Why Realtors Should Add Commercial and Business Finance to Their Services
Many years ago I started in the real estate business as an agent and I had dreams of making it big. I worked hard and did very well. I was a sponge of knowledge and didn’t want to leave anything to chance. I learned as much as I could about finance so that I could pre-qualify everyone and I even got to a point where I simply called my mortgage guy and said I have a client for them to write up, it’s and FHA at 7.25% and they would write the application and it would close 30 days later. I had already collected the documents needed, reviewed their credit, had explanation letters written, and supporting documents that were needed. This assured me that the process would go smoothly and I would be able to close on time. I had a passion for finance and real estate.
Although my passion included real estate, I felt that driving people around in my car looking at houses was not good management of time. I started hiring agents under me, who I would set up with appointments and just set them loose to show houses all day long. This was a time before the internet and online marketing, we relied on Harmon Homes, Homes Illustrated, and other magazines to run ads. I focused on multiple full-page ads in multiple magazines and newspapers to keep the phone ringing. I also concentrated on open houses, where we would bring a PC and be able to run credit and MLS right there. I would pack the houses with multiple agents and they would be able to work the customer and take them out to show houses immediately. To round out the marketing I worked FSBOs and expired so that I could keep a large number of listings, which in turn resulted in many calls.
It was a lot of work and it resulted in a great income. But it wasn’t enough. I started thinking, how could I make more and build my business. The first route I took was to start buying homes that needed work with my rent to buy program, I would find tarnished buyers to put in them. But the more I tried to help people, the more they took advantage of me. I just didn’t have the heart to continue building my real estate portfolio. I started looking at my mortgage representative, and we started talking. I interrogated him and learned many things. First I found out that he was not a real go-getter. Why would he be, I provided him so much business and did most of the work he was able to live very well and not work that hard.
What I did realize from our conversations together was that financing could be an affiliate relationship business. Meaning, as a mortgage person you could build relationships with realtors, financial planners, accountants, and others who would provide you business day after day, month after month, year after year. After all, these people are doing all the work to get to the end client, then they are referring it to you. Wow, and a referred client is much more loyal and obligated to complete the transaction.
Because of this simple conversation I ended up getting into the residential mortgage business, and eventually built a large mortgage banking company. Everything was great and I started dipping my fingers into the commercial finance industry. This is a huge industry and the finance amounts were higher, and the best part was that it was not over-regulated and it was also something new. As the economy crashed and housing collapsed I also found that small businesses need help. Before this, many small businesses were using HELOCs on their personal property to maintain cash flow. But the collapse caused the banks to freeze all these HELOCs and this left small business owners standing there with their pants down. This forced many of them to close up.
After the collapse, the real estate investment market seemed to hold and then begin to grow. From Fix and Flips on up, business was available. On the business side, many small business owners were thirsty for cash flow and various sectors of business lending grew by leaps and bounds.
Now back to the question, as a realtor why should you add business and commercial financing to your program line? It helps maintain and grow your income, especially with the ebb and flow of the real estate market. Let’s explore what is entailed in enhancing your income.
As Yogi Berra once said, “if you come to a fork in the road, take it”. That’s what we have to decide here, but we have to see what side of the fork is right for you.
The easiest way is to refer and earn. In commercial and business finance it is appropriate to pay a referral fee. Referring is easy! You can be involved as much as you like up to submission. You can instruct the client (or you can sit with them to do it) to download the needed application package and have them fill it out and provide you with the necessary documents or you can simply provide the contact information via email or online. The more you are involved the more you earn as a referral agent. As a realtor, you are in contact with hundreds of people every week. You visit small businesses throughout your community, and you deal with real estate investors as a function of your business. The opportunities are numerous and you may not even realize it. That’s your marketing, just letting everyone you meet know what you do, through your simple and professional elevator pitch.
The referral path is usually the best fork to take for an active agent. Having trained hundreds of agents over the years in both residential, commercial and business finance to be an active sector of their business, I have found that many find it hard to do both. Remember, when I was an active agent, I was doing most of the work for the financing already. So when I first started incorporating it into my company it wasn’t much of an adjustment. Eventually, I did move totally into the finance arena because I found it to be a more profitable use of my time. I find that many who try to do both, allow their real estate business to suffer because they concentrate more on the mortgage. Referring allows you to continue as normal and when you come across something, refer it!
The other fork is for those who may be looking for a new path in life, those struggling as an agent or who want to add the full suite of services as a new income sector for their business.
This fork is the full path to becoming a full-fledged finance company. You can empower yourself with all the business and commercial finance and specialty programs, or you select one or a few sectors to specialize in. This also means that all your focus is on creating success. You will build your referral affiliates, you will learn to package and submit loan files so that they flow easily through the process and close in a timely fashion. You will be in charge of your domain.
As you build your referral relationships, just take note that these are the most important relationships in your business life. Develop ways to stay in front of them, phone calls, content marketing, the end client marketing, etc. I learned one simple rule when I had the mortgage bank, out of sight out of mind. During those days sub-prime or alternative financing was a big market for those with challenged credit or in foreclosure. Numerous companies were competing for the business. Reps would call, stop by, or send emails. I had one rep who stopped by once a week, would go through rejected files, talk to the processors, and was eager to build more business. He also was very responsive on the phone, always making himself available. While others would stop in once a month or never, call once in a while, or even send the occasional email always begging for business, 90% of my off-color financing went to that man that was always there. Why? Because he was always in plain sight! You too must be in plain sight to all your referral affiliates.
Working with your affiliates doesn’t mean that 1 visit or 1 phone call is going to lock them up to giving you all their deals. It takes time, they have to get to know you, you have to build trust. This is the most common reason for loan officer failure. They go out to develop realtor business calling on real estate businesses, they make their rounds once or twice and never go back. Studies have shown it takes up to 12 contacts before you can have that relationship where someone will trust you enough to give you a deal. Yes, it has happened where you can get a deal on the first visit, but that is rare.
Never over promise and under deliver, and follow the rules of 6P’s- proper preparation prevents piss poor performance. I believe in these golden rules and if you do too, you will be a success and make more money than you ever thought possible.
As a referral agent, you can earn up to an extra 40k or more with just 6 referred deals per year. That’s just 6 deals a year imagine 12 or 20. Taking the full-blown path, the income potential is unlimited. Many specializing in only one or two sectors earn over a million dollars a year. It comes down to what you want to put into your success. This is not a get rich quick scheme, it takes a lot of hard work in the beginning. Learning from someone will help you avoid common mistakes and get you up and running quickly.
No matter which fork you decide to take, we here at Ebizmore are ready to help. We will teach you everything you need to know to be a success. Our platform allows you to easily submit deals, download forms, and see what the guidelines are and the documents needed. An Underwriting professional will review the deal with you and assure that it is structured properly for easy and fast approval.
You will learn the in’s and out’s of taking the deal, the structuring, the various guidelines, sales, marketing, and much, much, more. This training would cost you up to 60k with some of these other companies, but you will pay nothing and you will earn more with our proven program. We will help you set your goals and we will help you surpass them. We want you to make money, and be successful because that’s the only way we make money.