Real Estate at a Crossroads

by Gregory Charlop

  It’s funny, but most folks don't want to tell me their ideas. They want me to sign a non-disclosure agreement. And I laugh because I was that guy once. I tell them that no idea is that great. It's really all about the execution. I've probably seen your idea five times before because I see hundreds of ideas every day. What differentiates ideas is a passionate founder with amazing skills to execute, build, transform, and not turn away from challenges or defeats to do something against all odds.

  That's a high order, but that's what it takes to build the next billion-dollar business that innovates a critical industry like real estate. If they say, “Yes, yes, yes, I'm ready,” then the next thing I tell them is to have a good technical co-founder. Because a lot of times, if you're a real estate agent, maybe you studied engineering in school, maybe it's your side gig, but chances are you're more of the idea and the marketing person. So you really need a strong technical co-founder next to you who’s just as passionate about this, has equal equity, and is 100 percent dedicated to it as well.

  Because, in the seed stage, we're not so much betting on the idea, we're really betting on the people. Especially in the seed stage, because most entrepreneurs need to be willing to pivot many times over—pivot big, pivot small. So, we're really betting on you as the founder and creating a relationship, a long-standing relationship with you. So, finding a good co-founder is key, and really being 100 percent in is critical.

  Interview with Darren Johnson, marketing expert, co-founder and CEO of AgentZip

  Gregory Charlop: Darren, thanks for joining us. You started in the mortgage industry, then you went on into real estate technology, and then you created Top Agent Connection and AgentZip. Can you tell us a bit more about your background and how you became interested in real estate technology?

  Darren Johnson: I started as an inside sales agent. I was on a dialer, cold-calling title leads to find opportunities from homeowners interested in refinancing. My job was to sit on the phone system, call 300-400 homeowners a night and get them essentially to say, "Yes, I'm interested in refinancing." If the answer was affirmative, I would next gather all their pertinent information—like a mini 1003 loan application—and get their social security number. That's what would constitute a lead at that position. From there, it would be transferred to the loan officer to take a full-blown application and hopefully get their loan for them.

  At the time, call center workers were making $10.00 an hour, plus maybe $5 in bonuses each hour, which is pretty good for a high schooler. I think the minimum wage was $6.75 at the time. But I saw that the loan officers were making some serious money at that time and I, of course, wanted to advance my career. So, I made a deal with a top producing Loan Officer. We agreed that I would call for him for free and get him leads in exchange for him teaching me the essentials of the loan officer job. That's how I started doing loans. After a few months of that, I learned how to originate a whole loan, and then I was on my own as a loan officer.

  When the market crashed in 2008, I left the mortgage business. I always had a knack for marketing and advertising, so I went to San Diego State to study marketing and learn media buying. My marketing professor said I had a gift.

  From there, I got a job with Homes.com as a sales rep. Essentially my job at Homes.com was to cold-call real estate agents and sell them on either a website, impression -based marketing or social media management. In our first 30 days in training, I outproduced the entire floor of reps. I brought in more revenue than the 70 other sales reps who were selling the services. I just had a passion for it because I'd been studying marketing. I understood the value of exposure, leads, having the right website, and the right presence. I tied it to my experience with real estate. It just brought together technology and marketing with real estate. I think it was at Homes.com that I figured out that real estate marketing was my passion.

  Next I worked for several other Real Estate Tech and Lead companies. I joined a startup, and, with my help, they grew from a tiny single room operation to millions in funding.

  After leaving that company, I was a bit rattled but motivated to start my own company. So I took the leap and founded Top Agent Connection. It was kind of like a hybrid of what I did at Homes.com and what I did at My Agent Finder. Top Agent Connection matched agents with buyers/sellers based on the best fit. Does someone want to sell a home in this zip code, in 90 days, and need staging? We're going to then match them up with an agent who fits that criteria. In exchange for us finding that lead, we would then collect a referral fee if they successfully connected and sold with that client.

  From there, AgentZip filled a void that Top Agent Connection had, which is Top Agent Connection can only work with the top 5 or 10 percent of agents because if we're matching people with the best of the best, we're leaving out the other 90, 95 percent of agents. AgentZip allows any agent to sign up, take their zip codes, and pick their city. Then, we do all the Facebook and Google marketing. We take care of all the funnels and get them exclusive leads.

  Gregory Charlop: You’ve gone from apprentice to entrepreneur. As an expert in real estate technology, what kind of tools should real estate agents be using?

  Darren Johnson: I think agents need to utilize technology for organization and automation. They need a website with a feed of homes that will give them analytics on what homes and features their prospects are searching through. The MLS is no longer a physical book; you need your own website that is very intelligent. Pair it with a good CRM and you have a solid foundation. I get mind blown when I hear agents say they don’t have a website.

  Secondary to that, they need to have lead sources. Some agents just want to work referrals, and that's fine. Some agents want to work referrals, do lead gen, have people calling, collect data. They are building a real pipeline and future database, and, as such, need to utilize automation and drip marketing. If they have a contact, someone who was interested in a home six months ago, there should be drip marketing campaigns on email. There should be text messages going out to those people. They should have a chatbot or be following up on home searches or market trends. They should be tracking all of the behavior of their leads, and their CRMs should be updating those behaviors and nurturing them accordingly.

  As far as websites, I think every single agent needs to utilize retargeting. If you go on Nike's website and you start looking at shoes, you're going to start seeing those shoes follow you on other sites. Through Google display ads, through Facebook—that’s all retargeting. I notice many agents don't retarget their visitors. I think it's one of the most underused tools out there and it has the highest rates of conversions.

  I think agents need to emulate what all the top companies are doing, which is having very well-structured CRMs. They need automation built in to replace the busy work, and they need retargeting marketing on Facebook and Google.

  Gregory Charlop: Many of our readers probably aren't that experienced in setting up technological systems themselves. How should someone who’s not that technologically savvy do this? Should they hire someone to do it?

  Darren Johnson: Yes. Some companies do everything for them. You can go on Craigslist, on Fiverr, on Upwork and find people who do it. Some companies do it. Local whiz kids do it. If you even start Googling how to set up a Facebook ad for real estate agents, you'll just start getting ads from these marketers saying, "Hey, I can do it for you." If an agent is tech-savvy, there are tons of resources online to set up retargeting and create Facebook ads. There are great YouTube videos and groups on Facebook for advertisers.

  I think most agents don't have the time to learn all this stuff because it is complex. Even learning it takes a lot of money and involves trial and error as you get up to speed. If this is too risky for you, it makes sense to hire someone to do it. A thousand dollars paying an expert marketer will get you higher immediate results than a thousand dollars learning it yourself. An expert's always going to do a better job and knows how to get more clicks, more leads, better results because they've alre
ady gone through the experience. If an agent has time, yes, learn it. However, I would hire a professional to do it because it will save me time and money, and they'll get me better results.

  If you want me to do some of these functions for you, I can be reached at GetDarren.com

  Gregory Charlop: What are your thoughts about technological products on the horizon? Any particular products you're excited about?

  Darren Johnson: Yes. Alexa, which was a data reporting company before Amazon acquired it. People have these devices at home, and they are logging all the conversations people are having and pulling keywords. Big companies are going to be using this technology to sell leads to agents.

  If an agent is a marketing expert or hires someone who is, these opportunities are huge. If they want to learn it on their own, learn on your own, I think a lot of this new technology is impressive. It will know when a husband and wife are talking about selling their home. You are going to be able to put yourself in front of the people who just talked about that. It is going to be another big opportunity.

  All the data collection with supercookies is getting better and better. I think agents need to understand that it's not just Zillow anymore, it's not just the portals. Google, Facebook, Amazon, these companies already know who is looking to buy a house and who is looking to sell. You can skip the portals and go directly to them. You can have your own website, funnels, and landing pages. I think that'll be the key for agents to get leads.

  Gregory Charlop: I can imagine it must be a little spooky if you're speaking to your spouse about moving and then the next minute you get an email or a message about new houses. Maybe we’ll just start to accept that?

  Darren Johnson: They have already accepted being targeted on Facebook, Google and other social media they regularly use. It is becoming common and acceptable to most people. You don't get an email or message about it, it's just that ads start coming up. I saw a video about this. Someone just kept saying cat food, cat food, cat food into their phone and they start getting ads for cat food. If you keep on typing in cat food on Google, you're going to start seeing ads. They don't know exactly why it's happening, but I think people are pretty used to the ads that they see online. The commercial they see before they watch a video on YouTube. It's all stuff that they've been looking up and they're interested in.

  It's crazy that I sit on my computer and I'm always typing in buying or selling a home. I'm always looking at keywords. I'm always looking at real estate stuff, and I get ads from companies like my company that sells leads. I very rarely get ads from the individual agent. If I'm looking at selling a home, I should be getting ads from local agents too. I should have this virtual billboard in front of me. It's almost insane that agents are spending money on bus benches and billboards when the online ones are so much more effective. You drive by a billboard; you're not stopping to write down their phone number.

  Online, I click on their ad and go to their website. I feel out a lead form. I should start getting email drips and text message drips from that agent. I should get retargeting ads. I keep seeing that agent over and over. At that point, it's a no-brainer which agent I'm going to hire because I keep seeing them everywhere. That kind of technology will help agents crush it. The brokerages aren't doing that for them; the agent's responsible for doing it on their own.

  Gregory Charlop: It seems like the agents are leaving money on the table.

  Darren Johnson: A lot. It will weed out a lot of the old-timers. It’s like commuting with a horse in 1956. Just get that Chevy already.

  Gregory Charlop: What are your thoughts about virtual or augmented reality in real estate?

  Darren Johnson: VR will be big. Think of the overseas investor. He doesn't want to fly and see a bunch of different homes. If he can conduct virtual tours of all the homes, he's saving himself plane trips. They're already using virtual tours like Matterport. Imagine looking at 30 open houses and not leaving the comfort of your home. Then, you can pick out the ones you really want and see them in person. The buyer's agent role will be completely redefined when VR hits the market and people are receptive to it and using it a lot.

  Gregory Charlop: Do you think this is going to hurt buyer's agents? Do you think it will decrease the need for them?

  Darren Johnson: It's hard to say, but I think it ultimately will. The bigger VR gets, the more it'll hurt agents. If everyone is into VR and putting on those headsets, you don't necessarily need a buyer's agent to show you all these homes, just an agent to show you the homes you really want. I think people need to still physically tour a home because VR's not going to give you the smell, the sense, the feeling you get once you're in a home. It can save a lot of time driving around to open houses, which I don't think agents enjoy anyway. It will cut out a big-time factor.

  Not getting too sidetracked, but I think there are 2 million licensed agents right now, and there are 6 million homes sold a year. The numbers are already screwed up there. There are already too many agents. Imagine what happens when you add VR into the mix and enable people to tour homes on their own. What's the need to hire a buyer's agent to show you 50 properties when you end up finding the one you want, and an agent just shows you three properties and then helps you negotiate the offer?

  Gregory Charlop: I think that there are a lot of companies now that are heading in that direction. They have very minimal agent involvement, and they essentially help with the paperwork and negotiating the deal. Those companies don't need many agents. I think the need for agents will decrease and probably just the best ones will survive. Those top agents will vacuum up most of the business.

  Darren Johnson: Something like 90 percent of agents fail their first year. A lot of people get into real estate thinking it's all glitz and glamour and an easy job. Then they find out how hard it is. Technology will make that a lot easier. The existing agents are going to need to stay very up to date with technology, immerse themselves in it. I think we'll see a lot of tech people enter real estate because they understand the technology aspect.

  Gregory Charlop: If a real estate agent or broker approached you today and wanted to start a real estate tech startup, what advice would you give them?

  Darren Johnson: That's a tough one. First, become a lifetime learner because the pace of change is insane, and it will not slow down, Be personally resilient. Get ready to fail a lot. Embrace your failures and learn from them. Don't let them discourage you. You don't need to have a perfect plan, but it always needs to be a work in progress. What may be working today may change tomorrow, so get ready for that. Assemble the right team. Have the right roadmap. Have the proper roles defined. Have a clear vision for what you offer and where you want your growth to be. With technology, things change quickly. Many entrepreneurs fail several times before they find their niche, but you will learn from those failures and some of those failures turn into wins.

  Interview with Suzy Truax, Board of Directors, eXp World Holdings

  Gregory Charlop: You’re an agent and member of the Board of Directors of eXp. Can you briefly tell us about eXp and what makes them different from other real estate companies? Some of our readers may not have even heard of eXp before.

  Suzy Truax: eXp Realty is a 3-D cloud immersive national real estate brokerage, and historically, the fastest growing. Unless a state requires it or an agent wants to open their own, we do not have a brick and mortar location. Like Amazon, Netflix, and Airbnb, you don't go somewhere to get it. You go on the internet to shop for real estate services. We have a 3-D cloud campus (EXP World) where agents and staff interact in real time, every day to replace the brick and mortar experience.

  People have said it’s like The Sims or Second Life. Built on the VirBELA platform, it's secure and agents have a full experience psychologically—just like if you were playing a video game, but a truly interactive video game. eXp World encompasses all the services you would expect at a real estate brokerage (legal, marketing, broker assistance, education, payment processing) but without the ine
fficiencies and without the costly overhead.

  Gregory Charlop: Is the idea to get the benefits of an office—like working with colleagues, advice, and mentorship—but without the cost?

  Suzy Truax: Collaboration, mentorship. Yes. Yes.

  Gregory Charlop: Great. That's a good idea because I think that a lot of real estate agents are stuck with overhead that may not be covering its costs.

  Suzy Truax: The profit margins are very thin on real estate brokerages. Glenn Sanford came up with the idea from launching a brick and mortar brokerage in 2008. And we all remember what happened in 2008 to the real estate industry. This iteration minimized overhead and continued to operate as a real estate brokerage, but with this unique concept of collaborating in the cloud that's mind-blowing. That's what makes us unique.

  EXP World is way more experiential than your typical webinar. It’s more collaborative than a physical office because, with an office, you're limited to the people who show up. I can go into the cloud campus today and attend a class with someone who was the number one agent in all of Coldwell Banker teaching how to do a listing presentation. Bricks and mortars can't scale this kind of collaboration.

  Gregory Charlop: Why would an agent choose to work with eXp rather than a traditional firm? Sounds like eXp has excellent networking opportunities.

  Suzy Truax: There are so many reasons, Greg. eXp appeals to entrepreneurial, smart agents who understand that they own a business. Number one is the compensation model. The compensation is extremely fair. It's a super low capping model. The monthly fee delivers high-value tech tools, that if an agent were to purchase on their own, the cost would exceed $600 a month instead of $85.