My Referral Source Don't Know Nuthin'

Every good business professional has a network of referral sources. If you don’t; get one, then come back and read this.

Welcome back, now that you have a referral network, you need to train them. This training will enhance the quality of your referrals and set their expectations at a workable level.

The goal is to get good quality referrals that have reasonable expectations when they walk through your door. Problems arise when a referral comes in with false or completely unreasonable expectations, which can get you started on an uphill battle right out of the gate. Worst of all, it can put pressure on you to perform; that is, to cut corners and force the client’s needs into a product that doesn’t exist or service that you cannot ethically provide .

Here is an example of a situation that happens far too often in the real estate finance industry:

Real estate agent Rodney meets Mr. Smith, a potential buyer, at an open house. Mr. Smith asks Rodney to tell him how much down payment he will need. Rodney says that he sold a house just like this last month and that the buyer only had to come up with 5%. Mr. Smith comments that his best friend will probably lend him the down payment money.

Mr. Smith asks what the interest rates are. Rodney says he thinks they are around 4%. Mr. Smith comments that this will be a great rental property. Rodney gives Mr. Smith your phone number (in this example, you are the loan officer). As Mr. Smith leaves the open house, Rodney says, “My loan officer will take care of you. She can get anybody approved.”

Before we blast Rodney the real estate agent, you of course need to thank him for thinking of you when it came to referring his potential customer. He is one of the reasons you are in business.

Let’s now identify the things Rodney could have done differently so that Mr. Smith would be coming to you with reasonable expectations.

When your new potential customer, Mr. Smith, shows up at your office he thinks that you are a real estate finance magician! He was told by Rodney that you can, “get anybody approved.” Hopefully this is not true. If it is, it just might mean that you are willing to cut corners and operate in the murky gray area.

That is not to say that you can’t be a good, creative finance professional. A creative professional works with their potential customers to get them into the right product using the skill and finesse of his vast base of product knowledge; not by force or misrepresentation – which are methods you might be tempted to use out of fear of loosing Rodney as a referral source.

So, Mr. Smith expects to get a loan. Not just any loan, but a loan with a 4% interest rate, to buy an investment property with a borrowed down payment of 5% or less. This is most likely, an unreasonable expectation.

Rodney, unwittingly, is setting us up for failure. He has no idea if Mr. Smith just lost his job, defaulted on his current mortgage loan and/or is in the middle of bankruptcy. While Rodney felt just fine about quoting interest rates and down payment requirements, he didn’t say anything about the common lender restrictions of borrowing a down payment, the hourly interest rate fluxuations, the loan-to-value limitations on an investment property purchase or any other guidelines.

Rodney didn’t say anything, because Rodney didn’t know. We don’t expect Rodney to know all about these things; we just want him to know some of the key things to listen for. But until you train him, you’ll need to politely ask Rodney to close his yapper.

At this initial phase of the customer’s purchasing experience, there is no way that even you could know which loan products or interest rates will work for this new customer; and Rodney, a non-finance professional, will definitely not know.

Additionally, even though we know that Rodney is not an expert in real estate finance, the customer’s perception is, most likely, different. If any of the professionals involved in the transaction tell Mr. Smith that his interest rate is going to be around 4% or that it’s okay to use 5% of borrowed money for the down payment, it’s likely that Mr. Smith will take that to the bank; and set him up with unreasonable expectations.

This brings us to the danger zone. This is when you can be tempted to bend the rules, to omit pertinent information from the file or outright lie just to get the deal done. You are tempted to do this for several reasons. 1) you don’t want to disappoint Rodney or loose future business from him, 2) you don’t want to make a liar out of Rodney – after all, he did tell Mr. Smith that you’re a loan magician, and 3) you just want to get this one loan closed for Rodney – if you have to bend the rules just this once, maybe its is no big deal.

In tough economic times, business is hard enough to come by. We want to shower our prospects with that sweet sweet customer service and do whatever we can to keep them. We all know that customers are often willing to go “across the street” to the competition; where some other finance professional is willing to cut corners to get the deal done.

Here are a few pointers for your Referral Source Training Program.

1. Let your referral sources know that you appreciate their business. This is a number 1 priority.

2. Give them an overview of the types of products and services you are capable of providing. Let them know the key indicators that could challenge your ability to deliver your product or service.

3. Tell your referral source that you are willing to keep them in the loop. There are privacy issues in many professions, so you can’t divulge the customer’s personal financial information, but an update can help your efforts in educating your referral source – if they want an update.

I’m sure you have horror stories of your own. Think of situations you’ve had with new customers who’ve come to you with unreasonable expectations. Why did this happen? What could you teach your referral source about these situations?

In the real estate finance profession (just like many others), there are tons of rules, guidelines and regulations. Again, I am not telling you to train your referral sources to be experts at what you do. It’ll take you about a half of an hour to think or read through the list of questions you ask during your initial conversation with a new customer, to come up with your little training session.

For example, you can tell Rodney that if a customer starts talking or asking questions about things like down payment, interest rates or qualifying income, he should tell the customer that you are an awesome finance professional and that you know all about that stuff.

Educate Rodney on a few big issues to listen for such as, non-owner occupancy, current state of unemployed, citizenship status, etc. When Rodney hears these types of things in his initial conversation with his customer, recommend that he say something like, “Oh, you’re going to want to mention that to the loan officer right up front.”

Make sure your referral source does not try to qualify your leads. You are the expert and can judge whether or not you can deliver, but a little bit of training for your referral source can save you a lot of potential prison time. (I always seem to be able to bring it back to something about prison)

As an added bonus, this “training” is just one more way you can get in front of your referral sources. Perhaps Rodney works for a company that has weekly or monthly meetings that you could invite yourself to. I’ve even gone as far as scripting a few different role plays; one that depicted situations of how NOT to manage a customer’s expectations and another one that showed the right way to do it.

As a team, you and Rodney can work together to make sure that the Mr. Smiths of the world have great buying experiences.

Fraud: Consumer v. Professional

Howell Haunson wrote a great post about spotting fraud perpetrators. Thankfully his audience was industry insiders (in this case it was mortgage and real estate industry professionals).

In many industries, education is focused on fraud spotting and "red flags" as it pertains to the consumer. That is to say that we're all worried about how to protect our companies from those bad eggs out there who are trying to pull one over on us, i.e. the mortgage, CPA or the banking professional.

This education is vitally important. There are sneaky, organized con artists that could cost your company millions. However, lets not forget - about 80% of all fraud losses are due to the collaboration or collusion of industry insiders.

So, this means that we still have to watch out for each other.

For more on fraud, ethics, public speaking visit JeromeMayne.com

Will Your Son Wind Up In Prison?

I had the unfortunate experience of serving a little over a year in federal prison. I took notes and have come up with what I believe to be a pretty accurate profile of a would-be inmate. To those of you who are mothers and fathers, this might explain a lot!

His name is Bubba
This one can easily be avoided. There are literally tens of thousands of other names to choose from. All you have to do is pick one of these other names. Caution: think twice about choosing a girl’s name – just in case. If you’ve named your daughter Bubba – why?

Has a hairy back
Sorry to say folks but its true. Prisons are full of hairy backed men. I don’t know if children with hairy backs grow up full of anger from the years of ridicule, and then work through the resentment by committing crimes? I’m just not sure. But you’d swear the Federal Bureau of Prisons has rounded up all of the “missing links” and locked them up.

He murders a lot
This one may seem like a no-brainer, but you might be surprised at how many people commit crimes and avoid prison.

He is loud
If your boy enjoys communicating at between 110 and 120 decibels during normal conversation, beware. Look on the bright side – he’ll get to kick it up a few notches once the cell slams shut. They like LOUD there.

He snores
We’re not just looking for a light rumbling snore. Here’s a little test: Assemble two 24 oz. slabs of raw prime rib (2 inches thick, min.). Take them to the car wash and pull up to the car vacuum area. Insert the hose halfway in between the two cuts of meat. Then, turn it on. The loud, percussive flapping sound that will be created as the air is sucked through the meat sounds exactly like that of an inmate snoring. Compare this with the timbre of your son’s snoring. Check!

He is an idiot
I’m not saying that your kid is doomed if he gets Ds or even Fs. I’m talking about the complete and utter morons. I’m talking about the stumped-for-an-answer-when-you-say-hello type of idiot. I know that this sounds harsh, but if you think your son might actually be a stupid idiot – just get it over with and call the cops. Tough love people.


I’m not suggesting that we pre-judge. I took advantage of a rare opportunity to conduct this research and now I’m sharing it with you. For me, only one of the above held true – I think.

Jerome Mayne is a public speaker delivering keynotes and workshops for conferences and conventions.  His topics deal with prison, crime and ethics.

You Might Be A Criminal If...

The National Association of Certified Fraud Examiners (ACFE) compiled a list of behavioral red flags from almost 1,000 case studies. Their research indicates that, to varying degrees, these behaviors were present in the fraud cases that they studied. If you exhibit some or all of these behaviors, you just might be a would-be felon.

Use your best Jeff Foxworthy voice and say each one of these aloud to see if they apply to you. Start by saying, "If you (insert red flag), you might be a criminal."

* are living beyond your means
* have financial difficulties
* have a wheeler-dealer attitude
* have problems with control issues and are unwilling to share duties
* have had a divorce or other family problems
* have an unusually close association with vendor/customer
* are irritable, suspicious or defensive
* have addiction problems
* have past legal problems
* have past employment-related problems
* complain about inadequate pay
* refuse to take vacations
* have excessive pressure from within your organization
* your life circumstances are unstable
* have excessive family or peer pressure for success
* complain about lack your of authority
* have a roommate named Bubba

Ok, now take it easy, that last one was mine. These are red flags only! The ACFE is a great organization - I've had a chance to speak at a few of their events and have met some of their members. They have unbelievable training and resources.

To see the ACFE 2008 Report to the Nation, go here.