Episode 3: An Entrepreneur Asks, “Where do you see yourself…”

Episode Transcript

Kyle: And welcome to another episode of Wit, Wisdom, and What Matters Most. It’s a podcast by Moneta’s Gast Freeman Troyer Racen Team. My name is Kyle Luetters, joined by Danton Troyer.

And Danton, on this episode of the podcast, the way we met this guest, or the way I met this guest, you met him when he came into the studio, but I met him at 5:30 in the morning in a park in Kirkwood about three years ago. So the gentleman’s name here today is Sean Zalmanoff. And Sean owns a mortgage company, Better Rate Mortgage.

And before we get into the mortgage industry, Sean and I do this thing, it’s a men’s workout group called F3, and you get together and you work out early in the morning. And you can tell a lot, I think, about someone’s drive and their goal setting by whether or not they’re going to show up at 5:30 in the morning, no matter rain or shine. And so in this episode, we kind of talk about how Sean got into this industry, the journey that he took to get to where he is today, because he was at one of the larger companies and won’t give away the entire thing, but there was a bit of a hard right turn, and a few other things that he brought up in his conversation about the industry itself.

Danton: Yeah, and I found it interesting just from his perspective and working through different firms, as you mentioned, and then hearing some of the stories of what to avoid, especially as a consumer in the mortgage industry, and those free lunches you hear on the radio or the TV sometimes aren’t so free. And so it was good to hear how to avoid some of those pitfalls, as well as how he manages a business, but also works with his family and is able to take care of his kids and really have a good relationship with them and use that as a drive for his business as well.

Kyle: It really was a story about an industry as well as entrepreneurship, but I think most importantly, and what I hope everyone takes away from this is the power of clear vision and what that means.

And with that being said, here’s our conversation with Sean Zalmanoff.

And back on Wit, Wisdom, and What Matters Most with Sean Zalmanoff, Sean, welcome to the podcast.

Sean: Thanks for having me today.

Kyle: Perfect. So, Sean, very interesting type of a conversation you and I had here a while back over a cup of coffee. We’ve been, I guess you could call it workout buddies, for quite a while through an organization called F3, and it was really the first time you and I had the chance to sit down and talk about business and what we did and how we do the things that we do.

So, you know, Better Rate Mortgage, your firm now. Describe the genesis. How did you get started in the mortgage industry? And then kind of take us through the steps, because I found it to be a very interesting story of entrepreneurship.

Sean: So I graduated college in ‘00, and I wasn’t quite ready to leave school yet. So played in Columbia, Missouri for another year. 9-11 happened, and I basically become a professional job interviewer. I think I interviewed for like 60 or 70 different jobs. And so during the course of that time, what I really realized that I wanted to do, I wanted to help people and I wanted to solve problems. And sales was just a natural fit, because I like to talk to people.

And there was a gentleman who came into the bar that I managed all the time, who was very successful in the mortgage industry. And then after 9-11 happened, interest rates dropped a lot, so there was even more opportunity.

But it was really interesting from the restaurant standpoint. You know, everybody’s heard of Reagan and trickle-down economics. And so during the course of my entire college career, I mean, it was just faucet on economics. Kids had lots of money. Parents’ stock portfolios were doing really good. They spent lots of money.

9-11 happened and portfolios got cut in half and nobody spent money anymore. So, I was like, oh, you know, I think it’s time to go get a real job. Yeah.

Kyle: And obviously, too, as we’re recording this, just coming up on 23 years of that.

Sean: January 2nd will be 23 years. Yeah.

Kyle: For you inside. OK. Wow, all right. Sorry. Go ahead.

Sean: So he had an office in O’Fallon, Missouri. I worked there for a few short months. It was probably seven or eight months. I learned everything that was wrong with the industry. If you imagine like a boiler room set up where kids in the back were ripping pages out of phone books. This was before the do not call lists, and we’re just like calling people for refis and transferring up – that was what I was learning.

I almost started a company that was just going to charge a flat fee and review people’s – we called them good faith estimates at the time – where terms were laid out and just consult them and be like, pick this deal, because what they were doing was terrible. Bounced around to a couple of different companies over the next four years.

And then in 2005, I opened my own mortgage brokerage company at that time; ran that for four years. But I had never worked in a big corporate environment.

Kyle: Okay.

Sean: And so I didn’t have some of the experience that I felt that I really needed to grow and take my career to the next level. So, 2009 happens, great recession, end of days of our industry is upon us once again.

And I had an opportunity from a company too, that didn’t have a presence where my office was in St. Louis City at the time. And so they asked if I would open up an office for them. And I did and I ran that for the next 13 years. And it was a great place to work; it was a great ride.

But the last nine years that I was there, I grew my region, we were doing a lot of loans. I don’t need to share numbers, but we did a lot of loans, we helped a lot of people. But I was managing offices in five states, I was managing 70 plus people.

And the interesting thing about loan officers is loan officers are typically sad when they’re sad. And then they’re sad when they’re happy, too.

Danton: I haven’t heard that.

Kyle: That’s a wide range of emotion right there.

Sean: And so it just, it grinded on me. And so a few years ago, I was on a vacation sitting on a dock and I was just like, what do I like about the industry? What do I not like about the industry? So, I just took out the old scientific sheet of paper and I wrote everything that I liked on one side, what I didn’t like on the other. And what kept coming up was, you know, the same thing that I got me in the industry was helping people.

And for a while, I was able to help a lot of loan officers. Maybe my time had just come. Maybe my message was a little bit dull, but I wasn’t helping them in the same way that I felt I used to. Some of them were grinding on my soul a little bit as well, too.

And then I wasn’t forming any relationships. I hadn’t originated in nine years, so I wasn’t – an origination, that’s actually helping the individuals who need mortgages get mortgages. I was just managing the team.

Kyle: It’s like boots on the ground, like meeting with actual clients.

Sean: Meeting with actual people, yeah. And so I wasn’t doing that and I wasn’t forming relationships with financial planners, with realtors anymore. And it just kept coming up. These are the things that I like to do.

So, I actually cut the vacation a little bit short and I went home and I wrote a business plan and then was like, well, what company fits this model that I want to do? And there really wasn’t one out there. And just with being in the industry at that time, 20 years, I knew that I could open a company to help individuals at a cost – I could close loans at a cost that most other companies couldn’t open their doors at. And one of the things that, I like listening to other successful people, and so something that Jeff Bezos said about a decade ago that I saw in an interview. Somebody asked him, Jeff, what do you do in your industry to prepare for the next 10 years? And what is changing and how are you adapting to those changes? And he said, great question. Very political answer, you know, great question. And then answered how he wanted to answer it.

And he’s like, well, we really ask ourselves is what’s going to be the same five years from now? What are we doing better than everybody else? And how do we continue to do that better than everybody else?

And in my industry, people like to call it something different, but we’re a commodity. People say you got to be, if you’re cheap and fast, you can’t be easy. I mean, in the mortgage world, if you’re not cheap, fast and easy, you’re dead. And if you’re not dead now, you will be in five years because technology helps us a lot. And when I coach other loan officers, one of the things that I often tell them is that there’s going to be a time, and it’s not in the very too distant future, where they measure the money that they make, not by how much they make a transaction, but by how much they make an hour. Because consulting people and then delivering AI and a lot of things takes a lot of work off of my plate. So I can close more loans now than I could 10 years ago in the same amount of time and in 10 years from now, I’ll still close more loans, but I will within the same amount of time.

And so I wanted to build a company that 10 years from then would still be relevant, competitive, and industry leading in rates, because that’s what matters. And that’s why I just led with Better Rate Mortgage and opened the company that way.

Danton: Wow. So, outside of the office, what do you have family that supports you or what else is there for you?

Sean: So, I have two amazing boys; they get the majority of my time. A lot of my community outreach and things that I did in the past, they’re eight and ten, so it really revolves around them. I get to take the third grade Cub Scouts camping this weekend. I’m the den leader, I coach both my kids’ baseball teams, I help with volleyball, but there’s only so many head coaching jobs that one man can take on.

So really, just a lot with them, and the outdoors is something that’s really important to me. So we go camping a lot and take them fishing, make sure to instill that in them with just hiking and anything that we can do to get outside and keep moving. Because, you know, Kyle, like we talked about in F3, I’m 46 right now and my mom passed away when she was 55 and I was a sophomore in college.

And when I’m 55, my boys will either be just of college age or a year away from entering college. And like, it’s great to come home in the morning. like Both of my kids run a mile a week with me. And then my eight-year-old loves to work out with me in the basement.

And so they’re like, hey, dad, let me see your muscles, dad. And it’s awesome. But when I’m 55, I want them to struggle to keep up with me or at least want it to be competitive.

And so I can show them something different than, unfortunately, the health issues that my mother had at the time. So that’s a big motivation for how I lead and live my life and lead them.

Kyle: I want to kind of touch on the cyclicality of your industry a little bit. We talk an awful lot as financial planners that markets go up, markets go down. You’re in a similar type of an industry where there’s always usually those same similar questions like what are rates going to do? When is this going to happen? How do you, having been in this industry for 20 plus years, how do you kind of manage the ups and downs, the ebbs and flows? Because you mentioned you’ve been through a couple of big downturns in your industry and now, we’re kind of like on a high from a rate standpoint, like people asking a lot of questions. So just how do you navigate through all of the ups and downs of the industry?

Sean: You know, the mortgage industry gives a lot to people who put a lot into it. And so the good times are really good times. And unfortunately, when you’re able to do well financially in an industry, it also brings an element of people who shouldn’t be in the industry. And it also brings an element of poor planners. So sometimes those people buy an extra car and a boat and an extra vacation house because it’s like it’s always going to be like this.

Like in ‘20 and ‘21, the industry did four trillion in loans.

Kyle: Wow.

Sean: It had never crested above 2.8 trillion before that. And everyone’s like, it’s going to be like this forever. And I’m like, it can’t be like this forever. And so, you know, you just have to save and budget during those times.

But the good thing is, is that when you take care of people and you build a good business, there’s always business to have. You know, people are always buying houses. They’re always selling houses. You may have that two and a half percent rate, but you just got transferred from Philadelphia to St. Louis. You just had your second kid that you weren’t planning on having since buying that house. And, you know, those two bedrooms are really small; you need three bedrooms; you need four bedrooms. So, there’s always business to have.

It definitely ebbs and flows in the volume, but it’s always there if you do a good job and put people first.

Kyle: And then from an entrepreneurial standpoint, like what do you see? What do you experience as being the biggest challenges of being a business owner and maybe going up against some of these bigger name brand institutions?

Sean: So that was a really big challenge in 2005 and 2006.

Kyle: Okay.

Sean: It’s not now. The experience I have, what I deliver and what I provide, it’s not a challenge. What is a challenge is misinformation. What is a challenge is there are mortgage companies, and even some great companies, but they just have some bad apples at them and they will tell people anything they want to hear.

So one of the things that’s really prevalent right now is selling everybody on this free refinance. There’s a really good chance if you buy a house today, you’re going to refinance in the next 6, 8, 12, 18 months. Rates are probably going to come down. I mean, if you bought a house eight months ago, you’re probably refinancing right now because rates have come down. And so what happens with these nquote unquote free refinances is nothing in life is free, friends. And so, mortgage companies are marking up the rate and then crediting money back.

And so, I can promise you a free refinance if that’s what you want to hear, but I’m also going to tell you you’re going to pay more to get that free refinance. And so some of that information, when I explain that to somebody, one of the things that I do that’s pretty unique is when a when a client meets, I will show them the rate stack, we’ll show them how much money we’re making on a loan.

They’ll be able to see, hey, if your rate’s here, it costs this. If it’s here, we credit you that. And by the way, that free refinance, look how much we’d have to mark up your rate in order to do that.

And so, you know, when people will go down that road, they understand how things work. Some people just they want to be right or they want to hear what they want to hear. And it’s great because they weren’t meant to be my client and it’s okay, too.

Kyle: And, you know, that open hand. Yeah. The open hand.

Yeah, it’s it’s just kind of a fascinating thing because we kind of see that in our industry as well, too. There’s a lot of promising at times. There can be a lot of different things that are open to interpretation. And you made a good point, too, like sometimes you’re not meant to work with everyone.

Sean: Yeah.

Kyle: And that can be as a challenge as a business owner, because you’re always trying to grow and you’ve obviously done a successful job with that.

Sean: So I’m a big, I’m really into stoic philosophy. And one of the things in stoic philosophy is acceptance. There’s just sometimes even though I know I could provide somebody a better offer, I know the load that somebody is feeding them is not in their best interest. But I can only do so much. And if that’s what they want to buy, that’s what they want to buy. And we just weren’t meant to work together. But there’s other people I can really help.

You know, one of the things that people don’t understand about a good mortgage professional, we work so much in tandem with financial planners because as you’re managing assets, my job is to manage their debt. People will come to me, they’ve sold a house. They want to put down 20 percent.

I’m like, well, do you understand if you put down 5 percent? They’re like, oh, no, I can’t put down 5 percent. I’m going to have mortgage insurance.

And like you have a 780 credit score, lthis mortgage insurance costs 50 bucks a month.

We can take this other 80 grand you were going to use and all these credit cards, which, you know, consumer debt is once again at an all-time high, and other liabilities that they have. And I’m like, look, we can free up three thousand dollars a month in cash flow for you. How would that work for you? Would that be great to take to your financial planner and put some more money in that 529 plan that your college costs are probably going to be underfunded as college costs balloon. Or we show them, look, what if we put this back in your mortgage and then that 30 year mortgage you pay off in 16 and a half years.

And so there’s really, you know, when people are just looking at a mortgage, they miss the fact that somebody who really is a nerd for numbers – and you really want to work with somebody who’s a nerd for numbers – understands that how they can put them in a situation for greater success versus just what’s the cheapest rate. I mean, we can always get you a cheaper rate. It’s just you’re going to pay to get that rate. And again, in an environment like we’re in today where rates are probably going to go down, you want to do a mortgage with some of the least cost possible because there’s not enough time to recoup the expenses if you’re paying extra points to get into those things. You know, the other thing, too, is the Fed, everybody’s worried talking about the Fed right now. We’re finally getting into a cycle of interest rate cutting.

And, you know, so how much are rates going to drop when the Fed cuts rates? That’s what everybody wants to know. I’m like, we’re down a point and a half and the Fed hasn’t cut rates yet. I’m like, they only meet eight times a year. Rates move like Tesla stock every day. They’re moving up and down a little bit like the mortgage rates are not set eight times a year. And we could go into yield curves and all that of what it really affects.

But that’s when, that’s the policy. It’s like when rates started to shoot up during Covid, rates were up two and a half to three points and the Fed had only had one meeting where they raised rates a quarter of a point. You know, it’s the inflation numbers. It’s the jobs report. It’s the consumer price index. It’s those things are what really matter in numbers. And if people understood that a little bit more, read my blogs a little bit more, they would understand. They’d have that information in their fingertips.

Danton:  It sounds like you spend a lot of time with your clients, which is, you know, I argue a good thing. How do you balance your time? And if you’re spending more time, I’m assuming than maybe most mortgage folks, how are you able to keep your business profitable and get the clients what they need as well?

Sean: I believe in leverage. I’ve learned a lot about it over the course of years. I have great technology built out and I have an amazing team. The most important thing that I can do is build relationships and work with clients. Most of our technology collects the documents that we need on their behalf already for them. And then I just have people who follow up on those things. You know, my underwriter underwrites the loan. My processor works to package everything together to order the payoffs, order anything that we need.

And so my time is really efficiently spent.

Danton: Especially with two boys, I’ve got one boy and I know they take up just a little bit of time.

Sean: You know, it’s a great business and like your guys’ business, because my schedule is really flexible. If I want to take off for three hours on a Wednesday because there’s a field trip, I can take off for three hours on a Wednesday. But I also sometimes answer the phone Saturday and Sunday afternoons and Tuesday nights because somebody wants to buy a house then.

Kyle: Well, and life happens in your clients’ lives. There’s so much going on and you are so intimately intertwined with them, hopefully, because they’re really good clients, that they seek you out as that trusted advisor and they’re trying to make those decisions. And normally, decision making is not happening for most families like nine to five. It’s happening nights, weekends. It’s conversations around a dinner table. If you get a free night, if you’ve got kids, you get a free night with a spouse and a glass of wine. And those are the types of times where it makes most of that decision-making available. So you have to be available to talk through stuff if they have an idea.

Sean: Yeah, they’re having that glass of wine; they just pulled up Realtor.com and they’re like, oh, my God, we need to buy this house.It just came on the market. And so, you know,

Kyle: That’s when you’re working.

Sean: Yeah.

Kyle: As we kind of like head for home here, I’m kind of pivoting back and forth between mortgage industry and an entrepreneur. Danton asked a great question about how you keep all the balls spinning with the boys, your community involvement, your business. You talked about automation and AI a little bit.

And then going back to the Bezos quote, where do you see yourself? Where do you want to see your business? Five, 10, 15 years. And I realize I’m asking the hard, opaque question. But do you have kind of that vision of what you want to see the next iteration of your business to be?

Sean: Well, I have an amazing right hand who helps me with my mortgage business and a few other things that I do. I have an ops manager who runs the mortgage company and she’s fantastic as well, too. So, they understand there’s contracts on their lives if they ever decide to do anything else. So, we have we just have a great system set up, like my business from the mortgage side is set to win 10 years from now.

So I we do need to continue to evolve. But if we can continue to provide the service that we are, at the margin that we are, it’s going to be very hard for others to compete. There was a time where I wanted to close a billion dollars in loans a year.

And I again, just going back to the stoic principles, closing more…your clients come to you and they’re like, I want to have five million dollars when I retire. And you’re like, well, what do you want when you retire? you ask them. They’re like, what I really need is X amount of dollars per month.

Well, if you have three million dollars and I can guarantee that you have X amount of dollars per month, do you really want five million dollars or do you want to have this lifestyle?

And so, I’ll be 55. My kids are going to be of college age doing something. I’ll still have the mortgage company. I will have that rolling. But, I don’t know if I have a future electrician or a college professor on my hand, probably more so electricians. And, there’d be nothing better than when I’m in my late fifties and early sixties, to like have them graduate, get some skills, and then help them open a business. There’s just nothing better than being able to work for yourself and help others. And if I can instill a little bit of that in my boys and then help them succeed with that afterwards. Not only is it incredibly rewarding for myself, but I’m doing my part to help society and help build that next generation of people who we need to lead.

Kyle: And that’s what sounds like is your what matters most: imparting what you’ve experienced in life, the things that you’ve enjoyed, and trying to pass that on to the next generation. Because you’re talking about this feeling of empowerment is working for yourself, and you’re trying to really pass that along to your boys, which is really, really cool.

Sean: I mean, it’s great to have people who 10 years ago, 15 years ago, when we told them to…one of the things that I always do is I pull up the compound interest rate calculator when I’m talking to somebody. We’re always on Teams, I share my screen. And when we’re talking about these down payments, I’m like, here’s what 5 percent down is. Here’s what 20 percent down is.Now let’s take this other 15 percent. What if you just invested in the S&P? What if it gets the 10 percent that it’s gotten since 1957? What if it only gets 8 percent?

And then they see over the course of 30 years, they see 20 grand, 40 grand, 100 grand. And they’re like, wait, this turns into hundreds of thousands, millions of dollars.

And so I get the pleasure now of after doing this for a couple of decades that people are coming back to me and they’re like, Sean, I’m going to name my next kid after you. I can’t believe how much money I have because I invested this cash. And so there’s just a lot of things that I can do, those little microcosms to help an individual or, you know, maybe a lot more to help my sons down the road.

Kyle: I think it’s really neat. You know, again, we got together, we’ve known each other for a while. We’ve done some really stupid things out in a park that were, by the way, all legal.

Sean: Yes.

Kyle: Nothing, nothing bad. Workout related,

Danton: We need to clarify that a little bit…

Kyle: All workout related, yes. But I wanted to have this conversation because on this podcast, we’re talking with folks, a good number of them entrepreneurs, a good number of folks that are trying to be money savvy. They’ve had stories. Your story of, and I learned even more today, about where you started from in college. You went through this and then you went and kind of climbed a peak. You sat on a dock. You decided, hey, I don’t really want that anymore. And then you, the empowerment that can come from you just said, hey, I want to design this. And you went out and you built it.

Sean: Yeah.

Kyle: That’s an inspiring thing. And I think that more and more people, if they hear those kinds of things…it’s a pretty awesome story to share and that’s what I really think a lot of the purpose of this podcast is. Thank you.

So before you get out of here, we have a couple of gifts for you. Everybody that comes, you need another mug.

Sean: This is a nice mug, too.

Kyle: There you go. And then, I tried to find something healthy, but then this just caught my eye. So, enjoy some craft beer mix. If you are out there with a yellow legal pad again, trying to start another business or something, maybe it’s a little brain food.

Sean: Thanks for having me, man.

Danton: Yeah, it was great.

Kyle: Yeah, I appreciate it very much, Sean, here on Wit, Wisdom, and What Matters Most.

And that was our conversation with Sean Zalmanoff of Better Rate Mortgage. And Danton, we were kind of talking offline about takeaways from this episode. And really, Sean’s story is just, I think, a really neat case study in the power of clear vision, because the story he told about sitting on a dock, I’ll kind of let you run with it here anyway from the takeaway. But that’s not what normal people do on vacation, or at least it’s not something I’ve ever come back or ended the vacation with.

Danton: Oh, yeah. I think we’ve all sat on vacation and whether it’s just dreaming of moving to that place because it’s so beautiful or you’ve got this great business idea, maybe you write it down. But I don’t know too many people that sit on the dock and then come up with a whole business plan. It usually stops there. But Sean decided he’s going to end his vacation early and go execute on this. I mean, that takes some dedication. But also, I mean, you could see that throughout his business is, you know, it’s well thought out. It’s not just kind of flying by the seat of his pants. He definitely has a plan to execute on these things. And that makes a difference.

Kyle: You know, one thing that we didn’t really necessarily get into was more of the genesis of this conversation really started from when I got the chance to meet with Sean for a little bit. It was how much he has very intentionally designed his business and the systems and processes and even he mentioned a kernel of it with AI, but how he is really building this business that sees a lot of change, a lot of turnover. He’s really building it to last and get out of it what he’s looking to get out of it.

Danton: Yeah, that business plan, he definitely has his why defined. And we talk about financial planning and obviously we are kind of biased that that’s important. But there’s other types of planning that people can do. And it typically goes back to the finances. But having that why defined makes a big difference in going to work every day and being able to execute that plan. If you don’t have a why, it really becomes difficult.

Kyle: And that why, what he wants to get out of life. He is a very not only for the business, does he have a very crystal-clear vision for what he wants the business to be, but also to what he wants to impart in his sons. Which another thing I thought was really cool was he knows what he’s trying to help impart in the next generation. And whether that’s a business plan or even as we talk to folks at various stages of life, whether they’re in the accumulation phase or they’re kind of in their spend down phase. That clear of a vision, you could tell it by him sitting here, there was just that subtle confidence when he spoke as to what he was looking for. And in a certain way, I think, you know, calms the soul a little bit as well. So, but anyways, wonderful conversation with Sean.

Wit, Wisdom, and What Matters Most is a production of Moneta’s Gast Freeman Troyer Racen Team, headquartered in St. Louis, Missouri.

Until next time, enjoy what matters most.

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