Marc King believes price appreciation will have to slow compared to what has happened over the past year. But he’s confident that real estate agents will survive today’s period of disruption.

All week, Inman is taking a Deep Dive into Keller Williams. We’re talking to key executives, unpacking its strategic moves and reporting live from the virtual KW Mega Camp. It’s everything you need to know about KW right now. Watch for future Inman Deep Dives into top brokerages coming in the months ahead.

Marc King rose to the top of Keller Williams at one of the strangest times in real estate history.

King, a multi-decade veteran of the company with a background as an agent, assumed the role of president in February following the departure of Josh Team. At the time, the coronavirus pandemic was still raging, vaccines were spreading and the housing market was seeing explosive price growth. It was a confluence of events no one could have predicted.

Many of those issues — COVID, vaccinations, etc. — continue to shape the economy today. And that means King has presided over the company during a period when concepts like normalcy and predictability went out the window.

Marc King

To get a sense of how the company and the market are doing, Inman recently spoke with King via phone. The call preceded Keller Williams’ annual Mega Camp event, which originally was going to happen in person but in early August was reimagined as a virtual event. The take away from Inman’s conversation with King is that he remains optimistic about the role of agents in real estate generally, and about Keller Williams specifically, though he doesn’t think the market can sustain the same price growth it has experienced over the past year.

What follows is a version of Inman’s conversation with King that has been edited for length and clarity.

Back in June at Inman Connect Now, you addressed the initial public offering rumors and I got the sense at the time that plans were still in flux. What can you tell me about those plans now? Is anything pinned down yet? 

I can’t wait to tell you when we know. We understand there’s growing speculation out there on all of our moves. The statement is that we’re just going to continue to prepare for optionality and focus on delivering world-class customer experiences.

Any sense as to what the timeline might look like, regardless of which direction you decide to go? 

I think we’re committing to updates but obviously can’t commit to any moves. But we’re looking at Q4 for some pretty significant updates around this topic. 

Despite hopes to the contrary, the coronavirus pandemic is still with us and looks like it’ll keep sticking around for a little bit longer. How is that impacting Keller Williams business and what are you hearing from agents? 

I agree with you, I think we all thought we were in the clear or headed towards it. And unfortunately, we’re not.

I think you’re well aware that we made a huge pivot. We have to protect our people, and the events we put on bring tens of thousands of people. So based on the infection rates and hospital shortages, we just couldn’t protect our people. Safety is number one. So it’s caused us to pivot from what I think we do a great job of, and our events team does a great job of, which is getting the largest number of Realtors together in the world.

Do you think the situation is trickling down into the way your agents practice? Are they once again cutting back on open houses for example? Are we going to see a surge in video tours? 

You know, what’s fascinating is the agents innovate faster than any company does. And that’s really cool. We embrace that. 

We are seeing our agents do a lot of interesting things. And some of the technology we’ve developed has been timely around this. A lot of virtual tours and those type of things. Just figuring out how to continue to deliver an amazing client experience while dealing with the pandemic. I think there’s no one better to help us all learn what’s possible than the real estate agent in the field.

Another big piece is that our company is looking into all kinds of training, education, etc. around mental health. We want to be prepared for anything. And I think we’re all learning as we go. 

Back at Connect Now in June, you laid out two scenarios with real estate. There’s the Expedia scenario, where new disruptors came in and basically eliminated travel agents. And then there’s law, where lawyers have remained integral to that field. I’m assuming you see real estate following the path that law has. But at the same time the barrier to entry to become an agent is relatively low. So break that down. Why is what happened in travel not going to happen in real estate? Why are agents going to stick around and what role does Keller Williams have to play in that transition?

You’re home purchase is more complex and more financially involved than almost anything else that we do. So it’s certainly not like a $5,000 vacation. The complexity of a real estate transaction I think protects the idea that the agent is the fiduciary, not just a functionary. So I think that’s one big piece of it.

I also believe that agents know their markets locally better than any national company can. Agents are on the ground and aware of market moves on a day-to-day basis way faster than a computer can be.

We are also seeing some market trends. For instance iBuyer businesses are on the rise. If iBuyer companies are willing to lose money on a transaction, they’re going to get more penetration. I think the ultimate question is, do you believe that people will buy real estate and sell real estate over their computer in the future without the help of a qualified, knowledgeable fiduciary?

When we talk about what Keller Williams is doing for this, we have kind of the opposite idea compared to what most prop tech companies do. I’ll give you one example. Think about bundling. When you think about bundling you think about Geico or some other insurance company. And they’re talking about how if you get your homeowners insurance there you also get a discount on your car, and that kind of thing.

In real estate we’ve always bundled. We’ve had a loan officer next door or a title company down the street.

What a lot of the disintermediaries are attempting to do is bundle things and ultimately charge the consumer less. Which is a good thing. We want the consumers to have the best experience for the lowest cost. But at the end of the day, their strategies seems to be to take more out of the agent’s commission.

Our strategy is to protect the consumer by protecting that agent and making sure the consumer has the most qualified person to help them through the transaction. We have a different strategy around how to give the consumer the best experience and the lowest price, while protecting the real estate agent. That’s fundamentally what makes us different. Our technology is all built to enhance the relationship and human experience. It’s not designed to replace it.

And I think what you’re seeing in real time right now is that all of the billions of dollars put into, what I’m going to call disruptive prop tech ideas, don’t seem to be budging the needle on consumers’ use of the real estate professional.

Now, you brought up a really good point and it’s really valid. It might be a few hundred dollars and a few weeks in some states to get your real estate license. As opposed to 13 years in residency and all that stuff to be a doctor.

Because of that, we have a focus and emphasis on how we train our agents to be a better fiduciary in the field. We are known for our training. Our Keller Williams University has won countless awards. Keller Williams has won best training company constantly. So that’s what we believe we do at a very high level.

Going back to the travel analogy, travel agents do still exist, it’s just more of a niche. For example if you want a special trip you can’t book on your own, or something very high end. Right now most real estate transactions are conducted by a real estate agent. But do you see that changing and going more in the direction of travel, where agents are focused in a specific segment of the market? 

I think there could be a movement, some percentage points. I don’t believe it’s going to be significant. I don’t think suddenly you’re going to wake up and half of all real estate transactions will be devoid of an agent. But I think there’s certainly room for a lot of different companies to innovate and create an experience.

But the reality is that that hasn’t caused the consumer to go, “hey, I think I’m going to go represent myself in a court of law.”

And I think that’s the conversation there. Anything is possible. And I do believe that the amount of money being invested into this industry to disrupt it is significant. But if you’re like me and you believe in the Realtor, you’re going to do everything in your power to keep them at the center of the transaction.

I do think we as real estate agents have to up our game. As real estate brokers we have to up our game.

Keller Williams has its own iBuying program. And there are some companies, like Redfin, that have been pretty explicit about saying iBuying is a way to get our foot in the door. So, most people reject the offers but that’s a good way to get consumers into the ecosystem. I’m wondering if you see iBuying as a similar strategy, so a foot in the door. Or do you want more people to actually take the offers? 

This really helps us delineate what Keller Williams is.

Think about it from this perspective. The real estate agent is the center of the transaction. They’re the fiduciary and everything else is an enhancement to that agent. So, our version of the iBuyer is to help the agent have another solution to create that world-class experience. We’re attempting to protect that fiduciary relationship. So it’s a different model.

We use the iBuyer to enhance our agent’s experience, not to replace it. And you could say the same about our mortgage products. Everything is about helping our agents create a world class experience for the consumer.

Once you have that lens around Keller Williams, everything we do seems to make more sense.

Finally, talk to me about what you envision happening in the housing market over the next six months or so. Is it going to keep going up? Will it taper off? Is there a bubble

We have tons and tons of data around this. And here’s what I’d tell you: Seasonality certainly shifted. When COVID hit there was this two to three month halt, if you will, of normal real estate transactions. So what you see last July August, September, it got shifted by 90 days. So we’re certainly seeing that. We expect the back end of this year to not look great against the back end of last year because last year was so great, it was so far up. And that’s okay.

If you compare the numbers to 2019 you get a better sense of where we think we should be.

Sales prices are going to have to slow. There’s no path where 18 percent a year can compound over time. The simple math in my head means the average sales price in 20 years would be $10 million, and I don’t see a path to that number. So there has to be some slowing.

I think that this idea that inventory is low is not exactly accurate. Active inventory is low so it makes it feel like inventory is low, but we’re actually selling more houses.

And I don’t see a path to raise interest rates substantially.

The employment market is continuing to heat up, there’s still high demand, the cost to build is still high. Mortgage rates are extremely low. Historic lows. The economic foundation, where we are right now, is really strong.

The fact that we’re going through the longest economic expansion since the Civil War, you’d expect there to be some kind of correction. And there will be. There has to be. But we’re prepared for that.

Email Jim Dalrymple II

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