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Join us for a great episode about changing direction with your business. Today we discuss how to reevaluate a time-line as we get mroe experienced with our businesses. Christian discusses the move to becoming a non-producing broker and how to pivot to ajdust the profitability of the company.
reThink Real Estate Podcast Transcription
Audio length 18:23
RTRE 42 – Pivot, PIVOT![music] [Chris] Welcome to re:Think Real Estate, your educational and hopefully entertaining source for all things real estate, business, news and tech. [Christian]: I am Christian Harris in Seattle, Washington. [Nathan]: Hi, I am Nathan White in Columbus, Ohio. [Chris]: And I am Chris Lazarus in Atlanta, Georgia. Thanks for tuning in. [music] [Chris]: Everybody and welcome back to re:Think Real Estate. I am Chris Lazarus here with Christian Harris and we are talking today. It’s like don’t we typically do this in a podcast? [Christian]: Talk? [Chris]: Talk yeah. [Christian]: That is primary yeah. [Chris]: Yeah that’s kind of what we do. Anyway Christian what is going on man? [Christian]: Trying to stay warm. It’s frigid here in Seattle. It’s 34 degrees right now. Almost 10 o’clock. Not almost 10. Almost 11 o’clock. Which is cold for us. It rarely gets below freezing here so…Yeah you know lets talk. It’s the end of the year. Looked at some numbers. Realizing that my ideal client this guy for 2018 isn’t paying up the way I wanted him to so we’re doing some pivoting. And maybe we could talk about that. [Chris]: Pivot? Like with the sofa going up the stairs? [Christian]: Yes pivot in the awkward switch back in the stairwell. Yeah. [Chris]: Friends reference for any of you generations that don’t know what that is. We…I can say that now. There is a generation below me that doesn’t know this stuff. So that’s kind of weird. So what’s going on? So numbers weren’t really where you wanted to be? Where are you pivoting? [Christian]: Yeah so in a nutshell my goal this year was growth and to transition out of sales. So that I could primarily train, mentor, build the brand you know. Agent support that kind of stuff. And you know we’re up to 11 agents now and some of them like well we have the agent numbers but I failed to look at the production numbers. And if they’re not producing it’s really hard to not do sales. To you know put food on my family’s table.
So that’s kind of what I am looking at. So not to mention that 3 quarter of our agents aren’t…haven’t really done any production ever despite the efforts and time and what not I put to trying to help them succeed. So trying really hard to not to do the classic you know get bitter at the agents. Or, you know, not responding and not being as interested in their business succeeding as it seems like I am.
So I am just pivoting to…I am gonna make my business you know really successful and if the agents want to come along than that is great. So I think that will free me up to be able to not to worry about the money so I can be more selective about the agents I bring on. And then hopefully they’re next year and bring year hopefully we get some producing agents a little more bought into their business succeeding and what we’re trying to do. So…[Chris]: So where are your agents in this? Like what… [Christian]: I have no idea. They’re not here. [Chris]: They’re not here [laughter]. Oh man I wish I could say I didn’t know that feeling but… [Christian]: No I mean the ones that are producing are in the office everyday. I mean there are some that live further away and they work from home and stuff. But we have the space for them so I always encourage them to come in but you know most of them are part and I am…Initially I was like “I have a one part time agent when this is a full time job”. But when you start a business and you’re hurting for money get a lower, you know a little more idealistic maybe “Hey I am gonna give them the benefit of the doubt. I am sure they’ll get some business. I am sure they’ll try. They’ll do some stuff.”
But sure you know part of the pivot is changing our…our business model a little bit. And so you know, there is expenses associated with having agents and if they’re not producing than I am losing money. And so we shifted that to having a monthly agent service fee so that if they’re producing at least they’re not dead weight dragging me down. They’re just gonna maintain and we’re able to cover our cost associated with them. So…[Chris]: Seems like… [Christian]: I didn’t wanna do that. Yeah I didn’t wanna do that because I didn’t like all the fees and stuff but the…at least this way every month their costs are covered. I am not losing money if they’re not producing and than the commission split is strictly profit. So… [Chris]: Good deal. Yeah that…I have found that that…you’ve got like your lofty goals right. There’s… [Christian]: Right. Ideals right. [Chris]: Theoretical. These are my ideals of what I want them to be and when you start doing it you really come to grasp with what’s…OK that’s the ideal world but we’re dealing with people. How are we gonna manage these people to get them closer to that ideal…but also be in business? [Christian]: Right. [Chris]: Right? [Christian]: Yep. And I understand from both perspectives obviously being an agent years before opening my own brokerage you know. So I am always kind of trying to put myself back in that mindset. But also you know if I can’t keep the lights on than no one here has a job so to speak. [Chris]: Yeah we so we kind of have both. Right. So when I started I was the agent and the firm that my in-laws had created was really a flat fee firm. Right. It was you paid $225 per closing. If you were on 1 MLS you had no monthly fees because you paid a fee at closing. If you were on another MLS you just covered the MLS fees. We were in a basement. We had no overhead. No desk fees. No…no nothing. So it was just…That was it. Paid your MLS dues. And then you know a flat fee when you had a commission.
Fast forward to 148 agents and overhead and agent survey coming back saying “Hey we want this we want that”. Than like the idea…you gotta start thinking about quality. You gotta start thinking about production. You gotta start thinking about numbers and how to make a profit off of the agents. Because at that point we weren’t making a profit off of them.[Christian]: Sure. [Chris]: My in-laws had their own business. They had their book of business I was producing. And you know when my father in law had the health issues, he had a ruptured aorta so he has an aorta made out of Kevlar now but you know we looked at these things and we were like “OK but what do we want to do? We’ve got 148 agents out of the 148 agents I am sure there is some really untapped potential for talent there. But they’re not doing anything. We sold 100 and…Or we sold 67 million in total sales volume for the entire company with 148 agents. That is like what an average of 300.000 dollars per agent, per person productivity? It’s ridiculous”.
So we…A little bit over that. So we…we really had to analyze and pivot and we figured out what we were gonna do and it took time. Like I had to…It took me 3 years to move from a non…To become a non-producing broker. Even now I am not making what I was as an agent but you know it is still significant enough to live while we’re growing this and a lot of it you know we had to figure out what kind of value we were gonna provide. We had to go through a process of really re-discovering who we were gonna be as a company. What we wanted to offer. What our new ideal were.
Because at that time our ideals were very much “We’re gonna do our thing and any agent that produces you know that’s added bonus”. But then when we started getting overhead and software and technology and stopped doing our books in excel you know[laughter]. I mean that stuff took an outrageous amount of administrative time.[Christian]: sure. [Chris]: And now it is all automated and it is so easy and it allows us to work on the business not in it. But it took that whole process of really trial and error. Trust me I learned how to not change a commission plan for an agent. Because I said we’re a ground of people. [Christian]: Yeah. [Chris]: “This is your commission plan”. [laughter]. And they were like “No no it’s not”. I had no buy in. So first time we lost some people and then you know we learned and we got better. And now we have everything. We’ve got an E team working leads that provide. Which is a much stronger profit center for us. Because we have a different split for you know company provided leads. [Christian]: Sure. [Chris]: And then we have…we have our agents doing their own split and they go anywhere from a 70-30 for new agents all the way up to you know like a 95-5 which is very much like Remax is. So it’s kind of a hybrid. We’ve kind of picked and choosed what we thought are the best things. And… [Christian]: Sure. [Chris]: But oh God it has taken us so long. [Christian]: Sure you gotta figure it out you know. Could be painful you know. [Chris]: Yeah. [Christian]: And the thing I am wrestling with now because there is…I feel like from a…like whether or not your DB you mentioned broker is producing or in the tension there’s pros and cons right. There is the theoretical well you don’t have them competing with the other agents because they have got special privileges with the access and peak works and stuff. You know so you don’t want them producing. The other side of that is it means that the brokerage has to be significantly profitable so that they don’t have to be producing to take a salary. [Chris]: They gotta make an extra 6 figures is a way to live and where were you with the cost of living? [Christian]: Right, and it also means that the possibility of them getting out of touch with the market and reality like if…if my role is to you know advice and do paper work and keep up with trends and stuff but I haven’t done real estate in years because I am you know quote non-competing. Well you know you start getting out of touch. How am I supposed to advise people how to run their business and what is the best practice if I am not actually doing it myself you know. So there’s kind of that tension there you know. [Chris]: Yeah that’s one area that I don’t agree with you though. What I have found being a non-producing broker is that now you have to schedule your day for it but doing things like this podcast and interviewing people and figuring out you know the best practices that are happening in the industry.
I know now how to operate a sales business way beyond the what I knew when I was a practicing agent. I can go out now and just implement the things that I have learned over the last few years and if I wanted to I could have a significant sales business. Because…you know…I have one client right now. I have sold the least that I have ever sold in my career. This year. Which was like 900.000. Like I have sold 3 homes.[Christian]: Sure. Sure but you are still business. Like I mean I know there is a lot of business like if you are the managing broker you will not do sales. You know. [Chris]: Yeah. [Christian]: So it’s a little different you know. [Chris]: Yeah that’s kind of the thing of being independent right. [Christian]: Right. [Chris]: When we’re independent we can kind of control that. But even on the franchise side there is plenty of franchise brokers that are out there that they’re selling. But I think that being a non-producing broker it is significantly more valuable to my agents because I get to teach them the things that I was never taught. And then as I learn something new I am able to give them that information. And frankly because I have been with this company since day one and my in-laws were always producing I never got that until I went out and started learning this stuff on my own. [Christian]: Sure. [Chris]: But it’s a challenge. But you’re right there is pros and cons to both. And frankly I think that when you are running a business you just gotta do what you gotta do. If you want to watch your business your baby grow, sometimes you’re in the trenches. And you make that transition when the transition is right. [Christian]: Yeah yeah and I mean in a nutshell I am pivoting you know back into sales. Pretty heavily which I haven’t focused on. Grow that again. Give me some flexibility on the finances so that I can focus on getting the right agents and who we will get more buy in and stuff. Because with all the assistance and stuff it is relatively easy and not time consuming for me to have a lot of business and be able to manage it all.
You know, and then I get also you know a trial by fire the systems that I have in place to make sure that they actually work for the agents. So I got that. I would be interested to hear you know our listeners what their pivots are and then the personal business. Obviously we’re kind of geeking out at the broker level here. I assume most of our listeners are probably at agent level so it should hear what kind of pivots you know they’re having. Maybe leave comments below. You know even if people can’t see us I am still gonna point down to where the comments would be on Facebook.[Chris]: [laughter] Yeah definitely leave your comments. Let us know. If you haven’t go to our website rtrepodcast.com and sign up for the newsletter. You’ll be notified every time a new episode launches and drops and it will send it to you right to your inbox so you will never forget to listen to our lovely voices every week.
But no definitely let us know what your challenges are. Where was the pivot that you made in your business? So on making this pivot Christian, what are you doing in order to do it? What have you done to start ramping up sales again that you haven’t been doing while you have been running the office?[Christian]: Sure. Practically the thing I have been doing while getting in the office every morning is what…Ask myself the question “What activity am I gonna do today that is gonna generate sales? That is gonna generate you know client acquisition”. Because I mean that is what I was doing when I was focusing you know when I was an agent. But at a broker level I am more engrossed in the systems and processes and you know that’s the stuff I enjoy but it doesn’t directly lead to business. [laughter]
You know so that has been the big thing. Practically is you know OK making sure that you know the brand is consistent, the message is consistent. Wrapping up the pipeline. You know, what message am I gonna get via what platform. What am I gonna pay and what’s that landing page gonna be or what’s that called action gonna be. The stuff I haven’t done really much in the past year either for the brokerage or for myself.[Chris]: Well one of the things that I found is when I go away from something for a while I come back to it I kind of have a new perspective. Have you noticed that as you started focusing on this stuff? [Christian]: I have I mean I feel like there is more clarity. You know kind of having stepped away from you know sales marketing. On an individual level. So now having thought about it for a bigger brand perspective. You know I think it better able to kind of match those 2 worlds. [Chris]: So we should be looking for big things from Sea Town next year. I am excited for you. [Christian]: Yes accountability I have to get to Dan’s message accountability group. [Chris]: Yeah I think we all need to be posting there more often [laughter]. [Christian]: I think we have audacious goals for 2019. [Chris]: There you go. Alright. Well it sounds like you’ve got a lot going on. I am happy for you. You know we’re gonna…I think we’re just about wrapping up with this episode here today. So tuning next week Nate will be back and we’re wrapping out 2019…2018 starting 2019. I don’t even know what. I don’t pay attention to this stuff. [Christian]: The numbers are getting so big. [Chris]: My January first started like a month and a half ago. I am already in 2019 mode. I keep forgetting that we’re wrapping up 2018. Hey everybody thank you so much for tuning in. Please like, share, comment, tell your people about our episode. Give us a 5 start review on iTunes. We need all the help we can get. Trust me. Because Christian and Nate they have to listen to me all day sometimes and just give them a 5-star review for doing that alone. Anyway have a great day everybody. We will see you next week on re:Think Real Estate. Take care. [music] [Chris]: Thanks for tuning in this week’s episode of the re:Think Real Estate Podcast. We would love to hear your feedback so please leave us a review on iTunes. Our music is curtesy of Dan Koch K-O-C-H, whose music can be explored and licensed for use at dankoch.net. Thank you Dan. Please like, share and follow. You can find us on Facebook at Facebook.com/rethinkpodcast. Thank you so much for tuning in everyone and have a great week. [music]