- Leverage
Top performing mortgage brokers understand they must use leverage to create a long and successful career or business in this industry. Having seen and worked with thousands of mortgage brokers over the years, one big difference in the level of success I see is because of leverage.
Mortgage brokers who don’t leverage find themselves with two big problems:
- Their business and income is 100% reliant on them and their time and
effort. This means they can’t take a day off, can’t go on holidays, and often have periods of high work load and stress. They are effectively chained to their business. It’s also very risky because if they get sick or injured, they can’t earn any money.
- They hit the volume and income ceiling very quickly. The point this
happens is different for every broker, but it always happens if the broker fails to leverage themselves. Once a mortgage broker has initial success and starts getting more leads and referrals, their workload quickly escalates and they struggle to keep up. Without leverage this will create a perpetual cycle of feast and famine, mixed with a high level of stress.
I find the biggest issue average mortgage brokers have, is they simply don’t want to give up any part of their business or process to someone else. They are either perfectionists, control-freaks, or firmly believe that they have to do everything themselves. They also don’t understand that low-level tasks like administration, loan processing, compliance and following up lenders are taking their time away from doing higher-value, income producing tasks in their business.
I can tell you that, on average, at least 50% of your time as a broker will be spent on administration, processing loans, compliance and sitting on the phone to banks and following up paperwork from clients. More than HALF of your time.
Let’s have a look at a leverage example:
Let’s say you are currently writing 5 loans per month, each around $400,000 in value, so doing $2,000,000 a month. Let’s say your upfront commission on that is $10,000. You’re doing it all yourself, so you’re probably struggling to keep up with it all and don’t have time to see more clients and grow your business.
Now let’s assume that you use leverage and outsource the administration, loan processing, compliance and bank follow-up to a third-party service. Let’s assume they charge you $300 for a full-service offer, taking your applications through the process all the way to settlement. So you’ll have to give up $1,500 to have your 5 loans looked after each month.
Given you’re now using leverage, you find that HALF of your time has been freed up to spend on getting more clients and growing your business. So the next month, now you have twice the time available, you write twice as many loans. So you write 10 loans and do $4,000,000 – earning you $20,000 in upfront commissions.
The result here is that your monthly income has gone from $10,000 per month to $17,000 per month ($20,000 in upfront minus the $3,000 to process the 10 loans) and you haven’t worked any harder at all – you’ve just leveraged your time to focus on higher value, income producing tasks.
This is so simple, but most brokers never do this.
The top brokers, having interviewed and worked with many of them over the years, often do this from Day 1. I know many top brokers who have never personally submitted a loan, don’t even know how to use the lender or aggregator software, and don’t do any follow-up with banks. They have a support team, or use a third-party provider, leaving their time available to see more clients, foster referral relationships and build their business.
The key success strategy here is to always be on the lookout for opportunities to leverage your time. Time is your most precious commodity in business, so be ruthless in managing it and always ensure your time is being spent on the highest-value tasks that only you can perform.