June 14th, 2021 by Marian McPherson — as seen on Inman
Industry veteran and newly minted Place, Inc. President Chris Stuart shares his thoughts on real estate teams, simplifying the consumer experience and creating a winning business strategy
Chris Stuart knows a thing or two about teams. The former Berkshire Hathaway HomeServices, HSF Affiliates, and Intero Real Estate Services executive spent well over a decade helping real estate agents and teams scale their businesses in the U.S. and abroad.
As the new president of Place, Inc., the brand-agnostic backend technology platform for high-performing real estate agents and teams, Stuart is laser-focused on what today’s real estate teams need not only to survive but thrive, through a rapidly-changing market marred by the pandemic and driven by record demand and price growth.
Here’s what Stuart had to say about his move to Place, the evolution of real estate teams, the mental shift team leaders must make to be successful, and the opportunities to create “a delightful real estate experience.”
Before we start talking about real estate teams, let’s talk about your latest headlining move from Berkshire Hathaway HomeServices to Place. What inspired the move?
I’m really motivated to contribute to the transformation and innovation of our industry. And, I’m always motivated to continue my journey professionally in terms of being in a role that impacts you know that outcome. With Place, I had an opportunity to align with not just the immediate team in place, but the expanded family of Place partners and their teams.
In other words, we’re just getting started. [I was drawn to] the people in terms of the like-mindedness, the spirit of contribution they all exhibit [and] their willingness and desire to be a part of the change and transformation within the industry. It just felt like a natural step for me, in terms of what I’m really passionate about doing. I really just feel like this is the next step and the continuation of my journey
Thanks for sharing that. So let’s get to the topic at hand, which is real estate teams. What’s the evolution you’ve seen with real estate teams over the past few years, and especially from 2020 into 2021?
I think this whole notion of teams is is an interesting description for me because 40 or 50 years ago, the brokerages were effectively teams. The broker, 50 years ago, was the rainmaker. They were responsible for the deal flow and the agents went and worked for those brokers because of a personal relationship, referral, or some kind of an extended association. Ultimately it was [the broker] who was responsible for the deal flow, and [agents] went to work there and the commission splits reflected that.
Naturally, as any industry evolves, the complexity of the transaction changes. Forty years ago, sales professionals developed the ability to create their own deal flow. That changed the economics between the agent and the broker, and the franchises that started to pop up in the ’70s started to create some nuance in terms of the economics. The royalties, the systems, the attention or intention to help agents become more self-sufficient. So really, it’s kind of an interesting label.
When I think about it, many brokers are still operating today the way they did 40 or 50 years ago. And some have evolved where the broker is really just aggregating production. What we call teams is really nothing more than today’s iteration of the brokerage that existed 50 years ago.
To answer your question, I think the difference is that it’s much more complicated in today’s world to generate business and generate it in a way that is sustainable and profitable.
What are the factors that make it more complicated? What’s blocking team leaders from creating sustainable and profitable businesses?
I’m seeing a few different scenarios. Number one, I’m hard-pressed to find individual agents that are actually growing their business. Some are, but most are not. They’re really just trying to hang on to the level of production they’ve done the last several years because it’s so competitive. So then you shift over to this label of teams.
For many teams there is a ceiling. There’s almost a sort of artificial kind of limitation that many of them are struggling to pass through. It could be in the form of the number of units they’re closing or it could be in terms of geographies.
Another scenario is they’re growing, their revenue is growing, their [gross commissionable income] is growing, but their expenses are growing commensurately. So their profitability at the end of the year is actually not expanding.
In fact, sometimes they’re actually making less profit because they’re chasing top line with expansion and expenses, or many of them have failed to realize their ability to get out of production.
A lot of times that leads to the next dynamic of many star teams, which is to create a succession plan. How many agents or teams actually develop a business that has scaleable equity attached to it? Very few.
Now, if we were to look at our counterparts in dentistry, law, medicine or architecture, how many of those small businesses actually have a succession path? I would say most of them do.
I think about how can we empower solutions that help teams address those challenges or realize those opportunities? For most people that are operating teams, that is in fact their ambition, and that’s why I’m at Place. That’s why I believe we exist as an organization and that’s certainly those are the things that we’re focused on helping teams overcome.
So how exactly is Place helping agents and teams create a sustainable and profitable business model for themselves?
With the complexity of today’s real estate market, it’s harder and harder to find deals [and] do it in a way that’s economically viable. A lot of people right now are spending almost the same amount of money to generate deals as the deals are generating for them. They’re spending $1 million to earn $1,000,005 in [gross commissionable income]. That’s unsustainable.
There are so many complexities: How do I find the business? How do I sustain it? How do I make it economical as I think about the team? How do I create an exit plan, creating a succession plan? Who am I hiring? What are their job descriptions? How much do I pay them? What are the different roles in my organizational strategy? What technology and marketing am I using to support all of this? What do my back-office operations and accounting and financial planning look like?
These are all of the solutions that Place has assembled in a nice comportable package as a platform that our customers get to simply plug into and adopt and leverage in their day-to-day business.
As you were talking about how it’s hard to find deals, I was thinking about the National Association of Realtors’ record-high membership growth and Redfin CEO Glenn Kelman’s comment about how there are more agents than listings right now. So what are some ways team leaders can diversify their offerings to survive in an oversaturated industry?
I think that [question] speaks to exactly the mindset that agents need to adapt moving forward. So here’s the biggest limitation, in my opinion, today. Most agents come into the business and they’re independent contractors. Obviously, they’re looking for their next paycheck [and] right out of the gate, they’re completely tactically transactionally focused.
If they don’t subscribe to a system that allows them to transition from that tactical mindset into one that’s more strategic and relational, they’ll always stay stuck in that sort of hamster wheel of trying to find the next deal and live paycheck to paycheck.
They need to evolve their perspective to more relational and strategic and develop what we call an ecosystem of value-added support partners [such as] home remodelers, lending partners — all of the folks that can bring the value to the consumer. They have their sphere, their social networks, their past client networks, and the referrals that they’re generating, so they have something more broadly to talk about than just trying to find the next deal.
Now, if they’re doing a great job of connecting people who need something — maybe a past customer needs lawn landscaping, maybe they need some help with pool maintenance, or maybe they have a leaky roof — these are the things that we need to focus on helping provide value to homeowners after the transaction.
Unless they change their mindset, they’ll never make the transition to being able to do what you articulate in your great question.
How can teams/team leaders make that mindset shift? No matter what we do in life, whether it’s adopting a new business model or trying to get our health on track, a true mindset shift is the hardest step.
As leaders in anything that we do, we’re all change agents. Because no matter where we are, what industry what role we’re in, the element of change is in front of us constantly.
With respect to changing people’s mindset, it’s an all-the-time thing. It’s in everything that we do — how we communicate and how we train, how we inspire, and the books that we read. We’re trying to constantly develop a spirit of innovation and the willingness to embrace change.
But specifically to your question, what we’re doing at Place is we’re constantly evangelizing one simple premise, that the winners in the future of the real estate industry will be those companies that deliver the most delightful consumer experience.
We have to deliver a better customer experience to buyers, sellers, investors and renters. The experience we deliver now is very fractured.
I got to go over here for my real estate, over here for escrow, over here for mortgage. I’m talking to six different mortgage people I don’t even know who’s giving me the best rate and quote and meanwhile, trying to raise my kids, deal with a divorce or care for somebody sick with COVID.
We’ve got all these stresses and here comes this real estate army of practitioners dumping all of this workload on people.
So the winners in the future of the industry are going to simplify the experience. They’re going to take the friction out it and deliver a delightful consumer experience. We’ve got to get agents to buy into that and take part in that. We’ve got to get them to say, “You know what, you’re right, Chris. We believe that that is the future winning formula, so we’re willing to put our egos, our selfishness, the way we’ve done things and put that behind us.”
We are an ego-driven industry in the way that we promote ourselves. How many ‘number ones’ can you have in the market? Honestly, people don’t care about that. Did you choose your dentist because of how many teeth they pulled last year? No, you didn’t. I mean, it just it’s so ridiculous.
We’ve got to get the spotlight off of ourselves and move it to our customers.
So what are those opportunities to create a more delightful consumer experience? I certainly think the pandemic forced real estate professionals to get creative with how they serve consumers, and I think there’s no going back to the way some things were done before.
We should be really excited about and honor and celebrate the resilience of the real estate agent. As demonstrated during the pandemic, people had a willingness to get on FaceTime and have a consultation with a buyer they’ve never met who’s looking to buy a home sight-unseen.
People’s overall willingness to embrace all the other different elements of technology to simply do their jobs last year gave me great comfort. Whatever happens moving forward, whatever adjustments or new technologies, processes or protocols that need to be embraced, our professionals will embrace it.
I absolutely think that the element of collaboration will stick around, too. I’ll give you a perfect example: If you were my client moving out here to Nevada and you called me for the first time, the first thing I would do is set up a Zoom with myself, yourself, my trusted mortgage loan officer, and we’d just have a discussion straight away.
Think about the efficiency of that. Think about how we can build a relationship and rapport together, we can give you great service immediately, we can provide you with the certainty that you need to now go online and initiate a great shopping experience.
Going forward, it’s going to be a combination of multiple things to create a better consumer experience. I think a portion of the industry thinks that they can solve all of these challenges just by creating prettier buttons on websites or apps, and that’s a really lofty, impractical vision, because deals are nuanced. Very few deals aren’t nuanced in some way.
So, I think it’s a combination of how to develop tighter relationships between all of the parties that are involved in the transaction and how to facilitate proactive communication so that we’re not responding to fire drills. And then obviously, the underlying technology that helps support all of that.
It’s hard work to change and bring all of this stuff together in a way that’s better today for the consumer.