Harsh Realities from Sunny San Diego

Pivot from Panic to Strategy

Compass

2019 will be a pivotal year for the real estate and real estate finance world. 2018 was the first year of a multi-year period of drought and starvation. In the first year, you are just thinking of getting through that month or that quarter or that year. Your decisions are short-sighted; you just react with survival instincts. You price irrationally (margins were unsustainable), pay irrationally (you would pay $20 for a $5 producer who would then deliver $2.50 due to the market), or buy any magical elixir that will make production appear (every lead and marketing appeared in your voice and email promising solutions).
Now firms know there is no end in sight and a refi boom is not coming to save us like the past 30 years. (Now the good news is that once we all believe that sad reality, refi’s will appear and the tone sure has shifted on Wall Street from 3 moves in 2019 to none, BUT if I start looking for my after Christmas presents I won’t get any! So now back to my campfire story…) This is the year that shifts us from panic reactions to strategic planning. When you realize you can’t cut margins that deep without changing your expense model, you make drastic changes to your business. If you’ve already cut salaried bodies and nice-to-have line items you are down to the heart and brain of the business, your sales and sales support team (leaders and assistants). In a perfect non-regulated world, how do you pay for being the best combination of revenue and efficiency? You must realign your business using new fresh eyes to see the marriage of consumer desires, technology, and compensation realignment to match.
Before we just slugged it out against our known competition; so we didn’t make big changes, just one more move than the guy we were recruiting from. Over the past year, money has poured into the real estate sector for pure disruption purposes. (Before that, money came into to gobble up existing firms and achieved efficiencies by layoff and consolidation theory.) We scoff at these new entrants like the internet lenders of 15 years ago saying it will never work. This time they have raised tech money and the tech attitude that they can lose money for years and still win. They didn’t come from banking; they didn’t grow up with a fear of compliance or risk. That forward thinking attitude frees up creativity that can create models and processes that are game changers---especially when accepted by the GSEs and major banks.
So what can we tell our aging sales teams who every month lose another potential customer before they ever got to their best referral source? They will never know because the oxygen just slowly leaks out of the room for them and their realtor. They see transactions occurring and neither of the traditional participants participates. Sure there will be plenty of deals to live off, but they shrink every year if you don’t adapt how you compensate so you can compete on price. Of course, then there won’t be plenty of deals to go around so LOs have to shrink.
So what do we tell them?
1) Master technology and the personal touch that makes you –YOU. If done correctly technology can replicate the basics of a relationship so you can be aware and present for the key parts where you are needed in a relationship. Tech can keep the relationship connected and warm so the clients never wander.
2) Communicate and listen to the way the customer wants you to. Ask and listen and ask again. Communication needs to be given the way the customer wants to hear it but YOU have to come through loud and clear throughout the process that becomes a relationship. Texting and video have to play a role as do self-serve portals for the customer to engage on their own time. AI (artificial intelligence) will sneak in here and be a subtle game changer.
3) Identifying the Influencers from day one and elevating them to an inner circle level of communication and first class service will expand your business, some of you are nodding your head as if you do. I throw the challenge flag on that. Have someone you trust audit that experience and I’ll bet you find three ways to upgrade the depth of the relationship that will tap into deeper levels of referrals.
4) Thoughtful and strategic thinking of how to mine your network by probing and connecting to the point of discomfort will open big doors. The amount of data we have that will continue to grow and be interconnected for us. But we have to be time-blocking to sit-down and put on the 3D glasses that make the 3 degrees of separation that connect two people who want to know each other and both who want to refer you.
5) Lenders need to think of themselves as being paid to give advice, as should Realtors. People only want to pay for that which they use. Our job is to correctly assess what the customer’s needs are and price that advice that will solve their need. If we assess it incorrectly or can’t get them to see what they really need, we lose the customer. If we win them we get correctly paid for that which we earned. The numbers could vary greatly by the customer, instead of the fixed % one-size cost structure today. How we work inside our crazy regulated world to do that is our challenge, but it needs to happen soon. Because others from the outside world who are disrupting us don’t know a Dodd from a Frank. They just know that customers want choice and transparency, and our industry is not known for either.
All but the last point can be accomplished by anyone. It takes a strategy, a plan to implement and the discipline to block it and execute it. If you don’t pivot in this pivotal year, there is always Amazon coming into our biz! I hear they just raised their wage to $15/hr.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name is required. Email address will not be displayed with the comment.)