Daily Dealio

Sarah Richardson CEO of Tru Realty | Women in C-Suite Positions, Technology, & Green Eggs and Ham

Today we are talking with Sarah Richardson, Founder and CEO of Tru Realty

Sarah is a visionary female leader in our space, she is the founder of Tru Realty and is an early adopter of the Zoodealio platform.

Tru started in 2010, Sarah was coming from commercial real estate. Commercial is a different animal, the sales cycle is a lot longer and it takes much longer to scale up, but there is a different level of professionalism there. When I came into residential I was working mostly fix and flip and investor deals. What I found was a lot of agents on the other side needed help … help with negotiation, with strategy, overall contract help and I saw there was a huge need for education in residential real estate. As fix and flip changed after about 2013 I decided to educate brand new REALTORS and get them up and running quickly. 43% of new agents with Tru have their first deal in escrow within three months of completing their training, the national number is in the 6-9 month range depending on the area.

The average age of agents is in their mid 50’s and they are using 15 different technologies in their business in any given week … and we wonder why we have adoption issues in technology. We are finding that new agents, those coming into real estate as their first career, even right out of university or occasionally still in university, pick up technology very quickly. It’s very intuitive to people in their 20’s to pick up a CRM, to use marketing tools, to actually run an ad on social media and make them work.

Sarah has taken the lead on all things technology and has led the way with crypto currency in real estate transactions. We adore our partnership with Zoodealio and being a start up we firmly believe in what you guys are doing in engaging the agent and making the REALTOR part go the iBuyer experience, this is critical to all our future. The consumer needs the help of a trusted advisor because they don’t fully understand all of the deal terms on an iBuyer transaction.

As for technologies, the set it and forget it mentality is interesting. Several years ago when each began to enter into the real estate space there was this notion that technology should replace the relationship. Over the course of 6-8-10 years we realized that we are a relationship business and that technology should NOT replace our relationships with clients and the consumer. Now it is all about the tech running in the background - our drip campaigns, our marketing campaigns, have everything turned on so when we are in front of people we can have better, more impactful conversations.

Let’s pivot for a moment and talk about the fact that something like 65% of REALTORS are women and 7% or so are represented in the C-suite of companies. There is this underlying notion that women are coming into their own and getting stronger in leadership positions. There is a shift happening. But at the management lever, not the managing broker lever - there are a lot of women that level, but in the ownership and C-suite level at brokerages and in the prop-tech landscape there are very few women. I think it is good for us to draw attention to that because there may be a lot of women who want to be in management/ownership, who want to be entrepreneurs and are apprehensive because they feel there can’t do it, ultimately it’s very daunting and it’s a huge risk.

Entrepreneurship was not a thing when I was in college, they didn’t even have entrepreneurship as a degree at ASU then. Now everybody wants to create their own hustle and be masters of their own future and create their own destiny. If we went to sit on a campus right now and listened to the people who want to be entrepreneurs and get into real estate in their 20’s, 50% are men and 50% are women. So I'm starting to see that anyone who wanted to be an entrepreneur is not just a man by any stretch of the imagination. Training people to take risks earlier makes it easier down the line. Putting your mortgage at risk, taking a full commission job, accruing a lot of debt is scary to a lot of people, and especially to women.

What would her best piece of advice for REALTORs going into the new year be? There are a lot of answers to that question! For the agent who might be struggling a little, she ay even be living commission to commission - Put together a year long marketing plan. Sit down and write out a plan for 52 weeks over the holidays. There are many you can find on the internet. These are little touchpoint so you can get face to face conversations with people.

And finally, what book would you recommend every agent read? This is a bit of a joke around the office but “Green Eggs and Ham” is a great book for REALTORS to read. Sam I Am never stops, he never gives up. Its the tenacity of an agent. I've said many many times you need grit and tenacity to be good in real estate and Sam I Am is the epitome of grit and tenacity.

Nick Friedman Co-Founder of Accept.inc | The ”Rich Uncle” of the Real Estate Industry

This week the team talks with Co-founder and COO of accept.inc, Nick Friedman

Zoodealio is now partnered with accept.inc to upgrade buyer offers to cash! We are very excited about this new and powerful partnership and it is our pleasure to have the opportunity to have Nick join us this week!

The conversation begins with Nick explaining what accept.inc is.

We are basically a mortgage company that upgrades any offer to a cash offer. We purchase homes for buyers who we predict will secure a mortgage, then we sell the home to them at the same price we purchased it for. We basically become the buyer’s rich aunt or uncle who buy the home for them.

We began the company by looking at what is real estate today and how can it be fixed, what would we do differently if WE could do it all over again. What is the simplest transaction and how can we give that to every buyer and seller? It didn’t take long to figure out this is a cash offer. Now how do you give the cash offer to everybody?

We had no real estate background or experience at the beginning. We failed for a couple of years and learned every way to NOT make someone a cash buyer, but the lack of experience played to our strength … We went in and said “Hey we’re just going to go in there with the bat and see what we can hit!” By not being jaded by the industry going in we were ablate figure out that this is the model we want to have, this is a model that is appealing to buyers, sellers and agents today.

Next he expanded on their value proposition and explained how they gained agent mind-share. Looking at the Denver market, it’s a great place to live and we ended up picking a market the really grabbed on to this model quickly. Our value proposition is not you all can have a rich aunt or uncle … that appeals not only to buyers and sellers, but also to real estate agents. We market to agents and they are able to tell their sellers to not settle for anything other than a cash offer and they tell their buyers to not submit anything less than a cash offer.

What's the catch?! There isn’t one, we explain to them exactly where we are making our money. We are a mortgage company add we have an in-house title company, so we make money there as well. Those are standard across the industry. Today even mortgage company and every title company make money. People do get a little confused when we layer on that were are a cash offer company that allows you to upgrade your offer to cash, so the question becomes how can you do all of that and still keep rates competitive? We let them know that tour marketing costs are very low and we don’t pay commission to our loan officers, they are on salary and the savings on commissions basically offset to costs of floating the home. Finally we are only holding the home for a week or two so there really isn’t any carrying cost. In this crazy market it makes sense to want to be a cash buyer, but why would a buyer want or need to be a cash buyer in a slower market? Simply the negotiating power that comes with a cash offer is key in answering this. Say you come to the table with cash and a quick close, ask for a $30k to $40k price reduction, the house has been on the market for 45 days and not been busy - the seller doesn’t want this deal to fall through.

What happens when something goers sideways? Things don’t come up often, but sometimes they do. We only own the home for a short time, so it’s pretty rare that we experience things like a burst pipe or something while we own it. We haven’t had any transactions fall out, meaning that the person we bought the home for ultimately purchased it from us. We have had some appraisals come in low, but that is the risk we taken ourselves and we take the loss. When an appraisal comes in low we actually lower the price and sell it to the buyer, we are willing to take that because we believe our offer needs to be a “true cash offer” and in order to do that we need to take on the risk of the home and the risk of the buyer.

An obvious question in the current makers in AZ and CO is do you let buyers overpay for a home? We do an internal value check which is what we feel the home will appraise for. Our value check is also a guarantee that we will fund that loan for up to that amount, if the appraisal comes in low we take the loss. The buyer can agree ahead of time to pay more in cash if they want to offer over the value check number, but we would have to verify those funds before the offer.

It does take a few days for the buyer to get the cash approval. It takes 3-4 business days to get it done. If a buyer finds a home immediately and they want to put in a cash offer in five minutes, that is just not going to happen. If they come to us a week or so ahead and let us know they are going be looking for a home, if they bring us everything on a Monday by the weekend they can be a cash buyer.

How are agents prospecting with this product? Listing agents pitch in the listing appointment that they will make sure that any offers that come in will be upgraded to cash. On the buy side they are telling people they can use their negotiating skills as na agent with a cash offer and you the buyer can win your first or second offer usually. Buyer’s agents use their use cases to help market themselves and this service, using testimonials from prior clients, the critical mass on that is about 3 transactions with us.

If you are listening to this in Arizona or Colorado Zoodealio has this available for you! And if you are a current subscriber you already have it and we will have it available in your back end soon!

Metaverse & The Business Advantages of New Technology | The iBuyer Experiment - Stop & Chat #40

Is iBuying still a thing?

This week the team talks about the aftermath of Zillow leaving the iBuyer arena.

The discussion begins with a bit about the Metaverse … the FaceBook “World.” Our first thoughts were of EXP, and that Microsoft started their own “Metaverse.” Will EXP world be the “world” people want to be in? With EXP the world is a software they license, you have to wonder how much the value of the world is tied up in their valuation. They started using the virtual world software from Virbela and eventually bought it, and maybe they’ll license it out beyond real estate, who knows, it’ll be interesting to see.

What kinds of things are going to become the new norm, like Zoom has in the past year or so. A year and a half ago you couldn’t use it because no one on the other end could manage to either technically get it working or be comfortable talking to a screen. Will iBuyers be it, will every consumer think about asking for a cash offer rather than talk to a listing agent? If the market softens there are those who believe the iBuyers will do even better. Much of it boils down to people not having any patience.

iBuying will continue because there's a ton of friction in the home buying process and that is THE problem iBuyers solve. We’ll see iBuyig continue to be strong going forward, the markets aren’t going to come crashing down around them.

Let’s define some terms - there is power buying, bridge buying, iBuying, FINTECH, PROPTECH and others … all the different strategies that people use to buy and sell, these terms are thrown around with out many people know what they really are. They are just structured sales, financial instruments, like a mortgage that allow people to buy. They are all similar in that they are simply ways for someone to unlock their equity so they can identify and at some point in the process move into their new home.

Over time agents are going to lose market share to the companies that are providing these instruments that are not branded to the agent. They are “Zillowing” agents, they are convincing agents that bringing their clients into the system with them is the way to go, in the short term they may get more deals, but eventually they will begin to chip away at market share. When it comes time for the client to transact next, they think oh, we used Knock for the buy, so lets call them and get our agent moving, then the company just pushes the agent aside because they don’t work for them. All of these companies are data companies first, these companies, if they are not already, will eventually be direct to consumer and sooner or later that are gigot to ask themselves how can we become more profitable and return more money to our investors? The answer is simple … Cut out the agents.

Bob Mangold Real Estate Strategist | Understanding the Department of Justice & NAR

This week on the iBuyer Experiment the team is talking with Bob Mangold. Bob uses Zoodealio with about 1,100 agents throughout his Homeboss platform.

Bob started his real estate career on the lending side and change to the agent side when he couldn’t find agent who could always get the job done. After several years he opened his own franchise brokerage, that is where he figure out that running a traditional brokerage isn’t the best way to build wealth. So he again teaching his agents a three-pronged strategy: One, build cashflow from your listing income; two, build referral income; and three, use the income from those to purchase income producing assets, like rental properties and Air B&B properties.

Another important part of being a real estate agent is keeping up on what is going on. Let’s look at what is login on with the Department of Justice and the National Association of Realtors. At a recent talk with about 1,000 agents only about 5% knew what was going on when asked.

The government is discussing regulating commission rates for real estate transactions. NAR is fighting this, but DOJ has more money and can spend enough to bankrupt NAR. In a situation like this it dopant matter if you win or lose, or if you are right or wrong … It just matters if you can survive. NAR will have to find a way to survive this.

At the end of the day this is all about the commission and how transparent we are. A lot of people question why the seller pays for an agent to negotiate against them, the sellers know how the system works though. In the listing appointment they talk about how much they need to net and what that looks like with the commissions paid to their agent and then add the commission to the buyers agent gets tacked onto the number to make the numbers work to get their net. What DOJ is saying is that the buyer does not understand this and specifically how the price of the home increases to cover paying the buyers agent. It really is form the seller inflating the price of the home to cover their agents commission.

Do we really want the government regulating what we charge for commissions? For Bob and everyone in the room that is a resounding no. If you are a real estate agent you have to know what is going on, these issues are coming for your career. It’s important that agents understand compensation and explain it.

The job of a real estate agent is actually quite simple. The job is to put your home in front o as many people who are ready, willing and able to buy it. The more people it is exposed to the higher price it will get.

Here’s a bit about how Homeboss addresses this NAR and DOJ issue. First the platform is completely open and transparent. We drive a lot of traffic to the property and do a big two-day open house (often with hundreds of people in attendance) that is well advertised and they open their platform to everyone to make their offers and set a date for them to be adjusted by. The seller pays them 3% and the buyers agent gets 3% (or what has been negotiated), BUT that is added to the price of the offer that was received, that way the buyer is paying their agent and can negotiate that rate if they want. Now the buyer and seller both understand how the buyers agent commission affects the final price paid. It is 100% transparent and it’s an answer to what the DOJ wants.

It is difficult for agents at first to understand how this helps buyer and sellers and the industry as a whole, but buyers like the idea when they understand it is about transparency. Agents just need to explain how this works in a way that shows the open and transparent nature of the system. Agents need understand that they are going to have to adapt or become extinct.

BREAKING NEWS Zillow Kills iBuyer Program | The iBuyer Experiment - Stop & Chat #39

BREAKING NEWS Zillow Kills iBuyer Program

Inman Connect Las Vegas & Co-Star Taking on Zillow | The iBuyer Experiment - Stop & Chat #38

Zoodealio is taking a trip to Vegas! Join us at Inman Connect Las Vegas 2021 at the Aria Hotel. Meet us at booth #115 and get to know the Zoodealio team and what we're all about! From October 26 - 28. Come along as Kala pitched Zoodealio at the 2021 Inman Pitch Battle & joins a panel to talk technology and advancements in the real estate industry and space.

Adam Contos CEO of RE/MAX | Taking Action & ”Partying With the Beast”

This week Kala does a one-on-one interview with Adam Contos, CEO at ReMax.

Adam has a new book “Start With a Win” that is being released October 19th.

A Little Background

He worked his way up through the ranks at ReMax to become it’s current CEO. Adam grew up in Denver and joined the Marine Corps right after high school, his goal was ultimately to become a police officer. While he was an officer he developed a real estate agent safety program that ReMax eventually bought and hired him as a consultant to teach. Later he accepted an offer form the ReMax CEO to learn the business form him and accepted the position, eventually making it to the C-suite. I’t about focused effort and working hard - caring about the people around you and doing what you can to make a difference.

His book is really a tactical how-to on achieving amazing things.

On iBuyers

He looks at iBuyers as cash buyers, there have always been and always will be cash buyers in the real estate space. So to anybody who says iBuyers are new he says it’s how cash buyers are doing things that is new, Burt ultimately we can see that how we are doing a lot of thing sin life is new. Evolution is business is nothing new. A lot of this change is through clarity of communication.

There is a report out saying that 77% of people say they would give up some equity to use an iBuyer and have an easier, faster sale. Contos says he doesn’t doubt the 77% statistic that people SAY they would be swilling to use an iBuyer, you just don’t see that many people actually doing it. What we are seeing now is iBuyers becoming more efficient and offering a less friction option, but I challenge you to show me an iBuyer making profit at this point.

It is nice to have iBuyers in the space to give agents and sellers options, we can share our sandbox.

The ReMax motto … MORE

The ReMax motto “MORE” is our value statement. We wanted to re-align ourselves to our north star - the way we are following. M.O.R.E. The “M” is for max, as in deliver to the max; the “O” is Obsessed, be obsessed, care with everything you’ve got; “R” do the right thing - we are ethical, honest and trustworthy people; and “E” everybody wins, this is what should happen with every real estate transaction.

What does a “win” mean? So many people go through life just doing things, the way Adam looks at it is that everything we do is a little mission. You either complete the mission and win or you don’t and you lose and learn. Everything we do in our lives we should look at and appreciate the opportunity to do it. Have the right attitude and take action, then you’ll win.

What is the beast and why would I want to party with it

Inside all our heads and hearts is this beast that causes us to doubt ourselves; doubt our knowledge, preparation, ability … Right when you get to the point where you need to do what you need to do that beast is going to come at you. You have to decide is that beast going to take away your power to do what you know you can do? Or are you going to go in there and use the beast as what it is, your realization that you know what yo do … that beast is your best friend and you have to decide if you are going to party with the beast or let fear stop you.

Action.

There is one solution to fear, doubt and being overwhelmed, and the tis action. The reality is that nothing happens thill you take action. Enabling is allowing people to get away with not taking action. Empowerment is encouraging people to take action. We deserve what we tolerate. Helping people take action is what leadership is all about.

A lesson about vulnerability

The interesting thing about vulnerability, people who have wrong intentions will use it against you. You have to be strong and vulnerable at the same time. If we are confident and strengthen we are vulnerable and we own what we say and how we do things and we are honest with other people, the reality is you’ll find out it’s ok and we don’t have to hide things and live in fear. We have to allow ourselves to trust other people.

The future of real estate

Every industry eventually goes through a complacency with the level of service clients. That is when disruptors come in and say “you’re going to go away” but really what we should be hearing is “raise your game” get better, provide a greater experience. There is a need for evolution, what the consumer wants is an expert. Let’s raise the bar, its like the difference between putting on a band aid and performing heart surgery. Let’s become heart surgeons.

BREAKING NEWS Zillow Stops Buying Homes | The iBuyer Experiment - Stop & Chat #37

Zillow Slams the Brakes on Home Buying as it Struggles to Manage its Backlog of Inventory

Zillow will stop buying homes through Zillow Offers for the rest of the year, as the company's iBuying program goes from full speed to full stop.

The company announced on Monday it would not contract to buy any more homes in 2021 in order to work through the backlog of homes it has already bought.

The "iBuyer" model used by Zillow and other real estate companies entails purchasing homes directly from sellers, and then re-listing the properties after doing minor work. But thanks to the current shortage on labor and materials, Zillow can't close, renovate and resell the homes fast enough. "We're operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces," said Jeremy Wacksman, Zillow's chief operating officer, in a statement.

"Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory," said Wacksman. Zillow will still market and sell the homes it has acquired through Zillow Offers, which has been on a purchasing tear this year. It bought 3,805 homes in the second quarter -- a record high for the company and more than double the number of homes bought in the first quarter, according to a note to company shareholders.

Zillow, known for its online real estate listings, introduced an iBuyer program, Zillow Offers, in 2018 and now operates in 25 cities. Like other iBuyers -- such as Opendoor, RedfinNow and Offerpad -- Zillow Offers uses data and algorithms about the property and the market to make a cash offer on an off-market home, and buys directly from the homeowner.

IBuyers appeal to home sellers because closings can take place anywhere from 7 to 90 days after the contract is signed and can provide some certainty and control over the sale of their home without the hassle of finding an agent and prepping the house for market. According to Zillow, the fee to the seller for Zillow Offers averages 5%, but can vary based on market conditions.

Home purchases by iBuyers now account for about 1% of the market, according to a report from Zillow. The share is still a tiny part of the whole market, but shows tremendous growth over the past few years as the iBuyer share in some cities, like Phoenix, Atlanta or Charlotte, North Carolina, now tops 5%.

Zillow wasn't alone among iBuyers in buying a lot of homes this year. IBuyers bought more houses, at higher prices, in the second quarter of this year than in any other quarter, according to research from Mike DelPrete, an independent real estate technology strategist and scholar in residence at the University of Colorado Boulder. That has surprised some skeptics who did not think the iBuyer model would be appealing to home sellers in a hot market.

His research suggests that sellers are drawn to the certainty and ease of iBuying and the market conditions fueled its growth. Zillow's move to halt purchases is surprising, he said, particularly because it is so sudden.

"iBuyers have access to a tremendous amount of data, they can see months into the future and plan their inventory," said DelPrete. "So the fact that Zillow didn't see this coming and wasn't able to make adjustments before it had to resort to an iBuying lockdown is pretty surprising."

This shift, he said, demonstrates how difficult this business model is to scale up. Large iBuyers need to be skilled at both managing billions of dollars in capital, but also the logistical specifics of prepping a home for sale, down to drywall and painting and closing deals.

"There is only so much that technology can do," said DelPrete. "At the end of the day you need people to process a lot of transactions."

However, the halt appears to be a Zillow-specific problem, not an iBuyer industry problem, DelPrete said. "Zillow just kept barreling down and now they've hit this wall," he said. This is not the situation a growth-focused company wants to be in, he said. "If you're trying to be number one in the market, slamming on the brakes is one of the worst things you can do," said DelPrete. "You want to make some adjustments before you get to that point -- slow down, switch gears. This is not the preferred outcome for Zillow." Opendoor, the leading iBuyer ahead of Zillow at a distant second, said in a statement it is still open for business.

Getting the Attention of the CEO of Zillow | The iBuyer Experiment - Stop & Chat #36

This week we are starting out with a viral video from Sean Gotcher that just asks a simple question.

He took on the big iBuyers with shit simple questions … What if? And that got the attention of the CEOs of Zillow and Red Fin!

What if everybody uses a home search site? And what of this site was collecting data about the buyer’s searches on the site? And what if in those neighborhoods buyers could afford some amount of money to live there? And what if this large company decided to buy up a bunch of houses? And what if they buy 30 of these houses at about the same price? And what if the 31st house they pay some amount over market value? And what if THAT house becomes a comp for similar homes in that neighborhood? And what if those 30 homes they bought at market price are now worth as much as the 31st? What if … They’d make about $1.2 Million in just that one neighborhood.

We’ll discuss this and what that might do the the market and the company and the neighborhood.

Consumer Psychology & Equity for Corvettes

This week we’ll start with out Deal Deep Dive because Keith has to lead soon to finish up that deal.

 

This one was a month in the making … The seller originally got a cash offer and a trade in offer, and either would have worked but after some deeper investigation by the agent and asking what they are truly trying to accomplish, the agent found out they wanted to access most of their equity and stay in their home. Their agent explained our Sell and Stay program and got them the numbers and it WORKS! This is a $1.3 million home in San Jose, CA - Everyone is excited, not only are the sellers going to get the equity out they need right now, they are going to stain their home for 12 months. It’s just a huge win-win for everybody.

 

It’s great to have options as a Zoodealio subscriber that you can bring to your clients to make things like this work out where everyone wins. Very cool.

 

It really is cool, the cash offer would have worked get them the funds they needed for what they wanted to do, but through the relationship of the agent, and the seller and Zoodealio they had options to work through and found the optimal solution. That is what it is all about.

 

Mortgage rates have hit a 15 year low, and people are thinking it isn’t because of a lack of demand, but rather from fear of the delta variant of the COVID virus. The fed is keeping things lower to keep the market moving even with greater fear out there about the virus. It was reported that the 15 year fixed mortgage rate was at 2.12%! That is insanely low.

 

When you go to your mailbox in the coming months, in stead of seeing 5 mailers advertising refi, you are going to see 30 of them. Because the tappable equity (the equity in a property above 80%) of American homeowners is through the roof! It’s $9.1 Trillion right now, that is enough to stack $100 bills for more than 4 round trips between New York and Chicago. What are Americans going to do with this money? We’re going t o see a lot of cash out refis and people using this money for all kinds of things. A lot of people will remodel - And some will buy a new Corvette. It’s their money they can use it how they want.

 

People are wondering how the big iBuyers are going to do in a down market. One theory is that they will do even better. If we do get to a point where the market price fluctuates a bit then people will value the certainty of the cash offer even more. 

 

It has been said that Home sales is consumer psychology. Very few agents really think about the psychology of buying and that we really do need to be armchair Psychologists. We need to know more about how humans thing and behave. One key thing is loss aversion … Most people will do more to avoid pain than to seek pleasure. The iBuyer model is changing consumer perception and its a big deal. It goes against the natural loss aversion and uses the idea that it will be easier and a more pleasurable experience. REALTORS can use that and show how they can avert the pain of selling. Ultimately remember YOU are the expert that is going to be their guide … their real estate sherpa.