Yes, size matters! So much of our industry has focused on volume that we fail to look into profitability. Posting larger numbers of units closed and sheer magnitude of loan dollar volume seems to consume the industry, at least those in the “Jumbo Tron and blasting music” arena, that we often forget to look and see what those numbers really mean.
Three originators are talking about their production, all doing the same type of business, and one states “I closed 120 units last year!” The next gets all puffed up and says “I closed 200 units last year!” Then the third speaks, almost ashamed and barely above a whisper, “I only closed 75 units last year.”
What wasn’t part of the equation were how many people where part of those closings? We all have processors, underwriters, and closers, so that is a company provided given, but how many total people were involved in acquiring the contact, talking to the client, structuring the loan, taking the application, submitting the application, and working the relationship through closing? When we drill down a little bit, something becomes obvious, numbers may not always be a good way of telling what kind of achiever someone is, and certainly isn’t an indicator of how much NET INCOME they had.
In this case, loan originator #1 has her and two assistants to handle the load. Well, that breaks down to 40 units per team member and a little more than 3 units a month per person.
Originator #2 has him listed as the “Team Leader” and a team of six people that are part of his process. That breaks out to less than 29 units per person annually and less than 2.5 units per person per month!
Originator #3 has a part time assistant that she shares with two other originators. That works out to an average of 56 units per team member or almost 5 units per person per month!
So to me, you have to be very careful about the size of your team and the average closings per person per team member. While there is no set rule on when to hire an additional team member, or if you start by sharing someone, I have always maintained that you should be able to close 8 to 10 loans per month for six consecutive months before thinking about hiring help. You should also plan that wherever you are in the production profile, you should clearly see how that new person was going to improve your production by five units a month.
While each situation is different and we all have different needs and uses for our time, the failure to clearly understand what you do and the experience you provide for your clients and your referral partners is a must! Bigger isn’t always better. Sometimes bigger is just bigger!
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