KGCI: Real Estate on Air - Chaos or Gold Rush? NAR Settlement and the Future of Real Estate

Episode Date: July 9, 2024

Hey, friends, welcome here to another episode of your uncommon real estate podcast with the host Chris Craddick, myself, Jeff Saferight. Today, we are going to jump on with our special guest, Gannon Brown, owner and operator of several businesses in around the real estate industry. So, Chris, why don't you go ahead and give us a little bit further introduction here of Gannon and let's jump in and get to business. All right. So Gannon was introduced to me by a very close friend of mine out in Oklahoma. and are you in Tulsa? Are you in OKC? Yep, in Tulsa. Okay. Yeah. So again, I've been talking a bunch and again is built a team that has broken the infamous once you hit 100 million or above, you know that you've done something right, right? And so they've gotten there to that

100 million mark. And today it was funny because we were talking about what we wanted to talk about in the midst of all the chaos. I think it was before the chaos. And And then the chaos really erupted. And so we're like, all right, well, how do you win in chaos? Well, here we go. Like, chaos is on us. So with that said, get, and do you mind sharing with us a little bit about yourself and just how you brought yourself to the 100 million mark with the team, a little bit about your

background, other business, everything else? And then we'll dive into how to win in chaos. Yeah, first off, thanks for having me, Jens. I'm honored to be here, excited to dive in and talk about it. And yeah, what a chaotic week. It's funny kind of how just the topic has spiraled. So a little bit about myself. My family and I own a real estate company here in Tulsa. We're part of a brokerage, but we got into real estate in 2004 when we were flipping houses. And we got stuck on one. My mom, who's one of my business partners, and at this point said, I bet I can get a license. And it just took off. I jumped in the industry about 12 years ago. And about three or four years into that, started the team and decided to, go all in on the industry and it took off. It's been it's been really good. It's been a fun ride. And yes, just like most real estate nerds, then once you get exposed to the residential side,

then you start to say, well, what else is there? And then there's the construction and the development and the commercial side and the investment side. And so we've dabbled and started and even exited any of those at different points through the career. And so have a couple of different ancillary companies and just just love eat sleeping drinking doing all things real estate i'm 36 i'm a dad to three kids i've got six year old twins and and a two year old all boys so we live a fast-paced chaotic life and and love the the real estate chaos that comes with it yeah no that's awesome so so you guys started i didn't realize this so you were flipping homes originally yeah yeah so i could probably build a house from

the ground up with my bare hands. Like both my parents are engineers. So just stupid frugal, right? So when I say we were flipping houses, it was like I was paint, I was tile, I was, it didn't matter what it was. Like, we did it all. And so it was great because it really gave me, it gave me a great understanding of like how a house worked.

And so later in life, and at the time, I truly didn't appreciate this. I was going and stupid and wanted to be doing anything else other than manual labor. But later, especially now in my career, it gives me a really cool understanding of just how house operates, how it's put together. What doing it well looks like from a construction standpoint, what doing it really poorly looks like. So it's given me some appreciation for that. Yeah.

No, that's awesome. That's awesome. Well, very cool. All right. So let's get into chaos here. What have you, obviously, all business is chaos, right? Like it's a train wreck that somehow stays on the track most of the time, right? So tell us, tell us about your business now and what are some of the things that you've been able to do like in the midst of chaos to win.

And then let's dive into NAR and like what we're doing to go forward. Yeah, love it. So initially the team was small. Really, it was born out of just an excess of my mom's business. And I was not in the industry. I was fresh out of college working in another industry. and decided that this might be something I was interested in and got interested. And early in my career, I thought I wanted to be a home builder and just got some advice

to not be, to not walk around and be the guy that needs $40 million worth of debt in his name to go to build houses. No offense to the builders. That's certain people's callings for sure. But to be a transactor. And so I had my mom in the industry already. So I had some exposure to what that transactional life could look like. And so got excited about that. But fundamentally, there was the CEO of our brokerage at the time and I were getting to know each other better and went to lunch one day. And he basically, I asked him at the time our team was doing maybe $35 million a year,

which still was not, it was still the largest producing entity inside the brokerage. But I just asked him, I was like, what would it, do you think it's possible even for a team in Tulsa, Oklahoma, or in Oklahoma in general to do over $100 million? And he just didn't even hesitate. You're like absolutely not, man, that's crazy. There's no way that would happen. Brokages aren't even doing this. And this was, again, this was 12 years ago or 10 years ago, somewhere in that time frame.

So scales of economy and price points and all that stuff were definitely different. But I just took that and it became this kind of personal goal where it was like, all right, well, just when somebody tells me you can't do it, that's the ultimate motivator to be like, hold my beer man or watch this. We're going to go do it. Yeah, if you raise the name with that at all? Yeah, I can tell both you guys are probably very similarly driven. And so that was a huge motivating factor. And what was interesting was, so we decided to grow. And there was always this kind of like dichotomy.

Do you be the SEAL team at four or five, six agents, or do you try and get bigger than that? And I just was like, I think we need to try bigger. We understand what our economics look like small. And then this kind of SEAL team situation, let's, let's, let's, go bigger. And so at the time, it was like, my mom was the primary producer. And then we had maybe two or three other others of us. And I was one of those other primary producers, right? And then fast forward, probably another 12 months, 15 months after that, I was like, I need to take on more of a leadership role. I think I enjoy trying to find and encourage other agents as well. So I started

to transition into what it would look like to help try and run the organization versus just be part of it on the sales side. And so we hit this, kept hitting this interesting ceiling. I think we had three years in a row production-wise where we were like 47 million, 48 million, 52 million. And we just were kind of like, what are we doing? Like how come we can't go to the next level? And so we really pressed in. I had never really recruited intentionally. And so I started to just be a little more intentional with our network.

We added some more seats still in a pretty organic way. And then we were at about the 10 people mark. And not everybody was all in. we had a myriad of different folks, but we finally were able to break through that, and we journeyed up into the $80 million mark. And so then I could start to sniff the, oh, okay, we're headed the right direction. And then finally we busted through that $100 million mark. And if, and have hovered some years above and some years below that up into this point. And it's a, it is a lot of chaos. I think that that is a coordinated chaos is the best way to describe team life or if you're running a

brokerage or a team ridge of some sort. It's just there's something going on all the time. There's almost a fire all the time. And yeah, so it's been fun to learn how to try and problem solve inside of that ecosystem. And then Chris, it's funny because we're talking about chaos and inside of this chaos. I'm at that next tier where I'm like, all right, well, so we broke $100 million. Now, how do I go to $150 and $200 million and trying to understand those economics and scales of economy from some guys that have done it. And interestingly, in Oklahoma, I felt like I was on an island for the last four or five years. And inside of the chaos, one of the stupid things we had never really done is get coaching. And I had never really been intentional outside of our city or in our

state and trying to just connect with guys like yourself to talk about what's going on in the business and what are we struggling with and how do we get better. And so I would say that that's certainly been a massive, massive advantage. and opportunity that I'm so glad that I'm taking better advantage of now that I wasn't inside of this kind of chaotic period is is really resourcing and networking well. The other folks who have definitely trailblazed 10 times, 20 times, 100 times further down the path that I have and taken some notes out of their book. Yeah.

Yeah. What is? Imitate that enemy is like the biggest key. Mm-hmm. Yeah, like R&R and D, rip off and repeat or repeat or. off and do it again, Bill? Yeah, exactly. I heard Gary Keller say one time that the biggest problems with entrepreneurs was that they're

so creative, right? So they can create all these different ways to do things, but also the biggest problem of entrepreneurs is they're so creative that all of those problems have been tried like a billion-y times. And if you can find other people that can show you how to do it right, then you can understand, okay, this is why these things don't work. And then once you understand how it works from the best in the business, then you can innovate and not just make the same stupid mistakes. Everybody else has made 500 times. Yeah, that's really good. It's really good. I think the other part

of this that is really cool to dive into for a second is just being able to tap into and hear the mindset of people who have done things at a bigger scale or further ahead of you. It's, it's so, the innovation side is fascinating too in the implementation and the application side of it, but even understanding the mindset of like, how do I take myself there has been really refreshing. Because if you can't get your mindset there, then it's really hard to go implement and, and replicate those whatever you've even heard if you can't really mentally get there. So why don't we jump in? I guess with this NAR ruling, right, we are all going to need to pivot. I'm, you know, again, and I, we were just talking earlier today,

and one of the ways that we're pivoting, we already focus a lot on sellers and especially our quick sell clients, people that need to sell quick, oftentimes in distress, oftentimes just all the different pieces there. But as, which obviously is a great win for us because of the fact that now we don't have to even worry about if you control the listing,

you don't have to worry about the buyer commission as much. Obviously, it still will impact you. But I am curious, what are the things that you guys are hearing and what are the things you're looking at? And obviously, Jeff, feel for to jump into as well.

But what are the things that you guys are looking at as far as just this, the chaos here. Yeah, good question. I haven't been around the industry like for 25 years or anything, but even in the 15 or 20 years that I've been paying attention to it longer and the 13 years that I've been in the industry, it seems like every couple of years there's something like this, right? That it just creates the chaos and the conversation and it creates the headlines and

all that stuff, right? and at one point that was, oh, man, the, the MLS is going to take realtors jobs away. And then it was, oh, the internet is going to take realtors jobs away. And then it was internet leads and that's the end of it. And then it was Zillow and Zestim, they're going to buy your house. And then it was interest rates. And right, now we're in the NAR settlement phase, right? And, you know, I think a great way to look at it because there's all the, the sky has definitely been following every couple years for the last couple decades. For sure.

And everybody gets hyped up about it and talks about it. But what I do know consistently is that the industry is changing the whole time anyway. It's a constant evolution of what we're doing. And it just gives confidence to me and to other guys. I'm sure like you that are like leaders already in the industry where it's like, all right, great. The goal is to stay on the edge, the front line. And if you're willing to pivot and shift, you can do that. And if you're not, you attrition.

You die at some point. And that's just kind of industry in general. It doesn't matter what industry you're in. If you're not willing to do that, you get cut out. And so from what I'm, you're hearing a lot right now. And I think the hardest part is to hear through the BS and the noise and kind of focus in on still what's the truth and all of this. And I think one of the things that you and I were talking about, that I really believe, and this is how we've tooled our business from the beginning,

is that if you can control the supply side of our industry, which is the listing side, and you can have a strong market share there, you can win, because listings bring buyers. And I think that with kind of the current shaking up that's going on with NAR, the questions that are getting asked, I think that that listing side is even more pertinent now, just because it really seems to be centralized, whether it's true or not, whether it's the right answer or not, but it seems to be a focused attack on this buyer's agent side of the industry. So clearly to be, clearly better to be on this other, more stable and secure side of the conversation, even at this point. What do you think? Yeah. Jeff, do you have any thoughts on that?

Well, I absolutely like getting your perspective. Listen, things are always changing. they're going to continue to change. This won't be the last change. As Chris and I were talking about the other day, your perspective, right? Winners win. They always find a way to win. They always find solutions to problems. And so if you stay on that track, you're going to be just fine.

I do think, and one of the things that I've done a little bit the last 24 hours or so is just listen to listen to response was just to listen. Okay, what does it mean for me as an agent, right? For what does it mean for me as an agent and looking at on the listing side, on the buy side, these things. I've started listening to what investors are saying, listening to what lenders are saying, listening to just different, different sides of it. I think that it's just been fun and interesting to a degree to listen to all those sides. But at the end of the day, listen, we are all going to need somewhere to live. And you're going to have to buy that. it's going to have to be bought somehow, right? And just like you said a moment ago, whether it's the Zillos, the red fins, the iBuyers, the whatever it is. Real estate is a relational business and it's

different than everything else. Right. So it's also, what is it like 20% of our economy, right? So who knows exactly where this whole thing's going to land? But it's going to get a lot of attention and it's going to probably look different in some ways. But at the same time, it's, I like what some people are saying. There are people out there calling for Doomsday. There's other people that are saying it's going to survive,

but there's going to be a seismic shift. And there's other people that are saying, look, it's not really going to be that different, whether or not what you can and can't say on the MLS. So at the end of the day, go to a yoga class, learn how to breathe,

relax, and we'll be here next week, we'll be here next month, and we'll be here next year, right so i'm just more so personally in the gathering data phases i learn how to pivot and to attack this as an opportunity because i absolutely as true as it is that we're all going to have to buy houses it's true that every time that that that things shift there's opportunity to be had and so my question is is is not am i going to survive or not it's it's where's the

opportunity that i can take advantage of yeah i love that that whenever stuff like it just fractures and it opens up. And I think that one of my favorite books that I've ever written is called Exploiting Chaos, right? And how do you get inside of in an industry like this where there's chaos right now? It was already an interesting topic of conversation for folks, even who weren't in the market to buy. Just rates are high and all values have changed a ton. There was just so much content to already talk about in real estate. And then this thing's just put a flashlight under it. And when the flashlight's under it, you can see all those fractures, especially those who are paying attention. They're plugged in. They're willing to listen to all

the different vantage points, evaluate, admit that they don't know everything, learn from others, right? If you're willing to do that, then the opportunities tend to unfold. And it's a really interesting time to take market share. In investments, one of the things I've always loved is buy when there's blood in the streets. Well, this is that same thing. situation here where it's, man, when they're when they're talking about how terrible everything is, that's the blood in the streets. That's the that is when that's when the hungry dogs come out and take advantage and level up and go to that kind of next tier of their business. And so I see this as that the beginning stages. I think it was prepped already with the rates and all that stuff. This is

just a cherry on top that that I don't know, you can dive into a million conspiracy theories, but it's interesting timing, right? Election year and and, but it's happening. Either way, it's, the cat's out of the bag, the conversation started. So I definitely think that there's a lot of opportunity to talk about, take advantage of. I also think that in the very short term, it changes really some key conversations you need to have. And it changes the way you need to be thinking about some things. Operationally, in a lot of states, this is how it's always operated. For other states, it's going to be a bigger shift. So I think, I think like you said, it's a gear up time, a data gathering time to get prepared for.

It's still a proposed settlement. A lot could happen between now and then. There's some big entities that need to sign off and give it the rubber stamp of happiness. So who knows what happens? We didn't know this was coming 90 days ago. Who knows 90 days from now if it's the same or different or shifted or what the situation is? Right. I think the one thing on an agent level, if you're still doing active production,

you're the one of the things that I love I feel like to some degree when we had kids we nailed the whole like infant toddler stage because the one thing that I learned very early on with with kids is like they respond to your reaction right they respond to your emotion so if you're calm and you're relaxed a baby will tend to calm themselves and relax much more quickly but if you're anxious and you're frustrated and and your heart you've heard you baby's cried all the time. I know. I don't know. The one thing I put outside, you know, the kind of a true story. No, I'm just kidding. But, um, Chris is like, he's not lying. You know, but the reality is, is that people respond to people. And the coolest thing about

this whole thing is I've had more people in the last week reach out to me about real estate than I have probably in the last six months. Because everybody wants to know my opinion. And I, and I confess, right, right? When I, when I first learned about it. My initial reaction was like, man, buyers are screwed. Like, first time home buyers are screwed. Veterans, military folks are screwed with their VAs. And one of my VAs or one of my military guys he calls me and he's, hey, man, what's going on with this whole thing? I was like, bro, you've just been screwed. And he's like, what do you mean when he gets all nervous? And then he's texting me the next three days. And as I realized, that was the worst response I could

have ever had. Maybe he goes and buys six houses in the next three months because he He doesn't want to have to pay buyer company. He wants to use his VA loan, I don't know, which would be great. But the reality is, man, if you're just calm and relax and like I said, just that simple, look, people are going to need to buy and sell homes. And they're going to want representation. Things are, everything's going to settle. The dust is will settle. And then we can have a conversation about how we can intentionally move forward when you're ready to buy and sell real estate.

That's the best response to have, right? Right. Staying calm. You don't have to, in my opinion, you don't have to be like, oh, this is the greatest moment in real estate history. Like, you don't got to be that cheerleader, but don't be the dooms day either, right? Just that, just that common look, the dust is settling. We'll find out as we go.

But the reality is we're going to have to buy and sell homes and that's a people business. And you're kind of, you know, representation. I think we, we all forget. Hey, we just, we, it was not that long ago. We came through COVID. Like, we came through COVID. That was the end of every. industry, everywhere, anytime, like the whole world was over, right? And then as a matter of fact,

it set us into a real estate mini boom for a little bit there. So I think, I think it's, you're right, that poise, that collective calm, that that's that mindset thing, right? Where it's, oh, man, and I've been guilty of it. Like last year, I bought it into the mantra, oh, the inventory's down, the market's terrible and yeah, that, that, that, and, and, and, and, we were sluggish. Like, like, that's, you can so easily get caught up in that stuff. And but it's also, it's a choice, right? And, and choosing to be on the opposite, the opposite end of that pessimist or optimist kind of spectrum, even just even dead middle, like realist. This is just what it is, right? Like, I think that's so much safer. Because what you focus on grows, right? If you're going to stay in that negativity camp, man, it's going to, it's not going to help you. I promise that. I've been there before and it's a, it's a dangerous rut to get stuck in for sure. use some of it for humor as well, right? Yes.

I wasted five minutes today to get some good humor because I learned that AI is going to take over the home buying business. And now you're going to go and you're going to present, you're going to scan your ID and then you get to walk around the house with AI. And then at the end, they're going to ask you if you want to make an offer and they're going to walk you through how to make it. So by September, none of us will have jobs because AI is going to take everything over. But have some fun, enjoy, relax. I'm having fun with some of it anyways. Agree. Yeah, life's too short to not be having fun. Yeah. And as I look at it, I've done a number commercial transactions. This is the way commercial transactions are done. Yeah. So that's the whole

thing. Like commercial transactions are like there's no buyer broker comp usually put on co-star or CREXE or any of those places. So it just is what it is. And the other side is buyers will just have to treat it like to do a listing, right? Like you negotiate the commission. That is it, right? Like, you've got to negotiate the commission. If you can understand this is where we're at, then you've got to go in, show value. Now, here's the problem.

On a listing commission, which, by the way, if anybody ever tells a seller what the commission is before they've talked about value, like you probably deserve. to lose that listing anyway. You have less time when you're standing on a front porch with somebody to talk value and get them to sign your buyer broker thing than you do as a listing. So that's harder. But there's a book called Flip the Script, which it talks about creating a flash roll for any of your things. Do you have a flash roll where you can say this is why working with me is worth basically

worth being exclusive instead of dating around, right? Like, that's it. Yeah. The one, I know we're wrapping up here, so I'm going to introduce a question for a later topic, but my biggest question moving into this is not whether or not I'm going to have a job or not whether or not the real estate industry is going to sink.

I think my biggest question comes around dual agency because that's where most of the, from mine are saying that's where most of the residential real estate issues happen, right? I was listening to a couple different people and their thoughts on the agent's side, and they're like, look, the only times I've been taking a court over transactions is dual agency. Yeah. And the way it's currently set up, it looks like dual agency or no representation is the push forward. So I do have some questions wrapped around that. But again, I, and what I like about that question is that that's a question dealing within with the business, right? It's not a, it's not a survivalist

question. It's not a, am I going to be here, not going to be here? It's how am I going to transact business? I, Chris, I can't remember. I think maybe it was last week we were talking. It's like that question of action. It's a question based on action, not a, not a question based on survival, right? Awesome, good stuff. Hey, friends, this does include another episode of your uncommon real estate podcast. Wherever you are, you know where you're at, go there, give us a rating, give us a comment, a review, let us know how great, fabulous we are, or what Chris needs to do with his hair. But we appreciate it all. Also, any topics, any questions you want us to deal with. We're here for, I'm sure we'll talk a lot more about this NAR, a situation moving forward and

how you can continue to crush it in this quote unquote new world we're supposedly living in. But until then, continue crushing this weekend, because that's what's on the agenda and horizon the soonest. So, and we'll see you again next week. Same time, same place. Have a great weekend, guys. Bye. Welcome to Uncommon Real Estate, where it's all about finding creative solutions for

real estate agents and investors. In exclusive mastermind conversations with some of the brightest minds in real estate, you'll learn how to earn an extra six figures a year. Don't follow the herd. Be Uncommon. Here are your hosts, multi-millionaire real estate agent and investor, Chris Craddock and Jeff Saferight.