JF1214: Why Building A Small, Loyal Brokerage Has Worked Better Than A Massive Brokerage with Billy Rose
Coming from representing high net worth and celebrity clients as a lawyer, representing them as their realtor was a natural transition. Now he is one of the top agents/brokers in the country, and does it by building a small, loyal, and high quality brokerage. Billy only takes in people who are performing at a high level already, rather than trying to get in as many agents as possible and charging them for everything possible. Hear why he prefers to build with quality over quantity. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Billy Rose Background:
-Founder & President of The Agency & Agency Created, a full-service luxury real estate brokerage/lifestyle company
-Been representing high-net-worth and celebrity clients for more than 30 years.
-Named the #10 real estate agent in U.S. by The Wall Street Journal REAL Trends sales over $197 million in 2015.
-Agency Creates is a stand-alone creative PR agency that services more than $4B in luxury real estate brands
-Commentator on all things “real estate,” featured in Wall Street Journal, NYTimes, LA Times, Forbes, CNN
-Was a former lawyer/agent to realtor before he obtained broker’s license he already developed, designed and sold a
number of “spec” homes.
-Say hi to him at http://www.theagencyre.com/
-Based in Los Angeles, California
-Best Ever Book: Delivering Happiness
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff. With us today, Billy Rose. How are you doing, Billy?
Billy Rose: I’m doing great, thanks for having me.
Joe Fairless: My pleasure, nice to have you on the show. A little bit about Billy – he is the founder and president of The Agency & Agency Created, which is a full-service luxury real estate brokerage/lifestyle company. He’s been named the #10 real estate agent in U.S. by The Wall Street Journal and sales of over $197 million in 2015. Agency Creates is a standalone creative PR agency that services more than four billion dollars in luxury real estate brands. With that being said, Billy, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Billy Rose: Sure. I’m actually an ex-entertainment industryite. I was an entertainment lawyer for 10 years, I was at United Talent Agency (UTA) for another five years, I got into design and development just because I had a passion for it, I started spec’ing some homes… I had some success there, and decided to just get into the real estate industry exclusive, and I quit being a talent agent.
While I was in that space, designing and developing, I saw that there was really a need, a niche within the brokerage industry which I felt was broken. I got in, I had some early success; a lot of people who were in the entertainment industry had seen a lot of the environments in which I had hosted events, parties, things I had designed or sold, and they said “If you can find something for me, you can represent me.”
Things took off quickly. Cut to about 11 years later and Mauricio and I started The Agency. It was with that understanding, that observation that the industry was broken, that we wanted to shake things up, be innovative, be a disruptor and do things differently.
Joe Fairless: What was broken about it and what did you do to solve it?
Billy Rose: Well, I worked at large law firms and large talent agencies, and they were integrated organizations. When I got into the real estate industry, it seemed quite anachronistic, quite counter-intuitive that a brokerage would say to its agents, “Okay, go brand yourself, go be this other entity which appears to be in competition with us.” That to me was very odd, and I look back at the history and it becomes more understandable now, because you had the situation where agents rebelled against the brokerages sometime in the ’80s and said, “Hey, these are MY clients. I’m doing this work. This 50/50 split is just not working!” And the brokerages said, “Fine, we’ll give you a higher split (whether it went to 80 or what) and in return you’re now gonna pay for all the marketing and the advertising.”
I have this vision in my mind’s eye of that [unintelligible [00:04:54].21] or whatever agent who was making their ad and it was all together, and they went “Okay, I’m ready to place my first ad that I’m paying for” and thought “It looks just like every other [unintelligible [00:05:04].22] I ever place, and I’m paying for it, so where’s the value to me?” That’s where this shift towards personal branding eventuated, and what I found from that was that 1) by creating these different personas, these entities which are now in competition with the umbrella brand, we’re diminishing the value of the umbrella brand. It’s no longer a credit enhancer, it’s no longer bringing you this cache, and it’s fragmenting the brand, because now everyone’s in competition with each other at the brokerage, and it’s encouraging everyone to keep their information, their knowledge, their resources, the database, those spheres of influence to themselves, so they can have that competitive edge over other people at their brokerage.
I had moved from one brokerage to another… Nobody knew that Rose & Chang wasn’t a brokerage (that was my brand) that I was at these other brokerages. They just thought they were dealing with Rose & Chang. To me, when you look at successful, mature industries, whether it’s law or accounting or talent agencies, I would never, while being at my law firm, be Billy at Rose Law; you would have to be Billy [unintelligible [00:06:15].27] or you have to be Billy at UTA. It would never be Billy at Rose Talent. It’s just so different from the way other industries work, and I felt that if we could create an integrated, unified organization where people are all working together towards the same goal and we’re all benefitting from each other’s successes and we’re all trying to help each other so we’re having less failures, it’s that concept of the rising tide raises all boats, and I believe that’s really what’s lead to a lot of the success that The Agency has had in a very short period of time.
Joe Fairless: How do you reward people who are doing exceptionally well, versus not reward people as much who aren’t doing anything and they’re just hanging on but rising with the tide because you’ve got some superstars doing really well?
Billy Rose: Well, there’s a number of ways that we all help one another. There is a financial reward that comes — for example, we really want to encourage the free flow of information, particularly with pockets.
Joe Fairless: With pockets? Pocket listings? Got it, yeah.
Billy Rose: Thank you for clarifying. So if for example Blair Chang learns of a pocket listing from an agent at another brokerage, he can post in our CRM – which we call Agency Connect – the existence of that pocket listing, and if somebody else here can transact off of that information, some of the company share with the agent who shared the information who’s not getting paid on it… So we wanna constantly be encouraging this total sharing of information. You’re only as good as your weakest link.
In the same way that we all benefit when Mauricio sells the Playboy mansion, or I might sell a case study house or whatever it might be, we conversely all are negatively impacted if somebody is doing something in not the best way. So we all become protectors of the brand from which we all derive a lot of benefit. If somebody’s not doing a great job or they’re not understanding the real estate purchase agreement or their marketing is not quite as good or their photography is not quite as good, we’ve got people here who will all feel invested to protect what they feel is their own brand – The Agency – and help these people all succeed.
We don’t have a lot of people. We’re a boutique, we’re not a real estate play where we’re trying to get people on the desks to charge desk fees. We’re not a we work; we’re a place where if you’re carrying the Agency flag, you’re a representative, a reflection of everyone else here, so we really are trying to just bring in best in class, and it’s very rare that we bring in people who are not business, and not doing business with integrity and on a professional level.
Joe Fairless: I wanna switch gears a little bit and talk about some of the stuff that you did previously… But you mentioned “case study house.” What is a case study house?
Billy Rose: Well, back in the ’50s there was a guy named John Entenza who bought this magazine called Arts & Architecture. He wanted to use that magazine as a platform to promote what he felt was the next best style of architecture, what we call now mid-century modernism [unintelligible [00:09:22].06] and really that true modern style exemplified through steel, glass, plywood. And what he did was he created this great marketing scheme where he went to, let’s say, Bethlehem Steel and said “Hey, I want you to donate or give us steel at a lower cost and I’m going to, in our magazine, promote the usage of your steel in this house.”
He then went to the cutting edge architects of the time, whether it was Neutra, Eames, Schindler, Koenig, and he said “If you’ve got a client who wants to have a house built, we will get you product for less or for free, and we will promote the home, and you as an architect in the magazine. The homeowner – all they’ve gotta do is allow us to publish the home and have people come through the house for a 30-day period or so to see it, and they will get the benefit of a lower cost.” So there were something like 30-something homes that were built – case study one, case study two etc. done by incredible architects who were in that pantheon of mid-century modernist architects. They served as this case study of how you could live this incredible life, how architecture influences life.
Joe Fairless: In your bio it says that you’re a former lawyer, agent to realtor before you obtained your license, and you also developed, designed and sold a number of spec homes. How come you don’t develop, design and do spec homes anymore? Or maybe you do and I’m not aware of it.
Billy Rose: Yeah, my focus really with that non-selling time of mine and that non-running of the company time of mine – I love that. To me, spec’ing homes, designing homes – it’s so fun, it’s so great, it’s so rewarding; it’s a great creative expression and it can be incredibly financially rewarding. My creative expression now comes through the design in the offices as we continue to expand; I get to godfather a lot of homes where my clients who are developers will rely on me to give them insight on what are people expecting today.
I think a lot of my success as an agent and a lot of our agents’ success is I came up with this structure in thinking about when you go to sell a house, who is your audience going to be? Who is your consumer? What are they gonna want? How are you gonna communicate to them and how are you gonna reach them? And that kind of really rose out of when I was spec-ing homes, you get a home up in the Bird Streets here in L.A. and that is known for these extraordinary views, their accessibility to nightlife on the Sunset Strip, and they’re kind of the world of the bachelor. What you’re going to build there is gonna be quite different from what you’re going to build, say, in the Huntington Palisades or Brentwood Park, which are big land, no view, family neighborhoods. You need to be mindful of who your client is.
For me, I love that and I think I’m good at it, but right now the focus is on building in terms of the Agency and the office is where that design expression comes. I do look to go back to that one day, and I hope to do so on larger scale with a more public component, whether that’s a hotel and condos, or a restaurant.
Joe Fairless: So you’re able to flex your creative muscle in similar ways that you were before, but it’s just in a different capacity, with your current business. Going back to the root of that question though, why did you change? Because I imagine feast or famine, from what I’ve seen – I’ve never developed before, I’ve never done ground-up development, but you can make a bunch of money (and you can lose a bunch of money), so why did you specifically decide to leave and go do something else?
Billy Rose: My last spec I brought to the market just really as we were starting the Agency. I think my intention at that time was probably to continue doing it. I never really thought of myself, other than when I first left the talent agency business and became a designer/developer, I never really thought of myself after some period of time thereafter as exclusive to either being an agent or being a developer, because I feel that they’re so complementary to one another, that you become better at each. You really have to become a student of the market to be a developer – and a designer – because you’re putting your money where your mouth is.
I think that if you really get to that point where you believe in the market so much that you’re willing to put money out to go do that, that you’re able to benefit your clients who are buying and selling more so, because you understand the market and the rhythms and the values so much more keenly I feel, because you’re really taking a more analytical approach to it. It’s almost like it’s a commercial venture, like in commercial real estate, where it does tend to be more about “Does it pencil out?” than when you’re buying or selling a home, which tends to be more emotional.
I think it allows me to communicate on a more dispassionate level and have them understand at a more dispassionate level what the values are and why a house works for them, for their life, for their family etc.
When we got to the point where we launched the company, there was so much to do that I had to make a choice, and I think at this time it’s — look, real estate is cyclical; when we hit that next cycle, I get more aggressive in buying and spec-ing maybe. We’ll see.
Joe Fairless: I’ve got some questions from some Best Ever listeners. It ranges from more high-level to credibly tactical, so we’ll just go with one in-between, and you touched on it a little bit, so feel free to just reference what you’ve said earlier and elaborate anywhere you wanna elaborate. This is from Genja in Connorsville, Wisconsin. Genja asks “What are some things I can do to attract people to an open house?”
Billy Rose: There’s a number of things you can do, and I think there’s fundamentals that we all have to undertake to really be as successful as we can. Social and digital media today are so prevalent and so useful, so create some compelling imagery and narrative with regard to what it is that you’re selling. And again, it goes back to thinking about who is your consumer, and… You’ve gotta create imagery and you’ve gotta create a narrative that’s gonna resonate with that consumer. Then you’ve gotta be able to reach out to them through channels that will connect to them – certain Instagram, Facebook, Snapchat, or whatever your platforms are; your website… Don’t overlook the neighborhood. Knock on the doors, deliver invitations, send them by mail, make sure that everybody in that neighborhood knows that you’re going to be there and that you’re selling that house. That’s a great way to pick up a new client, and it’s also a great way to potentially pick up a buyer, because I think that a lot of neighbors are invested in who is going to be their neighbor; it’d be great to have their friend there.
To me, if you don’t get people at your open house, it’s a waste of your time. Make sure you have the advertising that’s gonna support it. Get out as many signs as you can. You need to spread the word that you’re gonna be there, so you’re gonna get people there.
Then there’s sort of that event mentality, whether you’re in a family neighborhood – I don’t know, do you wanna have a lemonade stand? Do you wanna have a corn dog truck there? Think of clever, out of the box ways to get people to attend.
I had an open house once, it was on Easter, and I did an Easter egg hunt. We’ve done wine tasting… Whatever that might be something that will attract — to me, those three hours of an open house, they’re critical, and I don’t wanna feel like I’m wasting my time.
The other thing that you have to keep in mind too is be knowledgeable about a market that is reflective of and comparable to what you’re selling. If this house is not gonna work for them, might you know something else that you can direct them to and maybe take them to?
Joe Fairless: As I mentioned, some are incredibly tactical, so here’s a tactical one – this is from Meethew in Warner Robins, Georgia. Here’s the question:
“I am close to being done with my pre-licensing course. When should I start looking for a broker?”
Billy Rose: I would say start now. It does take time… The thing to me that would be of most interest is “Where am I gonna get the most training? Where is that education gonna come?” We at the Agency are not the best for that; we’re not really a new agent agency. We don’t have a great training program for newbies. There are some companies out there who are great at that. An alternative way would be to find a team that you can get on, somebody who can mentor you.
You’ve really gotta learn those tools, those tricks, those tips, those everyday things that you wake up and have to do as a real estate agent. This job, while being incredibly lucrative and something you can do into your seventies and eighties, and it’s every house you sell, you should be able to sell again… But it’s grind, and you have to wake up every day doing all the things that you need to do; it’s not that hard, but it does take tenacity, patience, focus and discipline.
Joe Fairless: I wanna dig into those aspects in the Lightning Round. Here’s a question I ask all the guests in some form or fashion – based on your experience as an entrepreneur in the real estate industry, plus having success in multiple areas of real estate, what is your best advice ever for real estate investors and entrepreneurs?
Billy Rose: I think that whatever you’re doing, there’s a few traits or things that you need to do. One is don’t undertake anything about which you’re not passionate. I think there’s so many businesses that people try to go lift off the ground because they think it’s a good business and therefore they’re gonna go do it, and most any business is gonna be hard. Nothing comes easy, that’s why it’s work. So if you don’t wake up excited, motivated, passionate about what it is that you’re gonna be doing, then you’re never gonna succeed or you’re not gonna really enjoy it. So I think you need to bring that to it.
You also need to be a student of whatever that field is. When I started as a real estate agent, I saw more properties on the market than any agent out there. We have a caravan, which for us is 11 to 2 on Tuesdays; my record was 23, and I think that’s still the record. To go see 23 properties in a 3-hour period is kind of extraordinary.
Then I would see properties through the week, I would make sure I would go to open house, I would be really studying what was open, and I had a plan as to what houses I was gonna see, in what order I was gonna see them, and if I got caught up and I wasn’t able to get quite as fast, what were my options if I got over this part? I would be starting on the West side; again, the caravan starts at 11, I’d be there at [10:45], I’d be helping the agent at that first house put in the flags, or turning on the lights, and I could see a house or two without time actually having elapsed.
I think you really need to know the market, and because I knew it so well, people were calling me to help give them pricing advice. I was seeing stuff earlier than anyone. So I was really a student of the market.
And then you really need to be disciplined and focused on what you’re doing. I don’t think that you can really have success on a grand scale if you’re doing it part-time. You need to commit yourself, you need to focus on it and you need to hold yourself accountable; you need to put together a plan for yourself – “Am I gonna door-hunt ten houses a day? Am I going to send out 20 letters? Am I going to have 10 conversations?” Create some structure for yourself so you can really hold yourself accountable to that.
Joe Fairless: That actually ties into what I was gonna ask you some follow-ups earlier, when you mentioned that you have to do certain things every day as an agent… Any other tactical things that you didn’t just mention that you should do as an agent or people should do as an agent, that you didn’t just list off?
Billy Rose: I think that you need to make people aware that you’re available, that you’re open for business. As a real estate agent, you need to be top of mind, you need to be everywhere all the time, and I think one of the ways to do that is take some of that knowledge that you gained — you go out on a caravan and you see an amazing house… Well, you may not have a client for it, but that doesn’t mean that’s the end of that usage of that information. Go an talk to business managers – “Hey, I saw this amazing house” or “I know of this pocket that’s not yet available. It’s 20 million bucks”, or “It’s two million bucks (whatever it might be). Do you have a client that would be great for? Because it’s a great house”, whether that’s to a business manager, a friend, someone you meet at a bar – that gets people thinking about you in ways they may not have thought about you before.
You may be selling routinely 700k or 1.2 million dollar homes, and you come across this ten million dollar home and you’ve never sold a ten million dollar home. You can get people to shift the way they think about you by talking about a ten million dollar home, why it’s so great, how you got to it early and how it’s a great opportunity.
The other thing is as a realtor, you’ve gotta be social. It’s all about engaging and nurturing and broadening your sphere of influence. It’s really about always bringing a positive attitude, being optimistic and creating an energy that people wanna be around, because it’s a very intimate, emotional experience when you’re buying or selling a home, and people wanna feel that you’re in control, that you’re in command, and that you’re a pleasure to be around. I think it’s really reflect that energy, reflect that positivity and try to get that to as many people as possible.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Billy Rose: Let’s do it!
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Joe Fairless: Okay, best ever book you’ve read?
Billy Rose: Delivering Happiness. It was our Bible. That’s the book that Tony Hsieh wrote about Zappos, and how to not only pursue profits and passion, but also purpose, and it really led to the way we created our culture.
Joe Fairless: Best ever transaction you’ve been a part of?
Billy Rose: We have this proprietary CRM that we’ve created that allows us to engage with our website, and each agent’s contacts go into our CRM. When one of your contacts is conducting searches or extended work on our website, you get alerted that they might be ready to buy or sell, and I had observed that I had a client who I’d sold a house to some ten years ago, who was searching in Brentwood Park – it’s a family neighborhood.
The house I had sold him ten years ago was this bachelor pad, panty dropper home, big views, up in the Bird Streets… And he’s a big entertainment industry guy, and I thought “Why is he looking between 10 and 15 million bucks in Brentwood Park?” I go on Facebook, I see he’s gotten married; the gal he’s married has two kids who were going to Crossroads… Light bulb goes off–
Joe Fairless: A different life circumstance.
Billy Rose: Yes. Light bulb goes off in my head. I’ve got clients who are looking to buy a house just like him. I call him up, “Hey, Bob, I’ve been following you in the trades, you’re killing it. As you probably know, the inventory is super low in the Bird Streets. I don’t know if you’d even consider selling…” “Dude, I can’t believe you’re calling me now! I just got married, my wife’s got these two kids; I’ve gotta find a house in Brentwood Park. If you could help me find a house and if you can help me sell my house, it’d be amazing!”
Well, I showed my two clients his house, ended up selling it to one of them, so I got two sides on that one, and then we found him something in Brentwood Park and I got a side on that.
Joe Fairless: Just paying attention to your client’s life circumstances. You mentioned something earlier – if we allow it to set it, it’s a very powerful thing… You said “Every house you sell, you should be able to sell again”, and it makes it much less daunting — I’m not a real estate agent, but if I were, it would make it much less daunting for me to think, “Oh man, I’ve gotta get all this business.” Well, wait, one success builds on top of other, so how do you stay in touch with your clients after you sell them a house or sell their house?
Billy Rose: That goes back to being everywhere all the time and being top of mind. There’s a number of things. One is cycle through your contacts, maybe keep a list of your clients. Keep a note of when they bought or sold their home. Check in with them on some regular basis. We have a weekly newsletter called The Agency Edited, which goes out to all of our clientele and our contacts [unintelligible [00:26:46].02] which was intended to be sort of like the Agency curated perspective of luxury lifestyle in the same way that [unintelligible [00:26:55].09] or Daily Candy, Urban Daddy, Thrillist, whatever it might be, so that we’re bringing value to everyone (that’s our intention) by letting them know “Where do you charter a yacht this summer in the Mediterranean? Where should you go see fireworks this 4th July? What’s the most popular place to go trick or treating? (as we’re on the day after Halloween) What’s the cool new watch or vehicle?”
By getting that out in front of them every week, it reminds them that I’m here and I’m in this business. I think that relationships are the key to this business, and unless you really mess something up, that house that you sold someone, you should be able to resell it for them again and help them find something again, unless you messed that up in some way.
Joe Fairless: Speaking of that, what’s a mistake you’ve made on a transaction?
Billy Rose: I think one of the biggest mistakes you can make is not treat every transaction as a way to mess it up. So often we hear of agents who say “I’m doing this lease and I’m only making $3,400 on it.” Well, you’re not doing that lease for the money, you’re doing it to maintain that relationship and that trust and that intimacy with your client. If you don’t treat that transaction just like a ten million dollar buy, then you’re doing yourself a disservice; you’re not helping your client, and that’s a huge mistake, because you’re gonna break the chain with that client by not giving them great service.
I think the lesson to learn from that mistake is treat every transaction, treat every client as if they’re your primary client, because you don’t know who they’re gonna refer you to or who they’re gonna speak badly about you to if you don’t handle that relationship and that transaction with the importance which it deserves.
Joe Fairless: And you’ve made that mistake. What’s the best ever way you like to give back?
Billy Rose: The best way to give back… I serve on the board of a nonprofit called Kiss The Ground, which is designed to promote regenerative soil practices. I give financially to organizations, we as an agency give financially and we’re super involved with Giveback Homes and Habitat For Humanity, where we will actually go on site and build a home for a needy family.
Joe Fairless: And how can the Best Ever listeners learn more about your company?
Billy Rose: They can go to our website, www.theagencyre.com. I’m Billy Rose.
Joe Fairless: Billy, thank you for being on the show and talking about how there was a broken part of the industry that you identified, and then how the business came together so that everyone can benefit within the team, and as you said, a rising tide lifts all boats (or something along those lines). Also, the way that you were talking about every house that you sell you should be able to sell again, and that ties back to being top of mind.
One of the things that you all do is that weekly lifestyle-focused newsletter where you know your clients, you know what they’re interested in; you’re not doing a hard sell during that weekly newsletter or in that weekly newsletter, but rather you’re just adding value to their life and staying top of mind. Then also the three things that you mentioned that we all should be focused on when pursuing business in real estate (or really in general), and that is make sure we’re passionate about it, number one; two, be a student of whatever we undertake, and three, be disciplined and focused on what we’re doing.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Billy Rose: I appreciate it. I enjoyed being here, and I hope your Best Ever listeners enjoyed it, too.