REB 140: One Year After Launch! How Is It Going?

I opened my own independent brokerage a year ago.  Many people told me I was out of my mind!  A few wished me the best.  So....how is it going?

Transcript

SPEAKER_00 0:01

All right, my friends, welcome back to real estate bites. This is episode 140. So I opened a brokerage a year ago and want to talk to you guys about how that's going. And then later on, we're going to talk about what is going on with home prices today. I'm going to show you in real time what's actually going on with home values here, at least in Northeast Ohio. So I opened up my own brokerage, Civitas Real Estate Group, a little over a year ago. It was June 13th, uh, 2025. And, you know, after a year, um, how's it going? You know, is it is it working out? Is it failing? Is it, you know, how's it going? I can generally say it's going great. I love it. I can tell you this. I'll tell you this, guys. Uh I knew I had planned that I was going to open my own brokerage before I ever even had my sales license. Um, why? I don't know. I just like doing my own thing. I like being in control. I like to um, you know, sort of shape and uh and and my own destiny, you know. It's I I don't want the blame or the credit to fall at anybody else's feet, right? This is my road, this is my path, this is my life. And um, I like to be the one in charge of shaping all that stuff. So that is why I knew before, again, before I even had my sales license, I was going to do this. So, how's it going? Um, again, it's it's going great. I can tell you that worst case scenario, the agents of my brokerage decide that I don't have what they need to succeed, and they all leave, and I'm just alone. And then that's how I would stay. I I would never return uh into the fold of another broker. I would continue to do this. Civitas Real Estate Group would be a one-man group. Um, obviously, that's not the plan. Uh, I want more agents. I I currently have four, um, and things are going great with real estate, Civitas Real Estate Group. The approach that I took um was slow, right? So I opened up, I did not start running around and recruiting people. As a matter of fact, I have only just recently in the last month actively started to try and recruit agents into my brokerage. And even that is slow. I'm not um I'm not at a place yet where I'm just you know dialing for flesh here in the brokerage. I there is a handful of people who that are out there that I know I want to bring onto my team and into my brokerage, and I'm targeting those guys first. Um most of them have heard from me, a couple have not. But yeah, the the recruitment process has just begun. And and like everything, I'm taking it slow, I'm taking it easy. You know, I wanted to make sure uh that I had two things in place before I actively started recruiting anybody. The first one is an office, a fully functional office that agents can come and work out of and invite clients to that they could come and spend time at, print the stuff they need, have the materials they need to get out into the field and and do the work that they need to do. Um, and and it's it's there, right? I've got one major piece left, and that's hiring a contractor to build a kitchenette out in this new office space that I just moved into a few months back. And uh, once I have that built out, I've got a fully functioning, complete office once again. Uh, the other thing does I needed to make sure that I had all of the intellectual material that I need and that my agents need, right? I needed to have all of the contracts, all of the legal matters, all that stuff in place, which I do. I've had that for a while. Um, but I needed to make sure that I had all of the legal and intellectual uh assets that an agent would need to go out into the field and do their job. So now I have everything that agents need and recruiting begins. Um, I didn't take out any debt, guys. I did not take out any debt whatsoever to launch this business, to build out not only the first office, but the second one. Um the only debt that I have tied to this business is a very small mortgage on the office condo that I purchased here, which it's uh it's a it's a five-year note on a commercial loan. And I intend to have this space paid off entirely before that note expires. So again, a very small mortgage. Um, I want to operate this thing debt-free, keep the overhead as low as possible. I will not take out lines of debt for the purposes of expansion, uh, at least not that I can foresee. I don't I don't see any reason why I would do that. Um, I've been able to open this company, this office, as well as partner with a property management group and open a property management company, all without um any operating debt, right? Again, I have the debt, the mortgage on this office condo, and that's it. Uh, even having a mortgage on this office condo, by moving over here, I was able to actually save uh to the tune of about $900 a month in expenses versus leasing the other place and owning here, right? So that move, albeit while taking on debt, has actually reduced my operating expenses by about $900. Um, so that's uh that's good news. That's good news for me. Um, okay, so that said, how's the business going? How are sales going? Uh I'm I'm very pleased. You know, I have we'll put it this way comparing the first six months that Civitas was open versus the second six months that Civitas was open, we have more than doubled production in that second six months over the first six months, right? We have more than doubled the units sold and more than doubled the amount of real estate that we have sold from the first half to the second half of the first year that's open. So tremendous growth, like tremendous growth. Um, I want to say, boy, hold on a second. Yeah, over 200% growth in from the the second half, or from the first half to the second half of the first year of being open. So exactly what I want to see, and doing that with one less agent. I had one agent that decided uh they they wanted to seek their fortunes elsewhere. The other four that I have right now are all growing and they're all um selling more than they did, obviously, half a year ago. So uh it's it's going great. I I honestly could not um I could not ask for a more amazing and blessed situation. Listen, I tell people like this all the time if you hear me bitching about my life, you have my permission to slap the shit out of me because I I've got nothing to complain about. I am literally living the things that I've dreamed about a decade ago before I ever got my license. Um so much so that I remember my first couple years selling real estate, driving past the place where I sit right now and thinking, boy, I would love to have my office there. I would love it because it's close to home, it's in the community that I work in, that I I, you know, um that I have my base in. Um and it's just a convenient spot. It's an office condo, so I would have ownership and equity in the space. I would love to have my office there. And lo and behold, you know, nine years later, um I'm here. I'm in that spot that I dreamed about, you know, five, six, seven years ago. I would love to be operating out of that spot, and here I am. So that was wonderful. Now, goals versus reality. Have there been successes and failures? Of course there have, right? You know, when when I started this, my for the first six months, I I wasn't exactly certain what I wanted this brokerage to be for me, for agents who are coming in. And uh, you know, it I did a lot of soul searching and it even got me down. Like going into fall of last year, I would say October, November, December, I was really sort of getting down on the fact that I felt like I I didn't have really clear vision on what direction I wanted to go. Obviously, I wanted to open a company, I did that, wanted to have my own brokerage, I did that, but again, I didn't know what I wanted this thing to be. And then as the year was turning and we were moving into 2026, I made the decision that I am going to really become a commercial agent myself, open a commercial division inside this brokerage, um, you know, and do it baby step, baby step, baby step. And uh, so I took that on. You know, I started to pay a couple big platforms, a good amount of money on the monthly to have access to commercial real estate data and and that kind of stuff. And uh we went down that path. I followed that path for five months, six months, easy. Um, five months for sure, like full time I was on it. And I I had some success in it. Um, I got some commercial clients, uh, you know, some a good amount of commercial leads. But I realized, I realized last month, you know, that I'm in a sense, I'm trying to invent something that isn't I'm trying to recreate my business. I'm trying to reinvent the wheel. And I just decided it didn't make sense. You know, that is, I didn't I have created a successful career in real estate sales, not through commercial channels. Um, I've I've sold commercial real estate basically since I started, but it hasn't been the large part of my business. What I'm getting at, guys, is I took the focus off of what got me here, right? So instead of doubling down on the aspects of my business that provided me with enough success and affluence to actually open my own brokerage and to live comfortably and to support my family and you know, all the things that I have going on for me that leads me to tell people like you, if you hear me bitch about my life, you got my permission to slap the shit out of me, right? I kind of lost focus, I lost sight of that and decided that I was going to recreate who I was as a realtor and as an agent and as a broker. Um, and I and I just sort of realized that that's probably not a good idea. Um everything that I've created comes from my involvement in my community, right? My brokerage is named Civitas Real Estate Group, and Civitas is Latin for community. I did a whole thing about this, right? A whole episode about why, what it means, all that kind of stuff. And yet I lost sight of that, right? I decided I wanted to become a commercial broker, and I wanted to do that because, well, I I do very much enjoy commercial real estate. I I love when the conversations are about maximizing returns, making money. Um, there's emotion involved in all of real estate in business. You know, where there is money, uh, I guarantee you people are going to take it personal, right? There's going to be emotion involved. There's no escape from that. And that's okay. That's that's what we deal with, right? As real estate professionals, uh, especially if we're real estate sales professionals, I, you know, our job is a practice in applied psychology and understanding the motivations and the emotions of our fellow human beings is critical to finding success in this, right? And so it wasn't that I wanted to get away from emotion. I wanted to get away from petty emotion, right? I wanted to get away from, you know, I was watching on my camera and and I heard somebody talking about how they didn't like you know, this paint color or this project that we did over here. My uncle, well, he helped out with him and he passed away last year. I I don't even, if those people even write an offer, I don't even want to see it, you know, that kind of emotion. Or what do you mean they want an extension? You know what? To hell with these people. I don't even want to be in this contract anymore. They want to extend it another week. We already extended one week, you know. It doesn't matter what their underwriting said, you know. I mean, that kind of emotion, right? The the cut your nose off in spite of your face, the self-sabotage sort of emotion that we deal with a lot in residential real estate sales. Um, you just don't have it like that in commercial. And that's why I wanted to shift my focus. Not to mention the paydays are oftentimes considerably bigger. Um, and uh I I also really like the depth that you go to when it comes to vetting commercial deals, the due diligence, um, you know, your ability to really dig into the diligence and understanding uh everything that goes into the commercial deal is what separates you from your competitors, you know, and it's just more complex and deeper than residential real estate sales. And I enjoy all of that, and that is why I wanted to make the switch. Um, but I realized again that that's not what got me here. What got me here was dedicated and focused service to my fellow human beings and especially those in my community, right? It's all focused on my community. Every bit of advertising that I do is really inside of my community with the sponsorships and the again the advertisement. Um, my business has been derived almost primarily, well, definitely primarily, almost solely, from the work that I've done in my community. If I look at the last six to 12 months of sales and I follow those sales, that business down the referral tree to its roots, it almost always comes from my involvement in my community. And so instead of abandoning that approach to my business, I've decided to double down on it and to be more active and more involved in my community and more knowledgeable of my community, right? Um, and so I've started to take those steps towards becoming a greater presence in my community. And honestly, that is what I propose to teach the agents who come into my brokerage. Is there's there's business planning, right? So let's sit down and talk about how you develop your database, how you develop the systems to communicate to and through your database, and what sort of networking do you need to do that's going to be impactful to your business, both by way of important relationships that can drive business towards you, as well as people who can bring you knowledge and wisdom and experience that's going to help round you out as a greater resource to your clientele. So, you know, that philosophy shift um has been crucial and key. And I finally feel like a year later, that I know exactly what I am, I know exactly what Civitas Real Estate Group is and is going to be. Um, and I can see the future with more clarity, clarity, and and uh and uh frankly, I like it. You know, I'm able to now speak a vision to the people that I have in this company, um, give greater direction and and greater mentorship to the agents who are in here who are trying to do similar things. Um, I can help with their ideas, I can help you know, add more meat on the bones of their ideas about what they want to do to impact their community, help them understand different ways that they can um capitalize on their involvement in their communities. And and so far it's it's happening, you know, and as those things evolve, I'm gonna bring some of my agents onto this program and talk about things that they're doing in their community and how it's impacting their business. It's starting to happen with a couple of them, but I think we need to see more fruition before we start to invite them on the program to talk about those things specifically. Um what have I learned? You know, in the last year since opening the brokerage, this isn't necessarily something I learned, but it is something that has been made clear and plain and really helped to steal and sharpen my focus. Um, people are everything, they're they're everything. There's there's nothing more important than my fellow human beings, the relationships that I have with them. Um, people are what make the world the world. You know, the greatest pleasures I have in being a principal broker and a business owner are watching my people succeed. Right? The greatest pleasure I have as a community member is watching people in my community take on things and find success. And watching my fellow professionals build their wealth and succeed, uh, watching my community grow and develop. There's nothing more pleasing and and fulfilling than seeing my people come up. At the same time, there's there's nothing more distracting, stressful, than people, right? You know, I recently sat down with my old broker at lunch just to talk, just to catch up, because I love the man. And uh, you know, we got to talking, and he was asking me questions about what have been my biggest challenges and you know what are the things that keep me up at night. And I asked him the same. And we we both agreed, it's always people. It's people are going to be the biggest stress, and they're gonna be the biggest um joy, right? Watching people succeed, watching them go through something difficult and come away with a great lesson and a great reward. That is fantastic, you know. And then trying to figure out how to best serve the people, and am I doing a good enough job and serving my people? Am I doing um the right thing as a coach and as a mentor and as a broker? Uh those are the questions that keep me up at night. Am I all the things that I really want to be to my people? And if I'm coming up short, how so? And and how do I become greater as a person, as a coach, as a leader, um, as someone whom they can count on? You know, that that's those are the things that keep me up at night, right? And that's not really a change, it's just a little more intense and amplified. And you know, it it causes me to also seek ways to sit back and chill and relax and you know, not take things personal. Um, and so that's that's what it's been in year one, right? I was able to I I shift courses a couple of different times, trying to figure out exactly who I am uh as a broker and what this brokerage is supposed to be. Uh, there's a couple things that I did not bring up that I have some additional ways that I'm developing that are actually underway right now for agents to make a little bit of extra money and and grow their wealth. But um, you know, that stuff is gonna stay under wraps. That's for the agents in the brokerage to to discuss with me. And and if uh, you know, they want to recruit others by talking about those sorts of things. Well, God bless them. Um they're also young enough, they're early on enough in these initiatives that I'm I'm not spilling any beans about those. So, you know, but again, in a year, uh I've I've shifted course a couple times, and now the ship is straight, it's set straight, the the course is clear ahead of me, and uh I know where we're going. Um goals, you know, I set lofty sales goals uh as happy as I am with the growth that I've seen, and I am definitely happy with the growth that I've seen. We're gonna come up short of those goals, most likely here in uh in 2026, unless something absolutely incredible happens, or unless, you know, a handful of these agents whom I've been recruiting actually come on board. Um, and that that will help attain those numbers that I had set for myself. Um, and then what have I learned? Again, it's not so much of what I learned as the lesson is exactly how critical and how real um that people are to everything, to every day. Um, I tell I tell my agents all the time that we this is a practice in applied psychology. What we peddle is information. The house, you know, the the property that that's what we sell, right? We get we get paid when we assist our clients through these transactions. You know, so we sell houses, we sell properties, right? That that's what we tell everybody. But the reality. Is we pedal information to our clientels to help them sell the house, right? Our service, our product, is information and guidance. It is attending to and guiding the psyches of our clients. Our clients are the ones that are buying and selling properties, okay? Our service is to guide them through that process and to protect them not only from the marketplace, but from themselves. Our service is to be a resource to them, um, not only through the transaction, but before it and certainly after it, right? I want my clients to call me if they got questions about really any of life's big decisions, you know. And it's oftentimes this is Jonathan. Do you got a guy who could help us out with this? And I do. I have that guy for you. Okay. I've sought them out. I've done business with them. I've sent them to friends and family. I've got a strong team of professionals, whether it's about real estate or estate planning or legal matters or financial planning, whatever it might be. I've sought out these partners whom I work with to be a resource to my clients. And my agents are doing the same thing as well. They're building these great teams whom they can trust with their people, who they can trust to take care of their people, right? It's what we do here. And um, it's going great, guys. I am blessed beyond what I deserve. That said, let's jump into some statistics. It's been a while since we've done this, but I want to talk about these statistics, especially as how they um reflect upon what's going on with housing prices and what we can expect in the near and far term. So let's pull these up. These are the stats for this last week of sales. Okay. This morning there were 493 units available for sale. So let me back up a bit and talk about what these stats are, where they come from. Uh, these are all from the MLS, and these are statistics on single-family homes and condominiums in Lorraine County. I do not look at mobile homes. I do not look, I don't look at mobile homes, guys, even though that's a sort of a single-family residence, it's not a house, right? It is not a traditional real estate holding where you own the land and then any of the improvements on it, right? Uh owning a mobile home is more like owning a vehicle, right? It doesn't appreciate value unless you do some very dramatic improvements to it and make it unique, but it doesn't appreciate value and you don't own the land that it sits on. That's ultimately what real estate is all about. It's about the land. You know, we talk about the house. The house is really what provides a ton of the value to the land, how it's been improved. But ultimately, real property is the land that that house sits on. And so I don't include mobile homes into these calculations and these statistics because you don't own the land that you sit on. You rent that spot from someone else, right? So I looking at single families and condos in Lorraine County. I'm not looking at mobile homes, I'm not looking at doubles, triples, or any other sort of income-producing properties. And I look at just Lorraine County because that's the sample size that I think fits in Northeast Ohio and the entire Midwest, right? These stats don't necessarily jive with the coasts or the southern part of the country, but they give you a really good picture of what's happening throughout the Midwest. I also look at median values for the most part because median it eliminates the outliers at the top and the bottom, right? So you can see in column J, these are the big sales of the week. These are outliers, right? The proportion of million-dollar properties to $315,000 properties, the million-dollar properties are outliers, right? They they pull the averages, they skew them. So does the $20,000 property, the pile of junk in the bad neighborhood that you sold for $20,000. Again, it gets rid of those outliers and it looks more of what a typical sale is and what a typical property is. So, with all that said, let's jump into it. There were 493 properties, single families and condos, active and available for sale in Lorraine County this morning. That inventory is 25% greater than it was a year ago. But for the sake of comparison, the last time we had a balanced market in 2019, we had about 11 to 1,300 properties, single families and condos, available for sale this time of year. So we are less than half of that number today, still suffering from low, low inventory. And I think it's what affects it's the it's the major driver for price discovery in this market. And we'll get to that a little bit later. There were 106 sales last week that were closed. The median square feet of homes sold last week was 1,811. Median sale purchase price was $315,750. Median square foot value for homes sold last week, $194.79. Guys, in 143 weeks of tracking twice. And you can see the last time was April 24th. And then here at $194.79, that's the highest we've ever seen median square foot value, right? Approaching $200 a square foot for resale properties. That is remarkable. Median days on market 21. This morning, when I looked at the conventional interest rate, it was out of 6.6% for a 30-year loan. The big sale of the week was $1.15 million. That was new construction in Red Tail and Avon. They did not have pictures available to show you, so we're not going to bother looking at it. But let's go back to median square foot value. This is the number that I have been tracking now for two years to say to determine what is going on in real time with prices. So I have been tracking those and I've been looking at average median square foot prices per quarter, right? And at $177.10, we are at the highest that we have seen since I started tracking this. I talked about as we went through the winter going from 25 to 26, we saw a big correction in Q4 2025 where these median square foot values had dropped significantly. So let's go back and take a look, right? We were at 175.54, dropped all the way to 167.19. I expected to see that, you know, kind of stay stagnant or even go down lower. Instead, it stayed pretty steady from Q425 to Q126. And then we jump up and we have the highest average median square foot value that I've recorded since I started, right? The second highest was 175.54. But you can see, guys, we are still looking at prices. Appreciate here's a chart showing median square foot values since I started tracking, right? This goes back all the way to where are we at when I started looking at this? Okay. September 22nd, 2023 is when I really started tracking. So we're almost three years into this, guys, of looking at these stats every single week. You can see it started before that, but I screwed this up for the first six weeks here. So I really start looking at this from the seventh week that I started tracking this number, right? One or the ninth week, right? So so for a couple few months I screwed this up when I was doing calculations, not to be recovered. At any rate, from week from episode eight is where I really start to look at these numbers, and I've tracked all the way here to episode 140, right? And this is what the chart looks like, guys. Going back to September of 2023, and you can see these prices are just going up, up, up, up ever so gradually. We are watching prices continue to appreciate. And we can I continue to hear people clamor for lower, lower interest rates, guys. A 6.6 percent um interest rate is it's not outrageous. The historical average is well above seven, right? And so we're below the historical average for interest rates in this market, and you know, 6.6, it's again, it's not bad. And should rates come down later, you can always refinance, right? Um, if interest rates go down again by another two points, um we're gonna see these prices accelerate to the upside. This is, I mean, you know, we have all-time low demand right now. And even despite that, even despite all the people who pulled out of the market, either because they can't afford the house they want, or they're scared of geopolitics, or they're scared of the economic picture, all the reasons that people are not shopping for a home still is not enough to stop the growth in home values, to stop the appreciation and purchase prices for these homes. And it is a function of too low inventory. There's not enough houses available for people to buy or rent to stop the appreciation of prices. Oh, and by the way, if we're excited about the government handing out money for nothing, when that happens, and you have more money in the system chasing the same amount of goods and services, prices go up. We've watched it happen post-COVID, right? I mean, listen, we have all of the lessons that we need in front of us to understand why home prices are where they are, why they continue to go up, and what needs to happen to change it. All right. Um, we need more houses. We need them, we need more houses built. We need more pressure on local and state governments to make it easier and more affordable for builders to build houses that are affordable to the consuming public, right? Most shoppers can't afford a $350,000 home in a newer development, right? Most shoppers are under a quarter million dollars in their price point. That is the most competitive price point in the market. We need builders to build more houses that are $250,000 and lower. And that's only going to happen um if there are some sort of subsidization. I recently did that episode with Nick Cam Sopa, where he's working right now about how to make that happen in his home state of New York. Um, and and other states can replicate it. Ohio can certainly replicate it, but government needs to work with the private sector to make sure that these housing opportunities are available to more people. All right. That said, that's a wrap on episode 140, an update of what Civitas Real Estate Group looks like after year one, some of the things I learned, the things that I did and why I did them, and then what's going on with housing prices today. I love you guys. Thank you for tuning with me. Thank you for sticking with me here now. Going on three years of doing this program, I appreciate it so much. If you like what you see, go on up here, snap this QR code that takes you to the YouTube channel. Subscribe. Facebook deletes these videos like two months after they go up, but YouTube has it for posterity. I put them all up there. You can also find me on Spotify. Thank you very much. As always, take care of yourselves, take care of one another. I love you, people. I'll see you next week.