Michael House (not the M.D.) likes to read the newspaper on paper. With coffee. Old school. He lives in a house he bought 3 years ago and "fixed up." For him, homes are like stocks in the market—every day he wakes up and wonders if he should be a buyer or a seller. Today, his house feels minty fresh nice and he thinks it'd make a lovely home for…somebody…and at a nice profit above what he paid.
The market is hot right now. He wants to sell aggressively. He thinks mortgage rates will go up soon and the market will cool; he wants to have dry powder for a year from now when it'll be time to strike—right around the time everyone thinks the housing market is dead and the cover of Time says that nobody is ever going to move again. That's the time to play offense.
Michael stands in front of his house for a moment to admire the craftsmanship that went into his house, which was built in 2009. He loves his reproduction Colonial shutters, large windows that allow sunlight to stream into the living room, and the attractive tile roof that screams elegance and sophistication.
Patting his refrigerator fondly he thinks, "Best high-end stainless steel appliance on the market, and it really makes my cabinets look sleek." He makes mental notes of the various physical features and the context of where his house sits in his neighborhood as if he is perusing eHarmony profiles. He makes a mental note to think about listing it. The market feels heavy or toppy or expensive now—he would love to be sitting on a bunch of cash when the bottom falls out.
An hour later, Michael is walking into his real estate office. His company, Better Homes for a Better You, Inc. has taken off in the last couple of months. He has brought on four new real estate agents to handle all of the business. His firm has sold 14 homes for a total gross sales of $10 million. His firm’s take: $300,000 (3% of $10 million). Obviously much of that dough was paid to the agents who sold the homes but he got to keep $75,000ish of it—and that more than covered his rent, secretary, media buys, and overhead. Relative to how much new brokerages do their first year, Mike is killin' it.
Janie, his assistant, is patiently looking through the newspaper for FSBOs (for sale by owners) that the company can contact to see if they need their services. Sellers of FSBOs are value conscious, and sometimes the lower commish can be enticing….
"Yeah, a couple looking for a single-family home."
The couple enters. Michael appraises their clothes.
"Two-story hard-wooders. I've got 'em.” A clock ticks in Michael’s head—if he's wrong in his assessment, he'll waste a lot of time feeding the client food they don't want to eat.
"Tell me about your dream home."
They use words like "quaint, charm, two-stories…." He was spot on. But he needs more details—there are a hundred homes like the one they outline on the market. He wants to show them 10 and pull an offer out of them.
He presses them by asking them if they like to entertain, how many kids they have, and what their hobbies are. He finds out that they love entertaining, which means that he needs to find them a house with a large kitchen, immense living room, and roomy dining room. Likewise, the husband is a lawyer who likes bird watching. Michael needs to find a home that has a wooded backyard.
"I have a few ideas. Let me make some appointments with the selling agents and we can go see some homes as early as tomorrow."
The couple looks relieved and happy as they leave. Michael calls Janie (who herself wants to be a realtor some day) into his office and gives her some notes, so that she can scour the MLS and provide "suitable" recommendations.
Bobby, one of the new real estate agents, walks into his office, "1pm closing. High five."
Michael extols, "Duuude." (Translation: ka-ching.)
"Yep, my first BHF (big fat home.)," Bobby says.
"Closing in two weeks?"
"Iron clad." Both Michael and Bobby know that deals aren't done until they're done.
Michael attends a Real Estate Brokers Power Lunch at 10am. Schmoozefest.
After the third round of crabcakes, he meets with a new client who's really just a "shopper"—uncertain of whether or not he actually wants to buy. Michael knows the perfect home for him, though—built-in round beds, round ceilings—and he wants to get him emotionally invested fast.
A huge percentage of people who make an offer for a home end up closing, so a big hurdle is getting them to write an offer. On the other end, he's working hard to convince the seller that the market is down, and the house isn't worth what they think it is.
Michael spends the rest of the day chatting with his real estate agents. He checks on their listings and makes sure that they are "moving the ball forward," whatever that means in real estate.
Janie walks in with a list of houses for the couple he met with this morning.
"This one is perfect," Michael says.
"How do you know?"
"I just know sometimes. Call them and see if they can meet with me in an hour."
Michael is impressed with Janie's work these past few weeks. Tomorrow he's going to formally get her started in a realtor training program—she's got game. It will also help matters once he frees up a little space by firing Nathaniel on Friday. That guy has been bringing everyone else down for too long. Fifty-three years old, washed out, done. He's given the brokerage his loyalty, now the brokerage is going to give him the ol' heave-ho.
Michael meets with the couple at a two-story English Tudor house.
"Wow. How did you know that I would love a Tudor house?" the wife asks.
"You grew up in Mill Neck, New York. There are a lot of beautiful Tudor homes. You said you wanted a house that reminded you of home," Michael says.
"Imagine coming home from a hectic day. You walk up your cobblestone pathway and take a moment to smell the flowers blooming in your English garden framing the house. You push through your antique front door and are suddenly transported to a time where beauty and elegance are important. What is that coming from your kitchen? The smell of freshly baked bread is drifting from your brand new stainless steel oven. You both enjoy a dinner in an opulent atmosphere fit for a king, but reasonably priced for the amount of square footage that you are getting," Michael says.
The couple places their bid for the house. Michael drives back to the office at 7pm to fill out paperwork and call the selling agent. He’s excited, but not for the possible sale of the house. He's riding the high of convincing someone to buy something that will change their lives. It's that high that keeps him in the real estate business.