If a fair share of your business is driven by referral relationships with real estate agents, now might be a good time to take a look at those relationships and ask your-self this all-important question:  Can my Realtor partners help take me where I want to go this year?

This change in the landscape may dictate a different approach for you moving forward when it 
comes to working with real estate agents.  In short, you may not have enough Realtor referral partnerships---or the right Realtor partnerships generating the right number of referrals---to meet your 2010 income and loan production goals.

Following is a series of questions that will help you formulate exactly how many agents you need to work with:

• What is your 2010 loan production goal?
• What % do you want coming from real estate agents?
• What is your average purchase  loan amount?
• How many closed loan units do you need from Realtors?
• Divide the number of closed loans from Realtors by 12 months in the year.
• What % of your purchase loan applications actually close?
• What % of your Realtor referrals and leads actually move to application?
• How many leads and referrals do you expect from each of your Realtors (on average) each month?

Let’s do an example using this formula.  Jack is a loan originator with a goal to close $16 million this year.  Jack expects 50% of his business to be Realtor driven, or $8 million in loans.  With an average purchase loan amount of $220,000, Jack needs 36 closed loans from Realtors, or three each month.

Looking back over the last several months, Jack sees that about 75% of his purchase loans close. (Others fall out for various reasons.)  So to close those three loans a month, Jack needs to take four loan applications. 

Jack realizes that many of his Realtor referrals don’t move forward to application; some buyers don’t qualify, some get
cold feet, and some go elsewhere for their home loan.  He estima-tes that about half of his Realtor referrals actually apply.  So, to net
four loan applications, he needs eight referrals from his agents every month. 

If Jack sets the expectation that any working relationship with any real estate agent should yield him at least two referrals a month (one, on average, every two weeks) Jack now knows that he will need four Realtor partners generating two referrals a piece every month to reach his goal.

If Jack already has those agents operating at that level, he’s fine.  If he doesn’t he will either need to add more agents to his business or upgrade his referral relationships to work with busier business partners.

See how it works?  Invest a few minutes, like Jack did, to find out what the right Realtor numbers are for you this year.

Power Selling
is a monthly publication of
Douglas Smith & Associates.

The editor of Power Selling is Douglas Smith.  Please direct any comments or input to 877.430.2329.
© Copyright 2009 DS&A.  Reproduction in whole or in part by any means without written permission of the
editor is prohibited.
http://www.dougsmithonline.com/

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