The Heath Barnes Show

Mortgages Reimagined

with your host, Heath Barnes

EP028: You’re Not A Loser: Misassociating Your Net Worth With Your Self-Worth With Danny Horanyi

HBS 28 | Self Worth

Stop disassociating your net worth from your self-worth. You have the find time to celebrate your wins because you are a winner. If your income is going down, that doesn’t mean you are bad at what you do. Market and demand shift all the time, so it’s not really your fault. Just understand that life is happening for you, not to you. And once you figure that out, you can shift your energy to what benefits you. Join Heath Barnes as he talks with the co-creator at NEO Home Loans and Triibe Coaching, Danny Horanyi. Learn how to navigate this weird and uncertain environment as a loan officer or originator. Find out how you can come out on top so that you can avoid suffering. Start focusing on your self-worth right now.

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You’re Not A Loser: Misassociating Your Net Worth With Your Self-Worth With Danny Horanyi

Our guest is the Co-creator at NEO Home Loans. He’s also a Co-creator and Coach at Tribe Coaching. Danny has been making an impact in our industry for many years. He has more than $2 billion in production, and is one of the top originators in the country. He has several years in the industry. He lives in San Diego and has two kids. He loves to travel, play board games, and drink wine. A man after my own heart. Welcome, Danny.

Great to be here. Thank you so much.

It’s a pleasure. Danny is my coach at Tribe, and I have been with Tribe for quite a while now. I invited him to go on the show here. I’m fascinated by the systems and processes you have in your head and all the knowledge I’d love to share with my audience, especially in this environment we are in. First, I’d like the audience to get an idea of who Danny Horanyi is, where he came from, and how he got into the business. How did you get into the business?

To answer the question, the first thing that comes to my mind is happy hour. That’s how I got into the business. I will give you the short version. I went to college and got a degree in Accounting. I thought I was going to become a CPA. Right out of college, I got a job at Centex Homes in the accounts payable department. My Accounting degree gave me the credentials to go in and be a data input person back in a cubicle dungeon. It turned out that CTX Mortgage shared a building with Centex Homes. CTX Mortgage was the mortgage arm of Centex Homes, and we shared a break room.

As an accountant, you're just going to be a data input person at the back of a cubicle dungeon. Share on X

I would go in every morning and afternoon. I would toast my bagel and get my coffee, and I would go back to my cubicle dungeon. I would come out and microwave my burrito. The mortgage people were in the break room too, and they were having a completely different experience of life than I was. Now, it’s 2003 in the mortgage industry, and they are loving life. At some point, I said to him, “What do you guys do? You were having a very different experience than I am back in my cubicle dungeon.” They said, “Why don’t you come to happy hour with us and find out?”

I did, and I ended up hitting it off with them. I ended up getting invited to be the loan officer assistant to what I later found out to be the top-producing loan officer at CTX Mortgage nationally. A guy named Steve Lemmons is an amazing operator, and I still owe so much of what I know now to him and his teaching and that branch manager, Laurie Peterson, as well. They brought me in, and the rest was history.

It’s funny how sometimes in life you’re at the right place at the right time. I don’t want to say it’s lucky. We create our own experiences, and that’s where exactly where you were supposed to be on the runway for you to be in the mortgage business.

To honor that statement, but also there’s an element of action. I could have gone and toasted my bagel, microwaved my burrito 100 times, never said a word, and gone back and lived my life. I could be working a terrible life at some accounting firm now instead of on this awesome call with you because I didn’t step up and act.

There’s an awareness to, “These people are living a different life than mine,” and the courage to say, “Tell me more. Your experience is different than I’m having. I’m going to my desk and I want to put a bullet in my head.” I’m assuming that’s what you wanted to do. If I were in accounting, I would want to put a bullet in my head. I’m assuming that they looked like they were having a good time. Everyone was like, “Life is good.” You are like, “Let me talk to these guys.”

They say, “Happy hour.” I’m like, “I have been training for this my whole life.” I went to UCSB like, “If I have one skill, it is this. Let’s go.”

That’s great. My hat’s off to you. To those reading, be willing to ask questions. It’s one of the things to do. I have an Italian exchange student, and the one thing that I’m trying to teach her is asking questions. It’s been my mantra since I learned that from a girlfriend. You were bold enough to ask a question and step out on a limb. Obviously, that went well because you were working for one of the top loan officers in the country.

I don’t know if you remember the name, Mark Cady. I saw him. He was one of the top loan officers at CTX out of Houston, but Steve Lemmons. It must have been good, and you followed the right people because now you are one of the co-owners of NEO Lending and Tribe Coaching, so my hat is off to you. What do you think about this crazy market? We went through a few years of going 150 miles an hour, and now we are going through a school zone, and people don’t know what to do themselves.

I have a lot of thoughts on this. I will approach it from a couple of different angles. The first way I want to approach it is one for your audience is the most actionable, something they could take away right now and put into their business because I always want to leave with value. I was having a conversation with a loan officer, and they were pretty down. They were having trouble. They don’t have a call reluctance. They had a conversation reluctance.

They would pick up the phone and call anybody as soon as they knew what they were going to say, and they didn’t know what they were going to say. I happened to have a glass of wine with a realtor friend of mine a week before, and I started asking them about their experience of the market and how things were going. They were telling me that, “Sellers were dropping prices. It’s pretty dire now, and we don’t have a lot of listings.”

I was trying to connect all the dots because I’m a very math-focused person. I love statistics and math. I love to understand how different systems fit and work together. I was hearing not a lot of listings and inventory, and then sellers dropping prices. I was like, “These things don’t connect because those things are not normally related to each other.” I’m an Accounting major with an Economist degree. Supply-demand would say low inventory, high prices, not low inventory, low prices. I asked them the question, “How many months of inventory do we have right now?” They said, “We are sitting at about two and a half months of inventory.”

I was like, “Are you saying sellers are dropping prices when there are two and a half months of inventory?” For those of you who are reading this that don’t have a baseline for this, if you think about a spectrum of buyer’s market and seller’s market, a normal market is six months of inventory. Anything an inventory exceeds six months, that’s considered a buyer’s market. It means there’s way too much inventory on the market, and buyers can force price concessions and command the marketplace. Anything below six months is typically a seller’s market where the seller’s in control and sets the price and terms. It’s not a gradient of every month of inventory lower. There’s a linear path.

HBS 28 | Self Worth
Self Worth: A normal market is six months of inventory. If that exceeds six months, it’s a buyer’s market. If it’s the other way around, it’s a seller’s market. And being at below three months is enormously favorable to sellers.

Being at below three months of inventory is enormously favorable to sellers. Being in the two-and-a-half months of inventory is enormously favorable to sellers. I went to this loan officer, and I’m like, “Several months ago, you had to learn the term buyer fatigue.” You had to learn how to keep your people engaged because they kept getting punched in the face because they took their seven-year-old and showed them where their bunker bed was going to be, and then they didn’t get their offer accepted.

That happened to them fifteen times in a row, and they said, “I can’t take my seven-year-old into this house again because they keep getting attached, and I’m not winning the offers.” We had to figure out how to navigate that marketplace where we had an appraisal, gap strategies in the conversation, and all of these things that we had to put in place because there was massive demand and low supply.

Now, we are in this weird environment where supply is still low, but demand is also low for reasons that are not from a macroeconomic perspective. I would defer to Barry Habib and his content on this household formation and the ratio of inventory to household formation. He does a tremendous job o on that. The fundamental answer to give you the punchline is there are not enough houses for the people that need houses, which means home prices should be going up, and they are not. They are going down in many markets. What that represents is a massive opportunity because you have a seller’s market where the seller is behaving like it’s a buyer’s market, and the buyers are not acting on that arbitrage, that opportunity to win on the emotion of that.

What I’m hearing you say is there’s opportunity out there, and it’s our job as loan officers or if you are an individual, and it is a wonderful time to be in real estate, especially buying. What I hear you saying is, on two months of inventory, where is the inventory going to come from? Some people are like, “What if inventory jumps up?” The likelihood of inventory jumping up is fairly low unless they start building a lot of houses.

It is physically impossible to do it fast enough. There’s not enough lumber. The supply chain is there. The permitting process in most markets takes years. They could start now. Our buyers are buying in this market, realizing that there could be this windfall of units created. Maybe, but it’s unlikely. Here’s the other thing that people need to go out and communicate. Empower your clients through education. Get them off the fence and make them confident buyers because they have facts that other people don’t have. This is one of the things I like to say to our team. Wealthy people are not wealthy because they have money. They are wealthy because they have access to better information.

You are the conduit of that information for your clients. 9 out of 10 people will not seek advice from a financial planner because they are embarrassed about their financial situation. They will speak with a mortgage advisor because they want to be a homeowner, and we are the greatest opportunity for that person to become wealthy.

People speak to mortgage advisors because they are their greatest opportunity to become wealthy. Share on X

It’s a great opportunity for a loan officer to learn about inflation and how you invest money. As you probably know, when I meet with a client, 9 times out of 10, they have almost $1 million in the bank, and their knowledge of investing is very limited. Understanding that inflation means if you are at 8% inflation, you are losing on every $100,000 or $8,000 a year. If you were to take that $100,000 to buy a $500,000 home at 8% interest, your return on that $100,000 would go through the roof. That simple principle, if we can relay that to clients, will totally change your business.

Everything you said was absolutely correct, but for anybody reading this, google the term inflation-assisted debt destruction. In the same way inflation destroys holders of assets, those that hold debt win from inflation. If you get a 30-year fixed payment at $3,500 a month and you are making $80,000 a year, you fast forward. Now, inflation has made your dollars where the value of every dollar has gone down, and your wages have gone up proportionately to the rate of inflation, hopefully, but your payment is still $3,500. You are putting 3,500 widgets into the machine, but those widgets are less valuable than they were many years before. The process by which that debt is paid down, you are paying it with pennies versus dollars at that point.

I’m thinking of my 2.75% interest rate that I was talking about last time with a buddy of mine. I’m like, “I’m not paying any more than my minimum monthly payment.” Think about it in ten years. My $5,000 monthly payment is going to seem like it’s $2,500 a month.

Exactly.

I appreciate that. It’s the middle of December 2022. When I call a loan officer now and ask how I’m doing, I say, “I’m literally depressed,” and they start laughing. I’m speaking the truth and what they say in return is, “I’m depressed too.” We are all scared. I don’t care if you are a brand-new loan officer. You’ve got 25 or 30 years to go. We are all nervous because the future seems bleak, but what I hear you saying is it’s not bleak.

The other answer, and I wanted to give that very tactical answer. Get out and tell your clients to buy now because several months from now or whenever it is, they are right back in the mix of buyer fatigue and getting punched in the face because that’s where the macroeconomic economy is bringing us forward.

HBS 28 | Self Worth
Self Worth: Buyers should buy now because nine or so months from now, the buyers will be back in the mix of buyer fatigue. That is where the macroeconomic economy is bringing forward.

Here’s another thing I want to say, and you can google this too. Look at what Wall Street and billionaires are doing. Blackstone put aside a $30 billion fund for the purchase of the residential real estate. You think they might know a little bit more about what’s happening in the global and macro economy than our individual buyers do, and wouldn’t that be an interesting data point for them to bring into their planning?

In addition to that, I talk about this with clients. If you are a loan officer and have clients, you should be asking them the question, “What’s your understanding of the market?” That’s going to give you better information you can share with them, but things aren’t changing because of Millennials. There are 74 million of them, and they are all in the home-buying age. Meaning, they are all first-time home buyers. I didn’t realize this until one of my episodes, but a first-time home buyer takes inventory, and versus a repeat buyer, there’s no change in supply. That’s going to have a huge impact. How do we make an impact? How do we attack this market? How do we sustain market share?

Can I go back to your depressed comment first? I don’t want to gloss over that. That was my initial instinct to answer your question about what’s in store for us in this market, but I wanted to leave with that valuable tactic you can use now in your business. I did an interview with Tim Braheem at the end of 2020. Tim is my personal coach. He asked me what I was worried about. I said, “The thing I’m worried about is that people are going to believe that 2020 was their fault, and they are going to believe that the person that they are, their bank account, and their W-2, somehow is attached immediately to the value that they created, and anything less than that will create a massive amount of depression.”

I said, “I know this is a fear I have because it’s exactly what happened to me in 2017.” I came off of 2016, and if those of us who remember 2016, it was the last 2020. That was the time when we were all working twenty-hour days trying to do everything we could to get every possible deal that we could in, and then in 2017, we started to see the turn. 2017 was the first time I ever had a W-2 that was lower than the previous years.

I was devastated. I did not know what I had done wrong. It was an existential crisis for me because I felt like I was a winner and had evidence that showed I was a loser. I also had throughout ‘17 the experience where I was doing all the same work. I was putting in all the same time and effort, but I wasn’t getting the same result.

Your myopic view of yourself based on not being able to perform every year increases your income without taking a look at how freaking lucky we are to even be in this industry. We don’t have a product. We are delivering an interest rate in an experience, and we get paid more than we should. We are super lucky. I get it. A lot of us are like that in the industry. If you are reading and your income is going down, that does not mean you suck.

I had disassociated my net worth with my self-worth, and that was a problem, and it’s a problem that I still struggle with, honestly, but I’m not free of it.

Stop disassociating your net worth from your self-worth. Share on X

What advice can you give to someone who is in that predicament, including myself, or you’re like your income has dropped, and you are looking at next year? How do you keep from freaking out? What should people be focusing on?

There are two things that come up for me immediately when you say that. The first thing is that you should be measuring yourself on effort and not the outcome, and that’s so hard to do. I’m an instant gratification person. I’m deep down in my core that I’m just a salesperson. I want to go out on the hunt, and I want to know that I came away with the kill, and if I don’t, I’m depressed, and I have that feeling.

HBS 28 | Self Worth
Self Worth: You should be measuring yourself on effort, not outcome. Give yourself the opportunity for small wins. Focus on the leading indicators, not the lagging indicators.

It’s about acknowledging the fact that you are still out there and still doing it. If you are doing the things, give yourself the opportunity for small wins, focusing on leading indicators, not lagging indicators. Pat yourself on the back when you go walk 1 mile. I like talking analogies. If you are trying to lose weight, you don’t stand on the scale every day, look down at the number, and hope for the best. You need to either control how much you move your body or how many calories you put into it.

Congratulate yourself on the inputs, not the outputs, and it’s very hard to do because instant gratification is not there. That instant feedback loop of the result is not there. You have to reframe, and it takes discipline to do this. That’s number one. As a one A, make sure you are doing the right things. When you are measuring the inputs, not the outputs, for this, I will use a farming analogy. When the ground is frozen, the farmer does not go out with his hoe and tries to dig a new lane for crops. They don’t do it because it would exhaust them and it would break their tool. They find the season they are in and do activities appropriate to that season.

If you are still buying freaking leads right now and thinking you are going to convert them at 1% or 2% and make a living off of that, you are digging on frozen ground. Rethink what you are going to do in winter. In winter, farmers plan their crops. They set an intention. They sharpen their tools. They train themselves, and they set themselves up for future success. Here’s the tricky part, and this is what we all screwed up big time. The other thing that a farmer does in winter is eating out of the granary. They don’t eat out of the field. Here’s what we messed up. We did not save enough money in 2020 to survive 2022 without stress, so don’t do that again.

HBS 28 | Self Worth
Self Worth: If you’re still buying leads right now and thinking of converting them at 1 or 2% to make a living out of that, you’re digging on frozen ground.

Most loan officers are thinking, “I’m never going to go through this again.” That’s because I’m thinking that I’m going to save and save. What I hear you saying is this is a season and opportunity as the tide goes out because the tide has been in for so long. We are seeing who does swimming without a bathing suit now.

I go every other day. I’m either depressed or I’m happy. When I’m happy, I get a list of the things that I’m doing. There was one time that I called 35 real estate agents, and instead of resisting them not wanting to meet, I set lunches for the entire month of January. I got lunch for every month of January moving forward because what are they going to say now? They are getting ready for the end of the year, so I pushed it out to the next year, and I’m double booking lunches at 11:30 and 1:00. I got two lunches every single day in the month of January.

Congratulations. There are some things that you can only script in. From that conversation reluctance, not call reluctance mindset, there are some things that you can only do from a scripting perspective in December and January. This is exactly the time for us to evaluate what our partnership is going to look like in 2023 and how we are going to grow together. We need to do this either in December or in January because if we do it in February, we lose 1/12 of our opportunity.

What I hear you saying is it’s a season of opportunity. Use this time to reach all your business. Use this time to do the things necessary to get ready because there’s going to be another refinance boom coming. Think about it. Your database now is probably more valuable. You said this to me. Your database is more valuable than it’s ever been.

I did a mortgage coach for every client that I closed this 2022 already, and we are booking calls to go over that with them and say, “I’m wanting to let you know these are going to be the opportunities and let’s talk about it right now, because when rates drop, they are going to drop and they are probably going to go back up, but if you are using us, we’ll lock you in.” That’s another good opportunity or tool you could use in this market.

There’s been a number of Harvard time-lapsed studies where they study happiness and success and things of that nature. One of them, an article I read many years ago, said that one of the greatest predictors of success in life is the ability to delay gratification, and that’s what you are describing. You are delaying the gratification of that funded unit by focusing on the leading indicator activity on some level of some statistical basis will result in you getting an abundance in your business in the future, and you are planning for that future. You are not just planning for it. You are manifesting it through your actions.

One of the greatest predictors of success in life is the ability to delay gratification. Share on X

Another thing to think about on that point is thinking about the fact that anyone could have been a great loan officer in 2021 or 2022. If you did any amount of units, pat your back, but it’s going to take a great loan officer to get through the next 3 to 6 months. You got to make hard decisions, and this is setting you up for success in the future so that you learn how to run a better business.

In that statement, there is something that a lot of people are going to need to internalize and learn. I’m seeing a lot of loan officers struggle with this because they have never been taught it before. There are still some that are being coddled into believing that it’s not important, which is running your business like a business. Understanding that whether you see it or not, there’s truly a P&L behind the scenes that are based and rooted in fact.

It’s rooted in the total economics that is available in every loan. What you are putting into inputs and the price exceptions you take on deals should be perceived as a direct representation of your ability to sell, the product at a fair price you have in front of you. These are things that are crucible now. The people that are going to survive are those that have the entrepreneurial will to muscle through it. There will be a handful of people that stumble their way through it and make it to the other side, but I would say that group is going to have a short window still even after.

I’m looking forward to getting through to the other side. Although, I hate going through it now. I keep telling myself that I got to ask myself a better set of questions. Instead of, “Why is this happening? Why is it happening to me?” I’ll ask, “What can I learn? What do I get to improve? What do I have to work on now?” It’s been a season of opportunity here now having you on our show. I appreciate your quotes. Before I let you go and end this episode, I’d love to know how our readers can get ahold of you if they need you. Do you email or cell phone?

The best way to reach me is by email, and I have two that I will share. One is Danny@TribeCoaching.com and Danny.Horanyi@NEOHomeLoans.com.

Before I will let you go, can you share one more nugget? Either a book you read, a quote or a piece of advice that you would leave with our readers that you think we are going to help them in 2023?

You touched on it, and I want to pull out some of the spirit of what you were sharing and emphasize it because it’s important. This was a quote that I heard. It was early enough in my career that it changed the course of my career, and that is, “Be curious, not furious.” Embedded in that is a lot of what you said, “How is what happening right now serving me? In what way can I learn something?”

If I’m in pain, it’s likely that this is global pain. If I can get through my own experience and turn this into observing it almost as a neutral third party, what would somebody that was taking advantage of this market do when everybody’s in pain? I promise you. Somebody is doing that, so why not you? Curious, not furious. Life is happening for you, not to you. Figure out what that is, and pivot your energy towards the opportunities, not towards the pain and suffering you are in now.

HBS 28 | Self Worth
Self Worth: Be curious, not furious. Life is happening for you, not to you. So figure out what that is and pivot your energy towards opportunities, not toward pain and suffering.

You can call realtors now the biggest of any kind because they are scared, and they will meet with you because they understand that it’s going to be a difficult year. I love that quote. Thank you for ending with, “Be curious, not furious.” It’s something that you could not only use in your business but even taking it home with your kids and wife.

Even more so there, let’s be honest.

It’s like growing up. I use anger to get me through most things, but what I forget is that my anger or frustration keeps people from sharing intimate things that they are probably going to help me. If we can be curious rather than furious or angry in the future, we’ll all be successful. Danny, many thanks to you for being on here. I’d love to have you back in the future. You’ve been a huge asset, not only to me and my life, but to this show and our readers. Thank you, Danny.

It’s my pleasure. Anytime.

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About Danny Horanyi 

HBS 28 | Self WorthDanny Horanyi is a Co-Creator at NEO Home Loans. He is also a Co-Creator and Coach at Triibe Coaching. Danny has been making an impact in the industry for 19 years with lifetime origination volume over $2,000,000,000. Formerly ranked in the top 5 originators in the nation by volume, Danny’s leadership and expertise have had a profoundly positive impact on the lives of his employees, business partners and colleagues

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