Interview with a Winner:
Michael Scalise
GSF Mortgage Corporation, Rockford, IL
2003 Volume: $31 Million
Average Loan Amount: $135,000
Software: Contour (for processing and taking applications), Mortgage Quest, Outlook and Excel
Referral Source Mix: 40% FSBO, 25% past client referrals, 20% Realtors, 15% affinity relationships with human resource divisions in the bigger companies in our area.
Boni Lonnsburry: How did you get started in the mortgage business?
Michael Scalise: I graduated from college in 1995 and took my first job in 1996 at one of the local banks. I was hired on with five other people. None of us had financial experience. We were hired because the bank was anticipating a big refinance boom, but it never happened. About three months later the bank merged with another bank and we were laid off. I then went to work for a subprime company. I worked there for the next three years. I finally found a home at GSF Mortgage Corporation. Here, I am able to do everything from conventional purchases to subprime loans.
Boni Lonnsburry: Were you an immediate success?
Michael Scalise: No, I was not. I was always in the top 10% of each company I worked for, so I guess I was a success as far as their company standards went. But until I reached my current company about five years ago, I didn’t learn about marketing. Once I recognized the importance of marketing, business began taking off for me.
Boni: 40% FSBO business is a lot. How did your FSBO program come about?
Michael: It came out of an idea I heard about three years ago but didn’t implement right away. I went to a seminar and heard a speaker talk about marketing to FSBO homeowners. The speaker suggested that you represent yourself as a tool to help the homeowners sell their homes. Basically you’d put a sign in their yard and give them some financial flyers.
I tried that and while it was successful, it wasn’t as successful as I had anticipated. Also, the other lenders in the area began copying me. Now everybody was doing it, so I had to come up with a way to take it to the next level.
I decided to produce a website for FSBO (www.homessoldbyowners.com). There are other FSBO websites out there, but the difference is that they are owned by someone who isn’t in the mortgage business. The owners are interested in making money off the advertising. They offer to put FSBO homes on their website, put a sign in the yard and charge the homeowner $125 for doing it.
I have about a 95% success rate when I call up a FSBO and offer to put them on my website. I tell them I’ll put a sign in their yard, list their home on the website, and do it all for free. They usually ask what the catch is. But there isn’t one. I’m selling myself while I’m helping them - that’s why I can do it for free.
I started out trying to do the website on my own, but I have no web design background. So I finally had to spend a little to outsource it. It’s now even easier to contact FSBO homeowners because many of them have already heard of our company. We even get calls from them!
Boni: How do you market the website itself?
Michael: We spend two days a week driving around our area looking for FSBO properties. We leave a package on their doorstep and call them a couple days later to make sure they got the information. We don’t do any direct mail pieces or advertise in magazines or on billboards because we don’t need to. Once we get our signs out in the homeowner’s yards, other folks who are thinking about selling their homes start calling us.
The cost for the program was very low once we were up and running. The biggest cost was developing the website. The only other real costs were having business cards made and putting the packages together. We don’t have a lot of maintenance costs on this program.
The idea that gets us business from the buyer’s standpoint is the coaching we give the homeowners. We teach them about the website and encourage them to send potential buyers to us for loan pre-approval before talking to them about buying their home. We also collect the names of the potential buyers. Obviously not all of them are going to buy the house they are in, but they may buy another house with the assistance of a Realtor we refer them to.
We help the homeowner’s with their open houses by putting together a registry kit. Visitors have a chance to win a $50 gift certificate to Home Depot if they sign the registry sheet. We do a drawing once a month. On Monday mornings, after the open houses are held over the weekend, the sellers fax the lists to us. We usually get the names of 15 or 20 people, per open house, who are in the market for a mortgage.
Boni: How do you contact the potential clients on the lists?
Michael: We call them directly. On the bottom of the registry sheet we have fine print that states that by signing the sheet the potential homebuyer understands that they will be called. When we call, we ask if they’d like to become pre-approved for a mortgage. We have a pretty good success rate. If they tell us they aren’t buying for another year, we still put them into our database and we market to them every month. We also offer a credit repair program and coach potential clients on raising their scores.
Boni: How do the Realtors you work with feel about your focus on FSBO?
Michael: In the beginning, they didn’t like it because they didn’t understand it. We were the focus of negativity on the part of a lot of the local real estate agencies. They were worried we’d steal their business. However, once we sat down with our Realtors, and explained the program, they understood what we were doing. Their attitudes changed.
We aren’t into FSBO for the seller. As a mortgage company, we’re not a threat to the seller because we don’t take the 7% commission that a real estate agent would. So we’re generating buyers. The buyers are not always going to be happy with the FSBO house they walked into. They are going to need Realtors.
Now we even get calls from Realtors to let us know where the FSBO homes are. Of course there are still Realtors out there who bad mouth us because they don’t understand, but the ones we do work with are okay with it.
Boni: How did you develop your affinity relationships with corporations?
Michael: The owner of our company likes to bring in speakers. We’ve heard from the likes of Greg Frost and Karen Deis. Most of my ideas in regards to corporate marketing were adopted from their ideas.
I was part of a networking group called RASA (Rockford Area Services Association). The group hosts a lunch once a month and most of the members are human resource people from the biggest companies in our area. The members of RASA market to each other.
The human resource folks are supposed to go back to their companies and educate the employees about the benefits they have from the companies that are members. However, I felt the human resource people weren’t always informing the employees. Maybe they were just in it for the free lunch.
To combat that, we set up an appointment with each HR person and told them what we could do for each of their employees. Now I do advertise in two of the real estate books in our area. I list the corporations we have relationships with and encourage their employees to contact us to find out what their benefits are. We’re even considering offering them a no closing costs loan where they would only pay the third party fees. We make less on these loans, but we get a lot of them in return because most of these companies have 2500 or more employees.
Boni: Do you do any first time homebuyer or real estate investment seminars for those corporations?
Michael: We’re actually doing our first one this Saturday. The companies in the corporate approach group hung up posters advertising the seminar. We’ve had 15 to 20 registration calls so far. We’d like to have 30 to 40 participants. We’re inviting a Realtor, I’m doing the mortgage portion and I’m also inviting a homeowner’s insurance representative to speak.
Boni: What mistake do you think new loan officers make most frequently?
Michael: So many people got into this business thinking they could make an easy dime without working. But it’s just not possible. When I started in this business, the only marketing that I did was picking up the phone and making calls. I did it until 8 p.m. Monday through Friday, and even on Saturdays. Now I see so many people who just sit by the phone and wait for it to ring. During the refinance boom, the newspapers were telling folks how much easy money people in the business were making. But to stay in the business, you have to work your tail off.
Boni: Do you think veteran loan officers make different mistakes?
Michael: Veteran loan officers get set in their ways. They don’t want to change. In this business, marketing is everything. But you’ll see a lot of the veterans stick with the same things they’ve been doing for years. It works for some of them, if they’ve built good relationships. But the problems occur when the Realtors they’ve always worked with leave the business. Then they don’t have anything to fall back on to develop new relationships. We’re definitely in the type of job where things change every six months – and you have to stay on top of it.
Boni: How do you differentiate yourself in the marketplace?
Michael: I differentiate myself from other loan officers through my marketing creativity. A lot of people see themselves as just loan officers. I consider myself a marketer. Everything I do is somehow related to marketing.
Boni: What are some of your most successful marketing campaigns?
Michael: The FSBO website and the corporate approach are the biggest ones we’re working on. We put so much time into them.
My past client marketing is broken down by database. My A+ database is made up of my top 60 past clients or referral sources. I speak with them once a month at least. I send them a monthly mailer and try to stay in constant contact.
I also have a B database, a credit repair database and a prospect database. My B folks aren’t my top clients, so I’ll send them something each month but I only call once every three months. My credit repair folks receive a letter every three months. My prospect database includes people who are looking to buy a house, have been pre-approved, but may not be buying or refinancing for the next six months to a year. This group will receive a letter every month, and I’ll follow up with them every other month by phone as well. It’s pretty simple. I use outlook and schedule pop ups to remind me to make the calls.
Boni: How many people are you calling in a day?
Michael: It’s not that bad. When the A+ database calls come up, I only have about 60 people to call. That takes me about three days because I’ll call 20 each day. The different databases are scheduled to fall on different weeks.
Boni: If you had a son or a daughter entering the business, what advice would you give them?
Michael: My college major was communications. Communications is always the major when you don’t really know what you want to do. It gives you a bit of a sales background, but I’d advise a marketing degree instead. You can learn the finance part on the job, but marketing is so much more important.
Boni: Who or what was the biggest contributor to your success?
Michael: The CEO of our company, Phil Seabert. He brings in speakers twice a year. We’ve had the likes of Brian Tracey, Jim Roan and Karen Deis. He’s also hired coaches for us. Every single day he has a new tip for us. He’s been the greatest president anybody could ever ask for. I’ve never worked for a company that puts this much focus on marketing.
Boni: If you had a magic wand, what would you change about your current business?
Michael: I’d like to see more education and licensing happen. In my opinion, mortgage lending is tougher than being a Realtor. I believe you have to know more, and you’re dealing with the biggest finance of your client’s entire life. Yet all you have to do to get into the field is sign a W-9.
I think training should be more along the lines of Realtor licensing where you take test after test before getting to the big test. Then you take more classes. Then you pay certain dues each year to keep the title of “Realtor.” I’d like to see the same in the banking and the brokerage business. When you make it so easy to get into the business, you’re going to get people who are looking for an easy dollar. I don’t want our business to be compared to the used car business.
Boni: What are your current goals?
Michael: My specific goal is to grow the For Sale by Owner program even bigger. We currently have about 50 homes at a time. I’d like to increase that to 100 homes. Once it reaches that level, I’d like to expand the program to other counties and other states, offering it as a marketing franchise to other mortgage companies.
Boni: Is there anything else you’d like to say to originators who aspire to the kind of success that you’ve created?
Michael: First, whether you’re a new or old loan officer, everyone has different strengths and weaknesses. You want to figure out what your strengths are and utilize those skills. If you’re good at something, stay with it.
Second, this is a marketing job. You need to stick with any marketing program for at least six months. There are so many good ideas out there, but if you just try them once or twice, they’re not going to work. Even our FSBO program didn’t happen overnight. Once we had it up and running, there was a point where we only had three or four houses. It took a good six months to get it to where we are now.
Third, it’s important to set goals for yourself. Set goals for the day, for the week, for the year, and for the next five years.