Real Estate Magazine Feature Nov 2015

www.rismedia.com

‘High Brokerage Fees Are Dying’ HomeSmart International Takes Today’s Brokerage Model to New Altitudes

HomeSmart International CEO & Founder Matt Widdows is taking today’s broker and agent income to new heights Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

‘High Brokerage Fees Are Dying’ HomeSmart International Takes Today’s Brokerage Model to New Altitudes

by Paige Tepping HomeSmart International CEO & Founder Matt Widdows is taking today’s broker and agent income to new heights

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

W

hen Matt Widdows founded HomeSmart in 2000, there were just two agents, a receptionist, and the dream of a new real estate brokerage model with low agent fees and efficient technology to drive what he calls “incredible customer service.” Today, HomeSmart is an international franchising company that continues to experience hyper-growth.

In the early ’70s, most brokerage models were traditional, charging agents high-split commissions.

Suddenly, a new breed of real estate brokerage came along—the 100 percent commission model.

As with anything new, the old guard promptly referred to the new model as “low service, discount brokerages” and attempted to discredit the evolution while diminishing the value that these companies offered their agents.

Fast forward to 2000 when HomeSmart emerges with its new disruptive model. And, just like in the ’70s, there was no shortage of naysayers trying to stop the progression of the industry and HomeSmart. But this time it’s different, and the industry as we know it is at stake.

‘The Traditional Model Is Dying— They Just Don’t Know It Yet’ What didn’t exist in the ’70s is the likes of Zillow, the proliferation of data available to buyers and sellers, and a more tech-savvy, informed consumer. This is putting more pressure on both the agent and brokerage to change. Brokers have to prove their value more than ever before, which includes finding ways to reduce fees to the agent. So, how does that translate to the death of the traditional brokerage model?

“Most traditional brokers have come to rely on high agent fees from

question the level of service and value they receive for those high fees, and that’s why we believe the traditional model is dying—they just don’t know it yet.”

Meanwhile, HomeSmart’s top agent across the company last year grossed more than $1 million in GCI while paying the company just over $12,000 in brokerage/franchise fees. It’s examples like this that are resulting in many top-producing agents making the move to HomeSmart.

8 2

heavy commission revenue to ensure operational success,” says Widdows, HomeSmart’s chief executive officer. “The high fees they charge their agents are causing agents to

Numbers that Back the Model HomeSmart International:

8 2015 REALTOR® Magazine Franchising List

82015 Entrepreneur Top Low Cost Franchises List 8 2015 Entrepreneur Franchise 500 List #376 (4th highest ranked real estate franchise)

82015 Inc. 5000 #2986 (a three-year growth of 120 percent)

8 Net positive franchisor growth in agent count and office count since franchising began

889 percent of all inbound calls are answered without going to voicemail

Recent HomeSmart Franchisee Accomplishments:

A snapshot of milestones hit by some of the company’s franchisees.

8( HomeSmart Phoenix) 2015 RISMedia Power Broker Report – Sales Volume No. 15, Transaction Sides No. 12 8 (HomeSmart Phoenix) 2015 Phoenix Business Journal Book of Lists No. 1 Residential Real Estate Brokerage 8 (HomeSmart Phoenix) 2015 Phoenix Business Journal Book of Lists No. 1 Residential Real Estate Agent (Bobby Lieb) 8 (HomeSmart Evergreen Realty in Irvine, Calif.) 2015 RISMedia Power Broker Report – Sales Volume No. 168, Transaction Sides No. 353 8 (HomeSmart Professionals Real Estate in Providence, R.I.) – Year-over-year growth of more than 100 agents 8 (HomeSmart Advisors in Spokane, Wash.) 2015 Inc. 5000 No. 279, three year growth of 1661 percent 8 (HomeSmart Professionals in Palm Springs, Calif.) Year-over-year growth of more than 25 percent

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

The HomeSmart team celebrates the recent opening of its new World Headquarters.

“These top agents are finding HomeSmart’s customer service and technology alone are worth the move, and the money they now save is a bonus they can spend on retirement or that vacation they always wanted to take. High brokerage fees are dying,” says Widdows.

How HomeSmart Charges So Little and Offers So Much Customer service was (and still is) mission critical at HomeSmart, and providing platforms that enable the company to offer that is key. More than 15 years ago, Widdows quickly realized there was very little in the way of transaction management software or other systems to manage a brokerage. What did exist was nothing more than glorified CRMs or accounting systems. He knew that he needed end-to-end technology and systems in order to achieve operational efficiency and customer service goals.

“The only way to offer high-touch customer service is through integrated technologies that create operational efficiency. I realized that few people in the industry had even begun to think about how proprietary, integrated technology would streamline the industry,” says Widdows.

“As an agent, I saw a lot of room for improvement in the industry, and I knew that I could create technology systems that met the high bar in service and support that I had set while keeping transaction fees low for agents.”

Widdows set out to create his own proprietary system to solve efficiency problems for both brokers and agents alike. He had owned and sold a computer company in the early ’90s and wrote the first version of his transaction management software. The system would track each transaction for the brokerage, allow input on the brokerage side for document review, track documents received, and then display that information to the agent through a Web portal. This was the first platform to truly connect the brokerage and its agents via technology in the industry. It resulted in a huge reduction in phone calls from his agents because they had what they needed throughout the transaction. Widdows estimates that initial platform alone saved him a full-time employee, which meant 50 percent of his entire staff at that early point in the company’s history.

Soon after, Widdows hired software developers to take what he had already created and develop a

full-blown brokerage management system based on his experience as both a broker and agent. The philosophy behind the software was to simply take the human tasks that staff or agents perform on a day-to-day basis and automate them. This was the first step in making real estate easy, which is the company’s motto.

As a result of this initiative, every HomeSmart office has been 100 percent paperless since 2007, an incredible feat in and of itself.

The problems we face today in real estate technology are not the same problems we faced in the early 2000s. Back then, it was tough to find much in the way of technology for the real estate industry. Today, it’s almost as if there is an abundance of technology and much of it doesn’t “play nice” together.

“A lot of companies that focus on technology do so for the ‘wow’ factor or to eliminate human interaction,” says Ashley Bowers, HomeSmart International chief operating officer.

“We create and implement technology to make everything in the real estate business simpler for people, not to remove the human element of this very relational business.”

As the first decade of HomeSmart came to a close, the question of

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

In Their Own Words franchising popped up more and more. Widdows had to make a final decision about whether to become a technology company that made an impact on the industry, or a franchised brand that changed it. He chose the latter.

Franchising Rebels HomeSmart International has taken a unique approach to franchising in that Widdows still owns three of the company’s highly successful brokerages in small, medium and large markets. And, all three brokerages operate at a profit without adding in affiliate partnerships and ancillary services, a rarity in the real estate brokerage business today.

Because of this approach, coupled with the immense success of the HomeSmart franchise in Phoenix, Widdows and his team are able to guide HomeSmart International franchisees to design their own company infrastructures based on a scaled model of the flagship brokerage to help set them up for success following a tried-and-true method.

“During the economic downturn, agents began demanding lower fees and higher value out of their real estate brokerages,” says Bowers. “We believe that’s why we grew so much during that period of time. We offer high value at a low cost, which is what agents want. We also provide a landscape for brokers under the HomeSmart brand to succeed longterm, regardless of the economic conditions.”

This focus on brokers, agents and consumers is the driving factor for why Widdows has invested millions of dollars to develop integrated proprietary technology, designed to make the everyday life of a broker or agent much more seamless.

“Our technology platforms exist to make conducting the real estate business as easy as possible,” says Todd Sumney, HomeSmart International chief marketing officer. “It enables our franchisees to conduct

See what HomeSmart franchisees are saying:

“This company is all about fighting for agents in the industry to get them what they need to be successful.

My brokerage’s growth in recent years is greatly attributed to the efficiencies and service I am able to offer to my agents under the HomeSmart brand.”

- Randy Rector Broker/Owner, HomeSmart Evergreen Realty (Irvine, Calif.)

1,100+ agents and 8 offices

“Formerly an owner of another major brand, I realized the need for change in order to compete in the marketplace. When I opened HomeSmart just over a year ago, I had no idea my company would propel forward like it did. The growth I’ve experienced is incredible, and I am running my business much more efficiently with HomeSmart’s technology.”

- Dean deTonnancourt Broker/Owner, HomeSmart Professionals Real Estate (Providence, R.I.) 103+ agents and 1 office

“My brokerage company has grown by 423 percent in agent count since my partners and I bought our HomeSmart franchise. We’re also growing in production, too—our closed transactions are up 97 percent and sales volume is up 102 percent year-over-year!”

- Don Sturgeon Principal Broker/Owner, HomeSmart Realty Group (Salem, Ore.) 80+ agents and 1 office

a high volume of transactions with minimal staff overhead and exponential efficiencies to make for a highly scalable growth model.”

The Sky’s the Limit Widdows, an avid pilot, approaches the world with a “sky’s the limit” attitude. He’s never satisfied and will continue to pursue all of life’s adventures to the fullest. This is a theme amongst the HomeSmart team, which often refers to this saying: “Set ridiculous expectations and find a way to make those expectations normal.” In this spirit, Widdows recently built a state-of-the-art, 38,000-square-foot World Headquarters for HomeSmart International.

This will allow the team to continue to grow in order to best serve bro-

kers, agents and consumers.

“We won’t succumb to becoming like every other real estate brand out there,” says Widdows. “From day one, I’ve wanted this company to approach things from a rebellious standpoint—and that’s exactly what we’re going to continue doing into the future because it’s who we are inherently.”

HomeSmart International has set a goal to help 100,000 agents get the raise they deserve. Based on the trends within the organization, the sky’s the limit for this innovative and revolutionary real estate brand. RE

For more information about HomeSmart International, visit www.HomeSmartInternational.com or www.Facebook.com/HomeSmartFranchise.

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

Honesty and Integrity Key in Today’s Market

by John Voket

Dendea Balli Broker/Owner HomeSmart RGV McAllen, Texas

Region served: South and Central Texas Years in real estate: 6 Number of offices: 3 Number of agents: 60 Best tip for getting the right listing price: Know the market and be plugged in.

Best tip for running a successful meeting: Keep the agenda short and the energy high.

In addition, deliver an action plan with goals and be sure to follow up.

Most effective way to motivate agents: Be consistent, persistent and relentless while showing them you care.

Best recruiting technique: Show them the money.

Key to getting buyers and sellers to successfully work together: Kill the monsters upfront, communicate, listen and emphasize the team approach.

Your McAllen office is closing 90 percent of listings in-house. What factors are making this possible? Most importantly, our agents are plugged in and educated about the properties we’re listing. Since there is strong unity in the office with a well-structured base and 100 percent commission paid, our agents are always willing to help one another and build each other up. This creates a wealth revolution for the agent who engages the system and uses it productively.

Tell us about the brand new agent training program your company is poised to launch.

We’re introducing Brian Buffini to train our team on his proven lead-generating system that emphasizes the basics in order to educate

“Since there is strong unity in the office with a well-structured base and 100 percent commission paid, our agents are always willing to help one another and build each other up. This creates a wealth revolution for the agent who engages the system and uses it productively.”

- DENDEA BALLI Broker/Owner, HomeSmart RGV

and motivate our agents to use a systematic approach that generates lasting business.

This high-energy, focused program will take our HomeSmart agents to the next level—from rock star to superstar.

You and your team are very proactive regarding Texas Proposition 1. Why is this issue so important to you and your team?

Prop 1 will save homeowners money by increasing the homestead exemption. This is great news for Texas homeowners because they keep more of their hard-earned money. Prop 1 helps seniors and people with disabilities by giving them much-needed tax relief, providing them a lower property tax cap, which helps keep their property tax burden low. Prop 1 will also constitutionally ban real estate transfer taxes, which target home sales as another taxing source. This means that Texans won’t ever be double-taxed on their property.

How do you coach your agents to deal with the negative effects of the media?

Honesty and integrity go a very long way in this business. Real estate is very unforgiving, and agents must focus on their fiduciary duty to the client. Perception is reality and agents must be well-informed, educated and progressive in their ability to adapt to the situation at hand. I am diligent in teaching agents to utilize good training and strong communication skills to overcome the persuasive tactics of the media. RE

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

Making Real Estate Easy

by Zoe Eisenberg

Randy Rector CEO Evergreen Realty – HomeSmart Irvine, Calif.

Region served: Orange and San Bernardino counties Years in real estate: 9.5 Number of offices: 8 Number of agents: 1,200+ Top tip for building relationships with clients: Timely communication in their preferred media choice. Some clients love text or email communication, as it’s quick and easy, while some only want to communicate telephonically.

What are the current market conditions in your area?

Although interest rates remain at or near historic lows, in Orange County, we have an affordability issue that doesn’t seem to want to go away. With average home prices at or above $500,000, it’s increasingly difficult for many families to generate the down payment needed to purchase a home. With that being said, sales have remained pretty consistent in 2014.

Any predictions for 2015?

I would agree with many economists that 2015 will be interesting in many facets. Not only should mortgage rates rise by the end of 2015, rent escalations are likely to surpass home value growth in certain areas. We should also see annual home appreciation normalize in the 4 to 5 percent range.

What is the best piece of real estate business advice you’ve ever received?

Have a great Plan B. This goes for life in general.

You can have a fantastic plan, but life happens and you need to be prepared at all times with a great Plan B.

“Our motto is ‘Real Estate Made Easy.’ We provide industry-leading support, risk management and the best technology-driven tools in the industry to attract and retain top talent.”

- RANDY RECTOR CEO, Evergreen Realty – HomeSmart

How are you embracing mobile technology?

We embraced mobile technology years ago in the early stages. Now we have responsive website landing pages, mobile apps for our agents, retarget marketing techniques, responsive email campaigns, and more.

Are you incorporating technology into your overall marketing strategy?

Yes, we’re utilizing technology in all aspects of our business. The HomeSmart technology platform allows our agents to market their listings, manage paperwork with a paperless system, utilize electronic signatures and personalize the agent marketing experience. Additionally, we educate our agents through webinars/YouTube and heavily market through social media outlets.

How do you motivate your agents?

Our motto is “Real Estate Made Easy.” We provide industry-leading support, risk management and the best technology-driven tools in the industry to attract and retain top talent. These talented real estate professionals need to concentrate on assisting their clients in the transaction; we concentrate on assisting the professional with the entire back-office support system that includes electronically stacking and auditing their file for them. Couple this with one of the most aggressive compensation plans nationally, and you have engaged, enthusiastic, motivated real estate professionals. RE

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015

Technology Overload: Does Your Technology Waste Your Time or Generate More Business?

Commentary by Matt Widdows

App Overload With the advent of new apps, overlapping software and even 3D video technology in real estate, it’s hard for agents to pinpoint exactly what it is they need to sell more homes and close more business in a given year. I love the “cool” factor just as much as the next guy, but often I see agents get caught up with shiny quarter syndrome in a way that doesn’t bring them more business, nor does it help them transact the business they have more efficiently.

Identifying and implementing new technologies for your business is something your broker and/or company leadership should be helping you do. I encourage our brokers and agents to try new things, but it’s important to stay focused on productive and profitable activities because wasting time on much else just isn’t worth it for your business.

Before you leap head first buying into the latest widget or software, I challenge you to ask yourself (and your broker), “Do I really need this?”

And, if the answer is yes, then, “How

does this integrate with everything else I use on a daily basis?”

Driving Agent Productivity How can agents close deals more efficiently and seamlessly when they are reliant upon dozens of technology-driven tools and systems that don’t interface with one another? The answer is that it’s much harder to do it when you don’t have a single sign-on and data integration for everything you use daily in the business. Look around and you’ll see that there are literally hundreds of tech companies in the real estate space who all want to sell you their product, their backend management system, their widget or gadget or app. Some of these companies offer competitive pricing and products that actually work well, but if you have to log into 20 different systems to manage one single transaction or one single client in its entirety, that’s not very effective for your already hectic days. According to a recent survey

by Imprev, 51 percent of all brokers

surveyed admitted that they have too many tools and systems that don’t communicate with one another. That’s not only a problem for your broker, but it’s a problem for agents, too.

The Solution Whether you pay for your tools through third-party vendors, your brokerage or your local board, the reality is that very few companies can offer what you need. A seamless approach to managing your real estate business is the best way to increase productivity and free you up to do what you do best…sell real estate. Based on a 2014 study conducted by the National Association of REALTORS®, REALTORS® get 69 percent of their business from within their sphere of influence. Marketing to your sphere across multiple platforms in your business can be daunting, and downright impossible, in some cases. Forget the apps that promise synchronization and social media prowess. What you really need is a company with systems that are already integrated to work together at a reasonable cost. Is it practical to have 100 stand-alone systems that look impressive yet don’t communicate with one another? What good does that really do for your business? It’s time to start sifting through the clutter and looking for ways to streamline your business.

You deserve to have your business made more seamless, so don’t be afraid to ask your vendors or company leadership the tough questions. After all, it’s your success on the line. RE Matt Widdows is CEO/founder of HomeSmart International.

For more information on Matt Widdows or HomeSmart International, visit www.homesmartinternational.com or Facebook.com/HomeSmart.

Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • November 2015