Peter Chabris, Lead Agent the Chabris Group - How We'll Bridge the Gap From 400 to 500 Transactions in 2021 With The Addition of a Small ISA Team and Agent Recruiting

Brian Charlesworth
October 8, 2020

[00:00:02] All right, Peter, how are you doing?

[00:00:05] Good, how are you? I was in the middle of something. Can you hear me? Is my mike on? Yeah, yeah, I can hear you. Great. Yeah. Am I on right now? You are on. Yes, we.

[00:00:16] We are live. There's no break here and we're just not.

[00:00:21] My title sucks, guys. Anyway, we're just jumping from one to the next. But have you join us today? Thanks for having me. Appreciate this ground.

[00:00:32] I know I know you you have a team. You're also a maps coach. A little bit more about that. Looks like you're you're probably at the four hundred range right now. Going to five hundred.

[00:00:42] Yeah. We should, we should cross the four hundred line impending and close if not the end of this week, early next week. So we'll probably close between four hundred and fifteen and four hundred twenty five this year, which is a big leap last year with two hundred and fifty.

[00:00:57] What's that. Congratulations to fifty to to 450.

[00:01:02] It sounds like God willing to creek don't rise. Yeah. As long as this hot market which by the way everyone's an expert in, everyone's a hero these days.

[00:01:10] So we're making for what it's worth right now.

[00:01:13] Yeah, yeah, yeah. You, you and the rest of the hustlers. Right.

[00:01:17] That's exactly right. Make hay while the sun is up. Who knows what next is going to look like. So stupid. Yeah, we can.

[00:01:22] Well hopefully what Greer shared with us earlier is is truth and that we're going to be up another ten to eighteen percent. So, yeah.

[00:01:29] You know, it's possible. There's really no the weirdest thing about all of this, it seems like we're there's like two parallel universes going on right now. Right. One is our reality, which is that our our market segment seems to be going great. And all the people that buy and sell seem to be confident and taking action. And there's this other parallel reality which seems to run the face of all logic, which is we should be in a recession right now. We should be feeling it and everything should be falling apart at the seams. And so I don't know when these two things reconcile, they've got to eventually. And, you know, if you study real estate cycles, we're probably about do for most people thought it was going to happen in twenty, twenty, twenty, twenty. And yet it hasn't. So who knows, maybe all bets are off.

[00:02:12] I personally haven't seen a pandemic before of you know, and you know, if you look at the real estate cycles, I believe the normal real estate cycle is about eight years. Sixty eight years.

[00:02:25] One to ten years. That's exactly right.

[00:02:26] And so that being said, I mean, we're way overdue. We're way over here. We were two thousand eight.

[00:02:33] So the recovery of the recovery from twenty from twenty eight was longer, longer, slower and longer. Yeah. And then all the previous recoveries. So it makes sense from that perspective that we should have a couple more good years. And of course, interest rates are retarded. So how much time are we buying from the future right now? And just to cram in deals today with this artificially low interest rate?

[00:02:58] Yeah, interest rates are absolutely helping in driving this forward.

[00:03:03] So no doubt we'll get well, I'd love to have you kick us off and share with us what you've done to really bridge that gap. And I would say bridging the gap not only from four hundred to five hundred, that's what you're going to do next year. But I mean, how have you done it this year?

[00:03:16] That's that's huge growth from two fifty to four fifty three fifty three fifty to forfeit.

[00:03:24] Ok, so I can't take credit for that. You know, I think when you when you have a big jump like that. So what is that. Three fifty. Four fifty. That's one hundred twenty five. It's just shy of it's just shy of thirty percent growth. Right.

[00:03:39] That doesn't happen.

[00:03:42] Because we started the year deciding it was going to happen. That's that's the consequence, that's the result of decisions that were made two years ago that are finally showing up in our business model. And one of the big ones is a couple of things we did differently.

[00:03:54] The big one was two years ago, I made a kind of a mindset leap and decided to to decentralize how our our business was run and when I mean that. What I mean is when I say that, what I mean is I removed myself from the center of everything.

[00:04:12] Up until that point, I had been a bottleneck. Of authority and a bottleneck of opportunity, and there are some great things about that one, it's a little bit more of a profit model to you're in total control or you're in a much larger amount of control.

[00:04:28] But there are also some real limitations. Unfortunately, all of us have our own limitations. And as long as you are trying to maintain absolute control or a high level of control, the organization can never grow bigger than you can because all of us are human. We all have our capacity. And so the big switch, the big switch that was flipped two years ago was choosing to decentralize leadership, decentralize opportunity and and allow for more fluidity and how agents go about hitting their numbers behaviorally on my head high. See, and so I had everything dialed in exactly the way I knew it could be done to be successful. And yet different people have different strengths. And so part of it for me was also letting them play to their strengths and creating more of a of a of a scaffolding of success strategies and best practices than an absolute this way or the highway. And that that for me was a huge leap of faith and required extreme circumstances to trigger it. But it's been it's been great. And again, everybody's a genius right now. So time will tell if that was a good move or not. But for the time being, we're enjoying it.

[00:05:41] Well, congratulations on it. Sounds like you were basically letting go. And I mean, people have different strains.

[00:05:49] People also have different goals, also different ones. And to try to fit them into yours. That's right. It can be fitting a square peg into a round hole and impossible. So I think it's important that we're supporting them in, as you said, letting them do what they want to do, supporting them in in their growth, in their life and their goals.

[00:06:12] Yeah, I think that's right. I think that you have to have a vision of what you want the culture of the office to be like. And that needs to be something that you can communicate and you have to know what the expectations have to clearly communicate, what the expectations are for each person's role and how that success is measured and provide the resources for individuals to.

[00:06:34] To hit those metrics of success and use those resources and get there, as long as it's ethical and in line with your with your organization's culture, do it do it the way that they're going to do it, which is playing to their strengths. And that really requires overhauling a lot of our systems, the majority of our script book, and for me to take a lot of deep breaths.

[00:06:56] So, yeah, so.

[00:07:00] I mean, that that sounds like a major decision, major change in your business and now you've got to keep that going. So what are your what do you see as the key items for.

[00:07:12] Having that trajectory continue through twenty twenty one and that kind of growth.

[00:07:21] And it looks to me like I mean, is is that team is that something new to you or is this.

[00:07:27] It is it is new to us. And I was facilitating a panel.

[00:07:34] We've got we've got agents from all different brokerages on this, right? We do, yes. What's that?

[00:07:41] Yeah. From from all over.

[00:07:42] I mean, so I was facilitating a panel at one of the Williams annual conventions digitally, and it was a conversation about what it means to be a team and what it means to be a brokerage and how a lot of teams are looking a lot more like brokerages where. Where the value is is in training and leadership, and that's ultimately what brokerages do.

[00:08:08] So unless teams are going to get really, really big and give up more commissions than than they really probably should stop pursuing that brokerage model. And yet all of us want to pursue scale. So how do we how do we most teams start when they're small, where there's there's traditionally there's some sort of large producer like your so-called mega agent or rainmaker or whatever you want to call that individual, and they create more opportunities that they can serve. And so they start to scale through people. Right. They start to leverage through people. And that's how that's how the traditional team model happened. And then I think technology in the early two thousands kind of created this opportunity for scale before the. An individual with enough drive, enough ego could put together a a real estate sales machine using instruments of scale like Internet lead generation, Internet leads and radio and other large media to create a machine without actually having generated the opportunities that his or her own personal experience and Sfeir and database. And I think that quickly bled into let's just stack a lot of bodies will look like a brokerage charge, higher splits and we'll deal with the churn and they'll be a great business model there. Unfortunately, not great for the agencies that participate in that model. So I think for us, if we want to go from four hundred to five hundred, if we start pursuing the stacking bodies model anymore, that's not healthy long term and that's not the business we're at.

[00:09:39] We're not in the brokerage business. The team business is one where the team is creating opportunities for the agents that choose to align their careers and their income with the team and yes, its culture and yes, its training and leadership and vision, all those things. But part of it is the cultivation and creation, the creation and cultivation and transfer of seeds for the agents that choose to to align themselves with the team. The value proposition of the split for a team has got to be a lot bigger than the value proposition of the splits the brokerage. So the choice to do to finally try this whole estate thing, No. One, I'm pretty conservative financially, so I wanted people to figure out the model. And that took a couple of years, I think. But I think now the model is kind of there's enough there's enough ratios for success that we can point at things and do some research and say, OK, this is what we want our thing to look like. The second is it enables us to at scale. We can now start converting leads at a higher level by investing in salaries and talented, specialized people. And it enables us to maintain our value position of creating and cultivating and transferring leads for our agents at scale, which up until this time we'd be able to do without without individuals focused on that exclusively. Now, that was a long winded answer, and I apologize.

[00:10:55] No, that's great. So with the size of your team today, you're talking about the difference between a large team and a brokerage.

[00:11:01] How many agents do you guys have today?

[00:11:03] Yeah, so I wouldn't I wouldn't I would say we're a medium sized team. Those people in here, they're beasts that have like 50 agents on their team and I think they're bad for us.

[00:11:14] We have 12 active agents.

[00:11:16] Ok, so you have 12 active agents, super high production for 12 active agents.

[00:11:22] So tell me more about I mean, you say the same model's been proven out, but I still see every day I still see 12 different versions of it out there.

[00:11:32] What what after your research?

[00:11:34] Because there's probably a lot of people listening right now interested in trying to try out the as a team. What did your research tell you?

[00:11:45] What what what's the amount of that, the road that you're going down to do that?

[00:11:50] But you might ask that I pulled up some of our research, OK? Dial contact 12 percent, and some of us, by the way, I don't take credit for all this, this is a lot of this is driven from an I'm not promoting here. A lot of this is driven from the KW program around how to hire and train and develop teams. So from that, as well as it is from kind of like qualitative conversations with peers that are further down the road that we are. So I don't want to take credit for any of this. I want to make sure I'm giving credit where it's due. So the big one that we're interested in is, OK, what is the contact to appointments ratio for?

[00:12:34] For and I say we're getting a little bit of background. I'm not sure what it is, but it sounds like something's hitting your mike or something.

[00:12:42] Oh, I'm sorry. Let me do this. There we go. That's better. What's it better. Yeah, much better. Thank you. So you got the part about me not taking credit for any of this, right? Yes, we heard everything. It was just. Yeah.

[00:12:57] The big ratio that I think is important. There's a couple of ratios.

[00:13:01] The one that we were most interested in when we were kind of building a business model or business case for this is what's the contact to appointment book ratio? That's the first one. Right. And recent research shows it's around five percent.

[00:13:15] And then the next one is OK, what appointment set to appointment held ratio. And we've seen that go anywhere from 60 percent to 80 percent based on the based on the team.

[00:13:27] So that they are your team numbers are five percent.

[00:13:30] For the first part, what we found is, is the industry average and we talk to people is about five percent contacts, appointment book and then anywhere from four to six percent and then anywhere from 60 to 80 percent appointment book to appointment.

[00:13:42] Keat And what about on your team? What are those numbers?

[00:13:45] So, yeah, so just to be clear, we are just driving as a model. So you don't know that for say. Do you know that for your part?

[00:13:52] Yeah, absolutely. For our sales team traditionally we're four percent appointment contacts to to appointment book, so. Twenty five contacts per agent yields a book appointment are kept is usually about 80 percent are kept to take in. Whether it's a listing agreement or a buyer agreement is around 80 to eighty five percent. Let me be conservative 80 percent. And then it shakes out from there.

[00:14:17] Ok, which which those are great numbers and congratulations on knowing this well. Well, thank you. So yeah. So. So let's get you down the NSA numbers that yet follow the.

[00:14:32] Ok, so the way I the way I explain this to people on the sales team is when you think about a real estate agent, when the average consumer thinks about a real estate agent, they think about million dollar listing and they think about the glory and they think about the service component. When you're out there with your clients looking for homes and the thrill of negotiating and all that stuff, and that is fun. And that's what people are ultimately, most people are attracted to the industry about is that service component. But prior to the service component, there's the sales component, which is finding, cultivating and converting the leads that you have the opportunity to serve. Right.

[00:15:06] And so the way which really is the number one thing, if you want to be in real estate like that, is your primary right there. Right.

[00:15:13] You build a business phone at the closing table in the service is great. But if you don't have people to do that with, then it's not much of a business. So the way I explain to people, we're talking to them that if they're more interested in the Issei role in the organization or the or the traditional real estate agent role, your organization is which they find themselves drawn more towards the service center, the sales. So if we're decoupling these two things, that's our experiment. And we didn't flip the switch. We've got these we have these systems running in tandem, in parallel so that we can evaluate this over a period of time.

[00:15:51] I lost my train of thought so.

[00:15:53] So when you have these running tandem in parallel, how many ISA's do you have right now?

[00:15:57] So we could start with two. And as they say in the military, one is done, two is one. And I would say three is better. So we start with two. We're down to one. The one that we have was an agent with our team for three or four years. She used to run a twenty four seven call center and had three hundred phone reps that were she was responsible for about 20 percent of those representatives. Activity was outbound. The rest was inbound phone calls. And she was one of our best converters of Internet leads, so prior to step into this role, so she's kind of leading. And what we've found, which I find very encouraging, is her contact to appointment book ratio for the first three weeks that she's been in this role is five percent and she's still building up her pipeline. So that's, I think, pretty encouraging. Yeah. So go ahead. Sorry.

[00:16:50] So just out of curiosity, I mean, you've done a lot of research. It's obvious. I've spoken with. A tremendous amount of team owners and heard many, many different ways to structure compensation. I'd like you to get into that because how do you get somebody to go from an agent to an essay and Roland and to be satisfied and happy and know they're going to make the money they want? Because obviously she came from that. So she's happy there, but she needs to be confident she's going to make the money.

[00:17:20] To stay there, right, you know?

[00:17:23] Yes, absolutely. Everybody has a money box that has to be checked. And and once that box is checked, I have my personal experience is that it's not about the money after that. Things like quality of life and work, life balance, balance and accessibility and availability to your children and stress levels and all of that stuff. Nights and weekends, like we all have different value systems and different priorities and how we choose our career path. And it's not I don't have the right to project my career value system onto anybody else. Mm hmm. And so I'm I'm presenting opportunities to people. And they can tell me if those opportunities correspond with with what they value in their career path. And Chris, who is who's the woman at starting this? She. She loves building and her favorite career, the favorite part of her career was when she was running this call center and she loves to build things and she loves, loves, loves being the engine room, being the tip of the spear. And she's very proud of it and she's good at it. And and so we were lucky that we found a talented person. And to start this, yes, she sounds like the right player, the right first place. The other thing that we've learned our research is the first person you hire is not an essay. The first person that you hire is somebody that has some sort of telephone based sales and service background. Understands the metrics that understands the mindset and just needs to be taught real estate. We were lucky enough to find somebody that that does that does both.

[00:19:11] And we were in a relationship, these guys, you know, gonna zoom right now, I guys sorry, the way you present these days, right now and look how big Zoome is.

[00:19:20] We're not even on a zoom, but it's just considered correcting me.

[00:19:24] Sorry, Steve Yard.

[00:19:27] Yeah, no, no. It's just I mean, talk about the right place at the right time. Look at Zoom.

[00:19:33] Yeah. And tissue and Kleenex tissue paper. Right. Yeah. Yeah, yeah. So so you now have for tracking.

[00:19:42] Yeah. Yeah exactly.

[00:19:45] And it is, it is a good time because I think Sisu like people have realized that in order to really take their business to the next level and to be able to make smart decisions, they really need to know these numbers. Like you just walked through all of your conversion ratios along the way.

[00:20:01] If you didn't know those, you can make a business decision. You really can't you don't have a business. You've got you've got a job or you or you are you're going to be held. If you don't know your metrics, you don't run a business and you are going to find that you are going to be a victim of whatever is happening in the market. And if you don't, if you can identify trends when you know your numbers, you're going to identify trends and be able to react before the market does. That can make or break a year. It can make or break one. So if you're if you're leading a team or a brokerage or whatever, whomever the user is of Sisu, presumably they are a leader within that organization. If you're not using the metrics to understand the market of the moment, stay a step ahead of it. Your job as a leader, as custodian, not custodian, is advocate for the careers of the people that get in business with you. It's your responsibility, know your numbers so that you can protect them and help guide them and lead them in the right direction when there's shifts in the market. And you can't do that if you don't have your pulse on the market in the way of pulse on your markets. You watch the media and you watch your numbers.

[00:21:10] Yeah, well said. So now here you are. You're down this road. You're going from four hundred to four fifty.

[00:21:18] Looks like you're going to add a one hundred transactions this year wherever you end up. You want to add another hundred and twenty. Twenty one. Yeah. You're down this road with the Issei. Your goal is to get to three. You're now at one. Is that, is that kind of where you're at.

[00:21:31] Yeah that's exactly right, yes. Is the short answer.

[00:21:36] Ok, so in order to get to three it sounds like you're making some very smart decisions and just proving this out along the way and figuring out what's working, what's not. And when do you when do you bump that up to three? And when you do, does your current NSA step into a leadership role?

[00:21:53] Yes, she will step into it. She will she will be the consummate player. Coach. Yes. She played a higher base salary and an override on their on their production.

[00:22:02] Ok, so do you mind talking about compensation for women? Because I think that's where people struggle. It's like, OK, am I going to have to pay a fifty thousand dollars salary? Now, where do I come up with that. Yeah. How deep do I have to dove into my commissions or into the agent's commissions? You've done a tremendous amount of research on this, so I'd love to hear how you've decided this is how I'm going about this.

[00:22:27] Well, I'm probably the wrong guy to interview because we're getting started and there's some beasts on this on this program you guys have put together, which, by the way, is really impressive, who are way further down the path and can probably answer this from their experience. What we've learned without actually being in the trenches for very long is obviously there's a base and best practices that the the the the bonus component of the of the compensation is only unclosed business. It's not on appointments or appointments. They're taken. It's unclosed business.

[00:22:57] Yes. I think that's that is one of the most important points that everybody has said. Everybody I've ever talked to, the successfully done this has said. And the reason that's so important is because at that point you have your booking appointments and their their interest is in line with the agents.

[00:23:17] The premise they're booking their goal is to get a closing from that. Their goal is not to just send somebody on a crappy appointment.

[00:23:24] That's right. They want elevated, qualified, motivated buyers and sellers and investors. That's exactly right.

[00:23:29] So thank you for bringing that up. I think that's a super important point.

[00:23:33] Yeah, that was loud and clear when we were doing our research. So sorry. It's a base salary. It is a override on the GCI from the closed transaction. We pay health insurance for individuals. We have a group health insurance plan on our sales team and the ability to participate if for one K after ninety days on the job.

[00:23:52] Ok, so do you mind talking about splits of what what your team splits are today and how that.

[00:24:01] Percentage that is going to be coming from the team, is that coming from the agents or so?

[00:24:08] Yeah, so talking about agent splits in a vacuum is is is useless because we don't know what services I am or I'm not providing to have any kind of perspective on whether that's a fair split or whether that's one to to to copy or to implement or make your own value decision on your split structure. However, what what what I do think is a good conversation is, yes, the agents pay for the Issei to identify, cultivate and convert schedule that lead, OK? And so the way we do that is their splits are adjusted down 10 percent.

[00:24:49] Ok, so I just want to clarify this, because I think this is really important and I think that's a great way of doing it. But what you're saying is you're paying their base salary, you're allowing them on to your benefits plan, which is a tremendous value in itself. Yes. And then the agents are getting 10 percent less out of their commission. It's not coming out of the gross GCI. It's actually coming off the agents split, whatever that is. Is that correct, 10 percent of the agent or is it out of the gate?

[00:25:19] Great question. If it's if it's a 50 50 split, just for simplicity's sake. Yes. If they are closing a transaction that was qualified and booked by the Issei, they will keep 40. I will keep 60.

[00:25:34] Ok, OK, perfect. That's what I thought.

[00:25:38] The easiest way to explain it is the estate. The next question is, what does the IRS get paid? The IRS is getting paid five percent override on on the transaction. OK, you're saying?

[00:25:51] Well, based on that, it's important for people to understand your average or I'm sorry, your average transaction.

[00:25:58] Our average sales price is about two hundred forty four thousand. OK, let's say to forty two point fifty thousand dollars.

[00:26:06] Ok, so average sales price, two hundred fifty. We had somebody in here, Carlysle, yesterday. He was basically running the same model you just talked about. So there's two of you that are doing this very, very similar.

[00:26:19] However, he was paying for what? I want to talk to him now. That's Kyle whistle. Yeah, you may want you may want to talk to Kyle Kyle's average. Purchase price is six hundred and something thousand is in San Diego, so one of the things he suggested is if you have a lower purchase price, you may need to go up to 10 percent in order to get that A.S.A. over one hundred. The magic, the magical one hundred thousand dollars that are available.

[00:26:50] Ok, so I take I take. I don't think OK. Yes, yes, yes, yes. That's all correct. But he's projecting a six hundred thousand dollar standard. So I keep my hands on my face. He's projecting a six hundred thousand dollar standard for somebody that lives in. What did you say it was. San Diego. San Diego. The cost of living in Cincinnati is probably two thirds or less of what it is in San Diego. So know.

[00:27:15] So your target, I guess that's a great point. And your target?

[00:27:19] Maybe sixty five to eighty five. Yeah. OK, OK, perfect. That's what I was trying to get to.

[00:27:24] Yeah. Sixty five to eighty five. By the way, if you're working five days a week, eight hours, maybe it's nine or maybe it's six days a week for seven hours, whatever that winds up being. And you're in the real estate business and you're not working nights or weekends and you've got health insurance, you have the ability to participate in a 401k. And we also provide additional investment opportunities for our people. That's a pretty good gig, especially if especially if you have younger kids, which is part of what what one of Chris's motivators was that she wanted to be home on the nights, on the weekends while her kids are teenagers. Will every teenager right now is going through the hardest time with social media and all the additional pressures and coronavirus and all this crap like they need their mom there and for her was a no brainer.

[00:28:11] Yeah, so I think, you know, one thing I love about you is everything is well thought out, well structured, and you come about it with a tremendous amount of confidence. It's like, yeah, well, living in San Diego, you're going to need one hundred thousand dollars living.

[00:28:27] In Cincinnati is a Cincinnati, Cincinnati in Cincinnati. Eighty five, sixty five to eighty five thousand is a great pay day. I think that's terrific. So, yeah, any last thoughts?

[00:28:42] Just because we're running out of time, any thoughts around, you know, what is going to be key for you guys getting to the to the next level next year?

[00:28:55] So my normal speed is pedal down always, and it might be maturing a little bit as I lose my hair here because we're doing this incrementally for the first time ever. I'm not jumping in feet first and figuring it out as we go where we are.

[00:29:11] We're experimenting and we are we've increased our oath. That's the thing you asked me about dollars and budget. I think to do this right, you have to have the savings to pay for at least one. Issei probably two, because two will do better, learn better, perform better. If they start at the same time because of just friendly competition and having a buddy, yes, you probably need to be able to pay for it. I a salary and whatever benefits plus the Legion budget increase for both of them to be successful for at least four excuse me, at least five, probably six months before you can decide whether or not it was successful. And if you can't do that, you're cheating yourself, you're cheating them and you're cheating your agents.

[00:29:55] Yeah, great point. So if you're if you're thinking about going down that road plan, plan for at least that, I would totally agree with that. Yeah. OK, well it's been great getting to know.

[00:30:09] Thank you, Peter.

[00:30:10] Thank you so much for joining us today and congratulations on all of your success.

[00:30:14] But congratulations on your product. Congratulations on pulling off this like marathon of killer content. Well done. Strong.

[00:30:22] Yeah. Thank you so much. And yeah, now for me, the goal would be I love talking to maps coaches because that's an area where we would love to break in and get a lot more of your customers, obviously on Sisu.

[00:30:35] So but anyway, thank you. It's been great. Love chatting with you today and best of luck over the next year.

[00:30:42] Thanks, man. Good luck, everybody. Thank you. We'll see you.

[00:30:49] All right, everyone, that ends our session here, we have still in the the track be we have Jeff Moore happening right now. If you'd like to join that, I'll be back with you in 30 minutes with Rivers' Pierce.

[00:31:07] So we will catch up with all of you then. Thanks so much for joining us this morning.

About the Author

Brian Charlesworth
Chairman and CEO

Entrepreneur and business builder. Built and sold software and telecommunications companies. Passionate about making a significant impact on lives by driving technology forward.