What To Say Now: Episode 7 - Real Estate Agents Earning Commission On The Mortgage Side Too?

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Dan Stewart (00:13): Hi everybody, it's me, Dan Stewart. With me as always is Brian Rayl. Say hi, Brian.

Brian Rayl (00:18): Hello.

Dan Stewart (00:19): Hi, hi, hi. So happy Monday afternoon. It's time for episode number seven. Can you believe it, Brian? Seven episodes already. Nuts.

Brian Rayl (00:29): It seems like only last month we started this.

Dan Stewart (00:31): Craziness. So episode seven today of What To Say Now, where once a week we get together and we tackle those difficult conversation topics, right? The idea is that you should be watching these episodes every single week, if you're interested in having conversations that lead to more opportunity for you and your business, your personal life, and of course, any professional endeavor that you may have. So Brian, we've got some good stuff today. I'm getting kind of excited about this. Are you ready?

Brian Rayl (01:03): Lots of conversation.

Dan Stewart (01:04): Yeah, we do have lots of conversation.

Brian Rayl (01:06): Love it.

Dan Stewart (01:07): So, you know what I was doing, I went over the logs of people who were paying attention to this. So many of the people watching these videos are my friends in the real estate space, which is amazing. So thank you to all of you for watching and participating. And we're also seeing that a lot of people are very interested in building a level of prosperity for themselves in their life. So if you are here today, it's probably because you think, "Hey, these guys might have something to offer me, that I can use in conversation to generate more business." Does that seem reasonable, Brian?

Brian Rayl (01:46): Absolutely.

Dan Stewart (01:47): Okay, it does. I knew, he'd say yes to that. Here's the thing that we need to talk about, guys. If we're going to be truly prosperous, we need to put our eggs in multiple baskets. We need to have our oars in multiple ponds. We need to diversify our income streams in order to be able to do that. And every time this topic comes up, I think of a mentor that I had very early in my business career, and I can hear his voice now, he says, "Dan, if you stand close to a waterfall, you're going to get wet. So picture a waterfall, you want to stand next to." I thought that was so interesting because I'm a serial entrepreneur, I've had businesses in many different verticals and I always think, "Where can I serve the most people and make the most impact?" And his perspective was, where are the most dollars falling over the edge of that cliff? Where's the fattest, widest, deepest stream of income potential possible. That's where he would encourage me to focus.

Dan Stewart (02:57): So naturally, I think about all my friends in real estate. Like our friend Gary Keller wrote a book, The Millionaire Real Estate Agent, you've probably read that, Brian.

Brian Rayl (03:09): Yep.

Dan Stewart (03:10): Yeah, and he lays out a plan in the book where a normal human being, without any special skills or talents other than desire and willingness to work hard can seriously build a tremendous income for themselves. I personally know agents who have massive amounts of income, several in that one million, seven figure GCI range, which is just tremendous and yet not every agent gets there. So I thought, "Well, what's the difference here?" And the difference that I'm coming up with that I want to share with you today has to do with differentiation and specialization versus broad market appeal.

Dan Stewart (03:55): Okay, so let's break this down. We'll talk about broad market appeal first. Think of Walmart, think of amazon.com. We just went to Walmart literally yesterday, and from one store we could bring home a tire, we could bring home dinner, we could bring home a bicycle, we could buy plants for the garden, anything and everything we could think of is there in one place, very similar with amazon.com. And yet, I look behind me and I see... See this guitar on the floor there? That's a Taylor, it's a serious guitar. It's not the most expensive, it's not the finest guitar made, but the quality of that instrument is far above anything you could buy at a Walmart, for example.
Dan Stewart (04:47): So you have to decide, and I have to decide with the time we get to do what we do, are we going to try to focus all of our energies and talents on one tiny thing or are we going to broaden it and try to serve a larger pool of people? So what are your thoughts about that, Brian? In your career as an agent, did you feel the need to specialize and focus or to try to appeal to a larger audience?

Brian Rayl (05:17): I did. At the beginning it was trying to get my feet wet, figuring out what everything was. I always knew that I liked the technology aspect and so specialized in the technology part of it. But then I realized fairly quickly that I didn't really care for working with buyers and driving them around and seeing 15 different houses and then not selling them anything in the end. So for me, I ended up focusing on listings and I was still really good at technology, so I continued all of my regeneration aspects and anything that was a listing, I would deal with the listing and then I would also help them buy. But anyone else that was just looking to buy, I would refer those out. So then I had that stream of income in addition to my commission income-

Dan Stewart (06:12): This is perfect, Brian, thank you. I'm going to stop you there because the segue is perfect. So, last week I posted on Facebook, a question. I said, "Real estate friends, how would you feel about getting paid on the mortgage side too?"

Brian Rayl (06:28): Oh, I saw that, yeah.

Dan Stewart (06:30): Because I'm really curious about this, because, hey, if you're a full time real estate professional, that's a lot. That is no small feat. And if you're a full time mortgage professional, that's a lot. That is also no small feat. So how is it that one person could do both? And the answers that came in, all the different comments that came in from that was really astounding. We had some people insisting it was absolutely illegal, it couldn't even be done. We had other people saying, "Oh no, it's legal, if you do such and such, and so and so."

Dan Stewart (07:08): So essentially there were two different roads that were paved. One was a dead end, "Absolutely not, I couldn't ever do it." Then there was a middle ground, which said, "Yeah, I'd be comfortable doing that, however, my fiduciary responsibility is to my client to get the best possible deal. It's not for me to earn more money on the mortgage." Right?

Brian Rayl (07:33): Right.

Dan Stewart (07:34): So other people were saying things like, "Hey, if it's fully disclosed, why not? Game on." And this to me is that concept from early in my career about standing next to the waterfall, because you're already closing transactions, that's happening. And oftentimes the difference between building significant wealth for yourself and just continuing to stay at the status quo, it's not a huge change, it's a small change. So if you were to earn that extra commission income by referring it to a loan officer, and then you took that additional income and you set it aside for investment purposes, that could truly accrue to be something that's life changing.

Brian Rayl (08:22): Absolutely.

Dan Stewart (08:22): So that's the spirit that I bring it up within. Even now as we're chatting about this, I want to just give some shout-outs to Melissa and Maya, I see you guys there. Always love feedback from the audience about different topics that we're talking about. So Brian, as a real estate professional, do you personally feel there's any legal objections to being able to do this in the state you're licensed in?

Brian Rayl (08:55): So I'm Texas and in Texas it is legal to do so, as long as you have a loan officer license. If you do not have a loan officer license then you cannot get a commission because of RESPA concerns.

Dan Stewart (09:12): Yes, thanks for bringing that up.

Brian Rayl (09:14): So there is that issue. And then there's the question about fiduciary duty. You have to make sure that you're actually fulfilling your obligation to your client, but it also depends on what that client's desires are, because it's like someone who is willing to sell for cash quickly at a lower price, versus someone who's willing to wait, get a higher price. What is it that they need? And loan products are often very similar. Some may have more closing costs, but a lower interest rate, some may have a higher interest rate but lower closing costs. What is important to that client at that time? And then there's some like, I won't say their names, but there's some banks that will never perform. So there's that [crosstalk 00:10:16].

Dan Stewart (10:07): Yeah, don't name those [crosstalk 00:10:16]. No, let's protect them so they can still take everybody's time and not perform, that's great. Sarcasm, insert the sarcasm font there [crosstalk 00:10:20].

Dan Stewart (10:20): So there's two things you brought up that I want to call attention to. First, RESPA violations. The days of the wild west are over. There used to be a time when title guys and mortgage guys, male or female, they could take you out and show you a great time and that was all great. They could buy your referrals, and rightfully that has been stopped and shut down.

Brian Rayl (10:44): Absolutely, yeah.

Dan Stewart (10:46): Now, in my family, my father in law, who passed away a year ago, he was a licensed real estate agent and a licensed loan officer in Florida for decades, and he didn't do every loan for every transaction that he had, sometimes he referred them out, sometimes he processed it himself. He just saw it as another tool that might be useful for him on occasion.

Dan Stewart (11:18): And so recently I was talking with a guy named Andre Lujan. He's at a company called Shore Capital and they're doing something really interesting. So, part of the reason I'm bringing this topic up is because I love the input of our community and what Andre has worked on is a way to help agents and get a license and NMLS number in their local market so that they can then refer the business back to Andre's company. So, in this case, the real agent is acting as the referring loan officer, but the back end, the back office staff at the lender are the people who are administrating all the processing and loan approvals and all these other things that have to happen, they move towards close. So I think that's just a really potentially smart way for some agents.

Dan Stewart (12:15): And yet, I'm not an agent, I'm an entrepreneur. So I want the input of our community and that's why I posted about it on Facebook. So any of you who are watching now that want to comment, I'd love to hear your feedback on the topic and, I'll invite Andre to join us here live at some point, we'll have that discussion with him as well. So a couple of shout-outs here. Want to say hi to Brooke Wolford, my buddy in Minnesota. I believe if I remember correctly, you just celebrated a birthday, Brooke. So happy birthday to you. And also want to say hi to Greg there. Thank you for liking this and sharing that. Definitely appreciate it. Maya, I see all sorts of stuff you're posting here. That's awesome. Thank you for doing that. So just segueing through these issues here.

Dan Stewart (13:12): We've got the need to generate more than one source of income that can protect us from instability in our markets. We've got some choices about how we can do that. You look at a company like, well, like eXp for example, they've built their whole recruitment model around the concept that it's nice for agents to have multiple sources of income that can be derived from their career in real estate. So conceptually, what am I missing? How has this totally different than that? Then we've got the question of specialization, versus broad market appeal, right? So you've got to decide which of those you're going to focus on. And of course, we're going to invite Andre to join us here for a future segment so we can answer those questions live. So, Brian, do you have anything else that you'd like to bring to the topic today, any angles we haven't considered?

Brian Rayl (14:11): I think a lot of agents have a source of multiple streams of income and they just may not necessarily realize it. There's several agents out there who also do staging for their clients. And while they may not be getting paid directly for the staging, it's a service that they provide in order to provide better client care. Other agents go the team route and start having teams and expansion teams and all of that kind of stuff and they generate revenue from that route. So there's a bunch of different ways that you can have additional revenue streams. And as long as everything is legal, up and up, and everyone is well informed of what's going on, if it's legal in your markets, I don't necessarily see a problem with doing that as long as you're keeping your fiduciary duty to your client first and foremost.

Dan Stewart (15:05): Got you. Okay. Cool. Well, thank you for your thoughts on that, Brian. I appreciate it.

Brian Rayl (15:10): My pleasure.

Dan Stewart (15:12): And to our audience, thank you very much for attending. Remember, like, share, subscribe to this, join our Facebook group, facebook.com/groups/whattosaynow and invite anyone you think that should be there. We're posting recordings of our previous episodes there in the group. And of course throughout the week, 24X7, you may post a question that you would like our group, our copywriters and myself included to comment about how to help you communicate anything that you can think of. So we've covered personal topics, business topics, you name it, and we'll comment for you in that section. So thank you, Brian, for joining me today. I definitely appreciate that. And I'll see everyone next week. We'll be live right at 2:00 PM Eastern time at facebook.com/groups/whattosaynow. Have a great week, everybody.

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