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Real Estate Brokerage

The growth of Compass and the digital housing market

(REAL ESTATE BROKERAGE) As the housing market continues to flourish during the pandemic, digital real estate corporation Compass’s success and stock has risen alongside it.

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home sales

The real estate housing market has – perhaps surprisingly – improved in spite of the pandemic. The National Association of Realtors reported that sales in August had increased by 10.5% over the previous year, and that the rate of sales in 2020 was at a 14 year high. Both existing and new homes have benefitted.

There are a number of reasons why this is happening, such as lower international sales and rental properties becoming more desirable. Fewer houses are being put on the market as well, which has caused the supply to shrink as prices rise. There’s also questions about how the business world will work post-pandemic, where remote work and telecommuting may become more commonplace.

In any case, home sales are brisk and show little sign of slowing down, and big tech is making moves to capitalize on the growing trends. The pandemic is bringing another revolution to the marketplace – some people aren’t even meeting their realtor, while others sometimes buy without even seeing the home. Even if these are outliers, it’s undeniable that this is big business for digital platforms.

Compass is certainly one of the rising stars in this area, having seen a massive revenue increase of 56% as prices climbed, reaching a total of $3.7 billion. As described by CNBC, “Founded in 2012, the New York-based company has sought to bring advanced technology to real estate agents, giving them better data, marketing tools, and customer relationship software than they can get from a typical brick-and-mortar brokerage.”

Protocol explains Compass’s technology: “…[their] primary offering is a CRM that contains a marketing center (Digital ads! Videos! Email newsletters!), market analysis tools, and client rosters. Compass also has an ‘AI-powered comparative market analysis tool’ that lets agents optimize prices, and ‘Compass Collections,’ a visual workspace where agents and clients can look at homes and chat within the UI.” Further, Compass makes 2.5 – 3% in commission on a house sold.

Alongside the revenue bump, net losses fell by from $388 million to $270.2 million, further bolstering an already solid market value. Softbank’s Vision Fund – which has had stakes in WeWork and OpenDoor, recently made a third investment in Compass after an evaluation of $6.4 billion in 2019.

All of this has led Compass to file for an IPO. Comparable companies such as Zillow and Redfin have seen similar stock market success, with the former seeing three times as many shares sold and the latter just below this.

Some have expressed concern that the housing market could change at any moment (even dredging up the events of 2008). Protocol’s article goes into great detail about this, stating that there is vulnerability with regard to interest rates increases, which would drive people to rent more so than buy. Competitors could also become problematic if they follow Compass’s model.

Still, at this time, Compass’s position is favorable and expected to continue this way. As the pandemic could last another year, housing market conditions may remain as they were in 2020, which may help push Compass’s success further. More and more people are utilizing online tools for real estate, after all.

Robert Snodgrass has an English degree from Texas A&M University, and wants you to know that yes, that is actually a thing. And now he's doing something with it! Let us all join in on the experiment together. When he's not web developing at Docusign, he runs distances that routinely harm people and is the kind of giant nerd that says "you know, there's a King of the Hill episode that addresses this exact topic".

Real Estate Brokerage

How to get to the truth when a client or fellow agent is lying

(BUSINESS NEWS) When a client or even an agent on the other side of the deal is lying, here is how to pull the truth out of them.

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Trust is important when it comes to running your business. So what should you do if you suspect that one of your team members, or even a client might be lying to you?

Shining a blinding light in their eyes and pounding on the table to demand answers may work on TV, but it’s not very effective for real people, says retired Green Beret Sergeant Major Karl Erickson.

Erickson, who perfected the art of identifying fibbers and extracting truths while in the military, and by studying interrogation techniques with John E. Reid & Associates, recently shared his insight.

First step – establish truthful behavior.

He notes that it is harder than people think to tell if someone is lying based on their body language alone. Sure, liars may have shifty eyes and jiggling knees, but so do honest people who are just nervous.

He suggests starting off by asking innocuous questions about things that the person will likely be truthful about. You could even use Facebook to find out more about the person, so that you can ask them innocent questions about their family or their latest vacation.

That way, you can establish an idea of the person’s general behavior.

If they break a sweat and bite their nails while telling the truth, then you’ll know that these habits aren’t necessarily associated with lying.

If you start by asking questions they won’t lie about, then slowly turn up the heat, you’ll be more likely to notice if they start behaving differently when you get to the juicy stuff.

Ask a question in various ways.

Erickson also recommends asking the same question at least three different ways. A liar won’t likely mess up their story, even when asked repeatedly.

However, they may reveal “carefully repeated phrases” and an “overly deliberate choice of words” that suggest that they’ve rehearsed their answers.

Don’t try to intimidate.

Being friendly and compassionate works better than intimidation. Erickson says that he’ll tell someone, “if I was in your shoes, I’d probably have done the same thing.”

Soften them up, and they’ll be more likely to confess.

Tell a version of the story.

Lastly, Erickson suggests telling the version of the story that you imagine could have happened.

The more you elaborate and exaggerate, the more likely the person will interrupt you to correct your assumptions, resulting in at least a partial confession.

Good luck! You deserve to know the truth.

This story was first published here in September of 2016.

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Real Estate Brokerage

7 red flags that scare buyers away from your listings

(BROKERAGE) While houses are selling quickly right now, there are some things that will almost definitely turn a home buyer off.

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Open home and kitchen that home buyers will be considering.

The process of buying a home is incredibly overwhelming not just for homeowners but practitioners. There are so many aspects that potential home buyers are investigating when they enter a spot that’s for sale.

Without realizing it, many sellers can be hurting their chances of selling by overlooking simple things, so let’s make sure your clients aren’t throwing up any red flags.

We all know the market is hot right now and houses are selling like hotcakes, but there are certain things that just cannot be ignored.

  1. Listing an unrealistic price: Be realistic about what a house is worth and don’t be misleading. People can easily search the worth of the houses nearby and do some digging to find out if what you’re listing is representative of what the house is worth.
  2. Skipping the deep clean: This is never a good idea – especially this year. The cleanliness of your house is akin in the buyer’s mind to the overall upkeep and maintenance of the house. They assume that if you don’t clean, you don’t care.
  3. Personalization: Since you’re moving, try and pack up some of your family photos and leave up less “personal” items (or color choices) to better help the potential buyer envision themselves living there.
  4. Expecting payment for features that are high maintenance: Things like pools and hot tubs don’t always return their value. Many home buyers aren’t interested in keeping up with that maintenance and it’s unreasonable to charge them for the assumption that they’ll keep up with it.
  5. Believing “It’s okay if this doesn’t work”: If a shower head is broken, the A/C is messed up, or a ceiling is cracked, owners should do all they can to replace or repair it before listing their house. If they refuse, they should be coached to not expect anyone to pay the full listing price unless they’re in one of the zones seeing bidding wars.
  6. Being nose-blind: Like those Febreeze commercials tell us, it’s common that we go nose-blind to our surroundings simply because we’re so used to them (i.e. a smoker doesn’t notice their house or clothes smell like smoke). Go back and check off deep cleaning, and then be honest with your client about their house’s need for smell help.
  7. Leaving pets home during showings: Due to the unpredictability with strangers – or the potential allergies the strangers may have – it’s best to make arrangements for a client’s pets to be elsewhere during showings.

At the end of the day, we have to look at our listings from an outsider’s perspective. And if you already knew all of these red flags, pat yourself on the back – you’re the real MVP!

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Real Estate Brokerage

How do you know it’s time to become a broker?

(BROKERAGE) It sounds dreamy to open your own brokerage and be your own boss, but when is it TRULY time become a broker?

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Everyone joins the real estate workforce for a different reason. Some to flip houses, others to represent buyers, and so forth. And most are happy with their broker of choice, but for others, the itch to become a broker becomes so great that it cannot be ignored.

But how do you know when it’s time to become a broker? Maybe it’s time for a new broker because you’re unhappy, but it’s also possible that you have the skills and drive to lead your own company.

To find out, we asked three brokers with thriving businesses:

Jennifer Archambeault is the Broker/Owner of Urban Provision, REALTORS®, a growing Texas brokerage.

We asked her how to know when it’s time to create your own brokerage:

It is time to create your own brokerage when the limitations of your current brokerage restricts your personal or professional growth, hinders your ability to serve your clientele at the highest level or you are no longer able to see the value your current broker brings to the table.

Regardless of the reason, it is important to be mindful of your competency and ability to handle the responsibilities involved with running a brokerage and/or managing or mentoring agents.

Is there a tipping point?

There are often many tipping points causing an agent/broker to dream about having their own brokerage, but they often only clue in on one when they are parting ways. A lack of respect or dissatisfaction within your current company, the inability to come to terms on differences with management, not seeing eye to eye on the company’s mission or vision and not being able to serve clients to the desired standard often top the list of tipping points if the agent leaves disgruntled.

However, there are times it is purely a natural transition having nothing to do with any reason mentioned above and solely taking your career and income to the next level.

Is it better to do so because of a gap in the market or because someone’s independent streak is unavoidable?

Personally, I think it is the latter more than the former. Gaps in the market will change over time but often the desire to be independent doesn’t ebb and flow as easily. If someone’s independent streak is unavoidable they often exude qualities that allow extreme focus to continuously keeping their eyes on a prize.

There are benefits of having your own brokerage, but there are also limitations as well. Some people’s independence can be a hindrance to their business especially when they want to start their own brokerage because they simply do not like or cannot continually follow the rules.

I believe it is better to part ways to build your own brokerage or brand because it satisfies a personal or professional growth need rather than leaving your previous company disgruntled. The latter generally allows for a flawed mindset.

What do you wish you had known before starting a brokerage?

Do not always focus on Plan A because often you’ll end up with the most perfect fit with Plan D.

Being nimble is a must-have quality for anyone in the real estate industry, but owning a brokerage often requires stretching far beyond being nimble and reaching for superhero status. Initially, I believed every agent could be molded into a specific model or a way of doing business but quickly realized that there is a not a one size fits all brokerage regardless of someone with decades of experience said so.

The perception of a brokerage with a large number of agents on the surface implies success. However, the old saying quality over quantity rings very true in a brokerage setting. Stop worrying about what others are doing – be different because that’s how you get noticed. Do what you do well and what works with your clients, for your personality or in your marketplace.

Tyler Forte, Co-Founder & CEO of Felix Homes saw a need to marry technology and real estate.

Here is his take on starting a brokerage:

Prior to starting Felix, I was a venture capital investor and I can tell you that any successful business, whether or not it’s a brokerage, is started because the status quo does not solve the market’s distinct needs.

Speaking specifically to why we started Felix, home sellers are facing a number of challenges that the traditional brokerage model does not address. When I sold my home last year, I saw firsthand how the home selling process is broken. I knew that starting a disruptive real estate brokerage was what I needed to do in order to make the experience of selling a home better.

The challenges homeowners currently face include hiring an agent who does not have their best interest in mind, to the uncertainty of not knowing if their home will be sold and for what price. At Felix, we are looking to provide consumers with the best home-selling experience period.

As far as the challenges we faced when starting a new brokerage, there are many. For one, the real estate industry is slow to adopt new innovative models. This is because current incumbents have built moats around the data and distribution of homes all at the consumer’s expense. In addition, because real estate is governed on a state-by-state basis, educating ourselves on the laws and regulations of each state was a challenge.

Jeff Brown, Owner of BawldGuy Investing has been a broker for decades and is never ever EVER shy about telling it like it is.

How do you know when it’s time to create your own brokerage?

I’ve always contended Dad was right, as you always thought most folks didn’t know when to create their own firm. Over the years I’ve spoken with countless brokerage owners about this very question.

Roughly a third of ‘em actually thought they knew the right time. Me? I did it WAY to soon, though in my defense, I had my dad’s infinite brokerage experience IN the office daily to back my rookie play, stop mistakes BEFORE I made ‘em, and generally mentor the crud outa me.

Most brokers told me they knew when decisions made by their broker bosses just were not what they would’ve done. They usually came a tipping point, where the decision made itself. But again, that was just a third of those with whom I talked. The rest just did what I did, rush in willy nilly. The huge advantage I had was a decades experienced brokerage owner mentoring me daily, in real time, and who, you know, actually gave a damn about me.

So what is that tipping point?

The most often heard tipping point was the feeling of being constrained by their boss’s operating policies. For example, and a gigantic tipping point, was a friend of mine who wanted to run his own office using the Broker-Centric model, not the Agent-Centric model run by the broker for whom he worked.

Is it better to do so because of a gap in the market or because someone’s independent streak is unavoidable?

The latter is merely personality. Sometimes it works to breakaway, and sometimes it’s been catastrophic. Being independent has nothing whatsoever to do with knowing what you’re doing as the person in charge.

The whole ‘gap in the market’ thing has always puzzled me as a reason to open a brokerage. The exception clearly would be that the policies of operation under which you’d run your own office would substantially improve your chances of taking advantage of whatever market gap you perceived. I find that to be uncommon, at least in my experience.

What do you wish you had known before starting a brokerage?

Without even a hint of maybe having a doubt, I wish I’d understood the good news/bad news joke that says: “Well, Jeff, the good news is you’re now the Go-To Guy. The bad news? See the good news.” 🙂

The difference between signing the backs of checks and the front of those checks cannot be overstated. Every single buck stops at your desk, period, end of sentence, over ’n out. Some folks find that to be too daunting.

This story was first published in May 2018.

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