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ryemerr
190 Posts |
 Posted - 04/25/2008 : 1:49:01 PM
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Hey Guys,
I have a small shop and just want to get a feel for everyone's opinion on this. I have an LO that has been with 8 mos. She has only closed 2 loans with me since coming on board She is now demanding a 70% gross payout on fees earned (Iam a net branch and the branch fee and the app fee's come out before the split). I think the main reason for this request is she has several loans coming in ...aledgedly! She is sort of the ring leader for 2 other LO's that came in as well. So if I tell her no and she leaves it is likely that i will loose the other two as well. Also, keep in mind that she has been provided with leads...not one deal off of them! She has also been given call sheets for FHA streamlines as well...again nothing!
My first thought was to say yes but make sure she gives me a guaranteed amount of production every month...lets say 4 closed per.
What does everyone think! |
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mantixmortgage
3389 Posts |
Posted - 04/25/2008 : 1:50:28 PM
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| what is she at now |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 1:51:02 PM
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50 on Lead
60 Self |
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davidfr
2733 Posts |
Posted - 04/25/2008 : 1:52:11 PM
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| I have a small shop as well, and I would tell her no. Flat out. That is unreasonable. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 1:54:28 PM
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| My feeling is that she is gonna get a 50 to 60% payout regardless of where she goes. No one in there right minds would pay her that payout unless she was generating volume...which I would be glad to do as well. It's a tough market and i don't want to loose an LO but i am not gonna cut off my nose to spite my face!!! |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:10:05 PM
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| Is that on banked or brokered loan? and I mentioned the payouts before in a different post. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:13:56 PM
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| Wow...how are they even making any money! I would venture to say that they can't survive with that business model. |
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davidfr
2733 Posts |
Posted - 04/25/2008 : 2:15:42 PM
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| I am sure they are not giving leads and paying 83%. You said you are providing leads, and thus your payout is very fair. If you give in to her, then you are heading down a bad path. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:17:11 PM
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Thats what my thought was as well. Thanks Davidfr! I think the most logical approach is to put her on a tier
1-2 50%
3 60%
4 70% |
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AK__47
1684 Posts |
Posted - 04/25/2008 : 2:18:47 PM
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| Shes crazy. |
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jcanepa
800 Posts |
Posted - 04/25/2008 : 2:18:54 PM
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| Tier worked the best for me when Dealing with LO's |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:21:31 PM
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| sort of cuts both ways with a tier. It forces you to produce! Now the real question should be do I do that on both self and lead generated deals or just Self. I am thinking just self. |
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signature123
22 Posts |
Posted - 04/25/2008 : 2:33:07 PM
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| I own a shop here in FL and the tier system works pretty well. Give her a test period to see if it motivates her to bring in and close more business. If she still *****, then she blew her opportunity. Out of the 2 loans she closed, how many were your leads and how many were referrals? Are other brokers closing your leads? |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:34:33 PM
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| Both were self generated deals. The leads other LO's have closed deals off of them, although they have not been the greatest. |
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AK__47
1684 Posts |
Posted - 04/25/2008 : 2:35:09 PM
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| I would tell her that she is lucky to have a job. She costs you money every month for leads, credit pulls and supplies. I would let her know that if she were working retail that she would have been let go after 60 days. 2 loans in 8 months is terrible. I hope she has a second job. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:43:19 PM
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| My point exactly!!!!! She probably should have been let go months ago. |
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AK__47
1684 Posts |
Posted - 04/25/2008 : 2:44:45 PM
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| how long has she been in the business? |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:46:43 PM
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| i think 5 to 60 years |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 2:50:16 PM
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| LOL...my big fat fingers getting in the way again! |
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AK__47
1684 Posts |
Posted - 04/25/2008 : 3:04:38 PM
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| after 5+ years there is no reason to only close 2 deals in 8 months. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 3:07:08 PM
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| Precisely!!!! |
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TheFinancier
1449 Posts |
Posted - 04/25/2008 : 3:10:20 PM
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Tell her you will think about it.... String her out until the other deals are in your pipeline. Then tell her no and keep all the commission.
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ryemerr
190 Posts |
Posted - 04/25/2008 : 3:11:30 PM
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| LOL...I wish i could! But that is just not me! |
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JasonAaron1
1354 Posts |
Posted - 04/25/2008 : 3:15:51 PM
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quote:
Originally posted by ryemerr
LOL...my big fat fingers getting in the way again!
Geez...they must be huge to reach from 6 all the way to 0 :) |
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mustang05
214 Posts |
Posted - 04/25/2008 : 3:17:54 PM
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| tell her you will put her on a 95% split with a $500/mo desk fee. You will make more money that way. |
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808
4550 Posts |
Posted - 04/25/2008 : 3:19:57 PM
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quote:
Originally posted by ryemerr
Hey Guys,
I have a small shop and just want to get a feel for everyone's opinion on this. I have an LO that has been with 8 mos. She has only closed 2 loans with me since coming on board She is now demanding a 70% gross payout on fees earned (Iam a net branch and the branch fee and the app fee's come out before the split). I think the main reason for this request is she has several loans coming in ...aledgedly! She is sort of the ring leader for 2 other LO's that came in as well. So if I tell her no and she leaves it is likely that i will loose the other two as well. Also, keep in mind that she has been provided with leads...not one deal off of them! She has also been given call sheets for FHA streamlines as well...again nothing!
My first thought was to say yes but make sure she gives me a guaranteed amount of production every month...lets say 4 closed per.
What does everyone think!
40-50% on leads that you provide, 60-70% on leads she provides minus $450-$650 per file is the going rate for shops in FL that provide leads and a desk. Tell her to check around town or Craiglist. |
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brianconner
354 Posts |
Posted - 04/25/2008 : 3:21:47 PM
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quote:
Originally posted by AK__47
after 5+ years there is no reason to only close 2 deals in 8 months.
After ONE year, that is pathetic production. I keep reading about guys closing one or two a month, how can that be remotely considered "full-time" in the biz? |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 3:25:15 PM
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| And the worst part is that she eats up alot of my processors time with the one loan that she has in currently. Been flipped to 4 lenders because she couldn't accept that the appraisal wasn't that great. (each one cut her appraisal to almost the exact same value). I mean really why don't i just pay her to sit around and do nothing. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 3:39:59 PM
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| The tier I used to have was a rolling 6 month average but with this market that was killing guys. Month to Month is probably the best. |
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64GTO
149 Posts |
Posted - 04/25/2008 : 3:42:51 PM
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| Doesn't sound to me she is in any position to be demanding anything. I agree with the others put her a tiered schedule and see if her deals are real. Anytime an employee gives an ultimatum can become a dangerous situation. It won't be the last one and can effect everyone else in your office negitively. An employer can not yield to ultimatums and is better off letting the employee quit. The employer must set the tone and expectations for the office. |
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ryemerr
190 Posts |
Posted - 04/25/2008 : 3:44:02 PM
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| Exactly...I was so fit to be tied that i almost toyed with just firing her on the spot for demanding anything at all! |
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brianconner
354 Posts |
Posted - 04/25/2008 : 4:17:11 PM
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| Do her (and more importantly, yourself) and fire her today! |
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fund-n
357 Posts |
Posted - 04/25/2008 : 4:52:37 PM
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| Fire her NOW! she has become a cancer and you know what cancer does...it spreads. I have to do the exact same thing as we speak. No one likes to fire anyone but she is actually costing you money, time and aggravation. p.s. tier systems work. |
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khok
6 Posts |
Posted - 04/25/2008 : 5:31:30 PM
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| I own a small broker shop as well and have first hand experience about a demanding under-achiever. I even tried a tiered split- never worked. The files they said they were working on were dead deals from the beginning and ended up costing me more in credit report and processing time/fees than it was worth. Let her go immediately. The previous poster is right. It truly is a cancer that will spread in your office. Two closings in eight months- she should be happy she still holds a position with your company. |
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Tsnyder
11706 Posts |
Posted - 04/25/2008 : 7:00:29 PM
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If she walks you really lose nothing... 2 loans in
8 months. If she's the leader of the other two I'm
guessing they haven't done much either.
Let them walk and fill those three seats with producers.
I'd tell her it's an interesting coincidence that she's
asking for a larger split because I was actually thinking
of reducing her split based on lack of production.
Tsnyder |
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GVDenny
902 Posts |
Posted - 04/25/2008 : 7:17:49 PM
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Here's my Tier
1-Hit the Back Door
2-Leave via the Front Door
3-50
4-50.1
5 and above 60 |
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CoolMtgGuy
12568 Posts |
Posted - 04/25/2008 : 7:37:18 PM
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| Put her on a tiered comp program as others have suggested. I would not acquiesce ... no way. I fired an "18-yr veteran" last week for similar reasons. Low production, demanded higher split and ticked off many folks. |
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syndicator
521 Posts |
Posted - 04/25/2008 : 7:56:36 PM
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Everyone here has some great replies.
My previous broker had a spilt that was tiered like previous posters mentioned but he only paid the additional splits at the end of the year.
All year you would get 50% split and if you were a high producer you would get a "bonus" check at the end of the year. That bonus check could be as high as 70%, depending on your produciton.
Helps retain employees til the end of the year and helps the LO so if he or she has a bad month or quarter they can always make it up later. |
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fund-n
357 Posts |
Posted - 04/25/2008 : 8:00:07 PM
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quote:
Originally posted by syndicator
Everyone here has some great replies.
My previous broker had a spilt that was tiered like previous posters mentioned but he only paid the additional splits at the end of the year.
All year you would get 50% split and if you were a high producer you would get a "bonus" check at the end of the year. That bonus check could be as high as 70%, depending on your produciton.
Helps retain employees til the end of the year and helps the LO so if he or she has a bad month or quarter they can always make it up later.
hmmmmmm, veeeery intersting |
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smoothlid
517 Posts |
Posted - 04/25/2008 : 8:35:32 PM
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wow does this ever hit close to home....lol.
I run my own shop. I produce @ 3-5 loans a month personally from referrals & previous clients. My partner does @ 2-3 of his own each month. I have had 6 LO's in last yr and half & all have avg'd less than 1 loan per month. All are on a tier of one kind or another, based on their so called experience, & negotiating skills, or my need to fill a desk.
I would tell you to fire her, but not until shoring up the relationship with the other 2 first, if they are producing...maybe even offer them something more. (more leads, bonus for next month, etc...
It is incredible that LO's who can't do squat on their own, want the highest payouts & leads, etc....
When I worked for a broker shop, I got 50% --LESS A $450 APP FEE TAKEN OFF TOP, LESS .125 OF LOAN AMT...this worked out to @ 45%, & we had a processor for @ 1/2 the time I was there, so I was processing my own loans most of the time, & we got some crappy leads that were aged...I brought in 90% of my own business, & paid for a lot of my own supplies...my manager didn't even know I had a deal until i brought him the signed hud, note & check after closing most of the time!
& I knew what I was doing & produced on avg $24k gross fees per month.
I asked for a bigger split a few times & was told no, then got it for the last 3 mos I was there, only because they heard I was thinking of leaving...I got 5% more....lol.
No way do you give in, it will destroy you!!!!
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fund-n
357 Posts |
Posted - 04/25/2008 : 8:50:35 PM
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| yea, I have been getting hit for a bigger split but here is my problem. I spend 30-40k per month on advertising plus overhead that was set up for 20 los' and we all know production is down so the trade off would be higher split = no advertising. Know what would happen... they would leave because the phone is not ringing. What I need to do is fire the people who are not producing b/c those are the ones who want me to pay out higher to make up for thier lack of production. |
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1stintegritymort
2708 Posts |
Posted - 04/25/2008 : 8:53:12 PM
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| i would give it to her if you really want to keep the LO's she brought in, but I would not give her any of your leads. When you get that high a cut, you pay for your own leads and get your own business. If she wants 70% on your leads, tell her to go home and pack her bags. She is expendable and you can find someone else to replace her real quick. |
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Gilby21
167 Posts |
Posted - 04/25/2008 : 8:54:16 PM
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I have used a tiered pay plan for my shop for 8 years with good success. Your commission for the current month is based off of last months production.
1-2 closed or $4,999 = 45%
3-4 closed or $5,000 to $7,999 = 50%
5-6 closed or $8,000 to 11,999 = 55%
7+ closed or $12,000+ = 60%
So if last month the LO closed 4 loans and generated $11,000, they would get paid 55% on what they close this month.
Works better than fiber.
I also give a $500 bonus for each top closings and total fees. |
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fund-n
357 Posts |
Posted - 04/25/2008 : 8:56:58 PM
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quote:
Originally posted by Gilby21
I have used a tiered pay plan for my shop for 8 years with good success. Your commission for the current month is based off of last months production.
1-2 closed or $4,999 = 45%
3-4 closed or $5,000 to $7,999 = 50%
5-6 closed or $8,000 to 11,999 = 55%
7+ closed or $12,000+ = 60%
So if last month the LO closed 4 loans and generated $11,000, they would get paid 55% on what they close this month.
Works better than fiber.
wow! thats high if you provide leads. |
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syndicator
521 Posts |
Posted - 04/25/2008 : 9:03:41 PM
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Giving her a 70% split doesn't mean squat if shes not producing!!! Who knows she may actually bring in more than 2 loans in 8 months, How are here cronies doing. If you give it to here and she not doing squat then everone else may want it including here friends.
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ryemerr
190 Posts |
Posted - 04/26/2008 : 05:07:59 AM
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See that is the danger of entertaining her idea of a higher payout! Everyone else will want it.
I liked the tier structure and am going to go with that but the bigger question for me is why????
Has she seen something better elsewhere...is she just genuinely unhappy??? Hmmmmm
Did i mention she has a Non-Compete! |
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808
4550 Posts |
Posted - 04/26/2008 : 06:01:30 AM
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quote:
Originally posted by ryemerr
See that is the danger of entertaining her idea of a higher payout! Everyone else will want it.
I liked the tier structure and am going to go with that but the bigger question for me is why????
Has she seen something better elsewhere...is she just genuinely unhappy??? Hmmmmm
Did i mention she has a Non-Compete!
non competes are soooo easy to circumvent, don't rely on that as any kind of leverage |
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CoolMtgGuy
12568 Posts |
Posted - 04/26/2008 : 06:06:15 AM
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quote:
Originally posted by ryemerr
See that is the danger of entertaining her idea of a higher payout! Everyone else will want it.
I liked the tier structure and am going to go with that but the bigger question for me is why????
Has she seen something better elsewhere...is she just genuinely unhappy??? Hmmmmm
Did i mention she has a Non-Compete!
You are th ebusiness owner and as such, you need to determine what is best for the long-term success of your business. That should be your primary objective ... then you can give some thought as to her world ... whether or not she is happy or has another opportunity. Also, start with your gut feel ... use it as a foundation to make your final decision.
I see a lot of percentage numbers being thrown around but we should be careful to qualify those numbers. For example, a 70% share sound like a lot ... but it may not be if there are charges that are taken off the gross revenue before that split formula is applied. My recommendation is to give them all a 70% split with no shop leads and charge a desk fee to cover some of the overhead of having their lazy butts in your chairs.
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brianconner
354 Posts |
Posted - 04/26/2008 : 07:24:28 AM
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| An average of 3 loans / year isn't considered production by a L.O. I would consider that to be a great referral source! |
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ryemerr
190 Posts |
Posted - 04/26/2008 : 08:19:34 AM
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| Maybe that's the solution. Tell her to work from home! |
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Gilby21
167 Posts |
Posted - 04/26/2008 : 09:04:54 AM
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quote:
Originally posted by fund-n
quote:
Originally posted by Gilby21
I have used a tiered pay plan for my shop for 8 years with good success. Your commission for the current month is based off of last months production.
1-2 closed or $4,999 = 45%
3-4 closed or $5,000 to $7,999 = 50%
5-6 closed or $8,000 to 11,999 = 55%
7+ closed or $12,000+ = 60%
So if last month the LO closed 4 loans and generated $11,000, they would get paid 55% on what they close this month.
Works better than fiber.
wow! thats high if you provide leads.
Well, I don't supply leads. For whatever reason I can't get my LOs to work the leads. A while back I decided that if they were not going to follow through on leads that I provide, then I would stop providing leads. The pay-plan penalizes inconsistency and rewards consistency. Keep in mind that your payout is determined by your previous months production |
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