Investor-Share Under-Index Audit
Compare your investor-loan mix with the market to expose lost share
- Difficulty
- Easy
- Time to result
- ~days to results
- Steps
- 4
- Confidence
- 97%
Davis offers a simple production-mix audit for detecting lost investor business. Pull one year of originations, calculate the percentage that came from investor transactions, and compare it with the market's investor share. He cites a national benchmark of 26% for the prior year and says California was closer to 30% or 31%, illustrating why the most relevant local figure should replace a broad average when available. If an originator's investor share is below the applicable market percentage, Davis interprets the gap as under-indexing: investor transactions exist, but another lender is capturing a disproportionate amount. The result is not merely a market forecast; it is a decision rule for where product education, referral development, and sales attention may be missing.
Origin
Extracted from Coffeez for Closers, where Tom Davis proposed comparing an originator's investor production with national and California transaction shares.
Core principles
- 01Measure production mix before assuming segment coverage
- 02Use an external market share as the baseline
- 03Prefer a local benchmark when the region differs from the nation
- 04Treat a below-market share as evidence that competitors are winning available business
How to run it
- 1
Measure production mix
Review the previous year of closed loans and isolate investor transactions. Divide investor transactions by total production to establish the internal share.
Pro tip Use a full year to reduce distortion from a single unusual month.
Watch out Keep the definition of an investor transaction consistent across the internal and external figures.
- 2
Choose the benchmark
Find the market's investor transaction share for the same geography and period when possible. Davis uses 26% nationally and roughly 30% to 31% for California as examples.
Pro tip Prefer a state or local benchmark when investor concentration differs materially by geography.
- 3
Calculate the gap
Subtract the internal investor share from the applicable market benchmark. A negative gap indicates that production is under-indexed to the segment.
Watch out A benchmark gap identifies an opportunity but does not prove why it exists.
- 4
Redirect sales attention
When the business is below the benchmark, strengthen investor-product knowledge and referral activity. Recalculate the mix after new production closes.
Pro tip Track the percentage over time rather than treating the audit as a one-off exercise.
In the wild
Davis says California's investor concentration was close to 30% or 31%. An originator whose investor transactions represent less than that share of production is under-indexing the local market even if the business looks stronger against a lower national figure.
→ The local benchmark exposes a segment where competitors may be taking available transactions.
Common mistakes
Using revenue intuition instead of mix data
The audit requires the actual share of investor transactions in completed production.
Ignoring geographic concentration
Davis notes that California's investor share was higher than the national figure, so the wrong benchmark can hide underperformance.
Treating the benchmark as a quota
The comparison identifies under-indexing; it does not establish the cause or guarantee that every originator should have an identical mix.
Is it for you?
Best for
It is best for mortgage originators deciding whether investor lending is an underdeveloped part of their production mix.
Not ideal for
It is not ideal when the external benchmark covers a materially different geography, period, or transaction definition.
From the transcript
“what I would do is look at production for the last year and see if you're at 26%”
“if you're not at 26% and you're below 26% that means you're under indexing the the national average”
“if your 31% of your production is not investor transactions that means someone's eating your lunch and taking your business”
From the episode
Getting Deep with Tom Davis