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S4 Ep05: Navigating Real Estate with Tom Meckey
20 Plays16 hours ago
In this episode, hosts Trygve and Dave sit down with Tom Meckey, a seasoned real estate broker from the Minneapolis-St. Paul area with over 20 years of experience. They discuss several aspects of the real estate industry, including contemporary challenges, changing market conditions, and the importance of relationships in successful brokerage. Tom provides insights into getting started in real estate, necessary training and costs, as well as nuanced real estate terms and their actual meanings. Additionally, they touch on the complexities of operating as an independent broker and how market conditions have shifted recently, especially affected by economic uncertainties. They emphasize the importance of selecting the right agent and maintaining low overhead costs to thrive in the real estate market.
Connect with Tom:
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Dial It In Podcast is where we gather our favorite people together to share their advice on how to drive revenue, through storytelling and without the boring sales jargon. Our primary focus is marketing and sales for manufacturing and B2B service businesses, but we’ll cover topics across the entire spectrum of business. This isn’t a deep, naval-gazing show… we like to have lively chats that are fun, and full of useful insights. Brought to you by BizzyWeb.
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Transcript
Introduction and Previous Episode Recap
00:00:08
Speaker
Welcome to Dial It In, a podcast where we talk to fascinating people about marketing, sales, process improvements, and tricks that they use to grow their businesses. Join me, Dave Meyer, and Trigby Olson of BusyWeb as we bring you interviews on how the best in their fields dialing it in for their organizations. Let's ring up another episode.
00:00:31
Speaker
Tom, just be quiet until introduce you. Oh, hey, Dave. Welcome. Welcome back. Thank you, sir. So good to What do you think of Liz? I still am just all of Twitter that we got to have Liz.
00:00:42
Speaker
Oh, she she was so much fun, and I respect and admire your complete and total fandom. Yes. Of Liz. She's great. Utter devotion.
Nicole's Birthday Celebration
00:00:52
Speaker
So we have a couple of housekeeping things before we get started.
00:00:56
Speaker
It's somebody's birthday today and she doesn't want us us to know about it, but yet it is Nicole's birthday today. So had happy birthday, Nicole. Come off you and say thank you so very much.
00:01:08
Speaker
It's another year. I'm excited. And we were super excited that she decided and by decided was told that she got to spend the afternoon with us recording a podcast.
00:01:19
Speaker
So it's our gift to you. appreciate it I love it. Thank you very much. I wouldn't have
Episode Theme: Industry Reinvention
00:01:25
Speaker
it any other way. So this is a- We're halfway through the season of selling. And so were today we're going to do an examination of a particular industry, which is all about set selling and has all had to completely reinvent itself in the last couple of years for a number of reasons. So we've got a great expert who's going to be joining us to talk about that.
00:01:45
Speaker
But before then, we have a sponsor for today's show, Dave? We sure do. Thank you very much.
Sponsor Introduction: Fractional Tactical
00:01:50
Speaker
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00:02:05
Speaker
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00:02:18
Speaker
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00:02:30
Speaker
You do the strategy, we get busy. Love it. Thank you,
Guest Introduction: Tom, Real Estate Broker
00:02:34
Speaker
Dave. So our guest today is my friend, Tom, who is a real estate broker with over 20 years of experience serving clients across the Minneapolis-St. Paul metropolitan area with a track record of well over a half a billion dollars in closed sales.
00:02:50
Speaker
which is not insignificant, and new construction. Before entering real estate, Tom worked in IT and software sales. He holds a degree in information science from his beloved University of Pittsburgh, Go Panthers.
00:03:04
Speaker
HQP. And his approach centers on listening to clients' needs, providing clear information and delivering a smooth experience start to finish. And most importantly, and the thing that he would want me to have led this with is that he serves on the board of the Southwest Minneapolis Business Association and is actively in coaching his daughter's middle school basketball team.
00:03:29
Speaker
I have to update my online profiles. I served past tense on the board of the Southwest Minneapolis Business Association, but I'm still involved as a member. And my daughter has since graduated high school and is in college now, but I still coach.
00:03:45
Speaker
Uh, I'm coaching the JV team this year at the Academy of Hall Angels at Ridgefield. So I'm excited about that. Oh, wow. That's a, don't know if you heard the introduction or not, Tommy, but now Andy's got to figure out if he's going to cut all that because,
00:03:59
Speaker
but well Good luck, Andy. So more importantly, because this is the first time I've seen you in a while, can we do ah could we do a forearm check, please? Can you hold your forearms up to the camera?
00:04:10
Speaker
Let's check for lack of hair because it was Tom's birthday last week and his son... You gave him a machete. So did you do the hair cutting or anything? what We haven't done that yet. The machete, my son's 17 and he works at the Santa Grins Ace Hardware in Linden Hills and he was coming home for my birthday and I'm sure he forgot to buy me something and he knows that I've always wanted a machete and I'm gathering he grabbed one off the shelf that had been sitting there for years and it was very dull.
00:04:41
Speaker
So, but but Oh, I've tried shaving with it. yeah So it's really more ceremonial more than power. We're going to get it sharpened and probably do some pumpkin hacking after the Halloween. yeah Get used to it before you sharpen it. Cause otherwise you're going to have fewer digits.
00:04:57
Speaker
Yeah. Okay. Yeah. Especially if
Becoming a Real Estate Agent: Steps and Costs
00:04:59
Speaker
you do Jedi wars, make sure like on the down swing that you're not cutting into your leg or anything. Yeah. It did come with the sheets. These are, it's a fancy machete and and i was very excited to receive it. Does it come with belt hoop so you can hold it next to your cell phone on your belt?
00:05:12
Speaker
It does. It does. Awesome. I've been meaning to talk to you. i have decided that I'm going to give up my vast podcast empire and start to sell homes.
00:05:23
Speaker
No, don't do it. Okay. yeah What let's say now I am undeterred. I'm going to go work at a large brokerage. What do I need to do in order to start selling homes? all I only use like a website, right?
00:05:37
Speaker
No. Okay. So let's start at the beginning and let's walk through. Cause what I want to illustrate is how much real estate agents have to go through just to have their picture on a bus bench.
00:05:52
Speaker
That's a very good question. Where do we even begin? i want to leave all this and I want to go work for Coldwell Banker. So do I fill out an application? Yeah, you could. Okay.
00:06:06
Speaker
yeah Coldwell Banker's good company. It's been around a long time. They're owned by a larger parent company called Anywhere Corporation, which holds a lot of different brands, Coldwell Banker being one of them.
00:06:18
Speaker
They own Sotheby's Century 21, ERA, Better Homes and Gardens. So they're all part of a larger conglomerate, which is actually in the process of being acquired by Compass, where a I spent three years okay struck out on my own here in the last couple of years, but Coldwell Banker is a fine local company. Every Coldwell Banker office is different based on the market you're in because it started off as a franchise model.
00:06:47
Speaker
So you go different places in the country, even locally in Minnesota, different Towns, Coldwell Bankers culture in the Minneapolis office might be a little bit different than it is in the Egan office or a Lakeville office, for example. So it just depends on where you're looking to run your business from. But good organization, good agents, real estate's like anything. that You've got the...
00:07:13
Speaker
80-20 rule, I think in real estate, it's ninety ten I think 10% of the agents do 90% of the volume. um Those statistics apply to any office of any brand of brokerage anywhere across the country, in my experience.
00:07:28
Speaker
but I fill out an application, then i can immediately get a bus bench. Or do I have to do something in between? Oh, no. You've got to do a lot of things in between, right? yeah You're starting a business. If you want to come into real estate, you are starting a business.
00:07:41
Speaker
You're going to be self-employed. You have to have a business plan. You have to figure out what your cost to acquire clients is. And if you decide that you want to advertise on a bus stop bench and that's how you think you're going to acquire clients, you can certainly do that.
00:07:57
Speaker
You're going to get in line probably to get on a bus stop bench, right? So a lot of those are managed by the brokerages. But before you decide that's how you want to market yourself, would advise anyone entering real estate to put together a business plan then see if advertising on a bus stop bench fits in with your business plan and your budget.
00:08:19
Speaker
All right. But there's no classes or anything that I have to take. her You do have to take a class. Oh, geez. All right. What do i what classes do I have to take? There's three courses to get licensed in the state of Minnesota, course one, two, and three.
00:08:31
Speaker
You take course one, and then my recommendation would be take course one, then take the test. There's a multiple guest test that you'd have to pass in order to be able to take courses two and three. Once you've completed courses one, two, and three, then you can apply with a brokerage who will then go apply for your license through the Minnesota Department of Commerce. That's the process.
00:08:56
Speaker
It's a, it's about a month long process if you dedicate eight hours a day. Okay. So then do I get the, but no, I probably don't get the most bench then. So that, so after I pass the class and my brokerage gets me the license, yeah then I'm good to go, right? I can start selling homes.
00:09:14
Speaker
You are, you can start selling homes. Okay, cool. And what did, but what does it cost me to have my brokerage have done that for me? To take the classes, you're probably gonna spend $1,000 to $1,500, depending on where you go to do your education, your pre-licensing education. So
Tools of the Trade: MLS and IDX Feeds
00:09:34
Speaker
you're going to do that. Then you have to apply for the license. There's fees to do that.
00:09:38
Speaker
All in, it probably costs somewhere in the neighborhood of $2,500 to $3,000 to go through the entire process to the point where you're licensed with a broker. Once you get started with a broker,
00:09:51
Speaker
ah Depending on what you want to do, you've got to invest in yourself in terms of your marketing materials, business cards, a website, marketing materials, tools to be successful.
00:10:06
Speaker
A lot of the larger brands will have those ready to go for you. And those are free? It depends. Okay. It depends. They can be. a lot of places they're free and a lot of places they charge you for them.
00:10:17
Speaker
It really depends on the compensation structure you arrange with your broker. Got it. But realistically, I have a certain amount of costs that I have to pay every month. I have to pay my own marketing costs. If I get it if i get a listing, yeah I have to pay for a website, yeahp I pay for all my business cards or things like that. Or if I have it done for me, then I have to pay the house, right?
00:10:41
Speaker
Correct. Okay. Yeah. how You're a 1099 independent contractor. So it's not like a W-2 job where you go to work and they withhold your taxes and social security and FICA from your paycheck.
00:10:54
Speaker
You're responsible for all of that. So let's say you sell a house and you actually earn some income. You will have a split with your broker. Your broker will retain some of that revenue. You'll retain that rev the other part portion of the revenue. And then you've got a plan for your...
00:11:09
Speaker
your own taxes. You got to pay your taxes. you got to all of those things. So those are things you have to be mindful of and thoughtful of and planful about. And your broker, a good broker will put you through training and help you with how to plan for those things.
00:11:25
Speaker
And they'll provide you with tools. so you're successful with that. So i have a real genuine question and I'll stop the narrative just because I really want to ask the question because at this point in the process, I need to have that great real estate headshot.
00:11:39
Speaker
that where I'm like turning and looking over my shoulder? Yeah. An action shot or something like that? Yeah. Is that a like a specified thing? You have to go to real estate headshot people or is that something that most photographers not do?
00:11:52
Speaker
It's something you probably want to go to a photographer who specializes in portrait photography to do. There's a woman in the South Metro named Tammy Bryce, who does a great job. A lot of realtors work with her. I think her business is yeah called Tammy Bryce Creative.
00:12:06
Speaker
She does great work. Or the one where they're rolling the shoulder back. They'll probably not have you do that. It's pretty modern and current with hat what she does with realtors. so you'll get i am I'm reconsidering getting into the business if I can't get the roll over the shoulder headshot.
00:12:23
Speaker
I hear you. but So when I moved to Twin Cities, I was 10 years old. We had my uncle Carl was a big giant bear of a man. Yeah.
00:12:34
Speaker
Was our real estate agent. And he lived up, he lived probably 30 miles from where we purchased the house. But somehow he was our broker of record when we bought the house on the east side of St. Paul. So back in the 80s and before the internet, the dark ages, what I like to call high school,
00:12:54
Speaker
Your relationships mattered and who you knew really mattered because that's how you found your listings, right? Yeah. hundred percent. I think that's still relevant today. Yeah. But then something that came along called the MLS.
00:13:08
Speaker
Yes. The MLS. What is that? the multiple listing service. It's a proprietary um software application database that's owned and operated by the Association of Realtors here. The Minnesota Association of Realtors owns Northstar MLS.
00:13:25
Speaker
And that is the platform by which real estate agents and brokers will market their listings. So in GeekSpeak, it's just a giant API that you plug into, right? It plugs into anything you want?
00:13:40
Speaker
Yeah, with a set of rules, you got to follow the rules. So if you want to have your own website, for example, you would subscribe to... A vendor that would provide you with a website that has what's called an IDX feed, that stands for Internet Data Exchange.
00:13:54
Speaker
That would be your MLS feed that's compliant with the MLS rules of regulations so that you can take the listing data that's in the MLS and display it on your own website. um Your broker can provide you with that, or you can go get your own.
00:14:08
Speaker
And there's a cost associated with doing that. so when you said, do I stand up a website and I'm ready to go? Yeah, that's an option. Some agents are good, some agents don't. It just depends what you want to do. and So we're were we're achingly close to the crux of why I wanted you to have on. So let me ask one interrupting question before then.
00:14:27
Speaker
So as I understand it, the idea of having pocket listings and secret listings, that doesn't really apply anymore because everybody's operating from the exact same batch of information.
00:14:41
Speaker
You have all the same listings that anybody
Challenges and Relationships in Real Estate
00:14:44
Speaker
else does. Yes and no. Okay. There's no straight answers here. there's Right. No, I get it. Really?
00:14:52
Speaker
But for the most part, I can find a house that I want just as easily as a realtor can. As a consumer, are you asking that question? As a consumer. I'm not imputing your profession because I'm getting to the good stuff in just a second, but I can go on any website and see the same inventory in any number of places. so In theory, that's how it should work.
00:15:14
Speaker
but It's been changing of late. Yes. Yeah. And that is the crux of why I, where I want to take the conversation next time is what do you mean it's been changing next? Because this.
00:15:27
Speaker
What you just described is just completely exhausting as a salesperson. i don't want to pay for all these things. And now i have to have learned what an IDX feed is and plug it into a website. And I really don't have a competitive advantage yet. This is my competitive advantage in my selling process in the real estate world right now.
00:15:44
Speaker
Yeah, that's a good question. And it's ah it's a loaded question. and there isn't just a silver bullet answer for that question. What's your competitive advantage? Your competitive advantage as a practitioner of real estate is your subject matter expertise.
00:15:59
Speaker
The challenge for you as a real estate salesperson is how to convey that to the your target audience who you're trying to work with or convinced to work with you to hire you to be their representation.
00:16:14
Speaker
It's really hard to convey what makes you differentiated, which is why i think this business is such a relationship-driven business, even still. People want to do business with people they know can trust and and that's why this business has always been relationship-driven.
00:16:32
Speaker
The challenge with real estate is the barrier to entry is very low. It doesn't take much to get licensed, so you've got a lot of people in the space.
00:16:44
Speaker
And ah in specifically in Minnesota, I think there's somewhere between 16,000 to 18,000 realtors, right? Licensed real estate agents in our local MLS.
00:16:54
Speaker
There's probably more life people who hold real estate licenses that just aren't part of the association of realtors. There's quite a few. And then you look at the number of homes that sell on an annual basis, you can see the math doesn't math.
00:17:07
Speaker
And that there's probably a lot of agents out there that don't do a lot of transactions. And then there's a lot of agents and teams out there that that do. And so it's really, it can be really challenging for a consumer to understand what to look for and and a real estate agent from the marketing that real estate agents do. You see a lot of agents that say they're number one and it's, what are you number one at? There can only be number one, right?
00:17:32
Speaker
And so I think that that's why consumers generally, want to find someone through a
Current Market Trends and Dynamics
00:17:39
Speaker
referral. That's the best way to find an agent is through a referral. But you get the opportunity to generate those referrals through having success in the business and then displaying that success through your marketing capabilities and systems that you use for that. I don't know if that's a a roundabout way of answering your question, but yeah, getting back to your question on pocket listings, private listings, exclusive listings, every broker
00:18:03
Speaker
now is playing that game. All the big ones, the red, the blue, the black and white, the other red, they're all trying to do it. And i understand why they're trying to do it. And there's use cases for private listings or off-market listings. But for the market writ large, i don't think I don't think it applies and I don't think it serves the client very well.
00:18:23
Speaker
That's just my... right. So I have one more thing and then I'm going to, cause Dave has been patiently quiet and he loves it when I just completely monopolize the conversation. So I'm going to do one more thing and then going to Dave talk for a little.
00:18:35
Speaker
I have a list of real estate terms. Okay. That I want you to tell me what it actually means when I read it in a listing. Sure. Okay. Ready? Yep. Number one, cozy.
00:18:46
Speaker
Small. Number two, charming. Old. Number three, up and coming neighborhood. A shitty neighbor. Okay.
00:18:57
Speaker
thought Number four, open concept. No walls. ah Number five, perfect for entertaining.
00:19:09
Speaker
A nice appointed house with all of the kitchen amenities one would need to throw a great dinner party. And an open floor plan, so not it crowds in a cozy kitchen.
00:19:21
Speaker
Yeah. Easy act for the kegs. Yeah. Eggs out back. No, number six, tons of natural light. Just what that means. Lots of windows. Okay. So it doesn't mean like the curtains are extra or anything.
00:19:33
Speaker
No. Okay. It means you've got a, what a south or west facing, uh, opening that lets in a lot of natural lights. You don't have to turn lights on historic.
00:19:45
Speaker
Again, old, probably in an area that is maybe you got a historic registry you got to deal with some historic covenants, things like that. So you got to ask permission to renovate and improve your home potentially that means, or it could just mean you're living in an old part of St. Paul or Minneapolis, you know, layout.
00:20:06
Speaker
Something that was not designed by a professional. Yeah. yeah What it says here is you'll get lost trying to find the bathroom. Yeah. That's something that wasn't designed by a professional.
00:20:17
Speaker
so Exactly. Motivated seller. Desperate. They know what's coming and you don't. That's right. And two more.
00:20:27
Speaker
Low HOA fees. Good. Yeah. Okay. It's here until next year when they double. could be a mismanaged HOA. I don't know.
00:20:40
Speaker
and i could That could be a lot of things. HOAs are a podcast. on all That they are. Needs TLC. Fixer Upper. Yeah, I was going to throw in Handyman Special.
00:20:51
Speaker
It's the same thing. roll gra yeah Yeah. Handyman Special on my list here, David, said you'll be handymanning it for the rest of your life and possibly your children's. you ever see the money pit yes tom hanks and shelly lung that's what that is yes the uh the hey you won the lottery we worked today yeah it's a great old movie that anybody under the age of 40 is probably asking gpt what the hell they're talking i promised i'd let you talk more now Okay, perfect.
00:21:20
Speaker
So I think it's clear that the real estate industry is under some big changes. There's been some changes to the disclosure process and how things are given or taken back.
00:21:32
Speaker
And it appears you for the friends that I know, like yourself, Tom, that are successful in real estate, you almost become a pivot pro where you can adjust to the market on the fly and you kind of have to keep ahead of it.
00:21:47
Speaker
Yeah. you are Not to mention the ups and downs of the seller versus buyers markets and all that stuff. So in 2025, towards the end of the year here,
00:21:58
Speaker
How's the real estate market doing? And if not giving away any secret sauce, of course, but especially for moves, you guys are doing great. So how how is that working? And is this, was it a buyer's market? Is it a seller's market? Is it, what where where are we at in real estate right now?
00:22:17
Speaker
That's a great question. And there is not a answer to that question that applies to all markets. Real estate's a very low. It's like politics. It's very local and it's very market specific. So how are we doing? I don't know.
00:22:31
Speaker
The number of transactions that are taking place this year as compared to years past is at an all time low. We're very rapidly transitioning from a seller's market to a more balanced market and in some instances, a buyer's market.
00:22:46
Speaker
It just depends on what town, neighborhood development you're buying in. It also depends on what price bracket you're buying in. And demand housing, like any other thing that is bought and sold by consumers is subject to the laws of supply and demand.
00:23:00
Speaker
And those supply and demand laws are segment specific. They're property type specific, location specific. Minneapolis is going through a little bit of a tough time right now in terms of homes sitting on the market a little bit longer due to the some of the social and political things that are going on in the Twin Cities.
00:23:21
Speaker
Whereas your tried and true first and second tier suburbs, especially ones with great and high demand public school districts, are still seller's markets, right?
00:23:32
Speaker
Try to buy an entry-level home and Edina, good luck, right? You're gonna you're going to compete. It just depends on what price range you're in. It depends on what location you're looking in. We're also seeing just...
00:23:43
Speaker
So many more homes now are being purchased with all cash. You've got different buyers. There's a lot of generational wealth transfers that are happening where people are coming in and maybe some grandparents are buying homes for grandkids so they can get into the market.
00:23:56
Speaker
We're seeing a lot of different things in the last three years and then specifically this year. And then rates have remained elevated. They are showing signs of improvements. We're now seeing at least we can get to the 30-year fixed mortgage rates in the high fives.
00:24:12
Speaker
Whereas they've been in the mid high sixes for the last 24 months. And that makes a big difference in your yeah mortgage. and don I have to confess that ah one of the best things you ever did for me was i you asked me, Hey, I need to fill my quota. Do you want to refi your home? I was like, no,
00:24:35
Speaker
dude You don't try here. Oh my quote. Or if they think it was a good deal for you to refund. You're like, you need to do it. And then I looked at it and like Tom said, yeah, the day they now we're like, Hey, high fives. My current rate that Tom actually more helped negotiate, I think is 2.5.
00:24:55
Speaker
two and a quarter, I think. Yeah. Don't ever get rid of that. i almost literally can't move because I have a killer energy trade. That's it's funny that you bring that up. That's called, we we call it the lock-in effect, right?
00:25:07
Speaker
There are so many people that refinanced into those two and 3% rates back when those were available. And It's to a point where but the only reason you would move is if you had to for a job or some of that, because why would you give up that to go buy a house where the prices are still inflated, housing prices have...
00:25:31
Speaker
Hey, they've gone up. They haven't really come down the way people thought they were going to come down, at least in this market, right? In other markets, I can't speak to. i'm not a I'm not a local expert in the Phoenix market, right?
00:25:43
Speaker
But here, we haven't really seen a lot of correction in home values. And bre regardless of interest rates, demand for housing has stayed pretty elevated, which means prices have stayed elevated.
00:25:57
Speaker
So, you know, the inventory is low because you've got yeah folks like yourself, Trigby, who are sitting on a two and a half percent rate or a two and a quarter rate going, why the hell would I move?
00:26:08
Speaker
And you shouldn't, you should stay there. We're not, in our lifetime, if we ever see rates that low again, something really bad happened in the economy. If mortgage rates get down into the... Low to mid fives on a 30 year fixed or even high fours, that will be great for the market. And you'll see a lot more people enter the market.
00:26:29
Speaker
And you might be willing to trade a 2.5% mortgage for a 4% mortgage in a new home, but you're not going to trade it to and a 2.25% mortgage interest rate for a 6% 6.5%.
00:26:44
Speaker
You're not going to do that. That doesn't make financial sense. It just doesn't. So that's what's keeping the inventory down and prices elevated because the supply is low and the demand is high.
00:26:56
Speaker
But what I am seeing is i am seeing more and more inventory that's coming on the market stay on the market longer. And then the demand for that inventory is there are people that just aren't buying.
00:27:08
Speaker
And so what that means is prices are moderating.
Tom's Journey to Independent Brokerage
00:27:12
Speaker
I would not say they're crashing. I would say they're moderating. The market's moderating here in the Twin Cities. And I think that we're just going to need a little more time for that to happen.
00:27:23
Speaker
One of the things that's contributing to The demand falling off. We're in very uncertain economic times with the current administration and the all the things that people are seeing in the news around tariff policy.
00:27:37
Speaker
lot of companies are executing job layoffs. Target just announced 1,800 layoffs, yeah I think, in the news yesterday. When people are uncertain with economic times, they don't move.
00:27:49
Speaker
They don't buy homes. They don't sell homes. They just, they stay put. Or they sell because they have to. But people are sitting on more equity now than they have in the history of our country. So the reason why we're not seeing a crash is we don't have burdened sellers.
00:28:05
Speaker
We don't have sellers that are sitting on, that are underwater on their homes. They're sitting on a ton of equity from the the appreciation that's happened since 2012 through today. It's been great appreciation.
00:28:18
Speaker
Coming out of that financial crisis, people have been way more responsible with managing the equity in their homes. So they're not in a position where they have to sell. And that's contributing to the low inventory.
00:28:30
Speaker
And that's why prices haven't really come down much. Is the housing rental market... making Making a big dent in sales. And we're the two-parter there. yeah And the first one is like the VRBO market or the vacation rental kind of properties versus like true rentals. Is that having any input or impact?
00:28:51
Speaker
Yeah, I think it did. I think that's yeah that's fixing itself a little bit. I think you're seeing a lot of municipalities put more regulation around who can have a VRBO and what that looks like.
00:29:02
Speaker
Certainly in a homeowners association, they're not allowing short term rentals. If you're trying to buy a townhome to be a VRBO, good luck with that. You're not goingnna you're not going to get away with that. and then people aren't using VRBOs as much, at least to my knowledge. We'll be wrong on that, but I don't think they're using them as much as they were.
00:29:20
Speaker
But then and at least as far as just regular rental housing goes, I think Minneapolis-St. Paul has done a better job than most metropolitan areas in other states across the country at building rental housing.
00:29:33
Speaker
Our rents are not as high as you would see in a Milwaukee or or Chicago. i think our rents are more affordable because we've done a lot of building in the Twin Cities. Whole developments, there's one in Eagan, there's one at Woodbury, where it's single-family housing that was built for rental.
00:29:49
Speaker
that are doing extremely well. And the rents are reasonable. Yeah, they're high, but like they're reasonable compared to other markets, I guess is what I would say to that. um It doesn't mean that there's still not, there's a ratio of people's income oppressive. Everything's expensive now. I do, we still have The stats from Minnesota Compass that show ah a large percentage of households in the Twin Cities are cost burdened, which means more than 50% of their income goes towards shelter expense.
00:30:17
Speaker
That's still a real problem here, but that's a problem everywhere. Sure. We just, people need to make more money. That's really what I'm back down to. You were a broker, then you went and did something else, you went back to being a broker for a little while, and now you think you've figured out a better way.
00:30:36
Speaker
Yeah, so I'm an independent broker. I have my own shop called Move. move dot Real Estate's our website. um I've done a lot of different things in the real estate space, but I left Compass where I was for the for three years before going out on my own for a myriad of reasons.
00:30:52
Speaker
Nothing bad to say about Compass. I enjoyed my time there. enjoyed the agents that I built relationships with there. I think Compass is a it's a juggernaut of a company that's grown very fast. They've grown by acquisition. They're in the news all the time and they're doing good things as far as growing a business are concerned.
00:31:12
Speaker
In my experience, and this is me personally, 22 years in this business, in a real estate brokerage, bigger isn't always better.
Surviving in Real Estate: Advice from Tom
00:31:22
Speaker
I like a small broker shop. I like, that's just my preference. And for me, it just was a style change.
00:31:31
Speaker
I wanted to do, I want to be able to run my real estate business the way I see fit without having to check in with somebody on whether or not I can price my services a certain way. And at a large broker shop, whether it's a Compass or a Coldwell Bank or a Diner Realty, that autonomy just isn't there.
00:31:52
Speaker
And which is that's okay. That's their business model. It just isn't mine after 22 years in this business. There's no one size fits all fee structure that applies to every consumer. You need to have the autonomy to be more flexible with how you price your services.
00:32:07
Speaker
And I just, I'm at a point in my career where I just don't want to ask permission for that. Right? So there wasn't anything that they were offering me that I couldn't do for myself.
00:32:18
Speaker
And so I decided to launch MOOC. How has that gone for you so far? Oh, it's been great. I mean, yeah, it's successful. We're not losing money, right?
00:32:29
Speaker
Are we crushing it? i don't think anybody in real estate's crushing it right now. there There are some teams that are doing extremely well in the business. We're doing fine. We're doing what we plan to do.
00:32:41
Speaker
There's a other side of my business as i was and I'm involved in mortgage and I started a business in 2019 timeframe with a partner called Onward Financing that we have since sold to Growth Bank, where I'm currently the growth officer and I lead our mortgage lending division. I'm involved in two aspects of the real estate space, both on the brokerage side and on the mortgage lending side.
00:33:05
Speaker
So you're in a business where it's harder than ever to sell. Everybody has the same information by and large, one way or the other. That's correct. And go out and make a living. And it sounds like yeah i mean it sounds like you can't even get your picture on a bus bench anymore. It's just how much you want to pay for it. I guess. It depends on the day. But my question to you, Tom, is this. is You've been in the business forever. You're one of the titans in the area where we live.
00:33:34
Speaker
What can you give our listeners as advice on how do you survive in 2025? Yeah. What I would say is keep your overhead low.
00:33:45
Speaker
That's the big thing. If you're an independent sales professional, whether you're in real estate or you're a financial advisor, you're The CPA attorney, keep your overhead low, right?
00:33:56
Speaker
Focus on your relationships. ah Your relationships are what's going to sustain you through these tough times. I would say there's a market in every market.
00:34:08
Speaker
So if we're in a down market, you, it's incumbent upon anybody to understand the business that they're in, the landscape. So really know your numbers, know what your, know the size of what your opportunity is.
00:34:21
Speaker
And just be hyper, hyper focused on what it is that will bring business to you. For me, it's there's it's twofold, right? It's there's the lending side of my business and then there's the brokerage side of my business.
00:34:37
Speaker
I designed the real estate brokerage to serve other real estate agents who are like myself, people who are very experienced, who know the business and just want a really solid brokerage platform that they can plug into and operate, keep their overhead low and maximize their real estate commission revenues. That was the whole,
00:34:58
Speaker
um thought process behind launching move and who move is for. And the thing that I think differentiates move for agents is we don't have agent splits.
00:35:11
Speaker
Agents keep 100% of their commission at move. We charge a monthly subscription fee to plug into the platform. Is that for a brand new agent? No, it's not for a brand new agent.
00:35:22
Speaker
ah Doesn't mean I wouldn't take a brand new agent on. i just, I wouldn't advise a brand new agent to take on fixed monthly overhead while you're an upstart. Move is designed for experienced practitioner who has a track record of success and a book of business and a database of, you you know, a sphere of influence and past clients that they just want to operate independently, autonomously, keep their revenue,
00:35:50
Speaker
keep their overhead low.
Fiduciary Responsibility and Transparency
00:35:52
Speaker
Part of overhead for a real estate agent is your split with your brokerage and run your business the way you fit, serve your clients the way they need to be served. And what each client's needs are going to be different.
00:36:06
Speaker
Therefore, your pricing model as an agent needs to be able to ebb and flow with market conditions and client needs. And an agent should have the autonomy and the authority to set that the way they see fit and that's appropriate.
00:36:22
Speaker
I will advise on it, but at the end of the day, it's your business, it's your relationship with the client and figure out what works and go with it. Being willing to adapt with shifting markets and pivot where where you can is critically important.
00:36:39
Speaker
Real estate has always been like, It's been that 6% model that costs 6% to transact and that 6% gets split between a listing broker and a buyer broker.
00:36:50
Speaker
And to a certain extent that really hasn't changed much, even with the class action lawsuit that has, that that impacted our industry that has led to a lot of the changes that we're seeing in the industry.
00:37:01
Speaker
When you look at When you look at what people are paying for their representation in real estate, it's, and largely hasn't changed, just how it's done has changed, right?
00:37:12
Speaker
What I always say to consumers that I'm working with is, hey, look, you're going to engage and deploy me on your behalf to, to execute a goal, a task, right? Which is to sell your home or help you buy a home.
00:37:27
Speaker
No consumer expects you to work. for free. Nobody expects that. i think what they do expect is transparency and they expect to understand how it all works.
00:37:38
Speaker
And when i what I would encourage every real estate agent to be really sharp on is really understand like your value proposition and your fee structure, explain to your prospective clients how it works, where the money goes, where it flows, um so they really understand what they're getting themselves into.
00:37:57
Speaker
And that's, by the way, that's just fundamental to the job. That's never changed. but So that's not new. But the challenge in this business is the scarcity of the business. Everybody's competing with one another. Even within a brokerage, you're competing with the agents in your brokerage to go get business. Like somebody who's working with them isn't working like with your colleague at Coldwell Bank or United Realty or Remax.
00:38:23
Speaker
that If the consumer's working with another agent in your office, that means they're not working with you, right? So like from that perspective, like everybody is your competition, even within your own, with your own brokerage, which is why I say like really have a solid database sphere of influence and good relationships. If you're trying to enter this business and You don't know a lot of people, to a tough time.
00:38:46
Speaker
You just are. And business begets business, right? So you get a listing or you get a buyer and all of a sudden that there's a multiplier and an effect from that if you do it the right way.
00:38:57
Speaker
Oh, thank you, man. i appreciate you fitting us in. I know you're a busy guy, especially with two different jobs. So thanks for your taking the time to be with us today. Dave, what did we learn? What did we learn today? I've learned for sure that the real estate market is complicated and it really pays to work with people that know what the heck they're doing.
00:39:16
Speaker
hundred percent or 100%. It's been a delight chatting with you today, Tom, and I know that you guys have different approach and that's why we wanted to talk to you. And it's clear that you have a super...
00:39:29
Speaker
level-headed, caring team that is going to go to bat. So it's been awesome. Thank you. Yeah, no, thank you. And I think you're right. It is complicated. It is complex. And who you work with definitely matters.
00:39:42
Speaker
And choosing the right agent or brokerage or team to represent you if you're consumer is critically important. I think the advice you gave me at the time is anybody can help you find the house.
00:39:52
Speaker
You need a professional to help you buy the house. That's 100% true. And one of the things that I think doesn't really get talked about is there is the potential for a perverse incentive between an agent and their client, especially when the agent only earns an income when the client performs on a sale.
00:40:13
Speaker
So the the potential for there to be like I said, a perverse incentive where the incentive of the agent doesn't align with the incentive of the client, that can happen in this business. I've seen it. I've witnessed it.
00:40:25
Speaker
I've taken over listings. I've taken over buyer representation from other agents who who lost sight of what their role is. And that's where it gets nuanced and complicated, right? Finding an agent that really does wear that fiduciary hat earnestly always puts the client's interest ahead of themselves and their business interest is critically
Episode Reflection and Conclusion
00:40:46
Speaker
important. Those are the things that are harder for consumers to differentiate.
00:40:51
Speaker
Reading Google reviews and Zillow reviews, you really got to go interact with the person and I would say trust your instincts, trust your gut. They're people, they'll show you who they are and you'll vibe with them or you won't.
00:41:03
Speaker
If you don't vibe with them, don't work with them. That's it's that simple. Thank you, Tom. all right. So that was been it for our latest episode in the season of selling dialing in. Don't forget it's Nicole's birthday. So visit the website to send her a nice note.
00:41:20
Speaker
Happy birthday. Uh, the website is built by Andy Watowski, who also is our editor and one of the producers as well as Nicole. He's Dave. I'm trig me. And with apologies to Tony Kornheiser, we will also try to do better the next time.
00:41:37
Speaker
Thanks guys.