COVID-19: How Will It Impact the Industry with Jim Brown #702

Jim Brown blog

Bruce Norris is joined this week by Jim Brown.  Jim is the owner of Keller Williams Corona and has been involved in real estate for over 30 years.  He got his start in 1983 when he began working with land development. Since then he has worked with listing homes in the Corona area as well as continuing his work in land development with large lots subdivided for new tracts.  In addition to land development and residential resales, Jim also specializes in short sales and bank-owned properties. See below for full video and resources.

Episode Highlights

  • What has impacted him the most as a retail broker?
  • What is the new thing Keller Williams is putting together, KW command, about?
  • How do buyers make decisions now?
  • Who is Ben Gay III, and what does he do differently that stands out to Bruce?
  • Does he see anything concerning in real estate right now?
  • Where are people moving out of California wanting to migrate to?
  • Does he expect COVID-19 to change the industry, and how?

Episode Notes

Bruce Norris: Thank you for joining us. My name is Bruce Norris, and today once again is our special guest Jim Brown. Jim Big again his career in the early 80s. He and I had a transaction around 1990, and it was a pretty tricky one, which we had discussed in the first segment. He since has gone on and been very successful his whole real estate career. Part of what I enjoyed about the first segment is talking about – I figured there were some stories about him being a young entrepreneur, and we got some of that and understood why he’s so successful. In 2004, Jim launched Keller Williams and Corona, over 350 agents, and very successful. He is actually having a successful 2020 in spite of all that’s going on. So, Jim, congratulations on that and for a very successful, trusted business.

Jim Brown: Well, thank you.

Bruce Norris: The home buyer business got confronted around 2009 with the buyer from Wall Street. And so you go to a trustee sale and somebody with a billion dollars would bid one hundred percent of value for the property because they had no intention of flipping it. They intended to hold it at rental, and the game changed overnight. 

Jim Brown: I honestly expected rents to drop. Rents have gone nothing but up, right?

Bruce Norris: Yeah. Well, that’s because of a foreclosure chart. So you had a lot of people turn into renters that were never going to be, and the credit characteristics said, OK, well, you can’t buy for seven years. So you’re a renter for a long time. Now that’s about to reverse. So that’s an interesting thing to think about. So you’ve got a lot of people that couldn’t own that had to rent, and now all that’s past. Their credit’s better, so they’ll either be buyers or they’ll exit, but they won’t be renters. And so everybody that has an apartment building got real spoiled. That could be an interesting thing. It really could. So what has been the biggest impact for you as a retail broker where you’re dealing with the person that’s buying homes to live in and then they get a tract and are also listing people homes to sell, and all of a sudden they get wind of this big real estate company that can, like, do it overnight, you know, buy your house or whatever.

Jim Brown: It’s a factor. We we see it and we deal with it, but I can’t say it’s affected us much yet. I think that’s something that’s going to grow because I think more and more companies will get into it. Generally, unless the seller is in a panic mode, they can certainly get more from going through a realtor. But, yeah, there is a certain amount of convenience to sell it to somebody generally for fifteen percent or so under the market to make it a quick sale. And it’s done. I don’t see it really affecting as strongly yet. There’s a couple of brokers in the area that get houses from companies like Zillow or whatever that are buying these homes up. Then they get the listing, and then they sell it. I don’t know how long they’re going to be doing it like this, because I see some of them where there’s no way around it, and the companies that are doing it are actually losing money. So why they’re in that business to do that other than market share and maybe some control, I can’t fathom that because it’s not how I think.

The real estate industry right now is is is fine, and it’s not going to affect us. Even Keller Williams, incidentally, has put together a thing where we can go out and buy a house. They don’t do that much in California, but around the country, they are. They see that.

Gary Keller is incredibly innovative. He’s a thinker, and for example, the technology side of it Ahe’s committed a billion dollars towards technology for the Keller Williams agent. Three billion dollars. Now, every agent in Keller Williams pays a twenty five dollar a month fee for all the technology that we’ve got. But when you’ve got one hundred and eighty thousand agents paying twenty five dollars a month, that’s a lot of money. And so they’re building a platform which is called KW Command, and it’s not done yet, but it’s well on its way and it’s going to revolutionize the way real estate’s done.

Bruce Norris: Can you tell me a little bit more about that? What is KW command?

Jim Brown: It’s everything. It actually deals with artificial intelligence. It makes you more efficient, more effective. It keeps all of your stuff in place. You can update things in a moment. You’ll never miss an appointment. You’ll never miss an opportunity for something because it tells you what to do. It actually sends you leads. When this is all done, which it’ll be done by the end of this year, it’s just a new chapter in real estate technology. They call KW a technology company, not a real estate company.

Bruce Norris: OK. Well, you know, sometimes I’ll be on a cell phone conversation in front of my computer, and I’ll have a conversation about something that I haven’t even been on the computer about, but I’m saying, Okay, I have a brother that has a mental illness,” and I’ll make a statement of “I need to go to somewhere.” Within five seconds, there’ll be an advertisement for something like that. And you’re just going, what the heck just happened? And so, if I’m searching, let’s say my wife and I said, Let’s leave California, and we start poking around to looking at something in Florida, is that knowable?

Jim Brown: Oh yeah.

Bruce Norris: That’s knowable. Wow.

Is that a lead that’s purchased by people in the real estate industry?

Jim Brown: It certainly can be. It’s not through Keller Williams. If you happen to have Alexa in your house, the world knows everything about you. You can pick up leads off of that. I was looking for a car last year, and I was talking about this car. I think the only time I said it to anybody was with my wife in the bedroom. And next thing you know, that’s on my computer. And it’s like, really? Okay. That’s basically artificial intelligence. It may not be true artificial intelligence, but let’s just say there’s not a lot of secrets if you say something in public anymore or if you search for something. I’m sure everybody out there has experience that.

Bruce Norris: How do buyers make decisions now? I’m just really curious.

Jim Brown: The same way they always have.

Bruce Norris: OK. But that’s not the perception.

Jim Brown: No, they think critically and act emotionally.

Bruce Norris: But I’m talking about how do they choose? Are they loyal to somebody they dealt with in the past typically? Or is it more spur of the moment to what’s there?

Jim Brown: Depends on the relationship they had with the person in the past. Not one hundred percent on that. Generally, there’s absolutely no loyalty unless that person that they’ve dealt with in the past has given them a reason to be and stayed in contact.

Bruce Norris: That’s what I was really wondering if there was just touches along the way.

Jim Brown: The software that we’ve got tells you to touch each client you’ve got or each person that you’ve had as a prospect 33 times a year.

Bruce Norris: I would have no idea it was that much, and that doesn’t necessarily just mean a phone call. That means a lot of various different ways.

Jim Brown: This new software we have not only tells you to do it, it will do it for you. Thirty three times, it’ll go out to them, or how ever many times you set it for, but they say the optimal time is 33 touches a year.

Bruce Norris: That’s an interesting thing, because that would be the dominant person in your mind.

Jim Brown: That’s what you want to be.

Yeah. Ben Gay III wrote a book about sales, and he is really the guru of door to door sales. And I did business with him one time. We hired him to do a one hour talk. When you pay somebody, you know, $10 grand or $25 grand for their hour, usually they’re done. He wasn’t done. He stayed for two and a half days and just enjoyed himself. You could tell he actually enjoyed himself being around. And then, I would say for years after that, I would get in the mail an article he cut out. He said, I read this and I thought of you. Ben Gay III. You’re like, who does this?

Jim Brown: I’ll tell you who does it. Somebody who’s incredibly successful.

Bruce Norris: Oh, yeah. I actually paid him five grand to do our letter that we mailed out to buy houses directly to people. What am I going to do? I mean, that’s what he charges per page, because his stuff is that good. But I would have felt so disloyal because this guy has been sending me like 20 something things a year for years that touches me. Things that say “I’m thinking about you. I care about your business. This could benefit you.” I’ve never had anybody in my life do that. And it was impactful.

Jim Brown: Well, you’re talking about an exceptional person. I’ll say that falls into the top two percent of the people that’ll do that. But then if you look at successful realtors, the one who really makes money is the top one percent. And then the top two percent make pretty good money. And then it drops like a rock after that. One of the things I tell new agents coming into the office after a prior group graduated with huge blocks of training, I’ll tell him that the bad news is the top five percent make 90 percent of the money in real estate. The good news is it’s easy to get in the top five percent.

Bruce Norris: This is kind of an amazing statement if you think about it. There’s a lot of things that the bottom 95 percent are incapable of doing or just refuse to?

Jim Brown: They just don’t do it. There’s a quote. “When you limit what you will do, you limit what you can get.” When I first started as a realtor, I was working 80-100 hours a week. I did everything.

Bruce Norris: That’s what I was just gonna ask. So when you said you’re a real attorney and you worked 80-100 hours a week and you did everything, has that changed to where now you see the Norris Group or the Jim Brown team or something like that. With these people that are pretty successful, do they have their own people just doing assistance to their contacting of clients or their transactions?

Jim Brown: Once I became a realtor, I was only by myself for roughly six months. Then I hired an assistant. I paid that assistant ten dollars an hour to work 20 hours a week. That lasted for three weeks, and then she was full time. I’ve been increasing that salary ever since. I have had the same assistant for 20 years. She makes more money than most of the people in my office. She’s the real Jim Brown. I sell a house and I come in with the contracts, whatever I put it on her desk or take a listing, put it on her desk. And oftentimes that’s the last time I deal with the people till we come to closing because she handles it all. And you just condition people for that. She knows everything that I want her to do. She does it. I don’t have to look over her shoulder at all. She creates the report.

The downside to that is whenever there’s a gift that they give the realtor, they give it to her. But I have no problem with that at all. During the last several years of the team, one of the most successful groups in my office was a team of around 16 people. I’ve got one agent who makes a million dollars a year, has for years and years and years and years. Does it all himself. But he is the exception. Truly an exception.

Bruce Norris: I’m just curious, what kind of real estate does he sell? Is it expensive or is it normal?

Jim Brown: Higher than the normal average sales price, which is probably around $750 in Riverside. He does Orange County as well. An exceptional guy, is honest as the day is long, very direct, and he has several investors that sell their houses and buy new houses with him because he works for them. He makes money. He likes money. But he works for the client and does what’s best for the client. And he’s been doing it for a long time.

Bruce Norris: I’m an investor, and I get excited about the proposition of working with them.

Jim Brown: Well, you get a hold of a new agent, tell them you’re an investor, and you get them all excited. Anybody who’s been in the business for a while learns that with investors, you kind of have to vet them because when you talk about no loyalty, most investors have none. They will work you to death and never buy a house through you or never list it with you. That is the nature of that beast, at least as I see it. So with new agents, some investor gets a hold of them and say they would like to buy like 20-30 houses a year or whatever and the guy’s thinking, “Oh, I just hit the gold mine.” And they’ll work him to death and never buy a house. So you have to vet them. You have to ask for commitment. I’ll work my butt off for you, but you’ve got to be loyal to me. And if they’re not willing to be loyal to me, I would never work with them.

Bruce Norris: You know what’s interesting. I hadn’t thought about this, but when I was trying to learn things, I became an agent for trademark for one month. I worked for an auction company, Kennedy Wilson, for one month. So I went around different facets of the industry, and the thing that I found interesting about being a listening agent for 30 days was the abusive ability of the client.

Oh, yeah. I shared this with Roger Sashay. He was the owner. And then we had a sales meeting, and this was a call I got. This is how I handled it. So this lady was on the other end of the phone and she was kind of throwing her weight around because I wasn’t going to give her the address of the property she called on an ad. So after she did this and said, I know the drill, I said, “Do you know you’re being rude?” There was a pause, she says, am I? I’m so sorry. She said, My husband makes me do this every day. I said, “How long you been doing it?” She said, “Almost a year.” “What was your goal?” She said, “I want to own the house.” “How’s it working?” And so she came in, and when I said that, though, there was like “You said that?!” That lady needed to hear it. We’re not here to be abused. Right. I mean, you’re a professional. What is this? So by standing up for myself, there was a result that saved the lady another year of nothing, and frustration. The reaction was interesting. It was like, You actually confronted a client. It’s like, well, wait a minute.

Jim Brown: Well, you have to not be afraid to lose them to do that. But this goes back to what I was saying. Self-image. Your self-image says I’m not something to be walked on. It’s like I don’t feel worthy of actually getting a three percent commission because, my God, you know how much money that is. And that’s more money than I have made in the last six months or something like that. And you have to feel you’re worth it. I’ve had some pretty big checks from one sale. What people don’t realize is you do a whole lot of work, sometimes with no money.

Bruce Norris: 30 touches a year for eight years before you get a listing.

Jim Brown: That used to be a lot of work. I don’t think I’ve ever done that many myself, but a lot of the touches that I do, I never did them. My assistant did them in my name right. Jim asked me to give you a call and tell you this, you know, something like that. And that’s leverage. Leverage is the key to sub more than what everybody else does.

Bruce Norris: When you started, you’re talking about an example where interest rates were over 20 percent, and now probably good chance this year they’ll be under three the majority of the time.

Jim Brown: They are right now.

Bruce Norris: And the next two years, probably.

Jim Brown: Just so you know, the guy that bought that two point four million dollar house, 20 percent down, got a 2.9 interest rate fixed for 3 years. And I thought, oh, okay. That’s pretty amazing.

Bruce Norris: Yeah. We had a report where that was the title. You know, what was funny about that is that you needed a recession for that to occur. Not wh