On Friday, September 28, the Norris Group proudly presents its 11th annual award-winning black-tie event, I Survived Real Estate. An incredible lineup of industry experts will join Bruce Norris to discuss perplexing industry trends, head-scratching legislation, tech disruption, and opportunities emerging for real estate professionals. All proceeds from the event benefit Make A Wish and St. Jude Children’s Research Hospital. This event is not possible without the generous help of the following platinum partners: the San Diego Creative Real Estate Investors Association, InvestClub, Inland Empire Real Estate Investment Club, ThinkRealty, Wilson Investment Properties, Coach Fullerton, First Lending Solutions, PropertyRadar, the Apartment Owners Association, MVT Productions, and Realty411. Visit www.isurvivedrealestate.com for event information, and see Amazon Prime or YouTube for past events.
Aaron Norris is joined this week by Nick Bailey. He is president and CEO of Century 21, a wholly-owned subsidiary of Realogy Holdings Corp. He leads the iconic Century 21 brand and the organization’s approximately 7,400 independently-owned and operated offices and more than 115,000 independent sales professionals in 79 countries worldwide. He has over 21 years of industry experience as a licensed broker, and he is known to be a trailblazing, revenue-generating operator who increases margins while ultimately mitigating the impact of economic change. The Norris Group last saw Bailey in his role as vice-president of broker relations for the Zillow Group. He was on the I Survived Real Estate panel a few years back. Before that, he spent 12 years at the RE/MAX worldwide headquarters as vice president.
Episode Highlights
- How people reacted to him moving from Zillow to Century 21?
- How did Nick help Century 21 with their rebranding, and what new things are coming from it?
- Who are the two main audiences his business deals with?
- What does the future hold for realtors?
- Could we see a reduced volume of agents going forward, or more growth in the industry?
- When it comes to employee models versus commission models, which do consumers prefer and feel works better?
- What technology services and trends is he most excited about?
Episode Notes
There is so much technology change going on, and Nick always comes to mind here for Aaron. For somebody to move from Zillow to one of the most iconic brands in real estate was astonishing. Aaron wondered what people’s reaction was to him moving from Zillow to Century 21. Nick said Zillow Group has done a lot of forward movement and a lot of interesting things in the industry. One of the things people asked him was why he would leave the “industry darling” and get back into the franchise brokerage side. Nick said it was pretty easy since he was not looking for the role at the time. After he engaged in conversations, he looked at it as a great opportunity to help create some clarity not only for franchisors, but also for brokerages.
The big thing Nick saw was that the industry is really noisy. Nick was an agent, broker, and franchisor who worked on the tech side during his time at Zillow Group and the various companies required. It amazed him how we are in a time when a lot of agents and brokerages are questioning their relevancy to their value propositions to consumers and real estate agents. This is due to it being a very noisy environment. He thought it would be a great opportunity to use the different components of the experience he has had in the industry to try and create clarity for the best-known brand in the business.
Aaron said the re-brand has been stunning. He is a PR and marketing nerd, and he has been watching quite intently on everything Century 21 is doing. From the graphics to the language, it has been pretty impactful. Aaron asked what the response has been from the agents who are in-house. Nick said it has been overwhelmingly positive. They knew that with a network this size, they had to get it right to make it clean, crisp, sophisticated, and relevant for today and moving forward. The truth is that they have two audiences they deal with in this business. They are consumers, buyers, and sellers. This brand has been around nearly 50 years, and consumers have come to know it, love it, and trust it. This is one of the best assets they have as an organization.
At the same time, there is a second group of individuals, which is the industry. This includes real estate agents and brokers. When you are dealing with an organization that is 50 years strong, they also have to admit they have been around 50 years. There were many components of the brand identity that, because of graphics, visual changes, flat designs, and some of the things that impact how they view brands and interact with them, they decided it was time to do that. They wanted to create updates to make sure they were as fresh and relevant for today as they would be tomorrow.
Aaron watched the National Association of Realtors try to launch a brand new logo. People do not think this is a big deal, but they got a lot of flak for that. Aaron gave kudos to Nick’s team since Aaron did not see anything negative about the rebrand. When you are touching something 50 years old, there is a lot of responsibility that goes with that. You never know exactly what response you will receive. Nick said they did not do it in the back room, but rather they did it with a lot of responsibility and research. They had some great parts and partners they worked with along with an agency and another company.
Nick said it was a little bit different from a NAR experience. They were just creating more of a logo. Nick and Century 21 were truly rebranding their identity, not just slapping a new logo on the old ways. In so many ways, there are so many components to their business that are different, and they wanted to reflect that. One example happened about 20 years ago when he started selling real estate and had MLS books. The consumer came to him first, then housing second. That is totally opposite of consumer behavior today. Consumers have access to view homes virtually in many different capacities. They generally go to real estate and look first, then they engage with an agent second. The process of how we can connect with consumers is different in just a short period of time. If they are not listening to consumer behavior, this is a dangerous place to be.
For their rebranding, part of it was their new mission statement to defy mediocrity and deliver extraordinary experiences. Most consumers will tell you after they buy or sell and bring it to the closing table that they did not have a good time and do not want to do it again any time near future. This was a shame but also told him they had the option of making a better consumer experience. Aaron loved the word “relentless” that was on his website. There is some really great language Century 21 uses is a segway into what Nick was saying. It was a total rebrand of not just the message and the logo, but also somewhat the technology.
Aaron wondered if there are other things coming along with the rebrand. Nick said there are; and coming from his background and age, he is a big fan of it especially when it comes to technology. There are two components. One is engaging the consumer with what they want to see when they start their adventure in looking to buy or sell. The other side of it is agents are demanding better productivity tools. The industry has been late to the table in many ways. There are still real estate professionals out there who are logging into 6 or 7 different systems to try and do their business. The lack of integration in their space has so much room to grow. We have a nice runway to create streamlined mobile first-productivity tools for real estate agents who helped them scale to a much greater degree.
Another statistic that amazed Nick was in 2011, there were about 4.8 million transactions and 4 ½ million leads generated. Six years later, it was 5 ½ million transactions, not that much different. However, the amount of leads generated was 87 million. This year could likely see over 100 million. You have this space where leads are flying around agents in all different directions. They need them to land in one spot, and they need to be able to engage with them and take care and handle their needs versus eight different systems trying to figure out who’s who, who is qualified, what is real, and what is not.
There is a real problem with leads coming in multiple ways. Aaron has leads who want to talk to him on Facebook. He’s happy no one has contacted him on Twitter or Snapchat as that would be horrible. However, they do contact him through email and text messages, and it is intense. To have just the right message at just the right time and the platform people want is not easy and a very expensive integrated system to manage all that. Nick said they also have to look outside of their industry, and that is what they did as part of this venture on the rebrand work.
One person quoted that email would be dead in five years. When you say that, it is pin drop when people respond by asking how they will do what they do without email. Over 70% of Nick’s engagement with people comes through some social media platform. He doesn’t even really use email for a communication tool, but rather a productivity tool. Aaron and Nick didn’t even communicate via email, they did it via Facebook. We should pay attention outside of the industry and learn how people are behaving and take advantage of this in society.
For a lot of realtors, especially the ones how have been around a long time, there is a feeling that technology is moving so quickly that there is sense one is giving up since they are about to retire anyway. However, there is also a lot of stress on the relevancy of being a realtor. Aaron asked what the future of the realtor is. Nick’s opinion is that the real estate profession is and will continue to be the most crucial part of the transaction. It is the way in which they engage with consumers. They create visibilities throughout their transaction process, make it an extraordinary experience, and they help real estate agents be more productive. All of those things will leverage technology to do, but the concept of putting things in shopping cart and checking out is there. The trusted advisor role a real estate professional brings to a buyer or seller to make the biggest decision one will make in terms of financial investment requires more than just a shopping cart experience.
Aaron asked Nick if he sees the compression of agents moving forward or a real growth in the industry overall. Nick said those coming in has been low for a very long time. As real estate cycles and will continue to do so, there will be hot markets, slower markets, buyer markets, and seller markets. Depending on where the flow of the market is, we will see more people get their license in some years and not in others. Right now, we are in a growth cycle because a decade ago since we lost nearly 35% of all licensees. We also still have a huge number of people who just have a license or do 1-2 deals a year. This is where they came in and said they wanted to defy mediocrity because, unfortunately, with such low barriers of entry it allows for mediocrity to exist in the industry.
State licensing and associations are all based on volume. We will continue to have people get in the business as well as people getting out since they just want to do a get-rich-quick scheme. We are on the uptick, and he does not see it slowing down for the next couple of years. Aaron asked Nick if he thinks there will be a push for those part-time agents to be pushed out. Nick said you can never really push out a part-time agent. He is actually an example since he does not sell real estate but he is licensed. There also may be another with a license who only sells one or two deals since they help out a family member or a friend here and there. He does not think there will ever be a pressure that pushes them out; they just push themselves out when they decide not to pay the renewal fee.
With that being said, he does see with the increase in technology and importance of productivity for agents, you are going to have your big producers continue to get larger. If you look at 20-30 years ago, if you were an agent doing 35-40 transactions a year as an individual agent, it was a lot. Nick met an agent just the previous week who does 200 transactions by themselves. They are leveraging pieces of technology that help them scale their business. Aaron said it is really a professionalization in the industry, and it is happening in the vacation rental space too. It is really getting professionalized now that we have the technology there. It’s a business, so people are treating it as such. This is the case when you are spending the money on advertising and technology to create that business. It is really hard to be mediocre and make a living at this.
Nick thinks it’s the reality that components of the industry are mediocre, especially when it comes to how we are set up in terms of getting a real estate license. For decades, every meeting he has gone to he has heard someone say, “Well, now that I have a license it needs to be a lot harder for everyone else to get one.” They feel like they need to raise the barriers, but it was these barriers that allowed a lot of really good people to get into the business. Now, it seems in the last two years the heat has been put on by some new competitors. The discount brokerage is not necessarily anything new, but Aaron said he has been surprised by some of the language they are using in some of their marketing. It is almost defensive if you have been in the business a long time. They say they are just trying to discredit the agent.
Aaron has heard many mixed reviews since people don’t really understand. They are looking to save dime, but they don’t really understand everything that goes into the process. You are really banking on volume, and this is where you can really provide the experience you want. It is another keyword in Nick’s motto toward which Aaron gravitated. Aaron asked Nick if he is scared of these low-cost disruptors. He said the way he looks at it is people talk about models and a new company. When you start peeling away the layers, they are competing on price. Commissions are negotiable, and the amount of commissions are what defines a real estate model.
Nick has every model out there, even in his own system. If you think back, every agent has had clients who may have gotten their first house from someone, then three years later they move out because of a family expansion or scenario. Following this, you may have referred the agent to your brother or uncle, or you had a scenario creating volume of income for them. In this situation, they returned the favor by telling the agent how much business they sent them and that they know they are selling their house and moving into a bigger one. They decide to give them a break on the commission they are selling on the house. Nick said this has been the nature of his business ever since he has been involved in it. The beautiful part is that commissions are negotiable.
Something cropping up now is the talk about employee model versus commission model around experiences. Someone asked Nick which one was more viable and if we are in a scenario now where the employee model will work better. Nick’s response is that this is not something new. Consumers have voted time and again that they like the commission model better. With these, there is more invested interest for the agent to work harder on behalf of the buyer and seller.
Real estate is not always neat and clean. There are a lot of different possibilities with the state planning. Real estate can be as complicated as you want to make it. When you layer on state planning, there is a lot there to do. Real estate gets as complicated as you want to make it, so he definitely sees value in the more complicated transactions. Aaron asked if there is a lot of training going on in that space. Nick said there is constantly training, and this takes you back to history repeating itself. In 2004-2006, you could not get an agent to sit through a training seminar. They thought they had the business down pat and would put a sign in their yard for multiple offers. All of a sudden, when there is a short sale or foreclosure it was shocking how many did not know what these were. However, it was because they had not experienced it prior.
Nick said as we go through different cycles, there is always room for training. As transactions continue to get more complicated year after year, agents have to be well-informed and well-trained. Aaron has been at seminars where there is a lot of competition in the hard money space. A lot of it is technology-focused, and there is a big question Aaron focuses on for the panels if they are available. He asks if we experience a decent recession, how many of these competitors will likely fade. It has been getting higher, and the last time he asked the question a specific panelist involved in the software business said 85% was the number he expected to disappear.
When you look across the spectrum of some of the disruptors in the technology space, Aaron asked if they are session-ready. He wondered if the model will no longer work when things get tougher. Nick said it depends on what kind of financial backing they have. They had discussed earlier about some of the “discounters” that are out there. He does not know why this term is used in real estate since commissions are negotiable. They are not really discounters despite being referred to this way. Going back to 2004-2006, several companies’ advertising push was the exact same as some of these startups we are seeing now, and they did not survive the recession. They were not recession-proof at the time, and it had a lot to do with a lot of their funding.
In some of these companies today, they are very well-funded. When you look at the number that tipped over $1 billion coming into the technology side of the business this last year. Some of them are well funded, but they are also expanding very rapidly, which puts good scale on their side. However, at the same time there is a point you cannot carry that load. If they go through a session where they just cannot get through it, it will be tough. For this reason Nick thinks there is a handful who just aren’t going to make it if we go through some type of recession. We will see who these people are.
Aaron asked if there are any technology companies, services, or trends he is really excited about, whether it is artificial intelligence or virtual reality that will change the business. Nick said there are two he finds particularly interesting. When you look at predictive analytics and the entire idea around artificial intelligence, this will get the most attention in the next 24-36 months considering all the chatter in the industry. He believes we are also in a place where agents will throw money, and it will likely have some high churn. When there is anything fairly new, agents jump on board and are great with adopting. They like the next best thing, but it has to be proven out. We will see which of these organizations will do it really well and which will not. It is an interesting space, but he likes the idea of turning on the phone and it showing him which people in the area are interested in selling. You would just need to figure out how to contact them.
The whole concept of Big Brother is the world we live in today. Whether it is with Siri or other technology, we seem to be going down this path. The other thing he finds interesting that Century 21 is working on is along the lines of buyers and sellers wanting better experiences in daily life. When you get to the table with buyers and sellers in general, 40% said they would rather have a root canal than go through the buying and selling process. Right now, home search is fun. People engage in it all the time. When you go to home shopping and truly engage, are willing to buy or sell, and you go through the under contract to close period, that is still written by darkness, anxiety, fear, and stress.
The other technology component Nick finds interesting is taking the entire process and creating a better-looking side for the buyers and sellers involved. If you can reduce the amount of anxiety and fear from home shopping to close, then that is a winner. This is actually something Century 21 is working on, and Aaron wondered when we will start seeing this. Nick hopes to find out in his next meeting, but it will be soon. You hear the cliché in the industry about an end-to-end solution or need-to-close, everybody is looking at that through various platforms. He is talking about something a little different from what engages consumers and companies outside the industry as they look at how they develop the extraordinary experience for the buyer or seller.
If you would like more information or to check out the new brand, you can go to www.century21.com. You will see a lot of the rebrand work there. New yard signs and building signs are popping up, and people are going to see a lot of these in their local markets.
The Norris Group would like to thank its Gold Sponsors for supporting I Survived Real Estate: Guaranteed Rate and Nathan Chabolla, In A Day Development, Inland Valley Association of Realtors, Jason Thorman with Coldwell Banker, Jennifer Buys Houses, Keystone CPA, LA South REIA, Las Brisas Escrow, Lawyers Title, Michael Ryan & Associates, New Western, NorcalREIA, NSDREI, Orange County Real Estate Investors, the Outspoken Investor, Pacific Premier Bank, Pasadena FIBI, Pilot Limousine, SJREI, Spinnaker Loans, South OC REIA, Tri-Counties Association of Realtors, uDirect IRA Services, White House Catering. See www.isurvivedrealestate.com for event information.
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