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By Jeff Mandel and Steve Hamner

Last month, we began our discussion on the root causes of challenges by addressing personnel. This month, we will tackle accountability and objectives.

It amazes us to see how many real estate companies have not fostered a true sense of accountability between their real estate sales and mortgage operations. Most will have a system in place to identify the capture rate on buyer-controlled transactions and to track income and expenses. Many have some form of customer satisfaction survey tool and the ability to track cycle times and items such as "met closing date." The irony is that few firms actually take the time to interpret this information to identify challenges and opportunities.

It is important to take the time to identify what the lost opportunity was for those transactions that did not get to the mortgage partner. We have found that the best partners work together to analyze, on a monthly basis, where the business is actually going and why it went outside the partnership. This process usually instills a sense of accountability in the real estate office manager because it can provide him or her with the knowledge needed to understand the agent's motivations.

Quite often, we are told that Company X or Y is getting all of an agent's business. When we actually review the data, it is often the case that only a small number of the agent's clients are actually working with the assumed lender of choice. Once the motivating factors are identified, it is much easier to craft an approach to potentially influence an agent into allowing the internal partner to service a portion of their clients.

A thorough understanding of the important metrics of customer and agent satisfaction and the meeting of key time frames in the transaction (such as rapid loan approval and on-time closing) is vitally important to management of both the real estate company and the mortgage partner. This data can be a valuable leading indicator of looming challenges but more importantly is one of the best marketing tools possible for influencing the real estate agents.

When management has a solid understanding of how the operation is performing and is continually adjusting to ensure peak performance it is much easier to set the expectation throughout the organization that core services are highly important to the success of the company and that everyone, including the agents, should be expected to make the necessary commitment.

Limited Integration into the Real Estate Company
When discussing core services with many broker/owners they profess to understand the importance of their integration into the overall operation. After an analysis of the operation, it often becomes evident that most core services are loosely aligned at best. Merely having a loan officer sit in the real estate office and make a brief statement at sales meetings is nowhere near enough. The sense of integration needs to flow down from the top.

The broker/owner needs to be the ultimate advocate for the core services and continually striving for commitment from the office managers and agents. The leader of the mortgage operation, at a minimum, needs to be seen as a peer to the real estate office managers. The loan officers need to have a sense of accountability to their real estate office manager and the real estate office manager needs to have some influence over the activities of the loan officer.

When the loan officer speaks at sales meetings, he or she should be imparting information of value to the agents so that they can turn around and use the information with their clients. The loan officer should not be viewed as an easy target for doughnuts or lunch or as a silent sponsor of office events. When the loan officer does undertake some form of sponsorship, he or she should be showcased to the agents and allowed to derive some value for the mortgage operation out of the investment.

Gap between Broker/Owners and Real Estate Agent Objectives
This is fostered by the age-old challenge of agents thinking solely as independent contractors and wanting to do the opposite of what the broker/owner requests. In order to maintain their feeling of independence, the agent will often consciously direct their clients to external providers. We have reviewed a handful of companies that have found approaches to overcome this way of thinking.

The main focus tends to be on the creation of a cultural transformation through extensive training and coaching so that the agents begin to understand the benefits of providing a one-stop solution for their clients. It has been revealed in several studies that the consumer has less time to devote to the transaction than they have had in the past. The agent fulfills one obligation to the client by helping them identify the right home. That is only one facet of the entire transaction and the other steps are just as important to the completion of the deal.

When the client can perceive added value through the convenience of having all of the necessary services provided under one roof, their satisfaction level with the agent increases. If all of the required services are under common control, it is easier for the agent to monitor the transaction's progress toward closing and if one of these items appears to be causing concern or is slowing down the process it is much easier to communicate with the internal partner than it is to work with external entities.

This one-point-of-contact potential allows the agent to focus more time on developing the next buyer and less time on following up on transactions in process. When the agents come to understand the value to their clients as well as to themselves, the resistance tends to melt away.

In concert with the independence mentality, many agents have the misconception that the broker/owner is only providing the core services to generate additional income for him or her self. Yes, it is true that the broker/owner is in business to make money; that is the American Way.

What usually fails to be communicated to the agents is that the added income from the core services allows the broker/owner to reinvest more capital into the real estate operations to make the agents better sales professionals.
In today's world, the margins that broker/owners operate under are extremely slim. Without the additional income generated by core services, it is very difficult to give the agents an edge over their competition. When there is greater investment in technology, marketing, lead generation and training the agents can realize true benefits that improve their ability to conduct their business.

Marketing, or Lack Thereof
In the budget of any successful business you will find a well thought out marketing plan with an appropriate expense allocation for marketing and promoting the business. This does not seem to be the prevailing mind-set when it comes to core services.

In some cases, we have discovered that no marketing plan exists and the company had a very small or even non-existent budget for marketing and promotion. In others we have found various forms of marketing plans, but no one within the company has an understanding of what it entails and thus it has not been executed.

These business owners seem to feel that a loan officer sitting in the sales office is enough to create awareness and attract customers. There is no on-going investment in marketing materials or promotional activities that will create awareness among the agent's clients that a one-stop solution is available and capable of satisfying their needs.

Amazingly, even when the mortgage operation is a joint venture with a partner that has significant amounts of off-the-shelf materials available there are cases where, due to the lack of a marketing plan, there is little or no use of the items that are available.

We have found that the best performing operations have a detailed marketing plan that is followed and updated as necessary with the business cycles. The materials are integrated with those of the real estate company and provide the shared customers with a sound understanding of the options that are available within the family of companies. These firms have also integrated their websites so that the customer can easily click back and forth as they glean information.

One very important additional step these firms take is to monitor the impact of each aspect of their marketing plan to ensure that they are achieving the anticipated return on investment. This step is critical for without financial discipline it is very easy to expend valuable resources on campaigns that have no economic return.

As I often say, it's critical to know where you've come from and where you currently are before you can figure out where you're going. Instead of continuing to bang your head against the wall because of your frustration over the lack of capture rates and profitability within your mortgage operations, step back and take a good honest and objective look at what's driving the underperformance. I can assure you that the results will not materially change by just working harder and banging your fist louder on the table.

Diagnose how your mortgage company has been operating and then develop a systematic plan to make the prioritized changes based on numerous best practices that will have a lasting impact on your results. If you need help, don't wait until it's too late to seek an expert opinion from an independent third party.