Episode Transcript
[00:00:00] Speaker A: Welcome to Ed and Ken's mini podcast. Ken, how's it going today?
[00:00:05] Speaker B: Going great. Welcome, welcome, welcome. Hey, we got to talk about the hat, man. We got to talk about. First of all, big win, big win for the Phillies last night in Colorado. They're really, you know, they're on a nice little run approaching first. First place. But. But what's unique about that hat, this.
[00:00:23] Speaker A: Hat is my father. This is part of my inheritance.
So this was my father's Phillies hat. He passed away in 2011, and I was cleaning out some old storage that I had in Philly last week or the week before, and his hat was there. I love it. Reminds me, I'm surprised it doesn't smell like Aqua da Silva.
[00:00:47] Speaker B: I'll tell you what.
I think that hat, like, that's not retro. I think that was, like, original. Original. Like, you got that hat back when the Phillies were that design.
[00:00:58] Speaker A: I'm thinking, no doubt. I don't know when he got it, but I picked it up and I'm like, I never wear, like, sports hats.
No, No, I don't think so. It's always motivation, inspirational, or I still have to order. Well, you know what the P stands for, right?
[00:01:15] Speaker B: Princeton. There we go.
[00:01:18] Speaker A: There you go.
[00:01:20] Speaker B: I need.
[00:01:20] Speaker A: I'm very specific with the. The type of hats that I wear, though. They have to have a certain band. They have. This is actually a little too curved. I like the Richardson 112 trucker hat.
[00:01:33] Speaker B: For all you realtors and clients out there. The Richardson 112 trucker.
Yeah, that's what you get Ed for. For. For his birthday. The Richardson 112 trucker. That's very specific, Ed. You really do put a lot of thought into your hats.
[00:01:53] Speaker A: I. It's very important. It's part of my brand.
[00:01:56] Speaker B: That's right.
That's right. One of the five Bs.
[00:02:00] Speaker A: Yeah. How about that? Yeah, I like B.5 method. Yeah.
We got a lot to talk about today. All right, so I call you the mortgage architect.
And lately I've been talking, there is theory and then there's reality. Theory is just bs. It's just a theory.
So you hear other loan officers, other mortgage companies say, we can handle anything we can.
No, they can't. So you told me a story about a client that came to you 11 days ago.
Talk about that, man. It's really cool.
[00:02:41] Speaker B: Well, it's great that we're having this conversation on the heels of our. One of our previous conversations around late stage declines. Like, what. What is it? Like, why does a file get so close to the finish line and then fall apart. And one of the things with this particular borrower, he called us on the 9th of May and he had his, his, as his story goes, that the company he was working with just wasn't getting back to him. And really the service wasn't great. And he's supposed to close on, you know, the 16th and he's just, you know, he needs, he needs, he needs to switch gears. Now, that was a red flag from the gate because you're not a week from settlement. And switching gears because you're upset with how you're being treated now doesn't mean that how you're being treated is not important. But that's not, that's usually not the case.
But I took a look at his file and I said, look, I don't see any reason why this loan doesn't get approved.
But what he was missing, and I think what the other company missed was the fact that he had a tax lien. And with fha, he also is discharged out of bankruptcy. So there was a bankruptcy history there. But with fha, a manual tax lien automatically downgrades the file to a manual underwriting.
What that means is no longer can you just follow the findings of the automated underwriting system, like, hey, this loan's approved. Go get your W2s, your face stubs, your bank statements, and you're good to go with this. You actually have to follow much stricter guidelines. And most mortgage companies, believe it or not, do not do manual underwrites.
And the one that he was working with did not do manual underwrites.
You know, it was a credit union. They had very tight credit boxes and there was just no way that loan was going to get done where it was. But that's, again, that's a tax lien is not something that you find out about the last second. Right. So that's something that, that's just a misguideline and misinterpretation of the guideline. Now, fortunately, between myself, Andrew, and my processor, Maureen, on this one, we were able to get the loan re underwritten, fully approved, and we're ready to go to closing on Thursday.
Now, it's, it was not any like, aside from the tax, again, we're talking about tax liens. We're talking about two judgments, a bankruptcy history, discharge papers. There's a lot of moving parts to, to this, to this transaction. But the fact that we're able to turn it around and get it closed on the 22nd, that's a huge win for us and for my team and I'm, I'm pretty happy with it. And it is, it, it's an indication. And what's even crazier is that it wasn't that stressful like you might think, like, hey, we're going to get you to settle on the table, but you're going to, your life's going to be miserable for the next seven days. It really wasn't, you know, it wasn't stressful for us, it wasn't stressful for him. It was just we had to reprioritize a couple things on a couple of people's desk, but we were able to get it done. And that's the difference. You know, when you're, when you're, if you're a real estate agent out there and you're working with a referral partner, you want to work with the ones that are, that are able to handle the difficult transactions and the easy chair. Because there are some, there's some transactions that are relatively easy, but they should all be smooth. Whether it's a difficult, a lot of them in parts or it's an easy transaction, they should all be, they should all be smooth. And I think that the, the expectation management is the key. You know, the bot, the listing agent, a buyer agent called me.
He just found out that he switched mortgage companies. He called me on Monday and he says, hey Ken, just want to make sure we're going to be good to go closing this thing on, on, on Thursday. And I said look, I'm, I'm not here to, to lie to you. We're not closing on Thursday. Like we're, we're going to get it done and we're going to get it done, you know, next week. But for me to tell you that we're even going to, oh yeah, we're going to do it. Like it's just you, you have to know how long things take. You have to know what you're capable of. Because second you over promise this could have turned from a win into a back to back losses for this borrower if we mismanage the expectations, you know, so it's not just about execution, it's also about expectation management.
[00:06:58] Speaker A: What is the difference maker? And I have jumped into the mortgage arm of the real estate business probably two years ago, just digging around going, okay, how does this work?
The difference between you and you with Princeton and others, you just mentioned this deal and you went, yeah, me and you literally named two or three other people, Andrew and Maureen, the team.
Like you're an, you are an architect in your lane, they are an architect in their lane. And together, number one, you tell the truth. You. You face reality, you interrogate reality and, and face the truth.
My experience has been, what I've learned is it's not about just the loan officer, it's about the team behind them. And that's not cliche stuff.
That's what makes you guys special. And that's why I get raving, raving responses from the clients that work with you guys. And it's really cool.
[00:08:12] Speaker B: Yeah, I appreciate that. And, and it's, It. You know, when people talk about value, there's so much more to value than. For some reason that word gets tied to money. Right? In our, in our, in our culture, value is, is. Is tied to money. And, you know, there's so much more to the value proposition than, than money, although it's what we sell money. So if we're not taking money into consideration, we're.
But, but if you, as, as a, as a differentiator, if you want to go out there, you really want to separate yourself from the pack as far as the other loan officers go, then you need to have that. You need to have more than just, you know, you know, rate you have. You have to be able to execute and bring value in other areas. Otherwise you really are commoditized. And, and honestly, the, the folks that focus just on rate, they. It's lazy. That's what it is. Yes, we have great rates, but if I focus just on rate, I could probably work about 15 hours less per week, but I wouldn't be building the annuity of referral partners that I have. I would just be executing on rate and winning deals that come along. But it's not a growth strategy. The same goes for real estate agents, right? I mean, you think about brokerages, right? What broker. We were having this conversation earlier.
Brokerages. What value proposition is the brokerage bringing to the Realtor?
Because if it's just money, that's a problem. Right? But if it's, if you, if you ignore money, that's a problem. So, like, so what should real estate agents be looking at when they're trying to decide which brokerage to use with regard to the value proposition?
[00:09:57] Speaker A: Yeah, and that's really simple. And I've been honing in on this, and the value, like anything has changed. Just like the consumer used to look for different values from the real estate agent because they didn't have the information.
Right. So they needed the real estate agent. Now they don't need the real estate agent for the information.
Their perception is they have the correct information. They may or may not have it, but in their minds they have it. So we've had to completely change how we collaborate on a listing appointment rather than here's the information, this is where you're going to list your house. And it blows my mind that there's still real estate agents that go into a listing presentation like the know all you know, I know what I'm talking about. I'm your trusted advisor. It's like, oh my gosh, that went out in the 80s. But I look at it as. And I help agents. I call it a business audit. It's very simple. The two biggest expenses for a real estate agent or a real estate team are their taxes and what they pay their broker.
And today, in today's world, there's only so much value that any brokerage can offer their agent because it's accessible everywhere.
Right. So here is a few staples that are out that one staple that's outdated if you're with a company that charges you a royalty or franchise fee. Now here's the scary part. A lot of agents don't even know that they're paying this.
They just get their commission check and they don't realize that they're, they're, they're paying a 6% royalty or franchise fee.
It is 2025.
First of all, real estate agents don't need brokerages anymore.
It's legally we have to hang our license at a brokerage, but we don't need them anymore. So the royalty and franchise fee, and I've helped many agents just in the last year, that needs to be negotiated out of your split. Man. There is no value, 000,000 value in me paying a 6% royalty fee. And it doesn't matter if that royalty or franchise fee is capped or uncapped. It's frightening.
[00:12:40] Speaker B: But is that something you can negotiate?
[00:12:43] Speaker A: You can negotiate everything. Yeah.
So most agents will say, oh well, I actually just did the numbers here. I'm on an 85 15. No, you're actually on a 79 21. Is that right? Yeah.
[00:12:59] Speaker B: Yes.
[00:13:01] Speaker A: 7921 because of a 6% royalty. And I'm going to get back to these numbers real quick. I'll do a real situation of an agent that I recently recruited.
So negotiate that out. Of course the broker, owner or the team leader is going to go, no, that's, that's what funds your great website. All the websites are the same.
Basically. They're all the same. It does nothing. Just I'M just telling the truth. And by the way, I've been in the boardrooms of almost every major company. Like I, I got a little bit of experience here. So yes, take it out. I've had it done with other agents. Number two, if you're with a cap, a company that has a cap, the cap should be no more than $18,000 a year.
And, and, and that, that's like a conversation of like okay, well what do you get for that? And what are all the bells and whistles and blah blah blah blah. But just in general shouldn't be more than 18 000. And by the way like there's companies that because you hang your license in Manhattan, your cap 63, 000. That's B.S. now that, that doesn't fly anymore.
[00:14:19] Speaker B: So the caps and a lot of the caps are market based.
[00:14:22] Speaker A: Yes.
Yeah, yeah. So that, that's B.S. so negotiate your royalty, negotiate your cap.
And by the way the, there's just again I'm the pop pop of like if just reach out to me, I'll, I'll help work this out for you. I love it. And by the way, this isn't like let's flex our muscles. This is fair market value.
A real estate agent wouldn't sell a $300,000 home for 200,000. Right? So why would you do that with your own, with your own money.
And the last thing is if you're not with a cap company, get with a cap company.
A company that has a cap. Here's the latest victim. I call it 10 million dollar producer. 8515 split.
When I tell you 8515 can.
I'm guessing thought bubble goes oh I'm only paying 15% than a broker.
That's pretty fair. You've been into business over 20 years like me, right?
We still have old thinking like oh 8515.
Here's the deal.
Number one, it's a 7921 because it's. They were with a 6% royalty company for 20 years.
20 years with that company for 20. It's a long time they've done more than 10 million a year. That difference like I could literally lead, lead them to three different companies where they're, they would pay nothing to the company because of title. Rev share that. All the things that you should, every agent should be getting right now because that's fair market value. The difference is $63,000 a year.
You ready for this? She cried when I showed her this.
20 years.
$1.2 million she would have in the bank right now you're. You're a finance guy, dude.
20 years at 8% in any Vanguard account. Not any Vanguard account, but a Vanguard account. 8 to 10% average.
[00:16:46] Speaker B: Yeah, it's. The compounding effect is, is undeniable.
[00:16:50] Speaker A: I'm guessing that's going to end up around $3 million.
[00:16:53] Speaker B: Yeah.
[00:16:55] Speaker A: Yeah.
[00:16:55] Speaker B: Why do people. Why, why do people. I can see why someone might go to that model early on in their career. Need a lot of support, need a lot of handholding, need a lot of training.
[00:17:04] Speaker A: Yep.
[00:17:05] Speaker B: Now you're out. You're doing your thing.
[00:17:06] Speaker A: You know, people, hold on. This is not a.
[00:17:12] Speaker B: Number one.
[00:17:13] Speaker A: My intent here is to not hurt any company. It's not to. My intent is to make sure my tribe gets paid fair market value.
Why? Real estate agents don't do that. It's simply this.
Most real estate agents are salespeople.
They're not business people.
And when you're a salesperson, you don't look at the net net.
Their brain just doesn't work that way. It works perfect. But that's the difference between a salesperson and a business person.
[00:17:49] Speaker B: You know what's funny, Ed? Coming full circle, where we first started, I think that that's the struggle for a lot of loan officers in a weird, different way, because they are salespeople and they would rather. Because it costs money to have an Andrew, it costs money to have top tier processors on your team. They would rather keep the money for themselves and, and, and instead of investing in the pieces of their business that can help them scale and operate with more efficiency and create, you know, create structure and allow themselves to live a life, you know, have a, have a business worth, worth owning and a life worth living.
So it's kind of weird, but again, they're salespeople. They're just looking at like, how much am I getting paid? And they're not looking at like, all right, my investment in this person. I'm not saying, like, you know, it's, it's, it's a, it's, it's a thing that's going to hold a lot of people back. And in your analogies or in your stories, if this agent had access to that additional money, they could have invested it maybe not in Vanguard. Maybe they could have invested it in teammates that could have helped them scale, and that's the real missed opportunity.
[00:19:06] Speaker A: Yeah. Now I could. I know we're running, running out of time here, but just imagine if that money is reinvested in real estate. Imagine if that money was reinvested in leads, you're literally 10xing that number.
[00:19:23] Speaker B: Sure.
[00:19:23] Speaker A: And that's what I like to help agents look at, is, okay, what if you took that $5,000 and invested it in this? I met a guy, met with a guy when I was back in PA One of the coolest things I've ever heard in my life. He said, eddie. People from PA still call me Eddie. Eddie. I became a millionaire at 30, and I never made over $30,000 a year through real estate.
Yeah, never made over $30,000.
[00:19:59] Speaker B: That's the tortoise in the hair right there.
[00:20:03] Speaker A: How about that?
[00:20:04] Speaker B: All right, we, we did talk long. We. I know that there's another topic we want to touch on, so let's, let's, let's, let's get to that real quick. So this is going to be an action item. So if you're still here at 20 minutes and 18 seconds in, God bless you, you're about to get some, some real gold here.
[00:20:20] Speaker A: Again, just because I coach agents and team from not every major brand and an independent brand, but a lot of them, I have access to the greatest minds and one of my agent partners. Now, I'm going to hesitate before I say this, because as soon as I say this word, most people listening are going to go, oh, I tried that. That doesn't work. So just hear the whole thing. Take a deep breath.
It's Google Local ads, not Google Ads. Google Local ads.
For the sake of time, here are his rough numbers.
Just testing the market.
Invested roughly $600.
Got 18 leads.
Nine of those leads closed.
[00:21:20] Speaker B: That's a huge conversion ratio.
Humongous.
[00:21:28] Speaker A: I can. And he has given me permission that any agent that wants to.
I see how he did it.
This is one of those little secrets, the little things that when you're in the right rooms, you go, wait a minute. Wow, that's easy.
That's easy.
[00:21:45] Speaker B: I love it.
[00:21:46] Speaker A: Google local ads.
[00:21:48] Speaker B: So here's the accident. Your accident item is that everyone should check out Google Local Ads next week. I think we're going to get into it a little more in depth.
But my accident for the week is I re. Listen to our Selling the Dream podcast with Mike Shroka this morning on my way to an appointment. And for the agents out there, it's a good one. So, so we will, we'll put the link to the, to the selling. Selling the Dream podcast with Mike Shroka in the, in the comments once this goes on Facebook. That's, that's my accent for the week. He's a top producing agent and obviously introduced us, and this guy's killing it, and you'll get a ton of value out of it.
[00:22:31] Speaker A: So he's. He's another one that I've learned so much from about the way he trains his agents to work with investors. By the way, I think they've got five or six millionaires on their team through investing.
[00:22:50] Speaker B: Unbelievable. It's awesome.
[00:22:51] Speaker A: That's another thing your. Your company's got to be teaching is real estate investing. It's awesome, dude. Great job. I love working with you. I love your team.
Amazing, man.
[00:23:02] Speaker B: Appreciate you, man. I love this day.
This half hour. They're turning into half hour shows. By the way, the whole. The whole 15 minute thing. He's been gone for a while, but either way, man, I'll catch up with you next week.
[00:23:15] Speaker A: All right, brother.
