Are you average?

ParetoPrinciple

Did you know that the average origination volume per agent is approximately $3,500,000 per year? That’s right, if you take an estimated $60 Billion of mortgage origination through the brokerage channel and divide that by the approximately 16,000 to 18,000 mortgage agents registered across the country you come up with somewhere between $3 – $4 million of annual origination volume. These numbers may not be scientific at all but are strong enough to illustrate a point.

I would suggest those dedicated to our profession and make this their career do substantially more volume than $3m. Many will be quick to point out that this number is disproportianately skewed downward by the number of agents that do very little. I would submit that the average career broker is somewhere closer to the $10 million dollar range with many much higher than that. This is an extremely alarming statistic. If you are a broker doing less than $3 million per year you are not in a position to garner enough experience to improve your skills. At $3 million of production you are certainly not making a good living as a mortgage broker.

This means that the 80/20 rule of sales applies in our industry and maybe even more than most industries. To put that in context if we can agree that this rule is in effect, that means of the 16,000 brokers across the country only 3200 individuals make up the bulk of the mortgage volume. So we can assume that there are 12,800 individuals representing our channel with not enough experience or expertise to do it well.

Once again, I would suggest that this needs to be our area of focus if we want to increase the level of professionalism in our channel.

For those that are not dedicated this channel as a profession, we need to either:

  1. Train, mentor, educate and assist them to grow or
  2. We need to get them out of our channel

There is no other viable option. Forget about national awareness campaigns, as any ad campaign, no matter how well intentioned will leave the consumer open to an 80% chance of a less than professional experience.  If that happens than any advertising money spent has just been wasted.

3 Responses

  1. Scott Dawson says:

    Another great post Mike. I touched on the topic of part time brokers before on my blog as well so I think you know where I stand on the issue.

    The problem is too many people get into this business without a business plan. There is a fairly easy barrier of entry to the industry and that is perhaps part of the problem.

    I think most mortgage brokers enter the industry without any form of business plan.

    I know of more than a few brokers who got into this business and quickly exited after less than 2 years because they couldn’t make it.

    Typically, they are the ones that are quick to give away their commissions in order to “buy” a client. They quickly learn that this isn’t sustainable and because they haven’t built any relationships with their clients or referral sources they quickly exit the industry.

    Perhaps the broker owners need to step it up and not hire anyone off the street with a license?

  2. Julie Cooper says:

    Most powerful line “Forget about national awareness campaigns, as any ad campaign, no matter how well intentioned will leave the consumer open to an 80% chance of a less than professional experience”

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