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Joan Docktor, the well known president of Berkshire Hathaway HomeServices Fox and Roach Realtors, sits down with TRIBUS CEO Eric Stegemann to discuss the changes in the real estate industry. CoStar bought HomeSnap and now is nearing an acquisition of CoStar to consolidate into the largest owner of real estate data in the world. Zillow bought ShowingTime and now has the available data for over 1/3 of all showings in the entire United States. Compass is getting ready to go public.
What should large brokerages be thinking about right now?
TRANSCRIPT
Hi, everybody. Welcome to Brokerage Insider the podcast where we interview the leaders in real estate and technology. I’m your host, Eric Stegman. And I’m the CEO of TRIBUS. We’re one of the largest independent prop tech companies in real estate and providers of custom brokerage technology to medium and large sized brokerages all throughout the United States, Canada, Canada, and even around the world.
Now today on the show, I have the most sincere pleasure of having as my guests. Joan. Now Joan is the president of Berkshire Hathaway HomeServices, Fox and Roach Realtors. It’s a division of HomeServices of America and one of the largest brokerages on its own in the entire country. On top of being part of home services, the largest brokerage in the entire country.
Fox & Roach has more than 5,500 sales professionals in 75 offices in Delaware, New Jersey and Pennsylvania. Joan was recently named to the RIS Media Newsmakers Hall of Fame, along with other very prestigious folks like Sherry, Chris Allen Dalton, and the enforcement. Joan, thank you so much for taking time out of your very busy, busy schedule to join us here today.
Thank you so much, Eric. I really I’m pleased to be with you today and look forward to our conversation. Me too. Me too. So, you know, first I want to start with your background. You buck the trend of the average agent today, and that is you started your real estate career at Fox and Roach, right?
Yes, I did. I did. And I’ve never, ever left. We’ve just changed names many times and I’ve gone along for the ride that, yeah, for sure. Amazing. And if, if without going into specific numbers, you’ve been at Fox and Roach now for over 30 years, correct? Correct. Yes. And I could have gone anywhere. Sure.
Yeah. For sure. With your, with your pedigree now, now when you. Okay. Now I was going to say most agents have many choices and that that’s, that’s that’s a great thing about real estate. We have so many choices and, and I remember when I joined, I was told, you know, if real estate, wasn’t my thing, we had mortgage title insurance.
I could try out one of those businesses. For sure. I I’ve actually long joked about the the real estate industry. And one of my favorite things about it is that you could sell the same home three times and it would be different each time, right? Yes. Yes, it would. So it’s, I, I listened to a different podcast and I could hear your passion for the business still after 30 something years in the industry, I could still feel your passion as I was listening to you on this other podcast.
And one of my favorite things about this business too, is that every person that enters this business, it seems like they’re so positive. And more importantly, it seems like they’re willing to bet their paycheck on the fact that they can wake up tomorrow and make a sale. What was it specifically that made you decide to go get your real estate license and starting the business?
Well, like many other agents we all buy and buy houses eventually, and we either have a great experience or we might not have such a good experience. And depending on where we are in our lives. And I was at a place in my life where I was not so happy with my current career bought a house. I had a pretty bad experience.
And I envisioned myself in the place of that realtor thinking that I could do much, much better for people. So that’s kind of what started me off if that makes sense to you. And, and I, I had been a teacher, which many people know that about me and which I did enjoy. And I was a special education teacher and I taught emotionally disturbed boys.
So, what I really liked about that was the way I could help them in their personal lives, as well as educating them. However at the time that I decided to get into real estate, I was at a really a point of frustration in that these, these guys, these kids, they were 16 to 19 years old. Would learn a lot in class and, and we, we do group sessions and they would seem to move along emotionally, but they went home and they went home to really upsetting environments environments that caused them to be somewhat the way they were.
And I started to become frustrated that every day. I was, we were backtracking and not moving forward and I always liked to see progress. So I became frustrated. And at that very same time, you know, happened to buy a home and think, Hmm, maybe, maybe I could do this. Well, it sure seems like you did it. You know, and so.
How did you have that issue when you started selling real estate that so many agents do where it’s, it’s tough to get your first sale or did you start out and just, you know, it just came to you naturally and maybe within your first month or so you got your first closing. No, like most agents, you, you really have to work at this.
It doesn’t just come to you. It’s something you work at now. I got into the market in a very good, there were lots of buyers similar to market today, not many sellers, lots of buyers. And so I had and I had a sphere of influence. My kids. Friend’s parents and various people who would come, came to me over the first few months that they were, you know, they had a plan that maybe they’d like to move.
And I had marketed myself. I had sent out announcements. I did what I needed to do. But it took a while. I worked open houses. I, I sat floor time at the time. I did everything that you can do to try to find buyers which. Which I did in the first year and obviously finding sellers and representing sellers is a little bit more difficult because you need to have a track record, but when you’re representing a buyer, you know, you’ve, you really can move forward without a whole lot of experience and use your company experience as your experience.
So I worked buyers and actually I never had my first settlement for six months. And I was really frustrated by that. I think I sold a house within four months, but there was a two months, 60 day closing and then I sold another. So I had two settlements after six months. However the next six months per progress beautifully.
And I ended up being the rookie of the year, that year. So I think I did 3 million and in those days I wasn’t selling a $500,000 houses. They were, you know, in the mid one hundreds or 200,000. So it was a lot of houses. And I knew from the very beginning, how much I really had passion for what I was doing, because for the first time, in a long time, I was working with people who actually wanted to be with me.
And I felt that finally I had, I, I came into my own and I found a career where that I appreciated as much as I was appreciated, which meant a lot. Yeah, for sure, for sure. And that is that warm and fuzzy feeling. I always felt like when you have a good client and when they think you did a great job, a plus when they see that first house or that, you know, whatever a number of house it was that they saw and they walk in and they just love it.
And you’re the person that opened up. That, that figurative and literal door for them. There’s just something magical that happens in that moment. And I, one of the things, one of the things that I found, because there was such a scarcity of inventory, I would stay up hours and hours and we had to have MLS books at the time.
We didn’t have a computer and I would, I would search for a needle in a haystack. Because I knew right then from, from my experience in the past, in my other career, that just because somebody was asking you for something, you might be able to help them with something slightly different and you could deliver something a little bit different, maybe a little bit outside of the area.
They requested maybe a house with another bedroom or one less bedroom, and that you could satisfy that buyer. With and be a little bit creative when doing so. Yeah, that’s funny that you say that I actually used to train all of my agents and, and in my brokerage, I called it the 85% principle. And I said, if you can find 85% of what a client looks for that last 15% is always flexible.
You just got to hit all of the needs. And most of the wants and if you can get 85% of the way there, sometimes you can find people, things that they really weren’t thinking of or in different neighborhoods or, or new construction that they weren’t thinking about. Absolutely. It’s that, that last 15% is where it’s all at in this business.
I think looked at it. I hadn’t looked at it that way. So you know, now we, here you are. 30 something years later and, and you’re running the largest Berkshire Hathaway and, and you have 5,500 sales associates across the entire company in multiple States and in large region. But one of the things that I happen to know about you is you’re very big on staying current.
Nick did with agents and your staff and everything like that. And they. Love it because you, it seems like you really care about them. Now I know one of the ways you do that is you reach out to some of them or maybe all of them on their birthdays, on their anniversaries of joining the company. How do you stay on top of that with 5,500 folks?
Well, let me say this. One of the ways that I stay in touch is I decided to do this actually during the pandemic. But I decided that that video has become so important and people seeing you and during the pandemic, we aren’t able to be together. So I started to do a Monday morning video that I do every Monday morning.
No matter what, and it’s just a short message, maybe a three minute video where they can see that I’m there during the pandemic. You know, I was. Giving some mental health advice advice at times, talk about our training, talk about the convention coming up, whatever. Maybe, you know, just some things that I hear from agents where they might say, you know, Joan, I’m really frustrated my best friend bought from another realtor.
How could they have done this to me? So we, we talk about how those things might happen and what to do about it and how to move on. And. Pick yourself up and brush yourself off and keep going. So we do that right at this point, as far as birthdays, as far as anniversaries, you have to have systems. So I have I have notifications in my phone that come up.
I and I also have some, some automatic systems. To be honest because with 5,500 people, if you didn’t, it wouldn’t get done. So I use technology to my advantage. In some of those cases, I make sure that I attend as many events as I possibly can to be in front of agents. I mean, to me, The agents give me my inspiration.
They make me want to wake up in the morning I admire. So what they do, I’ve done it. I know how hard it is. I know how passionate they are. And one of the things that I was a little bit apprehensive of when I went from being an agent to going into management was would I lose that passion? How would I recreate that passion?
And what I found very quickly was that. Being a sales office leader is similar to being an agent in that it’s a relationship business. And so I was able to find that passion in my agents that I had found in my clients to help them. So now I could help many, many more people buy a home. Working through my agents and help my agents to have a better life, which I’m very passionate about.
So staying in front of them is, is kind of the fuel for my fire and whatever way I can do it. That’s, that’s what I do. That’s great. So in, in. You know, 30 years of this, obviously there’s been changes. You talked about just having systems in place. And, and obviously 30 years ago there wasn’t systems.
Like we consider them today in terms of being able to track things, there was a Rolodex and, and post-it notes and, and by the way, too many agents still use post-it notes as their systems today, they’re a system. If they were that’s true works. If you can keep track of it, then that’s great.
But. You know, in your experience over that period of time, what do you think the biggest change that’s happened in the industry has been, Oh my goodness. There’s been so many first off, you know, the internet came to be when I was in the business. And when before, I guess when I first managed there was no internet, so we right.
We were the gatekeeper. And how that has changed. We are, you know, we, we stopped being the gatekeeper in 2000 and the consumer had the information. So we always needed to be the trusted advisor for the consumer, but more than ever after the customer had the information, we certainly had to do that. And we had to create our value and our value and our expertise.
Was what was going to attract people to us, not the information. So that was, that’s been a huge, huge change after that, you know, it it’s, it’s just been one change after another, you know, with these, the social media, and I’m sure I’m skipping a lot of years getting from the internet, Ben to social media, but certainly the way that people can You know, in the way that people can be with other people without having to leave their home, even before the pandemic really changed our business, the use of social media and letting people know that you, you know, that you, their kids want a soccer game and you applaud them or whatever, you don’t have to be out and about as much to be as social as you might want to be.
So that’s a big change. And I think over time you know, it used to be a market for brokers. When I got into the business, the broker was King. Then, then the agent was King. Then the consumer was King. The consumer is still King, but the agents are right up there behind them and they have so many choices and it’s hard to decipher you know, which, which brokers best for them.
And oftentimes they’re told things that don’t come to be. And so I think it’s harder for an agent today. As far as the consumer, there’s so much information, so much on the internet and they really need the best agent they can find to decipher, you know, what their needs are and, and what will be best for them.
So, Lots of changes for sure. For sure. And one of the things you mentioned, you know, there was a sociologist, Robin Dunbar, have you ever heard of Dunbar’s number before? Hmm, I think maybe, but I’m not familiar essentially. He came up with the concept that that the average person can only keep track of 150 relationships in their head and and have real meaningful relationships with them.
And of course, social media brought us to a position where. You know, you, you can still have a, a semi at least semi meaningful relationship with a whole lot more than 150 folks by just doing that applaud or, or, or staying connected in those ways, or, or certainly now in terms of using systems to keep track like a CRM of all of your clients and keeping track and, and touching base with them on a regular basis that has empowered us to grow.
And that’s how you get to these. I think these mega teams and, and agents that are doing so much business. Not only are they great agents hopefully for the most part, but they’re, they’re also just very good at these systems and being able to grow that sphere of people that they can communicate with or stay in touch with on a regular basis.
So you, you bring up a good point because back when I started, there were no such thing as teams, right. That was a small broker in his office that, you know, we, we, as a company have have promoted teams since 2000. Incident that’s, co-ed coincidentally with the beginning of the internet. Right. But we have really embraced teams from the beginning and we feel like they’re a business within a business, but they have been able to grow in ways that are amazing since then.
And it used to be that a sales office leader sales office manager would have had enough experience to lead people. And maybe they did, you know, 7 million, 10 million, whatever. And now you have teams doing a hundred million and they look at their sales office manager, not necessarily as the, the content expert, because they never did as much business as this team is doing.
So that’s a whole nother change in our industry. And, and so being a good coach is so important for our managers because You can, you can be a great coach without having actually done the same amount of business, for sure. And actually, if you don’t mind, I’d love to dig into the teams concept with you for just a second.
Rob Hahn was on our podcast not too long ago. And Rob said that the biggest single threat. To the brokerage business is not, I buyers, it’s not compass. It’s not exp it’s actually teams. First of all, do you agree or disagree with that? I don’t agree. I think they’re not a threat. That, I guess it depends on the way you look at it.
However, I think that a broker that doesn’t embrace teams is threatened. Because teams are they work well for the consumer and they work well for the agents on the team and the team. So I think as a company, you’ve got to embrace teams and help them be a better team. So for instance, a lot of the team leaders are great sales agents, but they don’t have that management experience and they need the help.
Have a great manager, a great company to help them and counsel them and coach them to be a manager, to a certain extent, to lead their people, to retain their people. So in my mind, as, as our job, as a brokerage is to help these teams and consult with these teams to help them to grow and to retain their best people.
And then you become an invaluable to them because you’re helping them also with just not just the recruiting side and the retention side, but also the operation side. And that, that’s actually something that I dug into with Rob of saying, you know, Hey, a lot of teams don’t want to deal with this. But then his counter.
Point to me on that more or less was. Yeah, but even if they’re paying 7% or, or some very low commission split percentage to the broker, that’s still ends up to be a lot of money when you’re selling $200 million a year, a real estate. So do you, do you think that the systems and the tools that can be provided by a brokerage?
Maybe not today, but let’s say in five years from now, do you think the systems and the tools and the, the coaching, like you’re talking about. And the recruiting and the retention capabilities for keeping people on teams. Do you think that’s enough in five years from now to keep a mega team at a big broker?
Well, here’s what I think about that. I don’t think the systems and the tools are necessarily what will keep a team at a brokerage. I do think the relationship and the The counseling and the coaching is very important. They, the team are usually entrepreneurial and they want to differentiate themselves and they may not want to use any of the systems that you have because they don’t want to look like another team or an, or another agent in your company.
They want to look very, very different. Now they may use backend systems. If yours are good enough to support them. But I, I think that in order to be a viable brokerage today, you can’t just be a brokerage. You will go out of business getting 7% or 10% or whatever you get from top teams. No matter how much they give you in there, you know, in dollars because.
You have big teams to that you have to then support. You have to be what, what we’ve been since the 1980s is a home services company, providing mortgage title, insurance, and brokerage. And if you do that, then you have the profits from the other businesses that you can throw back into the brokerage business to help support the teams and the individual agents.
So do you see brokerage? Sorry, I didn’t mean to interrupt you there. Go ahead. I’ll say, you know, a brokerage will be the loss leader. I don’t believe it’s a totally lost leader, but the compression on company dollar for the brokerage is there and it continues. And it’s an, it’s an issue for brokers. I think that we can’t expect to get the dollars.
As a percentage of somebody’s business that we used to get when they’re doing so much business. But I do think we can expect to get the mortgage, the title, the insurance business from them to help us support the brokerage business. So I think the brokerage business has some profitability in it and it will continue to, but not what it used to.
And without those other businesses or other streams of income. Whether it’s moving business or whatever a broker decides to get into, they will fail and, and teams could then destroy a brokerage because you can’t, you can’t operate on that very small margin alone. On that side then, because that’s actually the question I was going to ask you is you led into it without even me asking the question is, is, does brokerage become a loss leader then, but, but to make a team or make mega teams work inside of a brokerage, don’t you almost have to get them to, to be on board within house mortgage and title.
And, and do you have trouble ever getting teams to be on board with that? Yes, we have to get them on board with that. And sometimes we do have trouble with some teams, but for the most part, our teams understand how important it is to us. And we don’t ask for a hundred percent of their business, you know, they give us.
You know, just, just some of their business, you know, if they could give us half their business, a third of their business for mortgage, you know, typically title is easier, especially in Pennsylvania. Now we operate in New Jersey and Delaware as well, but titles, an easier piece for us. And I, and I’m not exactly sure why that is.
I have my. My thoughts on that, but I won’t go into it here. I think that they’re willing to help. They’re willing to support the broker they want to be with. I mean, a lot of our agents really enjoy the Berkshire Hathaway brand because their clients do. It’s an upscale brand. It’s a brand that attracts people.
It’s recognizable, it’s gotten all types of awards. And so they want to be with that brand and they’re willing to pay something for that. Certainly not a big percentage of their commissions because they have a team to run and they have their own administrative costs and they, you know, they, they, if they want to keep their, the members on their team, they have to supply services to those people in addition to what we as a company provide.
So I think is it a loss leader? It’s it’s, it’s, it’s totally, I don’t think it’s totally a loss leader, but I do think there’s compressional company that. And will continue to be, well, there will continue to be, but you know, we’ll have to pay. Let’s just think about it. I mean, no matter what business you’re in, if you’re going to take up space, you have to pay for it.
Right. You ha you have to pay for your space. You have to pay for the various services that you want to use. And. They either pay a broker. If they went out on their own, it would be much more expensive. So I’m not sure what Rob was referring to, but if this team went out and they had to totally lease space and do everything from scratch, it would be much more costly than being under the umbrella of a broker.
Well, I think he was referring to more of the models and teams going more to a model. That’s like an exp and I’m not saying they go to the XPM saying they start a brokerage. That’s completely virtual, you know, where they don’t have space and, and they provide minimal Items to their, to the agents that work for them.
You know, they’re using their cell phones, they’re not using an office company phone line and they’re using the, the tools that the broker has paid for, for CRM and website and things like that. And so they’re saying, well, the, you know, I think what Rob was, was alluding to was. The costs can be not zero, but again, when you’re doing $200 billion worth of sales in a year, like some of these mega teams can do you end up with potentially saving, you know, maybe a million dollars plus in terms of, of commission and comment.
Even with that percentage points that they would be giving up to a big broker. And, and, and I think that’s the biggest thing is, is it, does the, does the team leader want to take that on? And I do find most team leaders. They want to be out there managing their team and not worrying about P and L’s and from a brokerage and worrying about paying rents.
But I think as the numbers increase in, as teams grow larger where you now have the, some of these mega teams, particularly in KW where their expansion teams across the entire country, it seems like that is a, a. A, an imploding proposition at some point it could be, if they don’t feel they’re getting the value that they’re paying.
So it just, it depends on what they’re being charged. One of the things that keeps the team together and also keeps a company strong is the culture. And when you’re virtual totally virtual and you’re not together, it’s really hard to keep that culture alive and viable. And so I understand virtual brokerages and I’ve talked to various virtual brokers and they still have to get people together to keep the culture, to keep the people, because I can tell you that through COVID our culture has been affected because we’re used to being together.
We’re used to, you know, gaining insight from each other. We’re used to you know, Walking down the hall and saying, I’ve got this coming and, Oh, I’ve got this buyer and working deals and you don’t have that as much. And, and so I think there’s some costs to doing business and, and I don’t think there’s anyone out there, no matter, you know, pay paying any broker, a million dollars.
We’re not getting anywhere near what we used to get. No matter how big the team is, I think there’s, and I think there’s a limit to what they’re willing to pay. You. But I think they’re willing to pay you something for the bat, depending on the value. But if there’s value in the brand value in the culture value in there, what our people tell us is they like the other people that they’re working with.
So they want to be part of our company so that they can be have these other people surrounding them that helps them in their business and they help others. You know, I, I couldn’t agree more in what you’re saying overall. And I actually retorted to Rob a little bit about this, and I actually use this quote from a team leader.
We interviewed for this podcast Joseph Magsaysay, who is an expansion team manager inside of the Better Homes and Gardens network. And he had a great quote, which was that splits and caps. Only matter in the absence of value provided by the broker. And I just thought that was such a great quote.
And I think it’s exactly what you’re saying here. I would agree with him. I love, I want to meet him. You should. He’s an easy, he’s a character. He’s a, he’s a great guy. But yeah, Joseph Maysaysay, we’ll have to get you an intro with with Joan here. Okay. So, you know, Obviously tech has changing things and we’re talking about teams and how all of that works.
I know in the past Fox and Roach added or moved to a model a few years back. Where it’s what I refer to as a best of breed approach, where, you know, you have an email marketing platform and you have a CRM system and you have a website platform. And you have, you know other tools that are out there, transactions system, et cetera.
And that the, the tech approach at Fox and Roach previously or at least for the past few years, has really been focused around. Bridging those best of breed tools together. How has that gone or what have you heard about from your agents about using that best of breed model? Well, we, unlike some companies, we don’t build it, we buy it and then we customize the tool as much as we can to fit our model and fit, fit our needs.
And we’ve, we’ve gone to you know, gosh, years back, even to single sign on so that that somebody could sign into our, our intranet and they could get into the MLS and they could get into our CRM and they could get into the marketing tools, et cetera, et cetera. And that’s worked pretty well. I would say that it’s a constant struggle to find, you know, the best of breed tools and.
The other thing that’s happened, which has caused us some agita is that some of the companies that we’ve we’ve been using, they ended up being acquired as we’ve seen with showing time this week. So when that happens and although nothing’s going to change with Zillow purchasing ShowingTime, it makes you a little bit, it makes you think.
And makes you take pause as to what you should do next and will it affect your business? We happen to be using Contactually, which I thought was a great CRM. And then it was bought by compass and things changed with it as far as are you sweat and we had to abandon it. So I think the problem with, with purchasing technology best in breed is if you know, these are a lot of startups that.
Yeah, they build their value and they sell. And depending who they sell to you could be stuck as far as how it works for the agents. It works really well because it’s all we have it all connected and everything integrates with everything. It takes a lot of work on our part to do that, but that’s what we do.
Use your question for sure. So you, would you say that you’ve had the agents feel like everything does connect? Well, because we’ve heard in the past year and, and obviously, you know, being a CEO of a company that provides custom broker technology, you know, including most of these tools like we’re talking about, I’m somewhat biased.
So I’ll try to remove my biases from the question here, but we have definitely heard a shift in big brokerages that went down the best of breed approach previously, and then found one of two problems. One is what you just mentioned is that by having five different vendors, instead of one. They felt like before it was hedging their bet against acquisition, but then they realized that if you have five of the companies that are out there, there’s a high likelihood that over the course of a three, five, 10 year agreement with the company that there’s a likelihood for acquisition during that time in, in the property technology space, PropTech space.
So that was number one, but number two was. That they felt like the promises and abilities for integration were almost always an over promise and under deliver. So, you know, I think we, we talked about the first side of that, but the second side of that have you, have you not experienced that issue?
No, we’ve, we’ve experienced that issue. I think I always take pause when a company, a technology company said, well, we’re, it’s, it’s on our, you know, it’s, it’s, it’s in our sites for April or it’s in a year. We’re going to have that done in may. It usually doesn’t get done. And so unless they have the technology available currently, We don’t want to be involved.
And we’re actually involved with a company now that would take escrow deposits and we want them to integrate with our our transaction management system, or we don’t want to begin which is, was something that I insisted on. And our tech people will agree that if, if I don’t want to go down this road and then ha and then make agents’ lives more complicated, because it doesn’t integrate with our, our, you know, our techno era, transaction management technology.
And, and so they promised us that they were going to, and it’s been a few months and we’re waiting and they’ve got like a band-aid. Six, it seems at this point in time. And we’ll see if it, if it, you know, becomes a, a permanent fix, but yes, I would agree that it’s hard for, it’s hard to keep up. It’s hard for us to keep up.
It’s hard for technology companies to keep up. And even if it were all stitched together, it’s still hard to keep up in my opinion, because it keeps changing so fast and furiously. That even if you were a company that built your own and you had it all integrated before you know it and it’s out of date and that’s what happened to us years and years ago, we used to have people on board building outfits.
We realized we just couldn’t keep up. We’re not a technology company. We are a real estate company. So it’s complicated. And being on the other side of that now, and having been a former broker, we actually built all of our own technology to run my brokerage. And then we spun out the tech side and sold the brokerage side of things.
And one of our, our larger customers is Corcoran, real estate cork, and particularly their first franchisee Corcoran, global living. And that company, when they first signed up with us, they had built all of their own technology and realized that for the cost of licensing, it from us, it was cheaper than having the entire staff of people that they were having that work, maintaining the system and keeping it up to date.
And when the MLS decided to change something tomorrow without telling anybody about it, they, they didn’t. Have the staff, the capabilities inside of their staff to jump on that, fix that problem. So yeah,
I hear it all the time for big brokers and, and what you just said. I think rings so true is that you’re either a real estate company or you’re a technology company, and it’s nearly impossible to be both at the exact same time, at least be good at both. Right? Exactly. Exactly. Now you said something yeah.
Passing that I just want to come back to for a second. And, and it was a fleeting comment, but I definitely want to come back to it, which is, you know, this past week showing time got acquired by Zillow and showing time was the largest independent, non. Non private equity owned organization in real estate.
And they got acquired by Zillow for $500 million and they have showing data in their system for, you know, the vast majority of of, of listings and transactions that are out there going back 20 something years. And you said that you weren’t, it seemed like you were saying you weren’t worried or nervous about Zillow having that data.
I’d love for you to explain that comment a little bit more, or maybe I misunderstood you. Well, Zillow has assured us and showing time has assured us that they’re not going to use that data for Zillow to Zillow’s benefit for now. I believe them. But do I think that that’s a long-term strategy for a company like ours?
No. I think that we have to take control of our destiny somehow. I, I think that, you know, Zillow won’t use that information until they use that information at some point in the future, when it, you know, they, they, they want a different direction. So the one thing that, that You know, I’ve talked to with our technology people is that we need an end to end platform.
Nobody really in real estate has that where you can, you know, start out and go through, start out with a listing and, and go all the way through to settlement and, and have all the technology within that platform. And within that company to get everything done. And so we’re, we’re B what should I call it?
We are dependent on companies like showing time, but now it’s bought by Zillow and Zillow now is a broker. So do I want another broker? No matter how well intentioned they are to have the data for our customers and clients. No, I don’t. But I don’t think there’s any immediate, dangerous. What, I guess what I meant to say that I do think there is a long-term risk in allowing another broker to have all of your information.
Do you think that it they’ll follow a similar path to what they did similar to dot loop where they’ll say, okay, well, for a while, we’re not going to do anything with this data. And then one day there’s going to be a terms and conditions changes that says if you want to, you have to opt out instead of opting in to having the data shared with Zillow like what they do with the transaction data.
Most likely. Yes. Yes. I, you know, Zillow is going to do what’s best for Zillow. And no matter what showing time is telling us now and what Zillow’s telling us now and what their intentions are currently. And, and I’m not saying that that they’re, they’re not telling us the truth, but I do think in time it will go down a similar path.
It always has with CILO. So, and Zillow now has changed, changed the game in a way, because they are a broker and no, they’re not hiring agents at the moment, but will they. I don’t know, it doesn’t fit their model at the moment, but will it, one day they’re a competitor and we have to treat it as such funny.
I actually saw a document from M red, which is the Chicago land alas. And I saw that they have a policy that says that no tool provided by the MLS can be owned by a broker member. So now I’m wondering what’s going on with Zillow and if there’s other similar items out there and are there policies at MLSs that are out there?
So I’m on the board of directors at bright and that’s you know, the large East coast MLS and we are talking, you know, we’re we’re we’re we have a meeting this week to talk about what we’re going to do. It’s a big change. It’s a big change. And we, you know, the, the, the unfortunate thing is that showing time, you know, had the mass amount of business across the country, and there’s not a, a second competitor, you know, coming up behind them at the moment, but believe me, there will be, but do we want to make the same mistake again?
Or do we take control of our destiny? So I think the MLS is, should take control of your destiny. Figure out their own showing time personally. And NAR is looking at what central app and, you know, they’re, they’re offering a webinar this week and really Alliance has another company they’re looking at.
And then, so there’ll be, there’ll be competitors to showing time. Yeah. I mean, in our space, try to spot a company. We bought a company back in November called solid earth that makes technology and software for MLS MLS. And that was the very first, I mean, within minutes we had phone calls from the MLS is saying, can you build this?
And because one of the. Tenants of solid earth is that the MLS is owned the data. We make products for them, but in our agreements, we don’t do anything third party with them and nobody else can have access to them. And so we of course got those phone calls, but that actually brings me to exactly where I was doing next was to talk about bright and some, some other things along with that.
So let me start out with this question. You know, bright is the, I believe the largest or maybe the second largest now behind CMOs MLS in the country. And you know, your organization, obviously you’re involved before your organization is a huge part of their overall user base. How do you see MLS is managing costs and expenses and features going forward in an ideal world for Fox and Roach realtors?
What service or services or breadth of services do you see that an MLS should be providing? Well, it bright, we, we, we say, you know, we talk about being a data company, so we have the data. But I think we’re more than that. I think that what an MLS can do to make sure that they retain their customers, the, the agents and brokers is to make their lives easier and provide, you know, a things for the agents that the broker wouldn’t necessarily provide because of economies of scale, et cetera.
So one of the things at bright that we’re looking at. Is that we can provide in a certain price range, the number of showings that have taken place in a certain neighborhood. And that’s information that as a broker, you only have your own individual information, but as a multiple listing service, you have everybody’s information.
And you know, you, you can give that data that those numbers. To help people make decisions. You can give that information, you can gather it. You can, you know, you can create reports, et cetera, that a broker on their own could not do. Another thing that I think that the MLS can do very well for agents and for brokers is a lot of the statistics.
You know, I’m reporting that agents use and brokers use to. Determine what they’re going to do next and determine, you know, determine their business model, not model, but they’re to see where their business is headed. I think that the role of the MLS is delicate because you don’t want to take the place of the broker or pretend, or even attempt to appear that you are yet.
You want to provide services. Besides being the you know, the place where all the listings are, because now all the listings, there’s lots of places. And so you don’t want to be you surfed by companies. Because I don’t think that, that every agent believes that the, the you know, the MLS handles compensation and cooperation compensation, but I don’t think everyone believes that you need an MLS to do that.
So I think they need to, like everyone else make sure that their value proposition evolves. That could be very different tomorrow than it is today. And, you know, they have, RMLS bright has been the they they’ve taken the place, I guess, of, of was it Lyft hub who used to provide all the listings to Zillow.
And so it goes right from our MLS to Zillow. So they provide all that, all that. Well, brokers want to do it, but will there be a time when brokers. You know, don’t want to do it. And so they’ve got to continue to evolve their value proposition and, and right now Zillow has the eyeballs. And, and I don’t think it’s, it’s not clear to me how they can be a broker, be a mortgage company and still be the portal.
I something’s got to give there. I’m not sure what. We’ll we will see it play out, but that’s actually brings me to the next question, which is around the idea of Zillow’s rival. So, you know, for a long time Zillow kind of everybody thought, okay, well there was truly in the beginning was Zillow’s rival.
Then Zillow bought Trulia. And then, okay. realtor.com is now the rival. And it’s, it’s really seemed like realtor.com has faded away as being a true rival to Zillow, but here comes CoStar. And so, you know, CoStar, they’re the biggest holder of commercial real estate data. And they pretty much consolidated the entire commercial MLS industry through acquisitions.
They I don’t know, just very recently made an increased offer for CoreLogic. Who’s the biggest holder of residential real estate data, anything to be concerned about there for particularly for big brokers, just like yours. I think there’s a lot to be concerned about with all these companies. But I don’t think.
The coast. I mean, CoStar, I mean, who, who should be concerned about CoStar? I think the MLS is, should be concerned about CoStar potentially, although they claim that that’s not, they don’t want to do that. I’m not sure of the real, I would guess that with any of these purchasers and where we’re. It becomes a monopoly and with CoStar, you know, that they have they’re costly.
And so they’re certainly not as, as inexpensive as an MLS. So many of certainly the rezzy Marshall agents don’t want to join CoStar because of the cost. I think you have to be careful. I think we all have to be careful and we all have to have our eyes wide open. I mean, these are mega bucks that are, they have so much more money than any anyone broker CoStar does, you know, Zillow does.
It, it, it, it’s something to be concerned about. Absolutely. I I’m, I’m not naive. Just, you know, we’re just watching at the moment. All of this happened around us. So we need a strategy. We need a three to five year strategy as a broker. And as an MLS, you need a three to five year strategy. Yeah, for sure. I mean, do, does CoStar start stepping in and buying MLS or at least MLS software systems and I mean, that’s what they’re doing with CoreLogic right.
So not only, not only is CoreLogic the largest holder of residential real estate data, but they’re also the largest single provider of MLS software systems that’s out there. And so bright, right. We use core logic. We use other things, but we do have core logic. It’s it’s, it’s an issue. So does the biggest behemoth win?
I’m not sure. And, and of course with Zillow and with CoStar, because they have access to the capital markets and they can just go print more stock and say, Hey, we bought another company and fit Solidated up under one. And you end up with this duopoly more or less between CoStar and Zillow down the road somewhere.
And I think that’s what I talked to other brokers about. And they’re sitting there saying. Look, if they’re holding all of the data, if they power the MLS, they could go out to all of the MLS and say, Hey, you need to raise your prices. We’re raising the price of matrix by 50% this year. I mean, commercial, if you were a CoStar member, when I was a CoStar member 20 years ago, you know, it was, it was 50 bucks a month.
Something like that. It was, it was inexpensive. And then they started tacking everything in. And then when they bought LoopNet, You know, then it went to as high as $1,200 a month for a license of, of CoStar. Right. So different than the MLS is what do they charge? $30 a month, $40 a month, $50 a month. I mean, the agents won’t know what hit it will.
What it would do is knock all of the low to mid-level producers out of the business. Yep, exactly. Exactly. Yeah. Then you’re left with the mega teams who can afford it. And they’re not paying their broker. They’re paying me MLS. Yup. Exactly. Exactly. That’s exactly what I would. I where I think Rob was going to a little bit there too, was you know, does the, the holder of the data become the winner, the real winner.
It’s the old picks and axes. Analogy, right? If, if you can have the data, if you can have the systems that’s where the money’s to be made in the industry who cares about the miners going out and actually, you know, getting the goal out of there. They’re, they’re not making much money. It’s the pick and ax sellers that are making all the money, but remember they have our data.
And so I think we’re of course is out of the barn and we missed the boat, but they have our data and they have it for free. Yup. And then they charge, you know, back for your own data, which is infuriating, but I hope we learned from what we did with Zillow. I hope we learned I know there was a point where Facebook was trying to get the data have, have, I guess, Homesnap send all the listings to Facebook.
And I sat on the broker public portal board. And when I heard this, I said, does this ring familiar? Because, Oh, they don’t want any money. I said, no, not right now. They don’t, you know, cause they have other things on their, their website. It’s not just real estate website, so, but it’s the same thing all over again.
If you give them everything and they have it and that’s where the eyeballs go and they can easily sell it back to you. Yep. That’s that is the truth. Speaking of that, let’s, let’s keep talking about CoStar for a minute here. When all the data is CoStar, not long ago, also bought Homesnap and bringing, bringing the conversation circled around here.
Homesnap is the public official public portal, not only for broker public portal, but also for bright MLS. So knowing that. CoStar this company with this data access has, has that, and is now powering that, do you foresee, and as a board member, I’m sure you can’t talk about bright specifically, but do you foresee MLS is wanting to move off of systems or, or even broker public Porter wanting to move off of systems that are powered by CoStar own companies.
So I’m no longer on the board at, at, at a broker public portal. So I’m not sure where they’re headed. They went and again, when, when Homesnap was acquired, everyone was told nothing’s going to change. You know, they’re gonna keep it. Everything’s separate. And with the broker public portal, we had an out, if we had to, if they didn’t do what they said they were going to do.
So you know, they were CoStar was going to support Homesnap and do more marketing to get more eyeballs to the broker public portal, which sounded all fine as far as right. And, and Homesnap, we have an arrangement. Yes. It’s the app. For bright it’s, it’s the app that the brokers have adapted. It’s our app.
And I guess we’ll just have to see for right now, it’s a fabulous app. Happy to have it on, you know, with our branding on it. But we’ll have to see what happens with that. And, and you know, how expensive it becomes. I mean, there are contracts that are signed and nothing can happen right away. So I think it’s, you know, we have to evaluate options, whether you’re the broker, whether you’re bright, whether you’re another MLS, whether you’re the public portal, you’ve got to evaluate these options and, and there will be other, other options.
I believe since technology continually changes. Well, I have one last question for you here, Joan. And I, we are, we are already over time, but I’m going to ask you this one last question that I ask all my guests and feel free to take a second if you need it. But that question is, you know, looking back on your storied career in this industry, looking back on anything, whether it’s today, 30 years ago, et cetera, if there was one thing that you could go and change about the real estate industry, what would that be?
Oh, my that’s a loaded question.
If I, if there was one thing that I could change about the real estate engine industry, I wish we wouldn’t have been so naive because when we gave away our data for free and didn’t realize the value it had when we. Just, and we did that so easily because the consumer was pushing for it and we didn’t have another option.
Could we, could we have figure something else out? Because once we gave it away, we’re never getting it back in the way that we, that we had it before. Now, I know that we had to, you know, it went on out on the internet and that was that. But when you, when you look at other, at these companies, the portals.
And you realize the power that they have with the agents, you know, with the clients just seems that it, I moved there somewhere. I’m not sure what it would have been people smarter than me could have figured it out, but I don’t think we had enough foresight as we just allowed others to step in and do their thing.
Well, Joan, thank you. You very much for all of your insights here today, it’s been really enjoyable talking to you. I really thank you for coming on the podcast and and talking about all of these topics that are time, especially the ones that are timely about right now. And we, we hope maybe we’ll come on and, and in six months, again, jump back on and kind of recap where we were and what we saw particularly on, on some of these items here at the end.
So thanks so much for joining me. Oh, it’s been my pleasure. I, I was happy to do it and it was a fun conversation and I look forward. Yeah. I’d love to come back in six months. That’d be great. Well, thanks everybody for listening to brokerage insider today, we had the pleasure of interviewing Joan Docktor, the president of Berkshire Hathaway HomeServices Fox and Roach Realtors make sure to subscribe to our podcast via any of your favorite podcast players to get this podcast episode, plus any of our future podcast episodes delivered right to your inbox every single week.
Thanks so much for listening.
