Real Estate Regulation Updates: Impact on Commissions and Tech Innovations

Mike Mills:
00:00:11

Well, hello, everybody. Good to hear from all you hardworking real estate pros out there.

 

 

Mike Mills:
00:00:18

This is the Texas Real Estate Finance podcast, and I'm your host, Mike Mills, a North Texas mortgage banker with Geneva Financial.

 

 

Mike Mills:
00:00:24

And when I'm not here talking nonsense into the Internet, my team and I help your clients find the best home loan options to fit their needs.

 

 

Mike Mills:
00:00:31

These days, every transaction is a little more complicated and a little more challenging.

 

 

Mike Mills:
00:00:35

So you need someone on your side to make sure that your clients reach the finish line, Not just with a great affordable home

 

 

Mike Mills:
00:00:41

loan, but with a huge smile on their face.

 

 

Mike Mills:
00:00:44

So when they think of you so they think of you each time that they recommend someone to their friends and family when they're ready to buy or sell.

 

 

Mike Mills:
00:00:50

We're gonna be your secret weapon to keep all those valuable referrals coming your way.

 

 

Mike Mills:
00:00:54

And speaking of referrals, your future clients are gonna start asking questions that you may not have to handle, that you

 

 

Mike Mills:
00:01:01

may not have had to handle much in the past.

 

 

Mike Mills:
00:01:03

Because right now, our industry is kind of under attack.

 

 

Mike Mills:
00:01:05

Realtors and lenders, believe it or not, also.

 

 

Mike Mills:
00:01:08

These lawsuits are starting to bleed over into mortgage lenders these days just like all you realtors out there. Commission structures are changing.

 

 

Mike Mills:
00:01:15

Your role as a realtor in the transaction might soon be changing, and new companies are popping up all over the place that

 

 

Mike Mills:
00:01:20

are looking to give different options on how to buy or sell a home to your clients.

 

 

Mike Mills:
00:01:25

I want you to understand, right now this isn't good or bad. It's just different.

 

 

Mike Mills:
00:01:29

And the key to understand what is happening and learn how to set up your business to meet these changing demands.

 

 

Mike Mills:
00:01:34

You have to know what's occurring in the market in order to be prepared.

 

 

Mike Mills:
00:01:38

And I'm here to be your inside scoop to this rapidly changing real estate landscape.

 

 

Mike Mills:
00:01:42

Now before we jump into today's episode, I ask my weekly favor from you.

 

 

Mike Mills:
00:01:45

If you find this podcast helpful and informative, please do me a huge favor and like, comment, share, or even drop us a review.

 

 

Mike Mills:
00:01:51

Your participation in our weekly discussions goes a long way in continuing to build our real estate family and bring more

 

 

Mike Mills:
00:01:57

and more insights to you each week in this incredibly critical time when so much of what we know is changing every single day.

 

 

Mike Mills:
00:02:03

So if you can help us out with a 2 second click, I would be forever thankful.

 

 

Mike Mills:
00:02:06

Now today, we are joined by a Harvard Business School graduate and a CEO of Austin based True Footage, a tech property valuation

 

 

Mike Mills:
00:02:14

platform, and and he also has his hands in a few other interesting ventures as well as we go through this.

 

 

Mike Mills:
00:02:20

But he's here today to talk about a topic he wrote about in his college thesis back in 2016, so it's been a long time.

 

 

Mike Mills:
00:02:26

Real estate commissions and NAR's role in all of this.

 

 

Mike Mills:
00:02:28

You may or may not agree with this point of view sometimes, but either way, you cannot discount it or ignore it, especially

 

 

Mike Mills:
00:02:34

with everything that has happened in our industry since then.

 

 

Mike Mills:
00:02:36

So without further ado, please welcome John List to the podcast.

 

 

Mike Mills:
00:02:39

John, how are we doing today, sir?

 

 

John Liss:
00:02:43

What's going on? It's great to be here. Thanks for having me.

 

 

Mike Mills:
00:02:45

Thank you, man. I appreciate you, hopping on with us a little bit today.

 

 

Mike Mills:
00:02:49

I know, with all the craziness that's kinda been going on in our which you are a big player in these days with your companies

 

 

Mike Mills:
00:02:55

that, are helping, not only with property valuations, but also helping with, sellers getting properties recognized.

 

 

Mike Mills:
00:03:02

I thought it'd be a great conversation, especially because, you know, you had this, this entire thing that you did back in

 

 

Mike Mills:
00:03:08

20 16 that you had no idea was gonna have any kind of implications to what's occurred in our market right now, but it you know, it's come up.

 

 

Mike Mills:
00:03:15

I actually I found you, one of my former podcast guests, Lance Lambert, who, publishes Resi Club, which is a great resource

 

 

Mike Mills:
00:03:22

website for anybody out there trying to get information on the housing market in certain parts of the country.

 

 

Mike Mills:
00:03:27

Lance is a great resource, but I found him there.

 

 

Mike Mills:
00:03:30

He had, done a short interview with you and got a few quotes on your, thesis that you'd done over at, at the Harvard Business School.

 

 

Mike Mills:
00:03:36

And so I wanted to kinda bring you on chat about that.

 

 

Mike Mills:
00:03:38

But before we get into all that, you are the founder of a company called TruFootage.

 

 

Mike Mills:
00:03:44

And, I want you to kind of explain what is TruFootage, what do you guys do, why you decided to come up with that, and, kinda

 

 

Mike Mills:
00:03:51

give us a little insight into, to what your company does.

 

 

John Liss:
00:03:55

Awesome. So TruFootage is a national appraisal technology company. So we do 2 things.

 

 

John Liss:
00:04:00

Number 1 is we complete appraisals for mortgage originators across the country.

 

 

John Liss:
00:04:04

Our largest market is actually Texas, and and I'm based in Austin.

 

 

John Liss:
00:04:09

We started in July of 2021, and we quickly grew to a couple 100 appraisers.

 

 

John Liss:
00:04:15

And our platform is different because everybody works exclusively for us, as opposed to kind of a sole proprietorship model that's normal in the appraisal industry.

 

 

John Liss:
00:04:25

So we have a lot more kind of ability to train and create a more consistent and reliable product.

 

 

John Liss:
00:04:30

And then the second piece around True Footage is software.

 

 

John Liss:
00:04:34

So we're building kind of the next gen of appraisal forms and workflows and software to provide appraisers with a much faster,

 

 

John Liss:
00:04:41

easier, and more credible way to complete their analysis.

 

 

Mike Mills:
00:04:45

So what you the the software that you guys provide ultimately helps appraisers.

 

 

Mike Mills:
00:04:50

It's not necessarily replacing what they do, but it gives them more data to kinda do their job more efficiently.

 

 

Mike Mills:
00:04:55

Is that a good way to put it?

 

 

John Liss:
00:04:57

Yeah. Definitely. I think, obviously, over the last couple of years, you've seen kind of GSEs cracking down on kind of the

 

 

John Liss:
00:05:02

variance in performance that they've been observing in the appraisal industry.

 

 

John Liss:
00:05:05

And so this software really helps kind of build credibility into the report.

 

 

John Liss:
00:05:10

So appraisers are responsible for not just making assertions about the market.

 

 

John Liss:
00:05:14

Obviously, it is an opinion of value at the end of the day, but also providing kind of support and analysis to back up the credibility of their report.

 

 

John Liss:
00:05:22

So we do things like help with market conditions analysis, help with adjustments in the comparables analysis, and other kind

 

 

John Liss:
00:05:30

of data science, tools in order to make the appraiser, you know, a lot more reliable and a lot, more efficient.

 

 

Mike Mills:
00:05:36

Do you feel like, you know, in in setting all this up, and putting your company together because, like, on the lending side

 

 

Mike Mills:
00:05:42

of things, you know, obviously, we have, you know, we still use appraisers that physically go to the properties and then look at them.

 

 

Mike Mills:
00:05:47

But, you know, within the past few years, the GSEs, Fannie and Freddie, have played a much bigger role in evaluating these appraisals and scoring them.

 

 

Mike Mills:
00:05:56

And it can be true issues when we go to files that have high scores, you know, that have high risk levels that, you know,

 

 

Mike Mills:
00:06:02

sometimes we have to kick it out completely and we can't use it for whatever reason.

 

 

Mike Mills:
00:06:06

And especially now these days with the market fluctuating as much as it has been because, you know, we're we're coming out

 

 

Mike Mills:
00:06:12

of a market where I mean, we're well out of it, but buyers and sell or sellers, you know, still live in the past sometimes.

 

 

Mike Mills:
00:06:18

But we're coming out of a market where it was pretty easy, you know, as far as comps because properties were moving at a pretty good clip. And now homes are sitting longer.

 

 

Mike Mills:
00:06:26

Now people aren't listing as much, so comps are fewer in, you know, in some markets are harder to come by.

 

 

Mike Mills:
00:06:31

And is it is it a comp that was 8 months ago when the market was really hot compared to what it is today?

 

 

Mike Mills:
00:06:36

And so we run into more and more of these valuation issues along with, there being a tool that that both Fannie and Freddie

 

 

Mike Mills:
00:06:43

provide, called collateral underwriter that basically evaluates that particular appraisal and then provides 50 other comps

 

 

Mike Mills:
00:06:51

that they would have used or adjusted either way.

 

 

Mike Mills:
00:06:52

So my question is is, you know, obviously, we've always relied on the tried and true human being to go out and evaluate these

 

 

Mike Mills:
00:06:58

properties, but how far are we away from, you know, some of this not even being necessary anymore because of the advent of

 

 

Mike Mills:
00:07:05

technology to where these properties and all the data that's recorded for them can be fairly easily evaluated without having

 

 

Mike Mills:
00:07:11

a human being go out and look at it?

 

 

John Liss:
00:07:14

Well, there's obviously a a widespread discussion on alternatives to the appraisal.

 

 

John Liss:
00:07:19

Everything kind of from an automated valuation model or an ABM, you know, like, the Zestimate as kind of the most prime consumer example to a traditional appraisal product.

 

 

John Liss:
00:07:28

And I think where most people shake out is there's gonna be a continuum of, appraisal valuation products available and a menu based on each type property type.

 

 

John Liss:
00:07:38

So if it's a in a subdivision in Houston, a Doctor Horton subdivision where everything looks the same and it's low LTV, you

 

 

John Liss:
00:07:44

probably are not gonna get an appraisal done on that product.

 

 

John Liss:
00:07:47

But in a more complex environment with less properties that look identical, there is probably going to need to be an appraisal done, almost in perpetuity.

 

 

John Liss:
00:07:56

I think AVMs fail in very kind of complex or, nonhomogeneous marketplaces, and most cities in America, you know, have kind of a diverse housing stock.

 

 

John Liss:
00:08:08

So I don't think it's a one size fits all answer, but this was certainly you know, some of the dynamics that you're articulating

 

 

John Liss:
00:08:13

is certainly kind of one of the reasons why we launched our company.

 

 

John Liss:
00:08:17

Obviously, during COVID, you saw mortgage originations at an all time high.

 

 

John Liss:
00:08:21

You saw appraisal as really kind of one of these constraining bottlenecks in the whole mortgage manufacturing process because

 

 

John Liss:
00:08:28

people couldn't get out to properties fast enough.

 

 

John Liss:
00:08:30

You have labor supply of people where the average age is 63.

 

 

John Liss:
00:08:34

They've been doing things a certain way you know, way for the last 20, 30 years.

 

 

John Liss:
00:08:38

Some appraisers are really good at their job, others aren't, and and we're gonna get into that with realtors as well.

 

 

John Liss:
00:08:43

I mean, you kinda see that in in basically any profession.

 

 

Mike Mills:
00:08:46

Yeah. Yeah. It's normal.

 

 

John Liss:
00:08:48

And so kind of what we seed is, you know, time adjustments, what you're talking about about how the market was moving.

 

 

John Liss:
00:08:54

Appraisers weren't making those, and that was causing a lot of issues with the appraisal.

 

 

John Liss:
00:08:58

And so what our kind of thesis is is let's power the appraiser. They're still in the driver's seat. Let's give them technology.

 

 

John Liss:
00:09:04

Let's make sure they're making those time adjustments.

 

 

John Liss:
00:09:06

You know, in COVID, for for example, the time adjustments were historic.

 

 

John Liss:
00:09:12

Nobody ever made a 4% per month, you know, time adjustment on an appraisal report.

 

 

John Liss:
00:09:16

But but that's what you had to do in order to, you know, present a rigorous analysis that was credible at the time.

 

 

John Liss:
00:09:22

And so we were able to kind of provide that analysis because of kind of the rigorous, you know, data driven approach to the software.

 

 

Mike Mills:
00:09:30

Well, I mean, I think that it's just like anything else.

 

 

Mike Mills:
00:09:33

It's there's gonna be a lane, you know, for all of these different pieces just like there's never gonna be not a need for

 

 

Mike Mills:
00:09:40

a human being to go out and evaluate properties in certain circumstances because, like you said, markets are so diverse and

 

 

Mike Mills:
00:09:46

so different, you know, all across the country that you can't eliminate the need for an appraiser entirely, but there will

 

 

Mike Mills:
00:09:51

probably be more and more where these automated approvals come through.

 

 

Mike Mills:
00:09:55

I mean, we see them still, you know, on a fairly regular let's say regular basis.

 

 

Mike Mills:
00:09:59

For those that are putting down at least 20%, we'll get those appraisal waivers, where we don't need an appraisal to go out and and and get that determined.

 

 

Mike Mills:
00:10:05

And so I think that'll probably, you know, continue.

 

 

Mike Mills:
00:10:08

I don't know if we'll ever get to a point, you know, I guess, we'll see if someone who isn't putting down 20%, 5, 10, you

 

 

Mike Mills:
00:10:14

know, less or the minimum, if we'll ever get waivers on those.

 

 

Mike Mills:
00:10:17

And if not, then, you know, obviously, there's always gonna be a place for a physical appraiser to go out there and look at it.

 

 

Mike Mills:
00:10:22

But it is interesting to see how, you know, with our our industry as a whole, in one degree, it's difficult for technology

 

 

Mike Mills:
00:10:30

to truly penetrate things sometimes because of the regulatory restrictions that we have in in so many levels whether it be

 

 

Mike Mills:
00:10:36

state or federal that it makes it a challenge sometimes for new technologies to penetrate quickly. It it it's a slow burn.

 

 

Mike Mills:
00:10:42

And so, you know, but at least with what you guys are doing, it seems like it's more of a pairing of, hey.

 

 

Mike Mills:
00:10:48

We're we're taking the traditional appraisal route, and we're just giving you some extra tools so you can do your job a little bit more efficiently. And maybe one day, we'll see.

 

 

Mike Mills:
00:10:57

Costs never come down, but maybe, you know, do it a little bit more, cost effective as well. Do you agree?

 

 

John Liss:
00:11:02

Yeah. I I definitely think so. I think there's a way to do things more efficiently, and to kind of increase the throughput of each individual appraiser.

 

 

John Liss:
00:11:09

I mean, we're gonna have no choice kind of based on where the labor pool's going and the fact that the, you know, regulatory

 

 

John Liss:
00:11:17

restrictions around making an appraiser, it still takes 1 to 2 years to make an appraiser.

 

 

John Liss:
00:11:22

Volumes are at an all time low.

 

 

John Liss:
00:11:23

There's not a lot of people being trained into the industry right now.

 

 

John Liss:
00:11:26

So technology is kind of the only way forward.

 

 

John Liss:
00:11:28

I think that that doesn't kind of, lower the need for experts in in the market, but let's elevate the top 10% of the appraisal community.

 

 

John Liss:
00:11:36

Let's give them more reports to do because they're, you know, very good at their jobs and kind of use technology to to impact them.

 

 

Mike Mills:
00:11:45

Empower the 20% so they can do their job better. Yeah?

 

 

John Liss:
00:11:49

Exactly.

 

 

Mike Mills:
00:11:50

I also want you to talk about, Glasshouse. Right?

 

 

Mike Mills:
00:11:54

I I say that, but in my brain, I'm like, do I say that right? It's Glasshouse. Correct? That's the name of your company? Yeah. Okay.

 

 

Mike Mills:
00:11:59

So, this gets onto our topic of, you know, what's going on in our industry when it comes to, you know, realtor commissions and realtor's roles in these transactions.

 

 

Mike Mills:
00:12:07

And, you know, there are companies out there, that are looking for ways to I don't wanna say supplant agents, but I would

 

 

Mike Mills:
00:12:15

say definitely, diminish maybe what their role is in the transaction with technology based.

 

 

Mike Mills:
00:12:20

I'm gonna actually have somebody on next week that's gonna talk a little bit about that.

 

 

Mike Mills:
00:12:24

But your company is, using technology to help realtors do their job a little bit better.

 

 

Mike Mills:
00:12:30

And so, I want you to talk a little bit about Glasshouse and what you guys do there, why you decided, you know, to come up

 

 

Mike Mills:
00:12:37

to create that company, where the idea came from, and and a little bit about what you guys do.

 

 

John Liss:
00:12:42

Sure. I might take this back a little bit, just kind of tray trace my history into the industry to kinda speak to Glasshouse.

 

 

John Liss:
00:12:49

So I started as a real estate agent. It was my first job ever.

 

 

John Liss:
00:12:54

I got licensed on my 18th birthday, and I worked full time.

 

 

John Liss:
00:12:58

Actually took a year off between high school and college to work full time in in New York City in in the Manhattan market.

 

 

Mike Mills:
00:13:04

Is that where you're from? Are you from New York?

 

 

John Liss:
00:13:06

Yeah. Exactly. So I've always kind of been, very interested in the brokerage space, and then I studied it in college.

 

 

John Liss:
00:13:15

I wrote my thesis, which we'll get into, kind of on the brokerage space, particularly focusing on Manhattan.

 

 

John Liss:
00:13:21

And then, obviously, you know, my career after college before I launched True Footage was in real estate finance, and we often

 

 

John Liss:
00:13:28

dealt with brokers whether that was kind of office, hotel, industrial, whatever, but, obviously, constantly interacting in the brokerage industry.

 

 

John Liss:
00:13:37

And one thing that we've noticed over time is just that transparency is incredibly important, and I think that's kind of what

 

 

John Liss:
00:13:45

is at the heart of this settlement, which we'll get into.

 

 

John Liss:
00:13:48

But, you know, it used to be when brokers were around in the 19 eighties, they carried a little black book.

 

 

John Liss:
00:13:55

They, you know, had listings printed out in the newspaper on paper, and information asymmetry was, you know, a big thing.

 

 

John Liss:
00:14:02

Certain brokers knew where the listings were. They knew who the sellers were.

 

 

John Liss:
00:14:05

And if you weren't in the in crowd, you didn't get the news.

 

 

John Liss:
00:14:07

And being a broker was all about kind of hoarding that data about the market.

 

 

Mike Mills:
00:14:12

Well, but, obviously Yep.

 

 

John Liss:
00:14:14

Exactly. And, obviously, you know, over the last 10, 15 years, brokerages moved online kind of early 2000, and then you have things like Zillow that come out.

 

 

John Liss:
00:14:23

I think Zillow was founded, you know, 2009 or something like that.

 

 

John Liss:
00:14:26

And, really, the democratization of of real estate search was born, and it became a lot easier for any consumer to, you know,

 

 

John Liss:
00:14:35

search on the Internet and find homes.

 

 

John Liss:
00:14:37

And, obviously, S and L spoofed this, but Zillow's basically porn to a lot of, you know, people. Yeah. And so Yeah.

 

 

John Liss:
00:14:46

And so I think what what's kind of the next generation of this transparency is, okay, brokers top brokers can still make a a big amount of money. Right?

 

 

John Liss:
00:14:54

Whether commissions go from 3 to from 6 to 3 over time, if you're a top agent, you're gonna figure out how to win in the new market that exists. And the consumer demands transparency.

 

 

John Liss:
00:15:04

And so the the vision for Glasshouse is how do we extend that transparency from the search world into, kind of the offer world?

 

 

John Liss:
00:15:13

How do we make sure that all the offers are very clear?

 

 

John Liss:
00:15:16

The commissions are communicated clearly to consumers.

 

 

John Liss:
00:15:20

All the offered terms that are constantly negotiated are are clear.

 

 

John Liss:
00:15:24

Love letters are stopped in favor of actually giving the property to the top person who is bidding the most.

 

 

John Liss:
00:15:31

And so Glasshouse is really a and pricing. That's the last piece.

 

 

John Liss:
00:15:35

You know, we offer appraisals up front as an option for consumers and for listing agents so they can kind of show the market. Hey.

 

 

John Liss:
00:15:42

We had a third party, non object an objective person come in here and show what the property's worth.

 

 

John Liss:
00:15:48

So Glasshouse is kind of this platform for listing agents to sell properties for top dollar and faster, leveraging all these

 

 

John Liss:
00:15:54

technology tools that focus on transparency, pricing, offer management, and a few other tools to really kind of showcase a

 

 

John Liss:
00:16:02

listing as best as possible and then provide additional tools to the listing agent to make the process smoother, faster, make

 

 

John Liss:
00:16:09

them more likely to get a referral, and all those kinds

 

 

Mike Mills:
00:16:12

of things. So it it sounds like I mean, one one aspect of that sounds, I don't know.

 

 

Mike Mills:
00:16:17

I guess it depends on the agent if it's good or bad, but the well, that that's the second part.

 

 

Mike Mills:
00:16:21

Let me let me say this part first.

 

 

Mike Mills:
00:16:23

So the idea that, if I'm a listing agent and one of the issues that listing agents run into today is they go sit down with

 

 

Mike Mills:
00:16:30

a client to review, you know, their listing agreement on what they think they should list the house for.

 

 

Mike Mills:
00:16:35

And because, again, realtors and lenders were doing this every day, but the average consumer is living their life doing their

 

 

Mike Mills:
00:16:42

thing and isn't involved in the real estate market until they're ready to buy or sell.

 

 

Mike Mills:
00:16:45

And so what ends up happening is, and this happens to everybody including realtors, is we always value our houses a little

 

 

Mike Mills:
00:16:51

bit more than what the market would. Right? Sometimes it's 5%, sometimes it's 50%.

 

 

Mike Mills:
00:16:56

But either way, typically speaking, owners are gonna think their house is worth more than what it actually is.

 

 

Mike Mills:
00:17:01

And so it sounds like there's a tool inside of this that could help for a listing agent to say, hey. Look.

 

 

Mike Mills:
00:17:08

This isn't my opinion of the value.

 

 

Mike Mills:
00:17:09

Look at this tool and what this technology tells us that based on other properties in the area, this is probably where this

 

 

Mike Mills:
00:17:14

house is gonna be most suited to sell.

 

 

Mike Mills:
00:17:16

And then the idea behind that, and you'd mentioned this a little bit in our previous or in our conversation before we went

 

 

Mike Mills:
00:17:22

on, was that you know and I experienced my wife's a realtor, so we experience this on a regular basis.

 

 

Mike Mills:
00:17:27

When you list your house at the very top of the market as a seller. Right?

 

 

Mike Mills:
00:17:31

You're putting it at the very, very top end of the market.

 

 

Mike Mills:
00:17:33

Well, unless there's somebody that comes along in the 1st week that just absolutely loves your house for whatever reason,

 

 

Mike Mills:
00:17:38

then that house is typically gonna sit a little bit longer.

 

 

Mike Mills:
00:17:41

And the problem with the property sitting is that the longer it sits, the less desirable it becomes to a potential buyer.

 

 

Mike Mills:
00:17:48

Because somebody looks at it and goes, why is that house been on the market for 60 days? What's wrong with it? Right?

 

 

Mike Mills:
00:17:52

Now more often than not, it's the price.

 

 

Mike Mills:
00:17:54

That's what's usually wrong with it, because anything will sell if you give it the right price.

 

 

Mike Mills:
00:17:58

So what you're saying is that what Glasshouse can do is assist the listing agent and say, hey. Look.

 

 

Mike Mills:
00:18:02

I know that you wanna list your house here and, you know, they all say we can, of course, do that.

 

 

Mike Mills:
00:18:06

But when we settle in, if we listed here, not only could we possibly get more offers because we're more competitively priced

 

 

Mike Mills:
00:18:12

in the market, but you could have a you could ensue some sort of a bidding war even in this market to where you could maybe

 

 

Mike Mills:
00:18:18

get 5 to 10% more than what the main the actual value would be if you listed appropriately.

 

 

Mike Mills:
00:18:22

So is is there a is there a tool on that on your site that actually helps with listing agents in that regard?

 

 

John Liss:
00:18:28

Yeah. So much there. I mean, that's foundational to everything that we do and and the exact purpose for Glasshouse.

 

 

John Liss:
00:18:34

So that the the kind of phenomenon that you just spoke about is, you know, very, visible in the data. Right?

 

 

John Liss:
00:18:42

If you more than 40% of listings in the country are are going through a price cut right now, and then there's another kind

 

 

John Liss:
00:18:49

of, call it, 30 to 35% that are selling with up above 97% of the original ask price.

 

 

John Liss:
00:18:57

And those listings that are not price cut and are selling at 97 percent above are selling on average within 8 days, and the

 

 

John Liss:
00:19:04

other box that has the price cuts are selling in 80 days and are going through multiple price cuts.

 

 

John Liss:
00:19:10

And so, literally, if you price your house right in America because there's just, you know, a dearth of supply in pretty much

 

 

John Liss:
00:19:16

every market, you will sell your house in 10 days. Yep.

 

 

John Liss:
00:19:19

But the example that you used is is more often than not what's happening. Right?

 

 

John Liss:
00:19:24

I put so much money into my house. You know?

 

 

John Liss:
00:19:27

I put in its all these special features.

 

 

John Liss:
00:19:29

I put in a fountain that, to me, I think, is worth $50,000, but to everyone else is worth nothing. I raised my kids here. It's a special place.

 

 

John Liss:
00:19:38

We our lot's a little bit nicer than our neighbors.

 

 

John Liss:
00:19:40

And the appraisal let us be your boogeyman. We'll come in to the agent.

 

 

John Liss:
00:19:44

The agent were will tell you the house is worth $700,000.

 

 

John Liss:
00:19:47

There's no contributory value to that fountain.

 

 

John Liss:
00:19:50

The seller is gonna be like, I wanna try 750.

 

 

John Liss:
00:19:53

That seller who ends up trying 750 is gonna end up selling their house for 675.

 

 

John Liss:
00:19:58

If they had just started at 700, they might have sold it for 7:10.

 

 

John Liss:
00:20:01

And sometimes that conversation as a realtor is really hard, especially because realtors are naturally incentivized to try

 

 

John Liss:
00:20:07

to lock things in for a 180 days and then price chop because eventually they're gonna get paid.

 

 

John Liss:
00:20:11

But if you're a consumer, you know, that's not the best thing for you because eventually you're gonna sell for less.

 

 

John Liss:
00:20:16

And if you're an agent, telling the truth is probably the best thing for you. Why?

 

 

John Liss:
00:20:20

Because if you tell the truth and you price right, it's gonna sell in 9 days.

 

 

John Liss:
00:20:23

You're gonna get to your commission faster, and you're way more likely to get a referral from that person who had a really

 

 

John Liss:
00:20:28

pleasant, you know, frictionless experience as compared to the person you had to price chop 3 times.

 

 

Mike Mills:
00:20:33

Yeah. Yeah. And and it's difficult because, you know, agents, you know, especially especially right now because deals are

 

 

Mike Mills:
00:20:40

so few and far between that nobody wants to, you know, piss off a seller and and tell them that their house isn't worth what

 

 

Mike Mills:
00:20:46

it's worth because you might lose that deal because I you know, there'll be another agent that comes in behind you, and we'll

 

 

Mike Mills:
00:20:51

just tell them whatever they wanna hear so they can get the listing. Right?

 

 

Mike Mills:
00:20:54

And it's not the best it's not the best deal for the consumer ultimately.

 

 

Mike Mills:
00:20:57

But having a third party verification, which is what we all you know, we talk about all the time in our space when it comes

 

 

Mike Mills:
00:21:03

to advertising and marketing for realtors and lenders that, you know, being on social media and being visible in places that

 

 

Mike Mills:
00:21:09

that you can be seen gives third party validation when someone recommends you as a as a referral.

 

 

Mike Mills:
00:21:14

So if I have a a realtor that's that recommends me as a lender to their client and that client then goes online and looks me up. Well, they can see me. I do podcasts. I have videos online.

 

 

Mike Mills:
00:21:24

So they know who exactly who I am.

 

 

Mike Mills:
00:21:26

So so it gives third party validation.

 

 

Mike Mills:
00:21:28

So what you're saying is that if if I'm trying to convince my client as a listing agent that this is gonna be the best strategy

 

 

Mike Mills:
00:21:35

for selling their home, then I can use Glasshouse's tools to give me third party validation and say, hey. Look. It's not just me. Here's the data. Here's how this works.

 

 

Mike Mills:
00:21:43

Here's the statistics that'll show you why this is the most effective way to do it. Don't listen to me. Look look at the data.

 

 

Mike Mills:
00:21:50

And and I that those are the kind of tools that agents need these days because it's incredibly important that we're they're

 

 

Mike Mills:
00:21:57

able to to fully share and and and and communicate their value proposition to their clients and show them why they are the

 

 

Mike Mills:
00:22:04

expert because we are moving most likely into a market to where the days of, you know, you just are neighbors with so and

 

 

Mike Mills:
00:22:13

so, and you just got your real estate license, and they're gonna call you to buy or sell their home. That's not gonna continue.

 

 

Mike Mills:
00:22:18

And and you have to be a true professional at this business.

 

 

Mike Mills:
00:22:21

You have to be, you know, we're moving into the most likely, we're moving into, like, the CPA land where you can file your

 

 

Mike Mills:
00:22:27

taxes with TurboTax and you can get the bare minimum of what you need, or you can go to a professional CPA and you can get

 

 

Mike Mills:
00:22:33

all the benefits of what that brings.

 

 

Mike Mills:
00:22:35

There's a little more cost obviously involved with that, but it can save you a lot more money.

 

 

Mike Mills:
00:22:40

It can do you a lot more good in the long term, and that's that's kinda where this market's shifting.

 

 

Mike Mills:
00:22:43

So if you're a realtor, you need to have tools available to you that are gonna help you show why you were a professional agent

 

 

Mike Mills:
00:22:51

and not just somebody that, you know, sat down for 30 minutes to try to come up with a value for a house and and just cross

 

 

Mike Mills:
00:22:56

your fingers and hopes it works out.

 

 

John Liss:
00:22:59

Totally. And, I mean, you know, especially if you're in a bake off with 5 other agents coming to that house and that listing

 

 

John Liss:
00:23:06

with an appraisal really kind of, you know, shows more credibility and shows that you're you're taking things seriously.

 

 

John Liss:
00:23:11

And we can turn any, you know, agent who even if they're new and they're not so comfortable pricing, we can turn them into

 

 

John Liss:
00:23:17

someone that looks super experienced because they have all this data available to them.

 

 

John Liss:
00:23:22

And we're so sure about this process and it working that if you list the property at the pre appraised value, which, by the

 

 

John Liss:
00:23:30

way, we offer the the appraisal for free up front, so anyone can get one right now.

 

 

John Liss:
00:23:34

If you offer that appraisal and you list at that pre appraised value, if the home doesn't sell within 30 days, we'll pay your seller $5,000 credit.

 

 

Mike Mills:
00:23:43

Wow. Okay. Well, you're really throwing down the the gauntlet there.

 

 

Mike Mills:
00:23:47

Really telling them that, you're you're super confident in your, technology. So that's awesome.

 

 

John Liss:
00:23:51

I I think the other thing also is that, you know, because of our appraisal business, we we know who the top appraisers are in every single market. You know?

 

 

John Liss:
00:23:58

We have a team of exclusive appraisers, but then we also have our software.

 

 

John Liss:
00:24:02

So we have all of these appraisers that are using our software that don't work at our company, but are just kind of, you know,

 

 

John Liss:
00:24:07

software users, and we're able to track who the top people are in each market.

 

 

John Liss:
00:24:11

So we know, you know, if we need to get something priced in Dallas, we know who the top person there is.

 

 

John Liss:
00:24:16

Obviously, it's gonna be a different person in, you know, Fort Worth versus Arlington versus Island Park, but we can kind

 

 

John Liss:
00:24:23

of make those decisions and figure that out.

 

 

Mike Mills:
00:24:25

One other aspect that you talked about on that too, which is, I'm curious as to how this would work, but the transparency piece. Right? I'm look. I'm all for transparency.

 

 

Mike Mills:
00:24:34

I think it's but to say that transparency isn't hasn't been a big player in our industry over the last few years would be

 

 

Mike Mills:
00:24:41

a little bit of an understatement, especially when it comes to multiple offers on a home. Right?

 

 

Mike Mills:
00:24:47

And, you know, this happens to everybody.

 

 

Mike Mills:
00:24:49

I've experienced it myself on, several occasions. You find a house.

 

 

Mike Mills:
00:24:54

It's been on the market for 30 days, 60 days, whatever. You're like, I we like it.

 

 

Mike Mills:
00:24:58

We wanna offer, but we're gonna offer maybe a little bit less.

 

 

Mike Mills:
00:25:00

So we're gonna ask for closing costs because it's, you know, been on the market for a minute.

 

 

Mike Mills:
00:25:04

And then you put your offer in, and then immediately you get a response back that says, we just had a showing yesterday, and we're in multiple offers. Now we have 2.

 

 

Mike Mills:
00:25:12

So give us your highest and best.

 

 

Mike Mills:
00:25:13

And everybody now we wanna assume that realtors have their ethics and, you know, there truly is another offer, and I'm I would

 

 

Mike Mills:
00:25:20

venture to guess in the vast majority of cases that is true.

 

 

Mike Mills:
00:25:23

But there are probably circumstances because human beings are human beings where, you know, you're as a buyer, you're now

 

 

Mike Mills:
00:25:30

having to put maybe extra into something that wasn't there because you have no idea if there's another offer. You don't know.

 

 

Mike Mills:
00:25:36

You there there's no way for you to ever tell.

 

 

Mike Mills:
00:25:38

So with it sounds like with Glasshouse that the offers when they come in, they're there and they're listening.

 

 

Mike Mills:
00:25:43

You can see who's offering what and so is that true?

 

 

Mike Mills:
00:25:46

Did I did I get that right?

 

 

Mike Mills:
00:25:47

Or what how does that process work?

 

 

John Liss:
00:25:49

Yeah. So we're kind of piloting multiple scenarios right now, but there's a scenario where you can toggle it basically on

 

 

John Liss:
00:25:54

and off where where you could say, okay.

 

 

John Liss:
00:25:56

The property, everything's gonna be completely visible, and it's up to you to kinda set your strategy.

 

 

John Liss:
00:26:02

That's what we think is the best in terms of maximizing for the seller, how they're gonna get the most money.

 

 

John Liss:
00:26:07

But, obviously, it's kind of a a different way of thinking about things. Yep.

 

 

John Liss:
00:26:11

But, you know, another poor part of that is setting a buy it now premium with your sellers.

 

 

John Liss:
00:26:17

So when you list the property let's say you have the appraisal comes in at 700 and you wanna list, buy it now premium at 725.

 

 

John Liss:
00:26:23

That basically is a button on our technology that says if someone comes in at 725 right now, they can just click it and within,

 

 

John Liss:
00:26:29

you know, 24 hours, they can be under contract.

 

 

John Liss:
00:26:32

Additionally, you can set different features on your platform.

 

 

John Liss:
00:26:35

So if you're a seller, you can work with your seller's agent and say, hey. I really wanna close in June. My kids gotta finish school.

 

 

John Liss:
00:26:41

If someone will do a June 30th closing, that's worth $3,000 to me.

 

 

John Liss:
00:26:45

Well, now it's really kind of qualitative when there's 7 offers coming in that the, you know, buyers gotta figure the sellers

 

 

John Liss:
00:26:51

gotta figure out which one is the best.

 

 

John Liss:
00:26:53

Now we're we're quantifying each of these attributes, and so it's a kind of new way of thinking about things.

 

 

John Liss:
00:26:58

This is gonna be more important when, you know, a lot of buyers are coming in with different buy side commission agreements.

 

 

John Liss:
00:27:04

So as a realtor, you gotta manage 7 different offers.

 

 

John Liss:
00:27:07

Each of them has a different percentage.

 

 

John Liss:
00:27:08

You're sitting here thinking, like, oh, what's the what's the net proceeds for my seller? And it can be confusing.

 

 

John Liss:
00:27:13

We provide a digital platform for all of that to be done completely.

 

 

John Liss:
00:27:17

And so these are some of the things that we're thinking about right now.

 

 

John Liss:
00:27:20

I think, ultimately, you're gonna see kind of over the next 10 years more transparency in the offer process, but I don't think

 

 

John Liss:
00:27:26

every single part of it will be kind of completely transparent overnight.

 

 

Mike Mills:
00:27:30

What's if you don't mind me asking, what how do you guys monetize this?

 

 

Mike Mills:
00:27:34

So what how do you earn how does your company earn money in that regard? Are you taking a percentage? Are you taking a flat fee? You charging for the listing?

 

 

Mike Mills:
00:27:41

Are you not charging till it closes? How do y'all structure that?

 

 

John Liss:
00:27:44

Right now, we're, kind of in, launch mode.

 

 

John Liss:
00:27:47

So we're actually just it's at no cost currently. Okay.

 

 

Mike Mills:
00:27:51

There you go.

 

 

John Liss:
00:27:52

But our plan eventually is, a combination of kind of success fees and subscriptions.

 

 

Mike Mills:
00:27:57

Okay. And then this would be a good it sounds like at least because one of the issues, and we'll we'll get start getting into

 

 

Mike Mills:
00:28:04

this a little bit, is, with this NAR settlement that came out.

 

 

Mike Mills:
00:28:07

Obviously now from what I understand, I haven't looked today, but it hasn't been officially approved yet.

 

 

Mike Mills:
00:28:12

So we're still that's still outstanding, and it's supposed to take place in July.

 

 

Mike Mills:
00:28:17

But then also, throwing a wrench into the situation, which I covered in my most recent market update was the idea that the

 

 

Mike Mills:
00:28:24

Department of Justice has now come back out and reopened the antitrust case against NAR.

 

 

Mike Mills:
00:28:28

And part of the reason that they stated, at least from what I read, that they're doing this is one of the assistant attorney

 

 

Mike Mills:
00:28:36

generals for the, United States said that, basically, as long as sellers are allowed to offer compensation to buyers' agents, there will be steering.

 

 

Mike Mills:
00:28:47

And they kind of look at it as black and white, at least the way that I interpret it.

 

 

Mike Mills:
00:28:51

So my interpretation on what the Department of Justice has stated and reason they're opening this up again is because, ultimately,

 

 

Mike Mills:
00:28:57

they want buyers to pay buyer agents and they want sellers to pay seller agents, and that's it.

 

 

Mike Mills:
00:29:02

That remains to be seen if that's what's gonna happen.

 

 

Mike Mills:
00:29:04

But my question is is let's let's factor out the the antitrust thing right now with NAR, and let's just say that this this,

 

 

Mike Mills:
00:29:12

settlement gets approved and they have take the compensation off the MLS and they have to take it out of the listing agreement.

 

 

Mike Mills:
00:29:18

And from what I understand, it's also gonna be required to not be even list mentioned in the, listing description.

 

 

Mike Mills:
00:29:24

So your platform because I've heard a lot of agents discuss about, well, if I list the house on my website and it's not on

 

 

Mike Mills:
00:29:32

the MLS, then I can put what our offer of compensation to a buyer's agent would be in that scenario because there's nothing

 

 

Mike Mills:
00:29:39

in the language currently that would prohibit that.

 

 

Mike Mills:
00:29:41

So let's just say hypothetically, everything plays out like this.

 

 

Mike Mills:
00:29:45

Would they be able to list the offer of compensation to a buyer's agent through Glasshouse and still be compliant with the way you understand it?

 

 

John Liss:
00:29:54

Yeah. So I guess let's take a step back there.

 

 

John Liss:
00:29:56

I I do not believe that the DOJ is gonna accept the settlement, but if we assume that they did accept the settlement, in the

 

 

John Liss:
00:30:04

way that I understand it and our intention is exactly that.

 

 

John Liss:
00:30:07

Glasshouse is a compliance tool for real estate agents to protect their reputation, to give and to give cover to their customers. You know, hey.

 

 

John Liss:
00:30:14

What are you doing about this settlement? And we heard this.

 

 

John Liss:
00:30:17

And it's a it's a opportunity for sellers and sellers' agents to be transparent in the process, to lay out exactly kind of

 

 

John Liss:
00:30:26

what the concessions are, what the, commission it has to be a concession, not a commission, exactly what the what the available concession is for the buy side.

 

 

John Liss:
00:30:35

And it's up to the buy side to use that concession however they want.

 

 

John Liss:
00:30:38

If they are using it for a brokerage, to pay their broker, the broker has to have that signed prior to the search.

 

 

John Liss:
00:30:47

So if this property that they end up landing on is paying out 2 a half percent, but the pre agreed number with your, you know,

 

 

John Liss:
00:30:56

party that you're working with is 1 a half percent, you don't the broker can only max out at 1a half percent. Right.

 

 

John Liss:
00:31:01

They're not gonna be able to get that 2a half percent.

 

 

John Liss:
00:31:04

And so that that's kind of what I understand the settlement to look like today. Sure.

 

 

John Liss:
00:31:10

And where Glasshouse comes in is obviously making it, allowing those concessions to be made articulating clear and consistent

 

 

John Liss:
00:31:19

from if you're a brokerage and you are protecting yourself from liability, because, obviously, all these lawsuits are going

 

 

John Liss:
00:31:24

after the brokerages and not the broker, you can have a subscription based software that is repeatable.

 

 

John Liss:
00:31:29

And every single time, all of your agents are gonna have the same exact way of listing out these concessions, which shows the market that, hey.

 

 

John Liss:
00:31:36

You're doing some something about this issue.

 

 

Mike Mills:
00:31:39

Right. Okay. Alright. So then let's let's get into, the meat and potatoes here, which is, you know, your you know, you alright.

 

 

Mike Mills:
00:31:47

So you went to to Harvard, which is in and of itself incredibly not everybody gets into there, and you graduated from their Harvard Business School.

 

 

Mike Mills:
00:31:54

So to say that, you know, you're, have a have a head on your shoulders would be, an understatement.

 

 

Mike Mills:
00:31:59

So, I want you to tell me a little bit about, you know, your process through what what you did in school and then why you

 

 

Mike Mills:
00:32:06

chose this particular topic to write your thesis on back in 20 16, and then your you know, kind of what you wrote about, and

 

 

Mike Mills:
00:32:13

then give me an idea of where you think things currently stand today.

 

 

John Liss:
00:32:19

Sure. So I kinda mentioned my background already, but kinda been a real estate junkie since I was a little kid, and went into

 

 

John Liss:
00:32:26

college knowing that I was gonna pursue a career in real estate.

 

 

John Liss:
00:32:29

I, wanted to be a developer, but I started working in the development industry after college and just realized it was kind of too slow moving. I was more frenetic. I needed kinda more chaos.

 

 

John Liss:
00:32:40

And I just, you know, waiting for zoning and things to happen over multiple years and construction plans and architecture

 

 

John Liss:
00:32:46

plans is I was gonna lose my mind.

 

 

John Liss:
00:32:48

So, I when I was in college, I decided that I was gonna write my thesis about the real estate brokerage industry in Manhattan.

 

 

John Liss:
00:32:59

I had worked in there for multiple summers and 15 months between high school and college, so I had experience in the industry.

 

 

John Liss:
00:33:07

And I just saw every day that I was working, which was, you know it's an intense market, obviously.

 

 

John Liss:
00:33:13

It's the most profitable market in the in the world.

 

 

Mike Mills:
00:33:15

Into Trump?

 

 

John Liss:
00:33:17

My boss knows him. I I I don't know. Yeah. My old boss.

 

 

John Liss:
00:33:22

And, you know, I I thought, okay. There's something here.

 

 

John Liss:
00:33:26

This is just such a weird industry.

 

 

John Liss:
00:33:27

There's so many, like, interpersonal weird, you know, deals happening kind of everywhere.

 

 

John Liss:
00:33:31

Like, there's somebody's gotta write a book about this. Yes.

 

 

John Liss:
00:33:34

And so I did a what's called an ethnographic study of the industry. So that was an interview study.

 

 

John Liss:
00:33:41

So I interviewed kind of, like, a 190 agents, some of the most top performing agents in the country, in the New York market,

 

 

John Liss:
00:33:48

and just asked them questions about their business, anything from, you know, how do you procure customers, what do you think

 

 

John Liss:
00:33:54

about this neighborhood, really kind of just a list of kind of, like, a free form, not so different from a podcast, a free

 

 

John Liss:
00:33:59

form question of maybe an hour, an hour and a half interview. Yeah.

 

 

John Liss:
00:34:03

And then I would basically take all that data and then find themes in the paper.

 

 

John Liss:
00:34:09

One of the major themes was steering, and that was before I even knew what steering was.

 

 

John Liss:
00:34:15

You would often hear brokers kinda speak in coded language about how they determine where to take a buyer.

 

 

John Liss:
00:34:23

You know, and they would say, oh, I know this buyer is gonna like new construction, or I know, like, you know, this buyer is gonna like this building.

 

 

John Liss:
00:34:29

And it's like, well, why do they like that building? It's like Right. Okay.

 

 

John Liss:
00:34:31

Because certain people live in that building, and they're like that person.

 

 

John Liss:
00:34:35

So there's kind of 2 elements to steering.

 

 

John Liss:
00:34:37

There's, you know, what has been written about in Fair Housing and Steering, which is rampant in New York, and there is so much data on that. That's pretty much widely across America.

 

 

John Liss:
00:34:46

Like, that I can't really put a dent into that literature.

 

 

John Liss:
00:34:49

But then there was also commission based steering.

 

 

John Liss:
00:34:51

You know, certain developers were paying out 5%.

 

 

John Liss:
00:34:54

All of a sudden, their customers liked new construction.

 

 

John Liss:
00:34:56

Certain, listings were paying out only 2% versus 3%.

 

 

John Liss:
00:35:01

All of a sudden, you you know, that was where people were pushing their buyers. And Right. Sometimes I don't think it's malicious.

 

 

John Liss:
00:35:07

It's just kind of capitalistic and and even potentially subconscious. When

 

 

Mike Mills:
00:35:13

you can rationalize this is the and I'm sorry to cut you off, but this is something that, as human beings, we all do.

 

 

Mike Mills:
00:35:18

We can rationalize all kinds of stuff. Right?

 

 

Mike Mills:
00:35:20

If if good information comes our way that's a benefit to us, right, whatever that may be, and we are assisting someone else

 

 

Mike Mills:
00:35:27

in doing something, if we can find a way inside of that information that is also that we feel like is beneficial to the person

 

 

Mike Mills:
00:35:36

that we're trying to assist, then it's a mutually beneficial thing.

 

 

Mike Mills:
00:35:39

Whether or not it's completely beneficial to them or, you know, the best either way, it's just it's just rationalizing something

 

 

Mike Mills:
00:35:46

that you feel like is gonna help you out to help someone else. And you're not doing it maliciously. You're just, hey.

 

 

Mike Mills:
00:35:52

This works out for both of us. Hey. It's good news. You know?

 

 

John Liss:
00:35:54

Yeah. And by the way, most of these buildings in new construction, you know, when I was doing it, it was 2012. I was 19 years old.

 

 

John Liss:
00:36:00

You were you know, there were apartments being sold left and right.

 

 

John Liss:
00:36:03

You'd walk into a new development office, and you'd be sitting with a customer, and then you'd be going through the, you know,

 

 

John Liss:
00:36:09

roll call of all the apartments that were available.

 

 

John Liss:
00:36:11

And then all of a sudden, every 5 minutes, someone was coming in from the the marketing team saying, oh, this unit's gone. This unit's gone. It was insane. Oh, yeah.

 

 

John Liss:
00:36:18

Lot of these buildings held up in value much more than some of the older kind of old world y New York buildings.

 

 

John Liss:
00:36:25

So even if the agent was making more money and it was, quote, unquote, steering, the, actually, the consumer was also ended up being better off.

 

 

John Liss:
00:36:32

But, anyway, I guess, what I noticed was that this was happening, and so it just never really kinda made sense to me.

 

 

John Liss:
00:36:38

It kinda seemed like a time bomb that, eventually, someone would look into this because it didn't feel like a lot of the times

 

 

John Liss:
00:36:45

there were agents you know, a lot of bad agents out there who didn't really have the back of their customers were really kinda

 

 

John Liss:
00:36:50

thinking, how do I maximize this deal? Yeah.

 

 

John Liss:
00:36:54

And so that kind of was my first foray into this.

 

 

John Liss:
00:36:57

And then, obviously, I've been tracking this story over the last couple years.

 

 

John Liss:
00:37:00

And, you know, you have a lot of people kind of who are, like who were talking about, you know, NAR is super powerful, NAR is effective, and they are.

 

 

John Liss:
00:37:06

They they do deliver value, but, that doesn't mean that they're not impenetrable.

 

 

Mike Mills:
00:37:10

Right. Yeah. It's, it's it's been it's been a situation where, you know, I think that, and I've I've heard this argued by

 

 

Mike Mills:
00:37:20

other realtors, right, where it it was kind of a perfect storm situation.

 

 

Mike Mills:
00:37:24

And I I do think personally, I think that there is some big money interests, that are looking and have been looking for years

 

 

Mike Mills:
00:37:31

to penetrate into real estate because it's 30% of our national GDP.

 

 

Mike Mills:
00:37:35

And there's so much money that comes in and out and transactions that occur that is, you know, the the profits that can be

 

 

Mike Mills:
00:37:41

made inside of the real estate industry as a whole, and I'm not just talking about buying and selling, I'm talking about all

 

 

Mike Mills:
00:37:45

aspects of it, have have always been an incredibly lucrative business to be involved, which is why I think if, I don't know

 

 

Mike Mills:
00:37:52

the exact number, but I think I read one time, it's like 90 90% of the millionaires in the United States, you know, earned

 

 

Mike Mills:
00:37:58

most of their, you know, wealth in real estate.

 

 

Mike Mills:
00:38:01

So there certainly has been a big target on us for a long time.

 

 

Mike Mills:
00:38:05

And back in the 19 seventies, if you were a real estate agent and the Internet didn't exist, you had to go to an office.

 

 

Mike Mills:
00:38:11

You had to pull up all the current listings that came through through the fax machine or whatever it is at that point.

 

 

Mike Mills:
00:38:16

You had to put all those together.

 

 

Mike Mills:
00:38:18

You had to go take them to your clients.

 

 

Mike Mills:
00:38:19

You had to go through them and figure out which ones you were gonna go see that day.

 

 

Mike Mills:
00:38:23

And then you had to go look at maybe 15 or 20 houses on a weekend, drive them around in your car. You decided you were making offer.

 

 

Mike Mills:
00:38:29

You had to call that other agent.

 

 

Mike Mills:
00:38:30

You had to drive over there to get to sign the documents.

 

 

Mike Mills:
00:38:32

You had to drive back to your client's house to get them to sign. There's all this back and forth.

 

 

Mike Mills:
00:38:37

The amount of time that it took to put a deal together was tremendous because of the lack of technology at that point, but that was just what we did.

 

 

Mike Mills:
00:38:43

Whereas fast forward to today, and now it the Internet exists.

 

 

Mike Mills:
00:38:48

People can go online and look at Zillow and they can find or or get an email in the MLS, you know, of a property that matches

 

 

Mike Mills:
00:38:54

their description, and they can have 20 properties that they can sort through, narrow it down to 3, and go see those 3.

 

 

Mike Mills:
00:38:59

And then once they have one that they wanna make an offer on, the the realtor can type up a few things into a a document that's

 

 

Mike Mills:
00:39:06

already pre prepared, send it to them, fill it out.

 

 

Mike Mills:
00:39:09

Obviously, there's there's a ton of advice and there's a ton of, consultation that goes on with all this, so I don't wanna

 

 

Mike Mills:
00:39:15

make it sound like, you know, there's not other value here.

 

 

Mike Mills:
00:39:18

But, just talking about the nuts and bolts of the process, and now that buyer can sign that document.

 

 

Mike Mills:
00:39:23

That document can be sent to the seller and the seller's agent. They can sign it online. Nobody has to go anywhere.

 

 

Mike Mills:
00:39:27

Nobody has to do anything, and now you've got an executed deal.

 

 

Mike Mills:
00:39:30

So and then when you add on top of that, the fact that the median home price in 1982 or whatever it was was $70,000 and now

 

 

Mike Mills:
00:39:38

it's $412,000, That percentage now carries a much heavier weight.

 

 

Mike Mills:
00:39:43

And so when you have people that are I don't and I've talked to realtors about this too.

 

 

Mike Mills:
00:39:48

I have never I've had very few realtors that I can say when I ask them, when's the last time you had a client that you've

 

 

Mike Mills:
00:39:54

worked with in the past, buyer or seller, say anything to you in regards to what was paid to sell their home?

 

 

Mike Mills:
00:39:59

Because for the most part, consumers were generally like, this is how it works. I'm I'm okay with it.

 

 

Mike Mills:
00:40:04

Nobody where there wasn't, like, this big swelling of everybody angry because realtors were making too much money, especially

 

 

Mike Mills:
00:40:10

because the average realtor closes one transaction a month.

 

 

Mike Mills:
00:40:12

So it wasn't like these people are getting, they're not millionaires.

 

 

Mike Mills:
00:40:17

But all of a sudden, you get these, you know, phone calls and emails and said, hey.

 

 

Mike Mills:
00:40:22

Did you know your realtor made this much?

 

 

Mike Mills:
00:40:23

And did they do that much for you?

 

 

Mike Mills:
00:40:24

And there's kind of this baiting that goes on.

 

 

Mike Mills:
00:40:26

And and then all these people pile into these class action suits, and then they start popping up all over the country.

 

 

Mike Mills:
00:40:31

And this kind of stuff, in my opinion, is coordinated because you can't just you know, it wasn't just some angry person. It's like Erin Brockovich.

 

 

Mike Mills:
00:40:38

You know, it wasn't a situation like that where some housewife was mad about something and took over the world. It that didn't happen.

 

 

Mike Mills:
00:40:44

So so when you have these these big money interests that are pushing against the industry as a whole and now trying to find

 

 

Mike Mills:
00:40:51

a way of who we're gonna villainize, who's gonna be the evil person in this transaction.

 

 

Mike Mills:
00:40:56

And, of course, they pick the realtors because you can't say it was the fed for making money too cheap for the last, you know,

 

 

Mike Mills:
00:41:03

5 years when, you know, basically money was free.

 

 

Mike Mills:
00:41:05

They're not allowed to say that it's, corporate interests that are buying up properties at record paces, and and turning them into rentals.

 

 

Mike Mills:
00:41:12

And, you're not gonna blame it on the news media for, you know, villainizing these people over the years. So they're going after the realtor.

 

 

Mike Mills:
00:41:19

So, we're in an environment now where we're we're moving to a place where things are going to change. They're going to be different.

 

 

Mike Mills:
00:41:28

And good or bad, you have to be aware that this stuff is occurring.

 

 

Mike Mills:
00:41:32

And so from your point of view, when you look at everything that's occurring and happening in the market, why do you think,

 

 

Mike Mills:
00:41:38

you know, just in your opinion, how do you think we got to this point where we're now we're at a place where, you know, the

 

 

Mike Mills:
00:41:44

our entire industry is being turned upside down in less than a year because of all these lawsuits.

 

 

John Liss:
00:41:51

Yeah. I mean, that's a very loaded question.

 

 

John Liss:
00:41:54

I'll try to kind of pull on some of the threads that I think, had to do with this. Obviously, asset prices is number 1. Yes.

 

 

John Liss:
00:42:02

And if you look at other countries in the world, you know, the average commissions paid out in England, for example, are 1 a half percent.

 

 

John Liss:
00:42:08

So 6% is just a lot, especially in a world where many buyers are putting down less than 6%, and there's an affordability crisis in America.

 

 

John Liss:
00:42:18

And so you have this big number that just seems large. Right?

 

 

John Liss:
00:42:23

And I think that's obviously kind of number 1.

 

 

John Liss:
00:42:27

Number 2 speaks to kind of this the search and discovery.

 

 

John Liss:
00:42:30

The role of the broker has changed.

 

 

John Liss:
00:42:31

It's not so much about finding the listings, and that was a huge kind of point of purpose.

 

 

John Liss:
00:42:38

Number 3, the average consumer is just a lot smarter.

 

 

John Liss:
00:42:41

So, you know, the the services provided to to the, buyer are different now.

 

 

John Liss:
00:42:47

Most people can see dog per square foot data. Most people can pull comps theirself.

 

 

John Liss:
00:42:52

Most people can set up tours themselves.

 

 

John Liss:
00:42:55

And so there's just a lot more kind of self-service options out there that makes 6% seem scary.

 

 

John Liss:
00:43:02

And, by the way, you've already seen in New York and I I recognize New York is is New York and, you know, outside of maybe

 

 

John Liss:
00:43:09

LA, there's not really other markets that see pricing like that. Maybe Miami now too.

 

 

John Liss:
00:43:13

But we've seen commissions come down in the super luxury market to 4% already just because the commission numbers are just, you know, very high.

 

 

John Liss:
00:43:22

I think also, you know, unfortunately, and I think a lot of realtors will, agree with this, especially the good ones, is a

 

 

John Liss:
00:43:30

lot of these shows on HGTV and Bravo and everything, you know, they brag about the size of the commissions as if this is,

 

 

John Liss:
00:43:37

like, a normal thing that most people are making $500,000 on a deal. Right.

 

 

John Liss:
00:43:41

That pushed a lot of people into the industry that were like, oh, I can be a realtor too, and I can make a lot of money.

 

 

John Liss:
00:43:47

And that kind of diluted the quality of the realtor.

 

 

Mike Mills:
00:43:50

Then rise the lifestyle. Yeah.

 

 

John Liss:
00:43:52

Those bad realtors, you know, created a stigma for the profession that basically, you know, was a negative one. Yeah.

 

 

John Liss:
00:44:01

And, unfortunately, that, you know, has an impact on the kind of general perception of what a realtor's worth, even though

 

 

John Liss:
00:44:09

really good appraiser really good realtors, excuse me, can be worth their val value and more. Yeah.

 

 

John Liss:
00:44:15

And so I think the last piece as well is is most people realize that not all buyers are the same.

 

 

John Liss:
00:44:22

And so to kind of have a generalized commission structure might not make the most sense, kinda similar to what the appraisal

 

 

John Liss:
00:44:29

industry is seeing with this continuum of options.

 

 

John Liss:
00:44:31

If I bought 6 houses already and I grew up in the same town where I'm still at, like, I know the market. I understand how transactions work.

 

 

John Liss:
00:44:40

I might not wanna pay someone 2a half, 3%.

 

 

John Liss:
00:44:43

But if I'm a first time home buyer or if I'm moving to Austin for the first time and I get connected with a realtor who is

 

 

John Liss:
00:44:50

not just a realtor, but is almost like a tour guide.

 

 

John Liss:
00:44:52

Like, oh, your kids should go to this school or sign them up for this program, or this is the coffee shop you should go to,

 

 

John Liss:
00:44:57

or this pharmacy is great, or I I got a therapist for you, whatever it is. Like Yeah.

 

 

John Liss:
00:45:01

That broker is delivering a different service in addition to, you know, contracts and negotiations.

 

 

John Liss:
00:45:07

And so to that buyer, that broker might be worth 3%, 4%, whatever it is.

 

 

John Liss:
00:45:12

And so what I believe is if this is not the buy side broker going away, it's a buy side broker evolving.

 

 

John Liss:
00:45:18

And so those kind of that evolution will mean that just higher quality brokers are gonna survive and really kind of take more of the market.

 

 

John Liss:
00:45:28

So I I really think it's actually probably a good thing for a lot of brokers out there.

 

 

Mike Mills:
00:45:32

No. And I actually hear that quite a bit. It it's funny.

 

 

Mike Mills:
00:45:35

When I talk to when I talk to a group of realtors or brokers, you know, there's a different vibe.

 

 

Mike Mills:
00:45:40

But when I talk to an individual, realtor or broker, most of them do say that. They do say, yeah.

 

 

Mike Mills:
00:45:46

We're not real thrilled about how all this is working out because it's changed, but, ultimately, we think it's gonna be good

 

 

Mike Mills:
00:45:51

for the industry because the professionals or the cream of the crop are gonna rise, you know, to the occasion.

 

 

Mike Mills:
00:45:56

And then the all of the, you know, part time folks that just kinda flooded the market over the last 3 years that came into

 

 

Mike Mills:
00:46:03

real estate are gonna eventually go away, and and this is gonna be a good thing. And this is I mean, look.

 

 

Mike Mills:
00:46:08

The mortgage industry is a prime example of this because we went through this in 2,008 when prior to 2,008, you know, if you

 

 

Mike Mills:
00:46:15

go watch the the big short, you see, you know, Steve Carell interviewing the 2 bros, you know, at the bar talking about giving loans to strippers. Like Yeah.

 

 

Mike Mills:
00:46:23

That was a real thing that occurred. And Yeah.

 

 

Mike Mills:
00:46:25

And it needed a a a kind of a slap down in in order to change everything.

 

 

Mike Mills:
00:46:30

So that way, the professional mortgage banks and the professional lenders would, you know, have a lot more requirements on on them.

 

 

Mike Mills:
00:46:37

So then that way, the consumer was protected in a better way, and you don't have guys that are out there taking advantage of the system.

 

 

Mike Mills:
00:46:42

And I think that this will probably have a similar result.

 

 

Mike Mills:
00:46:46

And and like I said, most agents feel like that's a pretty good thing.

 

 

Mike Mills:
00:46:49

They don't feel like that's a bad thing.

 

 

Mike Mills:
00:46:51

You said something a minute ago, which I I kind of agree with, but I wanna I wanna know why.

 

 

Mike Mills:
00:46:56

So the you said that you do not expect the Department of Justice to accept the settlement that, that NAR went into with the Citro Burnett case.

 

 

Mike Mills:
00:47:03

So, tell me a little bit about why you think that is, and then what do you think you know, obviously, you don't know. I don't know.

 

 

Mike Mills:
00:47:09

You know, this we're just we're just going off of what we think.

 

 

Mike Mills:
00:47:13

But, what's your opinion on where you think some of this might be headed ultimately?

 

 

John Liss:
00:47:19

Yeah. I mean, so I think two reasons.

 

 

John Liss:
00:47:21

Number 1 is, like, they their the clear objective is to eliminate steering. Yes.

 

 

John Liss:
00:47:25

And so if everybody's talking about a workaround, that's not gonna eliminate steering.

 

 

John Liss:
00:47:32

So that's kind of, you know, the obvious thing.

 

 

John Liss:
00:47:34

The second point is the reaction that realtors have had.

 

 

John Liss:
00:47:39

I think you've seen a lot of realtors go on LinkedIn and Twitter and and podcasts and all these different mediums kind of

 

 

John Liss:
00:47:45

almost bragging about how they're gonna make it work and find alternate ways to keep status quo. Yep.

 

 

John Liss:
00:47:53

And they're doing themselves a disservice by doing that, because it's basically kind of like rubbing it in the face of the Department of Justice that, hey. We're gonna just ignore you.

 

 

John Liss:
00:48:04

And I think it would have been better if that was their plan to kind of just stay quiet.

 

 

Mike Mills:
00:48:09

I've actually had I've actually had several, again, several brokers that I've talked to that have said just that.

 

 

Mike Mills:
00:48:15

They basically told her, stop talking about it.

 

 

Mike Mills:
00:48:17

Like, it's just you're you're not helping yourself by saying you're gonna do this and you're gonna do that. Just leave it alone.

 

 

Mike Mills:
00:48:22

But, you know, you there's millions of realtors out there, and you can't control everybody.

 

 

John Liss:
00:48:25

So Yeah. And I think, you know, people wanted to kind of create a rallying cry that they're gonna punch back or something.

 

 

Mike Mills:
00:48:32

Yes.

 

 

John Liss:
00:48:33

But I I don't think that that was doing anybody any service services.

 

 

John Liss:
00:48:38

And so I think those are the two reasons. 1 is just, like, the reaction that has is gonna kinda push someone to take a more aggressive approach.

 

 

John Liss:
00:48:45

And then the first one is just the objective doesn't appear to have been reached, and so I think they're gonna do whatever

 

 

John Liss:
00:48:51

to make sure the objective is reached.

 

 

John Liss:
00:48:53

And I think what that means is making it really clear that, hey.

 

 

John Liss:
00:48:57

If you're working with a buyer, you know, you have to document upfront what your commission is, and that's your commission.

 

 

John Liss:
00:49:03

It doesn't matter what the sell side is going to pay of it.

 

 

John Liss:
00:49:05

It has to be upfront documented, and you can't push a certain seller, therefore I'm sorry, a certain buyer, therefore, into

 

 

John Liss:
00:49:13

a specific listing because the seller number is higher.

 

 

Mike Mills:
00:49:17

Right. So do you think what I said earlier about ultimately because I think the whenever we come to, judgments like this, simplicity is always the better route. Right?

 

 

Mike Mills:
00:49:28

Because the more room you leave for gray area, the more room you leave for interpretation, then the more more workarounds come about. Right?

 

 

Mike Mills:
00:49:37

So my opinion is is that if the Department of Justice has its way, which, you know, they are the Department of Justice, so

 

 

Mike Mills:
00:49:43

they can typically get what they want, that they will say, if you're a buyer, you have to pay your buyer agent.

 

 

Mike Mills:
00:49:50

If you were a seller, you have to pay your seller agent, and there is no no if, ands, or buts. Sellers cannot pay buyers. They can't pay buyer agents. That that's not allowed, period. End of story. No questions asked.

 

 

Mike Mills:
00:50:02

That's what it seems like is gonna happen.

 

 

Mike Mills:
00:50:04

In your opinion, do you think that that's the route, or do you think there's still gonna be room in there for a seller to

 

 

Mike Mills:
00:50:10

offer comp or to I mean, not even saying the word offer compensation. They've explicitly said that they would.

 

 

Mike Mills:
00:50:15

Do you think there's a world in which a seller can still pay a buyer's agent once all this shakes out?

 

 

John Liss:
00:50:21

Yes. I do. I do think so.

 

 

John Liss:
00:50:22

Number 1, I think that what what hasn't been discussed, which is kind of important, is if if the buy side is expected to come

 

 

John Liss:
00:50:30

out of pocket for this, you know, obviously, that would need to be financeable somehow because most Americans just don't have

 

 

John Liss:
00:50:37

3% of the asset price, like, rolling around.

 

 

John Liss:
00:50:40

And then second is, this would affect the appraisal process too, because the asset values would be different, and concessions

 

 

John Liss:
00:50:49

would concessions are have a kind of special place in the appraisal process.

 

 

John Liss:
00:50:53

It's it's a little technical, but the TLDR of that is that we we would need to be thinking about the appraisal process and

 

 

John Liss:
00:50:59

kind of how this impacts the appraisal, and we don't want more appraisals to come in low, if they shouldn't come in low.

 

 

John Liss:
00:51:05

So those are kind of 2 pieces, but, ultimately, I think that the sell side is gonna be able to offer a concession amount.

 

 

John Liss:
00:51:12

I just don't think that the buy side is going to be able to pick which property they end up selling the their buyer on because

 

 

John Liss:
00:51:20

of that, because they're gonna have this prepaid agreement with their buyer.

 

 

Mike Mills:
00:51:25

So you can right now, I mean, the the system exists where, as a seller, you can offer concessions, and that's no problem.

 

 

Mike Mills:
00:51:32

The issue comes into play with the concessions is that, you know, it's limited depending on the type of loan.

 

 

Mike Mills:
00:51:39

So if you do a VA loan, you have a 4% max. If you do FHA, it's 6%.

 

 

Mike Mills:
00:51:44

Conventional varies depending on how much money you're putting down, 3 to 9% just depending on, you know, if you're putting down the minimum or 20%. So it's there.

 

 

Mike Mills:
00:51:52

But, again, this goes back to having buyer's agents be very clear upfront because and right now, if someone's getting concessions, like, as a lender, I'm hey. They'll pay your closing costs.

 

 

Mike Mills:
00:52:02

This is gonna help you keep money out of pocket.

 

 

Mike Mills:
00:52:03

Well, now that concession may be going to pay your agent, and that's a whole other conversation that they have to have.

 

 

Mike Mills:
00:52:09

I I personally don't see a world in which they're gonna go back to financing that into the loan because the problem with that

 

 

Mike Mills:
00:52:18

is that this is that was the whole reason we got to where we were in 2008, 2009 was because loan values were higher than the appraised values of the property.

 

 

Mike Mills:
00:52:28

And therefore, when the market, you know, went in the opposite direction, people were underwater, and and the the lending

 

 

Mike Mills:
00:52:34

industry as a whole does not wanna get back to that.

 

 

Mike Mills:
00:52:37

So I don't know that there's gonna be and I've heard realtors say, well, we'll just figure out a way to finance it. And I'm like, I mean, maybe. I I look. I'm I'm up for anything.

 

 

Mike Mills:
00:52:46

But just looking at it logically, I don't see a world in which that occurs, not to mention the fact that you're putting now

 

 

Mike Mills:
00:52:52

the onus on the the GSEs and HUD to to completely change their requirements and their regulations and their underwriting guidelines

 

 

Mike Mills:
00:53:00

to allow for that to be financed in.

 

 

Mike Mills:
00:53:02

Now I do think one thing that they have to do and they have to do quickly, and I don't even know why I'm not seeing this anywhere

 

 

Mike Mills:
00:53:08

other than people like us talking is the VA has to change their requirements, like, today, you know, or or immediately.

 

 

Mike Mills:
00:53:15

Because right now, veterans cannot they're not allowed.

 

 

Mike Mills:
00:53:18

It's one of the non allowables to pay a realtor commission, and that I mean, you can't have that in this new world that we're about to step into.

 

 

Mike Mills:
00:53:24

So so that certainly has to change.

 

 

Mike Mills:
00:53:27

And I haven't seen that brought up.

 

 

Mike Mills:
00:53:28

But but outside of that, I just don't know a place in which where they're gonna be able to finance it.

 

 

Mike Mills:
00:53:34

And and, yes, you know, when you're saying can a seller still pay it, they absolutely could through concessions.

 

 

Mike Mills:
00:53:40

But I guess what I'm asking is, do you see a world in which outside of concessions, if they don't raise the max on that I mean, I could see that too.

 

 

Mike Mills:
00:53:46

Maybe FHA says, you know, you can do 9% now for concessions as opposed to 6. You know, maybe that happens. I'm not really sure.

 

 

Mike Mills:
00:53:54

But do you see a world in which there's a lot literally a line item on the closing disclosure that the the seller is paying

 

 

Mike Mills:
00:54:00

to the buyer agent, you know, broker or anything like that?

 

 

John Liss:
00:54:04

I think so. I mean, it's not it's again, it's gonna be somehow mangled into this concession, conversation. And so I agree with you.

 

 

John Liss:
00:54:12

There's still a lot to figure out.

 

 

John Liss:
00:54:14

You know, the government is not typically known, especially some of these agencies related to the mortgage world, to to move exceptionally fast. And Yes.

 

 

John Liss:
00:54:23

I would argue that July 1st is is a relatively fast timeline for some of these, agencies to get moving.

 

 

John Liss:
00:54:31

However, we did see COVID, a lot of alternatives quickly, made to provide liquidity to the market, which is obviously, you

 

 

John Liss:
00:54:41

know, the number one objective of these government entities.

 

 

John Liss:
00:54:44

So it is possible that they can, you know, create more certainty, in the next 3 months, But I agree with you.

 

 

John Liss:
00:54:52

I think it's it's absolutely essential that we get this certainty, because right now, you know, I think part of the anxiety

 

 

John Liss:
00:54:59

is just it doesn't feel it feels chaotic.

 

 

John Liss:
00:55:01

It doesn't feel I I know that some of us have been knowing that this is gonna happen for or at least thinking it was gonna

 

 

John Liss:
00:55:07

happen for 5, 6, 7 years, but it doesn't feel like there's a plan, in in some of the areas.

 

 

Mike Mills:
00:55:13

No. And that's the most disconcerting part of this whole thing is that there is no clear guidance on what's gonna happen.

 

 

Mike Mills:
00:55:19

There's so many questions, and and it's it's it's it it couldn't be this couldn't be happening at the worst.

 

 

Mike Mills:
00:55:25

I mean, it's like the worst possible time for it to occur.

 

 

Mike Mills:
00:55:28

We're in a place where, like you said before, we're in a housing affordability crisis. Housing is so incredibly unaffordable compared.

 

 

Mike Mills:
00:55:35

I mean, I I saw a chart the other day again.

 

 

Mike Mills:
00:55:37

I think it was, like, 1982 where the average household income in 1982 was, let's say, you know, $39,000.

 

 

Mike Mills:
00:55:44

Again, I don't remember the numbers exactly.

 

 

Mike Mills:
00:55:46

And the the average home price was, like, 70.

 

 

Mike Mills:
00:55:48

And then today, fast forward to 2024, and the average income US income is, like, $75,000 household income, and the average median home price is $420,000.

 

 

Mike Mills:
00:55:59

I mean, it's it is insane, and it's not sustainable.

 

 

Mike Mills:
00:56:02

And part of the you know, we're not building more houses.

 

 

Mike Mills:
00:56:05

You know, we have the lock in effect taking place where you have people with 2 and 3 and 4% mortgage rates that are not looking to sell.

 

 

Mike Mills:
00:56:10

Buyer or excuse me, builders don't wanna overleverage themselves and put too much out in their supply because cost for them

 

 

Mike Mills:
00:56:16

has gone up so much that they're not trying to build homes that they can at least you know, because they're still beholden to their shareholders.

 

 

Mike Mills:
00:56:22

So it's not like we have this glut of supply that's coming.

 

 

Mike Mills:
00:56:25

And, oh, by the way, interest rates are up, you know, and and going up.

 

 

Mike Mills:
00:56:30

Because after the inflation data came out and after the, job report came out, which I've got all kinds of issues with that

 

 

Mike Mills:
00:56:36

and and where those numbers actually are.

 

 

Mike Mills:
00:56:38

But but either way, the headlines show that the economy's great. We're booming, and everything's awesome. And so rates keep going up.

 

 

Mike Mills:
00:56:46

You know, the 10 year treasury yield is going through the roof.

 

 

Mike Mills:
00:56:49

So all of this stuff is occurring, and all the while, we are now threatening additionally the the facilitators of the housing

 

 

Mike Mills:
00:56:57

industry, which is, again, 30 percent of our GDP.

 

 

Mike Mills:
00:56:59

So so how how does all this stuff resolve itself?

 

 

Mike Mills:
00:57:03

I mean, are we on a good tie do we think there's gonna be some some answers in July?

 

 

Mike Mills:
00:57:07

Do you think it's gonna be kicked down the road, and we're just gonna keep getting drugged through this world of unknowns?

 

 

John Liss:
00:57:12

Well, if everyone uses Glasshouse, so it'll be fine.

 

 

Mike Mills:
00:57:15

There you go. Exactly. Exactly.

 

 

John Liss:
00:57:18

I think, you know, clear transparency and and a system.

 

 

John Liss:
00:57:22

I think, you know, I have gone through this on the appraisal side, in the last couple years.

 

 

John Liss:
00:57:27

There have been some launches, and the GSEs are are attempting to, as they should, kinda modernize the appraisal industry.

 

 

John Liss:
00:57:34

But a lot of the rollouts have been, confusing for a lot of stakeholders in the ecosystem.

 

 

John Liss:
00:57:39

You know, nobody knows who's responsible for each of the tasks that are in the entire manufacturing process, and so adoption has been really hard.

 

 

John Liss:
00:57:47

So I think the more communicative and clear things can be with an exact kind of, like, this is how what you need to do.

 

 

John Liss:
00:57:55

Here are the platforms that we approve to kind of get this done.

 

 

John Liss:
00:57:58

This is exactly how the commission could should be discussed.

 

 

John Liss:
00:58:01

This is exactly how the concession should be discussed.

 

 

John Liss:
00:58:04

This is how the VA is gonna, respond.

 

 

John Liss:
00:58:06

This is how FHA is gonna respond.

 

 

John Liss:
00:58:08

Like, all of that in one place would be hugely valuable, obviously.

 

 

Mike Mills:
00:58:12

Right. But are they gonna do that?

 

 

John Liss:
00:58:14

I mean

 

 

Mike Mills:
00:58:16

it doesn't seem like everybody's just staring that ship at this point.

 

 

John Liss:
00:58:19

Yeah. I I I don't know. I mean, obviously, you know, I was not I was in high school in 2009, so I was not really kinda paying

 

 

John Liss:
00:58:26

attention as much as I am now. Yeah.

 

 

John Liss:
00:58:28

So I know that guidance historically has been confusing.

 

 

Mike Mills:
00:58:33

Yeah. Yeah. Yeah. Well, they had to in 2009 because the entire economy fell apart, and we almost, you know, lost everything.

 

 

Mike Mills:
00:58:39

So they had figure out things quickly.

 

 

Mike Mills:
00:58:40

Right now, we're just kinda skirting along without any real changes.

 

 

Mike Mills:
00:58:44

One last thing before I let you go.

 

 

Mike Mills:
00:58:46

I do wanna know, so since you exist in this space a little bit, what are you aware of any other, you know, technology platforms

 

 

Mike Mills:
00:58:53

or any other, you know, new new ideas on how to transact real estate that are coming to market that you've seen that you think

 

 

Mike Mills:
00:59:01

are interesting or or have any kind of merit to it?

 

 

Mike Mills:
00:59:03

Obviously, you know, not any direct competitors with Glasshouse and and True Footage, but, have you seen anything out there,

 

 

Mike Mills:
00:59:09

because you're in the technology and real estate space that you think is promising?

 

 

John Liss:
00:59:14

Yeah. I mean, there are a bunch of other companies, you know, Clear Capital's, and Class Valuation are other companies in

 

 

John Liss:
00:59:19

my space that are trying to modernize.

 

 

John Liss:
00:59:23

And, there are a few kind of, like, early entry start ups that are trying to build technology platforms as well.

 

 

John Liss:
00:59:31

New Zip is another one that I know of.

 

 

John Liss:
00:59:33

So there's definitely kind of a lot of innovation happening in the space, and then a lot of the lenders are are investing

 

 

John Liss:
00:59:38

big money, in, you know, innovation, AI, all these categories.

 

 

John Liss:
00:59:42

Rocket and UWM are spending, you know, 1,000,000 of dollars a year kind of in this space.

 

 

John Liss:
00:59:47

So I think it's, you know, both the incumbents and kind of, you know, very early stage companies that are all trying to move the industry forward.

 

 

Mike Mills:
00:59:55

Well, I really appreciate you, hopping on with us, John.

 

 

Mike Mills:
00:59:58

I know, you know, this is this is, obviously, a hot topic for everybody around, the industry these days, and the uncertainty

 

 

Mike Mills:
01:00:05

is the worst part of it is is nobody knows what's gonna happen, and we can sit here and speculate all day long as to what

 

 

Mike Mills:
01:00:10

could happen and how this could play out.

 

 

Mike Mills:
01:00:12

But until we get some real direction, we're all just kind of, you know, shooting into the wind. Nobody really knows what's going on.

 

 

Mike Mills:
01:00:17

But, before we go, what would you tell a realtor that is existing right now, in trying to find how to navigate, you know,

 

 

Mike Mills:
01:00:26

this change with a little bit of uncertainty?

 

 

Mike Mills:
01:00:28

You know, what do you feel like is the most important thing that they need to be focusing on right now to make sure that they're

 

 

Mike Mills:
01:00:34

that they make it through onto the other side of this?

 

 

John Liss:
01:00:38

I think the best piece of advice would just be to embrace the future versus trying to basically pretend like it's not gonna happen.

 

 

John Liss:
01:00:44

Like, the this is a new world.

 

 

John Liss:
01:00:47

Commissions might go down, but, if you prepare yourself, if you kind of tool yourself with technology and different opportunities

 

 

John Liss:
01:00:55

to make yourself more of an expert in your neighborhood, in your market, you're gonna win.

 

 

John Liss:
01:01:00

And a lot of people are gonna be tired.

 

 

John Liss:
01:01:02

A lot we're seeing in the appraisal industry right now.

 

 

John Liss:
01:01:04

A lot of people have left the industry.

 

 

John Liss:
01:01:06

There's just not a lot of work, but there's some people that are doing really well.

 

 

John Liss:
01:01:10

And so, I think there's realtors that can kind of experience the same if they buckle down and and and, you know, learn about what's going on around them.

 

 

Mike Mills:
01:01:19

Yeah. It is, change is never fun, and it always breeds opportunity.

 

 

Mike Mills:
01:01:24

And knowing where the opportunity is is the most important part because the more information that you take in, the more awareness

 

 

Mike Mills:
01:01:30

you are of platforms that are coming on board that can help you do your job better, the the better you're gonna be equipped to move forward.

 

 

Mike Mills:
01:01:36

Because as you know, and I don't think anybody can argue, real estate is gonna continue to be bought and sold.

 

 

Mike Mills:
01:01:42

It's not the industry is not going away. And, it may shift. It may change.

 

 

Mike Mills:
01:01:47

It may there may be some small adjustments into how transactions are handled, but it's not going away.

 

 

Mike Mills:
01:01:51

It's in a slow period right now, and it's you know, we went from the greatest real estate market in the history of the country

 

 

Mike Mills:
01:01:58

to one of the worst in less than 24 months, and that is a big shock to the system for a lot of people in the industry.

 

 

Mike Mills:
01:02:04

But, you know, when you have a big time of of when you have a time of big opportunity and big money coming through, there's

 

 

Mike Mills:
01:02:10

a lot of bad actors that get into the business, and this is kind of a calling of that to kinda minimize.

 

 

Mike Mills:
01:02:15

It's just a matter of survival at this point and making sure that you can can still provide for your family, but there will

 

 

Mike Mills:
01:02:21

be opportunity on the other side of this.

 

 

Mike Mills:
01:02:23

And while the market is slow and while things are kind of changing and adjusting, this is the time.

 

 

Mike Mills:
01:02:28

It's so important right now to really sit down and look at your business, evaluate it, come put together your value proposition,

 

 

Mike Mills:
01:02:35

find out where your strengths are in the market, and highlight those to your past clients.

 

 

Mike Mills:
01:02:39

Make sure you have a strong database of people that you reach out to, and provide content educational on the process of buying

 

 

Mike Mills:
01:02:46

a home, why yours why it's so important to carry an agent and have an agent, and all the tools like Glasshouse that you can

 

 

Mike Mills:
01:02:52

use to help your buyers and sellers be able to make sure that that what they're paying you and the compensation that you are

 

 

Mike Mills:
01:02:59

getting, you are absolutely earning, if not more than that.

 

 

Mike Mills:
01:03:01

And, you know, it's not an easy thing to do because if it was, everybody would do it.

 

 

Mike Mills:
01:03:05

This is gonna be something that's a bit of a challenge.

 

 

Mike Mills:
01:03:07

And if you haven't done it before, it's gonna be it's gonna be a new thing.

 

 

Mike Mills:
01:03:11

But, if you do it well and you really put your nose to the grindstone and work, you will come out the other side because there

 

 

Mike Mills:
01:03:17

will be a lot of very successful, very professional realtors that continue to thrive in their individual markets.

 

 

Mike Mills:
01:03:23

And, it's just a matter of, you know, if you if you're gonna be that 1 or if you're gonna be working in insurance next year or something. I don't know.

 

 

Mike Mills:
01:03:30

Even though that in that industry is not doing so a lot either. They're incredibly expensive.

 

 

Mike Mills:
01:03:34

So well, John, again, I appreciate your time.

 

 

Mike Mills:
01:03:36

Thank you so so much for hopping on with me and, and going through all this.

 

 

Mike Mills:
01:03:40

I know that, it's, you know, it's like I said, it's not a fun topic to talk about all the time because, you know, what what

 

 

Mike Mills:
01:03:46

you guys have done with, with Glasshouse and True Footage has been great because the technology pieces are incredibly important

 

 

Mike Mills:
01:03:52

to be adding to what your repertoire of tools that you have as a realtor, and I thank you for all the work that you did with

 

 

Mike Mills:
01:03:59

us and then sitting here with us for an hour to talk about it.

 

 

John Liss:
01:04:01

Thanks for having me.

 

 

Mike Mills:
01:04:03

Alright, guys. Thanks for everybody that stuck around to the end.

 

 

Mike Mills:
01:04:06

I will be back on Monday or, excuse me, Tuesday next week with another market update.

 

 

Mike Mills:
01:04:10

We'll still stay heavy into this in our stuff, kinda keeping you up to date with any developments that are occurring.

 

 

Mike Mills:
01:04:14

There's all kinds of lawsuits now that are being filed against mortgage companies too. Talk a little bit about that.

 

 

Mike Mills:
01:04:19

So nobody's immune from it these days. We are lawsuit heavy.

 

 

Mike Mills:
01:04:22

And next week, I will be, welcoming, a CEO of a company that is actually, gonna be working against you as an agent to some

 

 

Mike Mills:
01:04:32

extent, not fully, but a little bit.

 

 

Mike Mills:
01:04:34

So, you know, again, this is opportunities and threats type thing.

 

 

Mike Mills:
01:04:37

So you gotta tune in and find out what they're looking to do because companies are coming into our space, and you gotta be aware of what they're doing.

 

 

Mike Mills:
01:04:42

So everybody have a great weekend, and I will see you next week.