How do they do it? Top 5 closing department tips
In this installment of our series: the new normal, we are going to share highlights from our most recent roundtable.
We gathered the top 10 closing departments nationwide to see what they have in common. These staff in these closing departments close far more transactions per person per month than the national average. What we found was these successful companies have many operational similarities.
Transaction coordinating is key
All high producing closing departments have staff or managers or transaction coordinators that fully prep the transactions before they get to accounting.
The closing department only needs to quickly review the files using their commission software and pay the agent. In the very highest producing offices, they report that between 75% to 99% of the files are perfect when submitted for payment and need no data entry by accounting staff. Not all top producing offices receive files for closing that are really ready to close. In most closing offices, a large percentage of the files need to be completed or corrected by the closing department before the files can be closed and the agents paid. If your closing department staff needs to modify transaction data for more than 25% of their files your per person productivity will be approximately 50% lower than the highest producing offices.
Takeaway: You cannot reach maximum productivity unless you get 75% or more of the transaction data correct and complete before submitting files for payment.
Belts and suspenders
All high producing closing departments have some two-step process for notifying accounting that a transaction is ready to close. Many report using BOTH a status flag in their back office software and a transaction summary sheet that is faxed or emailed. Others use BOTH a status flag in their software and a check of the status in their transaction management software. By using two notification methods, they have a way of still “catching” the closings...even when staff forgets any step in the closing process.
Takeaway: High production closing departments have two separate ways of knowing a transaction is ready to close.
Trusting the admin staff and training
The roundtable participants emphasized that for their work, it is critical that they are able to trust the accuracy of the admin’s work. To help administrators succeed, they spent (or regularly spend) time making sure the team is not only trained on HOW to validate files for closing...but also WHY their work is so important. One company explained to us that by training admin staff well, they have been able to reduce the number of employees reviewing files by 75%. Watch this short clip for details.
Takeaway: Time spent training admin staff to do a good job reviewing files will save time in the accounting department and could meaningfully reduce labor costs.
Transaction management software and integration
Every high producing closing department uses transaction management software. Among the group surveyed, dotloop is the most widely used (followed by SkySlope & Paperless Pipeline). Integration automation between the transaction management software and the back office software was mentioned multiple times as important to speed the process. In fact, one company mentioned that the lack of API technology (which enables easy software-to-software integration) in their transaction management program slows down their closing department. Attendees said that having their transaction management software or relocation software updating their back office software reduced “do-overs” on closings. Many attendees commented that the use of transaction management software is on the rise among agents (likely in response to offices being closed due to Covid 19).
Direct deposit, escrow and banking process impact on efficiency
At our roundtable there were some consistent practices related to banking. Across top producing closing department, here are the most important takeaways:
- ALL the highest producing closers use direct deposit from within their back office software. This saves hours per person per week. Alternately, closers that do direct deposits at their bank website or using Nacha files report that they spend approximately 30 min to 1 hour per person per day.
- Closing departments do not make their own bank deposits. Usually admin staff at remote offices is scanning and depositing commission proceeds. Copies of commission deposits are sent to the closing department, and closing department staff records and reconciles the deposits...but they don’t make the deposits.
- Commission closings are centralized. Large organizations (often with multiple legal entities in multiple states) are running their closing departments from a single centralized location.
To reach maximum productivity in your closing department, you need to do this:
- Get the transaction data and documents entered, checked and approved BEFORE the file gets to the closing department – with at least 75% accuracy
- Set up 2 separate ways that the closing department can “know” a property is ready to close
- Invest in training your admin staff till they can check files with at least 75% accuracy
- Get transaction management software and integrate it into your back office software
- Have admin staff handle deposit scanning
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