opportunity. That’s a whole different level. When I walk in to see my team in the morning, these people are battling alligators, taking bullets for me—not in the chest, but in the arm or leg. They count on me to make sure they have job security, right? They count on me for that. And I count on them to earn their keep and make the company money.

We think hiring people will be a headache, but it’s actually the reverse of that. The hardest business of all is a business with just one employee. When you take a day off, or you’re sick, or you break your leg, what happens? Work stops. Money stops. If you have a team, then missing work isn’t an absolute tragedy; it’s just a minor inconvenience, if that. The bigger your team, the less impact your absence has. It’s our job to have the vision of what needs to be done. Pay people a monthly salary, and they’ll help increase your business exponentially. 

Do You Need More Leads or More Conversions?

How do you know if you need to get more leads or just convert more of the leads you already have? If you’re closing 25-30% of your leads, that’s a sweet spot. If you’re lower than 25%, don’t get more leads; improve your process to convert more of those leads.

My branch that I oversee closed $1.7 billion last year. One of my strategies to get there was the “Just Ask.” We do our Just Ask calls on Tuesdays, and they’re how we convert the most pre-approved and lookings. If you ever have call reluctance, these are the easiest calls you’ll ever make. These people will be mad if you don’t call. I specialize in following up on leads, like green on a pickle. The Just Ask call is cloaked in an update call, and we have specific scripts we use for the listing agent, the buying agent, etc. We get so many deals this way.

After analyzing literally thousands of loan officers’ businesses, I’ve found that it’s rare that somebody is totally screwing up. Almost always, it’s small little tweaks they need to do. It’s the difference between night and day. Have you tried this one extra call, this one extra activity? Have you tried this call to action? Are you saying x at the end of the call? It’s usually so simple, a very easy fix.

Don’t Waste Your Database

There’s so much money to be made in our past database. I had someone ask me once, “If I have 1000 people in my database, at what point do I stop calling and emailing them?” 

My answer: never. It’s an ongoing relationship. Somewhere along the line our paradigm got skewed to where we think that checking in with people is adversarial or salesy. Nope. It keeps you top of mind. If one or two say, “take me off your list,” you do it. It’s okay. You have 998 more. Never stop doing something because two people in a room of a few hundred are booing. The loudest boos come from the cheapest seats. Just show them to the door. No worries.

Steve’s approach is to have a full-time person doing nothing but working on his past database. We have some people in our Freedom Club who have two teams, one working on purchases, one working on refinances. They’re independent of each other and both just growing stronger and stronger. 

When I helped someone get a loan to buy a house, I told them I would take care of them, and I meant it. I said I’ve got your back. I’ll make sure I treat you how I would want you to treat me. That’s how I do business. If someone has an opportunity to refinance and save money, I’m being selfish if I’m not reaching out to them and telling them, “Hey, you could save $100, $200, $800 a month.” It’s more than a mortgage. I’m in this with them for the long haul. 

Growing your business, doing more purchases and more refinances means you can help more and more families. Not just with their loans. You could set up a scholarship program for students who can’t afford college. You could help feed people who are hungry. Whatever need you see in the world, you can help meet. This is way bigger than you. 

Making a million dollars is cool, but what’s really cool is what you can do with that money. Think of the effect you can have on your family, your extended family, your community, and the world. 

We’d love to help get you started down that path to working less hours, closing more loans, making more money, and helping more people. Need some loan officer scripts to help you ramp up either your purchases or your refis? Schedule a FREE strategy call with us TODAY.