Speaker 1 (00:00):
For insights into starting, growing and optimizing your real estate team. We're talking with Jim Remley.

Speaker 2 (00:06):
I was one of the first people in the country to start a team. Where do I see teams going is an interesting question. I think

Speaker 1 (00:12):
He started a real estate company with a friend who grew it to 17 offices across Oregon. He later took a 30 agent team and grew it to 250 agents.

Speaker 2 (00:21):
You as a team leader, your number one job is to be a rainmaker and whatever you're doing to generate leads and you master that, that's what's going to attract people to join you

Speaker 1 (00:29):
Today. He helps team leaders and brokerage owners with per agent productivity and profitable growth. Thanks so much for talking team os today. Jim.

Speaker 2 (00:37):
I'm excited to be here. It's quite a privilege. Thank you, Ethan.

Speaker 1 (00:40):
Yeah, I'm excited to do. I want to get into per agent productivity and profitable growth. There's a lot layered under each of those and I want to do it from two perspectives as well. Of course your own direct team building efforts and of course all of the work that you're doing across a variety of teams and brokerages now essentially in a consulting capacity, but where we're going to start, Jim is where we always do, which is a must have characteristic of a high performing team. When I offer that to you, what comes to mind?

Speaker 2 (01:11):
I think the must have characteristic of a high performing team for me would be the ability to have some empathy, and I know that sounds a little different, a little outside the box, but empathy for your team members, what they're going through, how you can help them grow and scale themselves because ultimately that's going to be how you're going to grow and scale the entire team and then empathy with your clients, where they're at in their lives, where they're at in their situation. What I find is that sometimes teams can get transactional and they can look at notches on a belt and say, we closed a hundred transactions, I want to close 150 or I want to close 120, and they lose touch with relationships, they lose touch with empathy and then their business kind goes sideways. Empathy is what's going to drive, should be driving most of your decision making.

Speaker 1 (01:53):
Interesting. So I mean you hear it, but not necessarily as this must have characteristic. Right, so I like raising this up. It's a reminder that this is a human to human business no matter how much kind of technology and all the different forms that takes. It really is a human to human piece. I guess go one layer deeper there. What is the human component of this? And feel free to even just share the obvious and walk into maybe something that's less obvious.

Speaker 2 (02:22):
Yeah. I'll give you an example. My wife and I buying, we're in contract to buy a second home in Las Vegas and so you forget the forest for the trees when you actually become a buyer again and you're actually in a market you've never been in. How foreign the whole situation is as a buyer. So for me, the empathy part of it is let's rewind the clock. Take yourself, put yourself in the buyer's position and then walk yourself through every single layer of your business from the first point of contact to using a website, to driving by properties, to seeing properties to the evaluation process, the offer writing process, the follow up process. Does it feel like world-class service, like the best of the best, the best, or you just kind of whole hum and it's just transactional and it's just like we're moving you through the process so we can get to a closing. I think having a reset around that's really important and then being self-critical, really having the ability to critique your business model is really, really important.

Speaker 1 (03:22):
So good. I'm going to go at this one more time. I love the way that you broke down all the stages of it. I think when I'm thinking about a highly productive solo agent who's thinking about starting a team or bringing some people around them perhaps with ambitions of making it a very, very large team, whether or not that's true doesn't matter. For what I'm going to set up and ask about, which is breaking down each of these steps, being honest, and I think that's the thing, documenting what's going on there and where I really want to go just dwelling in this human idea again is as we implement repeatable steps, whether that's automated, whether it's intelligent, whether it's just like we're going to use a human to make this easier for me so I can focus on, essentially what I think we're really trying to do is automate up to the point where I now have the time and the ability to take what I know and adapt it for this individual human being who's in front of me, automate all the things that are true of 95 to 99% of people and use the time savings to be empathetic truly in the moment to do it before the interaction, during the interaction and after the interaction.

Speaker 1 (04:34):
Does that sound about right to you?

Speaker 2 (04:35):
Yeah, I think everybody wants technology to make it a more seamless, frictionless process, so you're trying to remove friction out of the equation and I think there's a lot of opportunities for that to happen. Where you want to step back in is where you want to deliver the highest level of service and so these high service moments, these euphoric moments where you need to help buyers really understand the process, that's why we step back in and that's why we earn our money. If it's all automated, then you got to say, well, this is going to be commoditized to the point where do we need an agent and do we need an agent that's costing me 20, 30, $40,000? So now we got to step in and be the surgeon. So I'm the surgeon with the gloves on. I only come in to do the surgery. Everything else my nurses handle and everything else they're touching, but up until that point, when I want the surgeon, I want the surgeon.

Speaker 1 (05:25):
Yeah, really, really good analogy. I hosted over 270 episodes of a show called the Customer Experience Podcast and one of the theses I withdrew after reflecting on all of those conversations was essentially what you just described and it's a layer onto your initial response too, which is as you're reviewing these things and documenting what you need to document, someone else can step in and support it as you're maybe offloading some of the activities to automation or other tools or technologies. The language that I like here is moments that matter when you need to step in and create these particular moments where your expertise, your empathy, super matters, what I call moments that matter. Okay. I would love to hear your perspective before we get into your personal story, although some of your response here might be layered with some of your personal experience, personal story.

Speaker 1 (06:14):
Give us an overview of the team model. I mean, you've been in the industry for a couple few decades. You have a wide range of experiences yourself both directly and through serving other people and helping them with their businesses. Give me a quick rundown on past, present, future of the team model. When did this language emerge to you? What were some of the most interesting or challenging things about it? Where are we in the team movement? Is this something that's going to be dominant in your view, dominant for five to 10 years and we're kind of riding up into that kind of plateau and then something else is going to, where are we in the team model, past, present, future, high level?

Speaker 2 (06:57):
Well, I can tell you I was one of the first people in the country to start a team back in the late eighties, early nineties. Teams were just very, very beginning. The big thing, but it was back then was what hire an assistant and that was kind of the team was you and your assistant, right? So my buddy and I formed one of the first teams in Oregon and in our market nobody could understand it. What do you mean you guys are partners? They thought, are we romantically partners? We're like, no, we're not romantically partners. We're just a team. They just couldn't quite the wrap their minds around. Two guys partnering together to form this team. We then had an assistant. What's changed over time is I think you've seen over the last 10 or 20 years where the team has become essentially a mini brokerage within a brokerage, and so what's happened now?

Speaker 2 (07:48):
Now each of the team members has a very specific role and the most effective teams really have broken down those roles. It McDonaldized it if you want to take it there. You've got a tc, a transaction coordinators handling just transactions. You've got a listing coordinator, you've got buyer's agents, you've got admin people that are running the marketing. You might have a social media expert on staff, so everybody's got their little niche that they're specializing in and they're working in. I see the most successful teams are niched that way. I see some team leaders are like, all my people do everything. And I'm always like, well, then you're really just have a brokerage and they're, it's not really a team structure then and the reason why you want to get really niche with it is that those people become really, really good at their job and they get really to the place of being an expert in their little niche.

Speaker 2 (08:40):
They little Fido and that's where you want them to be. Where do I see teams going is an interesting question. I think teams are absolutely going to be the dominant players. I think right now I see teams growing to 60 to 70% of the overall GCI in the country. I think that's where we're headed could go to 80%. I see that it's going to be very difficult for individual solo agents to compete with them at scale. Not that you won't see people doing 20, 30 to 50 transactions very, very successfully, but people getting hired in that without a team will be very difficult. But where do I see teams going? I like this concept that I've kind of been working with some of my team leaders with is to do a virtual team and let me tell you the concept of a virtual team. The idea of a virtual team is over the last, let's say you go back five years or 10 years, there was a model and there's still a lot of agents that are hanging by a thread onto this model where they were going and buying Zillow leads or realtor.com leads.

Speaker 2 (09:37):
They were hiring buyer's agents then they were taking these leads that they're getting from Zillow, realtor.com handing to the buyer's agents and the agents there would grind through and they'd get to their two or 3% close rate and there was a spread there that could be made. They could make 20 or 30% and get an ROI on that money. Today that doesn't work. In fact, there's a negative 32% ROI on that investment. So you're actually losing money for every dollar you invest. So you can't have agents, buyer's agents sitting there with their handouts saying, give me another lead because that doesn't work anymore. So we have to do, we got to totally transition our thought process. My thought process is a virtual buyer's agent could be a virtual showing agent. This is where you look in your office and you say, that's a good agent.

Speaker 2 (10:20):
That's a good agent. I don't want them to have my desk every day looking for a handout, but I'm going to use as a virtual part of my team. So I go to the agent and I say, listen, I've got some overflow leads. I'm going to have a steady stream of, for my sphere influence on the marketing, I'm doing maybe five to 10 leads a month. I'd like to hand those over to you and when I do, you're going to represent yourself as being a part of my team transactionally within that transaction. And when you close that transaction, we're going to split it 50, 50, 60 40, whatever your number you pick. And during that, you're going to be reporting to me just as if you're a team member every week you're going to give me an update. You're going to be on our CRM system, I'm going to be watching everything you're doing. If you don't perform, I'm not going to use you anymore. But now it's virtual. They can still run their own business, they can be their own solo agent, but transactionally, they're with me on the team now. I don't have to settle for an agent that may be on the fence of being a solo agent versus on a team. So I see that being a new progression in the industry myself personally, I'm advocating for that.

Speaker 1 (11:17):
Really interesting. When you said virtual initially I thought highly distributed geographically and connecting as we're connecting now on a virtual meeting, virtual call, video call. But this reminds me of some of the origin stories that I've heard from some very large team leaders today, which is I was the first to really dominate my local market from an SEO perspective. I all of a sudden couldn't handle it anymore. Of course, I already had a couple assistants alongside me and I would do these deals with other agents in my, do you see this similar or do you see this different or do you just see this as this is what it's going to be? For me,

Speaker 2 (12:01):
I see it as a progression for a lot of team leaders because they're going to want to alleviate some costs out of the structure because if I have that buyer's agent, I'm probably paying for their realtor dues or MLS dues or EO dues. Maybe there's some split with the company, some desk fees. I'm going to eliminate all that cost and now it's just going to be profit for me when they close a transaction. So I'm looking at it again, getting back to this idea that I'm running a brokerage within a brokerage in essence, I'm a lead generator, I'm a rainmaker. I'm handing leads to these people, and this is where I think the mistake comes from. Some team leaders that say, I am going to recruit people and they're going to bring me business. If they're able to create their own business, they're not coming to work for a team. There's no reason for them. So you as a team leader, your number one job is to be a rainmaker, and if you can figure out your SEO, your online marketing, whatever you're doing to generate leads and you master that, that's what's going to attract people to join you virtually or not virtually. So that's where I'm from.

Speaker 1 (12:58):
Really good. So I hear from you a very strong leads based, this is what is attractive about this tool. A lot of folks, we just need to be efficient about it. The other arguments that I hear for a solo agent who should be joining a team, whether they're new or they're experienced, and we're going to get a little bit into some of that nuance too. I know the idea of recruiting more experienced agents more often is an unlock that you're helping people with. But another one I hear is lifestyle, and part of this goes into that specialization you were talking about before, I don't need to be good at all 37 pieces of an average transaction. I can focus on the six or eight that I really love and I have specialists to do it, and if heaven forbid I get sick or injured or something, I need to step out.

Speaker 1 (13:47):
There are these documented processes that my partner agent can step in and I know they're going to do the same thing in about the same way because still with the same culture supported by the same specialists, et cetera, there's kind of a lifestyle benefit to it too. Besides leads and besides the support and lifestyle dynamic, I guess layered in the lifestyle dynamic is this idea that I'm focusing more of my time and attention on things that I like and that I'm really good at. Therefore in theory, I should be more productive. I might even do more transactions for example. Are there any other benefits that folks might be overlooking about the team opportunity?

Speaker 2 (14:24):
Well, from a leadership perspective, if you're the team leader, one thing I do think that a lot of team leaders are not great at that they need help with is systemization of their entire business model. So they're great at sales, they're, they're alphas, but they're not great at detail. It's just by nature. That's just kind of a two separate kind of skill sets. So I think the best hire that a team leader can do is an admin that's going to work on systemization at a desk level. Let's work on the TC structure and how that's flowing. Let's work on the listing coordinator, let's look at how that's flowing. So they step in and like you're saying, document it. I call it having knowledge books for every position so that somebody could step in and do the same position with just looking at the knowledge book, whether that's Trello or whatever you're using.

Speaker 2 (15:13):
But yeah, walking and walking in that and stepping through the system. So I think having systemization I, the coaching and mentorship is a big part of why somebody's going to join a team as well because they're going to want to say, I want to be trained by this agent that's closed a thousand transactions. And that alone, for some people it could be worth a hundred thousand dollars, $200,000. Getting that hands-on training where I can go on a listing appointment and watch somebody that's done a thousand of these things just crush it or overcome some negotiation barrier, which I would've never overcome by myself, by myself as a solo agent, and they just seamlessly, effortlessly go through it. That level of coaching, even if you only do it for two or three years, you join a team just for that purpose. That is huge. So I think those are big things as well.

Speaker 1 (15:58):
What do you think about teams supporting teams within their structure? Where I was in my head was I was thinking about this person who is attracted to join this team because of the accomplishments of the team leader. I get to learn and grow alongside this person. I get to model some of their behavior. I get to inherit some of their systems and processes that they were smart enough to have turned into playbooks or knowledge books. Something else that I've heard is that the opportunity for me to grow my own team within this organization is also another lever for retention. Thoughts or observations on whether or not to support teams within your team? I mean obviously it's a layer of complication, but it's also potentially some upside for you and for retention. What have you observed around that?

Speaker 2 (16:48):
I would be careful of it. I've never seen it done successfully. I'm going to put it that way. If somebody's done it successfully, I'd love to see it. I haven't seen that done yet, but it doesn't mean it's not happening, but I haven't seen it done yet. I think if you were going to do that, I would probably reframe it as not a team but a group within the team. So that group could have a specialized group. That group could be, we're going to do waterfront properties within the team group and we're the waterfront group, we're the luxury group. We're the first time home buyer group. And having that specialized niche kind of bubble I think would be an effective kind of thought. Then you could brand it around that. I think you might get some brand confusion if you've got two teams that got different branding and it could get very confusing very fast. So I think the bubbles within the group, within the team, yes, but not teams versus teams in the same team. I don't see that happening myself.

Speaker 1 (17:41):
Very good. I would love to hear before we get into some very practical tips around per agent productivity, and I have some very specific questions for you about profitability. I would love for context for you to share at a high level your two main stories of growing from, Hey, let's partner up to, Hey, we have 17 offices across Oregon and we're kind of pioneering the team model decades ago as well as that growth story from 30 to 250 agents. Give us some high points on both of those kind of story arcs for context.

Speaker 2 (18:22):
So when I first started 23 years old and my buddy and I started in 19, but when we formed our first company at 23 and when I started, I thought I had this thought process that I can go out and hire people and have them do what I was doing. So I thought, I'm going to go out for new agents because I can coach them, I can train them, I can mold them, and they'll be just like me. I'll just have a bunch of little clones of me out there. And so I started doing a, at that time we did a room where we would fill a hotel room, conference room up. We would advertise the heck out of it every month we'd put 50 or 60 people in the room, I'd get up for an hour, my buddy and I'd get up for an hour, two hours and we'd rah rah everybody about getting their license.

Speaker 2 (18:59):
You get four or five people that would sign up for the real estate classes and maybe get one or two out of that group that would join the company and we were able to grow. But what I found after a few years of doing that was that there's an 87% attrition rate in the industry. No matter how good a trainer, no matter how good a coach, no matter how good your systems are, eight to nine out of 10 are still going to fail. So what I found was I needed to pivot my thoughts and my processes towards recruiting experienced agents, and this still applies today, whether you're a team leader or whether you are a brokerage donor, which I coach both. So I pivoted about five years in and I'm a slow learner. So five years in, I started to go after experienced agents and then our whole business has exploded from there, we started recruiting some of the best of the best in the industry and we grew from one office to 17 offices, and I got lucky and sold in oh six, got recruited to come down and do it again in southern Oregon.

Speaker 2 (19:50):
Took that company from 30 agents to two 50 agents. Again, focusing on recruiting experienced agents in terms of the attraction, which is recruiting is a whole topic we could spend hours on, but the agents are attracted to companies and teams that can help them with one thing and that's helping them sell more real estate. So there's a fallacy out there right now. It's especially prevalent and pervasive in the industry that it's all about commission splits and so you've got all these companies that are coming in with lower caps and lower caps and lower caps, and you've got one company at 16 that another company at 14 that another company at 12, and pretty soon were paying agents to work for us. That doesn't work, and that just completely collapses your profitability as a team leader and as a brokerage owner. And it's not about that because a hundred percent of nothing is nothing. What we got to focus on these agents on is we're going to take you from closing two transactions a year to closing 10, we're going to take you from closing 10, closing 20, and we're going to do that through systems and training and coaching and technology and overall profitability. And that's what you're selling is you're selling, I'm going to help you be more productive.

Speaker 1 (20:59):
How distributed were these geographically? Were you serving three markets with 17 offices or offices? Just kind of go one layer into there in terms of the expansion rate or what pieces were in place or how you're kind of doing some of that decision making. I think we can open two more offices here and there and here's why. Break that down a little bit more for someone who's thinking about, my impression is that you were dominating a couple of local markets with 17 offices, but I could be wrong about that. You're absolutely right. Give me a little bit more on that.

Speaker 2 (21:32):
So we went from zero to being a market dominant leader in our little hometown. So we were number one in market share in that town. We ended up with three offices in our hometown, so we had our mothership and then two other offices. And honestly we acquired one of them. One of 'em was a company that came and sold to us, a franchise that said, we want to join you. We bought them. And then another one we just opened at a second location and from there just kind of spidered out from there with ancillary markets. And we did get pretty spread out. I mean we got as far in our market, I'd say 120 miles in north and 120 miles south, and we kind of covered everywhere in between with 17 offices. So we ran it with a mothership kind of mentality where all the admins done through the mothership, all the accounting and the marketing and all the hard work's done through the mothership, and then all the offices might have one admin person in each of the offices. And then our office locations. Back then it was not a virtual environment, so we had physical locations in all 17 spots. We did end up actually licensing our branding and our technology and our training and our coaching to a couple, not a lot, two or three offices that paid us a transactional fee per transaction closed. So that was another part of our model, but that that's kind of the way it built out. And it took some time. It was not like it was overnight, but it took some time.

Speaker 1 (22:59):
I see this going one of two ways, although I'm sure there are many other versions that I'm sure that the truth is maybe not even anywhere near one of these two, but we think there's an opportunity in this geographic area. Let's go do some research and see if it works out. The other path, I think maybe even more likely is, oh, we know Jeff and Tina and they're amazing and they see things the way we do, and so let's partner up and open this office over in this market because they already have a good presence there. And this seems like a good partnership. For example, office 14 or 16 or 12, what were some of the precursors to saying, okay, this is our next thing?

Speaker 2 (23:40):
So we basically went into markets one of two ways. Either a, we acquired an office, so we bought an office where they came to us and said, we want to join in the Eugene market was a great example. We had a guy that wanted to sell, he had 40 or 50 agents at the time and we bought his company. And when I say bought his company, in a lot of cases, especially in today's market, I'd say 80 to 90% of the offices in the market are losing money. I mean, that's just a reality. So they may have a big operation and from the outside they may look super successful, but most of 'em are losing money. So there a lot of them would be glad to h the keys and say, please take over when you're taking over. You have to make sure you have economy scale and you can make it profitable.

Speaker 2 (24:22):
We knew what we were doing, so we were able to take that Eugene office and turn it into an office. That was very successful. My partner did that and ran that very well. And then there was other opportunities where we just, as you said, we knew an agent or a couple agents in that market that wanted to have a presence there. And we said, these are strong enough agents that if we put an office there, we know we'll attract more agents to join us. And that was basically the two paths. We never went into an area cold and said, we're just going to put a location here. We think we will pray to the gods and if we build it, they will come. We never did that.

Speaker 1 (24:55):
Yeah, good. And was the path from 30 to 250 agents similar? Was that acquisition or was that a recruiting effort?

Speaker 2 (25:07):
A little bit different. We ended up with three offices there. So we had a mothership, again, super successful, mothership number one in market share. Then we went to the next ancillary market and we did acquire an office, but we acquired a small office. And what we did there, which I think is something a lot of team leaders should do, brokerage owners is in the process of acquiring that office. I went and met with every top producer in the market. I had somebody that I worked with that got me an invitation or got me into those meetings and I said, listen, we're going to buy this office and we're going to build an office out. Here's my vision of it. Is this a place you would work for if you had the opportunity? And we did recruit, I would say five or six major players so that when we opened, we had a powerhouse right out of the gate. Yeah. And then the Eugene office, which was another office, was another acquisition. So mothership and two acquisitions.

Speaker 1 (26:03):
Very good. So I heard you say something that, and then you brought it to the present, which is something I've been hearing presently, which is it's actually a pretty good time if you're in the right financial position and you have your operations in order. It sounds like you guys did at that time in both of those stories that it's actually a really good time to do some acquisition because there are people at a certain point in their career that say, okay, I'm ready to be done with this. Either exhausted or it's not fun anymore, or I don't see a way out of this kind of financial trap that I'm in general, I mean obviously we can point to the dramatic slowdown in just transaction size period, but what are a couple other keys to running a business profitably in good times and bad, or at least running it well enough in good times that you can get through the bad for folks that look successful from the outside but are not running a profit? What are some of the common themes that you've observed?

Speaker 2 (27:04):
The biggest issue is going to be their per agent. Productivity is very low. So they're supporting a large body of agents, but most of them are not producing any sales. So we have to rethink our business model and say, if I'm going to run a company, I've got to have agents that are productive. So the first thing, everybody that I'm coaching, when I'm sitting with them for the first time, I'll say, what's your per agent productivity? And they'll say, I have no idea. I'll say, let's figure it out. So what you're going to do is you're going to run your MLS stats, you're going to figure out how many transactions on average agents are closing. And in most markets, it was just a new study done around this by the way, and they did a study of 2000 agents and five metro markets. Over 50% of that body was closing zero to one transaction a year, and then 70% were closing less than five transactions a year.

Speaker 2 (27:53):
So for most offices, we need to get that number to 7, 8, 9, 10 to be making profit. If our agent body, 70% of them is closing zero to five transactions, we're probably losing money. So we probably are not profitable. So when I'm looking for targets, I can go in and I can just look at agent productivity and say, this is an office that has 80% of their agents closing zero to five transactions. They're probably not profitable. It's pretty quickly, easily viewed right there. And there's probably a lot of reasons around that. It could be technology, it could be systems, could be coaching, could be mentorship where we could step in and say, we're going to help these agents get more productive really, really fast. And if you can step in to a meeting and say, guys, the office leaders decided to make a change, the ownership is going to change, but I want you to know something. The only reason we're making this change is to help you guys sell more real estate. I want to take you all from where you're at, which I know your numbers and I want to help you grow. And in our path, we're going to show you how to grow and you get people excited about that they will follow you and when you make it about them and not about you.

Speaker 1 (28:52):
Yeah, really good. And that was of course the recruiting message as well. They want one thing and there are lots of ways to talk about it. I appreciate, by the way, you already answered one of my assumptions, which was that, or which was I was going to phrase as a question, which is that per agent productivity and profitability are two sides of the same coin. Is it as simple as are these the three main levers, leads and lead flow, agent count and staff support? And you need to keep all of these kind of imbalance and when they're in balance, you can find a profitable balance in there, assuming that there is some costs, whether you're buying them through a direct partnership or whether you're just buying them outright or whether you're investing in such a way to generate them. Let's just call all of that cost per lead. At a certain point, we have more leads than our agents can responsibly handle, let's say. So we need more agents and of course we have more agents, more transactions, we need some more support staff, but those things are never perfectly in balance. But are those about the three levers to focus on in terms of profitability or is there a big missing fourth piece or is one of those doesn't belong?

Speaker 2 (30:04):
For me, it's training technology, which technology is going to be lead flow training is going to also be lead flow, helping agents create their own leads, right? But I'll tell you there is a missing component there, and you can really identify weak companies really quickly. This way is overall listing count at the company. So listings drive sales. So listings, it's like a grocery store. If you've got inventory on the shelves that buyers are going to come in, the inventory is empty, no buyers are going to come in. So when I'm looking at a possible acquisition target, let's look at their listing count. If they have a very low listing count, basically they're out of business, we have a strong listing count now we've got a robust company. So everything that we do as a company, every single thing we're driving towards higher listing counts because the listing leaders dominate the market, whether it's agents or companies.

Speaker 2 (30:51):
So if you can get your agents to get out there and take listings and dominate the listing field, now you're going to dominate the market really quickly and you're going to dominate the lead gen because leads flow from listings in general. So the more listings you have, the more lead flow you have. So I think that's maybe a fourth leg to this as well. Staff is important as well, although I will say that because of technology, A quick story on this. When we started this company, when I took over, we had 30 agents and about 10 staff people. It was kind of crazy. They had lost aton of agents that had gone from 50 or 60 and got down to 30. So we've taken that same number of staff. We went from a hundred million dollars in production and now doing 1.4 billion in production. We have about 16 staff members today, but we've 10 xd our volume with not 10 xing the number of staff, we don't have a hundred staff members. So the reason for that is technology. Technology has enabled us to be much, much more efficient with a lower staff count versus the work output. So we can actually have much, much more economy of scale today than we've ever had.

Speaker 1 (32:02):
Yeah, I've heard that story on this show before too, and it was framed in, we needed a lot of those people at the time. We needed to build the systems, we needed to build the processes, we need to integrate these things together. And a certain point it was really hard to do, but I had to let X percent of them go because we frankly didn't need them anymore. We just needed them to set up and build. And then once we're running, the technology itself is so scaled that, and frankly that's what you need.

Speaker 2 (32:32):
Yeah, exactly. A hundred percent key to

Speaker 1 (32:34):
Profitability listings. I'm going to spend a minute there as we record this in Q1, 2024 for folks watching or listening because people will do it at different times. Some people the minute it releases and some people a year later or more, obviously listings are the key to this market because inventory is so challenged, but listings are always to your points that you've already made always a really important part of a successful business. What are you seeing or hearing folks doing right now to really emphasize within their organizations to success generating more listings?

Speaker 2 (33:18):
Well, a couple things. One is understanding where the listing is going to come from. So the number one place where listings will come from in 2024 without question is the silver tsunami. So the silver tsunami is people that are 45 to 55 years old. Exactly my demographic that are and yours as well because empty nester, right? So you're an empty nester. I'm an empty nester. I have four kids, they're all gone. So we're in a place, we just had this happen where we had a 4,000 square foot house, a pool that we never used and two levels and all these bedrooms, and we just never used the space. So we sold it and now we have two houses, one here, and we're buying one in Vegas. So that's a classic example of who's going to drive the market in 2024 is the silver tsunami. People that are not interest rate sensitive because they probably paid off their loans or have very low loan on their property.

Speaker 2 (34:05):
So it's not as a big a deal, and they've got some equity they can play with. So what I'm targeting this as an office or as a team leader, I got to say, okay, now I'm going to go after this group. How do I go after 'em? I'm targeting people that have owned a house over 15 years that are in this age demographic. I'm going to do that virtually and through physical mailings. So I'm going to have a layered approach with Facebook ads and Instagram ads and TikTok ads and YouTube ads, and I'm also going to have, for me at least, I'm going to do a massive amount of mailings in these neighborhoods. They're much more susceptible to mailings and they're much more likely to respond. So that would be one approach for me is understanding the target audience you're going after. That's the number one target audience for 2024.

Speaker 1 (34:45):
Yeah, really good. And there's a ton of education that can be done. You mentioned a few of the channels you can distribute through, but I think of it as like an educational effort. There may be people who, and add to this, as soon as I stop, which will be just a second, there are probably people that this is a ripe opportunity for, but they've never put the pieces together to say, oh, this is an option for me. I mean, it is one thing to say, let's be present with messages like these so that when someone thinks about downsizing, they maybe think of us and reach out to us. It's another thing to say, Hey, is this true? Is this true? And is this false? Well, you might not have considered blah, blah, blah, blah, blah. I think there are probably in this tsunami people that don't even know that they're part of this potential tsunami.

Speaker 2 (35:30):
100%. And Yahoo did a finance did a whole study on this, and they believe over the next 10 years there's 30 million people in this category of people that may be selling their houses. What we did kind of to your point is we created in our coaching group a series of, we call it the five whys. What are the five reasons why somebody might consider moving that are in this demographic? Because the worst thing that we see happening with agents is that their marketing is basically this, call me if you want to list your house. That's their marketing. The second marketing is call me to find out what your house is worth, sleep or boring. We've all gotten that marketing message a million times. That's not talking to the five reasons why somebody may want to come to market. For instance, we will talk about downsizing.

Speaker 2 (36:17):
We'll talk about just exactly what I did, downsizing, but also maintenance, the cost of maintaining the house. We'll talk about capturing your equity that's sitting in your house that's kind of lost money that you're not using fully. We'll talk about the idea of being, the number one reason why people will move is being closer to family and friends, especially retiring people. So we'll hit all those categories, but we'll do it over time. So we'll have Facebook ads, Instagram ads, TikTok ads, all hitting that same comment, but then another layer is they'll get the mailings as well. That's hitting the same thing. Well, people will be like, you know what? I do want to be closer to my grandkids. That's the number one reason they're going to move. So maybe we should talk to Jim now. And so we just go through an educational process.

Speaker 1 (36:57):
Love it. We've been talking a condo lifestyle at my house, just so that if you're not there for some period of time visiting family or friends or doing other things, no big deal.

Speaker 2 (37:09):
Who cares?

Speaker 1 (37:09):
Set up that nest thermostat and adjust as necessary. Right. Yeah, really good. Appreciate that so much. Let's double back into per agent productivity. It's part of the recruiting conversation. It's part of the training conversation. It's probably the single most important factor in profitability it sounds like. I don't want to isolate one thing, and I know it's a big category, so I felt pretty safe in saying that. But from this recruiting perspective are, I mean obviously if you're at X, we're going to get you to four x and we're going to do it over a period of time through these milestones or through these gates. What are some of the keys to just getting into that conversation? I mean the same way you broke down the silver tsunami, what I'm imagining here is a team leader who is in a very small operation, they have ambitions to maybe double it in size of the next X number of months, whether that's 12 or 36, doesn't matter, and this is going to be a good opportunity for them. What are some of the messages or what are some of the sparks to leave and initiate this to say, I have something that can help you?

Speaker 2 (38:21):
Well, first there's something called the Hawthorne Effect, which is a really interesting psychological effect. And the Hawthorne effect just states that as human beings, we all perform at a higher level. When we're being watched, when we're not being watched, we'll sink to the level of mediocrity that surrounds us. So when you have a brokerage leader or a team leader, it's very easy to get caught up in your own stuff, like your own listings, your own sales, your own transactional problems, and you stop watching the people that are around you. And when you stop watching, they sink to the level of mediocrity that they think you can get away with. They'll do just enough to not get fired basically, and some will do less. So what we have to do is to say, number one, we're watching and here's how we're watching. And when we are having a conversation with somebody that's joining the team, it starts at that initial conversation.

Speaker 2 (39:07):
We say, listen, our goal is to help you go from where you are to where you want to go and you're going to set the goal is not me. So what would you like to do? And they'll say, A number one, close, 10 million, 20 million, whatever. I'll say. Now here's how we can help you get there, but you have to be a part of this. I measure you by two things to remain on this team, and I think it's a privilege and an honor to be on this team. I measure you with two things. It's either participation or performance. So performance means you're out there taking listings, making sales, doing everything we're asking you to do. If you miss one of our office meetings or a training session, I'm going to get it because you're out there crushing it. I want you to all of 'em.

Speaker 2 (39:43):
But I'm going to understand, okay, on the flip side, if you are not out there producing, you're not making sales or taking listings or doing things, I'm asking, I'm going to expect that you are participating in every single thing we're doing, every training event, every coaching session, every mentorship thing, everything we're doing, I want to see you there. So it's either participation or production. I want to see both, but if I see neither, you're not producing and you're not participating, there's not going to be room for you at this team. So here's what we're going to do. We're going to do a weekly. If you're a team leader, you can get away with this. At a brokerage level, it's a little bit different, but with team level, we're going to do a weekly huddle, and the weekly huddle is a standup. 10 minutes. We're all going to go around the room.

Speaker 2 (40:22):
We're going to talk about what we're done and what we're doing, what's in our pipeline. So that's going to be my process of watching them. If I get to a point where I have somebody that's not performing on a regular basis, I'm going to give them a sheet which I call my daily dashboard. And my daily dashboard is going to measure all activities for the week, and they're going to turn it in every Friday, I'm going to say, I have to have you do this. So we get you back on track. If you don't do this, I'm not going to have room for you here. And then if they don't do it for three or four weeks, I cut 'em, right? It boils down to agent productivity. At a brokerage owner level, it's a little bit more of a delicate dance because they're independent contractors, but you still need to have the dance and you need to talk to 'em.

Speaker 2 (40:59):
The magic words, whether you're a team leader or brokerage owner that you should be using with everybody that you're managing all the time is when I'm meeting, if you're one of my agencies, I'm just going to have a conversation with you in the hall and say, Ethan, how's your pipeline, man? How's it going? I want you to know that I care, but also that I'm watching and it's not going to be about How's your day? How's this, how's that? I'll get to that. How's your pipeline? And you're going to say, oh, it's not good. Let's talk about it. What can we do to fix it? Let's get on the same page. Let's do a coaching session. So they know that every time I'm going to be talking to 'em, it's going to be about pipeline and we want to get you to a winning position. So that's kind of the way I approach it.

Speaker 1 (41:34):
Love it. And I love the way that you broke it down into something very, very practical. I've always enjoyed back when I was doing a lot more work in office, I always enjoyed this process of leading and managing by walking around and sparking some of these conversations just to get one level. For me, it was like a pulse. What's the tone? How are people responding? And of course, every single one of those then has the potential to become a coachable moment. Really appreciate that. A really difficult aspect of team leadership that I have observed is those folks that are caught in between. I'm not sure if I want to leave production or not. I'm not sure if I'm ready for full-time leadership because it's completely different than me being an amazing agent who just absolutely dominated this market for five years, generated all this business, and now I need to start building around me to support all the opportunities that I've created. How are you advising people or kind of look, what's your line of inquiry for folks who are trying to decide? And I'll give you a very specific example and maybe you can coach to this. It's me, a part-time assistant, a full-time assistant, a buyer's agent alongside me. We're doing really well. It's profitable. And I've got a couple other agents that want to join us. I'm just not sure if we're ready yet.

Speaker 1 (42:55):
And I'm on this path. When should that person start to be considering whether or not this is right for them? And if so, what is the right time to step out of sales? Because de tension is really difficult for people to manage. I'm responsible for all my agents to have these conversations like the one you just talked about, how's your pipeline? Let's talk about it. But I also need to be accountable to all of my clients as well. And this just becomes this really difficult, if you thought it was hard selling a hundred houses on your own with a part-time assistant, this is a different version of the same challenge. So in light of what I just shared there, what's your line of inquiry or what's your line of recommendation for someone somewhere on that path?

Speaker 2 (43:40):
So if your goal is to exit production, which I think most team leaders a little bit in the mix, they all kind of want to do that at some point. You first have to establish what's the number that I would have to be closing? What would my team have to be doing in order to hit that exit strategy? And I get this with brokerage owners that are also competing. So this is a very similar for a brokerage owner that's also still selling. They'll say, Jim, I want to exit selling. My first question is, what's that number going to have to be then? How many transactions is your office or your team going to have to do to support that? So you got to start to work towards that number, and you got to get that number out there. Is it 50 transactions a year? Is it a hundred transactions a year?

Speaker 2 (44:18):
Until you cross that threshold, you probably can't do it. I would say as well, that here's the number one mistake though that team leaders make that are trying to exit, is that they are way too cheap. And I'm going to be honest, right? This is just the reality and they're too cheap in the sense that they think that they're going to have these people that are buyer's agents or listing coordinators that are just going to run the show without a leader leading them or having a very high level like them agent in the hot seat. He or she is going to have to put a good, I mean, really good solid agent into the chair that they were sitting in. So they're going to have to be a strong listing agent, strong buyer's agent, strong negotiator. That's going to cost 'em quite a bit of money.

Speaker 2 (45:04):
It's going to cost 'em maybe $200,000 a year minimum could be $300,000 a year. It ain't going to be $50,000 a year. It's not going to be $60,000 a year because these agents will go sell on their own. But if you pay somebody a solid, really, really good amount of money, now it allows me to exit and really do some of the fun stuff or do the things I want to do, and I'm still making five or six or seven, 800,000 a year. That's okay. You're going to have to give up to two or 300,000. That's the inflection point. That's the challenge point. And that's a place where a lot of team leaders just can't get to, but they have to if they really want to exit

Speaker 1 (45:38):
Really good. This idea of a starting to think about who would be a good candidate to take that chair over and just the idea that the chair exists. It needs to be occupied and all. To me, it comes down to a lot of self-reflection, a lot of goal setting for yourself. And then again, this kind of clarity on the financials of it, can the organization sustain? Something else that I hear a lot is that when I stepped out, I had the assurances that all these people were going to step up. I handed over my processes. I had some staff in support of them, but they just didn't do it as fast or as well or as dutifully as I did. And so there's this kind of surprise and disappointment. I think this idea of creating the role as well as this kind of alignment or this vision with this person in advance of the move actually happening with some shared targets reduces the likelihood of it going kind of sideways. Anything else? When you think about the brokerage owners and the team leaders that you're coaching right now, I mean obviously again, beginning of the year 2024, what are some of the themes like coming out of Q4 and coming into the new calendar year? What's really top of mind for a lot of folks right now?

Speaker 2 (46:56):
Well, I mean there's a lot of good news coming into the market in this year. I was just in a coaching session this morning. We were talking about consumer sentiment is up 29% over the last two months. I know we don't know when people are going to listen to this, but it is a good sign that coming into the first quarter, 2024, there's definitely some strength. One of the biggest, most interesting things I found was there's a new study out from Zillow that shows that we had what's called rate lock hesitation for sellers that have a super low rate of putting their house on the market, giving up that rate, that rate lock hesitation is starting to dissipate, and that more and more sellers are willing to come to market even though they've got a low rate. And that's been a real holdup in the marketplace.

Speaker 2 (47:35):
We're starting to see that dissipate. So I think there's some good news on both sides of those fences, buyers coming back to market. The fed's going to starting to say that they may reduce rates three times in 2024. So I think there's some good things happening. Here's the biggest challenge though, for agents, and the biggest challenge is as we see the market improve, and it will improve, in my opinion, dramatically this year, and I was just looking at the pending sales this morning. They're at 4% just this month. My question to my coaching students, is your business up 4% so far this month? And if it's not, then you got to stop blaming the market. It's not the interest rates, it's not the weather outside, it's not the time of year. It's your strategy. So if you are not in tandem rising, and as a team leader and as a brokerage owner watching and rising with the market, then that's a signal that your strategy is flawed and you got to fix your strategy.

Speaker 2 (48:24):
So this is where I think that team leaders and brokerage owners need to really be self-critical, and every quarter do kind of a reevaluation of their strategy. Am I keeping up or surpassing the market or am I falling behind? And a good way to look at it, and a easy way to look at it is your overall market share So all of this have a market share. Your team has a market share in the market. Maybe you're 1% of the market, maybe you're 2%, whatever your number is, but your office has a market share. What's that number? Are you gaining market share or losing market share? That's going to be the ultimate litmus test of whether your strategy is working or not. So those are things I'd be looking at.

Speaker 1 (49:00):
Great. You've mentioned, I've got a few standard closers and I'm really looking forward to asking this. I got one more quick one, just because you've mentioned three or four specific studies, and by the way, for folks watching or listening, I'm going to do my best to go round those up and drop some of those links down below. If you're watching in YouTube, it's down below in the description. If you're listening to podcast apps down below in the description, if you're at realestate team os.com, it's obviously right there as well. High level, are you subscribed to a bunch of, how do you stay in touch with industry news yourself?

Speaker 2 (49:33):
Be my four or five top sources. Okay. So I'm using Zillow research, and if you just type in Zillow research, you'll get it. That last study I was talking about, rate resistance is Zillow research. Another one I'm looking at quite a bit. I look at Inman, but not as much as you might think. I do look at the NAR economist blog, which is a really good source of data. I'm also looking at Redfin, which has good solid data there. Those are my top three or four that I'm pulling data from as well. I also use KCM blog because they're pulling from a lot of places as

Speaker 1 (50:04):
Well. Yeah, I have a lot of respect for KCM and what they're doing. Okay. Revised. I'm going to link those up down below so you could go read and look at whatever you want. Thanks so much for sharing those. Jim, before I let you go, three pairs of questions and you can answer one or the other on each one. What is your very favorite team to root for, or what is the best team you've ever been a part of besides the real estate teams you've been on?

Speaker 2 (50:29):
Best team I've ever been a part of would be part A team that we did. It was in my newspaper route, so we had a team newspaper route where we all kind of took turns doing the route together, and it was a good tight little team. We had a great time. I was 12 years old. We made a bunch of money and it was my first entrepreneurial experience, so that was my first one.

Speaker 1 (50:50):
Love it.

Speaker 2 (50:51):
Sunday mornings at 4:00 AM

Speaker 1 (50:54):
So much good stuff there. I mean, my crack of dawn or pre dawn stuff was swim team, but I wish more people had the opportunity to take paper routes these days. It's just not as big a thing. What is one of your most frivolous purchases, or what's a cheapskate habit that you hold onto even though you probably don't need to?

Speaker 2 (51:14):
Cheapskate habit would be, I'm definitely a fan of used bookstores, so I could spend 10 hours in the use bookstore, love to find old self-help books and pull great ideas out of there. That's my cheap cheapskate thing.

Speaker 1 (51:27):
Love it. A friend of mine, he refers to himself as the sales historian. He's been finding and reading hard cover copies of 70, 80, 90, a hundred year old like business books, and it's amazing how much is true today from things published 80, 90 years ago. Very interesting, isn't it in psychology? Yeah. Okay. What does it look like for you to invest your time and attention into continuing to learn, grow, and develop, or what does it look like for you to invest your time in resting, relaxing and recharging?

Speaker 2 (51:57):
Definitely a big believer in resting and relaxing. My wife and I play hard and we work hard, so I'm probably take more vacations than most people work on seven, eight weeks out of the year at minimum, so we like to travel, so that's what we do to recharge and reset.

Speaker 1 (52:11):
Awesome. Any favorite spots on the globe?

Speaker 2 (52:13):
We just, for the first time, went to The Bahamas, which is amazing. I've been to Australia, which is also amazing. I want to take my wife there. We haven't been to Europe yet, so that's another big bucket list we're working on. We actually have a map above our desk that has all 50 states. We got married six years ago, so we're trying to hit all 50 states together. We've gotten through about, I think we're about 20 in now, so we've got about 20 left, so we're trying to hit 'em all.

Speaker 1 (52:36):
Awesome. Some of them were brought to more often than others, certainly doing industry related stuff, and some of them in general are more desirable than others, depending on your preference. I appreciate the dedication to hit all 50. Jim, this has been absolute pleasure. I wish you continued success in the year ahead, both in checking off states as well as checking off spots like Europe as well as in your own business. If someone wants to learn more about the kind of coaching and consulting that you're doing or they just want to connect with you in general, where are some places you'd send people?

Speaker 2 (53:11):
So I'm all over the social media world as e real estate coach, E like Elephant, e real estate coach, so you can find me on TikTok and Instagram, Facebook, everywhere. We also have a website called e realestate coach.com where people can go and jump in. We've got a great webinar on there Right now. It's two hours of recruiting and retention ideas that people can get a lot out of. It's free and they can jump in there and check that out, but if anybody wants to reach out to me, they can also go to the website.

Speaker 1 (53:35):
Awesome. Sounds really good. Again, I will link that stuff up right down below, wherever you're watching or listening. Jim, I appreciate you so much and I hope you have a great rest of your afternoon.

Speaker 2 (53:42):
My pleasure being here.

Speaker 3 (53:44):
Thanks for checking out this episode of Team Os. For email exclusive insights every week, sign up@realestateteamos.com.