Looking at an industry where the refi market is approaching historical lows, Chris Heller is inclined to go on the offensive.
“I’ve always had the belief that the best defense is a great offense,” said Heller, the CEO of mello Home and former head of Keller Williams. “Being offensive in a climate where most companies are being defensive has served many well.”
Heller sat down with Mortgage Media’s SA Ibrahim recently in Washington, D.C., and discussed how managing adversities is a big key to what drives his success.
In a downturn, “most people go into a defensive mode or a survival mode. And if you’re able to go on the offensive, there’s a lot of opportunity there.”
Read the full Q&A and watch the video. Let us know in the comments if you agree with them!
Q&A with S.A. Ibrahim and Chris Heller
SA Ibrahim: We’re delighted to have Chris Heller, CEO of mello Home, with us today. Like the other industry leaders we’ve interviewed, Chris has a lot of insights and a great success story at mello Home, as well as Keller Williams, to share with you. And the whole purpose of Mortgage Media is to bring you these stories, so that you can learn from your peers and leaders in the industry. So, Chris, you have been with the industry, in one way or the other, since you were 20 years old. You are a tremendous success story at Keller Williams and now at mello Home. Can you tell us a little bit about first, who is Chris Heller? What drives you, and how did you get involved with this business?
Chris Heller: Fortunately, I, whether it’s natural or learned or a combination of both, I’m highly driven. So I’m just driven period. How I got into the industry, I actually got talked into it. I’d met a real estate broker in 1983, about there, and for three years, he recruited me and called me, wrote me notes. Every time I saw him, he said, “You should come and work for me and get into real estate.” He finally caught me at a weak moment, and I said, “Alright. I’ll give it a try. But I’m not gonna sell houses. I’m only gonna sell big things. Buildings.” That lasted about 30 days, and then I got into residential.
SA Ibrahim: Oh, fantastic. In fact, you put your finger on something very interesting. In all my years of recruiting people for companies I was with, the number one indicator of success I found was drive. Moreso than subject matter, expertise, or anything else. They could learn that. But the one thing you couldn’t teach somebody was drive.
Chris Heller: Yeah.
SA Ibrahim: So, with that, tell us about Keller Williams first. What makes Keller Williams different, and how did you achieve such fantastic growth at Keller Williams?
Chris Heller: I joined Keller Williams in 2004 as an agent. In 2006, I launched a franchise. Now, remember, 2006 was right as the market was-
SA Ibrahim: Peaking.
Chris Heller: Was peaking and starting to trail off. This was in San Diego, and San Diego had a pretty dramatic swing. From 2006 through the downturn, I grew that business, and I grew my own personal real estate business. We grew dramatically, interestingly, so did Keller Williams as a company. In the downturn, we were the only national brand that grew while all of the others, the Realogy brands, the RE/MAXes, all contracted. And some of them dramatically. One of the reasons that we grew, whether it was an agent’s business, my real estate office, or with the company as a whole, was that we really focused on it. We looked at the market and what was going on as an opportunity, an opportunity to take market share, an opportunity to teach our agents how to thrive in a changing market, and what to do and what to say and how to behave in a way where they could take advantage of what was going on. Because as we know, regardless of the market, people move. They buy and sell homes, and they finance them.
SA Ibrahim: And in every challenge, lies an opportunity if you’re creative enough and determined enough to find it. The beauty is, you may be the only one chasing that opportunity while the others are pulling back.
Chris Heller: Yeah. In the downturn, that’s often the case. Most people go into a defensive mode or a survival mode. And if you’re able to go on the offensive, there’s a lot of opportunity there. So you asked also what makes Keller Williams different. As a company, Keller Williams is a franchise company, like the other major brands. They have some things that are uniquely different about them, as do the other companies, respectively. A couple of things that makes Keller Williams different is that they are a profit-sharing company. So there’s a profit-sharing component for the agents. They also, because they are a profit-sharing company, they are an open book company, privately held but open to the agents. So the agents can see what the profits are and what the finances are to know what they’re sharing in and how they benefit from that. Very much a training and education company. Probably the best training and education in the industry, certainly at that time. And now they’ve been transforming and more focused on technology.
SA Ibrahim: How about educating not just the agents, but prospective homebuyers or first-time homebuyers or repeat buyers, looking to trade up?
Chris Heller: Yeah. So what we know is whether it’s a real estate agent or a mortgage professional, the very best ones are very, very talented at educating their clients. So they provide their clients with good information so the clients can make good decisions. And educating a seller that the market’s changed and what impact that has on their goals of selling and what pricing strategies will benefit them the most. Or a buyer in a red hot market. How to get an offer accepted, instead of missing out on property after property after property. The agents that are able to educate the clients at the highest level are the ones that end up with the clients that are the most satisfied.
SA Ibrahim: And it’s still a word of mouth business.
Chris Heller: There really is. I mean, there’s … We know the vast majority of buyers are online and shopping online. And that creates opportunities for agents and for companies to come in contact with the consumers at an earlier stage. But the bulk of the business is very much still word of mouth.
SA Ibrahim: Tell us about mello mortgage. What is mello mortgage about?
Chris Heller: Mello home and-
SA Ibrahim: Mello home. And it’s part of loanDepot.
Chris Heller: Yeah. So loanDepot is a sister company to mello Home, so these are two companies owned by Anthony Hsieh, who’s the founder of loanDepot. I met Anthony a little over a year ago, and we started talking, and I actually joined him earlier this year. And the idea behind mello Home was to create a brand, and a single brand, for a homeowner to get their home ownership needs met. So whether it is financing, buying, selling, protecting, improving, maintaining, to be able to do that under a single brand. Offer the services so a homeowner doesn’t need to deal with a lot of different companies, a lot of different service providers, and a very disparate type, disjointed type environment. Now that’s something that hasn’t really been done before, and that’s not a small task. But it was a big enough opportunity that, a big enough challenge where it was very interesting for me to join Anthony and to work on that.
SA Ibrahim: A new market to climb and a new peak to scale.
Chris Heller: That’s right.
SA Ibrahim: Looks like you’re somebody who’s drawn by challenges that others think are insurmountable.
Chris Heller: Yeah, actually, you hit the nail on the head. When I joined Keller Williams, when I transitioned from an agent to join in the leadership team, it was to build Keller Williams internationally. That was in 2008. We started talking about that. And I can remember making the decision, based on that it seemed almost impossible to do. And that was … It was close enough to impossible that I was excited to do it.
SA Ibrahim: So as you look at the changing landscape of homebuyers today, there’s a lot of younger people who are renting today, may or may not buy homes. There’s older people who want different homes because they reached a stage in life where, either location-wise or size-wise or maintenance-wise, they want less responsible, be more fun. There’s a lot of foreign buyers coming into the market. Almost every city has a lot of foreign buyers. How do you see that market different and how is it changing?
Chris Heller: Well, markets always change. The demographic changes that are happening now are the ones that you alluded to. We have the younger population who has been renting for a longer period of time than in the past, but are now starting to enter the market. And we’re seeing it at a noticeable rate. So we’re seeing a lot of first time homebuyers, and I think we’ll continue to see that increase. The Baby Boomers are either staying where they’re at, they’re downsizing or they’re moving to communities that are more affordable than what they’ve been accustomed to living in to be able to still have a great quality of life. So we see a lot of that transition going on. The U.S. is still one of the very best markets, financial markets, and one of the most stable. So we always have had, and probably in this last run, more international buyers enter the market than ever before, partly because of the stability of our country, but also largely because of instability in other parts of the world.
SA Ibrahim: Do you have … Does Keller Williams specialize in any one of those markets or view everybody differently?
Chris Heller: So as a company, we went and started Keller Williams in several different countries. The company is now in over 25 … Let’s see. I left in April of 2017, and when I left, we were in 22 or 23 different countries around the world that we started. The good agents in the marketplaces where there’s international buyers have learned how to tap into those markets. They’ve learned how to attract those consumers, not only when they’re here, physically looking, but also when they’re abroad. And then also how to build the relationships with other agents in other countries to create those referral relationships.
SA Ibrahim: So with the mello Home, are you going to be competing with your previous company? And what makes … I mean, in concept, having an individual deal with one company sounds very friendly, from a customer perspective.
Chris Heller: From a customer, yeah, and that’s our focus. To be able to provide a great consumer experience. Consumer behavior has changed dramatically. My behavior, your behavior. What our expectations are, how we like to interact, how we expect things to work has changed a lot of in the last several years. It’s the Amazon effect. And because of that, companies like ours have a choice. We can either do what we’ve always done or try to provide that experience to those consumers now want, and in most cases, are starting to demand and require. So as far as are we competing with other companies, in some cases, we’re competing for the same client. The services that we offer are a little different. We do utilize real estate agents. So although we’re a licensed brokerage, we don’t employ agents. So when we have clients that want to buy or sell homes, and these are loanDepot customers that have contacted us for financing, and we’ve approved them or pre-approved them on a loan, and their ready to shop, and they don’t have an agent, then we’re referring them to a top, top agent in that local marketplace. An agent who has joined the mello Home referral network. So are we competing with other real estate companies? Not really. We’re using their agents to provide a great experience for our customers.
SA Ibrahim: That’s very interesting. I did not realize that before. So you really are a partner to the more traditional realtors.
Chris Heller: Yeah. We are.
SA Ibrahim: As far as lenders.
Chris Heller: Yeah. We are. And as a national lender that has not only a direct lending component to it, but a sizeable retail operation, it’s important for us to create great relationships with the top, top agents.
SA Ibrahim: How long has the business been going, and what are some of the early lessons learned?
Chris Heller: The business was launched in January of this year. I joined in February. We sent our first referral in April. April 2nd. We’ve placed thousands of referrals. We’ve had several hundred that have closed during contract. We learn lessons every day, almost by the hour, as do most start-ups. Those are things that we are eager to learn because it allows us to tweak and modify what we do, and then make improvements on the fly to provide a better experience or a more seamless experience. Whether it’s routing leads or the process that we’re using for qualifying the customers, or the connection and a hand-off from mello Home to the real estate agent.
SA Ibrahim: Do you think your strategy’s going to benefit you in going after first-time homebuyers, in particular?
Chris Heller: What we’re noticing is that the bulk of the homebuyers that are shopping online … And by the way, the majority of them are seeking financing information first, which is a big change. In the past, the majority of homeowners that were looking to make a move would start with property searches. Now we’re finding that more than half are looking for financing information first, which allows us, as a financing company, to be able to come in contact with them before they’ve engaged with a real estate agent. Many of those people are first-time homebuyers. They’re the ones that probably don’t have relationships with previous real estate agents or loan officers or lending companies. So they’re online, looking for information, like they do for all the information that they’re after.
SA Ibrahim: It makes sense because in a hard seller’s market, if you’re a buyer, you present your financial strength and capabilities to the potential seller and the ability to close, to reduce the risk of closing as well as the speed of closing.
Chris Heller: Yeah. And if you’re a first-time buyer, you just don’t know. You don’t know what the process is. You don’t know what you need. You don’t know what you can do. I have four kids between the age of 18 and 28, and three of them, at the exact same time, are all looking to buy real estate. It’s fun and interesting to watch them go through the process to see if they can qualify, and what they can qualify for. And what type of loans still allow company-signers.
SA Ibrahim: So let me ask a question, which is more topical and see whether it applies to … whether it will shape your success in the near future. Interest rates are going up. There’s a lot of talk about home sales slowing down. The market is getting tougher. I know from a lender’s point of view, many of them have found the re-fi business go away. So there’s a lot more people struggling for what is available. So my first question is how do you expect the mello Home to compete successfully in that kind of market?
Chris Heller: I’d say there’s more than just talk about that. I think all those things are actually happening. We’re watching the number of property sales start to decline. We’re watching inventory increase. The re-fi market is almost approaching historical lows. So all those things are happening. Like any cycle that happens in our industry, there’s those companies that make it through and the ones that don’t. The ones that make it through generally approach things differently than the ones that don’t. One of the things, and, SA, you and I talked about this earlier is one of the things that we see happen is the companies that look at it as an opportunity, an opportunity to grow, an opportunity to take market share, an opportunity to refine what they’ve done, are the ones that have a better chance of coming out on top. I’ve always had the belief that the best defense is a great offense. Being offensive in a climate where most companies are being defensive has served many well.
SA Ibrahim: And that’s something that has served me well in all the companies I’ve been associated with, so it’s interesting to hear that. Finally, let me ask you a question about your insights for lenders. If you look back at the last downturn, and there’s an ample reason to believe this downturn is not gonna be as sharp as the last one, plus the loan features are better. The 2008 book of business, which was written at the cusp of the market, when things were changing, turned out to be one of the worst performing books of the business because the lenders and the home sellers and homebuyers, the whole real estate market was scraping the bottom of the barrel. Do you see that happening again? Should investors be concerned about this year, turning out the be the worst year in this down cycle?
Chris Heller: No, I don’t see that happening. I’m not being overly optimistic. I’m just being realistic. In the last cycle, what we saw happening with lenders and with homebuyers and the type of loans that were being written and the type of buyers that were qualifying for loans, that’s not happening now. Have things been relaxed a little bit in the last few years, compared to where they were in the 2012, 13, 14? Yeah, but not anywhere near how it was prior to 2008, where literally, we saw almost any buyer be able to get a loan. That’s not happening. Now we didn’t anticipate that that would trigger what it did. Well, I guess someone did, and the made a movie about it. But besides him. So could that happen again? It could happen again. If I’m an investor, I’m not overly worried about that. I’m spending more time, looking for opportunities than I am worrying about where the market’s going.
SA Ibrahim: Okay. The last question I want to talk to you about is what do you do when you’re not working? You’re such a driven person. Do you take the same energy to the personal side, the family side, or your hobbies? And what are those hobbies?
Chris Heller: I like to work. So there’s … So even when I’m not working, I’m thinking, and I’m planning and doing those things. I do read a lot. I like physical activity. I like to move. So whether that’s walking everywhere I go or going to the gym or doing physical activity, skiing in the wintertime, I like that. That’s a good release for me. It keeps me grounded. But my kids, I love spending time with my kids that are now all out on their own. The youngest one is in college. I just took her there a couple weeks ago. And I’m a big sports fan, so I love sporting events. I guess the other thing I’d add is music. I’m a very, very big music fan. I like going to music events.
SA Ibrahim: You go to Coachella and the-
Chris Heller: Coachella … this weekend, I’ll be in Austin at the Austin City Limits.
SA Ibrahim: Fantastic. Well, it’s been wonderful talking to you. Any final words for us? As we expand our mortgage media business and bring new insights to your peers, what are some of the areas that you believe the industry will benefit from learning more about from their peers?
Chris Heller: So we’ve talked a lot about companies. I think there’s a lot to be learned. In fact, I just had this conversation with a friend of mine. There’s a lot to be learned by people who have … When we look at people who have accomplished some level of success, whatever it is, there’s some consistent characteristics that we see. And we also have seen that in many cases and many times, those people also at some point, have had a lot of adversity. So I think it’s always insightful to learn about individuals and some of their successes and some of their challenges and how they reacted to those challenges and how did they come back and what can we learn from that? I think that’s … I enjoy learning from those type of individuals.
SA Ibrahim: Thank you. So if there’s one message we take away from the close of this interview, is managing your adversities a big, big contributor to your success, if you can overcome that adversity. We’d love to talk to some of your customers and some of the people you’ve been associated with and get their insights and share them with our audience. So thank you so much.
Chris Heller: My pleasure.
SA Ibrahim: Pleasure talking to you.
Chris Heller: Thank you. I appreciate it.