Interview with Bob Williamson

The following is a transcript from an interview of Bob Williamson, circa 2003

Curtis: Hi, I’m Curtis Warner, and I want to welcome you to another in our MasterMind Teleconference Series. Today we are pleased to have with us Bob Williamson. Bob is in Albuquerque, New Mexico, where he has been coaching mortgage loan officers and branch managers all over the country since 1988.

Here’s how I met Bob; I had been talking to some of my clients who have had long-term success with our technology, picking their brains for ideas I could share with my clients and prospects. Bob’s name came up in several of these conversations, so I called him.

After hearing Bob explain his system, and after reading his course materials, I knew this was something that would make a big difference for our clients. This system, in my opinion, provides the answer to all of the problems and obstacles that you all have told me about, including:

    Realtor relationships – why they’re not as satisfying & productive as they could be, and how to change that
    What to do when the refi market goes away; when the business cycle is down.
    Why on-line mortgage companies are taking business from you and what to do about it.
    How to turn rate shoppers into customers.
    How to recession-proof yourself against drops in production
    How to get far more referrals from your clients.
    How to implement marketing systems without them being too difficult or too time consuming to maintain.

Thanks for being here, Bob.

Bob: Thanks for having me, Curtis.

Curtis: Bob, how would you describe your system? What is it?

Bob: It’s a way for a loan officer or a branch manager to master their market, and by that I mean being able to do as much business as your “team” is designed to do, consistently, month-in and month-out, regardless of whatever the market may be like at that time of year, or regardless of where the industry is in its business cycle.

So in other words, if you’re a loan officer who wants to do 10 loans a month consistently, or a branch manager who wants your branch to close 100 loans a month consistently, the system is designed to allow you to do that in any set of market conditions.

There’s only one way to accomplish that, and it starts with having a clearly superior product – something that is way better than anything your competitors are offering.

Why do you need a clearly superior product? Because when the mortgage business cycle approaches its low point, where demand is relatively low, you have roughly the same number of competitors chasing after a smaller pie. Unless you can come up with something that definitely appeals more to the consumer than what your competitors are offering, you will end up getting in line with everybody else to get a smaller piece of that smaller pie.

So first you have to create a superior offer. I show my clients how to gain the expertise necessay to position themselves as more than "just" loan officers. Of course they will do all the things that competent loan officers should do, and they do them very well. But in addition to that, they help their homebuyer clients learn how to protect themselves in the buying and negotiating process, so that they can buy the right house for the lowest possible price. When you consider the total impact on the homebuyer's financesof paying thousands of dollar less for a home than they otherwise would have, a loan officer who provides that service is providing ten times the value of a more conventional LO.

The Homebuyer Coaching service starts with the initial appointment, called the Strategy Session™. A Strategy Session is a free consultation with a prospective homebuyer, in which you provide superior value, well beyond the standard preapproval service offered by most lenders, and you earn the customer’s trust and loyalty for the resulting mortgage loan. I teach my clients how to do a Strategy Session that will make every potential homebuyer who hears about it want one.

The second part of the system is what I call your Customer Care System™. This is a written, step-by-step breakdown of your “fail-safe” system from the point you take a loan application all the way through the approval and closing process and into your post-closing relationship with your client.

On paper, it can act as a checklist of what has been done and still needs to be done on every loan file. In a contact management program in a computer it can serve the same purpose without having to physically pull files.

You design your Customer Care System to make sure every customer has a great experience, whether you’re closing 5 loans a month or 50. It is one of the things that will ultimately enable you to grow your business, because it lets you know right away when your pipeline is getting too big to handle with the people you’ve got, and it makes it much easier to train new hires to your system.

The Customer Care System integrates all of the loan processing functions with the sales and customer service and marketing functions you would want to do with every single customer -- if you and your people could just remember and find the time to do it all. The Customer Care System makes sure you remember, and you will find that when you and your people stop treating each new loan as a whole new experience, a whole new wheel to reinvent – in other words, when you actually have a system, you will find the Customer Care System probably takes less time than your current method of pipeline management.

In addition to the benefits I’ve already mentioned, the Customer Care System incorporates a continuous gentle reminder every time we communicate with the customer that we appreciate their business and we actively seek their referrals. For example, I have a client who has about 1,000 past customers in his database. Through July of this year, he has closed 55 loans from customer referrals and repeat customers – that’s an average of 8 loans a month that come in his door just because of his Customer Care System.

A properly designed Customer Care System has the same kind of impact Walt Disney had on people when he first opened Disneyland. He completely wowed everyone. They’d never seen anything like it. When they came back, they told all their friends about it. That’s the kind of impact you can have with a well-designed, well-executed Customer Care System.

Curtis: OK, so far we’ve got the Homebuyer Coach and the Strategy Session, which is your superior offer, and the Customer Care System, right?

Bob: Right. The Homebuyer Coach/Strategy Session gives you a better offer so people will want to meet with you, and the Customer Care System gives you a way to actually over-deliver (deliver more than you promised), and to be able to do it consistently, loan after loan. Promising big and delivering even bigger – that’s the only way you’re even going to show up on the customer’s radar – otherwise you are just one more in a long parade of reasonably competent but not particularly inspiring vendors they have dealt with in life.

But if you stand out in the customer’s experience as someone who is extraordinarily competent and who actually cares about them and recognizes them as individuals, someone who goes above and beyond the call of duty for them, your customers are going to tell their friends about you. So, if you put those two pieces together, the Homebuyer Coach/Strategy Session and the Customer Care System, you’ve got a good solid foundation.

Third, you need a way to identify the people who are thinking about buying a home so you can reach them with your superior offer. In a typical market, only 1-2% of the population will buy a home in any given year. You have to be able to find out who those 1-2% are before they commit to another lender. That’s where lead generation comes in. I teach my clients how to do the 2 things that seem to give people the most trouble:

    How to get Realtors to participate with you in your lead generation efforts, and how to generate the maximum possible number of leads. There is only one way you’re going to get enough Realtors to participate with you in this lead generation effort – and that’s by convincing them that working with you will result in additional business for them that they would not have gotten otherwise. I show my clients how to have the right kind of working relationships with the right kinds of Realtors. And I've developed a PowerPoint presentation to Realtors that takes the Realtor step by step to the logical conclusion that they have nothing to lose and everything to gain by working with you on this. So that’s the first common obstacle for people to overcome in making lead generation really pay off for them. The second obstacle is:

    How to turn the leads into Strategy Session appointments and loan applications – and referrals to Realtors that, in turn, generate additional referrals from Realtors. See, once you have the leads, you have to do something with them! Assuming this person is probably going to buy a home, you have to make a connection with them that results in you getting the loan and your Realtor getting the sale. So the key is in being able to make the right kind of connection with the lead, the prospective home buyer. And I’ll be blunt here: If all you’re going to offer that person is pre-qualification or pre-approval, or your services in comparing various loan products to see which one would be best for them – in other words, if all you’re going to do is offer loan-centered services, you’re not offering anything different -- anything they can’t get in a dozen or more other places in your town, and I’m not even counting the Internet! That’s why I came up with the concept of being their Homebuyer Coach – it gives you something new and interesting and above all valuable to talk to the homebuyer prospect about.

So there’s the Strategy Session, the Customer Care System, Lead Generation & Appointment-Setting. The next part of my coaching system is Scorekeeping.

Curtis: Scorekeeping?

Bob: That’s right, scorekeeping. The reason most people fail when they try to implement perfectly good marketing ideas is they have no way to measure what’s happening in their sales system. So I designed a simple scorekeeping system that works whether you’re a loan officer working the system by yourself, or whether you’re a branch manager with an office full of loan officers and support staff.

The scorekeeping system tracks the specific activities that lead to closings:

    Leads generated
    Calls/Contacts completed
    Applications taken
    Loans Submitted
    Loans Approved
    Loans Closed

This way, you can see who is producing what results. You can look at each of the stages in your process (from leads generated to loans closed) and compare the relationships between them. If there’s a bottleneck in your system, it becomes immediately obvious. This gives you the tool you need to solve the biggest problem in maintaining a profitable business: knowing what to fix; exactly where in your system you need to improve TODAY.

There’s one last part of my coaching approach that sort of helps you tie it all together; and that's time management and leadership.

Time management is critical, because, let’s face it – none of you are listening to this conversation because you don’t feel like you have enough to do; none of you are listening to this because you’ve got too much time on your hands. Most loan originators work 50 hours a week and more, sometimes much more. The problem is not that you don’t spend enough time “working.” The problem is that poorly designed workflow systems, or the lack of any real system at all, makes it necessary for you to re-invent the wheel every time you do a loan. Or the problem is that, during the time you’re working, you are not always properly focused on the one thing that, at that particular moment, is your very highest priority. The problem is you don’t take the proper time to plan ahead your day, your week, your month – your year. The problem is that, during the hustle and bustle of the work day, you spend too much time thinking (worrying) about what to do next, and not enough time doing it. The problem is you haven’t yet realized that the number of things you could possibly do and might want to do is infinite, while the actual amount of time you have is not infinite. (I mean, it sounds kind of silly that you wouldn’t recognize that, but if you’re honest with yourself, when it comes to being realistic about what you will or won’t get done in a day, your eyes are bigger than your belly, which is what my mother used to say when I asked for seconds at the dinner table, and then didn’t eat it all.) And the problem is a combination of all of these things, so we’ll spend a whole hour talking specifically about time management challenges in the mortgage industry, and some of the things you can do to get more of the right things done in a reasonable workweek.

Leadership is important because even if you’re a single loan officer with no staff that’s accountable to you, you’re probably still working with people – processors, underwriters, Realtors, and customers -- whose behavior you must influence if you’re going to be able to get things done. So I work with clients on the qualities of a leader, and how you can develop more of those qualities in yourself.

Curtis: You mentioned that the first step is to have a superior product, a superior offer you called the Strategy Session that would make every prospective home buyer want one. What is a Strategy Session, and how does it make your offer superior?

Bob: Well, let’s first look at the existing industry paradigm of what mortgage companies and loan officers offer clients (and when I say clients I’m referring to the people that most of you call “borrowers”). You’re all offering:

    The loan product itself, which is a means to an end --a way to finance a home purchase. The loan product is a commodity – which means that, from the client’s point of view, the only difference between your $150,000 loan and your competitor’s $150,000 loan is the price!
    Service – This is one of your favorite words – whenever I ask a loan officer why a client should choose them over their competition, they always talk about how their “service” is better. But when you boil it down to its essence, “service” means you promise to keep the client informed as to the progress of their loan, and you promise to return their calls. That’s about it. Some of you keep client information in a database so you can let them know if at some point in the future it might benefit them to refinance. But whatever you call “service”, from the client’s point of view it is nothing more than a vague claim. EVERYBODY says they have good service! But for the client, there’s no way to objectively evaluate the claim, so your promises of good service mean nothing.
    Convenience – This is an aspect of service, but it’s a little more concrete. How easy (or difficult) do you make it for clients to apply for a loan, receive full approval, and close? For the client, differences in the convenience factor translate into their time – a valuable commodity for almost every consumer these days. That’s partly why so many of you are worried about competition from internet lenders – because (whether or not they are actually delivering on the promise yet) – they promise added convenience (in addition to the promise of more competitive pricing) – you can do everything from the comfort of your home computer.
    Honesty/Integrity/Experience/Reputation – Remember what I just said about service? You have to understand that just because you say you’re honest doesn’t mean the consumer will believe you. If they don't know you, they have no way to evaluate your claim.

These 4 components – the loan product (and its price), service, convenience, and reputation – these components make up the existing paradigm for mortgage loans. So if I’m a consumer and I’m trying to decide which mortgage company to go with, the only information I have to make my decision with is inside that paradigm, inside that box. Because, just between us chickens, all of you sound pretty much the same, you all love to talk about your loan programs, your service, and your reputation for honesty and competence.

Curtis: Yeah, I guess there aren’t too many loan officers telling people they have bad service, or that they cheat their customers.

Bob: Exactly. So if everybody else is talking about those same 4 things, and that’s the paradigm for what a mortgage company/loan officer does, if that’s the box everybody is thinking in, and if we want to create a product, an offer that’s, as I said, way better, clearly superior – then we are going to have to think outside of this box.

Why? Because if price, service, convenience & reputation are the only variables inside the box, then we’re all going to look the same to the consumer. I’ll give you an example. Ten years ago, it was not at all uncommon, in fact it was the norm for it to take 3 to 4 weeks to get a loan approval. This was often inconvenient for the customer.

The industry responded to consumer feedback, and now, with automated underwriting, you can get a loan approval in minutes. Well that’s great, it shows the free market at work, but, pay attention now, how much faster than a 5-minute approval can you get?

It made a difference to the consumer when we went from 3 weeks to 3 days, even when we went from 3 days to less than an hour. But who cares whether it takes 5 minutes or 1 minute? The changes we can make at this point are too incremental to be exciting. That’s why we have to think outside of the box now.

We are going to have to challenge the old assumptions about what a loan officer or mortgage company does for a customer. We are going to have to look for services that are NOT currently being provided to the consumer by ANYBODY – services that we have the ability to provide and which would have a very high perceived value in the consumer’s mind. In other words, we have to find a vacuum not being filled for the consumer in the home buying process, and then we have to figure out a way to fill that vacuum.

There was a very interesting survey recently commissioned by the NAR. They had the survey done to prove that people were happy with the service they received from a so-called “buyer’s representative” on their home purchase. Now the industry generally uses that term when there is a signed contract between the homebuyer and a Realtor, designating the Realtor as their representative in any purchase transaction. In return for a guaranteed commission if there’s a sale, the Realtor is contractually obligated to disclose certain types of information about the property, if they have such information.

[I would argue that, to be a true buyer’s representative, the agent would be working for a flat fee paid by the buyer, or for a commission paid by the buyer and based on how much money the Realtor saved the buyer through the Realtor’s negotiation efforts & skills – assuming there was even a way to come up with that number. (Actually the idea of a flat fee paid by the buyer has been tried in several states, but it’s not very popular with the Realtors, because they don’t think they’re making enough money on the transaction.)

Anyway, the NAR commissions this survey to measure homebuyer satisfaction with the buyer’s agent. Let me quote directly from the survey report:

“Most of the buyers surveyed who worked with a buyer’s representative understood that no other salesperson at the brokerage firm represents them. Two in three surveyed are comfortable with the arrangement, possibly because buyers choose a representative for the individual and not the brokerage.

"Of greater concern to the buyers surveyed was the lack of incentive for a buyer’s representative (i.e., Realtor) to negotiate the best possible sales price. The buyer cares most about getting the lowest price, while the perception is that the salesperson is motivated to complete the transaction and be paid a commission based on the final price.”

Do you get that? In other words, homebuyers are telling us they are aware of and are even uncomfortable with the fact that there is a conflict of interest in relying on a commissioned Realtor to negotiate the best price for them! And they are also telling us that negotiating the best price is their top priority.

And well it should be! They are going to have X number of dollars for down payment and closing costs. They’re going to finance the rest. So a $5,000 difference in the purchase price is going to be rolled into a loan amount and amortized over the term of the loan – meaning that, if they stay in the home and pay that loan off over 30 years, they will have spent over $8,000 in interest for that $5,000! (at 8%.) So they didn’t just pay $5,000 too much for their home, they paid $13,000 too much!

I’ll give you an example. Recently, U.S. Sprint conducted a study of 232 of its employees who were relocating to different parts of the United States. The employees who bought a home using a listing agent or a selling agent paid, on average, 96% of list price for the homes they bought. The employees who used a negotiating strategy paid 91%. I think the median price for a home is about $106,000, so if they all bought average-priced homes, the ones who went the traditional route paid about $4,000 less than list price, and the ones who used a negotiating strategy saved about $9,500 off the list price of the home. But they didn’t just save $9,500 – they also saved over $20,000 in interest – a total of more than $30,000!

Meanwhile, the Realtor is probably telling them they should shop the mortgage companies to get the best deal. And you guys are out there killing each other over a couple of hundred dollars in closing costs while you’re ignoring an opportunity to be worth $30,000 to that homebuyer – an opportunity that the real estate profession has ignored. In other words, they’ve left a $30,000 value vacuum for anybody smart enough to step up and fill it.

Curtis: Are you saying that loan originators should go into competition with the Realtors? I know they’re probably not doing it, but shouldn’t that be the Realtor’s job, to negotiate the purchase price?

Bob: No, I’m not saying we should compete with Realtors. We don’t want to sell real estate -- that’s what Realtors do. What we really want to do is help our customers do a better job of buying real estate. Instead of competing with the Realtors, what I’m suggesting is that we fill a vacuum that Realtors have not chosen to fill.

The home buyer is, without question, the most under-represented party in a real estate transaction. Most buyers are actually in a superior negotiating position to the seller, but they don’t know it! There’s a vacuum there, where somebody is not being served. If we fill the vacuum, we make ourselves much more valuable to the customer, the home buyer.

And that’s something our profession needs very badly right now, is to make ourselves more valuable to our customer. Right now, we’re just a means to an end. In the customer’s mind, they think they need the Realtor a lot more than they need us. Why? Because they see the Realtor (if they have one) as their principal advisor and they see you as one of several possible sources to fund their home purchase. You’re only slightly more important to them than the title company!

What I’m suggesting is that the ideal we aspire to is a partnership with Realtors. In the first stage, we identify a potential homebuyer with our Call capture technology technology. In the second stage, we contact the prospect and offer them a free Strategy Session – designed to help them develop a strategic plan for buying their home that puts them in the best possible negotiating position. In the third stage, we provide them with market analysis for the neighborhoods where they’re thinking of buying. We show them how to find out the actual prices homes are being sold for in a neighborhood, instead of exposing them only to the prices homes are being listed at! There’s a big difference! We help them understand what those numbers mean in terms of their effect on the strength of their negotiating position. We also get the customer preapproved.

So what the Realtor gets from us is a willing buyer, ready to buy a home. Our buyers are confident. They're not afraid of making a mistake on the biggest purchase of their life. So they are much more decisive, and they don't waste the agent's time.

In other words, we have followed the Golden Rule – we have referred the Realtor a customer in the same way we would like the Realtor to refer a customer to us. This is what partnership is about.

See, now YOU are directly contributing to the Realtor’s income with your referrals. The reason they don’t respect you is you don’t bring any deals to the table! In any organization, the person who can deliver the business ALWAYS gets respect. When you start adding to the Realtor’s business, they will respect you. When all you do is show up in their office with your hand out, you have to understand they’re going to see you as a vendor, no matter how nice your suit looks, or how tasty your doughnuts are. They’re going to see you as a vendor, because you never bring them business, you’re always asking them for business. And vendors don’t get that much respect. Partners get respect.

What Realtors want more than anything else is to sell more homes. They know that the hardest part is the selling part -- If you can bring them business, if you can do some of their selling for them, you will earn their respect. In fact, if you can establish a provable track record of being able to do that, you will be able to work with the Realtors of your choice. They’ll be calling you.

So, to answer your question, Curtis, no, this is not about competing with or trying to replace Realtors, it’s actually the opposite. I think that loan originators, if they’re willing to think out of the box, can create a win-win-win situation that benefits themselves, the Realtors, and the consumers. Everybody wins because, as I say, you’re filling a vacuum. It’s like you created a whole new product (or service), and you are (at least temporarily) the ONLY one in town who has it. It’s something that everybody who finds out about it wants it. I mean, it really gets people talking.

Leadership is important because even if you’re a single loan officer with no staff that’s accountable to you, you’re probably still working with people – processors, underwriters, Realtors, and customers -- whose behavior you must influence if you’re going to be able to get things done. So I work with clients on the qualities of a leader, and how you can develop more of those qualities in yourself.

Curtis: You mentioned that the first step is to have a superior product, a superior offer you called the Strategy Session that would make every prospective home buyer want one. What is a Strategy Session, and how does it make your offer superior?

Bob: Well, let’s first look at the existing industry paradigm of what mortgage companies and loan officers offer clients (and when I say clients I’m referring to the people that most of you call “borrowers”). You’re all offering:

    The loan product itself, which is a means to an end --a way to finance a home purchase. The loan product is a commodity – which means that, from the client’s point of view, the only difference between your $150,000 loan and your competitor’s $150,000 loan is the price!
    Service – This is one of your favorite words – whenever I ask a loan officer why a client should choose them over their competition, they always talk about how their “service” is better. But when you boil it down to its essence, “service” means you promise to keep the client informed as to the progress of their loan, and you promise to return their calls. That’s about it. Some of you keep client information in a database so you can let them know if at some point in the future it might benefit them to refinance. But whatever you call “service”, from the client’s point of view it is nothing more than a vague claim. EVERYBODY says they have good service! But for the client, there’s no way to objectively evaluate the claim, so your promises of good service mean nothing.
    Convenience – This is an aspect of service, but it’s a little more concrete. How easy (or difficult) do you make it for clients to apply for a loan, receive full approval, and close? For the client, differences in the convenience factor translate into their time – a valuable commodity for almost every consumer these days. That’s partly why so many of you are worried about competition from internet lenders – because (whether or not they are actually delivering on the promise yet) – they promise added convenience (in addition to the promise of more competitive pricing) – you can do everything from the comfort of your home computer.
    Honesty/Integrity/Experience/Reputation – Remember what I just said about service? You have to understand that just because you say you’re honest doesn’t mean the consumer will believe you. If they don't know you, they have no way to evaluate your claim.

These 4 components – the loan product (and its price), service, convenience, and reputation – these components make up the existing paradigm for mortgage loans. So if I’m a consumer and I’m trying to decide which mortgage company to go with, the only information I have to make my decision with is inside that paradigm, inside that box. Because, just between us chickens, all of you sound pretty much the same, you all love to talk about your loan programs, your service, and your reputation for honesty and competence.

Curtis: Yeah, I guess there aren’t too many loan officers telling people they have bad service, or that they cheat their customers.

Bob: Exactly. So if everybody else is talking about those same 4 things, and that’s the paradigm for what a mortgage company/loan officer does, if that’s the box everybody is thinking in, and if we want to create a product, an offer that’s, as I said, way better, clearly superior – then we are going to have to think outside of this box.

Why? Because if price, service, convenience & reputation are the only variables inside the box, then we’re all going to look the same to the consumer. I’ll give you an example. Ten years ago, it was not at all uncommon, in fact it was the norm for it to take 3 to 4 weeks to get a loan approval. This was often inconvenient for the customer.

The industry responded to consumer feedback, and now, with automated underwriting, you can get a loan approval in minutes. Well that’s great, it shows the free market at work, but, pay attention now, how much faster than a 5-minute approval can you get?

It made a difference to the consumer when we went from 3 weeks to 3 days, even when we went from 3 days to less than an hour. But who cares whether it takes 5 minutes or 1 minute? The changes we can make at this point are too incremental to be exciting. That’s why we have to think outside of the box now.

We are going to have to challenge the old assumptions about what a loan officer or mortgage company does for a customer. We are going to have to look for services that are NOT currently being provided to the consumer by ANYBODY – services that we have the ability to provide and which would have a very high perceived value in the consumer’s mind. In other words, we have to find a vacuum not being filled for the consumer in the home buying process, and then we have to figure out a way to fill that vacuum.

There was a very interesting survey recently commissioned by the NAR. They had the survey done to prove that people were happy with the service they received from a so-called “buyer’s representative” on their home purchase. Now the industry generally uses that term when there is a signed contract between the homebuyer and a Realtor, designating the Realtor as their representative in any purchase transaction. In return for a guaranteed commission if there’s a sale, the Realtor is contractually obligated to disclose certain types of information about the property, if they have such information.

[I would argue that, to be a true buyer’s representative, the agent would be working for a flat fee paid by the buyer, or for a commission paid by the buyer and based on how much money the Realtor saved the buyer through the Realtor’s negotiation efforts & skills – assuming there was even a way to come up with that number. (Actually the idea of a flat fee paid by the buyer has been tried in several states, but it’s not very popular with the Realtors, because they don’t think they’re making enough money on the transaction.)

Anyway, the NAR commissions this survey to measure homebuyer satisfaction with the buyer’s agent. Let me quote directly from the survey report:

“Most of the buyers surveyed who worked with a buyer’s representative understood that no other salesperson at the brokerage firm represents them. Two in three surveyed are comfortable with the arrangement, possibly because buyers choose a representative for the individual and not the brokerage."

Of greater concern to the buyers surveyed was the lack of incentive for a buyer’s representative (i.e., Realtor) to negotiate the best possible sales price. The buyer cares most about getting the lowest price, while the perception is that the salesperson is motivated to complete the transaction and be paid a commission based on the final price.”

Do you get that? In other words, homebuyers are telling us they are aware of and are even uncomfortable with the fact that there is a conflict of interest in relying on a commissioned Realtor to negotiate the best price for them! And they are also telling us that negotiating the best price is their top priority.

And well it should be! They are going to have X number of dollars for down payment and closing costs. They’re going to finance the rest. So a $5,000 difference in the purchase price is going to be rolled into a loan amount and amortized over the term of the loan – meaning that, if they stay in the home and pay that loan off over 30 years, they will have spent over $8,000 in interest for that $5,000! (at 8%.) So they didn’t just pay $5,000 too much for their home, they paid $13,000 too much!

I’ll give you an example. Recently, U.S. Sprint conducted a study of 232 of its employees who were relocating to different parts of the United States. The employees who bought a home using a listing agent or a selling agent paid, on average, 96% of list price for the homes they bought. The employees who used a negotiating strategy paid 91%. I think the median price for a home is about $106,000, so if they all bought average-priced homes, the ones who went the traditional route paid about $4,000 less than list price, and the ones who used a negotiating strategy saved about $9,500 off the list price of the home. But they didn’t just save $9,500 – they also saved over $20,000 in interest – a total of more than $30,000!

Meanwhile, the Realtor is probably telling them they should shop the mortgage companies to get the best deal. And you guys are out there killing each other over a couple of hundred dollars in closing costs while you’re ignoring an opportunity to be worth $30,000 to that homebuyer – an opportunity that the real estate profession has ignored. In other words, they’ve left a $30,000 value vacuum for anybody smart enough to step up and fill it.

Curtis: Are you saying that loan originators should go into competition with the Realtors? I know they’re probably not doing it, but shouldn’t that be the Realtor’s job, to negotiate the purchase price?

Bob: No, I’m not saying we should compete with Realtors. We don’t want to sell real estate -- that’s what Realtors do. What we really want to do is help our customers do a better job of buying real estate. Instead of competing with the Realtors, what I’m suggesting is that we fill a vacuum that Realtors have not chosen to fill.

The home buyer is, without question, the most under-represented party in a real estate transaction. Most buyers are actually in a superior negotiating position to the seller, but they don’t know it! There’s a vacuum there, where somebody is not being served. If we fill the vacuum, we make ourselves much more valuable to the customer, the home buyer.

And that’s something our profession needs very badly right now, is to make ourselves more valuable to our customer. Right now, we’re just a means to an end. In the customer’s mind, they think they need the Realtor a lot more than they need us. Why? Because they see the Realtor (if they have one) as their principal advisor and they see you as one of several possible sources to fund their home purchase. You’re only slightly more important to them than the title company!

What I’m suggesting is that the ideal we aspire to is a partnership with Realtors. In the first stage, we identify a potential homebuyer with our Call capture technology technology. In the second stage, we contact the prospect and offer them a free Strategy Session – designed to help them develop a strategic plan for buying their home that puts them in the best possible negotiating position. In the third stage, we provide them with market analysis for the neighborhoods where they’re thinking of buying. We show them how to find out the actual prices homes are being sold for in a neighborhood, instead of exposing them only to the prices homes are being listed at! There’s a big difference! We help them understand what those numbers mean in terms of their effect on the strength of their negotiating position. We also get the customer preapproved.

So what the Realtor gets from us is a willing buyer, ready to buy a home. Our buyers are confident. They're not afraid of making a mistake on the biggest purchase of their life. So they are much more decisive, and they don't waste the agent's time.

In other words, we have followed the Golden Rule – we have referred the Realtor a customer in the same way we would like the Realtor to refer a customer to us. This is what partnership is about.

See, now YOU are directly contributing to the Realtor’s income with your referrals. The reason they don’t respect you is you don’t bring any deals to the table! In any organization, the person who can deliver the business ALWAYS gets respect. When you start adding to the Realtor’s business, they will respect you. When all you do is show up in their office with your hand out, you have to understand they’re going to see you as a vendor, no matter how nice your suit looks, or how tasty your doughnuts are. They’re going to see you as a vendor, because you never bring them business, you’re always asking them for business. And vendors don’t get that much respect. Partners get respect.

What Realtors want more than anything else is to sell more homes. They know that the hardest part is the selling part -- If you can bring them business, if you can do some of their selling for them, you will earn their respect. In fact, if you can establish a provable track record of being able to do that, you will be able to work with the Realtors of your choice. They’ll be calling you.

So, to answer your question, Curtis, no, this is not about competing with or trying to replace Realtors, it’s actually the opposite. I think that loan originators, if they’re willing to think out of the box, can create a win-win-win situation that benefits themselves, the Realtors, and the consumers. Everybody wins because, as I say, you’re filling a vacuum. It’s like you created a whole new product (or service), and you are (at least temporarily) the ONLY one in town who has it. It’s something that everybody who finds out about it wants it. I mean, it really gets people talking.