Despite the uniformity of its housing stock — and maybe a byproduct of that aesthetic — the Phoenix, Arizona, market has become a battleground for disruption in the real estate industry. It’s a market crowded with venture capital-backed all-cash buyers, 100 percent commission model brokerages, and plenty of indie brokerages and franchise-affiliated offices.
Sarah Richardson, the CEO of Tru Realty, an indie brokerage with more than 75 agents in Arizona, competes with those forces every day. Richardson will bring that expertise to Inman Connect in New York, where she’ll be moderating multiple discussions during the indie broker track.
Ahead of her appearance at Inman Connect, Richardson spoke with Inman about staying competitive, choosing from a wide array of tech vendors and the importance of building a culture.
Can you characterize what the competitive forces are like in the industry for an indie broker right now? In terms of competition to recruit agents and competition for market share?
Okay, so some of the competitive forces that I’m seeing — and right now I’m only in the Arizona market, so I can’t speak to the national market — Arizona is very unique because we are in a race to the bottom. We’re the home of the 100 percent shop, so Realty Executives, HomeSmart, My Home Group. All of these flat-fee brokerages started in Phoenix. I’m a split-based brokerage. So I’m always going to have natural attrition to somebody that wants to go to a flat fee once they have their business humming. So it’s really figuring out what I can do to adapt my business model to create stickiness to keep the agents from going to one of the 100 percent shops or one of the flat fee, discount-based brokers.
So what are some of the strategies to compete with those companies and be able to retain agents once they start producing?
Some of the stuff that I’m doing is implementing really good tech at an affordable price where they wouldn’t be able to get it anywhere else. So implementing website services and CRM services. Right now we offer the Chime CRM at $50 a month. If they were to get Chime on the street, it’s $450 a month. So just by signing on with us, they save $400 a month just in their CRM services.
Staying in connection with our technology partners is huge. Another thing is offering one-on-one coaching and one-on-one accountability. And then, when an agent hits a certain deal flow in one year, I will move them to a flat fee, but they have to get through my sliding scale model before I’ll move them to a flat fee. So I will one day just hit a certain [gross commission income] or payment into the company, I will move them to a flat-fee model and they’ll stay there forever, but they have to hit that benchmark before I’ll move them.
Speaking specifically to technology, there are so many third-party solutions and vendors out there for websites, CRMs, transaction management, etc. How, as an indie broker, do you differentiate and chose?
It’s almost like I don’t even look at the tech, I look at the development team, I look at the size of the development team. As you and I know, the tech changes daily. So it’s not necessarily the tech, it’s the size of the development team that can put certain initiatives on the roadmap and push out a new feature to me as a customer. So the reason I use Brokermint, they’ve got a massive development team in the Ukraine. So their product roadmap is way faster than a SkySlope, or Paperless Pipeline. So that’s why I chose them. Same with Chime. They’ve got 120 developers pushing out new code. I can get something pushed out on a product roadmap in a couple of weeks. Where ThinkCRM, they didn’t even have a product roadmap when I was with them. I requested a change and they laughed at me. So I think it really isn’t so much the tech it’s making sure you align with somebody that has a large development team that can make the tech work better for you as the customer.
IBuyers specifically are really big in your market. Will it eventually become a necessity for brokerages to offer an iBuyer-like solution in markets like Phoenix or Raleigh, or do you think it won’t take up enough market share?
Well, I have a kind of like a three-pronged answer to that. My background is wholesaling, and investment properties. So I’ve always been an iBuyer, since the beginning of time. So we do have an iBuying program, just because I understand that space. But if I wasn’t an independent broker that didn’t understand that space, I wouldn’t be as worried because they’ve got maybe 8 percent market share. In Phoenix, typically, 12 to 15 percent of our entire market has been off-market or direct-to-consumer buying your house cash as part of our natural market.
So they haven’t even reached the cap of what the entire wholesale market is, they haven’t even absorbed all that. So if I was an independent broker, I think it would be a little bit more of a fad. But we’re playing in that space just because we’ve always been in that space. And we still lose deals to Opendoor every day, but then sometimes we sell our deals to Opendoor, so we’re all kind of playing together in the sandbox.
One thing I’m fascinated about is, as an indie broker, how much more important is an agent’s cultural fit versus some competitors that have tens of thousands of agents?
I think it’s absolutely critical. We have our core values on the onboarding paperwork, we have our core values on our wall. We have a two-prong interview approach for agents that are coming on, and if they don’t agree with any of the top eight core values they can’t even sign on. So I think once you have people that are behind your value system and behind your culture, your attrition is going to be a lot lower. So I think it’s absolutely critical.
One of the panel discussions at Inman Connect New York, on the indie broker track, is going to cover lead conversion. Obviously there are a lot of leads and a lot of money being poured into lead generation, but the conversion rate is still so low. What does your brokerage try to do to have a high conversion rate and what are some strategies for agents to convert at a higher clip?
Yeah, that’s a fascinating question, because you’re right, we don’t have a lead problem, we have a conversion problem. I think that broker-owners and agents need to leverage different services because an agent and a broker aren’t going to spend the minimum 15 months on a top-of-the-funnel internet lead and nurturing them for that long. So if you leverage call centers like Opcity, or Agentology, or anything else that will nurture them for you, I think it’s a way better play to have them nurtured and hand off a warm lead when they’re ready. It’ll take time off the broker, time off the agent. Let them [nurture]. That’s their specialty, calling people and following. Leverage their services, so that you can give a better client experience to the customers that you’re in front of. The conversation is changing. It’s not lead generation, it’s conversion and what can these tech companies that are providing leads do to better hand us over convertible leads. Handing over a referral fee of 30 percent or 35 percent like Opcity charges, 100 percent realistic. I think that it’s a brilliant business model, what they’re doing.
Do you think the nimbleness and uniqueness of indie brokerages will allow them to weather an economic downturn better, or does not having the backing of a big network make you more vulnerable?
All I know is, if you have people that get behind what you’re doing as a culture, and they’re doing good business and you make sure that they’re getting various benchmarks with their business, you’re probably gonna survive, regardless. For me, I think it doesn’t matter.
Are you ready for what the industry holds in 2020? Inman Connect New York is your key to unlocking opportunity in a changing market. At Connect you will gain insight into the future, discover new strategies and network with real estate’s best and brightest to accelerate your business. Create your 2020 success story at Inman Connect New York, January 28-31, 2020.
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