Revolutionary One-Stop Shopping Ideas Summary (March 2010)
Revolutionary One-Stop Shopping Ideas
The following "Revolutionary Ideas in One-Stop Shopping" were presented by RESPRO® members during the Opening General Session of RESPRO®`s March 8-9, 2010 Annual Conference in Las Vegas, Nevada. They all are designed to help enhance capture rates or to increase the cost efficiencies of our members’ affiliated businesses.
RESPRO® Counsel Jay Varon of Foley & Lardner, LLP has reviewed the ideas for RESPA compliance, and has noted when he is assuming that certain other steps have been taken to assure compliance that were not specifically stated in the summary of the idea. Naturally, RESPRO® advises all members to seek the advice of legal counsel proficient in RESPA and relevant state laws before implementing any new program involving referrals of settlement service business.
Engaging Your Administrative Staff to Drive Capture
Jon Coile, CEO & President, Champion Realty
At the end of 2008, we were not able to give our administrative support staff our customary year-end raises due to our disappointing results in the challenging economy. I called a meeting in January 2009 with all my office secretaries to get their help. I singled out one of the office secretaries, Tina, and pointed out to her that when a loan officer from outside came into her office and took a mortgage, that loan officer went down the street with that business and his secretary got a raise. Tina and the other secretaries suddenly got it. Their raises had walked out the door with the mortgage business that went to the competition because their agents weren’t fully supporting our affiliated services. I then told them that as CEO I may have 20 interactions a year with an agent; the office manager may have 200 interactions; but that each of them is likely to have 2,000 contacts with agents annually as they fix copier jams, take messages, distribute faxes and generally take care of our agents. I said “You have more impact than me. You need to let the agents know that supporting our affiliated companies is in all our best interests as we are all in this together.”
In 2009, our mortgage capture rate went from 25% to 34% and our title capture rate also went up. By the end of the year, we had exceeded budget and all expectations for our family of companies and were able to give our secretaries raises and a $500 bonus based upon our overall performance. We’ve never done Christmas bonuses before, and it was a big hit.
Jay Varon: This is essentially using persuasion and should not be a problem. If staff were directed not to offer services to those agents who did not support certain affiliated entities, a RESPA issue might arise.
New Real Estate Agent Tool Kits
Steve Barker, Prosperity Mortgage, Long & Foster Companies
Whenever a new real estate agent joins my Long & Foster office (and we expanded it to transfer agents) I have a “New Agent Toolkit” to give to them at our initial meeting. The toolkit contains some tangible items that they can use such as tape measure, a calculator, a flashlight as well as some pens and sticky notes. There are a few non-tangibles as well, which include a script on how to introduce the affiliated mortgage company (agents are told to use us, but no one ever tells them what to say) and a credit report request sheet so that they know what we need in order to begin counseling a borrower. There may be some other items that we use as well in terms of promotional literature.
Jay Varon: We presume the script for introducing affiliates includes a statement that the consumer does not have to use the affiliated company.
Measuring Closing Effectiveness Instead of Capture Rates
Stefan Peterson, Directors of Operations, ZipRealty
Rather than emphasize capture in our communications to our sales organization, we focus on the results our core business alliances provide.
Results are defined in terms of:
1. Closing ratio (i.e., minimizing cancelled transactions)
2. Customer satisfaction
3. Agent satisfaction
We survey customers and agents upon completion of each transaction. Customer response rates are very high, on the order of 80%, so we are getting rich data there.
With this information, one of two situations occurs:
1. We are able to make statements to Sales such as, “You should always recommend our alliance lender to customers because their closing ratio is 90% rather than the 80% we see for other lenders, meaning you will close more deals with our alliance. In addition, customer satisfaction is 15 points higher using the alliance, which will lead to more repeat business and referrals. Lastly agent satisfaction is higher too. Given all that, why wouldn’t you want to keep your business in our alliance?”
2. The alliance results lag other lenders/core business providers. In this case we provide our partner detailed and actionable feedback to improve. When the partner engages the issues using this information, this brings us back to scenario 1 above.
Either way, ZipRealty and its customers come out ahead. The bottom line is in the long run capture follows results, so we focus on the results.
Achieving Strong, Lasting Relationships With Your Partners
Lynette Hale-Lee, Senior Vice President, Prospect Mortgage
The list of strategies and tactics that can be employed to drive capture rate in Affiliated Business Arrangements, as most of us know, is endless. I, like most, have my list of favorites and that`s a pretty long list as well. However, after years of working with and along side ABA Partners, I consider the #1 innovation I`ve used in making the affiliated mortgage businesses which I`ve been involved with more successful is a combination of 1) setting mutual expectations up front, 2) achieving consistent cultural alignment and mutual accountability between Partners, and 3) reaching deep down into my heart of hearts, the absolute depths of my intellect, and exhausting my personal capacity to trust, listen, empathize and truly understand what`s important to my Partners, their teams and their customers.
Accomplishing this invariably leads to strong, lasting relationships. These relationships then have at their foundation a more motivated sales force, accurate performance measurements, increased capture rate, mutual support of affiliated services, more efficient operations, high customer satisfaction rates, and ultimately of course increased revenues, reduced costs and greater profitability.
When all of this is in alignment, there is also a pure joy in doing business together and great personal inspiration and satisfaction in knowing that someone else`s world is a little brighter as a result of the synergies created. Some of my closest business relationships have been formed throughout the years within the Affiliated Business Arrangement arena...to the point that trusted and lasting friendships occur. These relationships often become strong enough to make having a good old-fashioned, candid debate over primary strategies or day-to-day operations, often from entirely different perspectives, a possibility and a reality. Through the positive energy created through candor, trust and mutual respect, great ideas are formed and mutually implemented, often taking me and many of my Partners to the next level in terms of our own strategic thinking, effective relationship building, and successes in providing One-Stop Shopping services to our mutual customers.
We all know the high average failure rate within most Affiliated Business Arrangements. Yet, when executing on all cylinders with the right spirit, these businesses have been some of the most gratifying experiences of my career. I look forward to that being the case for years to come.
Although not for the faint of heart, I would recommend the Affiliated Business Arrangement arena to anyone looking for that deeper, more rewarding business experience that ultimately leads to both greater professional and personal fulfillment on top of all the benefits that come with running a successful business with a trusted Partner.
Expanding Your Markets by Using Your Core Competencies
Rosey Koberlein, CEO, Long Companies
In 2007, Long Companies began seeking a viable way to grow into the Phoenix market, and was subsequently contacted by a Phoenix-based competitor to explore opportunities for a possible tuck-in and acquisition.
We helped the competitor understand “core services” could be a great way to increase the revenue line of a real estate company. It became evident that the answer for both companies was a sub-joint venture: Long Mortgage would manage the competitor’s mortgage company – the first company in Wells Fargo/HomeServices Lending history to do. Rather than contact Wells Fargo directly, the competitor contacted Long Companies because of the company’s successful history of operating a mortgage company.
This was a win-win for both companies, as the competitor could focus on what they did best – run a brokerage company – while Long Companies could focus on what they did best – run a successful mortgage operation.
HomeServices Lending has mastered their customer service. Long Mortgage has our own fulfillment (processing, underwriting and closing) team that works only with us. Our business is their business. Service is what makes us stand out.
Impressed by the fact that Long Companies had boasted a successful history of operating a mortgage company within a real estate company – with one of the highest capture rate in HomeServices Lending and second highest capture rate overall throughout the country – the competitor greatly appreciated a mortgage company run by people who actually understood the real estate agent.
Managed by Long Mortgage staff, the competitor received the benefit of being backed by a national bank, but run by local management who knew mortgage and real estate in the Arizona market – at no additional management cost to them.
As revenue flowed into the competitor and Long Mortgage companies (split 50/50), Long Mortgage (under the name Phoenix Mortgage Advisors in this case) was able to expand its market in Arizona while able to show the competitor’s management team the culture of Long Realty Companies.
In the first six months of business, the venture made 71 bp, including all start up costs. The venture closed 48 transactions with very little expenses, keeping the profit per loan high.
This partnership gave valuable time to the company to work with us. The competitor successfully integrated as a full-franchise operation of Long Companies in December 2009, with plans to open similar sub-joint ventures in Title and Insurance in 2010.
Jay Varon: We presume the competitor`s mortgage company is a real entity and complies with HUD’s Sham Joint Venture guidelines.
Taking Your Core Services Meetings to the Branch Offices
Rosey Koberlein, CEO, Long Companies
Once a month, our “core services” staff traditionally had met to discuss new programs, issues, marketing activities, and so on. Last year, we decided that they would meet at our real estate branch offices and have our branch manager and loan officer for that office attend. These meetings proved to be very successful and have helped diminish miscommunications and unnecessary competitiveness. In fact, our branch managers have since asked for a real estate agent representative to sit in the meetings. It was a small tactical decision with big results.
Managerial Bonuses for First Time Referrals
Stuart Elsea,President, Realty One
Our managers receive a small bonus for each agent in their office who uses our mortgage, title or insurance affiliates for the first time. This applies to existing agents who have never used our affiliates and to brand new agents to the company. The manager will receive $100 if an agent has a closing with John Adams Mortgage, $50 for a closing with Capital Title and $50 for a closing with Insurance One. Three bonuses will only be paid one time for each agent. So, if a new agent to the company has three closed deals with John Adams this year, the manager will only receive $100 on the first deal. Each of the three bonuses are independent of each other, so a manager may receive one, two or all three bonuses on the same agent. We pay out the bonuses monthly at our managers meeting.
Jay Varon: We presume the managers are “bona fide” employees and that the bonuses are not reimbursed by the affiliated mortgage, title or insurance company benefiting from the referral.
Introducing New One-Stop Shopping Metrics
Andrea Zimmerman, Strategic Consulting Partners
Now that the industry has evolved to a more mature level of mortgage and title cross-sell, there are three important metrics to focus on beyond the standard mortgage and title capture rate percentages. Over the past two years, many in the real estate industry have realized strong mortgage and title capture rates – ones that some thought they would never see. Often when a goal is attained, some feel like “I’ve made it” and can now rest. One way to prevent stagnation in cross-sell initiatives is to change up the metrics.
Instead of focusing only on a silo view with traditional mortgage and title capture rates, consider evolving company metrics to include measurement of the team’s delivery of one-stop shopping. It is not uncommon that upon initial analysis, a company with healthy individual capture rates will uncover that clients are using both title and mortgage at a much lower rate than expected – this could be a great “low-hanging fruit” opportunity. This is especially true in markets where both title and mortgage are measured off the buyer-side transaction.
Metric: % of Buyers One-Stop Shopping. This metric helps answer the question, “How many of a company’s buyers are one-stop shopping by using both mortgage and title services?”. If one-stop shopping is as valuable to agents and their clients as surveys have reported, it’s time to measure and report back how well the company is doing at capturing both pieces of business from a given client. Many real estate companies with accounting systems like DPN or Loan Wolf are already entering mortgage and title company data for each transaction. Others have access to transaction level detail in their title and mortgage systems. Analyze this type of data to determine buyers that used both services. This number divided by the total buyers is the percent of your buyers that are one-stop shopping. Depending on the market, cash might be deducted and the company may want to also measure the sellers that are one-stop shopping.
The one-stop shopping metric can make a great rallying sound-byte for agents – much more so than individual mortgage and title capture rates!
Metrics: % Mortgage to Title and % Title to Mortgage. These two metrics help answer the question “How well is mortgage introducing title and title introducing mortgage to clients?”. For the business that they receive, mortgage and title sales representatives are in the best position to make sure a company’s other services are introduced to the client. It’s time to measure how much of mortgage’s business is also closed by title and how much of title’s business is also funded by mortgage and to create accountability metric based goals for these two groups. These metrics can be derived by either systematically comparing mortgage and title data together monthly (customer name/property address), or using real estate system accounting data when mortgage and title is captured by transaction. For % Mortgage to Title: take the total number of inside mortgage clients that also closed with title over the total number of inside mortgage business funded. For % Title to Mortgage: take the total number of inside title clients that also funded with mortgage over the total number of inside title business closed. These two metrics can help bring mortgage and title together in a way that encourages a one-stop shopping focus versus individual, silo results.
I am in the process of introducing these metrics in 2010 and do not expect to see specific, measurable results until next year. For those that have been exposed to these metrics, it has resulted in an “ah ha moment” creating increased communication, business planning and more regular meetings between mortgage and title.
The Home Court Advantage
Bill Stewart, AVP/Regional Manager, Prudential Fox & Roach/The Trident Group
We are in the midst of presenting to our offices “The Home Court Advantage”. It starts out with reviewing all of the tools (i.e. technology) that has available for the real estate agent to utilize in order to be successful in this upswing market. It then goes in to how many referrals you receive for a WOW type of transaction vs. when something goes wrong (people love to share misery).
We use examples such as:
* Attorneys doing the Title work and completely overshadowing the agent and actually pushing the Realtor aside (this unfortunately happens). We have heard of cases where the real estate agent was not allowed in the settlement room.
* Insurance agents who throw our Mortgage Company under the bus
* Mortgage Companies that do not fully cooperate with our Title Company
We then have a video from our top producer “Mike McCann the Real Estate Man” – we give his stats on production and national ranking (#13 in the country). He has real impressive numbers. The video is approximately 5min long with 3min devoted to how he became successful and what he recommends for others to do if they want to be truly successful. Then he goes into the only way he do the amount of units he does is to control the transaction and he speaks strongly of his use of Trident Mortgage, Title and Insurance. When we have the ball he can concentrate on his next transaction. Mike is full of energy…he really gets the point across for us.
The big message of the presentation is how the Trident Group will go above and beyond to help our agents be the professional in the center of the transaction. When everything is said and done – the buyer will remember the positive experience they had with that particular agent!
The Passionate Referral
Bill Stewart, AVP/Regional Manager, Prudential Fox Roach/TheTrident Group
I have attached a program that we rolled through our offices 2 years ago named “The Passionate Referral”. It is based on helping our Realtors understand that if they feel strong about the service provided by us and they can articulate this feeling to their clients; they truly can make a difference. Basically, if you love what we do – please don’t keep it a secret – let your clients know, with Passion!
Our Closed Capture as of December 2007 was 43%; we rolled out the Passionate Referral January 2008, Our Closed Capture as of December 2009 was 51%. The coined phrase “Passionate Referral” has become part of our culture.
The SmartClosing Calculator
Julie Han, Vice President, Business Development, Closing.com
The SmartClosing Calculator is a quick and easy tool to estimate buyers’ closing costs and sellers’ net sheets in just a few clicks. Rather than basing estimates on national averages, the SmartClosing Calculator uses Closing.com’s proprietary technology to deliver more precise rates for settlement services such as title insurance, closing attorneys, home warranty, home inspection, and pest inspection companies. Users can get an instant estimate of monthly payments, closing costs and cash needed to close, or net proceeds with data customized to each transaction.