April 2008

Note: Sharp Stick Fridays is an every Friday Feature where I tear apart the conventional, sleepy wisdom of the RE.NET.   We are taking the behaviors of Realtors/Lenders to their logical end product.  A chance, maybe to channel my inner Housing Panic.

We Know What You Take, But What Are You Here To Give?

So many real estate agents, mortgage brokers,  and hangers on came into this business around 2001, and made a fortune.   Was a 6 year run that people were able to drive German Automobiles, eat fine wine, and make every dime they wanted to. 

But there was no gratitude.  The assumption was never that this was a novel time that was not to be repeated.   There was nothing more than a sense of entitlement throughout the industry.  Realtors said, “My buyers lied to me, and had me show 23 houses and wound up buying with someone else.”

Mortgage people said, “What, the Realtor* is getting paid 3% and he had a problem with me making two upfront points.”  (And probably 3 out the back, but that’s neither here nor there)

The industry brought compensation far beyond the level of skill that the practitioners were forced to exhibit.   So, all sense of proportion was lost.  The famous quote about George Bush was that he was ‘born on third base, but thought he hit a triple.’   They thought they had earned ‘every penny,’ of the largesse that the industry brought to anyone on the coasts that was practicing Real Estate at the Right time.

Let’s list a ton of houses, let’s be hard to reach, and pretend that this success is sooooooooooooo stressful.   Let’s treat our clients like numbers, and let’s pretend we’re more important than we are!   Comeuppance is always a bitch. 

Realtors, were, by and large terrible at their jobs, provided self centered advice (Oh, sure, buy that slab PUD for 600k, it’s a GREAT find, what bubble, I need my $18k)

Mortgage Brokers, by and large, were committing INDUSTRY SANCTIONED fraud.   Let’s make sure that we acknowledge this.  It wasn’t a few bad actors.   It’s everyone.   I don’t know a single realtor who didn’t have a deep knowledge of “stated W2″ suicide loans.   And even though Option Arms were never really popular here in Ohio, they still existed.  The fraud was not even considered fraud.   It was something else, business as usual, the way deals get done, whatever.   Stated loan abuses were the worst–I heard a phone conversation from a reasonably honest loan officer in 2006…”Well, the question isn’t what you made last year, it’s what you intend to make this year…”   Under that standard, then I qualify for Buckingham Palace.

Mediocrity, pompousity,grandiosity, and probably obtusity had been the rage. I myself was guilty.   You get real confused when you’re making money and think that’s a reflection of the vitality of your soul.  It’s easy to do.   Look at PacMan Jones. 

Also consider: It’s not that novel or difficult to score $250,000 a year.  Really.  But if you’re an incessant shill, who is alone on the weekends, what the hell does it really matter how much money you’ve earned?   The money part doesn’t make any of us special.

So now that the jig is up, the news is out, and they’ve finally found you, how do you move on?

First, Last and Always, The Client’s Best Interests

You might have been a lead monkey in the past.  Hell, you might have been the guy that caused this mess.

The deal is that you’re probably not getting prosecuted.  You’ll probably be allowed to keep your business, your license, if not your house.  And if you learned the right lessons (the wrong lessons being the Moral Hazard), you can use this to make some money.  

Get out of fantasyland.  The days of overcompensation may return, but not for a while.  And in the mean time, there are people that need us more than ever.  A good practitioner that gets in the habit of being a Fiduciary, will not have any shortage of deals or clients.  Sometimes the best move for the client is no move.  And you can’t fake honesty, people have B.S. detectors.  If you lie as a habit, people will figure it out, find out and resist your every move.  So don’t lie.  

Our industry bred an army of middle aged obtuse boomers with a serious entitlement attitude.   So be grateful.  Don’t have your neurons fire ad infinitum on what things you “deserve” because, seriously, how much of yourself was used to help people?  How many times have you treated citizens as things to close instead of people?   Sew something great, and give of yourself, and you’ll reap spectacular rewards.

Your checkbook balance isn’t the sum total of your life.

…

Monday the podcast starts…

And then we’re doing a conference call in just a few days.

Go sell something.  And be humble and grateful for the opportunity.

OH–In Case you don’t see the stuff I see:

Jeff has impeccable taste in music.  So much so that I don’t rely on myself to find any music anymore, I just snag what he likes.  My new-favorite-band is the Hold Steady.  They are unlikely to make it huge.   My second favorite is Dan Bern.  Sometimes Dan is my favorite.  Probably most of the time.  But anyway, Chips Ahoy! is a great tune.   Maybe Eric will dig this one, although Certain Songs is more summery.

And Housing Panic totally wears me out, but this post won me back.

*Realtor is a trademark of the National Association of Realtors that they are doing EVERYTHING THEY CAN TO DEVALUE.

Greg Swann Called me a prolific weblogger today when he introduced me on BHB.  (Why is it that I always want to add an extra “G” at the end of Greg’s name to make him Gregg Swann).   Mayb

I’ll be posting on BHB about 4-6 times a month.

Add that to the 4-6 times a month I post on Lenderama.

Oh, and the 4-6 times a month I’m posting on the Cicerone. 

…and then this blog…where I post my rough cut ideas, the things I almost think.  I’ve averaged 5.8 posts a WEEK here.

…and then?  I’m committed to 5 guest posts each month to promote my efforts.

So I’m starting two more things:

newmarketsurvivalguide.com  Debut: may 1st.  I might want you to write.  You must:  Be new to blogging, have something that helps ultra small businesses, and have no more than one multi author blog that you write for.

and

survivalcast.newmarketsurvivalguide.com  - Starts Monday.  180 seconds of what the market is doing, and how you can survive today, and be ready to win when the next boom comes around.

That means that my ‘assignments,’ each month are going to be something like 35+.  Minimum.  Looks like some fun, baby.

I’m also selling my ebook, and it’s going spectacularly.  I was flattered today when the illustrious Brian Brady said that my book was “genuine gold for originators.”  I happened to get a chance to speak to him on the phone.   He told me I needed to change the name to “Loan officer THRIVAL guide.”   Made my day!  He said for $15 bucks, how can you not?   Well, Brian, for another two weeks, Volums 1 and 2 are $13.50.  Then it’ll be way more.

So if you’re on the fence? 

Go get ‘em.

Oh: The links disappeared from the side.  They’ll be back on a new page soon, with more links.

And in case you don’t read what I read:

Duct Tape Marketing Blog:  Talks My Language Regarding Shop Owners.

Absolute MUST read by Skellie: 10 Bloggers share their best ever posts.

More tomorrow, as I poke a sharp stick in someone’s eye on “sharp stick fridays,”

Jonathan Dalton says that Blogging Is Prospecting.  Nonsense.  For most real estate agents out there, and most of the ones (even the good ones), blogging is not going to be a justifiable use of time.  Blogging is in fact, creating the worst thing: the illusion of work that gets most agents no closer to a deal than they were before.   Now, there are great reasons to blog, but almost none of them have much to do with getting immediate (or even eventual) business.   Todd Carpenter said to me once that people that blog for money don’t stick around.   .

I have been blogging since 2002.  so don’t think ‘Sour Grapes.’ 

In the 4th quarter of 2007, I generated $37,000 in revenue by using blog + social media contacts. 

I’ve earned well over $150,000 in my career via my blogging efforts.   I also never doubt that you can get pleasant contacts that make you feel good via your blog.

It’s an ego rush whenever someone comes from any of my blogs.

But, for almost RE/Mortgage Guy, telling them to start a blog for money is horribly bad and horribly reckless advice.

Blogging is inefficient.

Blogging takes effort, but is going to lull people into a false sense of security that real work is being done and that something has been accomplished.  But can you send an awesome post to AMEX and say, “Dear AMEX, This blog post is so valuable that you actually owe ME money?” 

Most Consumers Would Swallow a Pill To Be Done With Us.

You get that, right?  Customers don’t care about the arguments between Cunningham and Shaw, they only wonder why they should pay you 6% when there’s no equity left, or why you need to charge an underwriting and a processing fee.  They aren’t scouring the blogs for the best and pithiest realtor.  They still get newspapers delivered to their homes, they watch Rockford Files reruns, but they simply want the easiest and cheapest way to move their house.  They don’t want new friends, they have enough.

And they have never seen a blog, let alone a real estate blog.

Bars Also Get Business.  So Drink Up.

I’ve been to sports bars a few times.  And I’ve wound up with 3 closings from me being at a couple of sports bars.   The obvious solution is to through out ROI and to go out and drink more.  This way, the deals will pile up as I enjoy a great Goose Island IPA.  I mean, I know I’ve had closings from bars, so it’s clearly time to go more often, right? 

Having Jonathan Dalton tell us to moneyblog is sorta like having Tiger Woods tell us to take up golf.   JD is great at blogging, and so he will be able to get different results.   But a new Realtor with not a lot of experience in real estate–or writing–should not blog.

What then should RE Pro do that is more efficient, predictable, fast and reliable than blogging?

• Call family, friends and past clients
• Visit family friends and past clients
• Do a talk at a CDC Corp.
• Send an E-zine to people that like you.
• Go talk to people teaching Real Estate/Mortgage at your local college/community college.
• Get a list, scrub it against the DNC, and call people.
• And yes, door knock.  Since I track everything, attributing 50% of the revenue to the acquisition of the lead…I know that door knocking pays $300 an hour.   No kidding.  Yes, it’s an ego hit, “I went to a good college, and I gotta $#%^ door knock,”  It’s the most predictable path to money.  (And If I was good looking, holy hell)
• Call CPAs who have just talked money with all of their people.
• Call loans that couldn’t close.
• Call orphaned mortgages.  I hear some dude is doing a good job of that.

All of this stuff is less pleasant than blogging, but it makes more money more predictably.  Our business case for blogging is that it’s low stress and low resistance.  And as one arrow in your quiver, it’s not bad.  And, in an industry that’s hideously negative, it’s one of the few places to get positive feedback.  I seriously doubt that most people make dough on their active rain site (Ah, but they can bitch about how countrywide didn’t get back to them).

Why Blog Then?

Having said all this stuff…I blog almost daily.  It is not something I’ll abandon, even though the business case is thin.  The most important customer you reach when you blog is between your ears.   You are setting up a standard of practice, advocating for an industry getting its teeth kicked in.   You are becoming transparent, and you’re writing because it ensures that you uphold a standard, you think about best business practices, and you connect with people that are WAAAAAAAAAAAAY more positive than those in the industry.  You’re putting yourself out there a little bit so you have people paying attention.

We want to stand up and be counted as someone who is helping the industry.

We want to help other practitioners do a better job.

I want a record of how I am as it happened for the future.

I want to set the best example I can.

But I don’t give a hoot if I get a client out of this.  I don’t give a hoot if anyone chooses to buy my ebook. (Thanks to the 80 that have).

For money, there are lots of better ways to do it. Don’t fool yourselves into thinking Blogging is the ‘best way to get clients.’ 

People spend an INSANE amount of time searching for some magic bullet. A “red pill” they can swallow that will give them the ability to make it in business, and life.  Some 2,000 website form that will capture leads.   A $150 a month do-hickey that will make things easier.   A CRM.  Whatever it is, it’s a fruitless quest for most people.

No tool or toy will change them.  I realized this.

There are veterans that bitched about how hard the business was in 2003.  You know, when you couldn’t go to a bar without having to climb over all the people closing their loans.  These people are bitching today, and during the next boom cycle, they’re gonna bitch then, too.  Only then they will be older, fatter and less attractive.  And probably more negative.

Nothing will happen that will make them suddenly become producers, but they will always LOOK OUTSIDE THEMSELVES for the answer…all the while people decide to bootstrap themselves into amazing production.

Think about it.  How many people say “my processor screwed up. ” or “MY company isn’t supporting me.”

How many people say, “I didn’t work hard, I was lazy, and I didn’t give anyone any value.”

Your money in your bank account is a reflection of how much value you’ve given to other people.

Magic Bullets are the Worst Thing in This Industry RIGHT NOW.

People that are telling you that you can do this job easier, with less effort.  This idea is a fantasy, and it’s are KILLING real estate agents and mortgage people.  They are lulling them into an entitled mentality, and creating the idea and notion that SOMEONE SOMEWHERE will make it easy the business for them.  Maybe it’ll be 2003 again, and anybody can roll out of bed and do 5 deals a month.   The idea that there’s some Secret way to just manifest your way into production is dead wrong.

I’m 100% for affirmations, but we don’t manifest stuff, we train our brains to create the reality that we want to create.  We create reality in our head, and then roll our sleeves up and do the work in the world.

You won’t ever make it in business or life without giving of yourself.  Without putting yourself on the line and giving it your all.  Work is sacred, you’re trading your time and your soul to get something built.  There is no substitute for clear thought and hard work.    The notion that some magic bullet can in fact fix your problems is In-SANE.

Instead of waiting on some externality or some different force to make this work, let’s think different.  Grab a pen and paper.  Write this down.  Seriously.

• What are 4 ways I can generate new deals cheaply.
• What are 4 ways to add once business is rolling.
• Who are 4 people you can talk to?
• What skills can I get to maximize my chances.
• How can I improve the way that I do business.
• How can I find business on my own with my own efforts.
• What resources do I already have
• What resources and knowledge can I quickly acquire.
• HOW IS IT EASEIER TO DO BUSINESS NOW THAN IT WAS A DECADE AGO.

Extraordinary intelligence isn’t necessary, as long as you know how to think.

The real answer to whatever slump you’re in is a “ruby slippers” answer.  Dorothy went through the whole kingdom of Oz, and that fantastic adventure without understanding that she possessed the power–the entire move–to get home.  Before you wait on anyone else to do anything else for you, think about your own ruby slippers.  The answers are probably within.

In about 10 days, I’ll be doing a conference call all about YOU doing business RIGHT NOW in this MARKET.

Some Link Heaven:

I was originally going to write a response to Dalton’s ridiculous notion that Blogging is Prospecting.   Funny.  Nothing is prospecting but prospecting.  Blogging MIGHT be valuable…but it’s there to be an advocate.  Jonathan, I dig you and you know that, but here is where I draw the line.  Your post will be up tomorrow.  But then I found this bit of genius by Kitano, and well, a thought that I’d been having congealed, so we’re gonna talk ruby slippers and magic bullets.

I’ll tell you mine. 

I want to get into helping originators do more deals.

I want coaching, not marketing. 

I want to help people survive this industry and bootstrap themselves into great performance.

That’s something that is cool enough to get me excited, and I’m putting stuff together to do just that really soon. 

My ethos is bootstrapping yourself, adding systems,and then making money.

…

But I don’t want to be an empty shirt.  I don’t want to be someone that couldn’t produce in this market.

So, to prove my point, and to prove my qualifications, I’m going to spend 2nd quarter producing.

Now,this wouldn’t seem novel in and of itself, except for the facts that:

• I have no “pipeline,” currently.  No deals that are in process, nothing that has been submitted.  It’s the 8th of April.
• Ohio is at ground zero of “declining markets.”  We can’t get a break.
• Almost no loan officers are making more than 55k a year (except at 5/3).
• I have a baby due May 1st and the house needs work.
• I have 3 people’s blogs I’m supposed to be launching, and I cashed the checks so I’m on the hook.
• I have done little follow up with my contacts for the most part.
• Our average fee in our office is ~$2400 (a guess, not a fact).
• I won’t spend more than $1,000 on marketing. 
• I don’t intend to make being a loan officer a lifelong career.
• I don’t have a processor, and my assistant no longer works with me.
• I don’t intend to work in the Loan business more than 26 hours a week.
• I will not let the service to my clients slip.
• I’m not gonna do anything Zilly
• I’m a broker, and we are dead men walking.

These constraints are how I’m going to operate. 

And with that said, I will produce $75,000 in fee income over the next three months.  $25k a month.  With room to spare.

It’s not just bravado and hollow talk; it’s what I will do, I’ll back it up with daily activity logs to prove I’m under 28 hours a week…and checks at the end.

I seriously want to help originators.  There’s a TON of good in this business. 

The Basic Plan:

1. Get average fee to $4200 bucks.  This means mostly increase my loan size to $250 or above.  (OR Tuckerize everyone) This means that I need to be working with buyers that are $300 and above…and that’s kind of a feat in central Ohio.
2. Close 18 loans; 4 in April, 7 in May and 7 in June.  This is not that hard.  In fact, closing less than 5 a month means you need a new career.  Something operating a “register” type device.
3. Don’t spend money.  A lot of LOs are B-R-O-K-E right now.  Let’s operate like one of ‘em.  

Since I’ve refined my process to get loans done quickly, it seems doable.

Let’s think of some more numbers:

This isn’t a perfect calculation, this is out loud thinking.

Total work time I have is going to be 26 * 11.5 = 299 hours.

To do 18 loans, i’ll need 40 application by June 15th.  June 15th is what, 9 weeks away?  So that means I need 4.25 aps/week. 

Taking an ap is something that takes me about 1/2 hour to do it correctly (and that includes selling).   So 40 aps = 20 hours.  279 left.

I will probably need to process 25 files to make this work; processing a file is about a 3.5 hour job.  25 * 3.5 = 87.5 hours = 191.5 hours left.

There will probably be 10 hours spent dealing with the nuisance that is “coworkers” since I’ll do this at the office.  = 181.5

There will be 3-4 (horrifically banal and worthless) office meetings…each taking 1.5 hours.  (-6) = 175.5

I will probably have to quote 60 people to get 40 bona fide aps.  Quoting/Qualifying someone should be a 15 minute gig; that’s 15 hours.

160 hours left.

Let’s also do this:  let’s say I’m off again and give myself another hit of 20 hours.  I’m guessing for prequalifying or whatever.  140 hours are left. 

June 15th though, brings a problem.  After that I can’t bring too many people in the pipe to close on 6/30.  There are 10 weeks between now and 6/15. The planned hours AFTER 6/15 will not be useful in this campaign.  Processing will still get done, but marketing won’t count for this quarter (though it must still be done IFF I plan on being in the business).  So 39 hours - processing time of 7 hours = 32 hours.   This gives me 108 hours….to find 40 aps.

Let’s shave off a few hours….for lead follow up with customers, and making sure my Realtors never call me.  

Let’s shave off 12 hours.  This puts me at 96 hours of “business development” time to get 40 aps. 

2.4 working hours then must be an application.  An application is a bona fide person that wants a loan, has credit and has money.  Every 2.4 hours spent looking must yield one.

….

Success in this business can be a lot of things.  For Brian Brady, it’s to see how far you can take being a mortgage broker.  For Scott Tucker, it’s making a sport out of turning worthless homeowner equity into big duckets for brokers….for Morgan, it’s getting out of the game after making a worldbeating blog.  For me, it’s working 26 hours or fewer per week…hanging out with my kid as he grows up…and making $25k/month.  Or $250 an hour.

…

I’ll resume some sort of transparency mechanism.  It’s a little hard.  It’s hard to talk about your customers without violating their privacy.  An example is if my stats are updated and a facebook friend sees me and knows I’ve spoken with someone else…I mighta been dealing with a loan ap.  I can’t also put the fee earned on each closing in real time.

I will have the copies of the checks, and/or Locks (since we’re sorta correspondent lenders) and the rest of this stuff done when I can. 

…

Another aside:  If I didn’t have an absolutely rock solid processing process, none of this would be possible.   Well, it’s 1:44.  My alarm sounds at 5:30.  Maybe it shouldn’t but it does.  So it’s time to go to sleep.  Any errors in math or whatnot were blamed on the time of day.

Downtown Westerville, I bumped into a dude that was the little brother of an acquaintance.  Recognized him because we’d bumped into each other for 4 or 5 years.  I think he’s 2 years younger than I am.

Didn’t have time to talk to him, Jack was crabby, I was crabby, you know.  So I asked–do you have a Facebook.  Let’s stay in touch.

Since I’m a GTD guy, I wrote it down when I got into the car, and when I dumped open my little Moleskine, I wrote it all down.   I connected back with him.  I barely knew him, cool enough guy, but barely knew him.  Now I’m connected.  You can’t exactly monetize it, but it’s interesting.  I found myself happier than I should to have connected with him…it brought back a wave of mid 90’s nostalgia…suddenly I was in my dorm room, listening to Collective Soul, Madden ‘95, and playing Doom.  

I’ve seen other people that were on the periphery pass through the newsfeed, and it’s been fascinating say hi and nod at some of the folks in my past (as well as people on the RE.NET).  People that you think are one way turn out to be another…

…and see names that pass that maybe I didn’t reach out to (or was unkind towards), and I feel a little guilty.

It’s pretty cool to be reconnected and retethered with such a wide swath of my past.  I love the fact that geography doesn’t stop people from saying hlelo.   There are tons of great people that are more or less Out of Sight|Out of Mind.  I don’t know that that is good or bad, it just kind of is.  A few weeks ago, I got to about 60 friends on FB, and that was some type of critical mass, because I started seeing people to friend and fielding friend requests.  I’m reconnected to GWU people, Otterbein People, Piqua High People…and I’ve got about 150 people on there now (and another overlapping 75 on twitter)…and it’s weird, but I feel less isolated because so many real people picked me up and said hello. 

So hi to all of you that I’m reconnected to (even those I barely knew).  Hello to you all.  For those people I was a dick to, please give me some Grace.  For those that were a dick to me, grace will be extended, as I’m a big fan of the grace concept. 

It’s like every day’s a reunion.  How can classmates survive?

I read this the other day. Blew my mind. 30,000 Katrina Victims are still living in FEMA trailers. Katrina was almost what 3 years ago at this point? And people have not rebuilt?

Then I think of the Real Estate business. I call on agents in their offices, and I get the half asleep mumbling zombies that are still bitching that it’s not 2003 anymore, and that they don’t know what they are going to do. Same deal. The subprime market had to end. Had to. There were mortgage broker water cooler jokes all the time. “Well, what are you planning on doing after 2009.”

The sleepy agents and lenders have no plan except to hopefully refi leftover A paper people that got a loan in 2004. They stand around bitching about deals that are no longer going through.

I then realized this: Being a victim is 100% your choice.

Let me say this again: Being a victim is 100% your choice.

What’s tougher? A cancer victim or a cancer survivor? Being a victim comes from an entitlement mentality. We feel we’re entitled to an easy and cushy life of riches and joy. When that doesn’t happen for us, we stop creating our own light, and feel bad that we don’t have as much light as others do.

The bad shit that happens to us isn’t always our fault. It’s 100% our choice what we do about it. I know people that survived cancer. Rape. Child abuse. Heroin. Stupidity. Bad Genes. Jail. Bad parents. You can wallow in self pity (and it’s easy to do, i’ve been there), or you can create the life you want. Our business isn’t as easy as it used to be. This is true.

But being a real estate agent or mortgage lender is (still) the EASIEST EXISTING PATH TO CASH. ANY lender that doesn’t work at a crappy company can generate $30k in PERSONAL income in 90 days. Come on. That’s only $120k a year pace. And it’s DEAD FRIGGIN SIMPLE. ANY REAL ESTATE AGENT CAN CLOSE 5-7 houses in 90 days…and that’s 42k in GROSS income.

But–problem is…being a victim is a dead simple path. Stare at the wall and feel sorry for yourself. Sit at home and watch Dr. Phil all day. Think about the toy you never got for Christmas. Think about the way things used to be. Worry. That’s going to help you feel like a victim.

This business is still great.

There are still a TON of deals to be had.

There are still a TON of people that need the help of an expert.

And you can BE BETTER THAN MOST in a SHORT period of time.

Be a victim or a survivor et

Take 90 days, dedicate yourself to 2 ideas. Education and production. Know products, programs. Read an hour or more a day. You gotta know the terrain if you are gonna survive, baby.

Your daily thing of value (not to be a RESPA violation)

lead-card

I carry those with me almost religiously in my “man purse.” (We call man purses go-bags) I can take an ap with meaningful info wherever I am.

Your Links (because I got google notebook syncing between my two google accounts so I’m free to link dump again)

If you’re a too fat.

Let’s outsource sales, shall we?

GTD and Procrastination

And finally, what is GenuineChris reading these days? Great, great quesiton.

Nonfiction:

The now habit and Blink.

Fiction:

The Virgin Suicides.

P.S. Don’t forget to buy my ebook

P.P.S. Today’s business objectives: (1) get office setup.