- Find a niche, find a specialty and build your brand on the shoulders of that specialty.
- Be consistent and embrace the mundane -- the things that make your business run that aren't "fun" or "sexy."
- You must also embrace technology to thrive in real estate today, and many experienced agents have more trouble with this than new agents who don't know anything different.
- "Stop worrying about the bogeyman in the closet, stop worrying about Zillow, get to work."
“The story of our firm’s brand is not some narrative a PR firm wrote up for us to peddle,” said J. Philip Faranda, who went from being a solo practitioner to owning his own brokerage with 60 agents.
“Our brand’s story is actually not a story at all, but the happy outcome of hundreds of clients over the years who were not cookie-cutter transactions. We have helped good people avoid foreclosure, bury a close relative who passed away, downsize in the wake of an empty nest, or manage a stressful job transfer, just to name a few.”
Faranda likes baseball, has a degree from Villanova and kick-started his Westchester, New York brokerage by focusing on the Great Recession eight years ago.
How’d he do it?
Greetings, Inman readers and listeners. I’m so happy today to have J. Philip Faranda. Phil is a broker in Westchester, New York. He started out as a solo practitioner less than ten years ago. He now has 60 agents, and he’s one of the largest independent real estate companies in a very high-end market. We’d like to talk to Phil today about how smart do you have to be to be successful in real estate, how do you go from being a solo practitioner to owning your own brokerage, and what does the industry need to do to get its act together.
Phil has got a very strong online presence — he’s an administrator of one of the Inman groups. He has a lot of opinions; he’s a contributor to Inman, and we always want his stuff because what he writes about is fantastic. Welcome, Phil, great to have you today.
Wow. Good morning, that is quite an introduction, Brad, thank you.
Let’s start out. You got a bachelor’s degree from Villanova, which is in the final four — congratulations.
Thank you so much, very exciting times — very exciting. I’m surprised I still have a voice.
Next weekend — the big one.
You started as a solo practitioner after being a mortgage broker briefly. And you’ve taken that business during some pretty tough times, swimming against the flow that the other agents and brokers faced in the Great Recession. How did you find the opportunity that you found and how did you grow your business over the last seven or eight years?
Well, Westchester County is certainly a competitive market. There are hundred-year-old companies, there’s a lot of competition. So what we did was we took a page out of Sam Houston’s book, and we looked at underserved markets. We sort of attacked what was left.
So we looked at short sales, we looked at other niches that were underserved by competitors and we went to work on those niches, and we parlayed that into growth. Now we don’t just do short sales anymore, we certainly do everything, but we parlayed it into a well-rounded brokerage.
Let me ask you to give our listeners three pieces of advice. I’m a solo practitioner. I’m not creating any long-term asset value. I’m going from commission to commission to pay my bills, and if I’m successful, putting away some money.
Building a brokerage theoretically builds a family asset. What’s your advice on how to go from solo practitioner to a brokerage, whether it’s 20 agents, 50 agents or 10,000 agents. Is that the first piece of advice — find a niche?
Absolutely. That would be the the first place I would start. I would find a place that is underserved by competitors. Big mistake that a lot of first-time agents make is they say, why don’t we just do mansions, why don’t we just do high-end, and that’s brutal to get into. If you’ve got that skill set and you’ve got an in, by all means go for it.
But what I would do is I would find a niche, and I would find a specialty and build my brand on the shoulders of that specialty.
No. 2 — what else would you tell an agent who wants to build an asset like you have?
I would embrace the mundane. Building a business is much like a restaurant. You think of a restaurant, you think of a chef. But it’s also ordering plates. It’s also taking care of your forks. It’s also doing a lot of mundane, boring things. So you have to be consistent and you have to embrace all the things that go into building the company. So you’ve got to lick envelopes and you’ve got to be consistent doing the stuff that’s not sexy.
Is that really the first piece of advice — consistency? How important is that to your business?
It’s crucial because if you don’t do it every day, then you can’t properly gauge the results and you won’t succeed. For example, if you work expireds, you’ve got to work them every day. Sundays, holidays, you’ve got to work expireds every day for months and years before you can look back and say whether it’s working or not. Because if you do it for two weeks and say “it’s not working,” then you’re not doing it justice.
Just like me and my weight. I can never control it because I’m not consistently going to the gym like I did this morning.
Let’s talk about this happy blend you seem to have between old-fashioned customer service — does it have practical meaning in your company? And the second is technology. You’re known for adopting the technology. What’s a proper blend: How do you execute on this customer service promise, and what kind of tech do you need to to support that?
Big question, I’ll try and give you small chunks with answers.
The family part can only be evaluated by whether or not it’s working. Everyone says the same stuff in this business. One of the big ironies is that people who you can never get on the phone always have the best voicemail messages. Ever notice that, Brad? The guy never answers his phone but you hear a little soliloquy about how committed he is to your satisfaction when you call him, and what you really want to do is reach through the phone and strangle him to call you back.
Have technology. Don’t let technology have you. All right? So you’ve got to deal with who is in front of you. My mother was not a big texter — never sent a text in her life. She liked phone calls. So if you’re dealing with somebody who’s in their 70s, obviously email blasts are not going to work. You’ve got to pick up the phone and you’ve got to call them. You’ve got to return calls. You’ve got to use technology to the extent that it satisfies the client, but not so that it’s something that you’re hidden behind.
And when people leave voicemail messages, and you’ll call them more or less when it’s convenient for you — that’s a good way to be an insurance broker in another year.
Let’s go through a list here. Facebook. Do you use Facebook for business?
Do you get leads from there?
Facebook is a really good — phenomenonal — sphere of influence tool. It is a garbage, in my opinion, lead generator for anonymous people. Now, there are people that are good at it — generating anonymous strangers, prospects, from it — and that’s good for them, those are usually community pages where they get found. But we’ve found the best success using Facebook to leverage our distant relationships.
A little bit. Not a business tool.
No, we don’t use that. I have an account.
What do you use for your CRM?
We use Kunversion.
Does it work?
We started in 2012, we were a little under $20 million, this past 12 months we’ve done $60 million — I’d say it works.
Big proponent of Zillow. As a matter of fact, we were an early adopter of Zillow. I actually was with Zillow in 2007-2008, before they were a pay model. And that’s actually one of the reasons why we got a foothold in the market and people wondered where the hell we came from.
Do they grandfather you in so you don’t have to pay ever?
No. I’m on their agent advisory board, but no perks.
Half of my readers seem to hate Zillow and half of them love Zillow. Whatever the number is. Why do people hate Zillow, what do you think it is? Is it perceived as a threat or something?
Because people hate change. Like Tom Ferry said, change is coming whether you like it or not, and change is not good or bad, it’s just something you have to adapt to. There was a time when we could sit in an office and people would walk in from the train station and that was a business model. We don’t see it any more. Main Street is now the information highway.
So it’s emblematic of the changes that are taking place in the industry. And I don’t believe for a minute, Brad, not for a minute, that if Zillow didn’t exist, there wouldn’t be a hundred other places, a hundred other platforms that do the very same thing, just not as well.
Any other technology I missed that you think is core to having a successful brokerage in 2016?
You have to have a transaction management platform.
Which one do you use?
We use something called Realty Back Office, which is phenomenal. It’s a document management/transaction management desk that takes the transactions from, in my market, the accepted offer right through the closing and post-closing client care. You’ve got to have that.
Are you using digital docs?
We do. We are an attorney-dominated market, so we can’t be as paperless as some people are in some markets. Our contracts, for example, are done by attorneys, and they kill trees, and that’s just the landscape.
What is that about? I live in California and I also commute to New York. In California you can buy a $10 million dollar house and no lawyers looking at it unless you choose to, which some people do. And I’m not sure litigation is any higher or greater here because some attorney doesn’t put a stamp on it. Do we need lawyers for every transaction?
I think you don’t, clearly, because probably 35 to 40 states don’t use attorneys to my knowledge. Florida, Texas, California — they don’t use attorneys in transactions. New York’s a little different in that half the state uses attorneys for just about everything. But upstate and western New York — in upstate New York, attorneys sort of put a rubber stamp on a contracts, but they don’t do everything soup-to-nuts the way they do in my market from contract on.
So are they needed? Well, just ask an attorney. They’ll tell you they’re needed!
Of course attorneys would say that.
Let me ask you this. Twenty agents that you work with — how many of those are competent? Not on your team, but on the other side of the table. The active agents. Are they representing their clients well?
If they’re active enough to have an active client and be involved in a transaction, then my opinion would be that 19 out of 20 are going to be minimally competent.
Then why is everyone complaining about incompetent agents? Is it the next 20 that aren’t active that happen to show up for a deal because their cousin’s sister-in-law’s brother’s wife sold a house?
That’s a big part of it. The barriers to entry are incredibly low. And this is a big problem in the industry where Tom, Dick or Harry can get — what you need? Age and to not be a felon. So as long as you’re 18 and you haven’t killed somebody, you can be a real estate agent. That’s a pretty low bar.
Although Inman just wrote a story, there are a lot of felons who are real estate agents somehow — I don’t know how that happens.
That’s a whole nother thing, too.
And then you get the new agents who aren’t felons yet but they become a felon because they commit a white-collar crime on a real estate transaction.
Let’s talk about smarts. Whenever I hammer the industry for, let’s raise the bar, let’s raise the real estate I.Q., let’s make it harder to become an agent, I get those who say, “Hey, low barriers to entry means that anyone gets a shot at an opportunity here. And the market will decide whether you’re good or you’re not good.”
How smart do you have to be in 2016 if there’s no barriers to entry to be successful?
To be successful, you have to be fairly smart.
Now more than 10 years ago?
Absolutely. As a matter of fact, the agents with more experience who have been in the industry and resist change have a bigger problem with the technological advances in the industry and the different changes in the industry than brand-new agents that just learn it from day one the way it is now. So it’s much more technologically oriented.
Can you run a real estate company or be an agent without technology today?
Not and thrive. You can’t and thrive. If we look at the market trends, the older guard are declining and the technology adaptors are the ones that are are growing and are taking market share from the older guard.
So you have to adapt. And that doesn’t mean you have to become a digit-head, it doesn’t mean you have to become a geek, it does’t mean you hide behind machinery. But it does mean that you have to understand that you can’t fax, you have to scan and email. You have to check your email. You can’t do “email@example.com.” You’ve got to embrace technology because the new breed of buyer and seller showing up to showings and putting homes on the market may have more at their fingertips than ever.
So you have to adapt to the new consumer. The new consumer is very savvy. They’re the ones that show up to showings and tell our agents about easements with the driveway.
It’s hard to imagine how someone who doesn’t use those tech tools can have any cred at all. Yesterday I was in a grocery line in Los Angeles, and a woman ahead of me pulled out a checkbook and I commented under my breath. “I haven’t seen one of those in a while.” And then I used Apple Pay. And the clerk after the older woman moved out of the way, she said, “How do these people keep up?”
And I said, well, she got her groceries, she wrote you a check. And she just winked. To me that was kind of symbolic of the tech gap that exists in the most mundane functions and if I said to an agent, “sent me a digital doc,” and he didn’t know how to do it, I wouldn’t do the deal.
Hey Phil, one last piece of advice — 2016, where we are in the market, a lot of uncertainty. Terrorism, elections, Wall Street, oil collapsing. Are you a bull or a bear on the market, and lastly what’s one piece of great advice for agents out there that want to want to want to grow their business?
Whether or not real estate appreciates in the next three or five years is not my concern, and I would say I’m bullish from that regard. People are still going to have babies, they’re still going to get job transfers, they’re still going to become empty nesters. So there’s going to be enough transactions for the industry to remain vibrant so long as people pay attention.
I would say the one piece of advice I would give agents right now with all this discussion about technology and change and everything like that: Stop worrying about the bogeyman in the closet, stop worrying about Zillow, get to work.
Smarter people than you have doubled down on real estate. Warren Buffett is no joke. And in the middle of the Great Recession he put Berkshire Hathaway into residential real estate front and center. And he’s in the thick of things. So, when Warren Buffett is charging up that particular San Juan Hill, you would be crazy not to follow.
Thank you, J. Philip! By the way, J. stands for Joseph and his real estate company is J. Philip Real Estate in Westchester. Follow him on Facebook. Join our Agent War Room, where he’s an administrator — there’s all kinds of cool stuff going on there. And good luck within your business and good luck with Villanova, Phil!
Thank you, Brad.