Episode Transcript
[00:00:00] Speaker A: Hello and welcome to what will be the last episode of 2024. And we are going to make some predictions for 2025 and let you know our podcast is going to be entering a new season very shortly. It is going to have a makeover where we are going to be looking for sponsors. We're going to be looking for friends of lenders. We will have some big names, some big lenders moving forward in 2025. And we want to be a place where it is an affordable place for if you have a solution to be able to get that out there to the mortgage industry and to the real estate industry.
We want to talk about origin stories in the new year. We want to talk about how mortgage companies and real estate companies are going to be going after customers in the new year. We want to bring light, hopefully for originators and then ultimately homeowners to understand who they're dealing with. You know, I think there's really little education we talk about and people don't know what goes on. So maybe this is a way to lift the cloak of mystery that occurs during the mortgage process. I created easy mortgage apps with some partners, but the origin story was the ability to cold call lenders out in California with this idea to get them to a gotomeeting. None of the others existed at the time. The zooms, the teams and sell, the ability to track milestones in a mobile app and lift the cloud of mystery or lift the cloak of mystery. So that's where that phrase came from. And we were highly successful with creating a channel, creating something that was tangible and it's still tangible today. Giving out that co brand card, though the company that has dominated that space has turned into a point of sale first, an eote first type company. I do think that mobile is a huge play in mortgage specifically because I still question how many actual lenders have invested time, money, thought leadership into mobile. And my answer is very little. But that will be somewhat of a theme, Mike. You know, we're going to have a whole new intro. We're going to be a whole new show in the sense that we do want to lift our level of production, make sure that we are a podcast people can listen to while they're driving around working to get a better idea of the landscape of the industry. And I think we do a good job of getting lenders on our show consistently and getting them to talk real without the high stakes pressure of maybe a magazine, you know, interviewing them. So it's been a great year, Mike. Going into 2025, you and I have started this venture, so maybe we can start there on. I'll actually preface it 2025. We can dive deeper into this. I want to call out CRMs and ask what lenders are doing with it and is it time we talked about in 2024 to burn the ships. I know that was on an episode the Vikings burn the ships. Is it time to burn the ships on rate term refi. If it happens, great. But don't put an ounce of energy into marketing it.
And you have, it seems purchase is the way to go. The golden parachute of cash out refinances. If anybody can figure that out without everybody being golden, locked in and then the ability to. And you were talking about it. So I'll give you a lead in here. There's so many loan officers doing two deals a month. Right. And that's not. Oh, what they probably signed up for from a livable lifestyle.
They stick around because they feel like they're building business.
Building that business of rate term refi plans. That's the ship you need to build. Now is the time those two can be replaced with great product. Can you talk about how we're working with IMBs and actually funding real money coming from what we're doing to help them with fix and flips and then we'll talk about some of the other programs. But in 2025, I think you're going to see some lenders really expand their product and other lenders say, whoa, whoa, whoa, when did, when did that happen?
[00:04:44] Speaker B: Yeah, I think, by the way, Merry Christmas, Mike.
[00:04:47] Speaker A: Merry Christmas to you too. A little soft on the volume there. I don't know. I know you're battling through like Bill Loman earlier this year, some sickness. So yeah, we'll work with you.
[00:04:58] Speaker B: Sure.
[00:04:58] Speaker A: A little close on the screen to get the better of audio. We're okay with it. But Merry Christmas. Hopefully all your stockings were, were stuffed this year with all sorts of treats.
[00:05:09] Speaker B: Lots and lots of family that was coming around. And you know, it's interesting, Mike, that the saying was survive to 25.
And now that we're. Now that we're here at 25, you know, and we survived and there are those that did survive, it's like, okay, well now that I've survived, now what?
Right? Because even if you did survive and even if your business was okay, let's say you went from doing two loans a month to four loans a month and you didn't do four loans a month, you, because you are so much more awesome as an originator, you need four A month because the origination platform in the industry has lost 60% of attrition. Right. And so the originator has been able to survive by attrition, a little bit by luck and a little bit by just market market conditions. So over the course of the last quarter, we've seen some inventory. According to nar, we've seen fairly stagnant growth in listings.
And that, that's actually good because that tells me that we don't see a lot of growth. But those, those listings are actually going into contract, which means that we have more properties going into contract, which means that there's more loans to be done on the purchase level. That being said, one of the things that we were looking at and are still looking at is that inventory is still an issue. Right? Mike?
So if inventory is an issue nationwide, whether you're on in the Midwest or on the east coast, and really what it comes down to, all across LinkedIn, I've seen it, it is, it's, it's really not about loan programs, although that's part of it. It's really about affordable housing.
And I think that if, if someone is a flipper, that means that they have the ability not only to be profitable, to flip properties, buy a property for a certain price at a lower price, fix it, and then sell it at a higher price. And I would say that there's a lot of flippers that are, that are out there right now that are leaving money on the table on purpose. And they're leaving money on the table on purpose because they've seen the market, because the interest rates going up, and they've seen the, and they've been able to leave money on the table because they've been able to be profitable not only to the lender that's providing them with the financing and also for them as the flipper. Now, everybody, you know, we're, we're for profit organizations, right? We do things for, for, for income, for profit. And we're not a nonprofit by any stretch of the imagination. But I think that if, if you're an originator out there right now and you don't have this as one of your products are out there, maybe you do have it actually, but you are brokering it on the side. And you know, you're talking to a broker, you're like, oh yeah, I brokered it on the side and I get a little something on the side. We actually don't talk about that, Mike. Right. Because those are, those are all behind closed doors conversations. But I would be, but it would be foolish to think that there isn't, there are deferred that don't, that don't make some money on the side.
[00:08:13] Speaker A: It seems an opportunity to control your own destiny if you now have this arrow in your quiver. So to break it down for an originator, we know now imbs with originators that are making great money on these fix and flips and they don't have any competition right now. And this opportunity came from or the ability for you to fund these has come from the fact that Wall street wants the street to do more fix and flips. And so that's why 2025 prediction is that's where the opportunity is. It's common sense math here on Mike Dub.
[00:08:59] Speaker B: Well, we talked to Rudy Orman about this on our show actually what two months ago and Rudy was saying that this type of fix and flip product needs to be more readily available to the in the origination platform, not just for non qm, but you can originate a fix and flip mortgage loan, collect your fees on it. Right. And not really have to. Depending upon who the investor is, it may not have any buyback provisions and that's why I say it depends on the investor. But if there's no buyback provision on that one, you know, there's no epo. That seems to be the topic of conversation lately. If there's no EPO or if there's a potential of no, then you could take something, utilize the financing and then refinance that with your borrower. You know, you got them into the property and then put them into a non QM. Why? Because you bought the property for $250,000. The appraisal came in at $420,000 and you know, with comps all within a quarter, a quarter mile of, of the sale itself of the property itself. And if you have comparable sales that are going to support the value, looks like it's going to be a deal. And for those who are buying at the lower price year, I haven't seen that much of those in San Diego or Seattle, Miami, you know, I haven't seen them in major metropolitan areas, but I definitely have seen them in smaller metropolitan areas, Dallas, Fort Worth or Charlotte, North Carolina.
And I think that those marketplaces, you know, with an average loan size of what, $250,000, those the investors already know that they are going to be paying more than the average cost for the financing for the, for that money. So if they already know it, then it takes out the argument or the pushback on fees. And if you've taken out that argument. You just know that it's going to cost that much. There's going to be some competition. But I think that if you are an originator and you're selling value proposition most of the non QM originators that are out there right now who have the fix and flip product can do this and not and and really make it more of a seamless product. And for those who are not doing fix and flip products they're actually missing out on another on another 500 to a million dollars of non human business profitable non human business refinances.
[00:11:20] Speaker A: Yeah. One thing I like to do with IMBs that want to have the conversation is and I learned a lot from the software world of easy mortgage apps was the lifetime value ltv own to value but it's a term lifetime value of a customer and I believe starting to segment out with you could do it with your CRM. They probably have somebody that's really good account rep that understands this at least. But what are the lifetime values of each type of of customer And I think that is where you'll start to see the rate term and making this prediction again. I've already seen or heard from the Strathmore group that servicers have been able to retain over 50% almost 60% of all rate term refisal since 2019. I believe it's because of a couple reasons the mobile app I think Mr. Cooper has an 80% adoption rate of their mobile app. People do go into it.
I always said eyeballs is the biggest currency in the mortgage industry and no one's figured it out yet. I always try to work with somebody that wants to figure it out but it it just hasn't clicked yet. Mr. Cooper has eyeballs. They have the ability to tweak a B test and figure out how to get those conversions and obviously they are getting them. Number two everybody went out and had a point of sale. Right. So consumer connect blend you know I I could keep going roostify when it when you know it existed people got used to clicking 265 different screens and buttons. That's the number write it down to apply for a mortgage.
Before that they typically talk to someone Mike like you right. And got advice or like me back in the day.
So you've now lowered the barrier to entry to be to have your business model somewhat disrupted meaning if you didn't take them through that point of sale then it would be a lot harder for that servicer to retain them because that's the weapon they're using or that's the tip of the spear is the same PH just went out and was able to sign up for blend. Now that's converting better and better every year because those people that they're servicing, that's how they got the mortgage in the first place. And so they're just doing the same thing. I think that has those numbers up. So lifetime value.
If you took a fix and flipper, one, they're going to be flipping property. Two, how in your company can you help provide the flip part of it? I've heard last year people were frustrated. They had 60 people with pre approvals.
Top producer typically was having trouble feeding his family and it wasn't for lack of ability to get buyers at 50 pre approvals they were out looking at property and every Monday, no, none of his bids won. If people are sitting, if that's one loan officer people sitting on all these pre calls, pre approvals, I don't know if you segment that within your company, but my prediction is how can you make a better lifetime value of your customer? So if one customer is the investor and you can somehow tell the Investor, we have 45 people that want to. Here's 10 want to buy in this profile. 10 want to buy in this profile. As you're looking at property, we also provide the fix and flip. And here's some, some ways we'd like to work with your contractors as well as referral partners. The grass is very green in that area. If you can be somebody that they respect, right. And then in one way to earn respect is be their, their money person. And not to mention a lot of those investors are also real estate agents. So I just think it's a faster way to find a higher LTV of a client than looking at that rate term.
[00:15:18] Speaker B: You know, there's a life cycle to a realtor that is also a flipper. And typically what happens is that they go out and they find some properties on their own and they go and they go, oh, well, I know the comps. Why? Because I know the comps. And so they find the properties, they talk to the relationship money guy and they say, oh well, you know, I want to put down as little as possible and I want to be able to do I want to be able to flip the property or I want to be able to refinance it and cash flow from it and you're an originator and you survived to 25 and you're losing that. The realtor, you don't even know what you don't know meaning that there's originators out there, that they're flipping properties. And they're like, well, you know, I already have someone that's doing private money for me. And they're like, okay, but outside of providing you with that financing, what, what are they giving you as value? They're like, well, I mean, that's pretty much it. I mean, I wasn't able to get it from you before, so I'm going to get it from them today. Because I wasn't able to get it before. I'm like, well, let's have that conversation. And I think that if there are more conversations to survive into 25, that the people who are originators and survived into this long can create that value proposition of that. Of introducing that product, not only into their product repertoire and also into the how to be that trusted advisor. Because at that point, if you're.
Excuse me, if you're flipping properties, typically you're going to be profitable. Typically. Not, not everybody's profitable. I've seen people lose money, too. But if you are profitable and you're making money, then what else. I mean, what, what else could be better than thinking? Because what I've. This is the life cycle that I was talking about, I was alluding to. The realtor goes out and they flip, and then they eventually own, let's say, six to eight properties and they refinance into some non qms, right? And then eventually they just go, you know what? I, I have surprisingly, I'm going to say this surprisingly, that realtor, what they've, they, they have like a. What do you call it, a diminishing return of time. So once they get to like six to eight properties, maybe 12 properties, maybe even less than that, maybe it's only four because of. Of toilet, tenants and trash. How you manage a property, you have to rehab it. You're gonna have to figure out how to talk to the general contractors or the handyman or the tenants. And then once you get into that, then you're like, okay, I'm done at 4, I'm done at 5. Right? And so I like that slogan. Toilets, tenants and trash.
[00:17:57] Speaker A: Trash, tenants.
[00:17:58] Speaker B: Yeah. And so if you are a flipper and you've reached that diminishing return of time, then now you're looking at it sitting there going, okay, I can now actually make some commissions. I can go ahead and make an extra three and a half to 6%, double, end the deal, there's money on the table. And sit there and go, you know what? I was going to do it myself, but you know, I can, I can get, I can represent the buyer, they can go and buy the property, they can use the fix and flip lender. Um, I'll be able to pick, they'll be able to piggyback me. Right. The new Flipper might not have the experience so it'll be important for that Realtor. Now the realtor is providing more value, a more value added proposition to the flipper buyer investor. And now they can literally, if they were only doing two to four deals in units a month as a realtor, they could probably generate another two to six units. Because what I've noticed in the smaller markets Mike, is that in the smaller markets there's, there's still plenty of inventory. It's still tight. There's no question that it's tight, but there's still inventory. And I think that's really what it comes down to.
[00:19:08] Speaker A: And this is where the better inventory would be. And if you can become somebody in town that helps take properties that need work, help facilitate investors to make them great properties and also bring your buyers early access to it. Early access to what it looks like. That's our prediction here in 2025. Also another prediction is another product is the advancements of self employed borrowers and what is now available to them.
Bank statement loans.
The ability to just buy property that debts and services correctly where you don't need to show income outside that you identified a property and you can take care of that property and it makes money.
This is an area where I think what's really going to make it big. My prediction, there is AI now that has created these SaaS companies that allow you to scrape data, scrape Google and get it into an Excel sheet and then automatically email it. You can't really do that on the consumer level is my point. It's hard to do, it's difficult to conceptualize and I don't even know how legal it is from a email, you know, without opt ins. But you can target small business. There's ways to automatically Google search it and grab the contact out of it. There's that, that's AI is there to do that. Put it in an Excel sheet. It's going to be easier for brokers and loan and IMBs. The problem with IMBs is I think a loan officer is going to have to go out and buy some of this themselves. But you can then target self employed borrowers and tell them I have all the, the pain points that you had solved, you were getting rejected and I know why. And now there are people that want to lend to you. I between the fix and flips that we're talking about and these loans and I don't want to call them non qm, they're just self employed gig economy. I think as a loan officer my prediction will be don't just learn them, but learn how to brand with them and learn how to use this AI. People ask like what should I use AI for? I would use this Google scraping to create lists for the self employed borrowers. To me that's the biggest market in 2025 and it pays the most. Right. With margin. Do you want to explain real quick what happened to margin on a, on a traditional 30 year fixed and why? Right.
[00:21:48] Speaker B: If you are an investor, meaning that a flipper or if you're a real estate investor and you're looking to make some purchases and if you can get 10% down on an investment property and there might be like a small prepayment penalty or they call it an interest reserve or interest guarantee back to the investor lender, then the investors who are borrowing the money, the borrowers, they already know they're going to be paying more, more points, more fees, higher interest rates because the collateral package of the property itself, typically it's just not as good, right? So if you have the forces of lending, your credit collateral capacity to pay in character and your collateral package is terrible, you know, and the appraisal comes back and the value of the property is subject to completion of repairs, that's going to be a fix and flip property. And you may want to. And if the purchase price, say for example was 300 and the appraisal came in at 325, you sit there and go, you know what, this may not be the right owner occupied deal. That might be a FHA 2 or 3K. But for the flipper, if they're looking to make a profit, they're going to go and renegotiate a better price because why they're looking to make a profit upon the resale of that property? And I think the value proposition for an originator and also a realtor is looking at this going here's some comparable sales and here's the key, what is the path of progress, Mike? And if you look at that and you can, it's kind of like during the summer I was running the hose and you know, playing around with the ants and the ant trails and so on and so forth. You can see where the water is going to go when the water's getting headed there. And so the path of progress evaluation is also following that, where, where the comparable sales are going and there are limited comparable sales out there, which is going to be a challenge whether. And so you're going to have to, as the, as the flipper and as the underwriter for the mortgage paper itself, you're going to have to be able to look at that and go, okay, is this, you know, if we have to take the property back, does it look like a good deal? And if the answer is yes, then do it. If the answer looks like it's kind of marginal, maybe you shouldn't be doing it. And sometimes, you know, there's a saying that if you, if you don't make a decision, someone makes a decision for you. And sometimes somebody makes that decision on behalf of the investor. Flipper, I think that that's an important notation that a, an investor needs to be able to look at when putting out the mortgage loan. And then the investor who's going to be flipping the property so they can make a profit on the flip itself, on the sale of the property itself.
[00:24:28] Speaker A: Yeah. So loan officers, you can reach out to us and we can coach you through which IMBs are working with this product and how we can get this into your IMB or refer it if, if we don't have the resources for that product. Another 2025 prediction, I think by the end of the year, a lot of larger mortgage companies will realize they're not a tech company.
I see a lot of them right now investing and trying to build their own robotic process automation, which is if thens, you know, on a hyper level or they are starting to get into the AI world and trying to build something in house.
I already know of a company out there that we work with, Silverworks Solutions. So I'm very involved in the apa, which was coined by the CTO of HubSpot, one of the most successful in the tech industry there is. And he said 2025 is the year of agent process automation, and if you don't know, please reach out. But it's robotic process automation at the next level where you actually have these bots that are able to communicate, they're able to use interfaces that you think can't be used. He said, 2025, RPA. And the reason I say that is many of the lenders I talk to are starting to build out these RPAs or they're saying that Encompass is coming out with a version where they're able to sort of build these inside. And this gentleman at HubSpot saying outsourcing, offshoring is a little Bit of yesterday's war. This APA is here to stay. And I say by the end of the year, people will be building in house. They will have teams of four, six developers, eight people. And they're trying to build to cut down their workforce by six to eight people. So for every year it takes you, you would have to cut two years out to, to break even. Is is my opinion. Meaning if you're trying to take one of the companies we work with went from 13 people at the setup desk at this brokerage, at this wholesale lender down to three. If it took you eight developers two years, cut 10, you've actually hired eight extra people to try and cut 10, you're not getting anywhere. It's like throwing sand in the ocean. So you have all these internal people working on it. What I'm saying is AI is moving so fast and the chips are moving so fast, you're going to develop solutions that for the first time ever, three years from now are going to be not as great and almost irrelevant compared to what other people are building. And then you're going to realize, yeah, we're just not. We were a tech company because we could put enough resources in being ahead, but we just cannot keep up with the speed of Boyle's Law and we cannot keep up the speed of these, you know, supercomputers. It's just impossible. And so I try to help lenders see that.
I just see them building and I, we know, I already know what's going to happen. It's just a lot of investment. It's not just money, it's change management, it's exhaustion, it's. There's just a lot of people investing in a lot of tech right now that is going to not be the best tech in two years. And I think that's when they'll realize we at least need a new sea level structure on how we're making these decisions.
[00:27:55] Speaker B: I had a holiday question on Christmas Eve and this person asked me which what is a better valuation website, Zillow or Redfin? And my answer to that was, I don't, I don't, I don't think either of them. Because if you think you're trying to flip a property and you're going to sell it to a short term rental person or midterm rental person and it's already set up with furniture, it's already set up with marketing, it's set up with a number of things. And the value add may not be in the improvement of the property itself, it may be in the improvement of the marketing of that property to go generate more income.
So I think it's important that people who are looking to flip properties, they understand the marketplace either they're either looking for a profit, then they need to know is their marketplace going to be midterm or short term rental people or is it going to be actual owner occupants? And once they understand who their marketplace is, then it's going to be easier to produce a budget and it's going to be easier to, to put down a scope of work. That's what they call it in, in this land, scope of work. So once there's a scope of work and whether it's 20,000 or 60,000 because the scope of work costs more to go to go buy furniture, then the person who's looking to make a profit is gonna, they're not looking at Zillow and they're not looking at Redfund. Maybe they're looking at Air DNA, maybe they're looking at furnish finder, maybe they're looking at other websites which the non QM lenders have already figured out by the way on producing valuation for the short term rental. And if, if the flipper understands there's a bigger, bigger world, a bigger marketplace for profitability out there and they know who their end buyer is supposed to be, then the, the, the gains of profitability are better based upon the creation of value. Right? Most people think that you can just put in a, you know, put in nice things, you know, put in Viking, Viking, Viking stove and Viking refrigerators and turn an okay property into an amazing property just because you put $3,000 refrigerator. And that's not necessarily always the case. Whereas if you automatically have put out the property to where it's profitable for somebody else to say okay, you're not just taking over this property in purchasing, you're also taking over the, the income that is also producing. And if that's the case, and I've seen it already happen, and if that's the case, then they can sell it at a premium because you know, if your normal rent for a property, let's say is $4,000, but it's generating $12,000 because of short term rental income or midterm rental income, then the value proposition based upon the marketing proposition that it already owns is going to be there.
[00:30:38] Speaker A: Plus you create honey like the, you know, bees fly to honey, meaning you've created a transaction. If you've helped facilitate and supplied the money and built the trust with this investor, hopefully it's a real real estate Agent too. They maybe need staging, they maybe need a contractor as a backup for all plumbing, you know, H vac, which also becomes part of your self employed borrower strategy. Right. You're creating an ethos and bringing people in. In order to truly bring people into an ethos or create a community, they need a commonality place to congregate, whether it's physically or virtually. And this, this transaction over the course of four months becomes a place where you have the honey and it's going to make your prospecting easier and create a pathway where you're at the highest ltv lifetime value clients and you have a pathway to start building and talking about it. You can stand up at BNI and rather than say I have the lowest rates, you can actually talk about a property that's in the middle of being flipped that when people close their eyes they can picture it and you can say like there are places we are going to need referrals and there's money going through this transaction and therefore you become somebody that everybody wants to talk to. And I think that boosts confidence and ultimately in 2025 it helps you understand leaning into community, leaning into the branding that we know is coming. And people do business like Shant said or Shant Said, they like, they respect and they trust and people respect the money, right? They certainly respect the money and they start to trust people that actually say they can get things done and can get things done. And that's why people are going to come to what we're working on because we're going to provide that trust that if you commit to a fix and flip it, you can fund it.
[00:32:49] Speaker B: Can we talk about then the loan origination software that's currently available out there for originators and CRMs and figure out which one might be the creation of efficiency for the independent mortgage bankers originator. Because if they're actually utilizing their IMB CRM, that means that they have, you know whether some people their, their best form of CRM is Microsoft Outlook.
Right?
[00:33:22] Speaker A: Yeah. I think if you're a large lender, total expert right now is the best CRM. They understand how to work with you. They have great people like John Hill over there that can, Dan Canella who can teach you, you know, what you should be doing and keep you compliant and in staying cutting edge. And they have the seed and the A round and the B round to really flex. I believe though, if you're an originator and you want to win, you should consider your own if you can afford, you know, a little bit of Investment. There's someone, Mike McAllister at Empowerlo and he gives you an instance of go high level which is similar to like a HubSpot or sharp spring. But he gives you all these playbooks and he has the passion, not the giant, right, not the Goliath, but the David. And he has the knowledge base to really go out and, and allow a loan officer to harness that and actually get more business. And I say that going back to like the build verse buy. The AI world is getting so advanced if you leverage it or lean into it and I don't mean AI, I just mean AI's ability to create marketing type software, the ability to scrape data, the ability to auto email and warm up inboxes so it reaches it, the ability to create video that you can say the word watermelon and then whenever you say watermelon it'll say a column on your Excel sheet. So when the video gets sent to you Mike, it's going to say Mike. And then when I say green bean it's going to say 30 year fixed or you know, however I do it. The piece here's where only so many loan officers, only the top 1% or even the 1% of the 1% and I don't mean by volume or units but just are leaning in in 2025. Those are the ones that would actually use this software to get ahead of their competition. And that's why almost in a one off scenario, if they really want to win, they lean into Empower Ello. They get their branch involved, they get people that want to play involved.
Total expert can't do that, right. They have to sell to 500 loan officers and some will use that, you know, 50 hours a week and some will use it 15 minutes and some will won't log in and blame somebody else. So there is such an opportunity and that's why brokers are doing so well right now.
I think I saw four have funded over 12,000 units this year for brokers. That's usually where the top IMBs are. For those listening, you know, independent mortgage banker means they fund their own deals and that's supposed to be a.
Traditionally means like you're bigger than a broker because a broker would turn into an imb. But these brokers are power brokers right now and it's because of technology within that brokerage, you know the, the smaller ones can go out there and I think leverage this software that's just better than what the mortgage companies have in house. And it's only been in the last Year and a half, so many naysayers out there like, oh, then why hasn't it happened already?
It is moving so fast over there and you would need partners and you would need about 500 to $1,500 a month, I think in SaaS software to really invest in yourself. But you could win markets if you combine that with some product like we were talking about, especially fix and flip.
[00:36:48] Speaker B: Can they do it without the software and just get on the phones and make calls and then produce this?
[00:36:52] Speaker A: Oh yeah, but the software like warms it, warms it up, right? Like, wouldn't it be better to automate who you should be calling, what time you should be calling them, let them know, you know, that phone call is like what it's about.
I know Total Expert has this new text piece. I think that's going to work really well where you can text. But I think ultimately, like you said, you want to try and get on the phone and build trust. But those with the AI, look, you can scrape cell phones. So while, while your competitors are calling work numbers, you have the cell phone of the top 25 plumbers that have more than 10 employees. Right.
And then you know the property that they want, like, that they should be looking for to buy.
That's certainly an advantage that a broker or a branch of a IMB. And I think these branches of the IMBs, from what I've heard now control their own P and L. And so can go out there and, and start to work with some of this software.
[00:38:01] Speaker B: Are the riches in the niches then? In other words, like if you're an originator and you're kind of doing one or two agency deals a month, maybe, maybe because your average loan size is 600,000 in a higher dollar area and you start doing fix and flips or looking at that and you go, you know what? I could probably do four of these at an average loan size of $250,000 and make anywhere between 150 to 200 basis points in profitability. So do you think that the riches could be in the niches for an originator for this product?
[00:38:30] Speaker A: Yeah. And anytime you combine a visionary like myself with a numbers person like yourself and maybe get a third practitioner to help implement it in this software, because it really all comes down to Excel, not Microsoft Excel, but it's going to look like Excel and, and automate out of it, you need the vision of how I always ask, how can I have something that other people don't have that's of value and create an arbitrage out of that to me. Look at this fix and flip. If everybody's going to be going to the same real estate agents because of every software out there tells you what deals they're doing, who they're giving them to. I've said this on a couple of shows and you talk about rates and product.
Does that get the like. Probably not. Does that get the respect?
Probably not. Does that get the trust?
And then you're asking, it'll give me one of your bad deals. Then you lose a respect. Right.
[00:39:30] Speaker B: Does it make the phone ring? No. Wow.
[00:39:34] Speaker A: But the fix and flip. The fix and flip would make the phone ring. Right? Because no one else is calling about that. You can use the AI tools and the CRM tools to go out there and actually do a much better job of figuring out who the investors are in the area. Like that tech is here now you just got to combine a couple software pieces together. You probably need a CRM that's a little bit outside the mortgage. But all of These are like $240 seats a month. They add up. I get that. But they should add up to a lot of if you're going to actually use it a lot of business. So I would absolutely say. And you already know the answer Mike. But yes, the niches, the riches are in the niches. And never has there been an opportunity to be able to almost be your own chief marketing officer. You probably need a little help. I can help to get started. I would love to help and I would lean in a fix and flip or I would certainly match, you know one of these self employed gig economy with the. You already heard me. I would match the self employed because that is where the gold is on the ability to gym owners. Right. You can look up any of that. It it's searchable on Google and therefore they have AI. I'm telling you that just brings it from pressing a button into an Excel sheet for you. Here's all the gym owners as long as you can build what it's supposed to look for. So look for emails that are not info at but actual people's names at the bottom of the website of all gym owner and search gym owner plus and then upload the list of all the towns and cities in Massachusetts and it will actually produce a list very accurate that you would then go out and do a couple extra steps, warm them up, then call them and say I'm the one that has been telling you that you don't need to be renting. Right. Or do the fix and flip like we talked about. And that would be. And as far as the LOS goes, encompasses just come on strong now for now with IMBs and with brokers. I like Lending Pad a lot. Yeah, Arrive has done a good job of letting brokers sort of fix the glitches. And every week that goes by, you know, less glitches and more earned trust. We talked about trust.
I love bite. Like if I was big or a broker, I'd be on bite. I, I just think it's. Yeah, you gotta, you gotta have somebody that wants to work on the LOS a little bit. But there's a lot you can do with Byte. And again from the broker standpoint, Lending Pad, which I bought our guy Roy George uses over at More Lending Lending Pad.
[00:42:13] Speaker B: You know, the people have been in the devil people know. The devil people know is Encompass right now. Right. And it just seems to be the most efficient for everything that seems to be going on in mortgage lending because of its capital markets procedures as well as its los. But it's not necessarily the best product that's out there if you start asking around. And so they're doing an okay job right now of producing a product for the masses. But I think that there are other pieces of software that are available for the fix and flip or for the non human that can provide more value to the originator and making sure that not only can they do easier underwriting and also a better, a more efficient way to put together mortgage loans for processing.
[00:43:07] Speaker A: All of these vendors that have become established big players within their vertical have created such a wall garden or such a moat around their business because of how loan officers today run the show. And I was thinking about this as we were talking here and I guess we'll, we'll take it home on this thought process. So you survive to 25. Typically when you sell a mortgage company. We could talk to Rick Rock about this, but I would think at some point in the past the assets were all those names you had and data you had to be able to rate term refinance. Right. And go after that book of business outside of having a servicing. I'm telling you, I think that's going away. So your database, and by the way recreating the database is getting easier and easier right now. You can use some companies in the mortgage space, but you can go out there and again I just talked about it, but you can scrape almost everything you need that would be as valuable as that database.
You know, AI bots are going to be able to go in and look up registry of deeds and, and all of that. So without having to pay this high premium to like a core logic like you'll just be able to go in if it's, if it's public. Right. So if that value is going down, then what truly are, are people buying because they don't want the cost that comes with it. The technology, if you have in house technology, it really is out of date. I mean, with the exception of maybe the los. Like I think Cardinal Financial has octane their own los. And I've heard, you know, if I don't, they're not for sale. But if they were to be, you know, they would put a premium certainly on that los.
But I can't name a mortgage company that was purchased recently with an los and everyone's raving about it. So. Right. So I, I don't know much of the value of a tech play unless you're going to do a, a, a spack or, or go public. So then it goes back down to. Where you going with this, Mike? Loan officers, that, that really is the asset and people are buying the loan officers and the branches and how do you retain them? You don't want to go through, I won't say it today, but you don't want to have them all come on and then they, they all, they all leave. And therefore you have to offer these loan officers these P and L models or these solo entrepreneur type programs. Now you allow them to use their own credit vendors, you allow them to use their own title companies. And what that creates is the Wall Garden because these LOS people out of Yale, you know, out of Stanford come out and they, yeah, we're going to, we're going to roll it out. And then top producer says, well, does it work with this credit vendor? No. Right.
You have to use informative research from Stuart. By the way, we want sponsors so that we will be sponsoring like different vendors throughout the show. So if you're watching this low cost, easy in maximum viewership through video, audio and newsletter with over 2,000 subscribers.
So they want their own credit vendor. And when the LOS of the future doesn't work with that credit vendor and tries to tell the ownership no, like you got to tell them uniform and they say, no. If Fred wants credit this informative research, then boom, Fred gets that. So you have to integrate and then that LOS obviously calls informative research and they, they have a, like a quick draw. Who's going to pay for the integration? Never. It doesn't pencil out. And then you can just go back to the happy land of these CRMs and these loses that already integrate with those and it just saves you that headache.
And I think that's why there was such a rush of like, where can we go from Encompass when ICE bought them, they're coming at us with all these extra years of contracts, which gives them more time obviously to, to advance their tech. And at the end of the day they said, yeah, I guess it's easier to just resign. And, and it works with all of our vendors. So that's my answer on it's a little harder. The, the loan officers have made it and it's very advantageous to brokers too. Right. They have made it where they are the asset and therefore they can fragment and frank and stack in each region what they think is best for them. And then it, it becomes harder to make a uniform scaled approach.
[00:47:45] Speaker B: Well, I think that really what it comes down to is how many phone calls can originator make? How many effective uses can they actually change or reframe their mindset in making the phone calls? We could talk about software, we can talk about AI, whatever. But end of the day, no matter what the originator makes, that needs to make a phone call and they need to get, generate some appointments.
[00:48:07] Speaker A: Yeah, it's just whether they are like, what are they like, you know, you don't want to get in the habit where you're calling the same 25 people that you did a past deal with. Right. Like you, you want to, you want something to tell you who to call and why and why it's different. And I think we talked a lot about that today. And then find yourself a niche and spend two days out of the five calling those, and then the other three call whoever you were going to call. And I think you'll probably end up.
[00:48:35] Speaker B: A lot further along because the average ll only does two to four deals a month and the average realtor only does maybe six deals a year. And that might be a top producer.
I think that if the originator just decides to go on a massive telemarketing campaign and just say I'm, I needed to talk to 20 people a day. Out of the 20 people I talked to, 20, I'm sorry, 10. And the 10 they talk to, maybe they get an appointment on five. And out of the five, one one a week is actually going to help them produce business.
[00:49:11] Speaker A: Yeah, but like I said, there's tech out there that gets you cell phone numbers versus home phone numbers. Right, right. Like make sure you're calling the right people at the right time. I mean, there's AI out there that's coming. That'll tell you when that person is most likely to pick up the cell phone. Like, you know, play chess, not checkers. Right. Like the phone works, but like people like to go to places. Like I, I was thinking I was listening to Ikea and now Starbucks. On this acquired podcast, which is absolutely amazing. Brad Blumberg had me, turned me onto it. It is, it's cool. It really is cool. It'd be cool if somebody could do it in more. It's basically origin stories. But it, it had me thinking, nobody yet in mortgage has created a place to go and that's what people like. You know, maybe it's a coffee shop that's also a mortgage company. Maybe it's a miniature golf company that's also mortgage. I don't know what it is, but that's what works. The, the best and the most, I think is the congregation of people and getting in front of them in that way. And I think phone has sort of gone down maybe compared to it, but it's difficult to do. It'd be like a first time holdinger seminar, but having a place where somehow people keep going back to it like twice a day, twice a week. Like, you know, and you're there always talking about, you know, you can get coffee and you can also get, you can go to the, the geek squad and ask questions about mortgage.
[00:50:45] Speaker B: Yeah, maybe we just need to have a, have a show Mike, where we literally invest 15 minutes a day on calling people and just show people that it's, it's not hard to make phone calls.
It's just hard dealing with rejection if it's something that we have a personal issue with.
[00:51:04] Speaker A: Yeah, I just don't find calling scalable anymore.
[00:51:09] Speaker B: And so I'm gonna disagree with you, but we can make that another conversation.
[00:51:14] Speaker A: Yes, we will.
And for all those out there, dial for dollars or find some AI and get some riches in the niches. But make sure no matter what you do, you tune into us on all of the different podcast stations. You subscribe to our newsletter every Friday. And if you're an originator, reach out to us for any advice on what we talked about.
If you're an imb, please reach out. Or put it this way, if you're a loan officer, have us help you get this fix and flip program at your mortgage company. And finally, if you know any vendors that help you close mortgage deals, put them in touch with us to get them on our show as a sponsor so that we can sing their praise.
[00:52:01] Speaker B: That's right.
[00:52:03] Speaker A: Thank you, Mike. For battling through this, you get the Bill Lowman award.
[00:52:07] Speaker B: Oh, my goodness. I'm not feeling. I'm not feeling my A game today, so no singing today.
[00:52:15] Speaker A: Thank you, Mike.
[00:52:16] Speaker B: Very good. See you.
