Amy Saylor and Dennis Degnan, co-founders, Key Realty, Ohio and Michigan.
By offering an expanded online learning platform, the leaders at Key Realty are ready to take on the new market. While their sales have been down, particularly in Michigan where real estate was not deemed essential, these leaders explain why their business model helped them retain agents and minimize losses.
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 coronavirus on their businesses. We’ll talk about the actions they’re taking, lessons learned, and more. This is Tracey Velt, editor in chief of content for REAL Trends. Today, we’re speaking to Dennis Degnan and Amy Saylor, co-founders of Key Realty in Ohio and Michigan. Welcome.
Amy Saylor:
Thank you.
Dennis Degnan:
Thank you very much.
Tracey Velt:
Tell me a little bit about your brokerage and your geographic footprint and then your status during this pandemic as far as real estate being essential or not in your area.
Amy Saylor:
Okay. We started in Toledo, Ohio in 2008 as a direct response to the recession. Dennis and I had both been in the business for a number of years. We weren’t unhappy with our broker, but we were definitely looking for ways to cut our costs at that time. We opened Key Realty to save ourselves and our friends some money.
Our business model is a low cost, full service brokerage with a small physical footprint that was specifically designed to reduce overhead basically. Since then, we’ve expanded into 16 markets throughout Ohio and Michigan. As far as being essential, we are essential in Ohio, but in Michigan our agents aren’t allowed outside, although as of two days from now, May 7th, that will change and they will be allowed to do business.
Tracey Velt:
Okay, great. Tell me a little bit about how your markets are doing and I know that it’s different obviously in each of the States, so we can talk specifically about Ohio versus Michigan, your pendings for May, how business has been impacted.
Dennis Degnan:
We very, very surprised by April actually. It looked like a normal April, normal closings and pretty close to normal activity in spite of the fact that we were shut down pretty much in Michigan. The agents have been very creative in their use of technology through virtual showings and that sort of thing.
April looked pretty solid and I was just reading that mortgage applications are up 12%. The challenge that we have right now is that there’s a tremendous lack of inventory. It’s almost 2008 turned inside out, and this has become more acute as sellers have taken their homes off the market.
Dennis Degnan:
But what we’re seeing is something I’ve been seeing, I’ve been doing this for over 40 years, and what you’re seeing is a fairly typical downturn reaction were 15 to 30%, but our industry’s always been grounded in what we call the must move market, where people still have to move regardless of job changes, life events, et cetera.
It’s been a little bit of a slowdown. We’re uncertain as to where we’re going in May. It’s so early in the month that it’s difficult to predict where we’re going, but that’s where we are currently.
Tracey Velt:
Okay, great. Obviously when this all came about, I’m sure you took some business steps to lessen the impact on the company. Tell me what some of the steps were and were you forced to do any layoffs.
Dennis Degnan:
Well, we did a number of things. One of them was that we have a free continuing education video series online throughout Ohio and Michigan called Key Education Online and we offer that free to Key agents and as a cost item for agents outside of the company.
We chose as a contribution to the industry in a response to the crisis to make that program available and open to all agents throughout Ohio and Michigan. Current to date, we’ve been very surprised and delighted by the response. We’ve saved the agents in the area over $22,000 in CE costs. Additionally, we donated $10,000 worth of career apparel, face masks to our agents, and we were fortunate to have a fellow named Joe Albring, our operations director.
Dennis Degnan:
He’s an MBA and together with a couple of other guys put together what we call the COVID Resource Center and this is on our website in the knowledge base. It has any and all information that we can find that we think is useful to the agents. That’s been really wonderful in terms of being able to direct the agents to the kind of deployment that they need in order to deal with PPP and the EIDL and some of the issues that have come about as a result of the virus.
We also put together a virtual program called Any Wednesdays where at three o’clock in the afternoon we have what we call Key Stars, in other words, highly productive agents, national speakers and coaches on there and we interview them. We were really surprised when that happened.
Dennis Degnan:
The first time we had a Zoom call, we had over 300 people on there out of a thousand agents. Amy and I were laughing because we said we’d never had 300 people at any kind of an event anywhere in the company ever. Our response to a virtual environment has surprised and delighted us because we have two to three times as many attendees as we would normally expect at a live event.
That’s kind of surprised us. It’s been an instrumental part of us keeping our community together. We also deployed a virtual design center through some folks out in California where they can print postcards and flyers and do Facebook posts and a whole host of other things from the comfort and safety of their home as they say. That’s been a hit as well.
Dennis Degnan:
Those are really the highlights of what we’ve tried to do to help them cope with what they’re dealing with, to provide them with the emotional support and the resources that they need to move forward.
Tracey Velt:
Okay. Now, have you done any surgery on your budget or had to do any layoffs?
Amy Saylor:
Yes. I’ll handle that question. I’m sure like everyone, we went through our expenses looking for fat which that always seems to accumulate in the good times. We did cut some expenses, but mostly, as Dennis mentioned, we’ve been adding things that we believe will help our agents through this crisis.
Our company has always had a strong virtual presence, so we really didn’t have to change a lot about how we disseminate information. We just can’t get together as much. The only thing we did have to cut as far as personnel goes is we have a compliance department. We have about eight people whose only job it is is to review files for compliance and pay our agents. We did have to cut those people down to half time, but they are still working.
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Tracey Velt:
Okay, great. Obviously the market is slowly reopening in a lot of different areas. You said in Michigan… Well, Ohio, it’s essential, so you haven’t really stopped doing business, although I’m sure it’s changed. Michigan will come back online soon. What are you doing to prepare your agents and what are you expecting business to be like in the next couple of months?
Amy Saylor:
Well, for many of our agents in the Ohio market, for example, the market’s still open. We recently just interviewed one agent who has 17 contracts pending right now. His previous record was 15 last summer. They are still doing business and obviously that is not the norm, especially for our Michigan agents, but they’re pretty creative in how they can still continue to do business.
We are encouraging them to reach out and stay in touch with past clients, with their sphere of influence because people still need to move. I think that as we get through this crisis, there’s going to be a lot of pent up demand. We choose to be optimistic about the market and are hopeful that that pent up demand will pave the way for a very lucrative third and fourth quarter.
Amy Saylor:
The truth is no one knows what the economy will look like. When it’s all said and done, what the status of the stock market will be or all that. But I think, Dennis, you had some ideas on this as far as there being a difference between the stock market and the real estate market and what that would look like.
Dennis Degnan:
Well, the stock market, I don’t think anybody knows what’s going to happen out there or with the general economy, but I think the real estate market itself is going to remain relatively stable unless we reach really, really catastrophic levels of unemployment. We’re basically asking the agents to focus on growing their social sphere of influence and making sure that they remain productive during this challenging time.
I think our message to the agents is there’s a difference between the real estate market and the economy and the stock market. Those are three separate and distinct environments, and we feel that the real estate market going forward will be relatively solid.
Tracey Velt:
I agree with you. I think we had good fundamentals beforehand. It will be different though. Let’s talk about are there any new protocols you’re putting in place for agents, like new showing protocols that require masks or gloves, or anything specific to that that you’re putting out there?
Dennis Degnan:
Tomorrow when we have our Wednesday call, we’re deploying a detailed protocol for buyers and sellers. The playing field is shifting somewhat and obviously we want to abide by the state rules and for now that means no open houses in Michigan. Although in Ohio it’s more ambiguous about this as an activity, we’re not going to have a policy against open houses, but we’re certainly going to have a guideline that strongly discourages them.
For example, I had an agent who wanted to have an open house on the weekend and she said, “Well, I can keep social distancing in place,” and I said, “Well, okay, if you’re in the back bedroom and there’s two people there and you’re all being socially distant and all of that and eight more people pile in the front door, how are you going to handle that?”
Dennis Degnan:
We have not been able to come up with a comfortable recommendation to them as to how to control traffic in an open house well enough to protect themselves and the people that are coming through the front door. We don’t think we’re going to do that one, but we’re also big fans of virtual tours where… There’s a new phenomenon in Ohio, especially called virtual open houses that’s been deployed that has met with some success.
We’re kind of learning as we go. I think the number one focus of the company, if we have one in responding to this, is to ensure the safety of the agents and their clients and their families. We feel very, very strongly that they will be able to work in a safe environment provided that they’re careful and deliberate about their behaviors.
Dennis Degnan:
We’re placing a lot of emphasis on that because we feel that it’s our responsibility. Sometimes it’s our responsibility to protect agents from themselves. We feel very strongly that that’s our role right now.
Tracey Velt:
Okay. Great. Let’s set the numbers aside for a moment. My last question is really just tell me a little bit about what you feel and how your agents are feeling about everything that has happened over the course of the last couple of months.
Amy Saylor:
Well, I ask this question regularly. We have different ways we check in with our agents and we’ll call them personally and we check in with them via social media and all of that. The reviews are mixed. People have good days and bad days. The weather here has been chilly. When it’s cloudy, it doesn’t help the mood.
We encourage them to be okay with an occasional bad day. I think one thing we all need to do during this time is grieve the loss of what our lives used to be, and that’s okay. But we also have a job to do and as self-employed people, we don’t have the luxury of just lying around in bed waiting for this to pass.
Amy Saylor:
We’ve encouraged them to take this time to learn new skills, strengthen your systems, reconnect with your sphere of influence, prepare yourself to emerge stronger and ready to seize the day. Our agents seem to be doing that. But like I said, I think we all have our ups and downs during this time.
Tracey Velt:
Yeah, definitely. The one last question actually that I meant to ask you earlier, but have you applied for the payroll protection and have you received anything? Have you encouraged your agents to apply for any of the emergency grants and loans?
Dennis Degnan:
Yes, especially in Michigan as basically they were shut down up there. We encourage them whenever and wherever possible to apply for the programs that have come out for the virus relief. Then in addition to that, we’ve been trying to coach them into the 401(k) access programs, et cetera. One of the things that I think has gone a little unnoticed in the industry is the fact that you can borrow up to $100,000 out of your 401(k), not pay any interest on it.
If you pay it back within three years, there’s no problems with it whatsoever. Yes, we’ve had a very proactive posture in terms of providing the agents with the information necessary to take advantage of those programs. Some of them have said to us, “Well, I don’t think I need it,” and I say, “Well, take it and then if you don’t need it, just give it back. Don’t worry about it.”
Tracey Velt:
What about you as a company?
Dennis Degnan:
Did we ever apply for that? Yes, we applied for the $10,000 grant or whatever two or three weeks ago and hopefully it will re be able to receive it and as a result of that, defray some of our employee costs, et cetera.
Tracey Velt:
Then the payroll protection, I know a lot of brokerages have been applying for that. It’s actually forgivable if you keep your employees that you do have working. I don’t know if you’ve applied for that or not.
Dennis Degnan:
I always confuse the two frankly. I think the one that we applied for was a $10,000 grant.
Tracey Velt:
Yeah, that’s the emergency loan. I can’t remember what it’s called, but yeah.
Dennis Degnan:
We did not apply for payroll protection. Our company has a little bit different financial footprint than most brokerages. We don’t have the huge overheads and things. It’s a different kind of business model. We don’t have some of the stressors that traditional brokerages have right now.
Tracey Velt:
Well, great. It sounds like you guys are doing well and it sounds like you’re really connecting with your agents, which is super important right now. Thank you so much for joining REAL Trends on our podcast and I wish you both well.
Dennis Degnan:
Thank you very much. You have a great day. Okay?
Amy Saylor:
Thank you.
