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REAL Trending Special Edition: Leading Through A Challenging Market

Jun 5, 2020 6:00:00 AM

Michael Nourmand, president,  Nourmand & Associates Realtors, Beverly Hills

As the market in California starts to open, civil unrest over the George Floyd murder ramps up. For Nourmand, taking care of his agents is a top priority. Find out what he's doing to ensure agents are able to transact business in the market.

Tracey Velt:

In this special edition of the REAL Trending podcast, we're speaking to real estate leaders on what they're doing to minimize the impact of the coronavirus on their businesses. We'll talk about actions they're taking, lessons learned during the reopening, and more.

Tracey Velt:

This is Tracey Velt, editor and chief of content for REAL Trends. Today we're speaking with Michael Nourmand, president of Nourmand & Associates Realtors in Beverly Hills, California. Welcome Michael.

Michael Nourmand:

Thank you for having me.

Tracey Velt:

Yeah, I appreciate you taking the time to talk to us today. So tell me a little bit about your brokerage, your geographic footprint, and your status as far as re-opening, and whether real estate was essential during the early stages of pandemic.

Michael Nourmand:

So we're a second generation family owned brokerage based in LA. We have three offices and about 175 agents. We've been in business for over 40 years. So we're a legacy company in our market.

Our geographic footprint is more or less from the beach. So think like Santa Monica Malibu all the way east of Downtown LA, and from the Valley, sort of the northern border down to LAX, like Westchester Playa Vista. So a good portion of LA County, but LA County is a vast area, so not all of LA County.

Michael Nourmand:

We closed our offices around March 20th because of the coronavirus. Our offices are still closed. The goal is to re-open some time in early July. Real estate was considered an essential service, so we could start showing vacant properties in mid April, and we could start showing occupied properties in late April.

And while this has all been going on, the operations have been pretty fluid in a good way, meaning that if you weren't physically in our offices, you wouldn't know that nobody was there. And that also was partially because we kept our full staff.

Tracey Velt:

Oh, great okay. So tell me how your market is doing right now. What are your pendings for June, and a little bit about how your business has been impacted throughout this?

Michael Nourmand:

So probably no surprise, early on impacted a lot. We had towards mid to late March, several deals fall out. Some deals were, escrows were postponed. There was some re-negotiating.

And my title rep kind of gave a summary, he said at one point the number of re-sales opening in LA County were down 70%. And that is actually worse than 70%, because most of the deals were in the lower price points. So from a sales volume standpoint, it was worse than 70%.

Michael Nourmand:

Then it was down 50%, and now it's more like down 25%. Number of sales, not prices. Prices have held within reason. Obviously every market is different, but somewhere in the three to five per cent adjustment is maybe a good generalization.

And then the affordable parts of our market are the strongest. So I know this may sound crazy for other markets, but kind of on like the west side of LA, I would say under $3 million.

Michael Nourmand:

It's common for a property into $3 million for there to be multiple offers. Obviously somebody has to price it appropriately. But with the limited supply of homes for sale right now, and interest rates being near all time lows, there's still some demand.

Demand isn't what it was, but when there's almost nothing to buy it's still been driving our market. I was in two multiple offers last week in the mid two and a half million range. One of them I got, one of them I lost.

Michael Nourmand:

And then what I would tell you is that the higher the price point, the softer the market. So you'll still see a $43 million deal, or something else. But I always like to give people background.

That deal that sold for $43 million in Bel Air, the owner of that property bought it for $38 million, and spent three or four years totally re-doing the house. So that person actually lost a lot of money. In my opinion, that was a favorable purchase for the buyer as an example.

Tracey Velt:

Okay, interesting. Yeah, your market is so different from a lot of markets around the country. So let's talk about the business steps that you took right away in March to lessen the impact on your company.

Michael Nourmand:

So the first thing we did, we went to a weekly Zoom call company-wide. That was the first major change that we did. We wanted to figure out a way to have quote unquote FaceTime with our staff, with our agents, with our management.

So we went to a weekly Zoom call, and we did that right away. And our attendance in that has been really strong. I've heard other people talk on this podcast about having these Zoom calls be their best attendance.

Michael Nourmand:

Getting over a hundred people on a call when your organization is 175 people, in my opinion, is excellent participation. So the first thing we did aside from the weekly Zoom call, which we're still doing, is I made sure that our management and staff knew that their jobs were safe.

We had one part-time receptionist that we laid off, because their job was pretty much to open up the office and handle the phones.

Michael Nourmand:

But aside from that one position, everybody else has been compensated the same as before. Same hours, same work expectations, and it's gone really well. In terms of costs, the first thing we did was try to cut variable costs.

I mean if you are a company that makes widgets, if you are selling a hundred widgets versus a thousand widgets, there should be some variable costs that should be adjusted. So for us print marketing, we cut print marketing drastically. So that was a big cost saving for us.

Michael Nourmand:

The other thing also may seem kind of silly, depending on where you are, is that parking is very expensive in LA. So think of parking going anywhere from let's say $150 to $225 a parking spot.

So between staff and management and some of our top agents that we cover the cost of parking, that was also another cost we were able to eliminate.

Michael Nourmand:

So those were two of the more easy things to kind of quantify out of the gate, but we've also continued to spend money as well, to try to improve our company. We had Matthew Ferrara, who I'm sure you guys are familiar with. I know Steve Murray, at the Leading ERA conferences, we're a member of Leading ERA, and were always very involved in the conferences.

So we've heard Matthew Ferrara speak a couple of times. So he did a Zoom presentation for our agents. We're still making new social media content. Obviously we want to be up to date on technology and content for our agents, in ways for them to promote their listings virtually.

Michael Nourmand:

And we also are rolling out new property signs. That should be delivered in the next week or two. And the way we did it was we basically went to our sign provider and we said, "Okay, tell us how many signs we have that are with our agents specific information?"

So let's say Tracy, that you were at our company, and you had six signs at the sign company storage. What we would do is we'd send you a proof. Say, "Here's the new sign. We're going to pay for six signs for you, and we're going to get rid of your old signs."

Michael Nourmand:

So I do think it's important that our agents see that we're investing in our company, even during these challenging times. And I view this as an opportunity that we can increase our market share that there's going to be a flight to quality during this unsettling time.

Tracey Velt:

Okay, great. So obviously your market's starting to re-open some. What are you doing to prepare your agents? Like as far as new showing protocols and that, and what are you expecting business to be like? And I don't mean busy as far as the volume of business, but more the way business is transacted, and the way properties are shown. What are you expecting?

Michael Nourmand:

So when this pandemic started, the first thing we told our agents are, I like to say this is not vacation. So if you think that this is great, and you don't have to work, and you don't plan on making money, and you're okay with that. Okay, no problem. But if you actually want to run a business, and you want to make money, that this is not time off.

That right now is the time to organize your database, get in touch with your sphere of influence. Develop a short term plan. And also when you're talking to your sphere of influence, just check in to see how people are doing. Don't force real estate into the conversation, but you should have dialogue of some information if it comes up. But let it be natural. Don't call it the idea that, "Hey, we're going to talk real estate, come hell or high water."

Michael Nourmand:

The other things that we stress was with fewer deals, that also means that you have less opportunity for referral business. So take the extra time to make sure your clients are happy, so you can increase the odds that they recommend you to their family and friends.

It's a simple math equation. If you're doing business with 10 people, you have 10 opportunities to get business. If now you're doing deals with five people, you have five opportunities. But on the flip side, you have more time.

Michael Nourmand:

So you should really be focusing on making sure that everybody has a great experience to increase the odds that you're going to get business, so that hopefully it's a wash, or maybe it's not your referral pipeline isn't down as much as it could be.

The other things we stress were to over communicate. During difficult times people need more handholding. So to check in with your clients more than usual. They may need more information to process the market.

Michael Nourmand:

Things are really ever changing. And some people just want a friend, someone to talk with them to... Look, it's a strange time. I'm married. I have three kids. Two of my kids are not going to school. So we have to deal with Zoom calls and all that other stuff. So it's a stressful time. So just to be a friend, and be there for people to support them I think is important.

Michael Nourmand:

In the near future I don't think there's going to be open houses. So for some people that will shift their business model. I know several agents, especially some of them are our newer agents, that that's been a way that they've been generating business. I think that it's now going to go more to like a block showing format.

Michael Nourmand:

So what happens is on Sunday from 2:00 to 4:00, I have five people that want to see the place. And I meet one person at 2:00, and finish that showing. The next person at 2:30. The next person at 3:00. The next person at 3:30. And that will at least in the short term, replace traditional open houses.

We've been lucky in California that the California Association of Realtors has been very helpful. They have a best practices guidelines. We've followed those since day one.

Michael Nourmand:

So the process kind of goes something like this, and I'm going to summarize it without all of the little details. But the summary of it goes something like this. You want to see a house, you send a PEAD form. A PEAD form is a form that basically spells out like release of liability.

What you're required to do. How everything is going to run. So when you run the showing, before the showing everybody's supposed to use hand sanitizer. Everyone's supposed to wear a mask. There's a pictograph that supposed to be posted on the front door before the showing.

The agent plus two buyers maximum from the same household. So maybe if it's a father and son, and they're not from the same household, you'd have to run the showing with the father. Then when you end, then the son would come in. So there are lots of rules in place that are doing it.

Michael Nourmand:

I am pretty optimistic. I think that if the economy continues switching gears, I think that if the economy continues to open up, I think there'll be some pent up demand. I think that it's going to be more of a process than I anticipated.

And I think that a lot of people had thought the idea that all of the pent up demand is going to explode, so that by the end of the year it's going to be like the pandemic never happened.

Michael Nourmand:

I think that that's very unrealistic, but I do think there will be some surge in sales, and I think that the emphasis of a house is changing. I think that there's a lot more emphasis on since we're spending more time in our house, for some people that means whether it's a home office, a nice gym, a pool, a grassy backyard, I think Los Angeles lends itself well to the idea of horizontal living, versus vertical living.

Michael Nourmand:

I'm not a believer that everybody's going to want to work from home. I think that yes, there will be more people that will work from home than before the pandemic. But I think that there are a lot of people that will be very happy to go back to work, and to get back to their routine.

But yeah, I definitely think that consumers preferences are changing in terms of homes. I think that designers are being contacted, and architects are being contacted, with shifting needs and in the past.

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Tracey Velt:

Yeah, I definitely agree. If you live in Florida, like I do, it's like coronavirus never happened. So it's a little unsettling to go out and nobody's wearing a mask anywhere you go. So it's crazy.

So my last question is really just let's set the numbers aside for a moment, and the protocols and everything, and talk to me a little bit about how you're feeling, and how your agents are feeling about kind of the new normal in real estate.

Michael Nourmand:

So today is June 3rd, I'm in LA. There has now been some rioting or uprising. There's been protests. Many of them non-violent peaceful protests, and there's also been some rioting, and looting, and damage to property.

So to give you an example, in LA County right now, yesterday the curfew was 6:00 PM. In Beverly Hills the curfew yesterday for the businesses was 1:00 PM.

Michael Nourmand:

So that kind of gives you a flavor of what's going on right now. You kind of had the coronavirus, things were moving in the right direction. Businesses were starting to slowly re-open there, and then we had this huge tragedy that took place, and a social injustice.

And things that did not go well, is an understatement, and someone's life was taken that should not have been. And people are rightfully upset about it, which I totally understand, and it's disturbing. I'm upset about it as well.

Michael Nourmand:

So, okay, so going back to... Putting that aside, because I think that the riots and the uprising, and the social upheaval will hopefully lead to change, but let's hope that the destruction is a short term thing.

So I feel good in the longterm about the future of the industry in our company. I'm pretty optimistic that our agents, our existing agents will grow their business, and that we'll recruit several productive agents that fit our culture in the next six months.

Michael Nourmand:

We've had really good dialogue with people that are thinking about joining us, and we had a couple of great key agents join us right on the beginning of the coronavirus. So I think the longterm prospects are good. I don't think it's going to happen overnight. Right now to give you an idea, you had asked about deal flow, and all that.

June will be our strongest month since March. So you look at it and you say, 'Okay March deals were far along, several deals closed before coronavirus shelter in place.The NBA got canceled, and the Major League Baseball got pushed back. The NHL got canceled for the time being.

Michael Nourmand:

So you had March. Then you had April where some of the deals that should've closed in March spilled over to April. Then in April until mid month you couldn't show properties unless it was vacant. End of month you could show occupied properties. So May to me was sort of the bottom for closed sale.

May is sort of the trough in my view. So now when I'm looking at June, I'm looking at things being as good as they've been since March. My agents, I feel are looking at that they can see the light at the end of the tunnel.

Michael Nourmand:

The coronavirus definitely hit us hard. LA was quick and speedy to put a shelter in place in which I think helped. But my agents are resilient. I'm confident they'll outsell the competition during this uncertain time period. And I've been very happy with their attitude, their support for me, and management, and the company.

I really felt like they've all stepped up, and we've been on the phone and email doing whatever we can to help them. I've been involved in things from getting price reductions on listings, to helping people on multiple, and working out initial deposits for deals that went sour.

Michael Nourmand:

So it's been a really, really good opportunity for us to bond with our agents, and get closer with our agents, even though this is not an ideal time in history, and I would have preferred if it never had happened obviously.

Tracey Velt:

Yes, definitely. But it sounds like you're on the road to recovery, and there will be setbacks as always, and hopefully out of all of this, the civil unrest and the coronavirus, we'll see some positives come out of it. So that's what I'm hopeful for.

Michael Nourmand:

Yeah, me too. Me too. I think that look, we're all in the same boat. Hopefully the industry comes out stronger, and I don't wish any of my competitors to go out of business. I hope that the comradery, I feel like more of my competitors have called me and vice versa.

There's been more of a colleague feeling than a "You know what, hey we're all competing for a piece of the pie, and you know what I want you to fail so I can pick up yours." I feel like for the most part, it's been a very, very friendly time period, in terms of helping each other, us and other companies.

Tracey Velt:

Yeah. That's great. It definitely brings out the collaboration in the real estate industry, and that's really nice to see. Well Michael, thank you so much for taking the time to talk to REAL Trends today. We really appreciate your insight, and you talking to us.

Michael Nourmand:

My pleasure. I think I've listened to just about every single podcast that you've done, so-

Tracey Velt:

Oh good, I'm glad to hear that.

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