May 15, 2026 • 30 mins
This week on Realty Talk, Suzanne and Paul break down one of the biggest real estate industry shakeups yet — the RE/MAX and Real acquisition — and what it could mean for agents, recruiting, brokerage models, and the future of the MLS.
The conversation dives deep into how caps work at brokerages, why some companies are aggressively consolidating, and how shrinking transaction volume is forcing major players in real estate to evolve fast. They also discuss the growing divide between independent brokerages and large corporate models, plus why collaboration may become more important than ever.
The episode also covers rising foreclosures across California, including HOA foreclosures and tax lien sales, and why many homeowners are still feeling the effects of the COVID-era moratoriums.
Plus:
• Spring market slowdown & buyer behavior
• Why repeat showings are increasing
• Interest rate and treasury updates
• The reality behind brokerage “caps”
• Celebrity real estate: Angelina Jolie’s $30M historic LA estate
• Hollywood tax credits & film production leaving California
• Why luxury buyers think differently
• RE/MAX & Real acquisition
• Future of the MLS
• Brokerage caps explained
• Independent brokerages vs corporate brands
• California foreclosure trends
• HOA foreclosures
• Interest rate updates
• Spring housing market trends
• Angelina Jolie real estate news
• Luxury market insights
• Hollywood production leaving LA
• Real estate recruiting & agent growth
🎧 Realty Talk covers real estate, business, investing, celebrity housing news, and real conversations happening in today’s market every week.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:11):
Welcome back to your favorite podcast on the planet, Realty
Talk. We're in a new room.
We are. It's so exciting.
Very, very exciting. Coming along, we've got, we've
got more enhancements coming in this room.
So this is just like phase one. The beginning yeah, some new
space to my left we have CEO, founder of Inve Realty, Suzanne
(00:32):
Cini, also known as queen of theclosing table and I am Paul
Hanson. I run by by house, a single
family fix and flip business. Therefore I have been named Paul
fix it all. I have to fix a lot of problems,
but we like to do extended intros because we have lots of
(00:53):
new listeners. So that's a little bit about us.
We're excited to to get feedbackfrom you, but we have a jam
packed agenda today. Yeah, it was actually really
funny because we wrapped last week's podcast and I would say
it was more of a lighter week. You know, we were just kind of
talking through the usual small updates and then we talked a
(01:15):
little bit about our businesses,but like as soon as we wrapped,
it was like big real estate newsagain.
So you know, a few weeks back, maybe months back now, we had a
really big merger in the industry or acquisition,
whatever you want to call it between Compass and Anywhere.
(01:37):
So everyone was talking about that.
What does that mean? And then last week we had
another merger acquisition situation coming through
acquisition, this one is like acquisition very clear and it is
with re/max and Real. So everyone's been talking all
(02:00):
about it. What does it mean?
And you know, I think I think that one kind of surprised me to
be honest. I, I, I, I know RE/MAX agents
and I know a lot of real agents and we've actually talked about
real on the podcast way back just because, you know, we were
(02:20):
actually a little nervous about real and just, you know, where
they were going to be and you know how they were spending and
you know, all the things. But this is super interesting
because re/max agents and real agents in my opinion are just
very different agents. I think I see real, I see RE/MAX
(02:45):
agents kind of as like, I want to say the word old school
because that's not the right word, but it's like I would say
kind of independent, top producing, you know, just very
different than the way I pictureand see a real agent.
So I think it's really interesting to merge that
(03:10):
together and come up with something new so.
Yeah, it's I'll give my $0.02 aswell because I think I can
provide some color. I.
Know I, I, I don't know, you know the right way to say this.
They're just different personality types.
I've never been a real estate agent and, you know, Innovate is
(03:32):
the first brokerage that I've been a partner in.
So I'm, I'm still learning a lotabout the brokerage business as
a whole. But when I read that news in my
head, I, I, I think of things visually, yeah.
And to me, when I think of Re/max, no offense, but it's
like the, you know, it's like that six unit strip mall in a
(03:53):
building that was built in like the 50s or 60s that hasn't
really been maintained. That's where the re/max agent
has their office. I get mailers in like the like
the saver plus packet, you know,and that's where I see their
agents. Real doesn't have offices.
And you know, my public perception of who they are has
(04:14):
been like a tech loose quotes enabled recruiting firm, more
like a multi level marketing approach.
Like they heavily focus on Rev share, putting caps on agents,
things of that nature. So you're taking two very
different cultures. Like re/max traditionally is
franchise. So these these locations are
(04:36):
owner operators. They, they've been agents
before. They write a check to RE/MAX and
now they own their geography or their region.
And Real is like kind of on the opposite side of that.
So I'm, yeah, it's a very, they're two very different
cultures to try to bring together.
And interesting because they're two different business models
(04:57):
really. You know, I mean, not to say
that RE/MAX agents don't recruitagents, but I think it's just,
it's, I would just say they havehad kind of different focuses
for quite some time. So, yeah, I mean, I'm, I'm just
thinking in, in my opinion, I feel like this is all kind of
(05:20):
related to what's happening withthe MLS, with the listings and,
you know, really trying to set themselves up for the future
when it comes to, you know, if there is no longer an MLS.
So, you know, having access to aton of listings, which I mean,
(05:44):
that's the route Compass went. I I think that's a huge part of
what they did and what they're doing.
And I think, you know, we're seeing other brokerages kind of,
you know, make those considerations and yeah, maybe
maybe do the same thing. Yeah, I, I think it's for me,
it's a slightly different vantage point.
I see real burning tons of money.
(06:07):
They have to grow. If they don't grow, they're
going to die. And so they on paper last year,
when you look at the, the math, I think they were the 4th from,
you know, the 4th largest brokerage in the US from a total
sales standpoint, re/max is number 7.
And so they're probably looking at it like, hey, if we don't
grow aggressively somehow like make a huge splash, we're going
(06:30):
to die. And that these recruiting
efforts of picking on onesie twosie agents is probably not
the kind of growth that's going to take them to the Holy Land.
Like is that, that incremental growth curve is really
difficult. You know, so early on it was
probably simple for them to growby 100% year over year, but
going in and adding another 100%growth this year would be
virtually impossible, I think. So I, I, I view this as maybe,
(06:54):
you know, an effort to not go out of business when you're
losing lots of money. Yeah, Yeah.
The, the cap, I mean they, they do offer caps and I think, you
know, we've talked about that. It's really difficult because
you know, it's we, we feel that we want agents at our brokerage
(07:15):
that want to continue to grow, that want to have access to all
of the things that we're able toprovide to them.
But those things cost money, youknow.
And so I think, I think if you are going to a brokerage with a
cap or with just, you know, maybe a small fee, you have to
(07:39):
kind of know that your brokerageisn't going to provide you with
a whole lot. And I think, you know, I guess
that is something that they actually have in common where
RE/MAX agents most of the time it's like a fee, a fee that they
paid a RE/MAX, which is why I have that perception of just
kind of the solo operator re/maxisn't doing a whole lot for them
(08:01):
except for the name re/max. But I mean, as you said, the
name that you, that name that you associate, you know, other
things with maybe isn't doing anyone any good.
So yeah, it's interesting. Let's slow down and double click
on one thing you just said, which is a cap.
Because I think, you know, whether you're a new agent or if
(08:21):
you're listening and, and not a real estate agent thinking about
joining what, what is, what is acap and how does that affect the
real estate agent? Yeah.
So a cap just means that an agent, you know, produces a
certain amount of business and after they pay their brokerage,
as you know, X amount, then the brokerage doesn't collect
(08:44):
anything else from that agent. So, you know, we, we have found
that we want agents to be reallymotivated.
We want our, our agents to want everyone to do well.
And I think it creates a different environment when we're
(09:05):
all in it together, you know, and also I think, you know,
looking at us specifically through our lens, it's we're,
we're providing a lot and we want our agents to be successful
and do more business and we invest a lot of money into that.
(09:26):
And so, you know, what would thebrokerages motivation be if they
weren't making money off of an agent anymore?
You know, it just doesn't seem like incentives are aligned.
And you know, it's it, it creates kind of, you know,
animosity from one way or the other, I think.
(09:47):
And, and the brokerage, I mean, not to say that they're not
incentivized, but they're, you know, at that point they, they,
I mean, does it matter to them if you do 10 more deals?
Well, I imagine, I imagine for those brokers, because a typical
cap you know is going to range between 25 and 50 grand or
something. So if you, if you're on a cap at
(10:09):
real, you're a top producing agent and you've gone out and
done a bunch of volume in the first half of the year and you
essentially gave them 50 grand or their 20% stake was worth 50
grand on the commissions that you generated.
Every deal after that, you're not going to be paying them a
dime. You're going to take the rest
outside of service fees or transaction fees or whatever.
(10:30):
And so, so that brokerage to your point doesn't have an
incentive to really support or grow the number of transactions.
But what they do probably have is and incentive to really push
on you to recruit other people, right.
So when you look at the brokerages that have caps or are
known for caps, they're generally recruiting heavy
(10:52):
brokerages, but they're not generating leads that then
distribute down to the agent base.
So it's just probably a different, you know, kind of
value proposition to a certain degree, you know, where it
innovate. We're very focused on trying to
create opportunities. It it wouldn't make sense for us
if we had, you know, 200 agents and 50 of them capped out.
We would never give one of thoseagents that had a cap a lead
(11:15):
that we generated if we weren't going to get any income back.
From the lead. So I imagine that might be
different to maybe, you know, maybe the lead type changes the
cap or something. I don't know.
But yeah, I, I'm excited to see how all of that, you know, how
all of that goes from a brandingstandpoint and just, you know,
(11:36):
being in business a while, watching 2 cultures blend
together, even when they're completely aligned is really
hard to execute when they're notaligned or just very different.
Man it, it, it seems like it's going to be a big undertaking.
The, the news that I read about the overall transaction would be
that both the back offices support and operations would be
(12:00):
consolidating and potentially moving.
So so you're jamming 2 operational cultures together,
possibly moving them, and then you're taking two brands and
trying to figure out what that'sgoing to look like.
It seems like a crazy undertaking.
And you know, nothing against either brokerage, but I, I don't
(12:21):
look at real as a big tech heavybrokerage.
Like the things that I've heard are that it's OK, like the, the,
the agents don't have too many issues, but it's also, you know,
not, there's nothing super innovative there.
So it's just really interesting.And I, I do, I, you know, we'll
(12:43):
see where it goes. I know the deal isn't completely
finalized yet. And and who knows, they got to
work a lot of things out, but, but it does kind of indicate
that our industry is making somemoves, you know.
And I think, I think that 60% ofof real estate agents out there
(13:04):
are actually at independent brokerages.
So I think that, you know, if we're going to take anything
from this, I think that we should look at this like maybe
independent brokerages should work together as well, should
work together a little closer. We've always been of the mindset
that, you know, the abundance, right?
(13:27):
And, and we always work really well with any brokerage.
You know, we, we open our doors to a lot of other agents that
are at other brokerages and try and help them.
And you know, we do this podcastevery week.
We we share a lot of informationand I think that all the
independent brokerages have the same opportunities to share
(13:49):
information. So if there are some big shifts
with the MLS and you know, I think that there's definitely
opportunities out there for the the independence to share
listing information just as everybody else would.
And I think, you know, keeping the consumer in mind for all of
(14:11):
it is, you know, what's going tokind of carry the future because
the consumer should have access to all listings no matter, you
know, what brokerage independentor not.
So I think, you know, there's, there might be some opportunity
there for the independence as well.
(14:32):
Yeah, I think it's it will. I can't wait to Fast forward a
year or two and see how all thisshakes out To me.
It's it's very much so driven bytotal transaction volume is down
at a national level. Brokerages, their public have to
grow, shareholders want to return.
If they're still losing money, then they've got to find a way
(14:52):
to grab more of the market. And so if there's if the the
total addressable market is shrinking, total home sales are
shrinking on an annualized basis.
And we don't have any sort of, you know, foresight into
interest rates going down to drive market, you know, to move
a little faster. If that's where you're at and
you're in that position, then you've got to roll up your
sleeves and find a way to grow, you know, in a different way.
(15:16):
So that that's why I think theseother transactions are
happening. And and, you know, additional
pressure from these MLS shifting, you know, dynamics or
what not, you know, that that that to me likely is how you
justify the deal. But yeah, I mean this this deal
from a top line standpoint is $880 million to a billion dollar
(15:37):
transaction or just shy of a billion dollar transaction.
You know, I think when you combine four and seven number
four company and #7 company, you're probably going to be
second or third largest in the US but you know again.
Yeah. Where do you go from there?
Yeah, yeah. How do you grow up beyond that
point? Yeah, yeah.
And. You're already public so.
Yeah, yeah, yeah. It's kind of weird.
(15:58):
Yeah, should be interesting. So market wise though, I think
today bond 10 year went up a little bit.
So I think rates ticked up a bit.
But I did see something interesting that we're at a six
year high for foreclosures. So I mean, I think that's kind
(16:20):
of expected and it's been ticking up, but we're seeing
more of those I. Think we talked about it two
weeks ago, we're starting to seeforeclosures from 2 veins or
locations in Southern Californiathat traditionally haven't been
the the beginning of the foreclosure market.
So a lot of times you see banks starting to unloan paper.
(16:40):
These are property tax liens andHOA liens.
So both of which were probably due to, you know, 2020 COVID
hits, moratoriums were placed where a homeowner wouldn't have,
you know, a county, for example,wouldn't have the ability to go
(17:01):
and foreclose on somebody's property if they were delinquent
on property taxes. And then the same for homeowners
associations. And now those moratoriums are
lifted. If consumers weren't in a
financial position to catch up on whatever balance they owed.
Those, those weren't things like, you know, 30 year
mortgages where they just tackedit on to the last, you know, I,
(17:23):
I guess the moratoriums that were placed on, on 1st liens on
mortgages would say, if you havea 30 year mortgage with 20 years
left and you owe 20 grand that you didn't pay during COVID
because you lost your job, then we're just going to extend out
that 20,000 at the very end of the 30 year mortgage.
Taxes are different. Like the, the local
(17:43):
municipalities need the tax revenue, the income to balance
their budget and HO as also havethe same, you know, problem.
And so they're, they're now getting very aggressive to try
to get that income, you know, tobalance their budgets.
And so, you know, I saw actuallyjust this morning, I had a deal
that was floated on my desk. That was an HOA situation.
(18:05):
Consumer had made all of their mortgage payments, but just
stopped paying their HOA fees for the last like 6 years.
The HOA is going to get the house back.
It's crazy. It's crazy how much power the
HOA has. Like it is crazy.
Yeah, I mean all things to consider were, you know, when
you're when you're buying. Yes, so important.
(18:26):
You know, I, I think I've said it before, but I always
encourage, you know, join your, join your board if you can,
because decisions are being madeand sometimes not for the right
reasons, you know, so it's really important to, to be
involved with that. Yep.
Yeah. Big or small?
Yeah, probably. The smaller it is, the more
(18:48):
important. It is exactly like the property
that you had where it was like 3friends or you know, in the
building. Yeah, I can't speak much about
that one, but we, we did a deal where there were 4 total units
in a building. We bought one of them, the other
three ran the HOA. And once I'm past that, yeah,
(19:10):
yeah, we'll have that. Full episode.
Yeah, yeah. But yeah, I mean, I think it
seems like market is, you know, doing what we thought it would
be doing at this point in the year.
I mean, I, I guess in fairness, I thought at the beginning of
the year we'd probably see a better producing spring, you
know, with rates being kind of flat.
You know, we're between we're, we're essentially being hovering
between 6 and 6.3% on the 30 year fixed mortgage for a long
(19:34):
time now. And I mean a little bit of
variation here and there, but soI expected the spring selling
season to be a little faster than it has been.
But as of a month ago, I've kindof acknowledged, OK, this spring
is going to be just slow, you know, but we're still getting a
lot of foot traffic at deals that we have on market.
We're seeing offers regularly onstuff.
(19:57):
Yeah, I think the most, you know, insightful or or you know
the the data point that makes mefeel the best about what's
happening is that our repeat. Visitors at a property are going
up. So nine months ago we would have
a bunch of people through an open house, but none of them
would ever come back for a second or third showing on their
own. But private showings and B backs
(20:17):
are coming up aggressively in All in all of our inventory.
So that to me indicates that we have really intentional buyers
out there. They may still be a little picky
and they may still be a little conservative on pricing, but but
they are going to buy something versus just kicking tires.
Yeah, Yeah. OK.
Well, with that, I think we haveanother celebrity real estate
(20:41):
segment. I can't wait, this one is great.
OK, so Angelina Angelina Jolie lists her historic LA estate for
nearly 30 million, so she reportedly listed it.
(21:02):
Formerly owned by legendary filmmaker Cecil B DeMille.
Conversation is really just about She is now planning on
spending more time in Cambodia, so once her youngest turns 18,
(21:22):
that's the plan. But it is a historic estate.
And, you know, there's some celebrity and film history
there. It's in one of LA's most iconic
luxury neighborhoods. And so this one, it's kind of
like what we were talking about where it's 30 million and it's
(21:47):
really about the emotion and thestory of the house, not so much
the house. So it's, it's interesting.
We don't know, you know, where this is going to trade or what's
going to happen. But what we've seen and, and
even what we've been covering over the past few weeks when we
(22:10):
talk about these is that I don'tknow, do you think that the
story matters? Do we think that you know that
that's going to make a difference?
I don't know. I think it just depends on the,
on, you know, the, the type of property and then the the buyer.
I mean, the first thing that comes to mind, we bought a
property. I think we've talked about this
(22:30):
a couple different times on the show, but we bought a property
that had a story to it. It was a horrific story.
There was like a double murder and we were really nervous when
we went back to market that there would be any level of
interest because we still had todisclose that that occurred.
And we had five or six people that wanted to buy the house
just because that had happened there.
I don't think they could have cared less about the actual
(22:53):
structure. They just wanted to live in a
house where murders had occurred.
And I'm like, that seems so odd.And so I, I think there are
some, you know, different peopleout there.
I don't know if you say different or weird or unique or
whatever. They just want to have the
feeling that they can live in something that's got history
behind it. But I don't know if that matters
when you're, you know, paying $30 million.
(23:15):
I think that can be it. We, we always go back to how
many qualified buyers can buy this.
The property I had was like a million and a half dollars.
There's a lot of weird people that could pay a million and a
half dollars for a second. Home or whatever, right?
How many people can spend $30 million to live in the house
that Angelina Jolie used to own or live?
(23:35):
In Yeah, yeah. So it's a much smaller market.
So I think that buyer's probablygoing to be more intentional
around the value of the asset oris it going to appreciate
they're going to probably care alittle bit less about the
history. That's my gut.
Yeah, I feel the same way. And I think we, at that price
point, from what we have seen, Imean, it is a historic estate,
(23:58):
which is I think a little different.
Like there's something to that. But, you know, we've been
talking about it every week where it's like it, I mean, it
didn't matter Ben Affleck's house.
And, you know, so I think at that price point, we're just
seeing people lose a lot of money.
(24:18):
Yeah. Or, you know, maybe list a
little higher than they should. Yeah.
I mean, I think, well, there's acouple of things that we should
unravel #1 when you buy something in that area of LA for
30 million dollars, the seller essentially is going to be or
buyer, depending on how this gets negotiated, paying an extra
5 to 10%. So there's $3,000,000 right off
(24:39):
the top that just gets evaporated going into the city
with the luxury tax. There's going to be a step up in
basis. I don't know what she
specifically paid for this, but if, if somebody does buy it for
30, their property tax bill is going to be, you know, at that
#30 it'll be $330,000 a year, maybe slightly more.
(25:01):
So there's just a lot of money that evaporates.
And to me, the most important thing that you just covered was
that it's a historic designated home, which means that you're
not going to be able to go in and change everything.
You know, we've bought a lot of historic property in LA and it
depends on the jurisdiction. Some have this thing called an
(25:21):
HPOZ, which is like a neighborhood HOA.
Others are deemed historical through the city.
But if that's the case, then youcan't make material
modifications to it without getting approval from everyone,
which is likely not going to happen if it's historic.
So you're buying a $30 million thing that's going to look like
the $30 million thing. So it's it's, I don't know.
(25:45):
Yeah, seems like we'll see, I guess.
Stay tuned. Yeah, we'll see what happens.
Okay well with that though fun fact that I learned today.
So we know that Angelina's Angelina Jolie.
I don't know why I can't say hername today.
Her dad. Her dad, we found out, is.
(26:08):
John. Voigt, John Voigt.
And there are some interesting we learned some fun facts about
maybe him helping the administration, helping
Hollywood. Yes, I went to, I went to an
event in Lai guess this was maybe a month ago.
He was there at Paramount Studios.
He spoke to a group of us for about an hour.
(26:29):
Sweetest guy on the planet. Amazing story.
You know, he went to college andSelena.
May disagree, I don't know I I think there's some bad blood
there so. It seems like a yeah to me.
You know, he, he had this story of going to college, not really
knowing what he wanted to do. But he's very intellectual.
He's reading a lot, studying artand all this stuff.
(26:51):
And, you know, somebody went andwon, I can't remember the guy's
name, but won an Academy Award or an Oscar.
And he was on a college campus reading a book and he's like,
that's what I'm going to do. And then, you know, later, he
actually won an Oscar. And the gentleman had reached
out that that inspired him to bein that space, had reached out
to him the night before and theyhad this touching moment and all
(27:13):
this stuff. He actually, the, the night that
he won his Oscar, that gentlemanwas awarded like the lifetime
Oscar award. So it's just kind of this full
circle thing. But yeah, I mean, he was an
interesting guy. I mean, you know, whatever
political side you're on, there's a lot of, there's a lot
of heat behind all of that now. And so, yeah, Trump brought him
(27:33):
on to essentially be or lead, you know, this Hollywood
revival. So he's the ambassador to
Hollywood. And, you know, for for the rest,
I I didn't know any of this but until a few weeks ago.
But most, you know, films, TV shows even 51015 years ago were
(27:53):
being made in LA or, or at leastin the US.
So they were being produced there.
And they may go shoot at a location or something, but it's,
it's become incredibly expensiveto do that.
And so, you know, people are going overseas to Ireland and
they're going to, you know, it'sin, in US some locations like
Utah and Colorado and places of that nature, those markets are
(28:15):
offering credits to film in those locations.
And so they're trying to bring that revival back where
everything gets made here in Hollywood.
And, you know, they're they're fighting for a tax credit, which
was confusing to me. I mean, you know, if, if you're
going to go and create this box office hit and it's going to
(28:38):
gross, you know, $100 million, you know, if your, if your cost
is $20 million to go and make the film, you know, they're,
they're choking right now on, you know, a difference of 5 or
10% on that cost. And so they're going out
outward, which obviously I understand because they don't
know if it's going to be a box office or not, But but that's
what we're seeing happen and they're fighting to find a way
(28:59):
to have that come back. And the argument is, you know,
the unions and the number of people with jobs and all this
other stuff. But it was really interesting.
At no point during that whole, you know, it was maybe an hour
that we interacted with him. Got to ask a lot of questions.
Did he even reference Angelina Jolie?
And so we actually looked that up at the beginning.
You're. Like wait, I just saw that guy.
(29:19):
Yes, yeah. So it was very.
Very interesting. OK, last question I have for
you. What is your favorite Angelina
Jolie movie? OK, well, what's really funny is
you said it earlier for you, butit is, it is Mr. Missus Smith.
I think that was, I mean, that'sprobably the only one that I
really liked. Like, I wasn't really in a Tomb
(29:40):
Raider. I'm trying to think if there's
like anything else that I'm super excited.
Yeah. Salt.
I I don't know, though. I I still, I'm going to stick
with Mr. and Mrs. Smith. I thought it was good.
She was like stoic. I mean, I like Brad Pitt a lot,
yeah, But she seemed more like aggressive and powerful in that
in that one, like she wore the. Pants yeah dynamic but wait
(30:01):
that's where they met right or or not not where they met but
like where they fell in love yeah so I feel a little guilty
now they. Fell in love kicking each
other's asses. Yeah, exactly.
So, yeah, OK. All right.
All right. I think that's a wrap.
Yeah, we covered a lot. Yeah.
If you haven't done so, please hit the little subscribe button
(30:22):
out, all right? It helps us a lot.
Share with family, friends, other agents here in the middle
of deals with. And don't forget to follow us on
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becoming an agent, check us out at Innovate.
See. Ya.
Welcome back to your favorite podcast on the planet, Realty
Talk. We're in a new room.
We are. It's so exciting.
Very, very exciting. Coming along, we've got, we've
got more enhancements coming in this room.
So this is just like phase one. The beginning yeah, some new
space to my left we have CEO, founder of Inve Realty, Suzanne
(00:32):
Cini, also known as queen of theclosing table and I am Paul
Hanson. I run by by house, a single
family fix and flip business. Therefore I have been named Paul
fix it all. I have to fix a lot of problems,
but we like to do extended intros because we have lots of
(00:53):
new listeners. So that's a little bit about us.
We're excited to to get feedbackfrom you, but we have a jam
packed agenda today. Yeah, it was actually really
funny because we wrapped last week's podcast and I would say
it was more of a lighter week. You know, we were just kind of
talking through the usual small updates and then we talked a
(01:15):
little bit about our businesses,but like as soon as we wrapped,
it was like big real estate newsagain.
So you know, a few weeks back, maybe months back now, we had a
really big merger in the industry or acquisition,
whatever you want to call it between Compass and Anywhere.
(01:37):
So everyone was talking about that.
What does that mean? And then last week we had
another merger acquisition situation coming through
acquisition, this one is like acquisition very clear and it is
with re/max and Real. So everyone's been talking all
(02:00):
about it. What does it mean?
And you know, I think I think that one kind of surprised me to
be honest. I, I, I, I know RE/MAX agents
and I know a lot of real agents and we've actually talked about
real on the podcast way back just because, you know, we were
(02:20):
actually a little nervous about real and just, you know, where
they were going to be and you know how they were spending and
you know, all the things. But this is super interesting
because re/max agents and real agents in my opinion are just
very different agents. I think I see real, I see RE/MAX
(02:45):
agents kind of as like, I want to say the word old school
because that's not the right word, but it's like I would say
kind of independent, top producing, you know, just very
different than the way I pictureand see a real agent.
So I think it's really interesting to merge that
(03:10):
together and come up with something new so.
Yeah, it's I'll give my $0.02 aswell because I think I can
provide some color. I.
Know I, I, I don't know, you know the right way to say this.
They're just different personality types.
I've never been a real estate agent and, you know, Innovate is
(03:32):
the first brokerage that I've been a partner in.
So I'm, I'm still learning a lotabout the brokerage business as
a whole. But when I read that news in my
head, I, I, I think of things visually, yeah.
And to me, when I think of Re/max, no offense, but it's
like the, you know, it's like that six unit strip mall in a
(03:53):
building that was built in like the 50s or 60s that hasn't
really been maintained. That's where the re/max agent
has their office. I get mailers in like the like
the saver plus packet, you know,and that's where I see their
agents. Real doesn't have offices.
And you know, my public perception of who they are has
(04:14):
been like a tech loose quotes enabled recruiting firm, more
like a multi level marketing approach.
Like they heavily focus on Rev share, putting caps on agents,
things of that nature. So you're taking two very
different cultures. Like re/max traditionally is
franchise. So these these locations are
(04:36):
owner operators. They, they've been agents
before. They write a check to RE/MAX and
now they own their geography or their region.
And Real is like kind of on the opposite side of that.
So I'm, yeah, it's a very, they're two very different
cultures to try to bring together.
And interesting because they're two different business models
(04:57):
really. You know, I mean, not to say
that RE/MAX agents don't recruitagents, but I think it's just,
it's, I would just say they havehad kind of different focuses
for quite some time. So, yeah, I mean, I'm, I'm just
thinking in, in my opinion, I feel like this is all kind of
(05:20):
related to what's happening withthe MLS, with the listings and,
you know, really trying to set themselves up for the future
when it comes to, you know, if there is no longer an MLS.
So, you know, having access to aton of listings, which I mean,
(05:44):
that's the route Compass went. I I think that's a huge part of
what they did and what they're doing.
And I think, you know, we're seeing other brokerages kind of,
you know, make those considerations and yeah, maybe
maybe do the same thing. Yeah, I, I think it's for me,
it's a slightly different vantage point.
I see real burning tons of money.
(06:07):
They have to grow. If they don't grow, they're
going to die. And so they on paper last year,
when you look at the, the math, I think they were the 4th from,
you know, the 4th largest brokerage in the US from a total
sales standpoint, re/max is number 7.
And so they're probably looking at it like, hey, if we don't
grow aggressively somehow like make a huge splash, we're going
(06:30):
to die. And that these recruiting
efforts of picking on onesie twosie agents is probably not
the kind of growth that's going to take them to the Holy Land.
Like is that, that incremental growth curve is really
difficult. You know, so early on it was
probably simple for them to growby 100% year over year, but
going in and adding another 100%growth this year would be
virtually impossible, I think. So I, I, I view this as maybe,
(06:54):
you know, an effort to not go out of business when you're
losing lots of money. Yeah, Yeah.
The, the cap, I mean they, they do offer caps and I think, you
know, we've talked about that. It's really difficult because
you know, it's we, we feel that we want agents at our brokerage
(07:15):
that want to continue to grow, that want to have access to all
of the things that we're able toprovide to them.
But those things cost money, youknow.
And so I think, I think if you are going to a brokerage with a
cap or with just, you know, maybe a small fee, you have to
(07:39):
kind of know that your brokerageisn't going to provide you with
a whole lot. And I think, you know, I guess
that is something that they actually have in common where
RE/MAX agents most of the time it's like a fee, a fee that they
paid a RE/MAX, which is why I have that perception of just
kind of the solo operator re/maxisn't doing a whole lot for them
(08:01):
except for the name re/max. But I mean, as you said, the
name that you, that name that you associate, you know, other
things with maybe isn't doing anyone any good.
So yeah, it's interesting. Let's slow down and double click
on one thing you just said, which is a cap.
Because I think, you know, whether you're a new agent or if
(08:21):
you're listening and, and not a real estate agent thinking about
joining what, what is, what is acap and how does that affect the
real estate agent? Yeah.
So a cap just means that an agent, you know, produces a
certain amount of business and after they pay their brokerage,
as you know, X amount, then the brokerage doesn't collect
(08:44):
anything else from that agent. So, you know, we, we have found
that we want agents to be reallymotivated.
We want our, our agents to want everyone to do well.
And I think it creates a different environment when we're
(09:05):
all in it together, you know, and also I think, you know,
looking at us specifically through our lens, it's we're,
we're providing a lot and we want our agents to be successful
and do more business and we invest a lot of money into that.
(09:26):
And so, you know, what would thebrokerages motivation be if they
weren't making money off of an agent anymore?
You know, it just doesn't seem like incentives are aligned.
And you know, it's it, it creates kind of, you know,
animosity from one way or the other, I think.
(09:47):
And, and the brokerage, I mean, not to say that they're not
incentivized, but they're, you know, at that point they, they,
I mean, does it matter to them if you do 10 more deals?
Well, I imagine, I imagine for those brokers, because a typical
cap you know is going to range between 25 and 50 grand or
something. So if you, if you're on a cap at
(10:09):
real, you're a top producing agent and you've gone out and
done a bunch of volume in the first half of the year and you
essentially gave them 50 grand or their 20% stake was worth 50
grand on the commissions that you generated.
Every deal after that, you're not going to be paying them a
dime. You're going to take the rest
outside of service fees or transaction fees or whatever.
(10:30):
And so, so that brokerage to your point doesn't have an
incentive to really support or grow the number of transactions.
But what they do probably have is and incentive to really push
on you to recruit other people, right.
So when you look at the brokerages that have caps or are
known for caps, they're generally recruiting heavy
(10:52):
brokerages, but they're not generating leads that then
distribute down to the agent base.
So it's just probably a different, you know, kind of
value proposition to a certain degree, you know, where it
innovate. We're very focused on trying to
create opportunities. It it wouldn't make sense for us
if we had, you know, 200 agents and 50 of them capped out.
We would never give one of thoseagents that had a cap a lead
(11:15):
that we generated if we weren't going to get any income back.
From the lead. So I imagine that might be
different to maybe, you know, maybe the lead type changes the
cap or something. I don't know.
But yeah, I, I'm excited to see how all of that, you know, how
all of that goes from a brandingstandpoint and just, you know,
(11:36):
being in business a while, watching 2 cultures blend
together, even when they're completely aligned is really
hard to execute when they're notaligned or just very different.
Man it, it, it seems like it's going to be a big undertaking.
The, the news that I read about the overall transaction would be
that both the back offices support and operations would be
(12:00):
consolidating and potentially moving.
So so you're jamming 2 operational cultures together,
possibly moving them, and then you're taking two brands and
trying to figure out what that'sgoing to look like.
It seems like a crazy undertaking.
And you know, nothing against either brokerage, but I, I don't
(12:21):
look at real as a big tech heavybrokerage.
Like the things that I've heard are that it's OK, like the, the,
the agents don't have too many issues, but it's also, you know,
not, there's nothing super innovative there.
So it's just really interesting.And I, I do, I, you know, we'll
(12:43):
see where it goes. I know the deal isn't completely
finalized yet. And and who knows, they got to
work a lot of things out, but, but it does kind of indicate
that our industry is making somemoves, you know.
And I think, I think that 60% ofof real estate agents out there
(13:04):
are actually at independent brokerages.
So I think that, you know, if we're going to take anything
from this, I think that we should look at this like maybe
independent brokerages should work together as well, should
work together a little closer. We've always been of the mindset
that, you know, the abundance, right?
(13:27):
And, and we always work really well with any brokerage.
You know, we, we open our doors to a lot of other agents that
are at other brokerages and try and help them.
And you know, we do this podcastevery week.
We we share a lot of informationand I think that all the
independent brokerages have the same opportunities to share
(13:49):
information. So if there are some big shifts
with the MLS and you know, I think that there's definitely
opportunities out there for the the independence to share
listing information just as everybody else would.
And I think, you know, keeping the consumer in mind for all of
(14:11):
it is, you know, what's going tokind of carry the future because
the consumer should have access to all listings no matter, you
know, what brokerage independentor not.
So I think, you know, there's, there might be some opportunity
there for the independence as well.
(14:32):
Yeah, I think it's it will. I can't wait to Fast forward a
year or two and see how all thisshakes out To me.
It's it's very much so driven bytotal transaction volume is down
at a national level. Brokerages, their public have to
grow, shareholders want to return.
If they're still losing money, then they've got to find a way
(14:52):
to grab more of the market. And so if there's if the the
total addressable market is shrinking, total home sales are
shrinking on an annualized basis.
And we don't have any sort of, you know, foresight into
interest rates going down to drive market, you know, to move
a little faster. If that's where you're at and
you're in that position, then you've got to roll up your
sleeves and find a way to grow, you know, in a different way.
(15:16):
So that that's why I think theseother transactions are
happening. And and, you know, additional
pressure from these MLS shifting, you know, dynamics or
what not, you know, that that that to me likely is how you
justify the deal. But yeah, I mean this this deal
from a top line standpoint is $880 million to a billion dollar
(15:37):
transaction or just shy of a billion dollar transaction.
You know, I think when you combine four and seven number
four company and #7 company, you're probably going to be
second or third largest in the US but you know again.
Yeah. Where do you go from there?
Yeah, yeah. How do you grow up beyond that
point? Yeah, yeah.
And. You're already public so.
Yeah, yeah, yeah. It's kind of weird.
(15:58):
Yeah, should be interesting. So market wise though, I think
today bond 10 year went up a little bit.
So I think rates ticked up a bit.
But I did see something interesting that we're at a six
year high for foreclosures. So I mean, I think that's kind
(16:20):
of expected and it's been ticking up, but we're seeing
more of those I. Think we talked about it two
weeks ago, we're starting to seeforeclosures from 2 veins or
locations in Southern Californiathat traditionally haven't been
the the beginning of the foreclosure market.
So a lot of times you see banks starting to unloan paper.
(16:40):
These are property tax liens andHOA liens.
So both of which were probably due to, you know, 2020 COVID
hits, moratoriums were placed where a homeowner wouldn't have,
you know, a county, for example,wouldn't have the ability to go
(17:01):
and foreclose on somebody's property if they were delinquent
on property taxes. And then the same for homeowners
associations. And now those moratoriums are
lifted. If consumers weren't in a
financial position to catch up on whatever balance they owed.
Those, those weren't things like, you know, 30 year
mortgages where they just tackedit on to the last, you know, I,
(17:23):
I guess the moratoriums that were placed on, on 1st liens on
mortgages would say, if you havea 30 year mortgage with 20 years
left and you owe 20 grand that you didn't pay during COVID
because you lost your job, then we're just going to extend out
that 20,000 at the very end of the 30 year mortgage.
Taxes are different. Like the, the local
(17:43):
municipalities need the tax revenue, the income to balance
their budget and HO as also havethe same, you know, problem.
And so they're, they're now getting very aggressive to try
to get that income, you know, tobalance their budgets.
And so, you know, I saw actuallyjust this morning, I had a deal
that was floated on my desk. That was an HOA situation.
(18:05):
Consumer had made all of their mortgage payments, but just
stopped paying their HOA fees for the last like 6 years.
The HOA is going to get the house back.
It's crazy. It's crazy how much power the
HOA has. Like it is crazy.
Yeah, I mean all things to consider were, you know, when
you're when you're buying. Yes, so important.
(18:26):
You know, I, I think I've said it before, but I always
encourage, you know, join your, join your board if you can,
because decisions are being madeand sometimes not for the right
reasons, you know, so it's really important to, to be
involved with that. Yep.
Yeah. Big or small?
Yeah, probably. The smaller it is, the more
(18:48):
important. It is exactly like the property
that you had where it was like 3friends or you know, in the
building. Yeah, I can't speak much about
that one, but we, we did a deal where there were 4 total units
in a building. We bought one of them, the other
three ran the HOA. And once I'm past that, yeah,
(19:10):
yeah, we'll have that. Full episode.
Yeah, yeah. But yeah, I mean, I think it
seems like market is, you know, doing what we thought it would
be doing at this point in the year.
I mean, I, I guess in fairness, I thought at the beginning of
the year we'd probably see a better producing spring, you
know, with rates being kind of flat.
You know, we're between we're, we're essentially being hovering
between 6 and 6.3% on the 30 year fixed mortgage for a long
(19:34):
time now. And I mean a little bit of
variation here and there, but soI expected the spring selling
season to be a little faster than it has been.
But as of a month ago, I've kindof acknowledged, OK, this spring
is going to be just slow, you know, but we're still getting a
lot of foot traffic at deals that we have on market.
We're seeing offers regularly onstuff.
(19:57):
Yeah, I think the most, you know, insightful or or you know
the the data point that makes mefeel the best about what's
happening is that our repeat. Visitors at a property are going
up. So nine months ago we would have
a bunch of people through an open house, but none of them
would ever come back for a second or third showing on their
own. But private showings and B backs
(20:17):
are coming up aggressively in All in all of our inventory.
So that to me indicates that we have really intentional buyers
out there. They may still be a little picky
and they may still be a little conservative on pricing, but but
they are going to buy something versus just kicking tires.
Yeah, Yeah. OK.
Well, with that, I think we haveanother celebrity real estate
(20:41):
segment. I can't wait, this one is great.
OK, so Angelina Angelina Jolie lists her historic LA estate for
nearly 30 million, so she reportedly listed it.
(21:02):
Formerly owned by legendary filmmaker Cecil B DeMille.
Conversation is really just about She is now planning on
spending more time in Cambodia, so once her youngest turns 18,
(21:22):
that's the plan. But it is a historic estate.
And, you know, there's some celebrity and film history
there. It's in one of LA's most iconic
luxury neighborhoods. And so this one, it's kind of
like what we were talking about where it's 30 million and it's
(21:47):
really about the emotion and thestory of the house, not so much
the house. So it's, it's interesting.
We don't know, you know, where this is going to trade or what's
going to happen. But what we've seen and, and
even what we've been covering over the past few weeks when we
(22:10):
talk about these is that I don'tknow, do you think that the
story matters? Do we think that you know that
that's going to make a difference?
I don't know. I think it just depends on the,
on, you know, the, the type of property and then the the buyer.
I mean, the first thing that comes to mind, we bought a
property. I think we've talked about this
(22:30):
a couple different times on the show, but we bought a property
that had a story to it. It was a horrific story.
There was like a double murder and we were really nervous when
we went back to market that there would be any level of
interest because we still had todisclose that that occurred.
And we had five or six people that wanted to buy the house
just because that had happened there.
I don't think they could have cared less about the actual
(22:53):
structure. They just wanted to live in a
house where murders had occurred.
And I'm like, that seems so odd.And so I, I think there are
some, you know, different peopleout there.
I don't know if you say different or weird or unique or
whatever. They just want to have the
feeling that they can live in something that's got history
behind it. But I don't know if that matters
when you're, you know, paying $30 million.
(23:15):
I think that can be it. We, we always go back to how
many qualified buyers can buy this.
The property I had was like a million and a half dollars.
There's a lot of weird people that could pay a million and a
half dollars for a second. Home or whatever, right?
How many people can spend $30 million to live in the house
that Angelina Jolie used to own or live?
(23:35):
In Yeah, yeah. So it's a much smaller market.
So I think that buyer's probablygoing to be more intentional
around the value of the asset oris it going to appreciate
they're going to probably care alittle bit less about the
history. That's my gut.
Yeah, I feel the same way. And I think we, at that price
point, from what we have seen, Imean, it is a historic estate,
(23:58):
which is I think a little different.
Like there's something to that. But, you know, we've been
talking about it every week where it's like it, I mean, it
didn't matter Ben Affleck's house.
And, you know, so I think at that price point, we're just
seeing people lose a lot of money.
(24:18):
Yeah. Or, you know, maybe list a
little higher than they should. Yeah.
I mean, I think, well, there's acouple of things that we should
unravel #1 when you buy something in that area of LA for
30 million dollars, the seller essentially is going to be or
buyer, depending on how this gets negotiated, paying an extra
5 to 10%. So there's $3,000,000 right off
(24:39):
the top that just gets evaporated going into the city
with the luxury tax. There's going to be a step up in
basis. I don't know what she
specifically paid for this, but if, if somebody does buy it for
30, their property tax bill is going to be, you know, at that
#30 it'll be $330,000 a year, maybe slightly more.
(25:01):
So there's just a lot of money that evaporates.
And to me, the most important thing that you just covered was
that it's a historic designated home, which means that you're
not going to be able to go in and change everything.
You know, we've bought a lot of historic property in LA and it
depends on the jurisdiction. Some have this thing called an
(25:21):
HPOZ, which is like a neighborhood HOA.
Others are deemed historical through the city.
But if that's the case, then youcan't make material
modifications to it without getting approval from everyone,
which is likely not going to happen if it's historic.
So you're buying a $30 million thing that's going to look like
the $30 million thing. So it's it's, I don't know.
(25:45):
Yeah, seems like we'll see, I guess.
Stay tuned. Yeah, we'll see what happens.
Okay well with that though fun fact that I learned today.
So we know that Angelina's Angelina Jolie.
I don't know why I can't say hername today.
Her dad. Her dad, we found out, is.
(26:08):
John. Voigt, John Voigt.
And there are some interesting we learned some fun facts about
maybe him helping the administration, helping
Hollywood. Yes, I went to, I went to an
event in Lai guess this was maybe a month ago.
He was there at Paramount Studios.
He spoke to a group of us for about an hour.
(26:29):
Sweetest guy on the planet. Amazing story.
You know, he went to college andSelena.
May disagree, I don't know I I think there's some bad blood
there so. It seems like a yeah to me.
You know, he, he had this story of going to college, not really
knowing what he wanted to do. But he's very intellectual.
He's reading a lot, studying artand all this stuff.
(26:51):
And, you know, somebody went andwon, I can't remember the guy's
name, but won an Academy Award or an Oscar.
And he was on a college campus reading a book and he's like,
that's what I'm going to do. And then, you know, later, he
actually won an Oscar. And the gentleman had reached
out that that inspired him to bein that space, had reached out
to him the night before and theyhad this touching moment and all
(27:13):
this stuff. He actually, the, the night that
he won his Oscar, that gentlemanwas awarded like the lifetime
Oscar award. So it's just kind of this full
circle thing. But yeah, I mean, he was an
interesting guy. I mean, you know, whatever
political side you're on, there's a lot of, there's a lot
of heat behind all of that now. And so, yeah, Trump brought him
(27:33):
on to essentially be or lead, you know, this Hollywood
revival. So he's the ambassador to
Hollywood. And, you know, for for the rest,
I I didn't know any of this but until a few weeks ago.
But most, you know, films, TV shows even 51015 years ago were
(27:53):
being made in LA or, or at leastin the US.
So they were being produced there.
And they may go shoot at a location or something, but it's,
it's become incredibly expensiveto do that.
And so, you know, people are going overseas to Ireland and
they're going to, you know, it'sin, in US some locations like
Utah and Colorado and places of that nature, those markets are
(28:15):
offering credits to film in those locations.
And so they're trying to bring that revival back where
everything gets made here in Hollywood.
And, you know, they're they're fighting for a tax credit, which
was confusing to me. I mean, you know, if, if you're
going to go and create this box office hit and it's going to
(28:38):
gross, you know, $100 million, you know, if your, if your cost
is $20 million to go and make the film, you know, they're,
they're choking right now on, you know, a difference of 5 or
10% on that cost. And so they're going out
outward, which obviously I understand because they don't
know if it's going to be a box office or not, But but that's
what we're seeing happen and they're fighting to find a way
(28:59):
to have that come back. And the argument is, you know,
the unions and the number of people with jobs and all this
other stuff. But it was really interesting.
At no point during that whole, you know, it was maybe an hour
that we interacted with him. Got to ask a lot of questions.
Did he even reference Angelina Jolie?
And so we actually looked that up at the beginning.
You're. Like wait, I just saw that guy.
(29:19):
Yes, yeah. So it was very.
Very interesting. OK, last question I have for
you. What is your favorite Angelina
Jolie movie? OK, well, what's really funny is
you said it earlier for you, butit is, it is Mr. Missus Smith.
I think that was, I mean, that'sprobably the only one that I
really liked. Like, I wasn't really in a Tomb
(29:40):
Raider. I'm trying to think if there's
like anything else that I'm super excited.
Yeah. Salt.
I I don't know, though. I I still, I'm going to stick
with Mr. and Mrs. Smith. I thought it was good.
She was like stoic. I mean, I like Brad Pitt a lot,
yeah, But she seemed more like aggressive and powerful in that
in that one, like she wore the. Pants yeah dynamic but wait
(30:01):
that's where they met right or or not not where they met but
like where they fell in love yeah so I feel a little guilty
now they. Fell in love kicking each
other's asses. Yeah, exactly.
So, yeah, OK. All right.
All right. I think that's a wrap.
Yeah, we covered a lot. Yeah.
If you haven't done so, please hit the little subscribe button
(30:22):
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