How To Get Better, The Easy Way (Never Make The Same Mistake Twice)

by Chris Johnson

Instigator, anthill kicker.

Author website

I’ve never been a lifer in the real estate business.   That doesn’t mean I don’t have a lot to give, it doesn’t mean I don’t love it, and it doesn’t mean that I can’t kick ass.  I say this: there is no finer, safer way to learn how to be in business than being a successful real estate or mortgage guy.  And I say that you learn more, faster in the 100% commission lifestle than you’d learn anywhere else.   It’s the perfect microcosm of business: you get a litle marketing, accounting, customer service and sales.  You get to work with people that gave the middle finger to being kept citizens, and you get to have control over your own income.

What a great job we have.

One of the things that ground me up in the latter part of 2006 was the number of crazy stips that underwriters started to send.   On every deal, starting in about August, the canary in the coal mine died, so everyone I worked with, from Lehman Brothers to First Franklin, and even Interfirst…was stipping files.  (The inside joke among appraisers was always: is this an Interfirst deal or a ‘real’ deal).  These companies begun to underwrite files instead of rubber stamping them.  The audacity!

And in my office, loan officers bitched and moaned about this.  “The underwriter is stupid to not take this deal,” one of my colleagues said.  That particular deal, i followed it for a while.  It is now in foreclosure.  Eevery colleague and every deal was hard.   Even good loan officers didn’t react (see OODA) fast enough.  I decided to be different.   I didn’t belive underwriters were merely capricious, and since it was every lender, I figured it was gonna get worse.   So, in order to keep up with my payments to the IRS, I had to close a lot of loans.  And to close a lot of loans, I couldn’t be sending the same file up 4 or 5 times.

So I made a checklist in Word, all the things in reasonable categories.  I used stip sheets as a starting point. (The same checklist lives in Basecamp nowadays).  Best I could of all the items a file needed, in tedious detail.  11 things are on the ‘title commitment’ list.   I sent my files up with a cover letter from me regarding the file and how I calculated income and liabilities and a VERY accurate fee sheet and HUD-1 and testimonials from other underwriters that felt like they could clear my files to close.  (By the way, Lenders:  Want to make Realtor love you?  How ’bout A Hud-1 on day 1, 100% of the time). I also didn’t submit anything that I wasn’t sold on.

Learn On Purpose: Never Make The Same Mistake Twice.

Now, the checklist was smart, but not the novel part.  The novel part was on EVERY DEAL having the first page of the file be a log.  What went right, what went wrong.  See, doing THAT is a ton of work, but you have a page of notes on each file.  Then you can learn stuff fast.  You add each mistake to your list, and never do it again.  If you get a stip back from underwriting, you meet the stip in advance on the next file.

At the end of every file, you do answer these questions:

What Stips Did I Get Back?

Where Did the Customer Resist Me?

What Will I Add To The List for Every File?

Were there any documents that didn’t meet approval on the first pass?

Were there any vendors that could have performed faster?

What went right that is not part of the process?

This created a loop:  a self correcting system that ensured that improvement was part of my process.  When another LO was hit with some stip, I would add THEIR stip to my list.    So….as a relatively new loan officer to close deals in Ten Days.  Anyone could do that, though.  It was how I reverse engineered the process of underwriting.   But–since we’re priveliged to be working in a beautiful microcosm of buiness, we can use the same process as Real Estate Agents, Computer People or Project Managers.   I trained an assistnt to do this, and for a time, it went swimmingly.

The lessons are out there.  I was inspired to action by something that I read.  It wasn’t hard, and after the third closing, I spent LESS TIME per file than my peers.   Of course, I had more time on a submission.  My office (and this was mid 2007, when I generated 70% of the gross revenue of a ten man office) said my Realtors ‘spoon fed me cake deals’.   My take was that I got the same batter everyone else did, I just was staring down the barel of the IRS, and had no choice but to produce.