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Join us as we take a deep dive into the real estate market with insiders in the industry.
Episode #027 Transcript
00:00:23:09 - 00:00:49:22
Michael Conrad
All right, everyone, welcome back to the Business of Homes podcast, where we dig into not only the entrepreneurship but the business side of real estate. And I want to invite you guys to listen in close today because I have a friend of mine, Kevin Wilson, who I have known for a number of years in real estate and who has navigated probably all parts and pieces and now plays a big role in local leadership here in middle Tennessee.
00:00:50:00 - 00:01:15:09
Michael Conrad
And I'm really excited to have him because I feel like he brings an incredible balance of that every day. Real estate agent perspective with someone who now sees some of the stuff that goes on behind the curtains. And so thank you, Kevin, for being here, and I'm excited to learn more about your journey. So we both have been in realty for a while and for at least the beginning part of my journey, maybe yours too.
00:01:15:11 - 00:01:36:13
Michael Conrad
There was nothing overly special about the day to day. You know, we were just out there, were working on transactions and we're sort of gaining that needed experience. But I know that you've kind of been changing and kind of going to new places recently, but I also want to know how did you get to the part where we even met each other just doing the day to day transactions?
00:01:36:14 - 00:01:39:10
Michael Conrad
Where did you come from that led you here?
00:01:39:12 - 00:02:19:07
Kevin Wilson
Yeah. So my story is not a story of being in a family that owns a real estate company. This was not the plan. When I graduated high school and started thinking about college or whatever was next. And so I have to say that I fell into real estate accidentally. And my first career was the United States Navy. I was in the military for six years and from there went to college, was at the university of San Diego in California, and then finally graduated many years later here in Bel Air, Belmont University here in Nashville.
00:02:19:07 - 00:02:53:14
Kevin Wilson
But for 13 years prior to real estate, I was in boutique and big box retail management. And so a lot of custom service skills that were really pressed upon me and formed that level of service over the course of those years that really were very transferable to to real estate as well as, you know, just the discipline that you learned in the military was also transferred referable to to what I do now.
00:02:53:14 - 00:02:54:01
Kevin Wilson
So I love.
00:02:54:01 - 00:03:09:06
Michael Conrad
That. I love and I also love those that have taken the long way around in the academic world. That was my story, too. And so I always appreciate not only the the fact that failure is a part of everyday life, but also there doesn't exist if you keep coming around the block for more. And so I love that.
00:03:09:10 - 00:03:15:05
Kevin Wilson
Yeah, yeah, it's definitely a part of my story. I was in my forties when I graduated with my bachelor's degree.
00:03:15:06 - 00:03:15:20
Michael Conrad
I love that.
00:03:15:20 - 00:03:16:15
Kevin Wilson
And yeah.
00:03:16:19 - 00:03:36:04
Michael Conrad
Yeah, that's good. That's a good a good reminder that none of us are too far out of any of the games to pick yourself back up and keep going. And I feel like I need to start keeping some sort of tally or maybe some sort of like for our video watching audience, like a dollar sign with tally marks paid for.
00:03:36:04 - 00:04:02:13
Michael Conrad
Every time I hear someone tell me that they fell in or accidentally got into real estate, it's the best wormhole. I'm convinced of it, or onramp into real estate because there is no obvious feeder, you know, it's it's very rare to have anyone get degrees in it. And like you said about the families, it's rare to have that early, early experience, unless you're just, I guess, I don't know, just clued in somehow like I wasn't.
00:04:02:13 - 00:04:35:00
Michael Conrad
But that becomes why the real estate industry has this incredibly wide range of different ways that people practice because they're feeding in all this past experience that so that that military background of keeping things very organized and regimented and working as a team, but also that retail background of having customer first, customer first, customer first. I'm sure that blend, very unique as it is, gave you a leg up in some ways because man discipline when you're starting out in real estate, definitely one of the hardest things.
00:04:35:00 - 00:04:59:08
Kevin Wilson
Absolutely. You know, real estate, your 1099, you're basically self-employed. You hang your license with a brokerage. But I think that the mistake that a lot of us make, including me in my early years, is I treat it like a W-2 position. I treat it like it's just a 40 hour workweek, come clock in, come clock out. But the benefit is, is that I only clock out and clock out when I want to.
00:04:59:10 - 00:05:26:14
Kevin Wilson
And there has to be, at least for me, there had to be a mind shift somewhere there that says, okay, yes, my license is with a brokerage and I work under a broker, but I am my own business owner and I have to learn disciplines and make decisions based on being a business owner. For example, you know, when I get a commission check, that entire commission check is not mine.
00:05:26:16 - 00:05:54:14
Kevin Wilson
A part of it is the brokerage. A part of it goes toward taxes, a part of it goes to business expenses. And so what I learned too late in not too late, but it was later in my career is that I pay myself a salary every month so that it's consistent income. And if the commissions outweigh the salary that I have, that goes into the business account, which in turn goes back into the business.
00:05:54:15 - 00:06:25:17
Michael Conrad
Yeah. So this is great information for any new listeners here or anyone who's a little off the rails that in some ways your commission checks should never hit your bank account first. They almost need to very much go into like an operating account or business account. And you'll see this in some of the more finely tuned areas of financial planning and financial management, those that are helping, you know, manage someone to have good sort of interactions with money.
00:06:25:22 - 00:06:43:18
Michael Conrad
Well, start any money that you're getting from a job or a business or an investment, and it'll go into an account that you largely can't touch or don't touch. Right? And then from there you pay all your expenses. Maybe you have like what would be traditionally considered like a cost of goods sold. So that would be like a brokerage takes that money off the top.
00:06:43:23 - 00:07:00:02
Michael Conrad
Heck, even Uncle Sam, you know, that money has to be set aside. I had a tax account, literally. I opened another bank account at the bank and I called it taxes. And I would take 30% of whatever dollars were paid to me and I would just put it in there and it would just stock up and then I'd pay it out.
00:07:00:04 - 00:07:12:12
Michael Conrad
And I later learned that there are some better, more simpler ways to deal with that. But ultimately, it was a helpful, almost simpleton way for me to remember that all that money coming in isn't just mine. Right?
00:07:12:14 - 00:07:34:16
Kevin Wilson
Right. And, you know, other important lessons that I've learned there is that there's taxes need to be paid quarterly, that I don't need to wait until the end of the year and then try to scramble for this big chunk of money that I owe. And that has been, you know, really life changing for me and being able to put that into practice.
00:07:34:16 - 00:07:54:16
Kevin Wilson
And when you first start, yes, it seems like it's a lot of money every quarter, but over time you realize that that money's going going to be gone and it's not yours to spend. And so you get used to it. It's just like funding an investment account. Like as if I had fund an investment account with the same amount of money every month.
00:07:54:18 - 00:07:57:20
Kevin Wilson
Then over time, I don't even miss that money. Right.
00:07:57:22 - 00:08:19:12
Michael Conrad
This is business. One, two, one. I love this. I'm so glad you brought this up, because I'm not sure this is being taught right alongside those real estate classes, which is a total shame, because you're right, it feels like every packet that you buy, that's like real estate one on one should be emblazoned. Whether you're starting a business, not a profession, you know, because it does feel like it's exciting.
00:08:19:12 - 00:08:42:15
Michael Conrad
I'm getting into something new. I'm going to have this new identity, I'm going to be doing these new actions, but it's like, Hold on, now you're starting a business. Do you have the proper financial and legal sort of set up to to make success? And those quarterly payments for taxes is very familiar to much of the business world, and it needs to be more familiar to real estate.
00:08:42:15 - 00:08:58:21
Michael Conrad
So that's really great. And if you pay those out of your operating account, I mean, and depending on the amount of money that's bringing in, Uncle Sam wants his piece and wants it on a frequent basis. And it's not only just psychological, it's practical because it's very it's very frustrating to have to come up with big sums of money.
00:08:58:21 - 00:09:01:09
Michael Conrad
It's much easier to be paying it a little bit over time.
00:09:01:12 - 00:09:02:18
Kevin Wilson
Absolutely.
00:09:02:20 - 00:09:23:09
Michael Conrad
So you mentioned something interesting that I want to touch on because it's so normal for agents who are getting in to be getting your affiliate broker license and then hang in under a broker's license. But if you really stand back for a second and don't just think to yourself, well, obviously it goes to B, but maybe Y, it goes to B.
00:09:23:11 - 00:09:49:10
Michael Conrad
Do you feel like in 2024 that brokers are providing the proper amount of transactional value for warranting this sort of to license world we live in? You know, he got the broker license, you got the affiliate broker license. In some ways, people, consumers, they don't know the difference between these things. And sometimes regular agents don't know the difference between these things.
00:09:49:10 - 00:09:56:18
Michael Conrad
And so are brokers still providing that ten, 20, 30% worth of value where that broker fee comes off the top?
00:09:56:19 - 00:10:24:06
Kevin Wilson
Absolutely. I think that there are full service brokerages out there that do a really great job in providing and earning the the income that they receive from their agents. I have always been a part of a brokerage where I could have certainly gone somewhere else and paid less to that brokerage. But I got the value. I saw the value in being where I was at.
00:10:24:07 - 00:11:00:11
Kevin Wilson
I will also say that there are lots of different levels of brokerage as far as what services are provided. And so if you are, there's there's something out there for everybody. It is just like the commission structure to the consumer that might be wanting to list their house or may be wanting to buy their house. We hear a lot in the recent media about the settlement and the the different fee structures, except we don't hear a lot about the different fee structures.
00:11:00:11 - 00:11:41:05
Kevin Wilson
We hear about one fee structure, right? Yeah. And so, you know, it's important for consumers to know that there are lots of different brokerage models out there. Some of them are flat fee brokerage models, some of them are full service brokerage models and and commissions are negotiable. Right. And they've always been negotiable. I think you see the same thing from the internal side of the from of the brokerage where certain brokerages just provide a higher level of service and culture than others to their client, which is the real to write.
00:11:41:07 - 00:11:58:07
Kevin Wilson
But if you don't want that service or you want to go with a simpler brokerage or a less expensive brokerage, that's available to you, too. And so it very much reflects the external consumer's option in the internal world of real estate.
00:11:58:12 - 00:12:21:16
Michael Conrad
This is really great because we're so familiar in other areas of our life with different options, different levels of service, maybe something that's more turnkey or more concierge or something that's a little bit more the carte. This is not uncommon to us. We can get full meal deals or we can just buy the sandwich, we can get a full card detail or we can just get a wash.
00:12:21:18 - 00:12:41:07
Michael Conrad
This is not a familiar to us, but somehow I have found that in the real estate related industry we go a little brain dead, thinking that, you know, all brokerages are the same. Or at the very least, we've now seen the rise of two models. You're sort of like 100% commission models which work off service fees and a variety of fees.
00:12:41:12 - 00:13:02:07
Michael Conrad
And then we have a quarter of your full service, quote unquote, models, which even that is like way too general and dull of a phrase, full service. Well, what type of service? What is the full mean? And of course, now that this you're right, elevated conversation for consumers saying aren't all agents the same? Aren't all commissions the same?
00:13:02:08 - 00:13:22:13
Michael Conrad
No, of course not. And what we should be doing is using our prior knowledge about all the different variations of what brokerages look like to be the beginning in the seat of conversation to see, oh, no, see, I exist in this A versus world or B world or sea World. And let me show you how the differences are in the consumer landscape, too.
00:13:22:13 - 00:13:32:01
Michael Conrad
And so that's a really good way for us to think. We need to educate ourselves better internally so that we can then use that to educate our consumers as well.
00:13:32:03 - 00:13:54:09
Kevin Wilson
Yeah, and I think that that's really the environment that we're in right now is really where that stems from, right? Is that we have taken for granted internally what we know to be true about the industry, that there are different levels of service and different fees for that service throughout the real estate industry. But we have not done a great job in communicating that to the consumer.
00:13:54:11 - 00:14:19:00
Kevin Wilson
And so this is an opportunity for us to communicate that, to really raise the level of professionalism in our industry and for the consumer to really understand, first of all, what is the value that we provide and then secondly, how we get paid. And so I'm really you know, it's probably not the way that I would have asked that we get there.
00:14:19:02 - 00:14:22:02
Kevin Wilson
But I'm really excited about this next phase. And in our industry.
00:14:22:07 - 00:14:46:05
Michael Conrad
You are highlighting, I think, a larger truism that we struggle to put words to what we know is true in our gut, and that is you definitely get what you pay for. No doubt you reference that some brokerage models give less charge less, some give more, charge more. So we know that we get what we pay for. But also I think none of us in the world are great at everything.
00:14:46:07 - 00:15:10:19
Michael Conrad
There's always something we're not very good at. One of the things I'm not very good at is fixing cars. I like to tinker when I was younger, but I. I've just fallen out of it. I'm just not good at it. And so for me, when some car person is really good at their job, but not just fixing and turning wrenches, but explaining what they're doing or maybe even how complicated is or kind of parent disease, how I can't probably do it myself.
00:15:10:21 - 00:15:26:17
Michael Conrad
All of the sudden, all of my concerns about cost just start to go out the window. Sure. Because what they're providing for me is such a valuable service. I'm like, please take my money. Please take my money and fix this car for me because I can't do it myself or I don't want to do it myself or I thought it was easy.
00:15:26:17 - 00:15:49:00
Michael Conrad
And now I realize it's complicated. And so when we somehow interact with a service person or a product and we innately figure where is price and my perception of value, we make a judgment. We might have a perception of value problem, but if it if it is the right perception of value, that's going to be an easy judgment.
00:15:49:00 - 00:16:18:06
Michael Conrad
Oh, man, that's a great deal. Won't be something we say, Ah, oh no, I would never pay that. And so I do think the consumers are dealing with one half of a their judging wrongly because they don't have a proper perception of value. But I also think the other half is that the community, our brothers and sisters out there haven't really had the words for themselves and are now not able to use those words to explain their value.
00:16:18:12 - 00:16:35:10
Michael Conrad
And I think any time that there is scrutiny, we professionals should be excited like, Oh, someone's kind of looking at me. Well, let me tell you how great I am, but not in like a self-promotion way, but like I've worked hard to be here and I've put the effort in. So let me share it with you and educate you.
00:16:35:15 - 00:16:49:03
Michael Conrad
That should excite us. And so some of the response where it's a little bit more of a whine perhaps than an excitement around this settlement, I'm like, Come on, people, let's get excited about proving our value and you got to put in the work. There's work to be done.
00:16:49:05 - 00:17:23:16
Kevin Wilson
And I think that that that's how that is true for every other business. Yes. Across the country is that you are paid based on the value that you provide. And that is the opportunity that within our industry that we have failed the public at large, like we have failed to discuss our value. We take care of the transaction for you, but we don't talk about all the things that we do in that transaction and all of the stressful conversations that we may have behind the scenes that you're not privy to and that you never know about because we just work it out.
00:17:23:18 - 00:17:56:15
Kevin Wilson
And so I think we have a real opportunity to learn to articulate our value and then demonstrate our value to the consumer and and again, I'm I'm it's not how I would have gotten here, but it's a it's a great opportunity. And I can think of two examples in my lifetime where this has been proven to me going back to running a business when I had to hire a CPA to actually go through all of my accounts, they, you know, they have access to all of my accounts and they reconcile those accounts every month.
00:17:56:15 - 00:18:26:06
Kevin Wilson
Right. That's not cheap. But let me tell you, it's valuable. It's valuable. And at the end of the year where I'm not I don't have a shoebox worth of receipts. And so that is one example. Another example is, you know, investment for retirement. Like when I first hired my financial planner, I questioned every charge I was probably not the most pleasant consumer that that he has run into.
00:18:26:09 - 00:18:47:07
Kevin Wilson
And now I'm like, I see what they do for me and the value they've provided in my retirement accounts. And and the proof is in the pudding. Right? When we talk about you talked about like, you know, meals, you can get all a cart or you can get like the the full, full size super sized meal. You know, that's a great example.
00:18:47:09 - 00:19:06:15
Kevin Wilson
And I use the one I use is that, you know, I can buy a t shirt at Target or I can buy a t shirt at Nordstrom. It's still a t shirt. It doesn't matter. But there's always going to be the consumer who wants the level of service and quality that's provided by Nordstrom's that isn't provided by Target.
00:19:06:15 - 00:19:11:08
Kevin Wilson
I love Target like I go there a lot, but I'm absolutely not buying my house there.
00:19:11:09 - 00:19:32:00
Michael Conrad
Right. I think that we can start to look inward and say, well, what is it that I'm doing? But not just what is it that I'm doing, but how can I communicate this better? You mentioned this great thing of like that. There's all these stressful phone calls and these problems that get worked out by your listing agent or by your buyer's agent.
00:19:32:02 - 00:19:59:08
Michael Conrad
I think sometimes the community has done too well to keep the stress away from the client and has accidentally kind of nipped themselves in the bud a little bit because they're like, Oh, well, that was a smooth experience. Yeah, because I literally threw my body on the railroad tracks so that the train could go over. But in reality the client wasn't aware of it, and so it kind of lost a little bit of its of its punch of that of that value.
00:19:59:08 - 00:20:20:17
Michael Conrad
And so I saw a broker a couple of months back write out this incredible laundry list. I mean, just hilariously long laundry list of all the little minute actions that go into managing a real estate transaction. And it was a really great thing to kind of read through kind of a little ad nauseum, ad infinitum sort of a situation.
00:20:20:19 - 00:20:38:10
Michael Conrad
But to realize, oh, you're right, there are a lot of little things. And honestly, I'm in the I'm in this world, but I don't know if I could have written those all down. And I certainly know that your average consumer could not have. And so without knowing all of those things, it's hard to really round out the value.
00:20:38:15 - 00:21:02:08
Michael Conrad
However, value is not an objective principle that hangs in space. It is something that is agreed upon between two parties. And if you are someone like this person was who writes out all this hundred items of value that you do as a buyer's agent and the buyer, whoever they are out in the world, says, Well, I disagree that 30 of those are actually valuable.
00:21:02:10 - 00:21:22:15
Michael Conrad
I think you're doing them great for you. Question Mark, But like, I don't really care. Well, we have to then reset as professionals our understanding of not only what are the actions that we're doing, but what is valuable to the consumer. I used to incorporate a little nugget of value early on in my business that I was like kind of shouting at the rooftops, This is so great.
00:21:22:18 - 00:21:42:18
Michael Conrad
You should love this. Look at us. We're so great. We incorporate this thing. And then I realized about a year in early investors, nobody cared. Nobody was reading it, nobody was watching. Nobody was interested. It was not something of perceptible value to the consumer. And so I eliminated it. And I was a little sore because I liked it and I'd put the effort in.
00:21:42:22 - 00:22:06:03
Michael Conrad
But ultimately I had to recognize the consumer may be uneducated in elements, but they are not necessarily wrong. It is a conversation between consumer and professional to arrive at the idea of like, Well, what should we then be doing to serve? We serve at the pleasure of the consumer, right? But what do they need? Sometimes they know how to talk about it, sometimes they don't.
00:22:06:05 - 00:22:26:06
Kevin Wilson
Yeah, And again, I think that that that is really where we have failed as an industry is to to communicate and not just communicate the value to your point, not just communicate the value that we think we provide, but what value are you not getting that you need that we can provide? Tell me about your last transaction and that you had.
00:22:26:08 - 00:22:59:05
Kevin Wilson
What were the pain points in that transaction? What is it that you need me to do that you didn't get the last time that you did this and not just being the like my buyer representation agreement and my listing presentation should not just be about me and how great I am and the things that I do, but it should be more about me listening to the consumer and saying, what do you, what are your goals in this transaction and what do you need from me?
00:22:59:07 - 00:23:23:09
Jake Hall
Hey everyone, it's Jake, director for the Business of Homes Podcast. I hope you have been enjoying today's episode, starting with the understanding that you are running your own business, the different levels of service brokerages can provide and how not demonstrating your value as an agent has become a huge problem. When we return, Michael and Kevin dive into how HGTV has created a version of real estate that's not real life.
00:23:23:14 - 00:23:43:16
Jake Hall
A reminder that the contract is the most important piece of the real estate transaction and their final thoughts on how the settlement should make you feel. You don't want to miss it. Don't forget to follow us on Facebook and Instagram @thebusinessofhomespod, where you can interact with us and see some great bite sized pieces from all of our episodes for you listeners out there.
00:23:43:21 - 00:24:01:18
Jake Hall
Did you know our entire podcast are filmed and are on our YouTube channel? Check it out next time you want to see our amazing guests tell their stories. And are you currently watching this episode in video format? Don't forget to follow us on your preferred audio streaming service to take us with you on the go. Lastly, do you have any feedback or one to suggest someone for the show?
00:24:01:20 - 00:24:13:05
Jake Hall
Email us at thebusinessofhomespodcast@gmail.com. Please enjoy the rest of today's episode with Kevin Wilson. Let's get back to it.
00:24:13:07 - 00:24:35:07
Michael Conrad
Let's just acknowledge the difficulty of trying to run a business, which inherently means automation, repetition, trying to like, streamline your efforts. So you're trying to do everything the same way because you're trying to improve everything. But then you needed to have this essentially custom piece every time so that it can feel relevant to each individual person that you worked with.
00:24:35:11 - 00:24:56:04
Michael Conrad
So then you're kind of like herky jerky a little bit. But I love I hope you're doing that. And man, I hope all you listeners are rewinding and listening to what he just said, because this idea of starting out your professional relationship with questions, what do you need? What has been your past experience? Where did things go wrong that I can maybe go right this time for you?
00:24:56:09 - 00:25:00:04
Michael Conrad
That's a wonderful way to start off. Are you incorporating that in your business?
00:25:00:04 - 00:25:23:04
Kevin Wilson
That's great. Yeah, right. Yeah. So? So I do that. You said there's a point where you talk about what are the things that you hope, what, what, what are what are your dreams in this transaction? What does the perfect transaction look like for you? And having that conversation with sellers and making sure that sometimes that comes at a cost.
00:25:23:06 - 00:25:51:00
Kevin Wilson
Right. Like, so if I want my listing to be promoted everywhere, I want it on the internet. I want it in print advertising. I want it every there's a cost associated with that to the to the listing agent or to the seller. And you know who's going to. I think that, you know, in the environment that we're in right now, you'll start having more conversations about who is going to pay for that based on the compensation that's being offered.
00:25:51:01 - 00:25:51:08
Kevin Wilson
Okay.
00:25:51:08 - 00:26:16:03
Michael Conrad
So I think you're touching on almost an entirely separate conversation, but it's one I'm dying to have, and that is why are the professional real estate agents paying for costs associated with the transaction when there is no guarantee of like compensation or success? Like. I've always been really uncomfortable with the fact that real estate agents put all this effort in.
00:26:16:05 - 00:26:35:14
Michael Conrad
You know, not everyone's doing like a stellar job every minute, but like there's a lot of good work that goes into this. There's no guarantee of payment. I don't live in that world. I'm more of a service business guy where I'm like, Dude, we render juicy service like we're getting paid. And so I want agents to almost like, get paid along the way because I feel like that's way more fair.
00:26:35:18 - 00:26:43:04
Michael Conrad
And I don't love the idea of you having to eat all these costs with just a big dice roll gamble of whether you're getting paid at the end, Right?
00:26:43:07 - 00:27:01:22
Kevin Wilson
Right. And I think that's part of the conversation. Right. Because what we see in the age of influencers and the age of social media and even the age of HGTV, where you show three houses and you get to choose one that is not real life fake. That is not fake news. That is not what we do in real life.
00:27:02:03 - 00:27:43:16
Kevin Wilson
You know, there are times that we work with buyers or sellers for six months or a year or longer. And if it's a buyer or seller like that, that transaction may never close. Like, you may never be paid on that transaction at all. And yet you have these upfront cost, whether it's with a buyer, you know, the gas, the time, the, the, the, the countless number of counseling and conversations that you have with that buyer, that the number of conversations you have with the lender trying to provide the buyer with the scenarios based on today's mortgage rates are based on any number of different factors.
00:27:43:21 - 00:28:10:17
Kevin Wilson
And then if you look at the listing side of it, you pay out of pocket for professional photos for these professional lock boxes where it's not just like a code you can like scroll on that anybody can, you know, figure out what that code is over time. And so you have these upfront expenses and it really is it goes back to our very first point that we were talking about here is that it is about being a business owner and not about being an employee.
00:28:10:19 - 00:28:28:14
Kevin Wilson
Like, these are costs that I absorb regardless of my success. And the reality is, is if I'm not good at this, if I'm not delivering on what I submit to you, that my value is, is that I'm not going to be in business very long because I have more input that are output. That I have input. Mm hmm.
00:28:28:16 - 00:28:38:13
Kevin Wilson
And so it's a really great question that you that you bring up there when we talk about, you know, the the out-of-pocket costs.
00:28:38:15 - 00:29:02:09
Michael Conrad
I think perhaps the consumers are maybe most confused about this point because I think that there is certainly a confusion in the wording, like, oh, agents are earning these commissions and sort of this word commission. It just kind of doesn't mean anything and it means everything somehow, all at the same time, because the way we're talking about it, like it's a business, right?
00:29:02:10 - 00:29:24:04
Michael Conrad
That's like revenue, like top line revenue. What you're earning as a commission is topline revenue. But do you have expenses and time and gas and all these sorts of things. And so I almost want them to get a better line item receipt of things. It's like, well, this is the hours I put in and here's my dollars per hour and then the discounted, you know, rate kind of like a medical bill.
00:29:24:10 - 00:29:43:23
Michael Conrad
And then here's like the money I spent on photos and staging and all this stuff. And then here's the time I spent, like making sure that your mortgage person didn't completely explode, you know, or whatever. And so a better line item they might be able to pick out easily all those hard expenses and be like, Oh, I, I was that agent was paid out this much.
00:29:43:23 - 00:30:04:07
Michael Conrad
But they had to eat that much. And then, oh, here's their earnings. So I always want to draw out this idea of like earning and expenses against revenue. But now we're just kind of all lumping to do a commission conversation. I like it separate because I think the consumer is like, Oh, I get it. I earn this many dollars an hour because I do these things.
00:30:04:11 - 00:30:11:23
Michael Conrad
Oh, I see this. They earn this many dollars an hour because they do these things. Oh, it makes a lot more sense to me. It just it feels very clouded right now.
00:30:12:04 - 00:30:23:01
Kevin Wilson
Sure. And I think if you look at the 1.5 million members of NA and you look at the statistics, the average realtor makes less than $50,000 a year.
00:30:23:03 - 00:30:24:13
Michael Conrad
Because they're part time in it or something.
00:30:24:14 - 00:30:50:03
Kevin Wilson
Well, and and because it's not what everybody thinks that it is, when you start talking about expenses being removed from that from the top line of everything that you're earning and that and not to say that there are realtors who are significantly more successful than that, but that's on average what an average realtor makes, which is probably below the average income, you know, nationwide.
00:30:50:05 - 00:31:07:10
Kevin Wilson
And so to to like maybe itemize the services that we're providing, I think that goes back to the value conversation we're talking about. Like we have to itemize that on the front end. These are all the things I'm going to do for you. And this is the professional fee that I charge to do them.
00:31:07:12 - 00:31:28:03
Michael Conrad
So there is a danger to itemizing. It's not a silver bullet. You heard it here. It's not a silver bullet. Because what itemizing does is it does educate the consumer and it does kind of empower them. But sometimes they start to wield that power against you a little bit. I've had this experience where someone will come to us and say, Can you render us a service?
00:31:28:03 - 00:31:49:18
Michael Conrad
And we say Yes. And then we're sort of saying in our professional view, this is kind of the service that you need and this is the fee that we're going to charge. And they're like, Well, but what if we did like 10% or 20% less? Is it going to be ten or 20% less price? And I'm like, no, you can't just like start dividing my pie up, removing pie pieces and then fashion your own fee out of it.
00:31:49:20 - 00:32:08:21
Michael Conrad
And maybe that's what the future of real estate looks like. I don't really know. But I do like this idea of engaging in a more clear, like you said, transparent conversation, because then an agent might be able to say, these are the removable pieces because I can excise those out and it doesn't hurt me. And these are the not removal pieces.
00:32:09:01 - 00:32:37:22
Michael Conrad
This is where the price can move and this is where the price can't move. And like, yeah, that sounds much better. But it is interesting because I like this. This is going more in a traditional business route. It's it's pushing the whole industry away from and I, you know, I get pinned for this one, but like it's definitely grown into more of an organically influencer oriented industry rather than a business entrepreneur sort of type industry.
00:32:38:00 - 00:32:59:21
Michael Conrad
You tend to sort of say, Oh, people who are in development or maybe, you know, the construction sort of building something out of nothing or more the entrepreneur side of real estate. And maybe they those who are the agents of conveyance and real estate are more kind of the influencer side when in reality that's not true 100% across the board.
00:32:59:21 - 00:33:21:14
Michael Conrad
That's not true at all. But that's the perception and getting us more into like a band that that real estate agents are like a hard working professional and they're cutting themselves a niche out there and they're really serving their population. And I mean, we should be saying that from a mile away, not kind of like, I don't know, man, you know, which is kind of, I think, where people are.
00:33:21:16 - 00:33:50:19
Kevin Wilson
Right? Yeah. And I think that, you know, 20, 21, 2022 really lent itself to that perception from the consumer because there was so much demand in the marketplace because interest rates were below 3%. And so from the consumer's perspective, it was very easy to sell a home. And and on some level, that was true. What what is not easy is that contract.
00:33:50:21 - 00:34:26:11
Kevin Wilson
There's an 11 page contract that has a lot of pitfalls and complexities that when you have a realtor representing your interest on that, we do that every day. And this is the largest financial investment that most people are going to make in their life and they're going to make it multiple times. And from my perspective, I'm never going to risk that with saying I can do this on my own or, you know, there's a service where I can pay a flat fee and just have someone list my property on the MLS.
00:34:26:11 - 00:34:41:08
Kevin Wilson
But all the phone calls come to me personally, I'm not going to do that because I understand that there are professionals in the workplace who do that. Absolutely every day, just like Michael, I'm not going to inspect my own home.
00:34:41:08 - 00:34:46:13
Michael Conrad
Right? We all have the ability to do things. Maybe there are other people who can do them better than us.
00:34:46:13 - 00:35:03:11
Kevin Wilson
Right, right, right. That do them on a daily basis. Yes. And so there's value in that. You're not just paying me for the time that it took me to sell your home. You're paying me for the years of experience that I've accumulated to get to the point to be able to sell your house in that way.
00:35:03:13 - 00:35:29:18
Michael Conrad
And that's a great reminder that the contract over and over after year continues to be tip of the spear. Arguably the most important piece of the business puzzle of this sort of real estate agent experience. And, you know, we easily see it from the consumer side. Oh, the consumer wouldn't try to navigate this 11 page, very complicated, ever changing document because there is an element of like legal understanding that is maybe beyond them.
00:35:29:21 - 00:35:51:23
Michael Conrad
And yet I find that some section of the real estate agent population chooses to not really go deep in the weeds on the contract. They continue to need assistance further and further year after year. And it really is an easy differentiator because I've also seen the other side people who are like, Well, if this is the thing that's going to be where things are won and lost, or then I'm going to know every word, every line I would be able to call it.
00:35:52:03 - 00:36:13:14
Michael Conrad
Well, that's in line for 2017 or whatever. And those people who are almost kind of becoming like paralegal professionals in some way, I mean, don't quote me on that one, but like, I think that's really I mean, if you're looking here and you're a listener and you're looking for one way, you can begin to immediately differentiate yourself, regardless of number of transactions or years of experience.
00:36:13:15 - 00:36:36:03
Michael Conrad
The contract contract contract contract, get to know it, sleep with it underneath your pillow, read it over breakfast, read it, read it, know it, know it, know every single blank area that you have to fill in and the importance of what filling in things is going to do and change the contract. That's it right there. I mean, that's the beginning of a larger puzzle, but certainly where a lot of value can be provided.
00:36:36:04 - 00:37:13:10
Kevin Wilson
Absolutely. You know, knowledge is power. Right. And if you know what that contract says, you can use that to your advantage 100% of the time. And unfortunately, there have been instances where maybe somebody didn't understand it to say exactly what it does say. And although that contract is a preprinted like legal contract that was written by attorneys at Tennessee Realtors, there are aspects of the transaction that are not covered in that in that contract, for example, you know, if I want my seller to have occupancy of the home for a certain amount of time, like I have to know as a professional how to write that into the contract.
00:37:13:10 - 00:37:36:12
Kevin Wilson
So there are many opportunities where a buyer or seller want additional language that is not in the contract that they rely on their professional representation to put that in there and that it's going to stick. And so again, it's important to when you're thinking about your most important investment, to have somebody who has that experience and that knowledge to kind of walk you through it.
00:37:36:16 - 00:37:53:03
Michael Conrad
Yeah, in the world of construction, we think of the code as like the rules about how to build a code, but it's but the real name of it is like, it's like a model code. It's just meant to be the starting spot. And, and the contract is kind of a model contract. In some ways. It's just the starting spot if you use it.
00:37:53:03 - 00:38:21:22
Michael Conrad
Sure, it's the bare minimum, but there's definitely ways to sharpen it and to increase its value to a seller or to a buyer in such a way where that is the best possible to help your client. And of course, that's the responsibility of each agent. And so you're right, that knowledge, which goes back to the brokerage conversation, because not every brokerage is going to have personnel or components of that brokerage that are there to help you as a safety net or an educational piece.
00:38:22:04 - 00:38:43:08
Michael Conrad
And so more your service brokerages are probably going to have better opportunities to teach you, to protect you, to watch over you and maybe your flat fee, 100% models are going to be a little less. And so it's interesting, if you're new to real estate and you're kind of eyeing those 100% models because you feel like you need every dollar, be careful, because maybe some of those safety nets and frameworks aren't quite there for you.
00:38:43:13 - 00:39:14:03
Kevin Wilson
Yeah, Yeah. I think the choices that you make, at least for me, I can speak to my own experience. The choices that I make early on in my career are going to dictate the rest of my career. MM And so where I chose in the beginning of my career has certainly shaped not only any success that I've had in real estate, but it is also helped shape me as being a part of a leadership team, you know, with at our local association.
00:39:14:05 - 00:39:30:15
Kevin Wilson
And so the value that I have received from making the choices that I made early on has multiplied itself immensely. Like, you know, yes, I paid a little bit more to be a part of that brokerage, but I have gotten that money back tenfold. I mean.
00:39:30:15 - 00:39:32:03
Michael Conrad
You were at village for a lot of years.
00:39:32:03 - 00:39:32:19
Kevin Wilson
I was a village.
00:39:32:23 - 00:39:38:06
Michael Conrad
Marine who literally teaches the bible of contracts. Was your broker for many years.
00:39:38:06 - 00:39:39:03
Kevin Wilson
Many years? Yeah.
00:39:39:04 - 00:39:40:01
Michael Conrad
Shut out. Twittering.
00:39:40:02 - 00:39:40:11
Kevin Wilson
Yes.
00:39:40:14 - 00:39:41:04
Michael Conrad
Killing it.
00:39:41:06 - 00:40:06:23
Kevin Wilson
And she sat in that office every day from at least 9 a.m. to 6 p.m. and there was always a line outside the door. And when you walked in, you were treated like you were the only person who who wanted to see her that day. And so she was such a support and and so much knowledge about the forms and the contracts that it really did set set those agents up for success.
00:40:06:23 - 00:40:26:18
Kevin Wilson
And and Bobby is one of my mentor mentors. I absolutely credit her with every success that I've had in real estate. But there are also other great brokers out there, and so that's still available in the marketplace. But if you are a new agent, I would say that where you choose to go.
00:40:26:20 - 00:40:45:22
Michael Conrad
It's really important in matters. I'm not sure that I've I'm aware of, and maybe this is more of an association thing, maybe, I don't know. There's a need rising the market for better ways to compare brokerages. So, you know, we almost had like a Facebook for brokerages so we can know what they are and what their pieces are.
00:40:46:00 - 00:41:07:00
Michael Conrad
I want to see my encouragement to the community here listening is that be someone who is judicious and scrutinized, start conversations with your peers. There's no such thing as too many questions about the nuances of value that you get from a brokerage or like what people's experience has been. And remember, everybody's going to have a different angle on it.
00:41:07:04 - 00:41:13:14
Michael Conrad
So you got to get down to those core things, not just what the splits are, but really what that transactional value is with your broker.
00:41:13:18 - 00:41:57:11
Kevin Wilson
Absolutely. And if nothing else, what I would leave here today is that start that conversation about splits or money, start that conversation about value. Hmm. What is the value that you're providing me for for hanging my license here? But then also, what's the flipside of that? What is the value I'm bringing to you? What is the value that I bring to your office as as an independent contractor here, like we often think, and I had this conversation earlier today, that people walk in with this idea that they're choosing where they want to go.
00:41:57:13 - 00:42:07:14
Kevin Wilson
It has to be a good fit for everybody. And so. Right. And so not only what is the value you provide, but most importantly, what is the culture of your office.
00:42:07:19 - 00:42:35:07
Michael Conrad
Hmm. Yeah. A broker said to me recently that he just he has way too many conversations about splits and not enough conversations about following some of the encouraged meant and the guidelines and guardrails that he's trying to build is sort of the cultural sort of wave and push that he's pushing his agents. You know, he's like, I wish we could talk more about finding success in the things that I'm recommending rather than like, you know, how can I, you know, give up more of the commission so that you can make more.
00:42:35:07 - 00:42:59:12
Michael Conrad
Mr. Agent And so, yeah, that's, that's I think that's missing. I think that's missing and that's a, that's a bummer. And I think this settlement to sort of take it full circle is is something that can lead you to an emotional response, no doubt whatever that emotion is going to be. And you have a pick, a pick of the litter of all the different emotions available to you.
00:42:59:14 - 00:43:40:09
Michael Conrad
And this settlement should not lead you to like feeling sorry for yourself or even outsized emotions of like depression, sadness and anger. And those might be something natural like chemical that you might feel. But my encouragement is that this should feel like an exciting challenge in which to overcome or even like, dare I say, prove everybody wrong kind of a thing, you know, in a good hopefully in a good way, it should be something that leads us to sharpening our pencils, sharpening our chisels, whatever the analogy is like, we should be excited to have these conversations.
00:43:40:09 - 00:43:58:02
Michael Conrad
And honestly, it might lead us to places of like, who am I? Where am I going? What do I want? God forbid, Because maybe if the industry you wanted was more Instagram focused and now the industry's telling you you have to be more business focused and you don't like that, That's okay.
00:43:58:04 - 00:43:58:14
Kevin Wilson
There's no.
00:43:58:14 - 00:44:25:09
Michael Conrad
Judgment there. You can do whatever your heart desires, but this industry is definitely going more in the direction of saying business acumen is important, education is important. Relationship with your broker and your consumer is important. Having the language in which to have those conversations is important and honestly, be aware of your MLS and your association and what they're doing to assist you.
00:44:25:11 - 00:44:39:16
Michael Conrad
And you know to kind of sort of wrap things up. You are the president of the local association and you didn't just wake up one day and be the president. How did you change from being the everyday agent to becoming president? Because it wasn't an overnight thing.
00:44:39:19 - 00:45:13:15
Kevin Wilson
Yeah, it definitely was not. I was a realtor for many years before I got involved with the association, and it started by just becoming a member of a committee and just showing up and participating and learning more about the value that's provided within the association. And you don't get here or anywhere by yourself. And so having mentors and leaders who really gave me opportunities to incrementally step up the responsibility that I had within the organization.
00:45:13:15 - 00:45:40:08
Kevin Wilson
And so eventually that became, you know, the chair of a committee. And then I made the decision, the very, you know, somewhat scary decision to run from the board. And so now you're asking for 7000 members to vote for you to be a member of the board and not knowing what that outcome is going to be. But what I've learned since then and as part of leadership is, is that you get zero of the opportunities.
00:45:40:08 - 00:46:03:02
Kevin Wilson
You don't try for it. And so I was able to be elected to the board. And then subsequently the next year was interviewed with a nominating committee and they found that I would be a good fit for executive. And, you know, it has been a five year journey since then. I'll be on nominating for five more years after I am the president.
00:46:03:02 - 00:46:29:00
Kevin Wilson
And so it is not a short stint. Nobody said, Hey, there's an in air settlement, Kevin Wilson should be president. I did not select these circumstances, but I am. I am. Again, another thing I would not have wanted to get here this way, but it has been a great opportunity to be in front of members and brokers and, listen to their concerns and answer their questions, the questions that we can answer at this point.
00:46:29:02 - 00:46:54:21
Kevin Wilson
And so it has just been honestly an honor to be in the position at this particular moment in time. And to your point, Jerry Springer, who is our CEO, who I can't imagine doing this alongside anyone else, often says don't let a good crisis go to waste. And so to your point on, you know how you can view this, like in that first week.
00:46:54:23 - 00:47:16:23
Kevin Wilson
Absolutely. Fear, lots of questions, serious concerns about the future of the industry. But you also got to find a turning point from that to start asking the question is, how do I get curious about this? How do I make this work in my business? And the reality, Michael, is not a lot is changing. There are really two major changes here.
00:47:17:04 - 00:47:38:09
Kevin Wilson
One is that there will no longer be a unilateral offer of compensation in the but it can be offered anywhere else. The seller can still offer compensation to the buyer broker. There's nothing in the settlement that precludes that. It's just saying that we can't put it in the MLS as a unilateral no matter what this is. The commission is being paid.
00:47:38:11 - 00:47:59:05
Kevin Wilson
The second thing is, is that we have to have a buyer representation agreement signed by the buyer before we show the first house. That's a big deal nationally because more than 30 states do not use by broker representation agreements. Yeah, Tennessee, we've always used one, right? And so we already have that. And so this is really not a new practice for us.
00:47:59:05 - 00:48:27:15
Kevin Wilson
There are some some minor changes in that in how it will be new, but it is not a significant change. And so I have to give a shout out to Tennessee Realtors and the Forms Committee. They have been on top of this game for years and set us up for success in this moment. And so I think that there's a real opportunity to look and see how can I make this work for my business and how can I gain market share based on what I choose to learn and the knowledge I choose to gain and move forward.
00:48:27:15 - 00:48:28:09
Kevin Wilson
With this.
00:48:28:11 - 00:48:50:19
Michael Conrad
I hope more buyers agents are willing to take a stand for their value and say, My buyers representation agreement is going to include a clause around, you know, valuing my time. And if we end up at more of a question mark or a stalemate on moving forward for a transaction, then my time is still has a representative value and a pay out of the X, Y and z.
00:48:50:21 - 00:49:13:05
Michael Conrad
I love to see more. Listing agreements include expiry clauses that include recompense for expenses paid out. I'd like to see consumers be made more aware of the work that agents put in, and agents can stick up for themselves a little bit more and not just say, I'm just going to take all this and then I'm just going to take the beating.
00:49:13:05 - 00:49:35:00
Michael Conrad
If it doesn't work out like I know I want to see, I don't want to see buyers break buyers agency agreements because they just kind of fell out of love or something or listing folks, you know, sellers just let things expire because they found somebody else who will do it differently. Or I want to see things stick because there's real relationship and real value represented.
00:49:35:00 - 00:49:59:08
Michael Conrad
And so I hope anybody listening here will continue to take a sharp pencil to those agreements that they're writing and be bold. Your consumers do want to compensate you. They probably care about you if you're working with them and don't just think that they're worried about that whole thing. They want to have an adult conversation with you about compensation, and I hope you'll be confident enough to do it and call Kevin if you have questions.
00:49:59:10 - 00:50:00:21
Kevin Wilson
Great.
00:50:00:23 - 00:50:20:05
Michael Conrad
Kevin, this has been great. If you guys are want to really figure out if your business is a business, jump into leadership because it's not a business. You're going to struggle and frameworks to make it a business. But leadership obviously has a huge opportunity of putting you in the right rooms. You want to be in the room where it happens, right?
00:50:20:06 - 00:50:39:19
Michael Conrad
And putting the right room, the right people at your education level with this explode and obviously you get to give back, which is a big part of being a realtor. And so thank you for being here. Very excited. Thank you for having me. Yeah. Guys, this has been the business of Homes podcast. I'm Michael Conrad. I love sharing these stories and helping encourage our real estate agent community.
00:50:40:01 - 00:50:52:01
Michael Conrad
I hope that you guys will continue to listen in here or wherever you get your free range organic podcast and hit subscribe and stick with us. We'll catch you next on.
00:50:52:03 - 00:51:13:02
Jake Hall
Hey everyone. Jake again, director for the Business of Holmes podcast. I hope you've enjoyed today's episode a huge thank you to Kevin Wilson for being a part of the podcast. Go follow him on Instagram @ourhousenashville, and let him know how much you enjoyed their story. Don't forget to subscribe on your preferred listening platform and make sure to follow us on Instagram as well @thebusinessofhomespod.
00:51:13:08 - 00:51:22:23
Jake Hall
Do you have any feedback or want to suggest someone for the show? Email us at thebusinessofhomespodcast@gmail.com. Thank you again for listening and we'll see you soon.