Where We Are Now: April 15, 2020
April 15, 2020 | Source: Compass California Real Estate Blog
Work From Home — Day 31
The Start – Another Flashback!
Reading Brent’s writing about the start and the finish yesterday inspired me to reflect again on playing offense at a difficult time. Now is your time to accelerate through adversity and claim your future.
Brent’s first day at PUI was December 1, 2009. We were four months into our merger of Morgan Lane and Pacific Union. The setting was Solage Resort in Calistoga, CA. It was the first of ten straight years of business planning for our team. Brent walked in confident in the middle of a &^%$ storm. She settled in and we got to work.
As a team, we were planning our future together. Our future several years out! At the time our seventeen Bay Area offices were a $2 billion sales on 2,200 units. I’m not sure if we were growing yet or still shrinking but today it really does not matter.
As we set into two days of business planning, we all started to set some goals for the meeting itself and our future. We had a meeting facilitator who was helpful managing the tension and opportunity of this new management team.
We circled the room at one point where everyone was asked to articulate their “vision.” Big word. It means something different to everyone from survival to greatness. When it was my turn, I vividly remember sharing a vision for $100 million in gross commission revenues in 24 months. At the time, we were $50 million. This was an aggressive vision. Sixteen sets of eyes in the room looked at me like I was crazy – including the facilitator.
Where did this come from and why was I so crazy?
Shortly after merging Pacific Union and Morgan Lane (August 4, 2009), maybe ten to twenty days, I received a call from Ron Peltier, Chairman, Berkshire Hathaway Home Services. At the time, I knew of Ron, his stellar reputation and industry stature, but we had never spoken before and I was surprised he found me. The conversation had a forever lasting impression on me.
I’m paraphrasing eleven years later, but the message from Ron went something like this. “You know Mark, we were in the backup position behind you to buy Pacific Union. This is a tough business you are now in and if you are ever ready to sell, please let me know. This was not a comforting call to get ten to twenty days into our acquisition and why would a seller pick us over Berkshire Hathaway? Lots of thoughts and fears running through my mind.
Ron then made an everlasting statement to me. “You know Mark, these businesses really don’t make any sense (money) until you get to 4,000 transactions.” I’m proud that I did not react to the statement at the time. Trust me that the statement itself shaped 100% of my inspiration and our success.
All of us have a mentor; a person we respect and rely upon for advice. Ron was someone I knew only by reputation – amazing! Ron’s statement was not really advice, it was likely 51 percent intimidation and 49 percent fact! It was effective to say the least.
So back to the December 2009 planning meeting: I set a vision and goal that aspired to this conversation. We were doing 2,200 transactions a year and a very smart man suggested we better get to 4,000 ASAP.
In September 2010, Patrick Barber and I were in Southern California for an industry event and had a meeting with Ron. Cordial discussion, very friendly. The message about 4,000 units was the same.
Our goals were set, and we were on our way!
June 2012, PUI closed 360 units. Multiplied by twelve equaled more than 4,000 units. When I looked at our P&L it was alive! We were on our way to be a fiscally vibrant business.
The lesson here for all of us is vision is aspirational. Vision can be an amazingly powerful motivator. If you do not write vision or goals down and live them daily, you will never achieve them!
Back to Brent’s start and finish. I often reflect on our profession and something my father shared with me early on in life. Athletes practice several days a week, during a season, and compete once or twice a week, you on the other hand compete every day of your life.
It would be exhausting to compete every day and never know where the finish line is established.
Make sure you have a vision, established goals, and a path to get there. Grab a partner, set some structure, build a plan, play offense. Do it with your team, respected colleagues, or your manager, and rock this opportunity!
Here is yesterday’s Path Forward.
This is Where We Are Now.
Mark A McLaughlin
Work From Home — Day 31 — Closing Bell
Deal Doctors Back in Business
The flow of our business has clearly changed. The nature of the phone calls I am receiving are waning on crisis, WFH and showing topics and spiking on “Deal Doctoring.” I don’t get anywhere near the volume of calls our Regional Executives receive, or Sam Kraemer does. So, it’s not the volume but the nature of the calls.
Consistent with our survey this past weekend, the early pricing pressure is definitely under 10 percent for homes $500,000 to $2.9 million and over 10 percent above $3 million. These are recently ratified sales, not yet in the MLS as closed.
Once these trades hit the MLS as closed, they will create further pricing pressure. Advice to your sellers is they have an opportunity to “set” the comparable sales pricing or “react” to them. Setting pricing is leadership, first-mover. Reacting to pricing, is just that, once the closing is in the MLS, directional pricing sets market trends.
A few examples:
- Multiple conversations with professionals putting trades together in the $1 million to $2 million range. In most situations, the properties were toured pre-SIP. These deals are happening at high velocity, pricing is 5 percent off the ask.
- Conversation yesterday with a top performer managing the purchase and sale of two properties in the $5 million range. The purchase of the new property is contingent on the sale of the current home. 10 percent of these figures are very real dollars. Call in the Deal Doctors.
- Conversation with another top producer about a recent closing at $43 million. Original list price was $75 million and last list price was $68 million. A 37 percent discount. Keep in mind there are buyers at all price points, we have simply shifted to a buyers’ market. Call in the Deal Doctors.
Three listening posts in the escrow and title business suggest new purchase openings are up versus last week. This can’t last long in SIP. If sellers are serious, buyers are too at their new terms.
Buyers will drive the market in our crisis period. They will likely be aggressive. Stay calm. Negotiate from a position of knowledge and strength, and always present facts. The facts tend to take the heat off of the conversation between you and your client.
The amazing good news in our industry, for you as a top performer, is like an amazing attorney, a gifted doctor or an inspirational artist, we generally are never asked about the price of service.
Now more than ever, your clients value advice and knowledge over discount.
Bring out the Deal Doctor in you and thrive in this new normal.
This is Where We Are Now.
Mark A McLaughlin