Nest’s Sweat the Details podcast continues. We just released our 67th podcast, and we’re excited to bring you interesting conversations that touch on real estate — and how we look beyond real estate for inspiration.
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Summary:
Everyone made mistakes over the last three years and we were no different. One of those mistakes was letting this podcast fall aside. So, we’re back!
We hope you’ll join us for the next episode of Sweat the Details. View the full transcript below.
Jonathan:
The market is solid. You can sell houses. You’ve got buyers that can buy houses. The market’s like up ticking by five, six, seven percent a year. It’s just a super solid market. And then, here we are again and we’ve been in the world of extremes for the last three years. It’s been extreme, chaos.
Jim:
Well, hey guys, welcome back. It’s been a minute.
Jonathan:
It has been more than a minute.
Keith:
It’s been three years of minutes.
Jim:
Lots of minutes.
Jonathan:
Yeah.
Jim:
Welcome back.
Jonathan:
It’s great. I will say that as we have fast tracked over the last couple weeks to get back around the table and restart, sweat the details. We’ve made some mistakes in the last couple years as probably everybody has with decisions and missteps. But this is probably up there with one of the big ones is letting this follow the wayside.
Jim:
Agreed.
Jonathan:
So big mistake, but we’re back.
Jim:
You learn from mistakes, you move on.
Jonathan:
Yeah.
Keith:
It’s nice to be in one room and not on three Zoom calls doing this. Trying to judge the facial expressions and have a conversation.
Jonathan:
Yeah, I think that’s probably what kind of pushed us off the other side is having to deal with … at that point.
Jim:
Zoom and internet and leaf blowers outside and dogs and family and life. But yeah, same room back again. Split the details and it’s 2023 and let’s move on.
Jonathan:
Yeah, let’s move on. So we’re back, we’re back in more ways than one, and we’re not going to dwell in this too much. But we did do a pod back in the day making an announcement about some changes in Nest that we had, that we partnered and merged with a firm in Chicago at properties. And it was going great for a while. And as some sometimes relationships go, they go in amazing ways and other times like people and companies grow apart. And from a mutual perspective, we made a mutual decision just recently with that properties to separate and Nest. The three of us have repurchase Nest, the shares in Nest back. And we are back and independent and on our own. And it’s super exciting and we’re glad to be back in that respect too.
Keith:
It’s hard to explain where we were three years ago that everything felt very different than it does today. And we never lost our autonomy, we never lost our leadership.
Jonathan:
Correct.
Keith:
So that didn’t change. But there is something about being truly masters of your own destiny on this. And I think our agents feel it, I think our leadership team around us feels the difference. And it’s just exciting, it’s back to this is what we want to do and how we want to lead it.
Jim:
Well, I think it’s great. I think the agents are happy that’s the three of us back in charge. I think that from a client and consumer base, I’d wager none of them knew.
Jonathan:
No, and we weren’t-
Jim:
Which was great.
Jonathan:
Yeah, and that was a whole-
Jim:
To them, it was never an issue, never a question because they just didn’t pay attention or know. But for the agent base, I think that they’re really pleased that they can reach out to us whenever they want.
Jonathan:
Yep. And this is what we said to our agents is we said, we made the decision, we said this three years ago and we then said it three weeks ago and we told our agents that about the new news. But we made the decision because we thought it was the best thing for everybody at Nest, every Nester.
Jim:
And it was.
Jonathan:
And it was. It completely was and we did our due diligence and we did everything and we dug in. And I’d say if … and I think you’re never a hundred percent confident in a decision, but we were 95% confident, maybe more in the decision and it was the right thing. But here we are and we’re super excited and glad to be-
Keith:
Now it’s about about the future.
Jonathan:
It’s about the future.
Jim:
Onward.
Jonathan:
Yeah, exactly. So, here we are. Let’s talk about … and this is a big topic and we could go on for hours about it. But let’s talk about the last three years in real estate. Jim, what are your thoughts in the last three years? If somebody came and said, “Hey, what’s happened the last three years?” What’s the number one or number two or a big thing in your mind?
Jim:
It’s just a big sigh of exhaustion.
Jonathan:
Yeah.
Jim:
It’s been exhausting for agents and brokers and buyers and sellers. Sellers, this market now, I think there was a concern of sellers coming out of the pandemic that they’d lost the opportunity to sell. And they still haven’t, I mean, it’s still a great market for sellers right now in a lot of ways. I think the market shifted pretty rapidly. Rates were two and a half, three percent. Buyers were moving all over the country, wherever they wanted to move because they could Zoom from anywhere and everywhere. Zoom’s stock went through the roof. It’s not through the roof anymore.
Keith:
It is amazing to think that Zoom currently is below pre-pandemic stock price. Their market cap did not change over three years when it should have.
Jim:
Well, the pendulum just keeps swinging from one extreme to the other. I mean, we were at 3% interest rates and we’re at-
Keith:
6.42.
Jim:
Historically, it’s easy to say that that’s a low rate. But I was talking to a client the other day, I’m trying to convince him to sell because there’s no inventory. And he said, you have to understand that there’s an entire generation of people who’ve never seen 6%. And I think that it’s reaccumulated to this new extreme is something that the consumers and the agents and everybody are getting used to.
Keith:
50% of all licensed agents in the state of Virginia have never lived through a buyer’s market.
Keith:
So it’s not just the buyers and sellers that are adjusting to a new market they’ve never experienced. The entire professional community is dealing with, a bunch of people are asking questions they’ve never seen. I had an agent yesterday who texted me, we were going over some compliance issues document wise. He’s been in the business a couple years, has had great success in business. And yesterday he was asking how to negotiate a home repairs addendum because he’s never filled one out. In several years in the business as a buyer’s agent, he’s never had a home inspection that has warranted going back to the seller asking for something. And this is going to be a new market, this is a changed … you can laugh, Jim. Go ahead. I mean, this is the level of experience because it’s been years since we’ve been in a position where buyers and sellers are on an equal footing.
Jim:
This is my 21st, 22nd year. I tell everybody, my first home inspection was on 9/11, so the math is pretty easy. And I remember during the crash, I was sitting down with an agent who’s still practicing, she’s very successful. And it was her first or second year, and she was representing herself to buy her first house. And this is years ago, and she came to my office and we sat down and we talked about the offer. And I just said, “How’s the market? What do you think about the market?” And she looked at me, she’s like, “What do you mean? This is the only market I’ve ever known.”
And I think that that’s the thing is that every year I’ve practiced, it’s been different. And there’s been very few consistencies throughout. Other than the humans involved, there’s been no consistency every single year. So every year is new in a lot of ways. And I’ve learned … things that we learned, we didn’t have the escalation clauses three years ago that we have today. We didn’t have inspection clauses three years ago with the inspection limiters that we have today. So I think that those are the things that, from a real estate community, we’ve evolved.
And I think that it was one thing that it was kind of heartening through the pandemic that the community of realtors and brokers and people was really supportive. And it was something that you always kind of knew that at least in our market, we’re small and we’re very cooperative. We’re competitive, we will negotiate hard against each other. But the community was really strong and we worked together, we helped each other out to … I won’t say stolen, I’ve borrowed clauses from other agents, from attorneys that I think that those are the sorts of things that I think we’re going to carry forth. Not forever, but for the future of working well together and negotiating well and having these clauses and these parts of contracts that I think are a testament to the community and frankly to the pandemic.
Jonathan:
If you think about even go beyond three years for the last 20 years, because I’ve been in for about 20 years now, also, not quite as long as you, Jim. But if you look at those, the ’03, ’04 to ’08 timeline, it was pretty busy. And then things fell off a cliff in that point in time, ’08, ’09, 2010, we were learning short sales. And I remember the first time I read about a short sale and I had been in the business for six years and it had been fairly consistent business. And then you start hearing about short sales. And I remember having a thought one time and being like, “I don’t think I’m ever going to have to deal with this. This is not really going to happen.” And then within-
Jim:
It was 40% of transactions.
Jonathan:
Yeah, and then within a month, it was like every listing you’d go to, it was a first question you would say. It wasn’t, what’s the price? It was-
Jim:
The bank that we’re going to be negotiating with.
Jonathan:
Yeah, is this a short sale?
Jim:
Right.
Jonathan:
And then that’s the navigation path, it was like, is this a short sale? Yes or no? If yes, then what do I do? If no, then all right, this is going to be relatively normal. But then the question was, well, if it’s not a short sale at this price, when is it a short sale? If it’s listed at 350, if I offer 325, is it? And do you have to disclose that? So we go through and we had that.
And then I made this comment at one of our summits a couple years ago, and I do remember we got kind of a laugh. But it was probably in the 2016 time, 2017, and it was probably 2015, 2016. And I was talking to our team at the summit, which is all of our agents are there and made a comment like, this is the glory days of real estate. The market is solid, you can sell houses, you’ve got buyers that can buy houses. The market’s like up ticking by five, six, seven percent a year. It’s just a super solid market. And then here we are again, and we’ve been in the world of extremes for the last three years. It’s been extreme, chaos.
Jim:
Yeah. And it’s what we do. I mean, I think it’s just adapting to and evolving with every market. It’s fascinating, it’s challenging, it’s exciting and fun sometimes, it’s enormously frustrating. But I think that, again, one of the things that I like about this market now in a lot of ways is the buyers have a little bit more time, a little bit to decide. And I think that what I’ve also found is a lot of the buyers for my career, it’s usually been a 15 to 19 month process for a lot of people to learn the market. And I’m finding a lot of people are back to taking that time and trying to learn the market because they’re recognizing that these are major life decisions and they might be here for 10, 12, 15 years. So I think that’s a good thing that the buyers are doing more due diligence and taking the time.
Keith:
They have a little bit more time to think about it. But the other piece is the last couple minutes we’ve been talking about things like clauses for escalation, addendums or changes in home inspections. Those are responses to the shortage of inventory, those are responses to the craziness of the market condition. But over the course of the three years, they’re also changes that have just taken place in our industry that are improvements to the entire process.
And right before we started, Jim, you were talking about the fact that you’ve got multiple video tours set up for out-of-town buyers. Those are tools that we didn’t have at our disposal easily three years ago that we are now utilizing every single day. That doesn’t go away when the ceases to be a seller’s market, when things balance. If there’s tons more inventory, you’re going to be doing tons more video tours.
Keith:
I think the changes that we noticed in ’09 when we went to DocuSign and we laugh about how much time we saved going to electronic signatures, that type of movement is never going backwards. Those are the things that … and Scott Galloway talks a ton about this pandemic didn’t change the market, it just escalated the timeline that things were happening, and then everything just accelerated. I think there’s just so much about our market that’s so much more buyer, seller friendly that has changed. I mean, the iBuyer market has dried up over the last few years. There’s just a ton of the MLS consolidation. These things are happening very, very rapidly right now. And those are not inventory based.
Jim:
No, I mean, think the iBuyers were something that there was a lot of fear around them. Both from a consumer perspective because they always thought they were competing with people from other areas and with these big conglomerates. And from the agent’s perspective, there was so much fear about the iBuyers were going to change the market in ways that they didn’t understand or anticipate. And that was a thing for minute. And now, you look at the companies that specialize in that and they’re just not doing it anymore. And Zillow tried, I mean, to their credit, they recognized it pretty quickly that it was a mistake. And they got out of it and it’s like, well done.
Jonathan:
Redfin followed not quite as quickly and backed off on it, but from a realtor perspective, it was something that we all were paying attention to. And you would look in some of the bigger markets, not necessarily markets that we operate in, although-
Keith:
We certainly are in some of them.
Jonathan:
In some of them. But it was just amazing to see the percentage, the increase in percentage of iBuyers that were buying houses. And over the course of time, look, it’s a strong potential business proposition for somebody to say, “You can sell your house in a day and don’t have to deal with open houses.” And this and that. But then you’ve got to take into account, hey, what does that cost me? And it’s expensive.
And I still think that, look, the iBuyers have … we talk about extremes. They went from kind of a thing to a big thing and they’ve fallen off a cliff a little bit. And what’s that Mark Twain quote? The stories of my demise or death are greatly exaggerated. I don’t think the iBuyer thing is dead by any stretch of the imagination. It’s going to get tweaked and it’s going to be a part of our industry for a long time. Just like there’s other business models that are part of our industry for a long time.
But going back to what’s happened in the last three years, the pandemic, there’s been the extreme approach with a lot of business models of, this is going to take over the world and the old way of doing things isn’t going to ever … no one’s ever going to go on a business trip again and no one’s ever going to … it’s all going to be Zoom meetings across the country. Look, that’s not going to happen, there’s a balance in there and iBuyers are going to have a place. I’ve read some articles that was like a third of the market’s going to be iBuyers. Probably not.
Jim:
I don’t think so. I mean, I think one of the things to the extremes is that there was a point in the pandemic where virtually every job listing was offering remote work. And now that’s dialed back.
Jonathan:
Massively.
Keith:
As soon as HR departments realized what it meant to manage remote workers from a tax perspective, from a legal perspective, from all types of financial questions. And states trying to exert their own influence and make determinations. That changed very quickly. But that was also super fast acceleration and allowed smaller cities to grow in ways from real estate perspective that we would not have … I mean, Charlottesville certainly benefited from DC type X migration.
Jonathan:
Well, a lot of the markets we operate have the face of some of these small to mid-size markets. And we’ve typically gone into what we call secondary and tertiary markets. And the face of these locales has changed. I mean, I look at places like Charlottesville and Asheville and Wilmington, and I could go right on down the list with almost every one of our locations. It’s how much they’ve changed in the influx of people that have come into these locations has been amazing.
Keith:
And honestly, even the larger cities, the [inaudible 00:17:34] that we’re in-
Jonathan:
Oh yeah.
Keith:
The type of development that’s been happening and the way that building construction, residential construction’s been happening since in the development end, it’s completely transformed since three years ago.
Jim:
If y’all could pick one thing that you think will or you hope will or would like to see continue beyond the pandemic, what would y’all pick?
Jonathan:
What do I hope?
Jim:
Yeah.
Jonathan:
Here’s my hope, I actually don’t have this T-shirt. But for those of you that follow UVA basketball since Tony Bennett came around, it’s boring. Like UVA basketball is so boring and it’s gotten a little more exciting, sometimes not in the best ways. But a little more exciting over the last couple of years with some more offense. But in the early days of Tony Bennett basketball, UVA would win 55 to 53 or 53 to 49. And it was boring.
Jim:
Blow, methodical, defensive.
Jonathan:
I would love if we got into a market that was boring, and sales increased every year by 4%, and prices went up by 2.9%. And look, I know that there might be some economists listening to this would raise their hand and say, “Well, if that happens, then you haven’t thought about the repercussions and this and that.” But it would be nice to get into a market where a buyer would come in on a Wednesday and they could look at 14 houses between Thursday and Sunday, go home to wherever they’re moving from, think about it for two days, make an offer, get a home inspection, know what they’re buying and go from there. And a seller would also know, Hey, if I list my house, there’s a pretty dang good likelihood it’s going to sell within 65 to 90 days. So I would love for the market to get boring.
Jim:
You kind of took mine.
Jonathan:
Sorry.
Jim:
Yeah, I think the thing that I want this market to carry forth, I think is going to be the cooperation of the agents, both within Nest because we have incredible agents. But also I want the community of realtors to continue working well together. Because I think it was one thing that … again, in a relatively small market, we have what? 1500 agents, give or take.
Keith:
And a little lower, but yeah.
Jim:
And 20% do most of the business, as in most markets. I think that we have a strong community here in Charlottesville and I assume everywhere else. And just for us to keep working well together and respect each other. And it was nice of checking on people, I remember doing things for other agents of, oh, you’ve got COVID? Fine, no worries. We’ll take care of it. And it was a camaraderie I think that in a lot of ways had been lost in the previous market and really sort of rebounded. So my hope for the out pandemic is just be nice to each other.
Keith:
Yeah, it’s funny, I look at what our agents do for their clients and how we are really trying to raise a level of professionalism. And I think what would I like to see moving forward is that there has been a view of, there’s such a shortage of inventory that we don’t necessarily have to take every step. But I think the reality is when we’re now sitting in front of sellers, we’re having to put our best foot forward because every agent wants those listings because of the shortage of inventory. And so what really has happened is while the houses may be able to garner a higher price point because of the shortage, I think the agents who are professional in this are standing out more right now than they ever have.
And there is a huge notice, not just among agent communities, but I think among the public of what agents are doing their job and who’s worth what we charge for fees. And I think that is a huge positive. I think the transparency of fee structure has gone up over the last few years for buyers and sellers, agents, both. And I think that’s going to continue and I think that’s going to be positive for the agents who are good, they’re going to be able to continue to show value. I think the agents who are not are going to have real problems in 2023. I think that has been my big thing is this is not going to be an easy market to be an accidental agent. And there are a lot of people who’ve succeeded as accidental agents, and I do not think that’s going to be the case moving forward. They’ve got to be intentional.
Jim:
Agreed. I got one more hope. Keep doing the pod consistently. Every time we need to get the schedule, we’ll get it done, and we’re going to keep moving forward.
Keith:
I have one last hope on that, and that is that this is … maybe we have one more pod that we record in this room before we have a new office that we’re going to be able to build out and move into. And we’ll be recording in the new office next go around.
Jonathan:
Yeah.
Keith:
There you go.
Jonathan:
We also need to figure out what biweekly means.
Keith:
Is it semi-weekly? What is it?
Jim:
Biweekly, I don’t know. I Googled it, I look at the dictionary, no one knows.
Jonathan:
No one knows. We’re doing this twice a month.
Jim:
There we go.
Jonathan:
We’re doing this in two pods a month. Whether that’s semi-weekly or biweekly.
Keith:
Semimonthly, twice a month.
Jim:
All right, y’all.
Jonathan:
We’ll see you in a couple of weeks?
Keith:
See you.