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REAL Trending Special Edition: Leading Through a Challenging Market

Sep 25, 2020 7:40:00 AM

Joe Rand, Chief Creative Officer for Better Homes and Gardens Rand Realty, Hudson Valley

Executive Director, Broker Public Portal

After taking a hard look at brokerage finances when the pandemic hit, Joe and the leadership team found ways to cut without sacrificing agent or consumer services. Find out some of the permanent changes they made. Bonus: Joe talks to us about some goals of the Broker Public Portal.

 

Want to learn from the brightest minds in real estate? Then you'll love our REAL Trending special edition podcast. Editor and Chief of Content, Tracey Velt interview brokerage leaders, top agents and teams and industry experts on leadership, recruiting, marketing, and more. Subscribe today on realtrendsinc.podbean.com.

Tracey Velt:

This is your host Tracey Velt, Editor and Chief of Content for REAL Trends. Today, we're speaking with Joe Rand, Chief Creative Officer for Better Homes and Gardens Rand Realty. The family owned brokerage operates in the Hudson Valley and has more than 1,000 agents. Joe was also recently named the Executive Director of the Broker Public Portal. Welcome Joe.

Joe Rand:

Thank you for having me, Tracey. I appreciate that and I look forward to talking to you.

Tracey Velt:

Yeah. So congratulations on being named the executive director. So I'd love to know a little bit more about that and some of your goals pertaining to the growth of the Broker Public Portal.

Joe Rand:

Well, yeah, I'm really excited about it. It's a really good opportunity for me to work with some really smart people. And I think there's a real opportunity here because what BPP has done in the last four or five years has been really remarkable.

They started with the goal of building or creating, or somehow providing a broker agent and consumer friendly portal for real estate search that would not be based on advertising, kind of a counterweight to the dominant portals, which are all advertising based.

Joe Rand:

And then their second goal, which was to help foster a better consumer experience through agent/client collaboration was realized as Homesnap built, what they call Homesnap Pro, which is their agent version of the app that allows for agents and buyers to work together and share information, lots of other tools for agents in there.

And then finally, the last part of the goal is the one that they brought me in for, which is that they have a great consumer app. They have a great agent/client, consumer product in Homesnap pro, and now we just have to get it in everybody's hands.

Tracey Velt:

Yeah, that's great. So we're going to switch gears a little bit. I want to talk a little bit about Better Homes and Gardens Rand Realty and find out how your business was impacted with COVID and how you're doing today.

So tell me a little bit about just how you were impacted and obviously business seems to be doing well around the country. So tell me a little bit about your business today.

Joe Rand:

Well, we were right at ground zero. My company is in New York City's Northern and Western suburbs. So we cover a big territory, all the suburbs of Westchester, the Hudson Valley, Northern New Jersey.

Other than New York city itself, those were the territory in the country back in March, April, May, that were the hardest hit. And we were on top of the public health implications of the pandemic. We were also under what were understandable restrictions on our ability to do our work.

We were not considered essential. So real estate agents could not show properties. So we went through April and May really thinking, as I went into the end of March and we were making our plans, I really thought the market was going to grind to a halt. I just did not see how we would be able to sell any properties without being able to show them.

Joe Rand:

But I will say it has been a remarkable thing. The real estate agents really stepped up. The managers stepped up. Everybody, I think did remarkable, amazing work in April and May. We were down in terms of open business, new sales in April, May, by about 40% compared to last year.

But I think of it as only 40% down. I mean, being only 40% down from 2019 in a market where you can't even show your properties to buyers is to me an achievement. And listings were down 70%. But that made sense because people, they were all living in their house, 24 hours a day. Their living rooms were now Zoom studios. They couldn't exactly put them on the market.

Wasn't that easy. So we got through it. And then in June, when the pandemic eased and all the things that we had done in the Northeast to push down the pandemic really started to pay off, and then the essential services order lifted and we realized to show properties, all that pent up demand from April and May just flooded into the market.

Joe Rand:

And on top of that, we started to get a new strain of demand that came out of Manhattan, of people that, pandemic related, were now maybe they were on the fence about moving before that and this was the thing that pushed them over the fence.

So we had a big flood of buyers that came out of Manhattan and other parts of New York City to come to the suburbs. So between the pent up demand from the spring, and now the new demand from the city, we had a real spike in activity in the summer, which really helped us. And as of right now, we're ahead of last year, even with what happened.

Even with everything that's going on, our sales opens and are closed, are now above last year. We're still behind on listings, which is something we're really working on, but the low inventory is driving price appreciation, which was double digits for, I think it's going to end up being a double digit price increase in most of our markets for the third quarter. It was hard. It was a difficult market to push through, but we pushed through it.

Tracey Velt:

Yeah. Yeah. I'm in Florida, so we're seeing a lot of people relocating here as well. So I was going to ask you whether you saw quite a few Manhattanites moving out into your area. So yeah, that's interesting.

So obviously you made some changes with everything going on with the pandemic. Have you found that you made any permanent changes due to the pandemic, to your processes, your systems implementing anything new, maybe closing offices?

Joe Rand:

Yeah. That's a great question. There's a really good opportunity right now to look at everything that we do and examine its value to the agent and the consumer, that we were forced to really take a hard look at every one of our expenses in March and April, because we really didn't know how much money was going to come in for the next few months.

And so we took opportunities to say, "Alright, what can we cut back on?" And we cut a lot of things that may have felt important, but , when we cut them, nobody blinked. Certain weekend coverage, which used to be a coverage in every office. There was one person and we put, instead of having somebody in 10 different offices, we put one person in one office and then that person covers all the incoming calls for 10 offices.

Joe Rand:

We didn't need someone sitting behind the desk because nobody was coming into the offices themselves. And so now I don't know if we'll have weekend coverage where we have somebody sitting in an office on a Saturday and Sunday for 10 hours, just for the occasional walk-in when what we can have is a coordinator managing it from a central location.

That saves us a lot of expenses. I think we also, yeah, I think everybody is going to take a hard look at facilities with the increased ability to work from home, people's facility working from home, everybody's much more comfortable with video conferencing technology and they used to be. That's going to be a big deal. The fact is that from in just the month of April, I would say that we advanced the average agent's facility and ability to do video conferencing.

Joe Rand:

It was about three years of a learning curve that compressed into one month, that if without the pandemic, we would have been going into 2023 or 2024 with the same level of adoption of video conferencing that we have right now. Video conferencing is a big change. That's a big deal. That means that maybe you don't need a manager in every office. You need a manager in one out of every three offices.

And since most of their interaction with their agents is going to be through some sort of video conferencing technology, you can do that. They don't see them in person that much anyway. And they're certainly not seeing them in person now. But everybody's getting used to that kind of engagement. That's going to be, I think, a big difference. I think you'll be able to cut some bricks and mortar, maybe not closing the offices, but maybe shrinking them to account for the fewer people that are coming in every day.

Joe Rand:

Maybe having managers cover multiple offices rather than every manager has an office, every manager has an admin. Those are things that we can save on. And I think the other big savings that, from a cost control perspective, is a lot of our training, which was done live, everyone now is so much more comfortable with video training, whether it's Zoom or webinar based or whatever that I can't ever see us going back to our full intro to foundations program that we do, the foundations program for our agents, for new agents that come in.

I can't ever see that going back to being a live instructional. I can see that being 90% virtual with a once a week or once a month get together to have everybody be able to share experiences and do stuff that you can only really do live.

Joe Rand:

And that's a big savings, particularly in a company like ours, that our training office, our headquarters is a good 45 minutes to an hour drive from some of our areas that we cover. So agents were coming into training, traveling a long way.

And now they don't have to do that. That's much more efficient for them and much more efficient for us that we can do the training for multiple people much more often than we used to, particularly if some of it's done on tape.

Tracey Velt:

Yeah, definitely. It just seems like this as much as it's been a horrible experience to go through, it's really opened up new opportunities and it's also really forced a lot of agents to get more tech savvy and maybe even take advantage of what the brokerage has to offer from a tech perspective. So that's a welcomed advantage of this, if you want to say there's opportunities. So yeah, definitely.

Joe Rand:

Yeah. I always shy away from when people say, "Oh, there's a bright light," or "A silver lining in the cloud," just because this has been such a horrific situation. It continues to be a horrific situation and you don't ever want to minimize it or say, "Oh look, but on the other hand, I did some more real estate sales." That's just not a way of balancing out the equities there.

Tracey Velt:

No.

Joe Rand:

But I think that every challenge, and I'm not saying that's what you were indicating, but I've heard people say that. But I do agree with you that every challenge brings with it certain opportunities. Every challenge has within it, things that you make the most out of the hand that you're dealt.

And I think that in large part, I think this industry has really shown in the last six months. I really do. I'm very proud of the work that we've done all in that we did during the height of the pandemic in terms of keeping the market going, that we're doing now, that people are adapting.

Joe Rand:

Agents that never would have dreamed of doing video tours and doing video showings of homes, they're getting phones out and they're learning how to. But the technology can be intimidating and technology can be hard and people are adapting.

And I think the other part of it is that, yeah, well, we referenced before about the fact that everybody's getting used to using less space in the office, which is good for everybody, because what it means is that if I can cut a little bit of space, a little bit of facilities and it doesn't make a difference to the consumer, it doesn't make a difference to the agent, well, then that means that their savings that can go into either more services to the agents or maybe a higher compensation package.

Tracey Velt:

Yeah. Yeah. I think everyone would prefer that this never happened for sure. We definitely don't want to minimize it. Now let's take a quick break to hear some exciting news from REAL Trends and our sponsors. When we get back, I'll talk to Joe about how their firm is handling growth and COVID-19, and where he sees brokerage opportunity in the next six months.

Tracey Velt:

Let's talk a little bit about the growth of your brokerage. So tell me how your growth strategy has evolved through the years and has it been impacted by COVID-19?

Joe Rand:

We've always grown multiple ways. I think that primarily brokers grow in you think of it in three ways. One, you organically grow the careers of the agents that work with you. So an agent that does 10 deals one year, you help them through systems training, coaching, whatever management, you get them to 12.

Well, that's a nice increase if that agent is doing more business, good for her, good for him, good for us. So that's one thing. And I think we've made a strong commitment to our company to hands-on management, to top-notch training, to systems that help agents build, to lead generation. We've done all of that. And that has helped us with the organic growth of the individual agent.

Joe Rand:

And then secondly, of course, it's recruitment, is having the value that you can bring agents in, either new agents that are getting their license, that you can get up to speed more quickly than other brokerages or recruiting from existing, from the competitive landscape, and getting people in by demonstrating how you can provide them with a better career path and both of those things.

Joe Rand:

And then of course, the third type of growth comes from acquisition. And we've done that as well. When we see opportunities to expand into new markets. So we've seen opportunities for growth within the existing market with roll-ins or with additional, with a new office with an area that we cover, we haven't been afraid to pull the trigger on them. Most of them have worked, some of them haven't.

You do good acquisitions, bad acquisitions. Some of them don't work out. Most of them, knock on wood, have worked out for us, and they've added immensely to the growth of the company. And we've learned lot and we're much smarter about the acquisitions that we do now than we, I think, you learn every time, you learn something new every time.

Joe Rand:

So I think we get better at it the more we do it. And so we've had a lot of successes bringing in some really, really great people to the company, both as broker owners who were producers who've come in and now they're freed up from the obligation to manage a company.

And all they're doing is the sales that they really like to do more. And they go from having a million dollar GCI company where they were doing half a million dollars GCI themselves, and then they sell the company and then they go from doing half a million by themselves to doing a million. And they're making a lot more because that other half a million that they added is that they're split rather than at the broker split that they were getting when they had agents that were doing that business.

Joe Rand:

So we've had a half dozen success stories like that, of broker owners that have come in and increased dramatically their take home income because they're freed up all the time that they used to spend dealing with a copier jam in the office, or, "Oh, there's a flood in the basement," or their top agent is thinking of leaving and they got to go bring them back. They're not doing any of that anymore. They're just dealing with buyers and sellers and they find that to be really a better way to live their lives.

Tracey Velt:

Yeah, definitely. Yeah. I know for REAL Trends, it's a good time to be a brokerage buyer. We have, I think, Steve has 22 companies for sale right now. I think some of those might've already closed or might be closing. But yeah, it's a good time for, if you're looking to take over market share, it's a good time to do it, I guess.

Joe Rand:

Yeah. I agree with that. I think that COVID has slowed down that a little bit because obviously no one was willing to go out and extend themselves in April and May, during the height of the pandemic. And even though things are still, from a public health perspective, things are still very much influx.

The economy seems to have stabilized and the housing market has demonstrated some resiliency, such that we have a situation where I think some of these buyers are now becoming a little bit more confident that, okay, well I wasn't really all that certain about what was going to happen back in April, but now it looks like things are going to be a little bit more stable going forward. So they're more willing to make that move. I haven't heard of any major acquisitions, any M&A activity in the last six months, but I expect it will probably pick up now.

Tracey Velt:

Yep. So what do you find to be the greatest challenge in business, whether it's related to the pandemic or just in general?

Joe Rand:

Wow. That's such an open ended question. What's the biggest challenge in business?

Tracey Velt:

Yeah.

Joe Rand:

I think the biggest challenge is keeping your North Star. It's keeping yourself centered that you're focused on the things that matter. To me, my focus, my obsession, my passion for this business is that it's what I teach and what I've written about in my books is that we have to focus on what other people need.

Your focus has to be on, what am I doing for other people? What is it they need and how can I give it to them? You think, okay, well, that seems very simple, but it's a simple concept. But very hard to execute because it's often tough to uncover what people need. Those needs often change. It might be that what they need is not a good fit with what you do.

Joe Rand:

And so you either have to adapt what you do and the services you provide, or you have to give up that person as a potential customer or client. It's not easy. And I think what also happens is that you get caught up doing things the way you do them and the way you always do them. And then as the need shifts, you don't shift with it.

I mean, we've learned that in the last six months that I think most of us in the traditional, quote unquote traditional industry, the industry that I think of is the partnership model of brokerage, where the broker and the agent are partners, and the agent gets most of the commission income, but shares a bit of it with the broker and the broker provides services and whatnot, that that model I think has been resilient. But has obviously been under a lot of attack from what we think of as more of the discount type brokers where they're charging less to the agent, providing a much lower range of services, but trying to do it at scale and making a little bit on each agent.

Joe Rand:

And what I think the traditional brokers learned in last six months was that some of the things that we were paying for, agents no longer valued as much. And I think the best example and the obvious example is facilities that we spend a lot. Traditional brokers spend a lot on bricks and mortar.

And even before COVID, we were seeing the growth of virtual brokerages around the country that they had a value proposition to the agents, which was just higher split and lower service. But who needs an office? You're working from your car, you're working from a Starbucks, you're working from your home. And that was already something, I think, that was a growing realization. And I think the last six months really drove it home, that we should be really careful about what we're spending on facilities, because the agents may not value it.

Joe Rand:

And if they value it, and I don't think that, listen, my company is not going to go virtual. We're not going to go from 25 offices to one and cover an entire Tristate area from my basement.

But I think that we can be smarter about the facilities we invest in. And we can be almost like a hybrid that, yeah, you don't have to be all bricks and mortar and you don't have to be all virtual. You can have a footprint. I think the agents that we have in our company like having a physical location that they can rely on. They don't want to go entirely virtual. But the ones that want to go entirely virtual, either they can do it with us or there are options for them.

Joe Rand:

But I just think that there's a place for the brokerage that still has some of the traditional bells and whistles. It's just that you've got to provide them as cost effectively as possible.

And I think what we have to really stay on top of is that we are adapting our services to the changing needs of agents and clients, so that we're giving them what they need in a cost effective way and not providing them with a lot of stuff that costs us money that they don't really care about because that's the death now. That's the thing that really hurts you if you fall into that trap.

Tracey Velt:

Yeah, definitely. And I think COVID's accelerated a lot of those trends. So where do you see the most opportunity in real estate brokerage, specifically in the next, maybe six months to a year?

Joe Rand:

Next six months to a year. So what do I see as the opportunity for real estate in the next six months to a year? I see, as we referenced before, I think that there's acquisition opportunities out there right now for growth. I do think that even if we get through this difficult period, I think there will be brokers that will be like, "Well, I've had enough. Enough ups and downs, enough having to deal with, every couple of years, something new comes up that we've never had to deal with before, and now we have to deal with it."

And whoever wanted to become an expert in public health and how to maintain an office, new cleaning systems and having to do sign-ins for people and all that kind of stuff, providing PPE.

Joe Rand:

There's a lot to being a broker that I think a lot of people are going to say, "Enough's enough," and they're going to want to step away, which is what you said, you see it as being that there are companies that are making themselves available.

So I think there's an opportunity there. I do think that there's an opportunity for smart brokers and agents who recognize that the consumer really does want to be taken care of, that there's a model that is being very well funded right now that the direct to consumer model of avoiding the agent and evading the agent and the consumer sells a house the way they would sell a car to a dealer rather than doing a private transaction.

Joe Rand:

And I think those kinds of models will have some impact, and I think they will appeal to some people. But I also think that we're definitely dealing with a situation in which people cry out for full service. They want to be taken care of. And I think there's an opportunity for good brokers and good agents to be the broker and the agent who takes care of people and gives them that higher quality service. You have to do it. You can't just say you're going to do it. You have to actually do it.

But the opportunity is there. You're not going to distinguish yourself in this market if you provide some sort of mediocre service, because if people are going to get mediocre service, they'll turn to a discount broker, or they'll sell their home through a direct buyer. They have to get a better experience. And if you were willing to invest in that, both in effort as well as in money and providing the experience, I think there's great opportunities ahead.

Tracey Velt:

Yeah, definitely. Well, Joe, thank you so much for joining the REAL Trends Podcast. We appreciate you talking to us and congratulations again on being named Executive Director of the Broker Public Portal. I look forward to seeing how you grow it.

Joe Rand:

Thank you so much. It's been a pleasure being with you. Thank you, Tracey. That was a lot of fun.

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