Unlisted with Brad Inman

REX's general counsel Michael Toth says the discount brokerage pays buyer agents in at least 40 percent of its list-side transactions.

Sue Yannaccone A graduate of Clemson University, Sue Yannaccone is the new president and CEO of ERA Real Estate. With deep operational experience across many real estate companies and brands, her appointment doubled the number of women in the senior-most executives positions of Realogy Franchise Services, joining Better Homes & Gardens Real Estate CEO Sherry Chris in the top-dog suite of the realty giant. //www.inman.com/wp-content/uploads/2016/08/Podcast_SueYannaconne_mixdown.mp3 Brad Inman: Welcome, Inman news readers, to the Unlisted podcast, I’m Brad Inman. Today, I’ve got with me the new CEO of ERA Real Estate, Sue Yannaccone. Welcome, Sue. Sue Yannaccone: Thanks, Brad, happy to be here. Now that name — did I pronounce it right? Are you Italian? What is that background there? You did — I am Italian by marriage, I guess. My prior name was Daniel. I guess I really love my husband! Let’s talk about this appointment by Realogy to put you in the CEO seat. This doubled the number of women, I think, in seniormost executive positions at Realogy Franchise Services. Have you shattered the glass ceiling over there, what’s going on? It sounds like good news for Realogy and good news for women. Brad, I think it is. It’s great news for Realogy, it’s great news for women. You mentioned Sherry, and I would say that Sherry and others who came before me did a great job of paving the path for the women. I’m actually the second CEO of ERA that’s a woman prior to Charlie Young. Brenda Casserly lead ERA for a number of years. So, Realogy is extremely supportive of woman leaders in our industry and I think it’s very important. Give us some CEO advice — like, what does it take to become a CEO? And then what advice might you give anybody, but also young women? We have a lot of young Inman readers, young women, who are aspiring to be really successful agents and brokers and someday be CEOs. What’s the path to becoming a CEO, and how do you get there and how do you be successful at it? I think it’s very important for women and all individuals to be very authentic, to be true to who you are and to lead from that place. One of the things I’ve always tried to be is who I am in any leadership role or any position I’ve had. And I’ve also never been afraid. I’ve been described as “somewhat fearless,” and I’ve had the opportunity to take a lot of risks and I’ve had that seat at the table, so to speak, and I’ve never been afraid to ask for it. And I think as women, and really anybody that’s looking to further their career, it’s important to have your voice, understand who you are, understand what you want to accomplish and don’t be afraid to go after it. A lot of women will sit back and wait to be asked to come to the table, or wait to sort of raise their hand with an idea. And I don’t know where that comes from, be it our upbringing or whatnot, but you just need to find your voice and go for it. Don’t be afraid of failure; be afraid of not trying. ‘Don’t be afraid of failure; be afraid of not trying.’Click To Tweet Well, it’s interesting. Leslie Ebersole was at Connect and did an interview with Joe Rand about this very issue, and she commented how, wow, we’ve got 60 percent of the agent population are women, but they’re not at the table, and she said it went both ways. She said certainly women are being blocked out by the old white guy establishment, but they’re also not stepping up to the table. So I think you make a really, really good point. Let’s move now to the industry. You’re in a franchise seat and franchises, like I think every part of the industry, are feeling not only market pressures, but also just changes in the industry. What are some of the challenges of running a real estate franchise, that you’re seeing out there, that the franchise has faced? I think one of the things you mentioned is exactly the biggest challenge, right? It’s the pace of change in our industry and the ever-changing dynamics. I find our biggest challenge is ensuring that we’re staying relevant in a way that provides true value to our customer. That need and that challenge is driven by that pace of innovation, fueled by that continuous and rapid shift in our consumer behavior. It’s a generational shift, right? It’s not slowing down, it’s not going away, and it’s imperative that we continue to evolve, not only to address the needs today, but to be ahead of what’s coming next, our future customers. And there was a lot of talk about that at Connect in San Francisco, the need to understand what’s going on today. Not necessarily because that’s what’s gonna be here in five years, but it’s that next thing that’s coming. And when you look at our consumers of today and when you look at the agents of tomorrow, they’re the digitally native generations that are coming. They don’t watch TV and watch the commercials. They don’t connect the long phone calls. It’s a whole shift that is not stopping. That train has left the station. And so, I find that the franchise, or our job is to help bring our brokers and our agents forward with all of that. And our industry, it’s challenging; it’s very fragmented and people do things very different ways. And so, being able to harness that and provide solutions can be challenging, but it’s the only way we keep moving forward and stay relevant. Yeah, it seems to me, just what you said, the young agent today isn’t watching the nightly news with whoever does the nightly news these days on NBC. They’re using Snapchat to communicate with their friends. And some of the old franchise kind of approaches to this use the old-school branding on television, and it just seems so irrelevant in so many ways to what’s going on today. I just did a road show, I was at KW at the Mega Camp — which, woo, unbelievable enthusiasm. Then I went to Re/Max and met with Dave Liniger and was on the stage with him and a few other media people. And he’s back, his health is back and he’s trying to invigorate that brand. And then I was at BHGRE; Sherry’s done a great job of bringing that brand to the table and being a meaningful competitor. And you’re new in this position. It seems to me, more than ever, the franchises are having to duke it out. I guess they always have, but it seems like there’s a new breed of competition going on. It’s gotta be healthy for everybody. It means brokers, they have better choices and agents as well. Do you see that or has it always been this competitive? Maybe it’s just because I was on the road for two weeks. You’ve been fully immersed in it, right? Yeah, pretty much. Sue Yannaccone: I think it’s always been competitive. I think the competition is in different areas, perhaps, today. It’s because it’s not so much about who has the longest-running commercial on TV. I think our agents and our brokers are demanding more value from us.They’re looking for more from us than just “what yard sign is going in and gonna save my world” because that’s not today’s business. And so, the competition, in my mind and at least the way we like to look at the business here, is on driving that true value, that true benefit to that agent, to that broker that helps their bottom line. Our margins in our brokers’ businesses have shifted dramatically, and we need to prove that we can help them convert more leads. It’s going beyond just getting more leads — what do we do with them now? So it’s really helping, and that is what I think people are looking for. When I’m talking to prospects, when I’m talking to our brokers, when I’m out in the industry, it’s great, you’re this brand or there’s that brand. But how are you going to help me take my business to the next level? And that’s in products, and tools, and education and support, more than it is what logo’s on my yard sign. Exactly. Let me ask you this: The rise of the indie broker is kind of interesting. They kinda came out of the ashes of the 2008 recession. They tend to be younger. They take technology for granted. They’re not wringing their hands blaming Zillow. They don’t even think about it that way. They have created really vibrant cultures inside their company. They’re very service-driven. It feels like a blueprint for every broker. And I’m told that some of them, like @properties in Chicago, allegedly has an incredible margin because they have about 10 percent to 20 percent of the real estate of an old-fashioned broker. And real estate’s expensive. I assume there are some lessons to be learned from these. And I know you have them inside ERA as well, but this next generation of brokers just seems to look at the world quite differently. And they don’t seem to be the least bit confused about what their value proposition is, which is great agents and good customer service. It seems pretty simple, and that easily equates to making money. Anything you’re seeing out there like the indies or anything else that are stars that you’re following? Are there lessons in all this? I think there are always lessons in it, and I think if we do a disservice or anyone does a disservice to themselves, their business and their customer, if they fail to look at what others are doing and being successful at, right? We learn from other’s successes, we learn from other’s failures, and I think it’s always critical to keep an eye on those. I know @properties and they do a great job in their market. I think what’s crucial to take from that and what we’ve always focused on and is very important is that stellar agents helping improve more and keeping relevant, and you’re gonna have a good business. It’s customer service, it’s collaboration, and it’s providing those systems that can help move people forward. I think one of the challenges that occurs for some of those independent and other companies is the scalability and the ability to continue to sustain in this dynamic ever-changing industry and what the long-term needs are as it relates to that. And that’s something that is a value that as a franchise like myself, we have greater access to. But I come from a very strong customer service background, and my belief is very customer service-focused. And I believe our agents should be, and our tools and systems should do that to help them. That’s great. Let me ask you this: What do you think the biggest threats are to the housing industry? And let me just go through a list. Is it economic uncertainty this year, setting ourselves up for a bad year next year? Is it the market? Would you say yes or no, is that a threat? I don’t know that the market is a threat. I think we have those constant macroeconomic trends like you talked about that are going to impact the market. I think everybody’s looking to see what happens in the political arena. I think lack of inventory right now, is if I talk to my brokers, that tends to be the biggest concern. For the most part, they’re very optimistic as to where we are, and where they’re performing this year. Again, we’re in a very broad sort of market, we’re not really focused in one demographic, which I think really helps bolster for the long term. So I think there’s a couple things that are always at play, but we’re feeling pretty good about it, and that’s what I’m hearing from most everyone that I speak to. If we could get a better pipeline of those kind of coming off the sidelines, interest rates will continue to impact that, lending opportunities for the first time in the millennials. But for the most part, I think we’re gonna continue to see a pretty stable if not slightly strong for our brokers. That’s what we’re hearing. Let’s talk a minute about — I don’t know if they’re threats or opportunities — but the big portals, kind of capturing the imaginations of the consumer. And you could arguably say, back in the day, if you ask consumers do they know the Century 21 brand or the ERA brand or the Coldwell Banker brand, it was top-of-mind for real estate. They may still know those brands, but these portals now really have captured the everyday habit of consumers, buyers and sellers and homeowners and renters, and people applying for a mortgage. Is that an opportunity or a threat in your mind, and how do you tell your people to manage to it? I think that it depends on what you’re looking for from that online engagement. But I think that the portals are there and they’ve been there for a while. We have launched a technology platform here across our network that is providing and sharing greater search capacity back to our brokers. I think that we have seen over the years a decrease, obviously, as you said, in the consumer going to broker or brand specific portals. But I feel that we’re hearing and we’re seeing a shift in some places back to that broker portal, that broker site. The brand really is to connect with the consumer and the agents, and to really make it what I talk to the folks about and what we really push is that hyperlocal content from an agent and a broker’s perspective that the portals can’t provide, right? So everybody goes online and they’re gonna start their search and they’re look for their homes, whether it’s a buyer or seller these days, right, everybody starts online well before they’re ready to transact. But that need for our agent and broker to remain relevant in their market is to retain and to provide that hyperlocal content that they can’t get anywhere else. And that increases the value of those agents’ sites, of the broker and the agent, and the local site. So whether consumers start on Zillow, they need to end up on your local site for information that you are the expert and able to provide. So I think that they’re both out there. You can start searching in a very large environment on Zillow or Trulia. But your consumer’s gonna end up on your site because you’re gonna provide information, value, content, analysis, expertise that nobody else can because you own your market. Let’s think ahead to 2017. Let’s deal with brokers and agents. As you’re beginning to make plans for 2017, what’s one rock solid piece of advice you would give a broker? Let’s start with the broker, and then secondly, what’s a piece of advice you’d give to an agent in terms of planning for next year? Well, you kinda hit the nail on the head because for me it’s planning. I think it’s understanding a plan. Brokers need to understand what they want to achieve in the year. They need to narrow that down. They need to understand you can’t be all things to all people. What is it you want to achieve? Are you gonna focus on innovation? What are the one or two things you need to do to bring your company to the next level? You need to create that plan, you need to commit to that plan and accountability metrics for it. And I think for agents, it’s similar. Focus on your business. Focus on who you are, what you’re best at, create that plan. A lot of agents, we find, don’t have business plans. So you are running a business, and focus on that, execute on it, and engage with the tools and systems that your broker’s providing to drive that success for you. And again, on the brokers, focus on your agent engagement. What can you do to drive value to your agents, to retain those agents, help them perform better, help them be more successful in the industry? That’s great, Sue. Hey listen, good luck in your new position. You’re now part of an elite circle of real estate CEOs. You’ve definitely broken a glass ceiling here. I think that’s good for everybody. It seems like you’ve got a plan. We wish you luck executing on it and we’ll have you back soon, and hopefully we see you on the stage in New York City at Connect. Sounds good, Brad, thank you so much, appreciate it. Email Brad Inman The post Sue Yannaccone on breaking glass ceilings and franchise competition appeared first on Inman.

Keith Krach Chairman and CEO of DocuSign, Keith Krach is an MBA, visionary and humble leader who is changing the real estate industry. In this podcast, Krach shares tips on leadership, relationships, cybercrime and business strategy. Greetings, Inman readers. I am so, so happy today to have with me the chairman and CEO of DocuSign, a friend of the real estate industry, Keith Krach, who is an entrepreneur, Harvard MBA, and done so many interesting things. And has one killer house in San Francisco that many people that were at Connect had an opportunity to visit. He’s a charitable guy, supporting all kinds of interesting causes. And he’s revolutionizing the real estate industry. Welcome, Keith. Brad, hey, thanks so much for being on. It’s a privilege. So Keith, we are gonna spend some time talking about some of the stuff you’re pioneering to make the world paperless, which is so, so important, and has been a vision of mine for a long time.?? ?So I feel like we’re partners. But I also want the real estate community to know this wonderful guy, Keith Krach, who people don’t know very well. You have a Harvard MBA, and right now everyone’s talking about how you don’t need an education to be an entrepreneur, and you’re both.?? ?How important are degrees and college educations? You know Realtors always struggle — should I get a degree? Would I be a better Realtor? Or should they follow Bill Gates and Zuckerberg and drop out of college. How do you put all that together? My grandmother always used to say, the most important things in life are not written in a book.?? ?And my father used to say, a degree and $0.25 will get you a cup of coffee in Cleveland. But with all that being said, I’ll tell you what: I learned so much in school, and the thing I learned the most is really how to learn, a process for learning and having a sense of curiosity. And if I look back, getting an engineering degree from Purdue, I learned the scientific method. Being logical, I learned that there’s one right answer. At Harvard Business School, I learned that there’s always more than one right answer. And I also learned, because there was a case study method, and 50 percent of your grade was based on class participation, it’s not necessarily what you know, it’s what you think of in time. But one of the greatest things out of my academic career is really making a tremendous group of friends. And a lot of people say, man, Krach, you’ve got a great network, LinkedIn, blah, blah. It’s not the network, it’s friendships. And as you kind of get older, I’m always amazed. Keith Krach: ‘It’s not the network, it’s friendships.’Click To Tweet And I always say this about my buddies: These guys are running Fortune 500 companies, doing all kind of things. And those friendships are life-lasting, and you learn a lot of life lessons, like there’s always somebody in the room smarter than you. And it really gives you a chance to exercise your mind and attack problems. But more than anything else, it’s just kind of that endless quest for learning, ’cause you’re never done. That makes sense, Keith. Now you have a humility to you, and I think the Midwest must play a part in that. And you always seem willing, and I guess it’s key to relationships to be willing to, you’re dynamic and you’re charismatic, but you’re also humble. Where does that come from? And were you always that way, or did that come with age? Or did that come from the sweet Midwest, as we call it? I think it probably does come from my upbringing. That side of it — I was never really gifted as a child, so it was all about, how hard do you work, to be honest with you.?? ?And I just think it’s good, old-fashioned Midwest values, in terms of courtesy, and respect and fidelity to principle. And you can always learn something from somebody. And one of the things I think that’s key, are these friendships in life and in business. And I think one of the keys is, how quick can you get to somebody’s core.?? ? Because you don’t have a lot of time. And I think the way to do that is you’ve gotta open up your heart, you gotta be authentic, you gotta be vulnerable. So, yeah, after a while it just becomes habit for me. Yeah, it’s interesting — that wouldn’t be the CEO mantra 20 years ago.?? ?You had to be harsh and tough and it’s a different approach. Let me ask you about this. You are a master at relationships. It was really evident to me. And let’s talk to my tech entrepreneurs here, who seem to sometimes think we can solve everything with a new piece of code or with an application.?? ?You’re an entrepreneur. You’re in the tech sector. You went to Silicon Valley at a young age after a marvelously successful track record at GM, youngest VP ever in history. What do my tech entrepreneurs need to know about the importance of personal relationships and your success? And how should they think about that, versus “tech can solve all the woes of the world.” I think when we look at ourselves in the real estate industry, we’re in the people business. And it’s all about relationships, it’s all about trust. And that is true for tech companies as well. I mean, I always stand up in front of all the employees at DocuSign and say, “Guys, we’re in the people business.” What we do is, we enable them to have speed, accuracy, a great customer experience, all that. But it’s that people side — because whether you’re buying a home, or whether you’re doing a $25 million software deal, you have to trust the person across the table from you. And I just think that is just so fundamental. Yeah, and what’s the key to building relationships? Is it putting yourself out there, is it how you approach people? What are the keys to those relationships? I think it’s first and foremost listening, and having empathy, and being curious. And to really get somebody, you have to get inside their core. And so, you’ve got to be willing to put that out there as well in terms of being vulnerable. And sometimes that might come back to bite you, but I’d say 99 percent of the time, that’s the catalyst for getting things. To really building a friendship. Exactly. And long-term relationships. Yes, absolutely. And you know my wife, Meadow — she always calls me a people collector. I mean, I’d go back and see the guys I used to play football with in Ohio and everywhere and… Did you play football in Ohio State or Purdue? No, I didn’t play for Ohio State.?? ?Back in high school, I was the old baseball pitcher at Purdue, but sometimes people say, “Man, I haven’t talked to them in 10 years or 20 years.” It’s never too late to call up an old friend. It’s never too late to say thank you. It’s never too late to say “I’m sorry.” ??Yeah, there you go, reconcile your past. My dad had a habit. We were from the Midwest, and his last 20 years, every week he said a prayer for someone from his past. And we said, “What’s that about, dad?” And he said, “Well, remember the guy that mowed our lawn??? He always wanted to talk to me, and I tried my best, but I didn’t pay attention to him sometimes.” Yeah. “And so I prayed for him today.” I mean, it was — we have to do that. And I guess we learn these things as we get older. Yeah. Hey, Keith, let’s talk about one other thing. The tech industry and real estate, it feels to me, and you are leading the pack here, that we’re finally getting our act together and smoothing out the transaction and talk about the people business. This gives Realtors more time to focus on the people side, instead of the administrative paper side. Yes. If this is a four-quartered game, are we at halftime, are we still in the first quarter, or how much further do we have to go before we finish this game out? I think we’re probably still in the first quarter, probably the latter end of the first quarter, because the things coming down the road in terms of technology, some of those things that we talked about, Brad, in the fireside chat. In terms of smart contracts, in terms of really making the agents and brokerages, just so they can focus on what’s most important. And that’s spending time with their clients. So take the drudgery out of it. And also, in this world of privacy and security and empowering, whether they’re the consumer side or whether they’re the agents, is to be able to transact anything, anytime, anywhere, on any device securely.?? ?So I think you’re gonna see some great developments. That’s why we doubled down in our real estate vertical, and this whole area of automating lead-to-close. And then also integrating it seamlessly with the title side, with the mortgage side, and leveraging our strengths in terms of all the big banks and title companies. Keith, one thing that came up at our event, towards the close — we had a really savvy broker, Angela Raab from Indianapolis, who talked about how she’s automating the back-end. And of course, she uses DocuSign. And then we also had Pat Stone, who’s done a lot of innovative work in this area.??? And then we also had Austin Allison, who is doing some interesting work as well on the back end. But Pat said something that really kind of startled us all. And he said, “Anything you’ve read about cyber crime, it’s 10 times worse.” And someone else at the event talked about how they’re getting hacked 24 hours a day. Yeah. And not successfully, but they’re trying. And tell me this, ’cause I’m a journalist at heart, curious, and I’ve been worried about this issue, and I think we’re all a little naive: What’s really going on? This must be a really tough thing for you, running a safe and secure platform.?? ? And what the heck is this country gonna do about it, because it’s everybody’s problem. Yeah, and at the core, that is what DocuSign is focused on. And that is the trust aspect of these transactions. And that is one of the reasons why the xDTM standard is so important because it’s that quantifiable, measurable, auditable aspects in terms of privacy, security, availability, interoperability, enforceability, compliance. And we’ve invested hundreds of millions of dollars in it, because these are people’s most important agreements. So the encryption technology, the security, is critical. Yeah, and it seems like we really, every company, every government agency, every individual really has got to fortify themselves, to get some of these threats. And this wiring of money problem we had in real estate was just scary, because there’s no recourse, there’s no insurance — if you mistakenly, because someone attacked you, do a wire transfer to the wrong account of a criminal, there’s no insurance for it, there’s no bank backing you up. And some of these things are gonna start, I think, melting into the real world in ways we don’t like. Anyway, that’s why we need companies like DocuSign, to provide that safety and security for Realtors. Let me end with this, Keith. I always compare the everyday Realtor to the entrepreneur, in the beginning of all my conferences I ask people to stand up that paid to get there using their personal credit card, and that’s always a Realtor. They’re not on payroll. They don’t get health insurance. They don’t get free vacation pay. And it’s the entrepreneur who’s bootstrapping their company with a credit card. These kind of startup hustlers that have to just put it together every day, without any job security. Yeah. What’s a tip to them of how to be successful? What is it that they need to do to succeed — and you’re a role model for that — what would that be? I guess I would break it down to three things: Even if you’re an individual entrepreneur or an individual agent, surround yourself with people who are smarter than you. I think, well, I made a living out of that. But I also think, it’s what I especially tell the young guys, don’t be afraid to jump in water over your head.? ‘??Cause you’re gonna learn how to swim. You’ve gotta take risks.?? ?And from your failures is where you learn the most. Keith Krach: ‘From your failures is where you learn the most.”Click To Tweet And I guess that the last thing is a lot of times, people say, “Hey, Keith, man, you’re really lucky.” And I go, “Yeah, man, I guess I’m just lucky.” But I know what the definition of luck is. It’s when opportunity meets preparation.?? ?And for the preparation part, and what you do when nobody’s looking is, I think, the key to making your own luck. I love that, Keith, I think you just nailed it for all of us. And you’ve created a lot of luck for yourself by being there and being present, and also being generous with your ideas and with your money. And I want to thank you. You’re one of our gifts to the industry. I’d like to close this out by giving a big round of applause out there from our listening audience to Keith Krach, the chairman and CEO of DocuSign. Let’s talk again soon, Keith, and thank you very much for being here today. You got it, Brad. Thank you so much, I deeply appreciate it. Email Brad Inman The post A 360-degree entrepreneur dishes on the future of real estate appeared first on Inman.

This week we are pleased to welcome Lennox Scott, the CEO of John L. Scott Real Estate based in Seattle, Washington. //www.inman.com/wp-content/uploads/2016/07/Inman-Lennox-Scott-070116.mp3 Scott joins us this week with a powerful session that can help you whether you are dealing with business challenges — or even a life-threatening illness, such as cancer. Here’s what he will be covering: A quick overview of the 85-year history of John L. Scott How “living life as a contribution” mindset can literally work miracles in your life “I am not the situation!” How to walk in the positive outcome and abundance Predictions about when to expect the next downturn and how the 10-year real estate cycle works How to classify super-hot seller markets based upon the months of inventory and price appreciation — frenzy, surge, strong, healthy, adjusting, correction Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/AgentTraining and www.RealEstateCoach.com/newagent Email Bernice Ross. The post Real Estate Radio: How living life ‘as a contribution’ leads to transactional excellence appeared first on Inman.

Today, RealSatisfied was acquired by Placester. Brad Inman talks to RealSatisfied president Jeff Turner. A customer satisfaction platform, RealSatisfied launched in 2010 in Australia. Jeff Turner joined as president in 2012. Buyer and sellers reviews are all done online, often with an API integration with broker websites. RealSatisfied collects 47 data points on sellers and 45 on buyers. The focus on the platform is helping brokers and agents get insights on their customers. With degrees in psychology from Grace College (Bachelor of Science: Psychology) and Ball State University (Master of Arts: School Psychology), Turner is a long-standing leader both online and at live real estate events. Brad Inman: Welcome, readers and listeners. I’m so excited today to have with me Jeff Turner, who is the president of RealSatisfied — and Jeff is in the news today because the company Real Satisfied was sold to Placester. Welcome, Jeff, great to have you. Jeff Turner: It is always great to talk to you, Brad; you know that. Let’s talk about a couple things. Sure. First of all, here’s an M&A [merger and acquisition] deal in the real estate space by two very credible companies — smaller companies, start-ups, I guess you could call yourselves. Yeah. Back in the day, marrying two start-ups was always challenging because there’s usually a burn rate. But it sounds like you two have found a way to do something strategic that’s kind of interesting. So give us a little background on where you all came from — but also, how it led to this deal. Sure. So I met the two founders of RealSatisfied, David King and Phil Kells, when I was speaking at the Australia Real Estate Conference in May of 2011 in Sydney, Australia. So the company was founded in Australia — and I think it’s really pertinent to this conversation of what makes this deal so interesting, because they built this product outside of the hype that really was just reaching some heat in the United States in May of 2011. It started when Bob Hale went online in 2009 with HAR [Houston Association of Realtors] with his ratings, those public-facing ratings that he was doing for agents. And Zillow was really just just getting started in the United States at that point in 2011 with their ratings — literally, [Kells and King] had no idea what was taking place in the United States around them, so the platform was built in a completely different real estate environment, without this notion that the end game was ratings and reviews. It was built as a platform designed to collect as much information as possible for brokers and agents so they could truly understand how they performed for the consumers they were delivering services to. So often, so much innovation doesn’t always happen in New York City and Silicone Valley and all of these other places in all far-flung parts of the world. Let’s move to the deal — I want to go back to all the ratings, and I think we should help our readers understand, one, the importance of data, two, reviews, ratings, what’s the difference, and how can people control them other than just doing a great job. But first, the deal itself — Placester and RealSatisfied, I guess none of us would have guessed that marriage. But strategically, you all felt like it was a great move for the company? Yeah, we did. Very, very early on in our conversations — myself, Phil and David — I told them, and they agreed, that they really felt that ultimately the future of RealSatisfied was to be a part of a larger ecosystem that was serving the same customer base. And our customers are agents and brokers, and that’s who Placester’s customers are. And we were, quite frankly, a little bit surprised, as well. I don’t think I’m talking out of school by saying when we were first approached by Placester, I’m not sure we saw the fit either. But it didn’t take long. Matt Barba did a presentation for us that was a future-looking presentation about the company, and when we finished with that presentation, the three of us said, “Wow, they really have some great ideas around how to assist brokers and agents in really capitalizing on business intelligence and really taking advantage of big data to help them make better business decisions.” And we saw where we fit in that. It seems like we all have a narrow view of Placester. They do websites — I did an interview with Matt, and I always sensed he had a bigger strategy. And you painted the picture here pretty eloquently. So this is a big part of their agenda, then. It is, they’re building a suite of tools for brokers and agents and brands. And the beautiful thing about about Matt is, one, he was a former real estate agent, and Frederick Townes, who was one of his co-founders, is a really brilliant technologist. And so this marriage that they have and this focus on the broker and the agent — we obviously think it’s the right focus, and it became really clear that the fit was perfect for us, and for them as well. Gotcha. So the deal came down today, it closed. You’re joining them? Absolutely. What’s your new title? I think my new title is going to be vice president of strategic partnerships, and I’ll work directly with the president of strategic partnerships. Exciting. It’s pretty fun. And all these talented people — Laura Monroe, you and Seth [Price] and Matt — I mean, that in and of itself sounds very exciting. We can’t wait to watch your success. Thank you. Let’s jump back to the data stuff, Jeff. Absolutely. Suddenly, real estate’s discovered little data, big data, medium data — everybody loves data. We’ve all been talking about it for 10 years — and actually longer than that, I think — this idea of tracking buyers and sellers after they do a transaction is something I remember when I first got into covering the industry as a journalist. But now, it seems like there are tools, there’s software, there are applications that are being built by companies to help agents and brokers collect the data that only they could possibly collect. Suddenly, the brokerage and agent community woke up to — my gosh, we got data, we gotta do something with it. Well, I think there are two parts to this. Some of it has to do with the fact that you finally have systems in place where data is just beginning to be able to, for lack of a better way of putting it, talk to each other. These different data sets have the ability to be co-mingled so that you can utilize them and see things, begin to see patterns. Quite frankly, that hasn’t been the case until recently. And so, we’re seeing, finally, in the real estate industry, the opening up of this data. And that’s really one of the things that we try to do when we launched agent profiles on RealSatisfied. We believe that the data we collect — and our license clearly states it — it doesn’t belong to us; it belongs to brokers and agents. So our goal is to is to empower that data to the greatest extent possible. And the way you do that in today’s world is to make it open so that it can be accessed and utilized and married with other data so that you can take advantage of those insights. Gotcha. Jeff, let me ask you this question. You said “our customers are brokers and agents” — I think that is what you said. Yeah. Wouldn’t the customer here be the consumer? No, not at all. OK, explain that — because you’ve got data that not only helps the public see how agents are reviewed and rated (and, by the way if I’m saying review and rated and should be saying rated or reviewed, clean me up, here). But secondly, you’re also providing a lot of business intelligence to brokers and agents for this data you collect from them. Exactly. Ratings are a by-product of what we do, it’s not the goal of what we do. Again, when we launched our product in the United States, there was no public-facing agent profile page to display ratings on. All of the ratings that were shown were done as a tool in the back-end to give them an easy visual to look at to say, “this is how I’m doing.” And we always provided tools that allowed agents to see how they were comparing to other agents in their office and other agents in the company. It wasn’t until we launched in the United States and some of our first clients like Meybohm in Augusta, Georgia, and ReeceNichols in Kansas City that came to us and said, “We love the data we’re getting in the back end. Don’t get us wrong, we like it. We’re getting great results. We’re getting good information from these surveys. “But we believe that our agents really need a way to show that these ratings and this data is being collected by a third party. How do you accomplish that?” And we decided to accomplish that by building our agent profile pages on an RSS feed of the data that we collected on their behalf. So our ratings really, truly are — they’re an afterthought. What do you mean, “afterthought”? The public display of those ratings wasn’t a part of the original product. So it’s an unintended consequence that was really positive. Exactly, and so what’s come about is this collection of this detail — and we collect a lot of detail. That is what we believe we were designed to do, that’s our goal. Our goal is to collect as much information for brokers and agents as possible at the close of a transaction. And all of that data that we’re collecting has some aspects of it which has some value on the public-facing side. These broker/agent clients — are they publishing it publicly or are you publishing it? They are, absolutely they are. So we can imagine a day when I’m Brad Inman, real estate agent in West Hollywood — which I’m not, by the way, I would have no customers — but imagine I was. If I was, I would have a web page from Placester. I would have my data, my customers being surveyed by RealSatisfied, and I would publish those on my website. And then, I presume, I’m a premium realtor.com agent, I’m a Zillow Premier Agent, so I could publish them there, I could publish them on my broker site. Tell me about the distribution of this content. The reason we built these agent profile pages on top of the RSS feed was to have it be as open as possible. There is no more open standard for syndicating data than an RSS feed. Right. So what typically happens for us is that third parties, like Cloud CMA and Spacio, for example, come to us and say, “We’ve got agent profiles, we think it would be beneficial to have ratings and testimonials appear on these public-facing testimonials.” Or in Cloud CMA’s instance, “We think it would be good to have this included as a page of the report that gets presented to sellers in listing presentations,” for example. It makes it really simple to be able to say to them, you don’t even need an API (application programming interface). We have an RSS feed that’s triggered off of a vanity key — just build it so the agent can put in their vanity key, and then these things will flow in real time. So you have a background in news and RSS keys. Did you bring that to the table, or had the Aussies already figured that out? No, no, the Aussies — By the way, can I use the word “Aussies”? I think they like the word “Aussies,” I think they’d just be happy for you to call them anything. Yeah, we love them. When it came about, when the action was asked for — “Can you create public-facing agent profiles for us?” — It was really Phil and David who said, “Listen, we’ve got this license agreement that clearly states this is their data, it’s not our data. Why should we put any barriers between this and it living anywhere?” And so the RSS feed just simply made sense because it was this standard for syndication, so we will never be the barrier between this data and it living anywhere agents want it to be. If there’s a barrier, it’s always going to come from a third party. Let me ask you this. No matter what, [the data] is  always there, it always exists. Can agents control where this is published? So I’m a terrible agent in West Hollywood — no one likes me, so I’m never going to publish my data. No one else is gonna publish it for me, right? So no one will ever know that I’m a really terrible Realtor? Brad, let’s be really, really frank here. If Brad Inman is a terrible agent in West Hollywood, Brad Inman isn’t surveying his clients. Right. Brad Inman isn’t pushing his clients to go fill out ratings on Zillow. Anywhere, right? No — I mean, listen. I guess what I’d love to see here — you know me, I’m pushing for a higher-quality agent, the brokers to hire better ones or fire bad ones. Ratings are not the way to a higher-quality agent because ratings are a marketing tool. I don’t care what anybody says about that. If I go right now, today, on Zillow and search in my ZIP code — 91390, anybody listening to this podcast, just go do it — there’s 25 pages of agents. You will page through 18 pages of agents before you find a single agent that has less than a five-star rating. So it’s all B.S.? There is a purpose to it, and the purpose to it is to act as validation. Isn’t the public kinda getting screwed here if they don’t know that there’s 18,000 pages or 18,000 agents, whatever it says you’re gonna find, and they land on one who’s on the front page of a paid premium listing, and they see five [stars] and they go “Ooh, wow.” Is this any different, I guess than Yelp, or anything? No. I would hope that maybe we would be giving the consumer some sort of feedback loop that was honest. I think that’s what we’re trying to do. So here’s the deal. No consumer gets to the closing table, Brad, and says, “Wow, I just finished closing my house, I guess I better go rate my agent on Zillow.” They’re going be directed there by someone, and it’s typically an agent who believes that they did a good job. Maybe they’ve even asked the client if they’re happy, and they go there. The beautiful thing about the way our system works is that 90 percent of our transactions are triggered by brokers through a transaction management system. We’re talking to people who have actually completed a transaction with an agent, and the triggering action is … It’s not an agent saying, “Give me a good review …” No, it’s not. This is just done automatically, and so arguably that gets more honesty, candor. Well, it does, in the place where it needs to be more honest, right. And the place that it really — if you’re talking about improving the quality of the real estate business, you’ve got to give brokers and agents as much data as … Are they taking action with it, Jeff? Absolutely. Are they actually firing them or training them or and doing something? I can’t speak to firing, but I can speak to this. There are pieces of data that I like to call “canary in the coal mine data” that we only surface to agents and brokers. And so for example, two agents can have the exact same customer satisfaction rating. But one agent has a return rate on their surveys of 90-plus percent –and there are lots of agents who have 90-plus-percent return rates on our platform. And another agent in an office with the exact same public-facing customer satisfaction rating has a return rate of 20 percent. They do not have the same customer satisfaction in reality. But you can’t see that from the public-facing aspect of it. So you’re saying your tool basically is most about helping brokers clean up their act, whether it be getting rid of [agents] or whether it be training them or … Exactly. … and less about this being a public-facing, honest-to-god review that consumers can use to discern who’s a better agent in their backyard. I think I, personally — obviously, this is going to be a very self-serving comment. I believe we do a better job of both than anyone. Yeah. Because the ratings that ultimately get surfaced come as a result of a really in-depth survey. It’s not a simple five-star. But whether it surfaces is up to the agent? Whether it surfaces is up to the agent. You have data that shows — unlike Zillow’s — that shows bad agents. Sure. But whether it’s published is not a function of you getting the data, it’s a function of the agent or the broker just choosing to publish it. It’s a function of the agent or the broker choosing to publish it. I guess I’m a little suspicious of Yelp — right? And I should be. OpenTable, I’m suspicious. Is there any stand out out there that you think we should reach, a bar with the public? I guess you’re getting really good data — that’s the key. My view is transparency, transparency, but obviously that’s not gonna happen. I’m not sure what I’m asking you. To say “it’s not gonna happen,” I think, is not true. I think consumers function differently around the real estate transaction than they do around a restaurant. And I think the mistake that real estate consistently makes over and over again is that they begin to compare their industry to things like restaurants. It’s easier for me to understand from a restaurant review whether or not I want to go to that restaurant. Because, quite frankly, the restaurant owner has control over the context of everything that happens in that restaurant, they have control over the quality of the food, etc., etc., etc. Real estate agents — the complexity, the psychology, the life circumstances that happen inside of these real estate transactions, they’re incredibly complex. And so the consumer, I think, gets this, and the data, our data, NAR’s data, consistently shows that the vast majority of consumers are still finding their agent based upon referral from a friend or family member, or having previously done business with the agent. And so the action that they’re taking online — I think people like to think the action they’re taking online is to go online to search for an agent, and that’s not what they’re doing. They’re going online to validate a friend’s recommendation, and so it’s a completely different mindset when you begin to look at consumer behavior in terms of validation instead of search relative to an agent. Searching for an agent online is not what’s happening, validating is what’s happening. Gotcha. So, Jeff, tell us about the future here — you’re joining this company. Laura, is she joining the company as well? Everybody’s staying on. One big happy family! It really is. What’s the social footprint of you four, like 10 trillion? You four are like the social gurus out there. We enjoy what we do and we believe in what we do — and thank you for letting me take Laura from you, by the way. She’s the best; she’s really fantastic. She really is. And so what we do, we believe in very strongly. I feel so comfortable talking about what it is that we do because I believe we are getting to what your hope is, Brad, that the industry will raise the bar. But the bar doesn’t get raised through ratings and reviews, that’s a public-facing aspect of what needs to have happen. There’s not enough data collected in any review system online to provide brokers with the understanding they need to make the kinds of decisions they need. We think we’re providing really necessary business intelligence to brokers. Well, I hope they do something with it. I do, too. My criticism is they’ve already gotten it, they know it and they don’t do anything. So I hope data’s just not an excuse not to do anything, I don’t think it will be, but at least they have it now, and it’s a tribute to you and all the other people. You brought up Bob Hale — God love the guy, I think he only lasted a day, but at least he tried. And all the other people that have tried and been criticized and chastised — God love them, this is a war to make change. Hey, we’ve run out of time, Jeff, but would you come to Connect this summer and explain all this to our audience? I’d love to. Because I know I don’t understand it very well. But at least we got people in the community that know this stuff that could explain it to everybody else. And congrats on the deal. I know what it’s like to sell a company, and it’s hard, and congrats to your founders in Australia — I’m sure they’re toasting somewhere today. And we’ll keep in touch on your progress — keep us posted on everything you’re up to. Thank you very much, Brad. Email Brad Inman The post How to use agent review data to get customer insights appeared first on Inman.

Steve Murray Brad Inman talks to Steve Murray, who owns Real Trends Consulting and has handled more than 2,250 client assignments for realty firms over the past 28 years, with more than 660 merger and acquisition (M&A) assignments, totaling $11.8 billion in aggregate value.  A 37-year real estate veteran, Murray publishes the Real Trends 500 and the Wall Street Journal/REAL ranking of the nation’s top sales professionals. He is the co-author of four books on the valuation of residential real estate brokerage. Brad Inman:  I’m so excited today to have Steve Murray, who is going to talk today about brokerage M&A — mergers and acquisitions — what’s going on in this hot, hot M&A market for real estate brokerages. Welcome Steve. Steve Murray: Nice to be with you. Where are you traveling? Today in Nashville, Tennessee. So, Steve, tell me this — I think a couple months ago, you and I chatted about trends. Your specialty is M&A and brokerage, and you were telling me that it’s hot as a pistol. Are there a lot of sellers, a lot of buyers or both? It’s both, Brad. The usual companies that people would think of — the Berkshire Hathaway HomeServices and the NRT unit of Realogy are both extremely active as active as I’ve ever seen in all the years I’ve been on the other side of the table from them, and they’re both looking at companies all over the U.S. — medium-size, small companies if they’re in an existing footprint — and looking at new markets and new acquisitions. But regional brokers are also very active. We saw last year the Howard Hanna company — a good example — bought Nothnagle, the no. 1 firm in Rochester New York. That is an example of some of the larger regional firms around the U.S., whether they’re independent or with a franchise organization, out looking at acquisitions both in their existing marketplaces and in some new markets. On the sales side, you see two companies in two basic categories. One, those who we would say are toward the last few years of their ownership and career owning a brokerage company. So those are the personal owners, the guys that have started the company and have been around a while. Yes, and they survived the downturn. And they’ve rebuilt their balance sheets and earnings statements, and they’re doing extremely well profitability-wise. But, you know, in some cases the value of their brokerage is a significant part of their family’s assets. And while there is liquidity, which there is today, they’re interested in checking to see what the market will pay them for their firms. You also have some younger companies owned by 40-year-olds, as an example, some really good companies that have been at it 10, 15 years, have built really nice independent brokerage firms, but they understand that to get to the next level, they’ll have to begin to reinvest significant sums of their earnings in building staff and structure and brand. In some cases, it’s not really what their passion is. So we have a number of those clients as well. Is there any evidence that brokers are trying to get out of the business because of any fear factor? Zillow, technology, the broker model not working — any evidence at all that there’s a fear factor or a market fear factor? If there’s a reason for selling that has to do with fear, it is more in two or three areas. One, the business is getting more complex. Zillow, Trulia, realtor.com, the abundance of new technology firms, SmartZip, BoomTown, technologies coming at the industry nonstop. It’s not that so much they fear them, it’s that they really haven’t been able to understand or get firm about what will be the end pack three, five, ten years from now. That’s a little bit of it — and probably a bigger part is downward pressure on gross margins, the amount of money a broker has left after the agents are paid, splits. You have to pay more and higher splits to the agents. You have the CFPB (Consumer Financial Protection Bureau) wading into the industry last fall and basically firing a cannon across the whole industry’s bough concerning mortgage marketing service agreements. And so hundreds of brokers have discontinued those. For many firms, they weren’t a huge — but they were an important — part of their profit, and now that’s gone. So it’s more of the financial pressures of the business from several different directions. And the fact that the market is extremely good, and none of these people wants to wait around or try to time the market and wait for the next downturn. I assume the last downturn was serious punch in the guts for some of these guys, just like every business in America. Hanging on was tough, right? It was. We saw unit sales decline by, depending on which report you read, 35 to 40 to 45 percent decline in units — the average price of what was selling was declining. It was a 50, 60 percent drop in the volume of business that they were able to do. We know from our own REAL Trends 500 rankings, the top 500 firms and brokers in the country — one quarter of the firms that were on the 500 in ’05 did not make it to 2011. And they went out of business — mainly merged with other companies. @stephenhmurray: 1/4 of firms on @realtrends 500 in ’05 didn’t make it to 2011.Click To Tweet What are you hearing from brokers about the market? We had a horrible, horrible downturn, but you could arguably say we’ve had four or five good years. That’s pretty deep into the traditional cycle. Are brokers nervous? Things like the election to things like Wall Street? What makes them nervous? We hear “shortage of listings” — are there any market indicators that they’re listening to from their agents or consumers? No, I think the thing that worries them, and even something I think about is, “let the good times roll.” We’ve had now four-and-a-half years of a significant increase in units and prices. Most markets are short of inventory. Prices are increasing steadily. Unit sales were up very strongly in January, February across the country. It is in the back of their minds — and in in my CEO group, there will be discussion about how long we think this will go. Now they can look at fundamentals and say that household are back, being formed at 1.3, 1.4 million new households a year in the U.S., and that doesn’t include illegal immigration coming into the U.S., which is something near a million people a year — many of them with good educations and capital, and they’re moving to America. You have foreign offshore buyers — although it’s backed off some from a couple of years ago, it’s still high single digits of all the home sales in the country are being bought by families from overseas from various regions. But yes, to answer your question, everybody in the back of their mind goes — because I get asked that question all the time — “how much longer do you think this has to go.” @stephenhmurray: Everyone is wondering, ‘how much longer can this #market go.’Click To Tweet And my answer just points out — the mortgage industry still has tight grips on the underwriting process, so people who shouldn’t get a mortgage aren’t getting one. The rates are still extremely low. Household incomes, while the last five or six years have been somewhat anemic compared to prior recoveries, it’s still growing at 2 to 2.4 percent a year. And the stock market seems to be recovering again somewhat. Up, down, all around. It’s no great immediate concern, but a real knowledge that, OK, five years, six years is pushing it. You’ve got age on the one hand, you’ve got the requirements of the business, the knowledge you have to have to be successful in this business, some of the regulatory pressures in the business — those are causing people to think, you know what, my profits are back to very strong, there are buyers out there, this may be a good time to do it. Go play golf in Florida. Back to M&A specific — tell me about multiples. I assume the good old days for a broker selling his or her business would have been 2005, 2006 before the crash. Was that the peak in your experience, and if that was the peak how are the multiples looking today? And for the young, smart brokers out there building businesses that have been involved, where they should focus to create their business, should they decide to sell? Is it in margins, is it top line, is it EBITDA, is it overhead, is it agent count, is it product, and what of the factors factors here do you think are most important to creating value? First let’s address the big question, which is “where are multiples in terms.” You know there’s two parts of a transaction — the price and the terms — in our industry. The multiples were at a peak level from ’01 right to the end of ’05 and ’06 to some extent. And they, of course, declined quite a bit in the downturn. They’re back at that same level today. I told an audience recently of large independent brokers, I said, ‘Look, if you are a very, very large independent record in a very large metropolitan area, there may be only 10 or 12 companies in the country that fit that profile.” You could get a five-and-a-half to six multiple of your last 12 months’ EBITDA (earnings before interest, taxes, deductions and amortization), which is the basis for valuations in our industry. You’re saying five to six multiple on a trailing EBITDA, or forward? Trailing 12-month EBITDA. So that means that a company that’s doing $10 million in EBITDA last year, 2015, could conceivably get $50 to $60 million dollars. Is that the math? Yes, that’s the math. How many fit that deal? How many firms actually generate … Oh, there’s only maybe 10 to 15 brokers — maybe that many — in the whole country. Independent, privately owned brokers that generate that kind of EBITDA. So using my example’s not a representative example. Are there quite a few firms making a million bucks a year where they could get taken out by the $6 million and sit on their profits? Well — But a firm doing $1 million in EBITDA is not likely not that large, and they’re not going to get a five or six, they might get a four to four-and-a-half. Gotcha. For the last 18 months, we’ve had a record number of valuations and merger or acquisition clients at our company, a double in both categories that we ran before the beginning of 2015. The typical client — we occasionally get a large one, that $40, $50, $60 million in gross revenues with EBITDA of $3 to $6 million — that’s a really good-size firm. @stephenhmurray: For the last 18 months, we’ve had a record number of #valuations and #M&A…Click To Tweet But typically, the largest number of firms we represent are those firms that are doing $10 to $25 million of gross revenues, and their EBITDA is $600,000 to $2.5 million. And there is a really, really good market for those companies. But those guys aren’t going to retire on that, are they? It’s the end of a chapter, but it’s not the end of them going out and making money unless they’ve stashed away some dough, right? That’s correct. Most of these people have other wealth, they own real estate, they have cash and marketable securities. This is an important part, but mainly even though they know it’s not a huge number — maybe it’s a $3 million or a $4 million dollar deal. And they’re not going to to get all cash, which I’ll get to in a minute. They’ve got to stay around for a couple of years to earn the rest of the payments. They don’t want the liability and the pressure of being an owner anymore. Especially, I guess, at certain times when things are changing. I was at one of my CEO groups, a very large firm, last week, and at our dinner table — the talk at our dinner table was two things you should never talk about among your business friends, religion and politics. And the political side particularly was as lively as could be because at a table of eight, we had people who were passionate about, on both sides — especially on the Republican and Democratic side of this election — about their particular guy, and everybody was was in favor of somebody else, so it was a really good discussion. We had a lot of fun, laughed a lot, nobody took it too personally. Obviously, the political situation in an election year — yeah, it’s a natural concern. But I don’t think it’s causing anybody to decide whether to buy or sell a brokerage company. Tell me this. Preparing my company for sale, I’m a young, hotshot broker. What I need to do — focus on top-line, bottom-line? EBITDA. Just earnings. Profit is what will drive value. Now behind that, you want to make sure that if you’re planning a sale that you’re going to stay around for two or three years to maximize your sale. Because typically — these are never all cash. That just does not happen if it’s a decent-size firm to a large firm. We might see 55 to 75 percent of the price in cash, but the rest — you’ve got to get in what we call an “earn-out.” You’ve got to keep your company operating. So you’re not going anywhere when you sell your company — golf in Florida’s probably not in the cards. Who do you represent, Steve — the buyer, the seller? We’re almost always on the sales side. So you’re always sitting across the table from someone in New Jersey, Minnesota, Ohio, Seattle, all those places. Yeah, but you know, the interesting part is, this is a deeper trend. Because more and more we’re seeing — I’m working on right now, merging, for instance, some Re/Max companies. Or one Keller Williams acquiring another one. Or a Keller Williams or Re/Max buying an independent firm. The smallest client we have right now is five agents. And we’re working to get a woman a reasonable proposition for her business. The other interesting things happening in M&A is we are starting to see — I think we’re at the front end of — large agent teams have now started to come to us and want guidance on how they build real value in their business. Is there a market for that yet, Steve? Not a big market, and particularly if it’s a personality-driven team where 60 or 70 percent of the business is sphere, personal relationships and referral — there’s a market, just not really a good price market or terms market. But we seeing these teams now — they’re what we call business chains — where 50, 60, 70 percent or more of their business is generated by cold-calling, direct mail, online marketing, online lead generation, which is not attached to a personality or a particular person. Those have some real value to them. @stephenhmurray: ‘Business chain’ #realestate teams ‘have some real value’Click To Tweet And we’re starting to work on that — we have a couple deals we’re working on now, and we think that market will get more active as some of these teams organize themselves more in a business way than just a really good agent who has a huge number of leads and hires agents to help with a personal business. So they’re creating  asset value that you could start to put a price on, conceivably. That’s interesting. Let’s wrap up with one last thing. One of the things that flummoxed me — Robert Reffkin is a smart guy at Compass and Glenn at Redfin is a heck of a smart guy. But they’re basically traditional brokerages with some tweaks here and there, with some killer technology. But a lot of good brokerages have technology. How is it that these guys command valuations that are insane? No one judges them on EBITDA because I’m not sure either one of them are even profitable. Is that just Silicon Valley math and not Steve Murray math? What’s going on there? I wrote a column about this stuff going on, and I called it “The Crazy Valuations,” and I made this simple point: For the last 20 years, Wall Street and Silicon Valley have had  this infatuation with combining their talents money and technology to disrupt industries one after the other — bang, bang, bang. They look at our business, they think it’s highly inefficient, highly fragmented, and this year there were $70 billion dollars of commission revenues floating around out there. The largest brokerage in the firm, owned brokerage, is NRT — they have 4 percent share. The largest franchise network in terms of closed transaction is likely still Re/Max and they maybe have got 9 percent share. And so you get the money and the technology guys — and you’ve seen it, Brad, in your career in the last 20 years. They just throw money at this and keep trying to unlock the secret. When will housing consumers change their habit of how they buy and sell a home, and how can we get them to do it by using technology to make it easy? Right? That’s Redfin. I think I’ve interviewed some of the senior people, some people running a region. Gosh, they’ve got a great system; they’ve got a great platform; I’m very impressed with their people as well. And I think recently they’ve backed off offering rebates to consumers. I think Glenn will find that he doesn’t need to have offered rebates; he can still build a good business, but is it a business that’s worth 60 percent more than Re/Max International? Hard to imagine. Or you look at the second round — I read somewhere, I never verified it, I read somewhere their second round of fundraising valued them at $800 million, which I told an audience is $250 million more than Re/Max’s market cap. Of course, we won’t talk about Zillow. I actually myself think Zillow’s business model, in another few years, will get them to where they’re reasonably priced. I don’t know if Redfin or Compass will get there. Compass is doing a lot of technology, but bottom-line, what they’re doing — which has been done a dozen times in the past — is they’re buying good managers, good agents, literally buying them. I wish them well; we always wish new competitors well, but the jury’s out on whether that ever gets to where it’s worth $800 million. Hey Steve, thank you so much. I know my listeners and readers of Inman are going to be excited to hear this. And thanks for all the contributions you make to the industry. We’re all very very grateful for what you do for the real estate industry. Email Brad Inman The post Why are so many brokers exiting the business? appeared first on Inman.

Leonard Steinberg Leonard Steinberg, the president of Compass, specializes in the marketing of high-end New York real estate, bringing in more than $2 billion in transactions. As his move to Compass signifies, Steinberg represents a new breed of brokers who are teaming up with new broker models and technology firms, as the real estate technology startup industry continues to grow. Steinberg will be speaking at Global Connect in New York City on April 7. Register now Brad Inman: I am so excited today to have with me Leonard Steinberg, a top-producing Realtor from New York City who is just all over the place doing such interesting things. He is a guy that upholds the standards of the best and the brightest of real estate. He is involved as a traditional broker representing sellers, primarily. But he also has joined a leading technology brokerage. Welcome Leonard Steinberg! Leonard Steinberg: Hi, How are you? I’m great. Hey, how should we define Compass? You’re in New York City. We call it a tech startup, but is it really a tech startup? Well, I think everyone wants to pigeonhole us as either a tech startup or a real estate startup. And the fact is, we are a new hybrid of real estate enterprise, which combines the best of technology with the best of traditional brokerages. So we are a hybrid of the traditional model, infusing technology into the real estate brokerage experience. Gotcha. Now, when you say best of brokerage, Leonard, what is the best of brokerage? Well, the best of brokerage, I think, is what Compass is trying to achieve not only infusing the entire equation with technology that helps the consumer, but as importantly, we want to infuse technology into the agent experience. There are outstanding agents out there, but they are in the minority. I think a good number of agents out there don’t have experience, don’t have the tools, don’t have the experience to really provide the consumer with a great experience. So step no. 1 is to to bring in only the best of the industry, and we really focus our attention on really infusing and attracting the best in the business. Once they’re in the Compass realm and family, what we want to do is provide them with the best technology that frees up as much of their time as possible so that they can refocus their attention on the consumer experience because there’s no better time served than an agent working directly with the consumer. Technology should be there to fuel — it shouldn’t be there to replace — agents. So you really believe in the traditional model. But you’re saying, “We’re going to give tech tools to the consumer and to the agent.” I mean, a lot of these agents are still pushing paper around; they’re acting like secretaries. I’ve done deals in New York City, and I’m always like, what the heck, this goes back to the nineteenth or to the Gutenberg press. No, it’s painful. It’s painful to look at the industry in relation to other industries, to see how far other industries have progressed and how slowly real estate has adapted to the new world. I think the biggest element that has prevented that from happening is, no. 1, companies that don’t want to reinvest profits into systems. And no. 2 is fear, fear that the technology will replace the agent, and the exact opposite is true. If you take great technology, great agents, put them together, have the agents speak to the engineers and scientists who do the technology to tell them exactly what you need and want — then you have a winning recipe. Let’s shift to the housing market. You work in New York City, probably a global real estate capital, notorious for very very high-end buyers, and we have all this luxury housing coming on the scene in New York everywhere I look. It’s kind of like Los Angeles, there’s just tons of luxury housing being built at a time when there seems to be heebie-jeebies on the part of buyers because of the elections or the stock market. Tell me, what’s going on with the market here in New York City. Well, the New York market cannot be summarized in one word, and I think the biggest mistake all real estate markets do is, they average. I just saw a report that came out this week that talked about how New York City is the fourth-most-expensive city in the world behind, I think, Singapore, London and Monaco. And they talk about multiple thousands of dollars per square foot for high-end real estate. And that may be true in pockets. But the reality is, there are multiple markets within each market. And in certain areas, there’s overdevelopment, in certain areas there’s under-development. But we also have to remember statistics. And I think there are some very, very interesting statistics about the volume of product in the New York City market. It’s a very, very small percentage — around 13 percent of all apartments in the housing stock of New York City, are owned co-ops or condos. Then you have individual houses as well, which are mostly in the boroughs. But when you look at an area like Manhattan, the volume of owned housing is a small, small fraction. Then, when you look at the percentage that is condominium, that allows for a bigger group of buyers to no. 1, be able to afford to buy in the building, and no. 2, desire not to have the co-op approval process. That becomes an even smaller amount. So looking at the global picture, knowing that Manhattan and the whole New York tri-state attracts a very broad volume of wealthier people, I think the inventory that is coming out is just going to take longer to absorb. I think the brakes of the system, the automatic forces of the free market system are already in the works; I can see banks are already cutting back on financing buildings that aren’t sound investments, and I can also see developers pulling back on certain projects where they say, “Our pricing expectations are simply too high for this to make sense,” or “We have to cut back on our pricing expectations, because they’re unrealistic.” So you’re already seeing adjustment in the marketplace because people are smart and they see what’s going on. Tell me this: Do you worry about all these events globally, and are buyers just going through a period here where they’ll get over it? Because you could arguably say the economy is strong, it’s not like New York’s suffering too much, rates are crazily low, there’s a lot of liquidity, and there continue to be a lot of rich people. It’s almost like everything that’s happening is psychological, to a degree. I worry every day, and I have been worrying every day for the last 51 years. And I should. I feel certain I’ll be worrying going forward. I think there are so many global events that happen on a daily basis, some reported, others not reported, that it can drive you a bit nuts. I also think that the a media is so competitive these days that to get ratings and to get readership or viewership requires sensationalist headlines. And without a sensational headline, you could go out of business. So I think the Kardashian-ization of our planet has made the extremes of newsworthiness a little too intense and frightening, frankly. But it definitely impacts markets when you have that sense of uncertainty. Uncertainty is something wealthy people don’t like. Wealthy people don’t necessarily have significantly less wealth when markets go through changes, but when they lose confidence in the market or if their feeling is that market pricing is going to come down, that is when they put the brakes on. But what we are coming out of is a three-year period of intense, exaggerated, unrealistic market conditions, where properties were selling at a speed and a rate and a price. that was intensely exaggerated. Now we’re approaching and entering a new market, which is a new normal. Which may be what normal really is. You’re a real estate guy; you’re a respected real estate guy. You have a lot of integrity and credibility, and you follow through. The next President of the United States could possibly be a New York real estate guy. Not to drag you into politics, but you’re in New York, you know real estate people. Is this scary or an opportunity, or what do you think? Could it happen? You know, I think the chances of a Donald Trump becoming President are very strong, as much as you could say the chances of a Hillary Clinton being the next President are very strong. I never like to guess elections. And I also don’t necessarily like to guess how a President will act. What I do know, however, is that I am the president of Compass. And my actions set a tone for my company. But I am not the company. I think people underestimate the power of the Senate, the Congress and the other 300 million people that constitute the United States of America. So I do think whereas the President’s role has great impact, I think its impact on a day-to-day basis are very very very different. So I’m not guessing politics at all, and I think anyone who guessed it six months ago has been proven dramatically wrong. Oh my gosh, everybody has been wrong. Leonard, you just said it very well: Whatever happens we do have some checks and balances in place. Whether it’s Hillary, whether it’s there it’s Trump we theoretically have some checks and balances in place to watch these characters, whoever it might be. I also think, with any change that happens, my philosophy is, “adapt or die.” You have to adapt in real estate and in life in general now a lot quicker than ever before because adapting to new circumstances and new environments is what prevents you from becoming extinct. I love it. I love that motto. Let’s wrap it up with our listening audience — and people may not know this — they can come to New York City on April seventh and meet you because we’re having global connect at the Mandarin Oriental. Yes, very exciting. We’re really looking forward to having you. You know the Inman brand is dig-deep, call-it-like-you-see-it. In the two years that you’ve been at Compass, what were you surprised. Was it the culture of the company, the new tech tools? I had multiple surprises, but I think the two biggest surprises to me were, upon moving companies, I felt that my business would drop by 50 percent and it would take me five to seven years to rebuild it to where it was. I was the no. 1 broker at my previous company, I had achieved great success, and I thought this would take many years to recapture. On that front, I was completely wrong. My business was up 15 percent last year over the previous year. Shocking to me. That’s no. 1. No. 2, which didn’t really shock me as much as remind me of something very important: If you bring great people together, you have a great company. If you have a great culture, you have a great company. And being a great group of people imposes two things. No. 1, extraordinary personalities who have a great sense of respect for one another, who are solid individuals and do the right thing; they have solid ethics and principles. And no. 2, competency. If you have ethics and competency, it is certain that if everyone in the room the shares those qualities, you will have success. Leonard, you’re obviously a wise fellow for the young age of 51, and you look even younger. Great to have you on the show today. And I know our readers at Inman are going to love to hear this. We will see you on April 7 in New York City at the Mandarin Oriental. Thanks to you, Brad, and what you’re doing is amazing. Thank you. Email Brad Inman The post Why did Leonard Steinberg join a start-up brokerage? appeared first on Inman.

Jay Luebke is the marketing director at The ART of Real Estate and became a licensed real estate agent at the age of 18. Jay Luebke Brad Inman Hi, this is Brad Inman with Unlisted. I’m so excited to have with me today, believe it or not, a 21-year-old real estate agent from South Carolina, Jay Luebke. Welcome, Jay! Jay Luebke: Thanks so much for having me, Brad. Jay, by the way, your voice sounds like you’re a lot older, but you’re a young guy. You got into real estate at the ripe age of 18, when you got your license. And you started as an intern in North Carolina, worked for a big broker. Now you work for a smaller broker in South Carolina. Do I have the bio right? Yes, that’s correct. We want to probe how young people think about real estate differently. You told me that your mom, who’s a lawyer, and your dad, who’s a business consultant, used to watch HGTV and watched Million Dollar Listing together? Do I have it right? And what about that inspired you to get into real estate? That is correct. I think those TV shows are just, they’re so interesting and they’re captivating, in a sense. Everybody loves to see the big multimillion dollar properties, but they don’t really understand what it’s like to have the day-to-day operations in a real estate business, so that was one of the things that pulled me in and got me to where I am today. I am impressed that you’ve had mentors. Your first broker in North Carolina as an intern, your broker in South Carolina, a bigger and smaller broker. Tell us about how important it is for a young guy getting into real estate to have those mentors? I think mentorship is, 100 percent, one of the most important things that you can have as a young agent. Working at a big brokerage where you didn’t necessarily have the support that you needed, I found it very tough to get started. By finding a mentor, it’s really helped me to get to where I am now. Mentorship is, 100 percent, one of the most important things that you can have as a young agent.Click To Tweet It’s given me the opportunity to learn about the business from a seasoned professional and get to try out some of the different areas, from listing to marketing to sales. It’s really given me the freedom to be able to ask questions and to be able to learn from somebody who knows what they’re doing. You have worked all ends of the real estate office. You’ve been a listing agent, you’ve helped buyers, you’ve worked obviously as an intern, you’re now helping on digital marketing, you’ve been a transaction coordinator. What’s that all about? Do you want to become a broker? Do yo uwant to become a powerhouse million dollar lister? What’s your ambition to be so careful and thoughtful about your training to do it right? I think the ambition is to one day become a top-producing agent. That’s kind of the goal, that’s what got me into real estate. And this is the way that I see my education, in a sense. Anybody can go through a course through their brokerage and get the basics down, but there’s something to be said for really getting down in the trenches and learning by experience.  I’ve interviewed Madison Hildebrand many times, and he’s one of the guys you used to see on TV. And Madison said how his parents freaked out when he was graduating from Pepperdine University and he told them he wanted to become a Realtor. You? You’ve got a mom who’s a lawyer. What do your mom and dad think about you becoming a Realtor? Originally, I think they looked at it as an interest, a potential job through college, something to do. But here we are four years later and it’s stuck. And I think that now it’s the direction I’m heading and it’s the direction that I want to be in, and I think they realize that there’s more to it than just what you see on TV. There’s an actual career there, there’s such an entrepreneurial aspect that you can build your own business, and I think they really respect it.  Is it true now that your generation increasingly sees it as a profession because we’re seeing more and more college graduates enter the business. Do you think it has more respectability than maybe 40, 50 years ago? I think it does, and I think that more and more young people are seeing it as an opportunity to create their own job and create what they want their working environment to be like, and that’s something that’s really drawing people in. I think the days of a big corporate company are becoming less and less appealing to a lot of my peers. They’re looking for more startups and more entrepreneurial outlets than they could typically have. The days of a big corporate company are becoming less and less appealing.Click To Tweet What’s your advice? What advice do you give to young people who enter the industry? You’re still a newbie, you’re only 21 years old, but what recommendation would you give younger people to enter the business, what do they need to do to qualify themselves to be successful? OK, we’ll take that one, one at a time. For new entrants who are younger, who are my generation, I would definitely say mentorship is one of the most important things that you could have. I would not be in the position that I’m at today had it not been for some incredible mentors. Almost everyone here in my office is of the millennial generation or just outside of it. We’re a very young team. And I think that that has really shaped me as a player in the industry, in a sense. I also think that being on a team is a must. I’m a complete team supporter. And you see the team as a way to partner up, collaborate, work together, solve problems together?  Exactly. Collaborate, and it’s a way that I can learn. There are so many incredible people on my team right now that I can learn from each one of them and from their different experiences. And how about the older people in the industry. Do they need to move out of the way, or adopt technology, or is there room for everybody? I think there’s room for everybody. I also think that just as I needed a mentor, I think that it would be great to have a mentee in a sense, that you could have somebody from a younger generation, a younger demographic, who can help an older agent pull in some of these new technologies. Somebody who understands it directly and can teach a little bit as well.   What are your goals? I think goals, yes, are important. I don’t have a direct plan for I want to be at X by this date, but I know that one main goal is to make the 30 Under 30 list, so I’ve got a 9-year goal to definitely hit. Before then, there’s still a lot of learning I can do, there’s a lot of hands-on experience I can gain on a team. And we’ll go from there. Being in the middle of all of these real estate deals and transactions and working with different people, what would you like to see changed in the real estate process so it’s easier and better for the consumer?  I think customer service is the no. 1 issue we see. There’s a lot of agents out there who don’t necessarily put customer service first, and one of the things that I’ve seen on our team is that that is really the direction that we need to push. The better client experience that you can provide, the more business you’ll getClick To Tweet It’s all about the client experience these days, and the better client experience that you can provide, the more business you’ll get, the more referrals you’ll get and the better you’ll do as an agent. You work with young buyers and sellers. How do they view the deal these days? Do they still want a Realtor, do they expect you to have great technology?  I think technology is playing more and more of an importance, but I think that there’s also the personal touch and the ability to have their questions answered that they can’t get if they try to do it themselves. I think that as buyers, they also realize that they don’t have to pay for a buyer’s agent and so they’re much more willing to work with an agent, work with somebody who knows what they’re doing and can answer their questions as opposed to trying to tackle it on their own. You at Real Estate connect in New York. Did you have a good experience there? Absolutely incredible. It’s one of the best communities that I’ve seen in a long time. I think it’s an incredible networking and learning community, from sitting down at round tables on the last day to meeting some of the brokers at drinks at Connect afterwards. I think there’s so much knowledge that you can learn from other markets, and what may work for them may also work for us. I think that’s one of the big things that drew me, to meet some of these other incredible agents from around the country, hear some of these fantastic speakers and gather in as much knowledge as I possibly could to bring back here to Columbia and implement in our business.     Great to have you Jay, and stay in touch, OK? Thanks so much, Brad, I appreciate it. The post What this 21-year-old real estate agent has learned appeared first on Inman.

Dolly Lenz Dolly Lenz is one of the very best top-producing agents in the world. Known for being canny, tough and super bright, she is obsessively client-focused, which accounts for her success. Her biggest prize a $212 million sale on Park Avenue in Manhattan, and her network is the envy of the industry. You can see Lenz at Inman Connect New York on January 27 in New York. The post How a top top producer thinks and acts appeared first on Inman.

California Association of Realtors CEO Joel Singer explains the public policy and economics behind the declining homeownership rate — and what, if anything, can be done about the downward-spiraling trend. Singer is also the CEO of zipLogix and was instrumental in developing CAR subsidiary Real Estate Business Services (REBS). He has a thirty-year history of challenging the industry to face its threats while working on practical solutions for keeping the agent at the center of the transaction. The homeownership peak was slightly over 69 percent in 2006 — and since then, it’s been on a decline. Is this a “hangover” from the subprime mortgage crisis — and does the number even matter? Now, the homeownership rate is about 63 percent — back at levels we haven’t seen since the 1960s. “Generally, the homeownership rate is an indicator of relative wealth in your society,” explained Singer. It’s a way to accrue wealth and solidify a citizen’s standing in the market. He also addressed whether the homeownership rate drop is a bicoastal concern or whether Americans in other areas of the country should also be concerned. “It’s correlated to urbanization to a degree, and to the costs on the coast, but the fact of the matter is, the trend is clearly not a very positive one,” Singer noted. And as interest rates increase, the rate of homeownership falls. Is it an income-to-price problem? Qualifying for mortgages? Or is it generational — the ever-popular “it’s the millennials” theory? Singer said that millennials’ historical homeownership rate is much lower than in the past, but he said that’s due to economics more than a generational issue. The delayed onset of marriage and children play a part, “but fundamentally, it’s economics that make it much more difficult.” In other words, homeownership is still part of the American dream. Email Brad Inman. The post Why is this industry leader worried about the US homeownership rate? appeared first on Inman.