URGENT: Want to know exactly when rates are going to drop again? Looking for a way to explain raising rates to your clients, so they understand why buying today is still an excellent decision? Tune in to today’s podcast with the legendary Barry Habib!
He gives us a technical yet simple and easy-to-understand overview of today’s markets. Then he gives you advice on exactly how to take this new information and use it to create stronger relationships with your database and create engaging social media content that gets you incredible local exposure and authority.
Then Barry goes the extra mile (as always) to dive into the secrets behind his own personal success.
We have an in-depth and valuable discussion on the power of mindset, discipline and personal development principles to success in today’s market.
Then, we discuss his incredible book, Money in the Streets, and the principles that can be taken to find success in today’s marketplace. We even have a fun and interesting conversation about how he was involved in one of the most successful Broadway productions to become a major motion picture.
Oh yeah, maybe this episode is not to be missed!
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Listen to the Podcast Below
Barry Habib Shares Crucial Rate Information And Much More Incredible Value On This Episode Of The Loan Officer Wealth Podcast!
I have an incredible offer for you. What we have done is we have taken the ten most profitable methods to grow your mortgage business that we have learned from interviewing the producers on this show. Many of whom are doing over $100 million in volume per year. We have packaged them together into a condensed 45-minute training where you get to learn the ten most successful and profitable activities that you should be running in your mortgage business.
We show you how to automate those processes with people and systems. They run and continue to produce loan applications and new partners that want to send you business pre-booked into your calendar without you having to do any cold calls, chasing, or any work. It is a blueprint for you to be able to produce more in your business while working less.
You can go get that training for free at ChrisWebinar.com. Make sure you head over there, grab that training for free and make sure that you watch it because the sooner you get started on implementing these strategies, the sooner you can see results and continue to grow your mortgage business. Thank you again for being here with us for this episode, and enjoy another one.
We are joined by Barry Habib. Thank you so much for being here.
Chris, it is great to be with you.
If you have been in the mortgage industry for any amount of time, Barry needs no introduction. His most recent book, Money in the Streets, is an absolute must-read. I love it, and hopefully, we get to dig into some of that towards the end of the episode here. Let’s start off by talking about what is happening in the marketplace and what loan officers are experiencing now, help shine a light and clarity on what is happening in the marketplaces and what loan officers can be doing in order to make sure that the businesses are still healthy.
I was a loan officer that went through some ups and downs. I have done it for several years. I understand. I know what it is like to start every month at zero and when things are good. They are good, but it brings a different set of heartburn. When things slow down, there are a lot of different issues arise. Anxiety and uncertainty can make you feel a little uncomfortable and even fearful. I don’t blame you if you are feeling that way. That is completely normal for you to have these feelings of concern and even fear. Many of you are in positions where you have to make ends meet, want to be successful, and see things are different. You got people counting on you and depending on you. In the back of your mind, there is uncertainty that you have to deal with.
Before we get too far, Chris, I want to tell people that there is light at the end of the tunnel. There is some good news that is out there. We will talk about where we are and why. Let’s start with the fact that rates are going to come down. Q4 and Q1, you are going to see rates come down. You are going to see them come below 5%. That is going to give the housing market a little bit of a revival here. That will be good. Believe it or not, it will also be good for refinances because anyone who is taken out a loan between April 2022 and the next few months will have the opportunity to refinance. Anybody you have done, it is like a 2-for-1 deal.
It is going to be okay. I want you to know that you are going to be okay. I’m going to give it to you straight here. You are in for a little bit of a tough time in between. We will talk about all the reasons why, but I want to give people what they can expect. What is more important than that is that we need to not understand it, which is critical because 99% of your competition doesn’t. We also need to be able to teach it and explain it. Your real estate agents are feeling the same level of anxiety. Your customers are unsure. People are coming out of the woodwork to tell people don’t buy a home and miss the opportunity, but they have been doing that for the last several years. We have to be able to be on our game here.
I want you to look at this as an opportunity because now, more than ever, people need your insight, and you are not going to be able to cut it the way we were cutting it the last couple of years. People are throwing loans at you. You are spending your time qualifying and quoting. That doesn’t make it right now. Let’s face it. This thing can do all that faster, more accurately and less expensive than any of us are possible of doing.
What we need to be able to do is differentiate ourselves, not as rate quoting machines and qualifying machines, because that is easy enough to pass off to automation. Get out of that war and do something your competition is not. Explain what is happening in the marketplace and why. That is what we will spend our time on, Chris. People can understand and explain it.
I cannot agree more and building a relationship with your clients. You have somebody to have a dialogue with. When you do have the knowledge from this episode and MBS Highway, and you have something to talk about. When you are putting it out on social media, you have taken the time to build your tribe of your past customers. They are there to listen to you when you have the advice to give to them.
Barry, you mentioned that there is going to be a little bit of a lull here and a slower time before rates tick back down. Now is the time to double down on database activation and building out, reaching those relationships and educating those people. You have them to talk to when rates do come back down, and you have the opportunity to have that other side of that transaction.
Let’s explain where we are and where we are headed. Price is determined by supply and demand. There is still a lack of supply in the housing market. We form households in the United States at a rate of about 1.7 million a year. In a household formation, it takes a family, and they are living in one dwelling. If somebody comes of age and leaves, the family still remains in the dwelling, but that person needs their own place. They formed a household. A couple living together, one dwelling, they split up, one person remains behind, and the other person gets a new place. It is the same two people, but instead of one dwelling two, those are household formations. It is happening in 1.7 million a year.
The other side of that supply and demand, the other side is the supply side. Where does that come from? It comes from new construction, but it comes from new construction that is completed, not a hole in the ground. We are completing about 1.4 million units a year. That is less, but it even exacerbates it because of those 1.4 million units, about 100,000 of those are replacements, rebuilding, or those homes that, from age, get destroyed.
We are building 1.3 million. We need 1.7 million. The math would suggest there is a lot of support for home prices. We are not going to see a crash. Some markets will see some prices moderate and come down a little bit. I’m sure people are8 going to take a victory lap because they have been saying for the last several, “Don’t buy a home. There is a housing crash.” Even for the last several years, home buyers are at 50%. If 50% rise, you might see a 3% drop, and they are going to say, “I told you so.” We have to be on the lookout for that.
Home values are going to be determined by supply and demand. Why are we seeing what we are seeing now? It is because interest rates have risen. If we want to understand what is causing interest rates to rise and we understand the cause of what makes interest rates rise or fall, we can better anticipate when we will see interest rates come back down to a lower level. Why I’m saying that rates will come back down under 5% sometime between the fourth quarter of this 2022 and the first quarter of next 2023?
The driving force of interest rates is inflation. What inflation does is inflation. If you are the lender, you are receiving fixed monthly payments. The value of it is eroded if the costs to buy things with that fixed monthly payment rise. If it rises at a small rate, 1%, which we have been experiencing in the last few years, you can offer a rate that is low because you are not worried about that rate of erosion being material.The driving force of interest rates is inflation. Click To Tweet
It is gone from 1% to 8% or 9% in the headline rate and about 6% and changes to 6.3% on the core rate, which strips out food and energy. Your buying power is being eroded at a much more rapid pace. The only line of defense that you have on future mortgages you will be lending out is to start at a higher perch. You get there by charging a higher rate. You collect more money every month, which offsets the more rapid rate of erosion of your buying power. It is that simple.
When inflation goes up, rates have to go up to account for the erosion of buying power. When inflation comes down, rates come down. We have seen inflation go up. It started going up in 2021, but the Fed rigged the game. The Fed had QE until roughly February of 2022. The Fed was buying mortgage-backed securities in large quantities. While inflation was rising, the Fed thought it was transitory.
Mortgage rates should have been moving up. Because the Fed buying those purchases meant there was such an appetite, but you didn’t have to offer a higher rate. You had a buyer in there that was a mystery buyer that was buying all these things up. If More people buy, that means the price goes up. When the price of mortgage bonds goes up, yields come down. We all know that relationship.
The second the Fed took off the magic mystery buyer program, what happened? Mortgage rates did, but they always do. They followed inflation. If you look at the chart, you will see that inflation and mortgage rates have done this. In June 2022, we started to get better news on inflation. Inflation came down. What did mortgage rates do after June and into July 2022? They came down. The numbers came out, showing inflation was up, and mortgage rates went up in tandem. We see that relationship. We know that mortgage rates will follow inflation. The housing market will be closely attached. Not only to supply and demand but also influenced by mortgage rates. Inflation holds a real key.
If that is the real key component that incomes the Fed, what is the Fed trying to do? Many people think, “The Fed is going to hike rates.” No, the Fed does not influence mortgage rates directly. The Fed has the cheapest money in the world. That is going to be the Fed funds rate. What the Fed has done is taken that Fed funds rate from zero. Now up to what most recent fed hike that we are seeing, they are going to bring that up to 3%. That is a big jump, and they are going to continue to do that. Probably November 2nd, 2022, will be another hike. They will bring it towards 4%.
What is that trying to accomplish? For every $16 out there, $1 is in cash, and $15 of it is credit. Imagine if all you could do was purchase what you had in cash. You couldn’t buy that car because that is a $70,000 car. Unless you have $70,000, you can’t do it. What do you do? You take out credit for it. Even a lease is a credit, or a loan is a credit that goes out because, on the other end of it, the seller of that car received the $70,000. If somebody got $70,000, you are paying $600 or $800 a month. You created $70,000 out of thin air by using credit.
The definition of inflation is too many dollars chasing too few goods. What the Fed is saying is, “We want to take dollars out of the equation. We want to create less dollars, not in cash, but in the credit that is out there.” They want to do something called demand destruction by making it more expensive. What will they influence with the Fed funds rate? We said it is not mortgages, but what is it? Credit cards and car loans, which we talked about. Home equity loans and lines of credit. All those are attached to the Fed funds rate. You will pay a little margin above the Fed funds rate, but the big ones are the commercial and industrial loans.The definition of inflation is too many dollars chasing too few goods. Click To Tweet
I’m going to acquire that other company for $700 million. How do I do that? I’m not going to do it in cash. I’m probably going to do with a big amount of debt. I don’t dilute myself. I’m going to build that huge factory for $400 million. Chances are I’m going to take out a loan for maybe $300 million or $350 million of that. Those are the big ones. Think about it this way. If I do that, I have created $300 million, $400 million or $500 million out of thin air.
That is something I might want to do when the Fed funds rate is zero, and maybe I’m getting a deal 2% above the Fed funds rate. $300 million at 2%, I could figure out, but maybe I will get a return that makes it worth my while. The Fed, as of November 2022, gets up to around 4%. I’m paying 6% or more. There is a big difference on $400 million. I’m paying 2% and paying 6% or 7%. The math may not work for me to do that. That is what the Fed wants to do. They want slow it down. They always go too far. They slow us down into recession. Mortgage rates come down during the recession.
The way that inflation is measured is you get a year-over-year number of inflation, but that year-over-year number of inflation that we all see quoted is broken up into twelve most recent months. You add them together, maybe account for a little compounding, and that gives you year over year rate. What we saw is that in the second week of September 2022, we got the data for August 2022. It was up six-tenths of 1% on the core rate of the consumer price index.
August of 2022 replaces the oldest month of the twelve months, which becomes the thirteenth month, August of 2021. That goes away from the income of August of 2022. August of 2021 was a pretty low reading. It was only two-tenths of 1% for August of 2021. You replace it with six-tenths of 1%. The year-over-year number jumps by that difference of four-tenths of 1%. The market saw that, and it threw up. That was the problem.
Anybody who saw my forecast for 2022, anybody who has heard me speak anytime in 2022, and there has been a lot of them have been to one of my webinars, you all saw me bring up the same chart where we said, “It is going to be a cruel summer.” We showed specifically that July and August 2022 numbers where the inflation for those months from 2021 was low. That low bar meant that in 2022, it would be hard to see inflation come down and easy to see it go up. We thought that inflation would go up. We felt that rates would go up over the summer.
Even when people say, “No, it is peak inflation.” I remember I did a whole thing for John Walden’s worldwide conference and on TV saying, “Don’t believe these people. They don’t know what they are talking about, saying peak inflation over the spring of 2022. It can’t be.” We saw peak inflation happening, and I still believe it is true. They were going to be proven correct in October 2022. Starting October 2022, when you now replace the 2021 numbers, the readings from 2021 starting October are much higher.
It would be easy to see them start to come down from October, November, December, and January 2023. That is why we are saying, “Fourth quarter and first quarter.” The readings for 2022 will have as part of it the Fed, hiking rates, and things slowing down. The Fed hiking rates, another thing that they do is promote savings.
Remember when you went to the bank, and you didn’t get anything for savings? Psychologically, human beings, if you get less than a 2% rate of return, this has been studied, you rather spend it or be speculative with it. If you get more than 2%, you start thinking about saving it because you get an actual rate of return. If the Feds are at 4%, you will start to see rates that you can get in a savings account. That is what the Fed’s objective is. Instead of spending it, more money is in the economy. I won’t spend it. I will save it.
Also, the goods component. The supply chains are starting to be worked out. Thank goodness we averted the railway strike. We should start to see goods flow. I have reason to believe we will start to see prices come down on goods because we will have an abundance of them. That tells me that we are going to see not only high comparisons that are easy to beat but lower inflation. When we make those comparisons, you will see big chunks coming down, with those inflation readings could be coming down half a percent per month. You get four months of that. That inflation reading goes from 6.3% to 4.3$. Yes, the Fed’s target is 2%, but we have started feeling a lot better, and the needle is moving in the right direction. The Fed starts to get wind of this and says, “We don’t wait for it to get to 2%.”
Paul Volcker, in the early ‘80s, took the Fed funds rate from 8.5% to 20% in six months. Inflation was at 14.6%. Guess when he started cutting rates when inflation was a 2% target? No, inflation was at 11%, and he started cutting rates because he was able to say, “The trajectory is turning quickly, and we are going to see it coming down quickly. Let’s not wait for the credits of the movie to roll. Let’s get ahead of it because the Fed has a habit of driving by looking at the rearview.”
Alan Greenspan gave a great analogy. He was a good fed chair. We have had some pretty subpar ones since then. Bernanke was terrible. Yellen was maybe the worst ever that we have ever had. Arthur Burns and Jerome Powell have truly bundled the situation. When we see what we are looking at with regard to Alan Greenspan’s analogy, he said, “We have to be able to anticipate things because when you take your morning shower, you turn it on, and if the water is cold and you would like a hot shower or warm shower, if you turn it to the extreme hot for a moment, it will feel okay, but then you will burn yourself. If you turn it to extreme cold because it is too hot, you will never get it.” That is what the Fed does. That is why they create boom and bust cycles. They hike too much, and they cut too much. They never get it.
What is needed here is you set it and be patient because the economy needs to catch up. The day that the Fed takes action, hike, cut, or whatever it is, nothing changes that day. Several days later, people who now see it in their payment go up experience it for the first time, but they haven’t taken the money out yet. It is the next month when it finally gets paid and comes up. That is two months there. If you are in the middle of a buying decision, you are probably in the midst of it. Go through with it.
It can take 3 to 6 months for the full effects of a Fed hike or a Fed cut to filter its way through the economy, which is why the Fed can’t seem to do this, but they should be thinking 3 to 6 months in advance. We have already heard from Fed members that they are not going to do that. They told us. They said, “We are going to keep hiking rates until we see inflation go to 2% and stay there for at least three months.” That is stupidity, and it is a shame.
We got a lot of technical people that are reading that love that, but for everybody in the middle, that makes it incredibly easy to understand. It is well explained. Thank you for that.
We have to do that. It is inexcusable for us not to understand that. Anybody who is out there in the mortgage business that thinks their product is mortgage, you got a product that sucks. Your product sucks because nobody wants to be in a lot of debt with a high monthly payment. They can’t go out to dinner. That is not what people want. You have to understand what people want from you is money. You are in the money business, not the mortgage business.What people want from you is money. You're in the money business, not just the mortgage business. Click To Tweet
The mortgage is how you get money to people, which means you have to understand how money works and what they are using the money for. They are using money to buy real estate. What you do is sell money to buy real estate. You better understand money and what drives the real estate market. If you don’t, somebody else who does will have an enormous advantage over you.
The person that can explain it the best is the one who wins not only the customer but the referral partners.
Nobody came out of the womb and started to be able to understand and explain it. It is your all-learned behaviors. This is what we have to do. If you learn it, you should be able to explain. What I went through with you, almost anybody can understand what we went over. It makes sense. It is not complicated. Each and every one of us needs to be able to do that. Our customer says, “That makes sense. If somebody else is clueless, what else am I going to miss if I don’t do business with you?”
Not realtor referral partners, that also goes for explaining it to accountants and financial planners. The mortgage market is such a nuanced part. It is a small component of what they do. When you can bring that clarity to them, there are all these other pathways that you can have as far as referrals in your business when you take this knowledge that Barry has given you and disseminate it.
9 out of 10 of them will think that when the Fed raises rates, mortgage rates go up. It is the exact opposite when the fed raises rates. If it curbs inflation, mortgage rates come down. Alan Greenspan, in a year, raise rates by over 2%. Mortgage rates came down 3%. Let’s take a look at Paul Volcker. He raised rates by 11.5%. From 8.5% to 20%, mortgage rates came down 6%.
It is not the rate of the Fed funds rate. It is the rate of inflation. The Fed could hike rates, and mortgage rates could go up if it is believed that the Fed is beyond the curb or if there are driving forces pushing inflation higher. If the Fed hikes rates and is successful in curbing inflation, mortgage rates go down based on the Fed hiking rates.
There is some social media gold in there for all of our readers to put out there and some other incredible things. Barry, thank you for that. That is incredibly helpful. Is there anything else that you want to add to the knowledge and understanding to the market for our loan officer readers?
The housing market is one where it gets gotten beaten up by the media, but it is still proven to be strong. There are areas in the West and the Southwest that have been heated. It could come in a little bit. We don’t expect crash-like conditions. If you wanted a quick comparison, back in 2007, we had 3.8 million units in inventory. Nowadays, there are 1.3 million units in inventory, third of the inventory, but yet, there are 14 million more households or about 30 million more people. It is competing for 2.5 million less homes in inventory.
That is not the full story. Out of the 1.3 million homes in inventory, half of those are almost under contract. There are only about 740,000 homes available in inventory. We are a country of 340 million people. Inventory is still tight. As I explained earlier, we are forming more households, and the supply, at the present time, is not keeping up. Could builders build a little bit more? Sure, they could, but we have a bit of a shortage here. Maybe quite a bit of a shortage. When interest rates come back around, you will see more buyers come in to come into the game.
A little bit of a speed bump in the marketplace. It is a fantastic time to get back to the fundamentals and get back to the disciplines. We are in business. It is not normal what has been going on for the last several years. Now is the time to double down and build yourself a nice, solid, successful business that you can grow from in the future.
If you are talking to your customer, it is true that rates are higher, but you will refinance that to a lower rate that is temporary. If you consider what the conditions were, you had to spend $50,000 over the asking price. You had to forego a home inspection, sometimes forego an appraisal. It was tough for buyers. It is more of a resumption of what seems like a sensible environment. Maybe not $20,000 or $10,000 off their asking price. I will get my home inspection. I will get them to throw something in that I wanted to. You can work out some terms now. This could be a good time to buy. The negative is that instead of a rate of around 3%, it is around 6%. Within a year from now, you will probably get down to a rate in the 4%s. It is not a bad thing at all. You can have a forever home without a forever loan.You can have a forever home without a forever loan. Click To Tweet
Barry, if you don’t mind, maybe a little bit of a shift in the conversation because you are a successful individual and looked up to by many in the mortgage business. Your book Money in the Streets talks a lot about mindset and making sure that the game that is played up here is much more important than maybe the tactical strategies of what happens.
Could you talk maybe a little bit about your story, how you got into the mortgage business, how you found success, and maybe some of those mindset tips that you can share with people that are struggling a little bit with the marketplace and some of those types of tips that you have for people? Your wisdom on those topics is invaluable now.
The most common trade among successful people is optimism. Your outlook and mindset are critical, but you can’t have just mindset, you have to be able to be willing to put the work in. You want to be able to begin relationships by giving. Many people start by asking. You want to get a new referral relationship. How do I get them? It is like, “Nice to meet you. I can do some loans for you. I will help you out with a loan.” You are asking for business. You are beginning the relationship by asking. That, in my opinion, is not going to work as often as beginning the relationship by giving.
I saw the listing that you posted. I created a real estate report card for you that you could bring to the open house. Here is an AVM report that I did for you. Here is a cost of waiting report that I put together for you. Here is a tool that would show as an investment. If somebody came in as an investor and they wanted to purchase it, how would they make money, what their rate of return would be, and what their cash-on-cash return would be all on your property? This might help you sell that home. I know you are going on a listing. Let me give you this AVM report that I can pull up on anyone that you want so that you can bring it to that listing and help them, certainly not one from Zillow because the army of Zillow will try and attack them for their mortgage and for another real estate agent to do business with them. You want to keep away from the Zillow site.
What you are trying to do here is begin relationships by giving and using the right tools. At this point in time, it is always inexcusable to not invest in yourself and not to have your brain, as the biggest investment is what you should be making to be the foremost expert in your marketplace. You want to be the best.
Some of my stories are that I had dreams of being a professional ball player. I was a good ball player when I was a kid. I was good in high school, but when I got to college, it seemed like people got better than I did. The thing that I love about sales and what we do is that you don’t have to bench press 500 pounds. You don’t have to be able to dunk. You don’t have to be able to run faster than ever. You need one thing. You need to have a heart. How much do you want it? How much are you willing to do to be the best?
You can be the best no matter how tall and fast you are. It doesn’t matter. You can be the best at what you do by learning the markets, explaining them, and being the source that people go to to make sense of things in times like this. When it is busy, business is being thrown at you. Now is the time. People need a beacon. They need a guiding light. That needs to be you, whether it is on social media, networks, one-on-one, or doing a little meeting for an office full of real estate agents. You want to increase your closing ratios, not by quoting rates or qualifying somebody, but by giving them true guidance and being an advisor.
I think we all agree that wisdom and knowledge are two different things. Knowledge is important, but wisdom is a real valuable commodity. The Fed has 18,000 employees. They have 400 PhDs, and yet, they have admitted they don’t understand inflation. They have bundled where interest rates go and bundle the economy. They have the knowledge, but they don’t have wisdom. What we want to make sure that we have is that wisdom. Seek it out with mentors, tools, knowledge, and reading. Absorb and be a sponge to enrich your brain. People will want to interact with you because they will gain something from you. Be a master of being able to communicate it.Wisdom is a real valuable commodity. Click To Tweet
Communication between us, Chris, is, you have an idea in your head, and you want to put it in mine and vice versa. We like to do it for those reading right now. The problem that many people have is they come to a conclusion in their own mind, and they expect to throw it out there to the person without giving them the benefit of how they got there. You need to work and practice on how to do that in an expedient manner. You cannot take them through the journey of how it took you six months to come to this realization, but you have to make that part of your communication.
Everything that you and I have discussed, you have explained to me clearly. You are very articulate. I hope that although the things that I have talked about, many people would initially feel are complex. We tried to make them, so they make sense. What happens to the readers is they get that idea that was in your head, clearly in their head, and they feel a lot smarter and better.
I talk about it in the book about being magnetic. You love people that are magnetic. When you meet someone, make them feel better and smarter. Make them feel smarter by helping them. You want to plant the seed when the ground is fertile. When a topic comes up that you have an opportunity, you want to be able to do that. Every customer is asking you, “Is their housing bubble? Which way are rates going? What does it mean with the Fed? What do they doing?” What a wonderful opportunity to gain this knowledge and expertise and then shine. Every person you talk to shines. This is your chance.
One point you put there is to take that six months of knowledge to take that career of knowledge and to spend the time putting it and distilling it down into something that somebody else can repeat at a dinner party. That is what borrowers want to do. They want to be able to explain it to their wife, husband, or spouse.
They need to be able to have that four-minute social media clip or 32nd clip, depending on how good you can get it. They want to be able to understand it and repeat it. That repetition, they are associating that back to you. The more they repeat it, the more they understand it. All that value comes from you, but you gotta step outside, take this knowledge here, take the time to distill what it is for you, and put it out in the marketplace so that we can help people in each of your different local economies.
You and I have been conversing for 30 minutes. The time that I have been speaking has been 20 or 22 minutes of that. Think about 22 minutes of what we have covered. The housing market, supply, demand, construction, household formations, the Fed, where rates are going, history of the Fed, who is done what, what the results are, mortgage rates, what drives them inflation, what drives inflation, what is inflation, what can cause inflation, and what can kill inflation? The incentives of creating money or demand. Think about all those topics, and I hope that they are clear to understand in 20 minutes. You could certainly take one of those things you can explain to your customer in 3 or 2.
Those are things that you could do, but you can’t say, “How is the market going to be good?” The rates are going to come down. The Fed can help us by hiking rates.” Why? You have to metaphorically hold your customer’s hand and take them through that journey. That is great communication. We could solve much of the world’s problems if we could communicate. Much of the disagreements and frustrations we have come from misunderstandings.We could solve so many of the world's problems if we could communicate. Click To Tweet
Barry, thank you for being generous with your time. Final question, if I may. This is valuable for our audience because it is sometimes difficult to put yourself out there when people are asking about rates. We are helping people with large financial decisions. We get a lot of people that are scared to put their ideas out there on social media. I thought maybe you could tell your breakthrough story of that first media appearance that you got simply by being there posting content and valuable content.
I’m going to date myself here. That was before the internet was out there. We were first exposed to the internet in ’95 and ‘96, as the general public goes. I had been an originator for several years already. My parents were immigrants. I’m a first-generation born here in this country. It was tough because my family had done well in Europe. They gave up everything and sacrificed everything because they saw more of a future here than there. I respect and honor that every day. I try to make those sacrifices that they made worthwhile.
I grew up poor. My dad passed away when I was a young boy. My mom worked in the spread shop. I know what it is like to be poor. It was important to me to help others because I know what it is like to be in that position. Optimism is a good quality to have. We can all improve our level of optimism simply by the lens we look at things. I’m not saying be foolish, but be optimistic.
The harder you work and the more you learn, the more optimistic you become because you gain more advantages. The better equipped and prepared you are, you gain more advantage. I wanted to learn more. I realized at a young age in the mortgage business that we are truly in the money business, as I have expressed to you before. Therefore I got my Series 7 licenses because I wanted to understand the whole picture. I studied how real estate works as an investment because that represented about one out of every six transactions. I wanted to make sure I was part of that, and I didn’t wanna lose that. I didn’t limit myself to qualifying and quoting.
The more I learned, the more of a resource I became for others. I said, “Maybe I can share this knowledge.” I sought media opportunities with a local newspaper because I had read things and was smarter than that. I say, “No, you got it wrong.” Politely, I write in and clarify that. They say, “Can we interview you?” I was getting media opportunities through local newspapers, which became statewide newspaper media opportunities because they all look at this stuff. It became an opportunity on local television, which led to an opportunity on CNBC. That led to a several-year run where I had my own show on CNBC, Fox, Bloomberg and all these others that had me do that.
At the same time, I started a professional career as a speaker because one of the best ways to learn is by teaching. That helped me constantly be sharp. I appreciate the kind words of saying that people look at me as someone who can help them and educate them. I consider myself a student. You would be shocked at how much I read, try and learn every single day. It is for hours every day. It is part of the discipline because I have a responsibility. My responsibility is to our subscribers and those who come and seek knowledge from me. I need to be able to be sharp all the time and on top of my game.
As a mortgage professional, don’t you feel the same way that you need to be that way with your customer? When you say, “What was the breakthrough?” The breakthrough was the realization that I wanted to be the best that I could be. I want to be the best version of myself. That was the breakthrough because that led to everything else. That led to my thirst for knowledge and expertise, constant education, and being that resource. The more you do it, the more confidence you gain.
Confidence, not cockiness, is an attractive quality. You will be more magnetic. You will draw people to you. I know that right now if this isn’t exactly the market that you wanted, I empathize with the fears that you might have, but use the extra time that you have available as an opportunity to be the best version of yourself and gain the knowledge that you need because it will get you through this time. It is not going to be a long time. It will change your life for the better now, especially exponentially as things begin to turn.
There is exponential growth that occurs if you are the best version of yourself. You get much more, which gives you much more. You already know the way that works. Someone who does a few transactions has fewer refinance opportunities from past clients. Somebody who does a lot gets a lot more ReFi ops because they have a lot bigger client base. That gives them more referrals. Exponential growth is what we want.
Grow your brain because that puts you in a position to grow referrals, sources and clients and create enormous wealth for yourself and fulfillment. It is one thing to write alone for somebody who comes and says, “I need a loan. There is a quota on my rate.” That is great. It is much more fulfilling when you help that family who has listened to the media incorrectly to make a wrong decision or about to choose the wrong type of strategy or product.
The other thing is to listen. Listening is critical. One of the important questions I would ask my customer is, “Tell me what you are most concerned about?” The reaction would normally be something that they are most concerned about is either the home, loan or terms. I want to make sure I can make the payments. I’m a little worried about that. You could talk about that.
I would say, “Aside from that, what are you most concerned about?” It might take a minute for them to answer. They were like, “As you can see, I’m not set up with savings for retirement.” Maybe we should choose a mortgage product that helps you achieve that but did you know that it would only be slightly more? You qualify for a twenty-year term instead of 30.
Let me show you what that means several years from now when you think that you will be in a position where you said you might move. You told me you might be moving, but you have been staying in this house for about several years. The difference between a 30 and a 20 is for the amount of money you probably would have blown anyway and wouldn’t have felt. What this will do for you is it will create $94,000 more and that might be helpful for you when it comes time for retirement.
You have to ask the questions, you have to listen well, you have to give them the opportunity, and you can’t give what you don’t have. You have to have gained some expertise to be able to do that. You shouldn’t do a mortgage application without at least going through the amortization schedule with your customer and showing them the magic of how it works because they are clueless. Maybe most mortgage professionals don’t understand how it works.
In all of these professions, financial planners, insurance advisors, and all of that, the details are what is important. For people who do it every day, those are the things we want to skim over because of the boring details. You are right there. There is so much value in there. May I ask one more question?
This one is for me. I see the finance background. It seems to be much in the real estate and finance world. We have an entertainment show successful. How did that story come about? How did the Rock of Ages become a thing?
I also have Chris Angel in Vegas, which is successful. I did Bonnie and Clyde in London too. That was a good show. I did the Whitney Houston one, and that was a flop. You don’t always get lucky. Believe it or not, I have done quite a bit of acting and TV things I did. I have been in ten movies. I’m a friendly person. I get to know people. I try to be kind and friendly and meet some relationships. On the movie set of Barry Munday, I made the trailer. It is a good movie. There are a lot of stars in the movie. I play a doctor. I made the trailer, as I mentioned, which is cool.
In that romantic comedy, the writer and director, Chris DiRenzo and I became friendly. He got to know me a little bit and knew I had a background that was good on what was going on in the economy and the overall market. He was interested in that. We became friends. You can’t give what you don’t have. I was able to give something in that relationship. He said, “I got this theatrical production, and I wrote it.” He showed me the script, and I loved it. That was a script for Rock of Ages.
I and four other guys got together, and it was a good thing. I was ignorant as to how risky it was. My heart was speaking to me. I sing in a band, and I love the music. We took a shot, and we brought it off-Broadway. Nobody gave us a chance. We said, “Let’s do it.” It became a hit off-Broadway. It is only the second off-Broadway show in history that got a movie deal. We said, “It is time to take a risk and put it on Broadway.” I put a lot of money at risk out of my own pocket, took the thing and put it on Broadway.
To let you know how scary this was, the owner of the theater was already looking for the next show because they didn’t think we would last more than six weeks. They were already searching for the next show because they figured we were going to be in and out of there. We lasted several years. We were the 27th longest-running show on broader. Now we are number 30 because other ones have passed us over the past couple of years. We were able to have a lot of success.
My role there is in some creative aspects of it because you have to be creative to be a professional speaker and perform, but it was a lot on the business side. I’m doing things on the business side and negotiating some of the contracts. Overall, I was the lead producer. We had an amazing experience. All the aspects of it were great.
We were the cool show on Broadway. The musicians wanted to come. I get calls, “Phil Collins is coming to the show.” I go, “Hugh Jackman and Paris Hilton are coming.” I would take them around. Even Chelsea Clinton, who was nice. We have hundreds of these situations. Bands would come. The guys from Poison and Journey are coming this night and many athletes. I still have many friends with professional athletes. As a matter of fact, the Tampa Bay Rays’ coach Kevin Cash knows me. He called me. He said, “Baron, can you the hookup on Broadway that I could go.” These are the types of wonderful relationships and friendships I was able to make from that incredible experience.
Opportunity is everywhere. How do you look at things? If you are looking at it with a negative lens, that is all you are going to see. If you are looking at this period of time optimistically, this is a chance for me to make myself better and build relationships. This is a chance for me to look around and see where the opportunities are. How can I help that family not be scared, buy this home and show them the comparisons? How can I help that referral source who wasn’t sending me business?
Let me help them in this more difficult time market that listing or show customers why this is a good time to buy. They are going to be more open to it because they need me. If you look at this as a chance for you to do those things, play the longer term. Don’t play the short game. If you think long-term and relationships and you start by giving, you will be amazed at what you receive.
How do people find out more about you? How do they reach out? How do they get more information on an MBS Highway subscription?
Thank you again for being here.
God bless, and thank you.
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Thank you so much for reading, and I hope that you enjoyed our guests on the show. This is a reminder that we have finished taking the greatest lessons from all of our guests and packaging them together into a brief online video presentation that is going to teach you the ten most profitable ways to grow your mortgage business. We show you how to automate those processes in your business with people and systems. You get the results without you having to do the work every day.
This is quite literally a blueprint. You walk into your mortgage business every day with pre-booked appointments, with borrowers that want to meet with you and referral partners that want to send you business. You are spending your time inside your mortgage business on the highest dollar-per-hour activities, and you truly become the executive of your business, a true business owner rather than somebody who is going to a job every day and making a wage on the way through. This is an absolutely incredibly powerful training for you, and I cannot wait for you to experience it. Head over to ChrisWebinar.com to get that free training
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