How Agents Play A Role In Key Real Estate Transactions With Bryan Bowles & Zain Jaffer

In this episode, we will be discussing the role that agents play in key real estate transactions. As you know, buying and selling a home is one of the most important decisions someone can make, and agents know how to buy or sell homes and can offer advice on what steps to take next.

Transactly organizes and coordinates the very messy and often chaotic closing of a real estate transaction. Whether you’re a real estate agent, broker, team, or an entire office, you can use our application or one of our Transactly Coordinators to organize and manage your home sale transactions.

For More Information Visit- https://transactly.com/

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How Agents Play A Role In Key Real Estate Transactions With Bryan Bowles & Zain Jaffer

We have the CEO and Founder of Transactly, Bryan Bowles. They're helping agents and those involved in real estate transactions be more productive. They're also venture-backed. Bryan, what's going on in the industry? How are you?

I'm doing well. There is quite a bit going on in the industry. It's a very interesting time. I've been in it quite a while. It's nice to have all this going on. You don't get bored.

Tell us a bit about your background. You've come quite a long way. I'm sure those experiences have helped you disrupt the industry. Give us a quick overview of your background.

I'll come back to disrupt because it's a little challenging to disrupt this industry is what I found. Prior to real estate, I have a technology background in the financial services industry. I got into real estate the way a lot of other people do, you fall into it. I was investing in residential properties and I thought, “There's a better way to do this agent and brokerage thing.”

I started a brokerage, and I scaled that brokerage and then within it, I started a number of other companies, including a property management company to which I exited. Another digital marketing company for people to better advertise their properties online. Then I started this company, Transactly, out of that brokerage as well.

What was going through your mind when you were running the property management company and trying to figure out what you want to do?

First thing, if you know anything about property managers, it’s like, “How do I get out of property management?” It's very painful but there are a lot of opportunities there. It was in 2012 when we got into property management. We did it because a lot of the homes that we wanted to sell just would not sell. We had owners that became this term called accidental landlords, and we ran with that. We did well with it until we got so beat up from property management, we decided to sell.

It's the worst time to try to be a new agent. It's not necessarily because of all that competition. It's because of a lack of inventory right now.

Getting those calls at random times for some issues like, “My toilet is clogged or this isn't working.” Having to work around the clock. As I got into real estate, I was speaking to a fund manager and the advice they gave me was, “I don't think you can understand real estate as an investor until you put yourself down as the property manager, and you're called constantly and you start to appreciate those little things that make real estate work and how difficult those little things are.” That was interesting advice for me. I didn't end up being the property manager. I was afraid when I spoke to a few people and decided instead to find a good property manager, but there’s truth in that.

We bootstrapped it. I personally took a lot of those calls early. Even as you start to scale the team and you have large teams handling that for you, you still hear the noise. It's a tough business to be in.

In this real estate industry, the assumption is that when technology comes in, it’s going to cut out all the middlemen, all the people taking fees. In there, you've got your financers and lenders, property managers, and your agents. These are the three big categories. Is it not true that this is the worst time to be an agent with all the disruption happening?

“The worst time to be an agent,” is an interesting phrase. It's the worst time to try to be a new agent. It's not necessarily because of all that competition, it's because of a lack of inventory. We hear it from even some top teams that they feel beat up at the end of the day because they'll show hundreds of properties and miss out on offers. It's very challenging. They will miss out on things because of new incumbents like an open door or this iBuyer concept, which is people making a market in the industry.

I don't think agents will ever go away. There will continue to be downward pressure on commission probably more than ever, and you'll see some consolidation. I came up early in my career in the dot-com boom with Scottrade, E*TRADE, and Schwab's. At that time, all the stockbrokers like Edward Jones and Charles Schwab, they're going to go away. They didn't. They're still doing incredibly well. There are tons of room in this market, especially with real estate. It's huge. Going back to that comment about disruption, it's more of an evolution. In terms of a real estate agent, I don't think anything is going to turn that on its head.

Which way is the market going? Are you going to see smaller shops come up? Are you going to see consolidation where people are going to have to hang their hats on large brokerage firms, and the large brokerage firms are going to get larger and larger? Do you see there will be more fragmentation?

There will be more consolidation from some of those larger brokerages. You'll see a rise on a lot of independent brokerages if they're not using something like a side, for example. It's now easier to run something entirely on your own. People are more empowered to do those things. You see companies like eXp, which are taking some of those and allowing those teams to do that same thing.

Those little struggles will be some of the more traditional mixed-box franchisors that we've seen in the past. People that were used to those models are going to claim to some of these more empowering, allowing you to be more independent without being independent, and then people going independent. I’m not sure if I'm giving you the answer you're looking for. There will be more consolidation at the top. Let's put it that way.

What I'm seeing is that everyone is starting to rethink what is the value they offer. If you're a large firm, you're thinking, “What value am I offering to these agents? Before, it used to be the infrastructure we had. Now, I'm seeing them focused much more on the research, software, network, systems and processes, and putting together a team.” Technology is allowing the individual agent to do much more by themselves. Less time spent on overhead and more time spent on closing, which means not having to pay a big, tasty chunk of your commission to someone else, which drives a lot of agents to disillusionment.

Coming back to the commission pressure, that will be a big factor. There will be much more transparency to how agents get paid, particularly on the buyer agency side. That will cause agents to lower their commissions in some way, which will make them change what kind of brokerage they affiliate themselves with. Again, it's an evolution. Nothing is quick in this industry.

Is it going to be an evolution where it's technology-driven and it's all AI where you've got these iBuyers out there, or do you think the humans are going to be in control and will be able to justify the commission they take as playing a role of an agent?

Automation will play a big role in that commission pressure downwards. Think of it like property management and how much pressure there is. A landlord hires property managers because they don't want to deal with it. In the same way from a homebuyer or seller's perspective, a lot of them don't want to deal with some of that stuff even if they have the sophistication to do so.

Let's empower agents to be truly entrepreneurial and provide them the resources and support they need to do that.

You also have some folks that need that permission, if you will, that it’s okay to buy a property or it's okay to sell it at this price. People need another human to give them that nudge, even if that human is entirely enabled by automation in some way that allows them to reduce their commission and do more value.

Do you mean emotions? Buying real estate suddenly is an emotional decision, not a completely irrational decision. Walk us a bit through your own experiences running the brokerage.

It depends on the type of brokerage. I'll explain the brokerage and the mission that we had. You've got different flavors of brokerages. You have a boutique, a brokerage of small teams, and then you have these large scaled efforts. You can be independent or you can be a franchise. When we started our brokerage, we wanted to do a scaled brokerage and offer something of value to agents.

Seeing even back then some of the downward pressure on commissions, we rolled out a flat fee model. The mission was, “Let's empower agents to be truly entrepreneurial and provide them the resources and support they need to do that.” Most agents don't want to deal with compliance. They don't want to deal with the regulatory obligations of the state. We'll take care of all that stuff. We'll return more commission so you can focus it on marketing and how you like to do marketing as an entrepreneur.

That's our model, you have a different dynamic. With that model, you have a lot of experience stages. There wasn't a lot of training that was involved. It's a little bit different across once you get there, but once you get to the point of dealing with the transactions, it doesn't matter what model you have. You have that human element. Most of it is putting out fires and what we refer to as adult babysitting. It was talking to the homebuyers and sellers because they weren't happy with the inspection. They couldn't get in touch with their agent and they weren't sure what they were supposed to do next, what was going on at the time.

There was a lot of adult babysitting. It’s the best way that we could put it. Minor arguments over a $400 inspection item, which you're finally like, “We'll reduce our commission and you can have it. It's not that big of a deal when you're buying a $500,000 property to argue over a $400 inspection item.” It's a lot of that and that is across the board at all brokerages. That's exactly why I don't think humans will ever be removed from this process.

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About Zain Jaffer:

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30,” “Inc. Magazine’s 35 Under 35” and the “SF Business Times Tech & Innovation Award''. He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.