Ahead of Inman Connect Las Vegas, the leader of the Chicago-based brokerage said he’s better positioned than Redfin and Compass to grow into a changing market.
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The market has shifted. Half the listings in certain markets are seeing price cuts. Thirty-year mortgage rates are approaching 6 percent. And @properties CEO Thad Wong is optimistic.
The coming years will separate companies that have been riding easy money and easy sales from the ones with a stronger value proposition, and Wong says he’s preparing to come out on top.
Chicago-based @properties and its recently-acquired Christie’s International Real Estate are positioned to grow market share across the country, he said. Just this week Christie’s announced it was expanding into Japan.
Meanwhile, he pointed out that companies like Redfin and Compass are among those cutting staff.
Wong is set to speak at Inman Connect Las Vegas about how to dominate in a declining market. He spoke with Inman ahead of the event next month to share his insights.
The following has been edited for clarity and brevity.
Inman: Where is your mind at right now?
Thad Wong: I’ve been looking forward to a downturn for a number of years. We’re hiring into the downturn. We’re getting ready to open three new offices. We’re getting ready to announce a number of affiliates around the country. More importantly, our growth in Chicagoland, San Francisco/Silicon Valley market and the Atlanta region, we’re anticipating incredible market share growth.
We’re announcing new Christie’s affiliates nationally in major markets.
I want to make sure I heard you right. You said you’ve been “looking forward to a downturn.” Why?
A slowing market is always the best market to grow. Oftentimes your competition becomes weak. You’ve already seen Redfin announce layoffs and Compass. Oftentimes if that’s your competition, you’re just seeing the beginning of their weakness.
When the market is growing everything is easy and everyone has great numbers and everyone is profitable. But when a market is declining, that’s the only time you can understand and see visually the well run organizations versus the poorly run organizations. The organizations that have true value prop and the ones that don’t.
Why is @properties set up to succeed in a downturn?
Any time you have, in my opinion, corporately owned offices in multiple markets around the country, it’s very difficult to operate a downturn.
When you have local owner operators leadership. Whether our owner partners in San Francisco or in Atlanta, or our affiliate owners, independent owners in their market, those are usually the entrepreneurs…that dominate their markets in a downturn.
What is it about corporately owned offices that set them up to shrink in a downturn?
They’re saddled with the fact that they’re publicly traded. They’ve gotta make their quarterly financials so their stock price doesn’t tumble. So they end up making decisions because of their balance sheet that are in direct competition with what’s needed to grow market share, add value to the agents, build culture when it’s really needed.
Culture is one of the first things that large corporations cut out in downturns. They start cutting staff first. Then events. In Compass for instance, they’re going to modify agents’ compensations.
You’ve mentioned Redfin and Compass a few times now.
Compass was always growing in an awesome market. They had to pay agents a lot more to come over, because why else would an agent join them? In a contracting market, agents don’t make decisions just on commission split. They make decisions based on brand power. Marketing — both physical and digital. And most importantly they make decisions on training and company and culture.
What is the company doing to help the agents maintain a positive mental attitude? Is that company growing or is the company closing offices?
If you’re an agent with a company and in your market your company is closing offices and another [company] is opening, it’s an obvious sign of strength in the market and who you should be aligned with in the future.
These lawsuits around agent commissions: How big of a distraction are they and how seriously do they cloud the future for brokers?
When you look at it at face value it’s pretty scary. The one change could destroy an entire industry. That could easily be done. But in a lot of cases there’s only so much you can do about that.
Even if that happens, the market will adjust. At the end of the day it would be hard for me to imagine. The consequences of those lawsuits would be so severe and so drastic it would be very difficult to imagine that that would happen.
I can understand remaining Zen. I don’t know if I could, but I understand it.
The entire financial market is not geared or set up for those end results. As much as I know people are nervous and how big a deal it is for me right now, we’re paying attention to it but we can’t focus on that.
Focusing on it would probably lead to bad decisions. The end result of that is so drastic it pretty much makes all your efforts fruitless. And you can’t control that. I would just build into it, personally.
