Start With A Win - 2020 Real Estate Trends with RE/MAX CCO, Nick Bailey

Episode Date: January 15, 2020

Nick Bailey, RE/MAX Chief Customer Officer, joins Adam for this episode of the Start with a Win podcast to discuss how consumers, agents, and brokers should approach the new year. Having spent his career working with RE/MAX and Zillow as an agent, a broker, and an executive, Nick has had a front-row seat for the changes in the market as well as industry trends over the years, and he has been digging in even more over the past 6 months in his role as Chief Customer Officer.In 2020, Nick says that consumers should recognize that they are driving more of what agents are doing than ever before. Because of the impact of the internet, families are often finding houses through their own research and then going to an agent for help navigating the process rather than the more traditional setup. Consumers see their agent as their advocate in the process, guiding them as they make their decisions. While relying on the agent quite heavily in this aspect, consumers should consider making housing decisions sooner rather than later since interest rates are low and the market seems to be turning over rather quickly.Agents should focus on building relationships with their leads and past clients, following up when appropriate, keep in touch with past clients even if they are not currently looking to buy or sell, and be careful not to let another agent take their clients just because they aren’t paying attention. The best lead is a free one, and the best way to get a referral or repeat customer is by being engaged and providing value to them even when they don’t know they need it.Brokers should focus on growth in 2020, looking into providing ancillary services that will help scale the business to relieve some of the pressure felt while trying to increase margins. The advantage that RE/MAX brokers have in this market climate is the brand recognition of the RE/MAX name, providing credibility to the agents before they ever interact with a consumer. Links:https://www.amazon.com/Little-Prince-Antoine-Saint-Exup%C3%A9ry/dp/0156012197Connect with Adam:https://www.startwithawin.com/ https://www.facebook.com/REMAXAdamContoshttps://twitter.com/REMAXAdamContos https://www.instagram.com/REMAXadamcontos/ Leave us a voicemail:888-581-4430

Every day is filled with choices. You're here because you're choosing to start with a win. Get ready to be inspired, learn something new, and connect with the win nation. And top of the 12th floor, Remax World Headquarters, Adam Canto, CEO of Remax here. We start with a win in studio with us here, producer Mark. How you doing, buddy? I am doing so good. I love it. 2020 in full swing. Boom, 2020 all over the place. New decade.

New decade. New intro. New show opening, yeah. That's right. We got a new guest. We do. New executive. That's right. We got a new guest. We do. New executive. That's right. Actually, by the time we're playing this, he's been here, oh, five or six months.

That's still new. Yeah. We got our chief customer officer of Remax, Nick Bailey. How you doing, buddy? Hey, good. Glad to be here. Hey, we're- New guest or am I a new old guest?

And that can mean a lot of things. Oh, wait a second. We'll just say you're a wonderful guest. How's that? Ah, that's nice. Yeah, I like that. Yeah. We're kind. Yeah, of course. Okay. So Nick, I mean, you're like an industry guru, long time. Did you ever think you'd be called that? No.

No? Listening to you say it makes me uncomfortable. I'm sorry. All right. I care about your feelings. No, but I appreciate it. It's, I never imagined. Well, gee, man, you got 23 years of real estate industry experience.

Yikes. A decade makes you experience a couple of them. You start looking down the guru line there. Yeah. You get some expertise. I mean, you've been in so many different aspects of this industry. You were with Remax for quite some time, your initial kind of 12-year tenure here. Yeah.

You were gone for, what, seven years? Seven years. Yeah. On my sabbatical. Your sabbatical? Yeah. Yeah, we're not going to call it your internship, right? No.

People are referring to it as my sabbatical. Sabbatical now? That works for me. Okay. There you go. I love it. You know, you and i were talking uh a little while ago and said what if we put the band back together some of the amazing things we could

do at remax here yeah the phone rang caller id and smoke started coming out of the left speaker and i went what does adam want because that was in your caller id still of course yeah yeah there you go yeah because we had texted and run into each other through industry events throughout the years. Yeah, we were like almost neighbors also. Yeah. Not too far from each other. And we were on the same plane, same places.

Yeah, like, what's up, buddy? And then I go, this is a weird phone call. And you go, what's up? And I go, hey, what do you think about coming back? And you're like, yeah, that's a weird phone call. I think I said, what the hell are you calling me for? That's how I remember it. Well, it worked. And we're having a blast. And if you hadn't called, I wouldn't be here. So thanks for the call. Well, thank you for answering. You know,

you could have like hit ignore the red button on the phone. Yeah. Curiosity killed the cat. So anyhow, super happy to have you here. And this is your first appearance on Start With A Win. So this ought to be a lot of fun. It is. I feel honored. Well, I'm honored to have you on here, my friend. Thank you. We've got a lot of fun stuff going on in our industry right now. And I want to talk about 2020. You've participated in the industry even as recent as a few months ago as a real estate agent. You've been a broker.

You've obviously been an executive throughout the industry, worked in all sorts of different aspects of it from brokerage, franchising, technology, all these different things. Some really cool perspective and insight. So I want to talk about three different things here. First of all, perspective for 2020 from an agent's viewpoint. I want to talk about perspective 2020 from a broker's viewpoint. And I want to talk about it from the consumer viewpoint as well. Yeah, super interesting. So let's dive into this. Let's actually start with the consumer. What should the consumer be thinking about in 2020 in the real estate space? Here's what I love about the consumer piece of it. The consumer's driving more aspects of what

an agent does and even what a broker does and even what we do as a franchisor more so now than they ever have. And that scares a lot of people that have been industry veterans and seasoned for a couple of decades. Because here's to me, foundationally, people ask me all the time, as you know, Adam, there's a ton of noise out there. And because I was an exec at Zillow, oh, what are they doing? And what is this company doing? And how about this company? To me, it comes down to the fundamental piece that's driving or that has changed in my two-plus decades. Because I started with MLS books, like many of our people in the industry have. And a highlighter or a pen or something to circle that list.

And you give your client the book from last week and say, shh, don't tell anyone I gave it to you. Come on, we all did that. I remember those days. Here's the three things. It was consumer, agent, then house. Right. Today, it's consumer, house, agent. The fact that those two have flipped is what, to me, is the fundamental issue that is driving people crazy, that is the basis of the noise.

So, to your question, what should the consumer be focused on today? Yeah. Statistically, 93% of millennials, which is the largest home buying population now, are using an agent. 93%. Wow. More consumers or buyers and sellers are using an agent today than in my lifetime in this business. And so what it's telling us is consumers still want an advocate in the process. Right, right. The best advocate they can get. So we went through this phase of transparency of, here's all the listings, here's all the data, here's what my neighborhood's doing.

And now consumers are saying, I want advice to make the right decision. So you think that is because the transaction itself, or is it because the agent themselves? I mean, what's the combination there? Why are there more consumers that want agent assistance than ever before? Because obviously the consumer wants to be involved in the transaction probably more now than they ever have been as well. Yeah. And I think instead of maybe a buyer coming when I first started as an agent coming to me and saying, I need to see what's on the market. So we were an access provider. Now they get all this data, all this information, and now it's what do I do with it? They're the guide more now than ever before?

Absolutely. It's not just about access. Okay. It's about guiding them through it. And there are still so many things with buying or selling a house that you can't serve up electronically. So here's an example. several years ago, we were looking at a house and the agent said to us, do you realize that the land behind this property is zoned for a two-story office complex? That's good to know. Not buying that, but nothing online did it say anything about the land development and it had

just been rezoned. Interesting. It was originally zoned for a one level. It wouldn't have obstructed a view. Ah. You know, it's interesting you say that because I was looking at a property with my agent, who happened to be my wife at the time, currently is my wife. So we're out looking at a property. We're like, oh, this is fantastic. And she says, drive around back. And it did back up to open space, which I thought was really cool because there were woods and things like that behind it. Yeah.

And we go around there and she goes, there's a fence post there. That hasn't been there very long. We need to see what gets attached to that. And it ended up being a zoning sign. And then she, through her real estate agent magic, came up and said, by the way, this is going to be an entire new subdivision going in right in the backyard of this house. And I'm thinking to myself, all right, no thanks. And sure enough. I had no idea you had that story. I mean, here we're telling similar stories. If the agent hadn't told us that, we might be sitting in homes that we either didn't

want or didn't appreciate the way. There's just a number of things. So that's where the consumer is showing us that they're reaching out and wanting that consultative advisor expert in the business. And I think that's awesome for our agents. I love it. I love it. So that's really one of the largest concerns of the consumer when you look at consumer studies. They want to define and overcome the challenges. But one of the biggest challenges they have is defining the challenges. So they need that agent to actually reach out because the consumer doesn't know what they don't know. They don't know what they don't know. And that's really key in that relationship that the agent builds with the consumer ahead of time for them to feel comfortable asking those questions

or knowing what questions to ask, I guess, right? Yeah, totally. And you look at, still, I'm convinced we've got a long road ahead of us to make a better consumer experience. I firmly believe that every consumer in our country had to buy or sell a piece of real estate once a month. The process would look different. Oh, yeah, absolutely. And coming out of the downturn, look how much more highly regulated the mortgage piece of it is. And so the complicated nature of the transaction continues to get more and more complex. Interesting. And so consumers want help with that.

Okay. So complicated, scary, don't know, need a guide. Many haven't done it before. Yeah. Yeah, you're right. The entire new generation, kind of the mainstream generation moving from rentals to ownership right now. And then we've got this whole silver tsunami that is alleged to occur here in the near future. A lot of things like that going on. Ultimately, let's just talk about the 2020 market. I'm a consumer coming into the 2020 market. Nick, you're my trusted agent, my REMAX agent. What advice do you have for me saying, okay, should I buy or sell a house now?

Take advantage of interest rates. We've had good rates for a number of years, but coming out of 2019, we saw that even get more favorable for buyers. And the other component is if you're ready to buy, you got to jump in because inventory constraints will, in my opinion, continue to be a challenge for a lot of markets in 2020. Right. And so consumers have to be careful how long they sit on the sidelines. I was online on Remax.com looking at some listings the other day, and they're not there anymore. What happened to them? Is that the small inventory, the low inventory?

Absolutely. Look at average days on market. Last year, they averaged around 46, 47 nationwide. Now, I do think in 2020, that may come up a little bit. We're entering a presidential election year. People just get more conservative by nature. Right. Regardless of politics, has nothing to do with that. We're entering a presidential election year. People just get more conservative by nature, regardless of politics, has nothing to do with that. We're in a presidential election year. We got a lot of fear and noise to overcome here.

So we might see average days on market clip up a little bit. Okay. And the introduction of new housing. Right. That's supposed to be increasing right now, isn't it? It takes a lot of years to get projects out of the ground. And so we're starting to see that now. And so to see 700,000, 800,000 new home sales coming into this year, that's going to give buyers some great options now too. Great advice for the consumer. So let's switch over to the agent. 2020, you're of opportunity for the agent. There's a lot going on, but you have to be better now than you ever

have been before. What advice do you have for agents in the new decade? Don't let other agents piecemeal or peel off one or two or three transactions from either your past business or your sphere. Ooh, I like this. So a couple of stats. Rewind to 2011. Yeah. 4.6 million transactions. Okay. Four and a half million leads were generated in the country. Tell me those numbers again, Ro. 4.5 million leads, and we sold about 4.6 million homes. That seems logical. Totally logical. Let's go to last year.

5.5 million homes sold. A little bit of an uptick from seven years ago, eight years ago. 89 million leads were generated. So what we know is consumers are creating multiple leads all over the place. Yeah. And what's happening is if agents aren't engaged, it's not one lead per consumer. It's probably 10 or 15 leads per one consumer. And it's going to be the agent that out-services in time, fashion, every component about response is going to grab that business. Let's say you're my agent and I'm a contact in your phone, okay?

But I've just gone on several websites, portals, things like that, because everybody comparative shops. Sure. And now I have a dozen agents calling me. How do you keep my relationship as you're my agent, but I haven't talked to you in a year or two years or five years or whatever it might be. Shame on me. Yeah. So, I mean, how do, what do you need to do to get in front of this, this tidal wave of agents calling your consumer? Let's face it. I've been in license now for just over 23 years. And so I feel like I can say this because I'm saying it about myself too. We as agents don't do a good job keeping in touch with our past

clients. How do we know that? Statistics show. Let's look at listings. And we had a big announcement at the end of 2019. Yeah. Tell me about that also. Yeah. It's the fundamental issue with what agents are dealing with. Agents miss 70% of new listing opportunities out of their own contact list. Wait a second here. So you're saying that- 70%. So I'm only like 30% effective in my client base as an agent? Yes. And you just mentioned an acquisition that Remax did in 2019 of an AI company, machine learning, that has proven that fact. So you got to see, because you tested this product, you got to see how many people in your contact database as an agent went out and bought or sold a house without you. Ooh, that's painful. I remember in real life when I was selling real

estate, there was somebody I sold a house to. I will never forget it. I can see the house. I can see the lot. I sold it to him three years before, had no idea that they were going through a divorce. And I drove by one day and one of my competitor's sign was in the yard. Ouch. It was my fault. That's hard to admit. But now in a world of we're going through the generation of some of this big brother data piece is a little creepy. But you know what? It's creepy, but it actually helps you hone in on your business. And it actually could help create a better experience. So if I'm thinking about selling, listing and selling, and keep in mind, sometimes, especially if you have a partner or spouse,

one of them's considering selling before they've even told the other one. You never know those dynamics. So when you engage, which this technology allows us to do, because it's saying, by the way, we've identified Adam. Okay. That he and Kelly may be going to sell. Great. Swoop in and remind him that I took care of you five years ago when you bought that house. Are you considering selling?

Can I help you? And I'm sitting there thinking, how did you know that? And at the same time, you might be going, oh, yeah, we are, and have a lot of questions. Yeah, exactly. And so it can be used in a really positive way. But that's where I think it's going to help agents not miss out on that big piece of business, but it's also going to help consumers have a better experience with their agent. Well, I think to that point, we also anticipate that people are going to, we as consumers anticipate that vendors or service providers are going to anticipate our needs. Just, I mean, you see it every day with, you know, you go on Facebook and you go, how did Amazon know that I want to look at this? Right. They know.

So why shouldn't we in the real estate industry know that somebody needs our services that we've done business with in the past? And we have the know, like, and trust. We just haven't had the recency of communication with them. Exactly. Okay. And I don't know about you, but there are many times when instead of seeing random products that come up, if I open and have an online experience and ladies shoes come up, I'm just not interested. But man, if they pop up, here's the new men's Magnani business shoe. I'm like,

interesting. They know my style. And so it actually helps me shortcut the process. So from a big brother, creepy data, I don't mind it at all. I'm not scared of it. If Alexa at home is listening to me or if Siri can help me, I'm all in. I love it because agents do spend money on cultivating relationships. They do spend money on marketing. So instead of spending a nickel on 2,000 different contacts, not knowing, okay, what is that nickel going to give me, wouldn't you rather spend a dollar on 100 contacts and go, I'm going to give them a greater experience?

When I hear an agent say, I need leads. I know where you're going with this one now. I have to find leads somewhere. Yeah. What's the best lead you can get? A repeater referral business. A free one. Yes.

And if it is repeat referral contact, it's not only free, but it's free with an endorsement and a referral attached to it in a way. So do a better job on those relationships. Yeah. And even if you're brand new and come into the business and you're sitting there saying, I need leads, man, most people know a couple hundred people, a thousand people. even if it's only 50. It's amazing if you engage and say, okay, you don't have real estate needs. Do you know someone that might? You'd be shocked at how many people say, ah, my neighbor, I have a colleague.

But you have to ask the question. And this is something that hasn't changed. Agents are terrible at doing that. True, true. So let me sum this up real quick for agents. Don't go get more leads. Get better relationships. Love it. Great way to say it for agents. Don't go get more leads. Get better relationships. Love it.

Great way to say it. Awesome. I'm going to steal that. All right. All right. It's yours. OK. We've got recorded evidence now.

So last one for 2020. Brokers. What should brokers be concentrating on? Growth. Tell me about that. Look at the constraint on margins that brokers have experienced, and they have pressure on their margins. Okay. It's just what they're dealing with. So should they be looking at ancillary services?

It does two things. It helps their profitability. It helps consumers have a better experience. I did a survey. It's been about two years ago. Do you know what consumers said after they closed a transaction? What's that? 60% of them

said, I'd rather have a root canal. Oh, that's lovely. I don't know about you, but I've had a root canal. I think I'd rather buy or sell a house. Yeah, I'm with you. But for most, they don't. And so brokers have to figure out how to scale their business because that is going to make up the margin piece. We've seen it in retail. Look at the hardware store 25 years ago on the corner. They were working off a 35% margin. Now look at something like Costco. They work off a 6% margin, but they do it in volume. The exact same thing is happening in the brokerage business. It's tough out there to be unaffiliated and maybe have 14 agents. I've got two parts to that then. So you

just talked about unaffiliated. So really what you're talking about is the scale that we provide as a brand, as a franchisor, to help the brokers spend more time growing their business and help their agents. We just talked about the agent piece of this. Help the agents do more business. So with all of those things working together, you add on ancillary opportunities like model mortgage, for instance. Oh, it's brilliant. Yeah. I mean, it just, it gives the broker a greater opportunity to actually work on their business instead of working in their business. And yeah, it's twofold. It's helping the consumer because they want a better one-stop shop

experience. And at the same time, it's going to help their profitability. I love it. But they've got to grow. I mean, that's one thing that hasn't changed. And at the same time, it's going to help their profitability. I love it. But they've got to grow. I mean, that's one thing that hasn't changed. If you're not growing, you're dying. That's true. Yeah. You really are.

You can't sit still in business. That's right. And especially not in brokerage. You've got to scale it and cover more territory. Wow. Some amazing business tips. Hey, Nick, let's switch over to a few questions that we talk to all of our guests about here. Okay. You'll put me on the spot. I want to put you on the spot.

All right. Here's a good one for you. Favorite book and why? Business or personal? You know what? You choose. Okay. Just favorite one, top of mind. Yeah, top of mind. The Little Prince. Ah, interesting. Most people haven't heard of it. It's a children's French book. Is it written in French or is it written in English? You can buy the English version. Okay. But I read the French version my senior year of high school. It took me two semesters to read it, and I think it's a third grade level.

Here's the piece that I loved about it. Kids are actually winning over adults. Here's what we do as adults. I meet you at a party or a function. Right. Hey, Adam, nice to meet you. What do you do for a living? You tell me.

Check. Great. I've put you in a box. What do you do for fun? Where do you live? Oh, yeah. You put, if we're both 10 years old, never met you, and you give us a soccer ball, what happens? We play.

We play. I don't care your background, where you came from, who your parents are, what happens? We play. We play. I don't care your background, where you came from, who your parents are, what your grades are, any of that stuff. You're my friend. And so what you're doing is you're finding a common element right out of the gate of acceptance. And then over time, you learn who that person is. We as adults have a wall, and I need you to answer four questions for me before I decide if I'm going to like you or engage with you. And so this book is the premise of how children from that perspective are more open and it creates open to different types of people, different situations.

They find the best in all of it. And we wait before we jump in. I love this. There's so much deep meaning in this because we talk about unconscious bias, and we talk about fair housing. We talk about inclusiveness in the organization here. It's a good reminder of that through a really simple concept

that really any of us can wrap our heads around. I have a rule. If I go to a dinner, a cocktail party, a holiday party, and I meet people for the very first time, I do not ask what they do for a living. I love that. I refuse to ask. Wow. Amazing. And it changes the dynamics. Because if I met you, sight unseen, and you say, I'm the CEO of Remax Worldwide Company, I may have a, oh, cool. I could become very intimidated. I may change my behavior based on just what you do instead of figuring out who you are.

I like that. I like that. That's a key point for all the listeners. So here's another one. How do you define starting your day with a win? Yeah. When I wake up, my win is I know what my goal of the day is. I like that.

It could start for me, fitness, at least three days a week. It's not seven. That may be my start that I start right out of the gate. Gets my head right. It could be on those off days. Here's what I want to accomplish by the end of the day. It could be sit on the couch and watch marathon movies. But if that's my goal, that's how I start with a win is deciding what my goal is for that day. I love this. You're very goal-oriented. You're very results-oriented.

And you execute. That's awesome. You have to know what you're after. And are there days that I fail at my goal? Absolutely. Didn't turn out the way I wanted it. But you didn't quit going after it? No.

Awesome. Nick Bailey, Chief Customer Officer of Remax. Such a pleasure to have you on the show today. Thank you very much. And Happy New Year, buddy. Yeah. Awesome. Nick Bailey, Chief Customer Officer of Remax. Such a pleasure to have you on the show today. Thank you very much. And happy new year, buddy. Yeah, thanks. Can't wait to see you next time. All right, we'll talk to you next time.

And thanks, everybody, for starting with a win. Thank you so much for listening to Start With A Win. If you'd like to ask Adam a question and potentially be on our next episode, give us a call and leave us a message at 888-581-4430. Don't forget to go on iTunes and subscribe, write a review and rate the show. For more great content, follow Adam on Instagram, Facebook and Twitter. And remember, start with a win.