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Join us as we take a deep dive into the real estate market with insiders in the industry.
Episode 025 Transcript
00:00:28:17 - 00:01:14:04
Michael Conrad
Hello, my friends, and welcome back to the Business of Homes podcast. I'm Michael Conrad, your host. And today I'd like to take you on a bit of a journey, but a subject that I think is so important but complex, and that is around innovation and how innovation intersects with the free market. Today, I'm lucky enough to have Jonathan Harris of Scout Realty here, and Jonathan and I have known each other off and on for a lot of years and he is someone who from afar I have seen adeptly create a new and separate and interesting brand and continue to innovate over and over in a field that largely is devoid of innovation outside of big
00:01:14:04 - 00:01:28:08
Michael Conrad
tech these days. And so I'm hoping that we can dig a little in to Jonathan and kind of what makes him tick and how he continues to generate these new ideas and what his experience has been in doing all of this stuff. So, Jonathan, thank you for being here. Yeah, thanks.
00:01:28:08 - 00:01:30:17
Jonathan Harris
For having me. Appreciate it, Michael.
00:01:30:19 - 00:01:52:09
Michael Conrad
When we met, you were carefully crafting and gathering experience and I don't know if I knew it at the time, but as I look back on your journey from brokerage to brokerage and then, of course, starting your own, it felt like you had made this choice to be with an established brand very intentionally. Is that true? So tell me about that.
00:01:52:09 - 00:01:59:05
Michael Conrad
What where was that? The on ramp into real estate right away. And Richard Clarke, or did you start elsewhere in college?
00:01:59:06 - 00:02:17:09
Jonathan Harris
I bought my first house, lived off campus. It was a state income, no doc loan. And so I went into the bank. I said this is my house I want to buy. They said, Do you make around 50,000 over whatever it was, 60,000? I'm like, I don't know. I could you in like, I mean, I guess I could, but I probably couldn't.
00:02:17:14 - 00:02:33:23
Jonathan Harris
I'm just a college student. They're like, That's good enough. We'll give you a loan. So I filled it up with renters and I made about $400 a month in cash flow. And I thought, this is this is crazy. I'm. I'm making money on a house that I owned that I didn't pay anything for. I didn't putting money down state income, no docklands, no down payment.
00:02:34:01 - 00:02:58:07
Jonathan Harris
That's why the mortgage industry had busted. But when in college, that's what got me into it. And I started buying and selling houses with these stated income, no doc loans, and I started flipping houses. So I wasn't doing too good in school, but I was doing pretty good buying and selling houses. I got my license. My uncle said, Man, if you're going to be buying and selling all your own houses and I had done about 50 transactions on my own without an agent.
00:02:58:09 - 00:03:14:11
Jonathan Harris
I got my license after that. And I think a lot easier because the 2008 bubble, when it burst, it, it was very, very, very painful for me. But I had my license and some friends said, Hey, can you help us find a house? And I said, Yeah, absolutely. I've never helped anybody before, but I had helped myself several times.
00:03:14:13 - 00:03:31:07
Jonathan Harris
And then they referred a client and they referred a client just kind of snowballed from there. So there was never a goal or intention to get into the real estate industry by way of being an agent. It was accidental. I was just getting it to service my own business. I needed it to help my clients whenever the bubble burst.
00:03:31:09 - 00:03:49:15
Jonathan Harris
And so I kind of woke up in 2012 and realized, okay, I never chose to become an agent. It was it was kind of one of those things just to have it out of convenience. I've personally experienced buying and selling houses about 50 transactions without having an agent. So like, do I really need an agent? You know, in some cases I could say absolutely not.
00:03:49:15 - 00:04:13:09
Jonathan Harris
I've experienced having a great run without representation, so I've kind of seen both sides of the fence. I got my real estate license, worked in a traditional brokerage, and there was some needs that I had as a as an agent that just were not being met in the traditional brokerage. And so I reluctantly started a business, not because I want to be a business owner, but I was trying to solve known problems.
00:04:13:10 - 00:04:21:00
Jonathan Harris
And I fundamentally believe, like if you can solve your own problems in some method, you may be able to solve someone else's problems. He had the exact same issues that you do.
00:04:21:06 - 00:04:40:17
Michael Conrad
I think that is literally how every therapist becomes a therapist. They're trying to fix themselves and they're thinking, maybe I can fix some other people to say, Oh, we've got a back up here because you've you've dropped a couple of really interesting facts that some of these listeners are going to have their minds spin on. So I got to make sure we're getting the right story here.
00:04:40:18 - 00:04:46:20
Michael Conrad
You had done 50 transactions prior to the recession, largely without an agent, without.
00:04:46:20 - 00:04:47:17
Jonathan Harris
An agent altogether.
00:04:47:17 - 00:04:58:00
Michael Conrad
And, you know, the age of Google was was in its infancy back then. And so was this complete trial and error. Were you using tar contracts? I mean, how did you navigate that?
00:04:58:02 - 00:05:01:19
Jonathan Harris
I had a one page contract that I just literally typed up.
00:05:01:19 - 00:05:03:15
Michael Conrad
I want your house. Yeah.
00:05:03:17 - 00:05:24:18
Jonathan Harris
I would keep it in my car and I would drive. I had a pretty good target area that I knew the mailman. I'd pay the mailman 50 bucks for every lead that he would give me if he knew somebody is going to nursing home or some. I plan on moving any forwarding mail. He'd bring me addresses and I'd pay him $50 or and I go track down the homeowner wherever they lived, knock on their door and say, You own a house in this neighborhood or your loved one.
00:05:24:18 - 00:05:37:01
Jonathan Harris
I'm interested in buying it. So, I mean, I was this bird dog and I would hustle. I had a one page contract and I made things happen and I had more friction points in the transactions whenever agents got involved.
00:05:37:03 - 00:06:12:17
Michael Conrad
So it is interesting because throughout it I would say, well, the last 25 years, which I think is more easier to talk about anything else. The last 25 years we've seen a rise in agents who are not necessarily owners or investors themselves because the real estate agent lifestyle is more visually on display. We're more aware of it. I think some of the older stigmas around who were real estate agents, you know, it's not the eighties, you know, and it's like your mom's friend or whatever.
00:06:12:19 - 00:06:41:12
Michael Conrad
So this is a really interesting entry point because it's actually a moderately rare entry on ramp into the market that which is a very experienced purchaser, seller investor type, becomes then an agent. Because in a lot of ways I think that we forget that these worlds are not easily overlapped. Those that own or invest is not 100% overlap with those that sell or list or whatever.
00:06:41:18 - 00:06:43:04
Michael Conrad
What's been your experience on that?
00:06:43:05 - 00:07:13:21
Jonathan Harris
Yeah, I think it's embarrassing. I think there's a danger report in 2015 or 16. I believe that in our National Association of Realtors put out and it has basically 160 some odd pages in the Danger report, The very first main point, A-1 is the real estate industry is saddled with untrained, unethical, unprofessional, and it undermines the credibility of the agent base in the marketplace.
00:07:13:23 - 00:07:38:11
Jonathan Harris
And I completely agree with that. I mean, why would an industry allow people to get their license in two weeks? That's crazy. Like, you can get your license in no time flat and then represent people in their most important purchase. It's weird that that that's allowed. You look at an appraisal industry, you go through an apprenticeship program so our industry kind of harbors and attracts weak and uncommitted people.
00:07:38:12 - 00:08:01:10
Jonathan Harris
I mean, I in my experience, I mean 21 years I've seen this, the amount of agents that have come into the industry, I would say. Is that a blanket statement? They're they're pretty much unemployable. Like they couldn't get a job anywhere else because they want the freedom and the flexibility and the lifestyle. And that is that has really become what our industry has has has happened over the last several years through the age of social media.
00:08:01:12 - 00:08:24:08
Jonathan Harris
Everybody wants to look the part, act the part, go in the beautiful kitchens, and it's just become a a style oriented business and something that's aspirational and like, how do I look and hat up here? We're in a service based industry. You're here to get on your knees and wash feet. You're here to serve humanity. You're here to make their experience faster, easier, more affordable, better.
00:08:24:10 - 00:08:47:10
Jonathan Harris
And so I just don't see that the Asian community has that grit and determination of like, I'm going to be awesome. I'm going to be the best, I'm going to be well-trained, I'm going to subject myself to a 40 hour discipline workweek because my clients deserve it. Yeah. So coming into the industry, after about 50 transactions with no license and I come in this year, I'm like, man, this is week.
00:08:47:12 - 00:09:03:21
Jonathan Harris
There is there is. There's a lot of reformation that needs to happen. And so I think that that's why we have the consumers pushback and reaction to the Asian lifestyle and the Asian and the the cost benefit or cost value exchange of like, what am I paying and what am I getting?
00:09:03:23 - 00:09:35:12
Michael Conrad
Yeah, I had an interesting conversation with someone awhile back and they were presenting this idea that there are units of value that we struggled to term, but I think we know it in our gut and that is if someone is a provider of goods or services, then we sort of internally begin to make these judgments and formulas about what was the time that went into being capable to provide that good or service, What was the time that went into actually building or curating that good or service?
00:09:35:12 - 00:09:53:09
Michael Conrad
And so we we think about everything from, you know, McDonald's employees to, you know, roofers and plumbers to neurosurgeons and attorneys and that amount of time there's sort of a before you begin the service are good because the amount of time the lead up, education, medical.
00:09:53:09 - 00:09:54:20
Jonathan Harris
Is ten years. Attorneys are four.
00:09:54:20 - 00:09:56:07
Michael Conrad
Years.
00:09:56:08 - 00:09:59:02
Jonathan Harris
Real estate agents by the hour get paid more money for two weeks.
00:09:59:03 - 00:10:08:15
Michael Conrad
Right. That's then there is the actual provision of service, the number of hours you're performing a brain surgery, the number of hours it takes to fix a water heater, whatever.
00:10:08:15 - 00:10:13:21
Jonathan Harris
It is, the opportunity cost. Could I have got this somewhere else for better or for less?
00:10:13:23 - 00:10:44:20
Michael Conrad
Yes. And the free market dynamics in I would say real estate sales have not fallen in a traditional free market. Downward pressure on, you know, pricing and competition sort of thing. It's been a little different, but we all have this gut feeling that tells us, well, could I do it myself? What could I learn that could I learn in a quick or relatively efficient manner to sort of to replace that good or service in my life?
00:10:45:01 - 00:11:04:21
Michael Conrad
Like does buying bread or making my own bread? Where's the cost benefit analysis? And there is this number of units of effort and we all have it right and which is why if someone ever were to tell us, Oh, well, this lawyer charges $15 an hour, something in our gut would tell us, Oh, that something is wrong. There.
00:11:04:23 - 00:11:34:16
Michael Conrad
Because if that person either knew what they were talking about and had the sufficient experience to call themselves that and were sufficiently licensed, certified, whatever, then it would be different. And I don't know if I can tell you why. Maybe some people might say, but it would be different. So one of two conclusions then comes about, and that is either they don't know what they're talking about or they are running an unsustainable and unhealthy practice or business that, you know, isn't worth linking up with.
00:11:34:16 - 00:11:58:07
Michael Conrad
And so this paradigm then is we look at real estate gets a little upside down, whether it's wholesalers or listing agents or buyer's agents, you know, just across the board. If you are in the conveyance of real estate, there is a lead up education and experience and there is a provision of service. The time you spend to do it and does it, is it commensurate with what's paid out?
00:11:58:07 - 00:12:14:20
Michael Conrad
And I think that this system we're in has organically led us here based on percentages and commissions. But of course the history of cost of things has been wildly different. And so it's not exactly equal in some respects.
00:12:14:21 - 00:12:39:12
Jonathan Harris
Yeah, I remember 2010 or 11, there was a client that I was working with and he said, and the husband and wife are business owners. They were super sharp Vanderbilt grads. They were buying at that time a very expensive house. It was like 1.8 at that time. That was massive. Massive. And we were in the car and I remember him said he said, Hey, tell me something.
00:12:39:14 - 00:12:56:16
Jonathan Harris
What type of training have you had around negotiation? I said, Training around negotiation. He's like, Surely the goodness to get your license. You would have gone through like a negotiation course. Or does your does your brokerage do they have a course that you train on negotiation? I was like, No, actually not.
00:12:56:19 - 00:12:57:18
Michael Conrad
You've a debate team.
00:12:57:21 - 00:13:15:04
Jonathan Harris
And he said he said, what? What gives you the authority or what gives you the privilege to be able to charge what you're charging when you've never taken formal training around negotiation? Like how are you even qualified to represent me if you've never even had to go that to get your license? Yeah, I see. That's a fair question.
00:13:15:04 - 00:13:30:11
Jonathan Harris
And now that you're asking it. Yeah, that's. That is pretty strange. I don't know. But I can say that because I've had maybe 50 transactions our own. I've had to do surgery on myself 50 times. I've learned a thing or two, and I think that maybe I could take those trial and errors and learnings on myself and apply it to you.
00:13:30:13 - 00:13:50:02
Jonathan Harris
But as it you know, as you say that I think that's very strange because this was earlier in my career as far as having my license. I thought, man, I can't believe it. I was it made to go through some sort of formal training or apprenticeship or having someone look over my shoulder. That was so you start to have, what can we say like this cost in value?
00:13:50:02 - 00:14:11:11
Jonathan Harris
Is it commiserate? I have a model that has costs and value, and so the value that someone has in their life and in their business that it comes through your experience, that comes through your training, that comes through your education, that how you've resource yourself, the connections that you have, like what type of value can you bring to the marketplace then is cost.
00:14:11:17 - 00:14:29:01
Jonathan Harris
Cost and value are mutually exclusive. They're definitely not the same thing at all. What you choose to charge someone is not it has doesn't have any to do with your value. Like, I'll give an example, Derrick Henry. Last summer I saw that he had a kids football camp and he was charging $50 for the stoop for the inner city kids to come 50 bucks.
00:14:29:01 - 00:14:48:19
Jonathan Harris
I was like, Man, that's really cool. Is on new channel to Derek Henry's football camp. 50 bucks, but he's getting paid 20 million. Whatever his contract is, he's worth more than $50. Does him charging $50 makes him less valuable, value him? Absolutely not. You know, so what you choose to charge someone does not make you more valuable. What?
00:14:48:19 - 00:15:07:14
Jonathan Harris
You choose to charge someone, anything less does not make you worth less. Like your identity has to be rooted in something much different than what you charge. So you have value in cost. It mutually exclusive terms. What you're worth. Because I hear agents all the time say, Oh, I'm worth my commission, I'm worth it. No, you're not. And I'll say, I say, No, you're not.
00:15:07:14 - 00:15:28:04
Jonathan Harris
To every single agent who's listening this, if you listen this, you're not worth it. And here's why The consumer assigns value to something they say it's worth it to me. So when you go into any store and you buy any product, you why did you not buy everything that you saw? Because there's something that says that was worth it to me.
00:15:28:04 - 00:15:50:17
Jonathan Harris
That's not worth it to me, that's worth it to me. So when agents talked start to kind of beat the drum of I'm worth it, it's not your judgment call is the consumer's job to assign value. And if they cannot quickly and easily recognize the value that you create and that there's a disproportionate exchange of value in cost, that they get more than they pay for, That's how you create a repeat customer.
00:15:50:19 - 00:16:04:03
Jonathan Harris
98% or 89% of all people do not use the agent that they sold the house with. Yeah, if you're value and cost were so aligned and the customer received so much value relative that they would absolutely continue to come to you.
00:16:04:09 - 00:16:25:04
Michael Conrad
Yeah. So this is wonderful. I mean, take a note here. Everyone paused, go back, listen to that again. And then when get to this point again, pause. Go back, listen for a third time, because value and worth have a interconnection. But they are not intrinsic. They are not at a core DNA level. It is something that is developed.
00:16:25:04 - 00:16:49:05
Michael Conrad
It is something that is arguable both and can be debated. And and the absolute truth is, is that we don't have intrinsic value natively when we start out the gate. It's built around what you're able to provide, what you know, what your experiences in. And going back a few minutes of what you just said, no one of those things is the magic bullet.
00:16:49:10 - 00:17:13:07
Michael Conrad
You can't get a gajillion hours of education and suddenly become perfectly qualified, valuable and full of worth. You can't get a ton of hours of experience. I hear this in the trades world a lot where, well, I've been doing something for 40 years. Well, you might have been doing something 40 years wrong, so experience is only a part of the puzzle and knowledge isn't enough to you have to be able to weave these things together.
00:17:13:07 - 00:17:25:03
Michael Conrad
And so you're getting into these lovely, really fascinating, essential business principles, and that is value. And worth is basically an agreed upon thing between two parts.
00:17:25:08 - 00:17:46:01
Jonathan Harris
I would say worth is almost like a vote. Someone says, You know what? I see the value, I recognize the cost I'm going to assign worth to the product or service. And I must say I'm going to vote to say yes. Think about a Lexus car commercial in the drive to December, whatever it is. And why does everyone not drive Lexuses?
00:17:46:03 - 00:18:03:15
Jonathan Harris
Because a lot of people could probably buy a Lexus. They are not driving a Lexus because to them, it's deeply personal. It's not worth it to me to go drive a brand new Lexus. I don't care how many commercials I get worn out with on December. It's not worth it to me because I have a different vision for my life or different vision from afar.
00:18:03:18 - 00:18:31:10
Jonathan Harris
Some people say it's worth if I have an opportunity cost to spend money, I'm going to send my kid to private school versus driver Lexus so it's not worth it at the expense of sending them to private school. So Worth is a deeply personal thing. The service provider has to harden themselves and say, I'm going to enrich myself and create massive amounts of valuable that's latent potential that can be deployed to bring a service to someone.
00:18:31:12 - 00:18:45:16
Jonathan Harris
Then I get the choice of what I choose to charge that person. Then I have to like, sit back and say, Is it worth it to them? Do they give me that vote? And listen, if they if you don't get the vote, it's feedback. And I was I was you know, I used to do this in real estate.
00:18:45:18 - 00:19:05:18
Jonathan Harris
Any time I would see someone list a house, I'd be Facebook friends with them. They list a house and I call them and say, Hey, listen, if you give me an incredible gift and feedback, you can teach me a lesson. There's something I'm missing here. I saw that your house was listed, and I'm just curious, what could I have done to earn your listing?
00:19:05:20 - 00:19:11:08
Jonathan Harris
Yeah, because there's an issue of value there. They. The value was not enough for them to say they made their choice.
00:19:11:08 - 00:19:11:22
Michael Conrad
They made they.
00:19:12:03 - 00:19:30:00
Jonathan Harris
They they cast a vote for someone else. And that is that is an incredible strategy for any agent. If you're listening to this, any time you don't get a listing, whether you know the person, whether you got beat on a listing presentation, whether you saw somebody that, you know, listing of don't get mad, don't get bitter, get better, like go in like Sherlock Holmes.
00:19:30:00 - 00:19:48:02
Jonathan Harris
Well and go into discover what could I have done sometime There is a a misperception, a value. Sometimes you just were not aware of what you do. I mean, I remember I called them my best friends early in my career. I'm like, Hey, man, why didn't you use me? He's like, Oh, man, I totally forgot you in real estate.
00:19:48:06 - 00:20:07:13
Jonathan Harris
So here's the feedback. You can't be an undercover agent Like you have to be, like, known about what value create in the marketplace. So I think that that pursuing feedback and when someone does not cast a vote for you learn from it. And sometimes people are like, Oh, that agent this and that agent this, or you get what you pay for.
00:20:07:13 - 00:20:14:23
Jonathan Harris
If they they're a discount broker. Whatever the narrative is about why you got beat, why don't you get curious and ask them and listen, don't talk. Listen.
00:20:15:01 - 00:20:45:09
Michael Conrad
So you're you're intersecting with a part of this conversation around building a company image and a brand. And in branding, it's one piece of this effectively, I think you're talking about a conversation. The brand is a this is my value. And your unique selling points are you espouse oftentimes are this supportive structure that says and this is how I defend my value or how I prove it out, but that's really just you shouting into the canyon.
00:20:45:11 - 00:21:03:10
Michael Conrad
If there is that vote backwards, that conversational element of two parties saying, This is my value, this is my brand, this is what I'm worth, I'm visible, I'm not visible. I have experience and luxury. I don't you know, the vote on the other side is the other half. You have to hear the response of quality to that and they have to agree to it.
00:21:03:11 - 00:21:24:11
Michael Conrad
Just because you say, I know this neighborhood or I am good in this way or I'm experienced this way, doesn't mean anyone agrees to you. And even if you do have some sort of number of notches in your belt, it may be irrelevant. And so that vote, that responsive quality and that larger sort of value conversation is so important.
00:21:24:11 - 00:21:48:10
Michael Conrad
But you have to be able to shape up and really present your brand best foot forward, defending your values, not in a pre defensive kind of way, but in a quite honest, had a lovely mix of both humility and confidence. And then you have to wait for those votes of yes. And if you get those in accidental silences or votes of no, you have to be able to tease it out.
00:21:48:10 - 00:21:57:23
Michael Conrad
And we had a great episode with Kaitlyn Evans about that exact thing, chasing down the person that didn't give you the listing and saying, I'll pay you to tell me what this is.
00:21:58:04 - 00:22:19:18
Jonathan Harris
This is lesson. This is this is a tuition. Like like I need to know why you did not choose me. I love that. So it applies to sellers as well. They have an opinion of costs or they they think their house is worth this number. Okay, you choose a listing price is different than a sales price. I care a lot more about a sales price and a list price.
00:22:19:20 - 00:22:40:03
Jonathan Harris
And so whenever a seller says, No, no, no, my house is worth 800,000, the agent's like, Oh gosh, maybe 800,000, like in 2021 and multiple offer. Like we'd be hard pressed to get. So video, let's go for it. You're 60 days in the market. Nine days in the market. Hey I think we need a price reduction. Just take the feedback for what it is.
00:22:40:03 - 00:23:02:14
Jonathan Harris
The market has rejected you. The market has said you're not worth $800,000. And so, you know, I've just kind of learned is I don't take I don't take opinions of value from anybody who's not willing to write check. So if if the agent says, I think the house is worth this or a seller says, I think my house is worth is your opinion doesn't count, It does not matter because you're not the one that's writing the check.
00:23:02:16 - 00:23:21:05
Jonathan Harris
We have to learn what the marketplace assigns to the value of the house. Yeah, but I'm in this neighborhood. I'm in this school zone. I've done these types of upgrades. I need this intrinsic. It doesn't matter. Yeah, it's a very personal opinion to the consumer. So you have to be open to receive feedback for everyone. Can be your teacher.
00:23:21:06 - 00:23:45:02
Michael Conrad
Okay, hashtag master class folks listening here, This is basically market free market economics 101. This is Adam Smith's invisible hand. There will be a rewarding of those that have created a proper formula for music value, and there will be a punishment of those that fail to do so. And so that that is a good word. I may even think of myself.
00:23:45:02 - 00:24:13:00
Michael Conrad
I have no intention of selling my house right now, but I'm sort of imagining myself doing it right now. And what's the words I'm going to say to some agent and what's the word I'm going to say to some future buyer? I think I need to be thinking there is no intrinsic value, which then leads me to an interesting next step, and that is what then can I do to my asset to create the highest possible opportunity for a mutual yes between two parties, which is a sale?
00:24:13:01 - 00:24:21:03
Jonathan Harris
Yeah, there's a to me there's a process of discovery. We will learn together what the marketplace assigns to the value.
00:24:21:03 - 00:24:25:15
Michael Conrad
That's iterative. Actually, it is. It's not very intentional. This is what it is.
00:24:25:17 - 00:24:54:12
Jonathan Harris
You know, I have seven principles that I think over 21 years know. And I'll I'll take a step back. My dad was a broker in the seventies and eighties, so my job when I was five years old was to trade out the MLS books. So I was I was in a real estate office my entire life. So my perspective is when there was one MLS book for the month for the entire office with a black and white photograph in it, my dad's office, he would, he would be very upset if anyone took the only MLS book out of the office because everyone needs this book.
00:24:54:14 - 00:25:19:05
Jonathan Harris
So, I mean, I'm looking back like almost my entire life in residential real estate. That being said is I've got seven principles that I work off of whenever I think about think through real estate. One of those principles is real estate market is self-correcting. The marketplace will not allow you to sell your house until you reach a fair market value or true market value.
00:25:19:07 - 00:25:40:06
Jonathan Harris
Think of it like a ball floating on the water, like a beach ball on the pool. There is a water table and the ball will always land on the water table. So in a free market, if you listen to how the market will force you to have price reductions to either meet the market or you will have to wait it out until the market meets you.
00:25:40:08 - 00:25:41:17
Michael Conrad
Right. Inertial pressure.
00:25:41:17 - 00:25:58:23
Jonathan Harris
Yes. So there is a time like when you want to sell your house. I mean, because let's say that you live in Crete Hall. You're like, man, I really want to make $1,000,000 for my house. You know what? I don't there's really not a lot of houses. Everybody could even touch $1,000,000 right now. But guarantee you in 20 years, every house will be worth $1,000,000.
00:25:59:00 - 00:26:03:05
Michael Conrad
And price are intersecting conversations on a graph. And we have to know.
00:26:03:09 - 00:26:05:00
Jonathan Harris
When you want to sell your house, is the question.
00:26:05:00 - 00:26:05:18
Michael Conrad
Pressure? Yeah.
00:26:05:18 - 00:26:17:15
Jonathan Harris
When you want to sell your house. If you want to sell your house by me, okay, that's a different strategy than I will sell my house in ten years. So just as if you want to sell your house. Hey, I want to have my house sold by the day. I can sell your house by the day for 100 bucks.
00:26:17:15 - 00:26:31:02
Michael Conrad
Okay, So another way to put this to help our listeners here is that time and price are levers and they are interrelated in a proportional, inversely proportional sense.
00:26:31:02 - 00:26:51:21
Jonathan Harris
So the intersection is the offer. The intersection is when a buyer, a willing and able buyer and a willing seller come to a yes, there's a yes agreement. And when I think about the buyer, the buyer's agent or sorry, the buyer, when they come to the property, if the property is too high, they say, I reject it. I will not make an offer because sellers always want feedback.
00:26:51:21 - 00:26:56:06
Jonathan Harris
Feedback I was feedback was feedback is only price. There's no other feedback except for price.
00:26:56:06 - 00:26:59:03
Michael Conrad
Price moves everything too soon? No, that's not the feedback.
00:26:59:04 - 00:27:18:11
Jonathan Harris
Yes. So you know, for you to come down, but also the market, if you've listed too low, the market will disallow you to sell it too low. It will force the price up in a most multiple offer situation. I think the only way that you can screw up the market dynamics is you either elongate the time in which someone could buy.
00:27:18:11 - 00:27:34:05
Jonathan Harris
It's like, Hey, we're not going to sell this house for 30 days. Place your offer. You got 30 days to wait and see if you got it. You could lose some people. But also in two days, if I will make your full price offer right now, if you take it, you might be able to hold out a couple more days and let me introduce a few more buyers.
00:27:34:07 - 00:27:42:11
Jonathan Harris
You might have sold it too low. So I think that real estate markets are self-correcting. You underprice it, it will get built up. You ever price it, It will have to come down.
00:27:42:13 - 00:27:57:23
Michael Conrad
Yeah. Grant Hammond and I were talking awhile back and he said, People like to think that there's all these mitigating factors of what sells real property. And there is in fact only one and a lot of other footnotes. And the one thing is price. Price is the.
00:27:57:23 - 00:28:00:09
Jonathan Harris
Greatest marketing tool you have available. I hate the.
00:28:00:14 - 00:28:27:11
Michael Conrad
Reality because I spend as it trades person in the larger landscape. I spend a lot of time trying to direct a conversation away from price because it is an oversimplified way of understanding, value and worth. However, when it comes to real property, you don't have to hurt the feelings of the house. It has a more specific price. It's going to follow market dynamics than, say, free market in the service world.
00:28:27:17 - 00:28:45:01
Jonathan Harris
If you ever watch Shark Tank, yeah, the person comes in, they want to invest in their in their business and they'll say, I'm willing to give up 10% of my business for $100,000 if there's only one shark left standing. That dude's giving up a lot more than 10% of his of his business. The pressure's on, the pressure's on.
00:28:45:01 - 00:29:09:02
Jonathan Harris
There's only one. But whenever there's five sharks bidding for the business. Hey, I'll do it for 8%. I'll do it for 7%. I'll give you the No, no percentage in a royalty. I'll double, you know, like they start to get really creative. So who wins? The guy that came in that in a sense he undervalue dude his under underpriced his property or underpriced his company to where there was a feeding frenzy.
00:29:09:04 - 00:29:30:12
Jonathan Harris
The one manipulative tool is buyers emotions there is a trigger of competition. There's a trigger in transparency that things can happen in that environment that can never happen in just a stagnant environment. So whenever you list a house, I mean, to me, you don't have to be that good at looking at comps. I'd rather create competition, let the competition inform the value.
00:29:30:14 - 00:29:38:07
Jonathan Harris
Just put a no brainer price on there and let the competition duke it out. Then for the seller to then show up and say, This is what I'm willing to do.
00:29:38:09 - 00:30:11:11
Michael Conrad
So this is hard if you stand back not as a 20 year practitioner of real estate, but if you stand back as a consumer who lives another mental life and doesn't think about these things, we tend to put real property in the place in the bucket of consumer goods because we do so much purchasing of consumer goods, both large and small, from cars down to, you know, toasters that we think that value follows a more formulaic sense of like manufacturing or time or inflation or whatever.
00:30:11:11 - 00:30:31:19
Michael Conrad
But there are greater issues at play in real property. And so people aren't recognizing that there's a larger dynamic at play. And so I think this is really hard for your modern consumer to wrap their minds around this, and the process feels very straightforward. Oh, I am going to use a comp and I'm going to use an appraisal to assign value.
00:30:31:19 - 00:30:37:14
Michael Conrad
But I think that those are really well, first of all, they are backwards trend in exam. It's like driving.
00:30:37:16 - 00:30:39:09
Jonathan Harris
The if I drove here today.
00:30:39:11 - 00:30:40:18
Michael Conrad
But you only look backwards on the right now.
00:30:40:18 - 00:30:56:16
Jonathan Harris
I look to the rearview mirror to get here. Yeah I have an indication of of kind of the environment around me because I'm looking at the rearview mirror, but I probably will have a wreck from not look through the windshield. Anybody who lost a house, you don't know how many buyers are in the marketplace. You don't know how many buyers have ID set up.
00:30:56:16 - 00:31:18:12
Jonathan Harris
You don't how many buyers are pre-approved. You don't know how many ready, willing. So everything is guesswork and just in assumption. I think that in our need, I think this is more like a human nature survival. And you need to feel right. You need to feel certain, you need to feel absolute. I think I think it's human nature to feel a little off whenever you don't when you have ambiguity.
00:31:18:14 - 00:31:31:19
Jonathan Harris
For me as a practitioner is like, I don't know anybody who tells you they know doesn't know what they're talking about. There's a very powerful person who thinks they know. I don't know how many buyers they are, but I know how to discuss over in service of buyer. There is a methodology for us to do this.
00:31:31:19 - 00:31:57:05
Michael Conrad
Yeah, And again, with the levers that are sort of moving at different rates, if you can possibly manage time as a more flexible factor in your formula, you will end up almost certainly more likely happy about price. But oftentimes we are not good about putting an appropriate buffers of time in to achieve price goals. Or maybe we don't even know what the price calls are.
00:31:57:05 - 00:32:14:17
Michael Conrad
And so we don't know how much mitigating time we need. But just as a general rule of thumb, if price is a concern and it always is when you're buying or selling, then you have to have time. Be a mitigating factor. Give yourself more time so that you can achieve those more specific price goals.
00:32:14:18 - 00:32:37:21
Jonathan Harris
Mm hmm. There's there's a guy that had gone to a conference of his, Russell Brunson, and he talked about basically there's a marketing conference and there's three things in marketing. And the first one was what is your bold claim? The second thing is what is your irresistible offer? And your third is what's your risk reversal? So we talk about pricing and time and like, oh my gosh, like I need absolutes.
00:32:37:21 - 00:33:00:20
Jonathan Harris
I need to kind of have a you know, I need 700,000 of this house or I need to have it gone in of a month. I think for innovators, for people who obsess about creating the future that aren't so much wanting just to play someone else's game, they want to like, literally build what's to come. I think coming up with formulas or recipes is saying, This is my bold claim.
00:33:00:20 - 00:33:21:00
Jonathan Harris
I can sell any house in Nashville in 30 days or less. I'm just using this example or I have a methodology or I have a formula to produce this predictable result in no uncertain terms. Here is a hook. If I can't do it, I'll pay you $1,000 in 30 days if I fail you. Oh, that. Well, that's pretty.
00:33:21:03 - 00:33:47:23
Jonathan Harris
You know, that's a risk reversal. So what what bold claims do you make around your service? What are irresistible offers? Like there's a guy named Alex Ramsay I think is a genius. He talks about making offers that anyone would feel dumb saying no. Right. Okay, what's what's the offering? And then how do you de-risk it for someone? So their mental leap of like, okay, you're telling me to price my house low, but like, I don't know, like, like, like what if that really hurts us?
00:33:47:23 - 00:34:07:00
Jonathan Harris
It's there's a risk associated with that. There are plenty of thought exercises that you can put in to say, okay, here starts to become a cocktail or my business offering of my bold claim, my irresistible offer in the risk reversal that I can package in a way to attract customers where they can easily and quickly recognize it's worth it.
00:34:07:02 - 00:34:24:03
Jonathan Harris
I tell you what, in 31 days, if that doesn't work, I know the benefit. 31 days it does work. I know the benefit. So you've taken a customer and you've kind of move them across. What I would call the Epiphany Bridge is who they are today or where they are today and where they want to go or where you want them to go tomorrow.
00:34:24:07 - 00:34:36:18
Jonathan Harris
How do you take them across this Epiphany Bridge where the lights come on? They say, This is my decision. This is the best decision for me.
00:34:36:19 - 00:35:04:19
Jake Hall
Hey, everyone, it's Jake, director for the Business of Homes Podcast. I hope you've been enjoying today's episode, starting with Jonathan's many moves before becoming Scout’s CEO, how clients interpret the cost benefits of agents, and how the worth of an agent is more like a vote. When we return, Michael and Jonathan dive into how guilt plays into the decision of choosing a realtor, how real estate hasn't changed much in 100 years, and shifting focus from style and image to substance.
00:35:04:23 - 00:35:23:05
Jake Hall
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, do you know our entire podcasts are filmed and are on our YouTube channel? Check it out next time you want to see our amazing guests tell their stories.
00:35:23:07 - 00:35:41:05
Jake Hall
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? Email us at thebusinessofhomespodcast@gmail.com. Please enjoy the rest of today's episode with Jonathan Harris.
00:35:41:06 - 00:35:45:23
Jake Hall
Let's get back to it.
00:35:46:01 - 00:36:08:21
Jonathan Harris
As past several Mark Spain billboards in the way here guaranteed offer props to that guy. He didn't even live in Tennessee. He lives I think in Georgia. He came in here in fall of 2019 with those billboards. I think last year he did like 1800 houses in middle Tennessee. He had a compelling offer that the audience, a a segment of audience was called out and responded to the offer.
00:36:08:21 - 00:36:28:22
Michael Conrad
And I got to be honest, I didn't think it would work. Oh, he smoked it. I judged it because I said, that is a hollow offering because you you're not getting overly specific in which to communicate the value from the billboard, which was very intentional. He wanted the conversation opportunity. And so people called because they were curious of what that was, what is the offer?
00:36:28:22 - 00:36:55:04
Jonathan Harris
And that's the brilliance of Zillow's Zestimate. Agents hate Zestimate. They make fun of Zillow, offers estimates, but they don't under agents do not understand marketing. If you cannot create a conversation, you have no opportunity to sell. You have to create a conversation, whether it's a guaranteed offer by Mark Spain. I'm curious enough to call which create a conversation that gives them a different opportunity sell or the Zestimate.
00:36:55:08 - 00:37:19:00
Jonathan Harris
I'm just curious. My house is worth even if it's wrong, it doesn't matter. It creates a conversation. So to me, the next generation agents or agents who deeply understand marketing, how do you create a customer? Because Mark, Spain did not have relationships selling on who does he know? Like and trust? He had value. He had a hook, He had a core offering that people said yes to not everyone but a segment.
00:37:19:00 - 00:37:20:07
Jonathan Harris
And that's making a lot of money.
00:37:20:09 - 00:37:35:02
Michael Conrad
It's really countercultural. I mean, I've had a lot of conversations on this podcast alone about people really banging the drum and flying the flag of no like in trust as the way forward. And it is interesting because.
00:37:35:02 - 00:37:57:13
Jonathan Harris
Knife cuts both ways, because if you don't have the strongest relationship at the point in which the decisions made probably every 5 to 7 years, they're going to use someone else. So if you're anchoring your entire business model on where there's my clients for life, they know me, They like me, they trust me. What happens when their sister in law gets their license in two years from now when they decide to sell a house and you're not the closest relationship they have.
00:37:57:15 - 00:38:22:04
Jonathan Harris
That brings me to this point. Most agents get chosen for representation based on the emotion of guilt. Most consumers say that if I don't use this in which which, which, who I want to use and I feel bad if we don't use such and such area. So most agents you may know like in trust, but they know six or seven other people, which one would they feel the most guilty not using?
00:38:22:06 - 00:38:41:12
Jonathan Harris
And you're going to spend the next several years glad handing, shaken hands, kissing babies, email and nurture sequence all the stuff that you're doing. You may never have a shot at the relationship because the relationship of guilt. So wouldn't you rather be more valuable and have a clear, distinct, more offering versus no like trust? That's manipulation. In a weird way.
00:38:41:16 - 00:39:06:02
Michael Conrad
It's this or indisputable binary choice of like you want to represent an element of inherent value in some ways in people's minds where they say, Well, I can either make a choice that isn't necessarily as wise, or I can choose this person that's clearly represented themselves as capable and valuable, etc., etc.. Yeah, that's really interesting. I can attest that guilt does play into the decision.
00:39:06:02 - 00:39:11:17
Michael Conrad
Decision. That is an uncomfortable truth that I think probably needs to be said a little louder for the folks in the back.
00:39:11:17 - 00:39:28:20
Jonathan Harris
So when you prioritize like, how are you going to build your business? I don't say like I've lowered like lowered the priority of no, like in trust. I've just I've just ranked higher as like create value. And, you know, for me it comes around value innovation, which I could have never done it at traditional legacy companies as that before.
00:39:28:20 - 00:40:06:08
Jonathan Harris
I can't innovate around value for my customer. And if for me, value is is kind of like this inversion of how can I reduce in eliminate cost, Netflix versus Comcast reduce or eliminate cost, Uber versus the taxi driver, reduce or eliminate cost. Airbnb versus the Hilton, like great companies have Disney Plus for crying out loud. I mean, good gosh, it's amazing that you have every movie that Disney has ever done for like ten bucks or whatever it is, reduce or eliminate costs and then raise and create new value, new distinctions.
00:40:06:09 - 00:40:32:14
Jonathan Harris
And so whenever you're you're having this overlap of reducing and eliminating cost raising and creating value that overlap is value innovation. And to me, for for agents, you have a choice. If you want to play the traditional model or you want to create value and the future of real estate. You know, Steve Jobs at his commencement address in Stanford, he said this thing that we call life was created and made up by people no smarter than you.
00:40:32:16 - 00:40:55:16
Jonathan Harris
So why would you want to basically live your life in someone else's reality, someone else's world? And I'm just really, just sad for the real estate community who chooses to live inside a legacy framework that is antiquated. It's misaligned with the customers. We should, in a sense, still propagate a lot of the traditions that my dad had in his brokers in the seventies and eighties.
00:40:55:17 - 00:41:01:15
Michael Conrad
Yeah, if we're being completely honest, we've actually been doing real estate for the same way about 100 years or more.
00:41:01:17 - 00:41:29:06
Jonathan Harris
If you're if you're new to the real estate world, if you still have a roadmap ahead of you and I say roadmap if you think you're going to be in this business in ten years, why would you not say, You know what, I want to create the future, I want to build the ideas in my head. And it seems to me like some of these things are going to work, Some things are not going to work, but I'm going to at least live life on my terms and not be beholden to this antiquated structure that, frankly, my friends and family are like, This doesn't work for me.
00:41:29:08 - 00:41:50:14
Jonathan Harris
This is not working for me. There are like our reputation is the industry is down there with you like used car salesman's now. I mean, seriously, like we just don't have that great of a reputation because of the ease in which someone can get into there is zero accountability. You can absolutely suck at your job as a real estate agent and your brokerage will aid in a bad week and uncommitted agents.
00:41:50:16 - 00:42:12:23
Jonathan Harris
It's maddening. So it's like I level of agents, like associations, level up, like raise the standard. Like this is embarrassing. The consumers deserve better. Yeah. So for some agents, if you're offended by this, I don't really care if you're offended by it, get better. I mean, I'm just I'm so I've been doing this for too long. And as I see people come in the industry, it's like, oh my gosh, you're really I use an example.
00:42:13:03 - 00:42:35:07
Jonathan Harris
The top 100 Instagram Influencers for Real Estate was released last year for the state of Tennessee. Oh, wow. I was on a trip and I was really bored, so I just started like at number one, going through and looking at their sales numbers to see how they've done. And it's like, Wow, you have 86,000 followers and you sold four houses and you've been in business for seven years.
00:42:35:09 - 00:43:10:02
Jonathan Harris
There's some I admire that that's the case. And I'm thinking you're you don't have enough reps in at bat to do enough volume of work to create competency. So why don't you start stop, focus on your subs, on your own, your style and your image, and focus on steps and stuff. Like I'm going to create value. Maybe I have to discount my services, maybe I have to like come down to where the people want me to be, but I'm going to to bank as many transactions as I possibly can and have as many reps as I possibly can and be in the trenches as many hours I possibly can day in and out.
00:43:10:02 - 00:43:27:00
Jonathan Harris
Because when I emerge on the other side is in two or three years, I have thousands of hours, hundreds and hundreds of transactions. I have to develop some bit of competency that I can freakin deliver for anybody who comes in my future. Like, I feel like your future customer deserves you to get battle hardened and be more capable.
00:43:27:04 - 00:43:43:00
Jonathan Harris
They were several years ago that I that I stepped from sales and I started to to look to succeed through my team and through other agents and see you know, help them to to do. And so I stepped away from sales and started to teach on what I know, not necessarily what I'm doing, but I had been to the trenches.
00:43:43:00 - 00:44:00:15
Jonathan Harris
I had gotten my 10000 hours. I had done, you know, a very large volume of transactions. And so just being in a different role now, in supportive role, I see a different aspect of transactions is like, Man, we have to get better. The association is not going to make us get better. The licensing at Schreck is not going to make us better.
00:44:00:20 - 00:44:20:20
Jonathan Harris
The brokerages are definitely not going to make us better. I think that if there's anybody who listens, it's like, you know what? I'm going to be in real estate in five or ten years from now. I want to elevate and I want to become more valuable, and I want to offer something more distinctive to my customer versus just rely on the emotion of guilt, which is a form of manipulation.
00:44:20:22 - 00:44:53:15
Jonathan Harris
I actually want to be a part of what the future looks like in its creation versus just hanging on to the Titanic and, this legacy model that is not in alignment with the customer's needs nowadays. I'll give you an example. The Federal Reserve I was tinkering around on the Federal Reserve back in the early 2000, 2000 when I first bought my first house, the average house in America federally, if you go to Fred Newcomb, St Louis, it's going to you can look at these amazing national statistics and it showed that the average house in America was right at $200,000.
00:44:53:16 - 00:45:19:16
Jonathan Harris
Okay, That's 6%. 12,000 bucks. Well, then by like year 2020, we're like 4000. So now you can make 24,000 in the legacy model. Now we're like at 550 just four years later. What are we doing? Consummate to what we're charging? We had nothing to do with that 24 year rise. But we're getting paid more than double what we did back then.
00:45:19:18 - 00:45:33:11
Jonathan Harris
But yet we have loop donkey signed like we had these things that we can. I used to get wet signatures and we had a drive around town getting wet signatures. I used to have a desk phone I didn't have. I remember the first time like there was a a mobile phone that this is this is going to change my life.
00:45:33:13 - 00:45:55:20
Jonathan Harris
I literally I remember I got first Toshiba laptop and I would go to Panera Bread and Starbucks because I could work in the field area versus I had to go go to the office and sit at the desk like technology has made the life so much more efficient for the agent, but that technology has not. There is no advantage in pass down of cost savings or time efficiency for the consumer.
00:45:55:22 - 00:46:18:14
Jonathan Harris
If anything, it has made the gap of like the age. You can be more, more efficient with their time and they can make geometrically more money to no benefit to the consumer. There's still an expectation of you're paying 6%, 5% commission and agents to say, Oh, be careful. The discount brokerages, be careful of the fee for service like you're going to get what you pay for their scare tactics around that.
00:46:18:16 - 00:46:23:18
Jonathan Harris
To me, the word discount, we're a discounting from what so you.
00:46:23:18 - 00:46:25:23
Michael Conrad
Take exception with discount, with intrinsic value.
00:46:26:00 - 00:46:51:09
Jonathan Harris
You're admitting that there's a standard by which this being discounted from in standardization is a monopoly. There's antitrust violations. So it when people use the word discounts, like you're actually admitting that there is a standardized monopoly, that there is antitrust potential issues. And that's why there's all these today. That's why the consumers in the hundreds of thousands have band together and said we're going have class action lawsuits against our friends and family.
00:46:51:09 - 00:47:02:21
Jonathan Harris
The realtors are the ones that we know, like and trust because we feel like we've gotten screwed. And Asia community wants to tell them why they're wrong versus they want to listen and say, Tell me more. Help me understand where you're coming from. Practicing empathy.
00:47:02:21 - 00:47:33:16
Michael Conrad
No, like and trust is really unique in the service world to this sort of subset in real estate, because what other industry has the ability to only work with the people that they know? There are so many service industries that rely on the general public. Strangers. And so you learn that a stranger doesn't care enough about you if you are poor in presenting your value or actualizing your service value.
00:47:33:22 - 00:48:08:19
Michael Conrad
And so in some ways you talk about being battle hardened strangers force you to have a business plan. Strangers force you to have great branding that's cohesive and is stable. Strangers force you to be able to deliver a regularized, high quality product. And so it's really interesting. This no, I can trust it does begin to lower us into having a relational connectivity to our folks that transact with us that almost covers over accidentally on purpose sins of practice or.
00:48:08:19 - 00:48:10:09
Jonathan Harris
You don't have to be valuable.
00:48:10:11 - 00:48:12:14
Michael Conrad
Like, Well, yeah, that's what I'm saying. I mean.
00:48:12:16 - 00:48:35:03
Jonathan Harris
Just be like, like when we went, we flipped our company to fee for service in 2000. I literally got with peripheral, I say peripheral friends, friends that I just don't see on a regular basis. I met with him. I said, Hey, I'm not going to take you out to coffee, take you out to lunch, create an artificial friendship with you over time just to keep the jig up in hopes that you use my company down the road.
00:48:35:05 - 00:48:53:09
Jonathan Harris
I can't do that. I've got young four, four young kids I got to spend time with. So you probably going hear from me like you used to in the olden days. And I'm no, like, interest in you. And I just I said, I'll shoot you straight. You will not found a better value proposition and you will not find a better service offering in this city, period.
00:48:53:11 - 00:49:12:12
Jonathan Harris
So remember that whenever you come to the point in which you're ready to make a decision, I offer the best service in the best customer value proposition in no uncertain terms. Here's my menu of services and here's the cost associated with it. I have had so many people. I remember that conversation that you had. Yeah. Two and a half years ago.
00:49:12:12 - 00:49:31:04
Jonathan Harris
Show me straight. Yeah, we got friends that are in real estate, but this. Listen, I remembered it. It's best for my family. And I've had people like, you know, we're choosing to work with a company in a system of service. The company is delivering the value versus an independent contractor who may get sick. They may be on vacation.
00:49:31:09 - 00:49:47:14
Jonathan Harris
They may have other clients that they're prioritizing. We can't be at the whim of an independent contractor just because we're friends. Honestly, for friends, we should still be friends At the end of this, we're choosing a company to execute based on a checklist, based on a process, not independent contractor based on relational strength.
00:49:47:15 - 00:50:05:18
Michael Conrad
A lot of the service world must steel itself and galvanize into a regularized process. Standards of practice. Repeatable production quality for their service are good because because the market requires it, they demand it.
00:50:05:18 - 00:50:10:02
Jonathan Harris
They say, I will only buy your good or service if you meet my need.
00:50:10:04 - 00:50:43:09
Michael Conrad
And we begin to trust companies over people. That is just a really interesting trend over the last 200 years of American business. And so there is an inverse paradigm, certainly still present in real estate where individual personality brands are sort of elevated, interestingly enough, over what sometimes is termed like a clinical or like a company identity, because we're still relying on this relational connectivity over sort of intrinsic service quality.
00:50:43:09 - 00:51:06:08
Michael Conrad
And you can point to what quality looks like. In fact, if we begin to move outside of the traditional and traditional real estate paradigm and look, say, at other industries, who's negotiating contracts, who's helping understand like a price and cost basis, who's understanding like the speed and the movement of repair or, you know, of management of a product to go to market.
00:51:06:10 - 00:51:29:03
Michael Conrad
If we look at all that things that we borrow, the costs associated with those little blocks in other industries, then what you begin to stack up is a value, a cost of conveying real estate that is quite a bit different than the current percentages and commissions of like that. And so I'm not saying we should go that direction or we shouldn't, but customer choice.
00:51:29:05 - 00:51:51:04
Michael Conrad
It is interesting that if the customers were able to break real estate down into its essential building blocks, like the DNA almost, if you will, and then go to other industries and look for those DNA sort of markers and then rebuild their own little version of it, which I kind of think is what the technological disruption, the grander disruption that's happening with Opendoor and Zillow and others to insure people.
00:51:51:05 - 00:52:06:23
Michael Conrad
If they're rebuilding it in their minds, then it comes in at a lower basis. And I think that the the the voice of the people, the vox populi has said we are uncomfortable with this in our gut. We don't exactly know why we're uncomfortable with it, but we want a different paradigm.
00:52:07:01 - 00:52:26:21
Jonathan Harris
That would be true for the financial services industry. Several years ago, whenever people were like, Why am I paying you a percentage of my assets under management, right? If we lose money, we pay a percentage. If we make money, we pay a percentage. That makes no sense. And so, you know, Vanguard was maybe one of the one of the earlier ones to start to move towards fee based.
00:52:26:23 - 00:52:48:08
Jonathan Harris
The industry did not like it at all. Well, I worked with the financial planner the other day who came to our company. They're working on our agents and I was talking to him. He goes, Man, we lost the ability as an industry to charge the way y'all have traditionally charged several years ago. It's only a matter of time till you have the market will force you to come and do fee for service.
00:52:48:10 - 00:53:14:21
Michael Conrad
We are in market correction. It's not just price of homes, it's price of service. It's it's so much of that is applicable here. And the truth is our original supposition. At the beginning here, we didn't really even get to and that is innovation. And setting yourself apart is one of the only constants in being able to be relevant and support ongoing value a.k.a pricing.
00:53:15:02 - 00:53:42:12
Michael Conrad
And so if we are not being innovators, then we will eventually fall behind the sort of the trending and that float line that you're talking about. And innovation at its core is looking around at everything that's going on around you, looking at the trending of how long these things have been popular or have been going on and saying what's not happening, where the space is in the voids, the market when everybody's zigging, when do I need to be zagging?
00:53:42:14 - 00:54:10:05
Michael Conrad
And that in this larger brand scape, so much white noise, we're not just all watching the big black and white telly anymore. We've got just so much assault, email marketing and social media and everything that's going on in our ears that the only way to set yourself apart as a practitioner, as a service professional, is to be able to be intelligently looking at the landscape and saying what values anybody else providing, and then what am I overlapped and what am I departing from and how do I promote that?
00:54:10:08 - 00:54:11:15
Jonathan Harris
Yeah, What's your points of difference?
00:54:11:15 - 00:54:42:16
Michael Conrad
Yes, I would love to have you back so we can get into innovation where Scout has been continuing to make departures in the market. What the pushback and the reality in a very difficult old framework system and kind of what's the next thing that's the forefront? Jonathan My goodness. Amazing conversation. If your veins listeners are not on fire right now and excited to go out and practice your profession in a better and new and innovative manner, you have not been listening.
00:54:42:16 - 00:54:58:04
Michael Conrad
You've got to start at the beginning and try again. Thank you, Jonathan. We'll have you back, guys. I'm Michael Conrad. This has been the business of almost podcast. We'd love to have you hit subscribe. Join us wherever you're listening and we'll catch you next time.
00:54:58:06 - 00:55:17:22
Jake Hall
Hey, everyone. Jake, again, director for the Business of Homes podcast. I hope you've enjoyed today's episode. A huge thank you to Jonathan Harris for being a part of the podcast. Go follow him on Instagram @jonathanallenharris 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 as well on Instagram @thebusinessofhomespod
00:55:18:03 - 00:55:28:22
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.