Ryan Gorman on why real estate brokerages still matter

Matthew Blake: Hello, and welcome to “Houses in Motion,” a podcast that’s part of “HousingWire Daily.” I’m your host, Matthew Blake, real estate reporter for “HousingWire.” Each week, we look at the most important topics in U.S. residential real estate. For this episode, we spoke with Ryan Gorman, CEO of Coldwell Banker. Ryan leads one of the most vulnerable and publicly recognized brokerages in the country. He also leads a brokerage facing competition from newer players like Compass and at a moment where the entire way brokerages do business is being scrutinized by the Justice Department and private lawsuits. I spoke with Ryan about these topics and I think our conversation provides some insight toward one understanding about the way real estate brokerages are, and can, and perhaps should be operated. I’m interested to hear your thoughts. Please email me at [email protected]. That’s [email protected]. With us today, Ryan Gorman, president, CEO of Coldwell Banker. Ryan, thanks so much for appearing on the show.

Ryan Gorman: Oh, thanks for having me. I appreciate it. I was looking forward to it.

Matthew Blake: So a little bit about yourself after graduating college, you held positions at major firms like Pricewaterhouse Coopers, and then you made the turn into jumping to Realogy. Why have you stayed in real estate after more maybe of a general business background, why have you stayed in real estate? And why specifically have you stayed with Realogy?

Ryan Gorman: Sure. Well, on the real estate, probably most listeners can relate to the fact that once real estate gets you, it doesn’t really let you go. So there’s definitely some of that, but, you know, I’ve been, to your point, not just with the same industry, but the same company all this time, which is unique and unexpected for me because, you know, I was always looking for the next adventure, but I feel like I’ve had 10 different jobs just with the same company, honestly, over the last I guess since late ’04 that I’ve been here. I mean, real estate is just vast, it’s all-encompassing. So whether it’s, you know, global relocation in Singapore or, you know, franchising in, you know, New Mexico, or title insurance, or mortgage, or property casualty, or property management, there’s, you know, endlessly something to do. And for me, I’m just…I gravitate towards service industries and, you know, whether it’s investment banking, I used to do consulting, I just adore service. But what we do is so tangible also. So it is service, but you can also see the tangible results of it, but, you know, the families we help, the homes that are created, the communities that, you know, function because we’re a part of them. So, for me, I guess that tangibility is part of what just won’t let me go.

Matthew Blake: Yeah. And during your time with Realogy, what might you say is sort of the biggest change that you’ve noticed in real estate?

Ryan Gorman: It’s funny. I mean, a lot has changed, right? So, you know, since late ’04, one might argue that everything has changed. You know, the players are different, the approaches are different, but if you really look at what an agent is doing every single day to help a client, you know, that sort of like difficult situation, you know, the family with nervous children that’s looking to relocate, you know, the conversations around whether, you know, this community or that community is gonna be the best for them and their family, that hasn’t changed, right? So how it’s done, how much technology is involved, how much, you know, we can take things off of an agent’s plate when it comes to marketing a property or marketing themselves, that’s changed a bit, but at its core, it really hasn’t changed that much. I mean, even the industry surrounding it, title insurance itself, and mortgage itself. And I know some people would sort of criticize the industry not having changed more, but at the same time, I think if it’s all about service and it’s all about the client, then hopefully that never changes and we just sort of make it more efficient over time.

Matthew Blake: And in terms, just to give the audience more of a sense of what you do for Realogy and head of Coldwell Banker, what is kind of your day-to-day job and what are maybe your primary responsibilities?

Ryan Gorman: My day-to-day varies a fair bit. So I can give you the…just the past couple weeks, I guess, a good example. So Sunday was in Utah in a sort of private mastermind group of some of the top Coldwell Banker agents in the world, really, outside the U.S. as well. Monday through Wednesday was in California with our top brokerage leaders, some of our top agents, also speaking with an acquisition candidate as well as some on the franchise side of our business to the affiliate side. Today’s in New Jersey, I’ve got about 20 meetings, all virtual stacked up today, a lot of double bookings. So that’s pretty typical for me on a day when I’m in the office, which is about 20 meetings and then I’ve got a back-to-school night tonight. Tomorrow will look a lot like today but without the back-to-school night. Then my weekends are typically when I have the longer conversations, more delicate conversations that are harder to cram into a, you know, a calendar slot. That’s usually what I do on the weekends. And last week was we had great leadership team meetings. We brought leadership together here in New Jersey, I was down in DC for dinner with a Senator talking about the infrastructure bill and then back here for lunch with actually one of the top real estate private equity firms in the world hearing how they’re looking at the market and them getting feedback from us and then prepping for Gen Blue, our conference coming up in October at Radio City Music Hall. We’re sort of trying to put the final touches on that. So that’s a pretty typical couple of weeks, really, for me. So I just try to support everyone and be useful where I can and people kind of pull me in when I can be helpful.

Matthew Blake: Yeah. That’s quite a lot. That’s quite a lot for me to think about. One thing that stood out, the meeting with the Senator over the infrastructure bill, what is sort of Coldwell Banker’s interest in an infrastructure bill?

Ryan Gorman: Well, we spend a lot of time actually, and I personally spend a lot of time on the hill, as they say, on Capitol Hill speaking with legislators because housing is so crucial to, well, every community, but there’s a lot that the government does or doesn’t do that helps or hinders housing. So oftentimes, legislators have questions about our industry, how it operates, how they can help to maybe passing legislation or repealing legislation to help people be able to step into housing more affordably, more easily, remove hurdles that currently stand in the way, help underserved communities with low homeownership rates, increase their homeownership rates. We talk a lot about what we think could be done, what we think could be improved. They oftentimes have ideas that they or others have brought to them that they wanna run by us and say, you know, “What if it worked this way? What if we change some dynamics, you know, in a certain way? How do you think that would help or hurt, you know, the aspiring buyer or existing homeowners?” So at the state level, this happens as well. There, it’s oftentimes more related to property tax initiatives, sometimes homelessness initiatives, things of that nature.

Matthew Blake: What would you say is Coldwell Banker’s niche in the real estate economy today? Obviously, it’s a pretty well-known brand, but where do you fit in especially since there’s other new national brokerages on the block?

Ryan Gorman: Sure. I mean, if you can call it a niche, I guess our breadth of strength is pretty key. I mean, so we’re operating not just in the U.S., but around the world, which is very helpful and those global connections are very useful, especially in the luxury space. But we’re one of the few brands, I think, possibly the only that has the attributes we have, right? So whether it’s a $100 million luxury property in Beverly Hills or a $200,000, you know, adorable craftsman in the north hills of Pittsburgh, we are representing those properties and we’re also expert on the commercial real estate side, you know, whether it’s industrial or office. And, you know, we were just on Sunday or Monday morning, having conversations with leaders from our Paris operations, our Mexico city operations, you know, to be able to put into context some of the global fund flows that some of our luxury agents are seeing and what that means.

We have the large own brokerage operation, you know, the largest and the large franchise operation. So we help entrepreneurs, or their agents, or franchisees, and then, of course, we’ve got the, you know, mortgage, and title, and insurance, and, you know, warranty. So I think that our breadth is perhaps the differentiator. I mean, I think there’s literally no other company that can say all of what I just said and that really helps us to deliver. You know, I like to say we do it all, but we do it with integrity and excellence, and that is also, unfortunately, a differentiator. I’d love to say everyone in the industry did it all with integrity and excellence, but I think that helps Coldwell Banker stand apart as well.

Matthew Blake: And in terms of Coldwell Banker’s business model and Realogy’s business model, like you said, it sounds like there’s really an effort to get into all aspects of housing, title, mortgage. One thing that I report on a lot is the downward pressure of commission splits and brokerages like Compass, and also like eXp, Side that tend to give agents say 80% of a commission, 90% of a commission. And when I read Compass’ publicly traded side is not publicly traded, but when I read their SEC filings, they’re usually losing money, or if they are profitable, it’s at a pretty low margin. And if your profit is based on what you’re getting from the commission, how can a broker stay profitable with the commission splits of today and what sort of Coldwell Banker strategy and Realogy strategy in terms of dealing with what might be downward pressure on commission splits?

Ryan Gorman: Sure. I’d say another thing that hasn’t changed too much, the rule hasn’t changed, the execution has, is if you take care of your agents, the bottom line will take care of itself. I think what has happened is taking care of your agents has of necessity evolved, and it should. So taking care of your agents really well now means offering a full suite of services. So that includes mortgage services, and title services, and property casualty insurance and being able to close quickly when, you know, the client shows up, you know, having a quote instead of a binder for an insurance policy and being able to, you know, get your own, or your relationship on the phone in 10 minutes, be able to get that done. Get a warranty on a property to be able to overcome an issue or an objection on the deal. Offering, you know, full renovation and make-ready services on the listing side like we do with for Vitalize, the cash offer program that we have with RealSure. Like that, to me, I think many of the groups that you mentioned are sort of groping for a way to be able to create or attach some of those things to help offset their significant losses. For us, that’s not really the approach. We’re obviously very profitable. It’s really about leveraging all of what we already have. We don’t have to, you know, kind of create them. We have them to be able to offer the full suite of services to agents and to their clients directly for every one of those circumstances that can emerge. So if our agent’s feeling great, like they have everything they need here and it’s delivered with excellence and integrity, then I think the bottom line takes care of itself. Unfortunately, for some of our competitors, they just don’t have those things yet, so it’ll be a bit of a journey.

Matthew Blake: You mentioned that, you know, when you started back in 2004, I think you started as part of the title resource group with Realogy. And so I’m curious because some of my reporting right now is looking at title and mortgage, you know, in brokerage. And how has this changed over time or hasn’t changed over time? Because my sense is, I know with Realogy, there’s the guaranteed rate. Affinity joint venture, it seems like there’s more of an emphasis right now on title and mortgage in terms of like bringing brokerage to profitability. Could you say a little bit more as to sort of how it’s become more integrated at Coldwell Banker and Realogy, those two, the title and the mortgage?

Ryan Gorman: Sure. So always been a priority across Coldwell Banker. In the Coldwell Banker realty segment, the company owned segment, that historically has been the entity that’s benefited most from things like guaranteed rate affinity, or its predecessor, or the Realogy title group service professional. So really, when I started in 2004, our success rates, the number of transactions that we were able to be able to help the client with their mortgage needs or title needs, etc., that hasn’t changed that much, honestly. So I know others are talking much more about these things because they’re promising investors that they will one day create them and that’s going to, you know, change their PNL dramatically. For us, it’s really been this way for a very long time. Now, the war for talent increases in those areas. So we need to constantly step up our game, have the best possible offerings on the mortgage side, for instance, the best capital markets execution so that we’re attracting the best loan officers to deliver the best experience for our agents. So we got to constantly raise our game there.

On the title side, we’ve automated a lot of the steps and we’ve leveraged digital mortgage and digital title experiences to be able to make those much more cost-efficient. The best thing about that, of course, is it’s also creating a better consumer experience, right? Because they’re digitally signing almost all their documents before they even get to the closing table. So it’s not this bewildering array of paperwork. At the table, there’s a few documents that require a wet signature because of some state rule in one place or another, but otherwise, they’ve had a relatively delightful sit on their couch, on their laptop, review things at their, you know, leisure experience leading up to a non-stressful closing. So for us, it’s taking cost out. For them, it’s created a better experience. So I’d say, again, the execution has changed a lot over the last 15, 20 years, but for us, the actual utilization of it has not.

Matthew Blake: One follow-up I wanted to ask about that is just with title, maybe I just don’t know much about it, but what kind of personnel in order to have a successful title arm, like what’s…you mentioned talent. And when I think of talent, I think of good agents, good loan officers, but in terms of title, is there talent you need to bring in for that? How does one title insurer stand out from a different title insurer and what are the ingredients of like providing quality title insurance too?

Ryan Gorman: Sure. Well, I think two main components. One, the part that the public sees and that the agent see much more frequently is more the closing experience. So how well prepared the documentation is and being walked through for the consumer, the actual physical closing experience itself that oftentimes takes place on the acquisition side as opposed to the refinance side, but, you know, the purchase money transactions, that experience, making sure that the consumer who’s signing feels like they know exactly what they’re signing, they understand it completely, and they can close with confidence. That requires special kind of talent that not just understands the technicals, but understands how to explain it to someone in a way that helps them understand the technicals. Someone who may only have never purchased a home in their life even though the closer at the table has done it a thousand times, they can’t get into legalese. They can’t just, you know, say sign, sign, sign, sign. They need to take the time to really make them feel confident in that. And if you’re an agent bringing a client to that experience, you wanna know they’re gonna leave the table feeling even better about their new purchase than they did walking into that room. So that’s the talent on the closing side. It’s a special person that has both sort of sides of the brain, you know, both the…you know, kind of the EQ and the IQ.

On the, I’ll call the office side or the production side of the house, those are individuals who are reading the legal descriptions and reviewing the actual easement activity and some of the potential breaks in the chain of title, curing those breaks, doing the hard technical work and research necessary to be able to bridge those two things and create the documentation that then the closing professional and the agent can walk the consumer through and say, “There’s a cloud on your title. There’s some challenges, there’s an easement from the local utility that you need to understand and know about, and here’s what this means for you. I’m not just gonna show you a map with a line on it. I’m gonna say this might mean that years down the road, the utility could ask to do a certain thing and you can’t tell them no. And here’s how that whole thing goes,” right? So that hard technical work needs to be done in the background but typically for Realogy title group, we train our own. You know, occasionally, we’ll maybe we’ll hire from another firm, but typically we’ll bring in people who we just think are smart, capable, and willing, and train them up in the sector since you don’t, for the most part, get a degree in this. You need to kind of learn on the go. And so we create kind of those partnership and apprenticeship programs that bring in and raise up that top talent.

Matthew Blake: So you have a title apprenticeship program?

Ryan Gorman: So for new people coming into the business in a lot of the processing centers as well as the closing, they’re typically partnered up with folks who have been doing it for a while. So they can kinda learn on the fly, but also learn safely. Learn in an environment that makes sure that we’re doing right by the client and we’re also training up our staff, right? Which is a little harder virtually, but that team’s done an amazing job, actually, of doing that virtually since the pandemic and making sure that we’re still able to recruit top talent and make them feel like they’ve got a great learning experience.

Matthew Blake: Zooming out a little bit, I wanted to talk about some of the biggest issues facing the real estate industry right now. I remember back in April, I think it was when I was reporting on real estate commissions. I spoke with you for that article and I thought you were maybe one of the more articulate voices for why the current real estate commission system may still work. And there’s litigation right now in terms of the agreement of splitting the commission between the listing agent and the buyer’s agent. There’s consumer complaints that the average commission of about 5% of home sale price is too high, it’s too high compared to other countries, is one argument. What do you think might need to change with the current commission model and why do you think we should maybe generally stick with the current commission model?

Ryan Gorman: Sure. Well, the second question, I’ll take first, I mean, just as an explainer, and this is one of the conversations I have with legislators fairly frequently is in a typical year, approximately a third, oftentimes more of all buyers are first-time buyers. So that means these are people who are not coming to the table with equity that they’ve grown through owning a home which is the fastest and most reliable way for families, especially in the lower middle class to create family or generational wealth. So these first-time buyers do not have that. Our system today of the seller typically paying a portion of the transaction expenses of the buyer effectively is the party that does have typically equity in their home that does have some wealth subsidizing the party that’s trying to step into homeownership to get them on that path to creating some financial, you know, wellbeing and strength for their family.

So it really is a system that whether it was intended to or not, has yielded a subsidy from those who have the greater asset value to those who wanna step into that, you know, that trend. So I think there’s a lot of benefit from that. Now, I would say that this system’s designed to be able to facilitate homeownership and some of the challenges that folks have given up saying, “Hey, we should end that subsidy program.” I personally believe that that would very dramatically and negatively impact homeownership, especially aspiring homeowners in the most underserved communities where homeownership rates are the lowest and where they typically are bringing the least equity to the closing table, the lowest down payment to the closing table. You’d effectively be asking them to double their down payment, which as you can imagine, would put a lot of people just simply out of the game.

Now, on the transparency side, I think there’s a lot of work we can do there. So, for instance, we’ve endorsed them and will be doing the display of the seller’s offer of commission so consumers can see what the seller’s offer of commission is. So while it will take some explanation for the public to understand exactly what that is and how to weigh it, we’re fine with and support transparency across the board so we can facilitate that on our side. So we’re doing that. We also have proposed and it appears to have some traction now that there should be transparency on who the listing agent is. So today, many consumers are looking at properties online and inquiring and thinking that they are inquiring with a listing agent who actually knows the property and can answer questions for them. When, in fact, they’ve accidentally filled out a lead form and are being delivered to an agent who might not be familiar with the property.

So we proposed a co-equal status on every website where there is listing syndication so that the listing agent’s contact information is as prominent as any lead form or any other agent’s information that may be on that page so that consumers can make the choice. You can contact the listing agent, or if you wanna contact a buyer’s agent, you can absolutely do that as well, but it’s fully informed. So, again, for me, the system, I think, works pretty well, but increased transparency, it can make sure that consumers have an even better sense of what’s going on behind the scenes and how they can get what they need.

Matthew Blake: Yeah. That’s really interesting. I didn’t know that you were proposing that. I remember when I started doing real estate reporting, I would go on to Zillow and I would click on a property and I thought I was being directed to the listing agent, but instead, I was being directed to a Zillow premier agent. What stage is that kind of in and how much buy-in is there with the rest of the industry to having more transparency as to who the listing agent is on Zillow or other consumer website?

Ryan Gorman: Sure. Well, we proposed it, I don’t know, maybe it’s probably six weeks ago or so, and it’s already gotten some traction, already passed through some committees with some minor modifications within NAR. And I can tell you from my conversations with various other, you know, real estate leaders and MLS leaders around the space, there’s basically no objection to it. You know, I think perhaps some of the site operators may have some objections to it, but within the industry, everyone’s response is, “Well, that’s a great idea.” It’s not the first time that it’s been proposed, but it’s typically been proposed in very highly technical rule-writing, you know, in terms of how a display should be, what the font size should be, and all those kinds of things. But with the advent of multi-size screens where you’re as likely to look at something on your phone as you are on a tablet, as you are on a computer, many of the sites have taken that flexibility of screen size and taken advantage of what some of the rules were intended to do. So what we proposed is a very simple principle-based co-equal status approach. So I don’t care if it’s on an iWatch or a 47-inch screen, it needs to have co-equal status with any other agent contact information or lead form on the page and those forms are typically designed to be legible by consumer so that kind of fixes the glitch, so to speak, and it appears to be getting some real traction. So I wouldn’t be surprised if by the end of this year, there’s some good traction on that.

Matthew Blake: And so there hasn’t been objections yet by Zillow, or Trulia, other listings websites to this?

Ryan Gorman: I mean, truly, I don’t know how all those groups feel about what was going through the system, but at least publicly people haven’t commented negatively on it. I think there was a couple of adaptations to the rule that we proposed that ended up getting through one of the NAR committees, but many of the MLSs and whatnot can interpret that to prioritize the agent contact information. And so it appears as though it’s gonna…it’s difficult thing to argue against, right? You know, so even if you want to, it’s sort of a difficult thing to say that, you know, I would prefer to mislead consumers. I don’t think many firms would openly say that.

Matthew Blake: And then what would you say to the argument that even if there are transparency measures, better transparency measures brought into the industry, the commissions are simply too high? They’re not as high in other countries. If I’m selling a home, I should not be paying 5%, 6% to an agent. I should be paying 2%, 3%.

Ryan Gorman: So it depends on…when comparing to other countries, it depends on what services are offered. So oftentimes the commission itself so but not the conveyance costs are what people are looking at when they’re talking about the transaction costs of, you know, someone in the UK or Europe or in different parts of Asia. Here, my personal view is that in order to attract and retain professionals who will be competent enough to be able to help consumers make really good choices, whether they’re buying or they’re selling, then there needs to be some sort of transaction consideration that matches that. I mean, the typical agent today…I don’t know the most recent NAR statistics, but the typical real estate agent today is probably making somewhere along the lines of the typical teacher today in terms of annual compensation, probably with more expenses than what a teacher is.

So I wouldn’t say that we’ve created an environment that is overly lucrative for the professionals that we’re attracting to it and I believe that a big difference in America relative to much of the world is what is standardized and what happens if something goes wrong? So obviously, we’re a more litigious environment in America than many other parts of the country. We don’t have monocle, you know, ownership. So if you do a transaction in most other countries, you know the actual providence of the land itself, you know, getting down to sort of who once owned it and what your rights are. Things are much more standardized. In America, for the most part, we’ve allowed, you know, kind of common law. We’ve allowed the courts to decide a lot of things. So even having someone competent enough to be able to help you understand, get what you want, but also what happens when something potentially goes wrong, I think that requires, you know, fair compensation. I think that’s approximately what we have right now. And typically most consumers, when you ask them how they feel about their agent, the service that they received, and the compensation that was given, the responses are overwhelmingly positive.

Matthew Blake: Yeah. And that kind of gets to the other big picture question I wanted to pose to you, which is that the NAR says, National Association of Realtors say that they have 1.5 million members now. They’re also real estate agents and that obviously is not all real estate agents, but it’s mostly real estate agents. And there are also real estate agents who are not part of the National Association of Realtors. So that’s a lot of people in the workforce who say there are real estate agents. And you were mentioning that consumers, you know, have been mostly satisfied in their experiences and your discussions with them, but how can consumers know that they’re going to, you know, a real professional, a real qualified agent, as opposed to maybe, you know, an agent who might be less experienced because it seems maybe… And this maybe even goes back to what you were talking about, transparency. It would seem maybe hard to far it out like who is an agent that’s been doing this for years that really knows what they’re doing versus who is an agent that just got their license or is maybe struggling to learn the intricacies or some of the problems that could come up during a home sale.

Ryan Gorman: So I think the best way to do that is to get a referral from someone you trust. And they’re typically going to introduce you to someone who you can trust. And that is the best way for an agent to grow their business, the best way for a consumer to find the agent that they can trust. Now, that’s not always possible, but typically, it’s interesting with most service professions, consumers have a very high opinion of their professional, their doctor, their dentist, their lawyer, but a relatively low opinion of the profession itself. You know, you’ll hear someone talk about how great their lawyer is but then talk about, oh, you know, lawyers, you know, separately. And so getting a referral from someone you trust be able to introduce you to someone great, far and away the best way.

Now, sometimes consumers moving into a territory where they don’t know anyone and they might not be able to source that referral, that’s where I think perhaps tapping into a company or brand that you trust… Obviously I’m biased toward Coldwell Banker, we’ve been doing this, you know, since 1906 and we’ve got a reputation for incredibly high integrity, but there are other good brands and broker out there as well. That is more about them trusting the brand to introduce you to the right person and trusting that brand or broker has surrounded them with what they need to have the resources. So, for instance, even if they are a newer agent or they run into a situation they’ve never seen before, they’ve got the resources around them to tap into to be able to explain it, to deliver it, to partner with them, to get it done. I mean, there’s nothing we have not seen within Coldwell Banker and certainly within, you know, other brands and brokers that have been operating for a long time.

I can understand that perhaps some of the, you know, newer comers to the professionals are some of the groups who really do very little to provide oversight to their agents, that’s a tough situation. Then if an agent encounters something they’ve never seen before, it’s really on them to either figure it out or just kind of Google it, I suppose. But that’s not how we work. We really, you know, bring the full institutional knowledge that we’ve gained over, I guess 115 years, to the benefit of every individual consumer. So consumer doesn’t know, you know, someone in an area, can’t get a referral, I’d say go with a trusted brand.

Matthew Blake: Do you feel that the industry overall, not just individual companies, but the industry overall might need to, whether that be the National Association of Realtors or state real estate departments needs to have higher barriers of entry for who can say they’re a licensed real estate agent, or do you think the barriers of entry now are working?

Ryan Gorman: Yeah. It’s an interesting question. I hear the question a lot and I certainly understand why, right? Anyone who’s had a bad experience or one of our agents who’s got to do the work of both sides of the transaction because of the competence level on the other side is not what it needs to be. They’ll oftentimes lament that and say, “We need to increase the barriers to entry.” I think the barriers should be high enough to ensure that it’s someone who’s serious about delivering for their clients and being knowledgeable in what they do. Whether we’ve hit that in every state or not, the states vary dramatically in terms of the licensing requirements today both to get license and to stay licensed. So I can’t speak in a blanket way across all the states, but whether we’ve hit that today or not, I’m not positive. I think some states could probably stand to increase their standards possibly a fair bit, but overall, within Coldwell Banker, we just don’t have that problem as much. We tend to attract people who are going to be serious about their profession, who are trying to learn and grow, who participate in our educational opportunities, who want partnership and apprenticeship, and mentorship opportunities. And, you know, not all brands do, right?

So if you’re competing, for instance, on price and saying, “Hey, we’re gonna be the cheapest game in town,” frankly, you just can’t afford to provide all of that and that attracts someone who has a certain, you know, priority. For us, it’s just not so much our problem. We don’t have that. We might hear our agents complain about the other side of the transaction not being properly represented, but, you know, I always worry about the answer to incompetence being, you know, raising the barriers to entry because that could keep a truly great future agent from being able to take the leap to be able to take that exam at night or those classes at night while they transition from another profession, because the bar was just that much higher. And there’s so many great examples of, you know, entrepreneurs being created because this was accessible. They could take the classes at night and become licensed while they transition. So I’d hate to raise the bar too much.

Matthew Blake: It’s interesting you mentioned the training of different brokerages. It kind of gets back to what I was asking you before maybe about the commission splits and some of the downward pressure. I guess my question is, is training maybe not being as emphasized as a once was at brokerage, or when you observe other brokerages in their training programs, what are you seeing?

Ryan Gorman: Certainly, there are a number of brokers and brands out there that just can’t afford it, you know, candidly. Now, NAR and state associations create and provide a fair bit of training. It may be that agents affiliated with other brands need to sort of self-procure their training more. They need to go to the National Association Realtors resources, the state resources, accounting the board resources to kind of stitch together what they need. One of the ways that even with tighter margins in the business, we and others have been able to continue to raise our game on education has been leveraging technology. So we may have that thousands of people together at Radio City Music Hall that receive great, you know, learning opportunities here in a couple of weeks, but we also have thousands of people together digitally, literally, while I’m speaking with you right now, learning and growing throughout the country because we can leverage teams, we can leverage other resources to be able to have virtual classes, to be able to have a trainer sitting in Florida be able to teach individuals in, you know, 15 different states for all across the country or for many of the non-technical roles all around the world so that they can really optimize their offerings to their client service, whether it’s learning about luxury, or commercial, or whatnot. So that’s gonna continue to be a theme. You not only can touch people virtually, but you can also record those things, dice them up in different ways so that they are bite-size nuggets so that someone who learned it once can go back and reference it again really quickly, right before a client presentation, tap into just a few minutes of video to remind them of what they wanted to keep top of mind before going into the conversation. I think that’s gonna continue. So I think resourceful brokerages and brands like ours will leverage technology in a way that we never lower, but always raise our game on education and others maybe will just have to rely upon some of what they can find, you know, from the state resources or even, frankly, YouTube university, I think, is popular for some of those folks who need to do it themselves.

Matthew Blake: And you mentioned some of the reputational issues. What would you say is real estate industry’s reputation right now? And one thing I always like to ask people is sort of what might be a misconception that people have about the real estate industry and real estate agents.

Ryan Gorman: Sure. I mean, you know, certainly, the television programs about real estate, whether it’s real estate agents or real estate itself are somewhat unrealistic. You know, the average agent’s life is not what you see on TV for the most part for most of these shows. That’s a bit of a misconception and the ability to, you know, gut renovate a house in, you know, three and a half days for, you know, $10,000 is typically not the average consumer’s experience, but right now I’d say probably the most fundamental disconnect is on the market itself. So I think there’s a lot of people who are seeing some of the price increases and worried that perhaps this is, you know, a 2006, 2007, 2008 all over again. And it’s just not.

The biggest differences between then and now, we have tighter underwriting standards, we have all-time high equity in homes, we have all-time high savings rates, funds are flowing from those savings rates in the U.S. and abroad into housing more than any other major asset class. That’s very supportive. And for the most part, people are seeking to occupy the homes they’re buying. They’re not purchasing homes for speculation or for flipping in any kind of material rate. They’re typically owner-occupied opportunities that they want, because the value of housing, especially in the pandemic has just resonated more with people and differently with people than ever before. So you’ve got a lot of folks, you know, coming in, that’s driving up demand at a time where supply is severely limited and it’s not going to improve anytime soon. So the builders are not going to suddenly be able to meet this demand, not by a country mile and probably not for a decade.

And they’re simply not…they’re not willing or able to take the massive risk that would be needed right now to be able to navigate difficult supply chains and uncertain timelines of construction and labor constraints to be able to execute to meet anywhere near the kind of demand we have today. And finally, you know, we have no foreign buyers effectively right now. And come November, foreign buyers will reenter and that will increase demand yet further. So I think there are a lot of people who are really concerned about, you know, what happens when the music stops, so to speak, and I think the reality is we’re going maybe go from an insane market to a merely crazy market for a little a while, but I think a strong seller’s market is most likely in our future just as it’s been in a most recent past.

Matthew Blake: No. That’s good to know. So you sort of see the seller’s market continuing for the foreseeable future. One thing to close on, is there any other sort of major trends that you foresee happening in the next couple years or something that you’re looking at that maybe if we were to speak two years from now, we might be focused on?

Ryan Gorman: I do. So what I’m seeing right now, there are a number of inside baseball area of the business, the agents themselves and sort of movement among brokerages and brands, I think there have been some shiny objects recently that have caused people to perhaps make a move that wasn’t too a high integrity operation but they sort of thought, “Well, you know, what’s the worst that can happen?” And based on the conversations I’m having with a lot of agents today, some of them have discovered what can happen when they’re associating with a group that perhaps isn’t so honest, or transparent, or forthright with them and delivering on their promises. And I think that is going to change. So I think the shine is going to come off a bit from those groups that just don’t prioritize integrity and I think that’s a huge benefit to agents, to brokers who do prioritize integrity, and to consumers who then can actually rely upon that brokerage to step in in a difficult transaction to ensure that their agent has everything they need to successfully, you know, transact and to guide them and to advise them in a trusted way. So I do think integrity, it’s always been a priority for us, literally a founding principle for Coldwell Banker. But for much of the industry, I think we’re going to rediscover the prioritization of integrity here in the coming two or three years and I think that’s really healthy and I’m looking forward to it.

Matthew Blake: One quick follow up on that, accepting that idea that some brokerages are not prioritizing integrity right now, how might that kind of come to bite them? Like what would be sort of when the shoe drops?

Ryan Gorman: Well, what many agents are finding today is that the agreements they thought they had are not the agreements that they actually have. That the arrangements that they had, the level of support that they were anticipating, the financial arrangements they thought they had and the obligations on them are very different than what was explained to them verbally. And, you know, I think once you discover that, I mean, just to be candid, you’ve been lied to, you question a lot of other things as well, and then suddenly the world looks different really quickly. And that’s a lot of what I think is happening today in the marketplace. There’s a lot of people who are feeling trapped, you know, associated with someone who lied to them and they’re finding a way to avoid it. And what’s happening just like we talked about referrals, people are calling them and saying, “Hey, how is it over there?” And they’re saying, “Oh, whatever you do, stay away. This is not the place to be. You can’t trust, you know, these people.” And that’s terrible for the profession. It’s emotionally draining for agents to even have to deal with that, but, unfortunately, it’s necessary for some of this to be cleared out of the system.

Matthew Blake: Anything else that you wanted to talk about before we part ways?

Ryan Gorman: No. I really appreciate the opportunity. I think we covered a lot of territory. I love your inquisitive nature and intellectual curiosity about this sector. I mean, I love it. You clearly love it. So I appreciate you kind of wandering around with me here with some of these questions and getting to a lot of…you’ve covered a lot of territory.

Matthew Blake: Great. Well, thanks so much. Really appreciate the time.

Ryan Gorman: Thank you.

Matthew Blake: Ryan Gorman, CEO of Coldwell Banker, thank you for appearing.