What We're Reading
T3 Insight Monthly Digest Readings
- Reading for: May 2020
- From: ShowingTime
- Summary
Showings in the seven days through May 12 have surged to approximately 10 percent above the first week of January, and closer to 2019 levels for the period. The last time year-over-year showings were as close was in mid-March.
- Commentary
The increase in showings reveal that buyer activity is picking up. This is the first step toward more pending sales and then more closings and a release of pent-up demand.
- Reading for: April 2020
- From: GeekWire
- Summary
After suspending iBuying service RedfinNow in March, and selling a $100 million stake in its company to investment firm in early April, Redfin announced significant furloughs to its employee agents and layoffs of 7 percent of its staff.
- Commentary
Redfin’s deep furlough of employee agents reveals one of the key vulnerabilities of the employee agent brokerage model. Many agents, like their brokers, face dampened income with real estate all but coming to a halt in many markets, but the employee relationship reveals a tighter bond, and a deeper cut when severed.
- Reading for: April 2020
- From: Inman
- Summary
RE/MAX has temporarily deferred broker franchise fees, and has provided agents its AI-powered marketing tool First for free for three months.
- Commentary
Many brokerage companies are finding ways to ease the burden on business partners as the web of COVID-19 spreads into nearly all levels of the economy. Brokerages and agents can apply this same thinking to their own partners, if even on a smaller scale. This will help everyone weather the storm together.
- Reading for: April 2020
- From: Franchising
- Summary
Agent flat-fee franchisor Realty One Group signed 25 franchisees in the first quarter of 2020. This brings the franchise brand to over 13,000 agents as it opens three new U.S. states: North Dakota, New Hampshire and Rhode Island.
- Commentary
Like other companies who offer competitive compensation packages to agents, Realty One Group has seen large growth recently. The company, founded in 2005, ranked as the ninth largest franchise brand with a 2019 sales volume of $28.10 billion, according to the 2020 Real Estate Almanac.
- Reading for: April 2020
- From: Inman
- Summary
Compass fired 15 percent of its 2,500-person support staff, or approximately 375 employees. It also has shrunk its concierge program and paused its bridge loan program.
- Commentary
Every real estate company faces daunting challenges now. In some ways, this difficult time allows firms to reevaluate their businesses and focus on their core competencies.
- Reading for: April 2020
- From: The Real Deal
- Summary
EXp Realty parent company eXp World Holdings reported $800,00 in net income for the fourth quarter of 2019 while revenue grew 82 percent from fourth quarter 2018. This is the first profitable quarter for the company since listing on the NASDAQ in May 2018.
- Commentary
EXp Realty has grown wildly in last few years, on the back of its relatively low annual commission cap for agents ($16,000), its revenue-sharing model and its virtual design. As a completely virtual company, the brokerage operates more nimbly without one of the main expense line items for traditional brokerages. Agent count grew 63 percent in 2019 to 25,423 agents.
- Reading for: April 2020
- From: Benzinga
- Summary
Constellation Real Estate Group and its subsidiary Constellation1, an all-in-one provider of front- and back-office technology and data services to real estate firms, acquired broker platform provider Virtual Properties.
- Commentary
Constellation Real Estate Group continues to amass a growing suite of real estate tech tools. T3 Sixty represented Constellation Real Estate Group on the transaction.
- Reading for: April 2020
- From: ShowingTime
- Summary
This real-time data set shows just how much COVID-19 has impacted showings. In data through April 6, 2020, showings are down 63.6 percent across the nation.
- Commentary
While companies have implemented virtual showing technologies, this chart emphasizes the demand drop caused by the coronavirus pandemic. While real estate activity is down, brokers and agents can refine processes and cultivate contacts with their spheres.
- Reading for: April 2020
- From: Seeking Alpha
- Summary
Realogy added $400 million from its existing credit line in March and executives temporarily cut pay: 90 percent for CEO Ryan Schneider and 50 percent for execs reporting to him. In a podcast with Brad Inman, Schneider also talked about deferring franchise fees and about his interest in making Realogy Brokerage Group more nimble and virtual. (Inman also spoke with T3 Sixty CEO, Stefan Swanepoel, which can be found here.)
- Commentary
Like many real estate companies, Realogy has made aggressive moves to add liquidity and cut costs. COVID gives brokerages a chance to reevaluate their operations in a digital world, it also requires decisive quick leadership, and cash. Realogy moved relatively quick on both
- Reading for: April 2020
- From: Sequoia Capital
- Summary
Sequoia Capital’s observations and advice to CEOs and founders about what to expect and how to adjust to the market environment brought on by COVID-19 include making fast, decisive and informed decisions, keeping a close eye on cash runway, revising sales forecasts conservatively and reducing capital spending.
- Commentary
Anyone response for their real estate organization’s P&L should carefully review their financials on a frequent basis and refine their operations to sustain a downturn.
- Reading for: April 2020
- From: Realtor.com
- Summary
In the weeks ending in March 29 and April 5, new listing volume dropped 34 percent and 31 percent, respectively, from the same weeks in 2019. While still up from a year ago, list prices show lower year-over-year increases since COVID’s influence kicked in.
- Commentary
We all sense real estate’s slowdown and these numbers back it up. With the possibility of a longer recession looming, even after the COVID-19 immediate impact subsides, brokerages should implement a conservative gameplan.
- Reading for: April 2020
- From: TechCrunch
- Summary
Zillow Group and Opendoor, and several smaller iBuyers, have announced they have paused buying homes in all of their active markets. Zillow Group had approximately 1,860 homes in its inventory as of the March 23 release and continued marketing and selling efforts.
- Commentary
In some ways, iBuyers are well-positioned to serve consumers in an environment when speed and certainty become even more important. In other ways, they face a big burden as they have large carrying costs and dampened homebuyer demand in many markets.
- Reading for: April 2020
- From: Harvard Business Review
- Summary
HBR studies what companies have done to prepare for, thrive in, and get through a recession. The review notes that quick financial decisions are important to survival in addition to managing cash flow and debt. Organizations with nimble decision-making structures, particularly those tuned to local market dynamics and who empower local leaders, fare better than those that do not.
- Commentary
Facing a potential lengthened recession, real estate brokerages, especially those with large footprints, should deputize local leaders to make important decisions based on local information while adhering to core company guidelines. While easy to consider, layoffs are often not the best long-term option, as hiring and training costs can be high; consider furloughs and reduced pay to bounce back quickly when the market returns. Adoption and training are always tricky to implement when schedules are full; use this time as an opportunity to refine and implement processes that streamline operations.
- Reading for: April 2020
- From: Inman
- Summary
Coldwell Banker’s new program — Coldwell Banker Diversity in Ownership Program — is available to brokers looking to affiliate who identify as racial or ethnic minorities, women, military veterans and LGBT. CB waives the $25,000 initial franchising fee when qualifying for the program. Brokers can also receive other perks including up to $100,000 in support, mentoring, royalty fee rebates for two years and fee membership into real estate organizations such as NAREB, AREAA, NAHREP and NAGLREP.
- Commentary
The definitive annual ranking of the 200 most powerful and influential leaders in our industry: the SP200:clearly depicts how industry leadership significantly lacks representation from minority groups. Programs like this one from Coldwell Banker represents a great proactive steps by a national giant to help the industry change its ways and become a more inclusive place, especially at its upper ranks.
- Reading for: April 2020
- From: Inman
- Summary
Plaintiffs in the Missouri-based class-action antitrust suit that alleges commission structures are anticompetitive have subpoenaed Fannie Mae and Freddie Mac for details of agent and broker compensation for the last 13 years.
- Commentary
T3 Sixty, publisher of T3 Insight, has also been subpoenaed to provide details of some of its industry research for the Missouri-based class-action antitrust suit. The industry reach of this lawsuit and the other class-action antitrust suit continue to deepen and all indications are that the case and its impact will persist for a long time.
- Reading for: April 2020
- From: Inman
- Summary
Redfin expands its partnership with Opendoor by nine cities bringing total markets in the partnership to 11. The partnership presents Opendoor as an option to sellers who visit Redfin’s site.
- Commentary
This partnership extends the reach of iBuyers even farther. With Zillow and Redfin among the most popular real estate sites in most markets, more and more consumers will encounter the iBuyer value proposition in the wild. IBuying is going mainstream.
- Reading for: April 2020
- From: Inman
- Summary
Agents who join KW after April 1, 2020, will no longer receive profit sharing (based on the agents they recruited) if they leave the brand and join a competitor. Agents previously received profit sharing for their lifetime regardless of their post-KW real estate journey. KW’s Agent Leadership Council also voted to increase the profit-sharing vesting period from three to seven consecutive years with the brand.
- Commentary
As competition heats up among the nation’s largest real estate companies, these changes from KW reflect how companies may work to incentivize their independent-contractor agents into staying longer.
- Reading for: April 2020
- From: Harvard Business Review
- Summary
Some organizations are utilizing new strategies for helping their employees to learn with “chief learning officers,” which is helping performance.
- Commentary
Chief learning officers (CLO) focus on how to identify and train talent within a company in part by focusing on capabilities not established skills and developing digital savviness. Smart companies know that leaders and staff are a company’s largest assets. This article provides some insights into how to adopt the CLO mindset: if not a CLO: to improve company performance.
- Reading for: April 2020
- From: Inman
- Summary
A deep dive into the evolving phenomenon of the iBuyer aggregator, a firm that collects offers (or estimates) from a number of iBuyers and other investors, and how and why iBuyers themselves are trying to limit them.
- Commentary
As iBuying evolves, offer aggregators present one way companies, agents and brokers are attempting to leverage the demand for these quick, easy, certain offers.
- Reading for: April 2020
- From: The New York Times
- Summary
A startup reckoning appears to be happening beyond just SoftBank’s painful WeWork stumble. The New York Times chronicles the struggles of an increasing number of once high-flying startups as investors, and Wall Street, refocus their attention on companies demonstrating profitable business models.
- Commentary
The idealism of recent startup lifestyles are crashing back to reality. Real estate has lived this front and center with SoftBank fueling Compass to exceptional growth that now leaves it with a reported tightened spending culture and cooled acquisition appetite. It, however, also helped Compass grow quickly into the nation’s third-largest real estate brokerage, by a huge margin, by surpassing companies such as Douglas Elliman, Howard Hanna nd Redfin over the past two years.
- Reading for: April 2020
- From: Realogy
- Summary
Realogy renames NRT as Realogy Brokerage Group.
- Commentary
This cleans up a legacy acronym (NRT was stood for National Realty Trust), which has no consumer recognition. The move simplifies the perception of its corporate structure. Its two large divisions now have the same naming structure: Realogy Brokerage Group and Realogy Franchise Group.
- Reading for: April 2020
- From: Tim Ferris
- Summary
Tim Ferris (author of bestseller “The 4-Hour Workweek”) interviewed Gary Keller.
- Commentary
This interview has great insights into starting up a company with little capital and a strong vision and is worth the listen.
- Reading for: April 2020
- From: RISMedia
- Summary
After expanding overseas, BHHS now also formally jumps into Canada for the first time with a 100-agent affiliate in Toronto.
- Commentary
BHHS, which rolled out its first franchisee in 2013, expands its global reach. It now has a presence in six countries: Canada, Spain, England, Germany, Italy and Portugal.
- Reading for: April 2020
- From: Inman
- Summary
The MLS RealTracs, which serves 15,000 subscribers in the Tennessee area, has launched a program, RealTrac Rewards, in which it will pay member brokers $5 for every transaction they close through the MLS, as part of an effort to encourage use of the MLS. The MLS paid out $300,000 in retroactive payments to brokers for 2019 transactions.
- Commentary
As MLSs strive to remain the center of the real estate transaction universe, this is one novel way to do it. Time will tell whether other MLSs will consider this or similar programs. The Clear Cooperation Policy, taking effect May 1, 2020, may preclude the need for others to take a step like this, however.
- Reading for: April 2020
- From: Inman
- Summary
Sarah Richardson, CEO of Phoenix-based, 75-agent Tru Realty, provides insight into how her indie firm selects technology vendors.
- Commentary
Richardson displays sound thinking in choosing the vendors she partners with by assessing their tech teams and ability to quickly add new features her staff, agents and company want and need.
- Reading for: April 2020
- From: Inman
- Summary
Climb Real Estate Co-Founder Mark Choey charts Climb’s journey, from budding idea to growth, to eventual sale to Realogy.
- Commentary
Choey’s blow-by-blow, over 5,000-word tale of Climb’s rise and eventual sale to Realogy reveals the passion, vision and savvy required for a brokerage to grow quickly and succeed. It also shows just how big a presence Compass occupies in the minds and hearts of brokerages, and how its growth instigated Climb’s eventual sale to Realogy and sheds light on the brokerage consolidations happening in many markets across the nation.
- Reading for: April 2020
- From: Inman
- Summary
The most public implementation to date of the so-called “Clear Cooperation Policy” by Bright gets another close look at their February deadline to start levying $5,000 fines. However, as of the date of this article, no fines have been needed.
- Commentary
Bright’s policy, which pre-dates the NAR 8.0 policy, is designed to address off-MLS listing concerns. It has become ground zero for the national discussion of this controversial MLS policy change. While not all Realtor associations and MLSs who will be implementing and enforcing this policy over the coming months will receive the same attention, each organization’s leaders should learn from Bright and thoughtfully develop implementation strategies, update policies, and deliver educational campaigns to reduce the potential for friction with the brokerage community.
- Reading for: April 2020
- From: Inman
- Summary
Realogy announced the development of a proprietary CRM and agent-facing listing websites for agents at company-owned and affiliated offices. The tools — built in partnership with tech startup OJO Labs in which Realogy has an equity stake — fit into Realogy’s new “productivity hub,” which features an open architecture that facilitates integrations with other tech, proprietary and third-party alike. Realogy currently has the CRM tool in pilot phase.
- Commentary
Realogy joins large real estate companies Keller Williams Realty, RE/MAX and Compass in providing custom, proprietary tech for agents in its network. It represents a slightly different approach to these companies, however; it has leveraged strategic partner OJO Labs to build the tech instead of building the technology in-house. Realogy participated in OJO Labs’ $75 million Series C round in March 2019 and its $20.5 million Series B round in May 2018.
- Reading for: April 2020
- From: Inman
- Summary
The nation’s largest MLS is expanding its services well beyond the state of California to partner with broker-owned Louisiana MLS Greater Southern MLS. CRMLS will provide technology and services. Greater Southern MLS is a relatively new entity that hopes to build a state-wide MLS in Louisiana. Brokers founded Greater Southern MLS in response to the challenge of dealing with (and paying for) multiple MLSs in their footprint.
- Commentary
This deal demonstrates CRMLS’s ability to work with a variety of ownership models, including brokers, and continues the noncontiguous collaboration emerging in the MLS industry. The Louisiana side of the story may contain more pertinent lessons for most Realtor association-owned MLSs as the emergence of this broker-led initiative is a direct response to the local MLS’s inability to address brokers’ request to bring the data together. If CRMLS and Greater Southern MLS find success, this could be a whole new competitive factor for local MLS leaders who think they do not have to work collaboratively or consider data and organizational consolidation.
- Reading for: April 2020
- From: Inman
- Summary
In announcing its new Cash Close service, HomeLight jumps into the iBuyer fray. HomeLight backs a synchronous seller — a seller who is also buying a home — with a cash offer on their new home. When the offer the seller makes on their next home is accepted, HomeLight purchases the seller’s old home and then re-lists it with seller’s agent. HomeLight also serves buyers with a cash offer. Both programs require consumers to apply for and use a HomeLight Home Loan.
- Commentary
As iBuying morphs into something we’ll call iFinancing, companies such as HomeLight are introducing twists on the traditional iBuying model as they work to win ancillary business on top of their core iBuyer value proposition.
- Reading for: April 2020
- From: The Atlantic
- Summary
Approximately two-thirds of American households would struggle to deal with a $400 emergency cost, according to a report from the Board of Governors of the Federal Reserve System. This reflects the increased cost-of-living challenges many Americans face. Housing prices represent the biggest cost families face; home prices have risen faster than wages in 80 percent of U.S. metros. And all but one metro of the 160 tracked by NAR saw affordability drop from 2017 to 2018.
- Commentary
Housing affordability has become an increasing challenge that the real estate industry should watch closely. Constrained inventory plays a role in keeping home prices high, but other economic factors play a role, too.
- Reading for: April 2020
- From: RISMedia
- Summary
Howard Hanna Jr., who founded his eponymous brokerage in 1957 in Pittsburgh, turned 100 on Feb. 10, 2020. Howard Hanna Real Estate is one of the nation’s largest family-owned brokerages and the eighth largest brokerage overall.
- Commentary
Hanna’s children — Howard “Hoddy” Hanna and Helen Hanna Casey, No. 9 on the 2020 SP200 — and his grandson — Howard “Hoby” Hanna, No. 43 on the 2020 SP200 — continue to lead the company today. Howard Hanna exemplifies the quintessential family-owned brokerage founder.
- Reading for: April 2020
- From: Redfin
- Summary
Relatively affordable neighborhoods dominate this year’s list. Seven of the top 10 neighborhoods to watch in 2020 have median sale prices of less than $500,000. Three even fall below the 2019 national median of $279,900, making them affordable compared to other parts of the country.
- Commentary
As the majority of America’s metropolitan housing markets price a growing number of residents out of homeownership, the southeast rises as one of the most desirable, affordable places to live. Half of Redfin’s neighborhoods with median sale prices under $500,000 are in the states of Virginia, North Carolina, Florida and Tennessee. These attract aspiring homeowners, and corporations looking for workers are following suit. This article also provides great statistics and insights into which regions to watch by metro area.
- Reading for: April 2020
- From: Crunchbase
- Summary
Philadelphia-based discount brokerage Houwzer, which lists sellers’ homes for a flat fee of $5,000 and uses employee agents, raises $9.5 million to expand into Baltimore and Orlando, Florida. It also plans to expand services to include title and mortgage. The firm currently operates out of Philadelphia and Washington, D.C.
- Commentary
Like Homie, Houwzer, launched in 2015, has proved to be an enduring discount brokerage with a newer model. Like many real estate brokerage startups, it’s now focusing on growing its ancillary business.
- Reading for: April 2020
- From: Inman
- Summary
Large San Francisco-based independent brokerage Zephyr Real Estate combined with Lake Tahoe, California-brokerage Oliver Luxury Real Estate to form Corcoran’s first franchisee: Corcoran Global Living. The new firm has 450 agents with an annual sales volume of over $2.6 billion.
- Commentary
A little over a year after announcing it would begin franchising the Corcoran brand, Realogy signs its first franchisee. This comes just a few weeks after Realogy decided to shutter Climb Real Estate, the San Francisc o indie brokerage it acquired in 2016 and announced plans to franchise in 2018.
- Reading for: April 2020
- From: BlackRock
- Summary
Larry Fink, the CEO of large asset management firm BlackRock, which owns large stakes in Realogy, RE/MAX and Redfin, announced in his annual CEO letter that BlackRock will now take climate effects into account when making future investments. With this, he predicts a large reallocation of capital into investments in environmentally sustainable businesses.
- Commentary
This announcement by a major investor in residential real estate companies that it will start including environmental factors into its investment analysis could push down real estate values, which, in many places, have not reflected the long-term impact of climate risk. Some analysts suggest that adding climate and environmental considerations into real estate investment analysis could significantly affect the mortgage market, in addition to the residential real estate industry as a whole. BlackRock owns 17.49 percent of RE/MAX stock, 15.56 percent of Realogy stock, 6.51 percent of Redfin stock, 2.22 percent of eXp Realty stock and millions of shares of Zillow Group stock (according to Inman).
- Reading for: April 2020
- From: TechCrunch
- Summary
Utah-based discount brokerage Homie raises $23 million to open in three new markets starting with Las Vegas in March 2020. Homie, which operates in Utah and Arizona and uses employee agents, represents sellers for a flat fee of $1,500 and provides buyers rebates of up to $5,000.
- Commentary
2015-founded Homie has shown some staying power as a new discount brokerage. Its performance as it expands will reveal whether it has the potential to follow in Redfin’s footsteps and grow into a national brand.
- Reading for: April 2020
- From: HBR
- Summary
Choosing effective leaders requires great care and the ability to discern whether a candidate is just a valuable contributor or a promising leader with high integrity and minimal character challenges. Choosing great leaders also requires accurately assessing candidates’ true impact versus just their overall impression and a proper assessment of their demonstrated ability to think intelligently and nimbly.
- Commentary
Strong leaders are the backbone of a successful real estate company and choosing leaders wisely is critical to operating smoothly and growing smartly. This article gives managers some key insights they can use to pierce their hiring and promoting blind spots and better evaluate the leaders that will help their organization grow.
- Reading for: April 2020
- From: 1000watt
- Summary
1000watt partner Brian Boero writes a blog about the realities of those involved with real estate and what the market tolerates with inexperienced agents.
- Commentary
A quick, poignant blog that says what many are thinking. In recent T3 Sixty MLS subscriber surveys, an average of nearly 10 percent reported not having a single transaction in 2019, while another 26 percent reported having between one and five deals. Not shocking or new but still astonishing every time you hear the numbers. With NAR membership at nearly 1.4 million members, that would translate to 140,000 and 364,000 agents, respectively, for a total of 504,000 members, who basically do not survive as full-time agents.
- Reading for: April 2020
- From: Vendor Alley
- Summary
Vendor Alley publisher Greg Robertson points out the differences in the way KW listing agents are presented on the new kw.com and zillow.com, and concludes that KW listing agent attribution is better on Zillow. In addition, he points out that the new kw.com site is slow, and the images have lower resolution.
- Commentary
Despite the success of introducing an innovative search experience around neighborhoods, the unavoidable challenges that companies must address when rolling out a big, new public-facing tool tend to dominate the initial feedback. This post highlights the challenges all companies, not only Keller Williams, faces in rolling out new initiatives and new software.