The Linuxifacation of Microsoft

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“Linuxifcation.” Is that a word? Probably not, but I’m making it one. Whatever you want to call it, Micro$oft has taken a turn towards the open-source side.

It was not that long ago that the idea of open-source software was anathema to the boys and girls in Redmond. However, in the last few years, Microsoft has taken a kinder, gentler approach to the open-source world and started incorporating Linux into its technology sphere. So, let’s look at some events and talk about what might be coming for our new Linux loving Microsoft friends.

Ubuntu in AD and Intune

With the release of Ubuntu’s desktop operating system 23.04, Canonical announced Azure AD authentication support on the desktop OS. Your users can now use the same Azure credentials for their Azure assets as their Ubuntu desktop, bringing those desktops closer into the fold.

Additionally, in October of 2022, Microsoft announced support for Ubuntu clients in Intune. This allows Ubuntu client’s configuration to be managed alongside Windows clients in a single pane inside of Azure’s management panel. Intune allows for custom reporting and conditional access for Ubunutu clients specifically.

Microsoft buys GitHub

GitHub is a well know code and development repository home to projects for droves of developers around the world. In 2018 when the acquisition of GitHub by Microsoft was announced for $7.5 billion, many people were scratching their heads as to why Redmond would pay so much for an organization valued at roughly $250 million. Roughly four and a half years later, it would appear that Microsoft wanted a platform to reach and endear themselves to that coding community, many of which are the creators of open-source projects.

Windows Subsystem for Linux

The Windows Subsystem for Linux(WSL) added a whole subsystem to Windows to allow devs, or sysadmins, to run Linux GUI and command line tools directly on their Windows workstation without spinning up a virtual machine. All of the familiar command line, and even some GUI tools, in Linux, become natively available by adding WSL to your system.

Edge and Teams for Linux

In 2019 Microsoft a native Linux app for Linux, its first full office app for the platform. Some speculated this was the beginning of Microsoft bringing the full Office suite to Linux. Sadly, in December 2022, Microsoft announced it was dropping support for the Linux client in favor of a PWA version of the Teams app. The caveat with the PWA version is that it requires Chrome, or Microsoft prefers Edge, to run the application.

That brings us to another point, Edge on Linux. The initial release was several years ago, but the full release came in Nov 2021. This gave MS a fully supported browser to base their PWA apps on, a direction they’ve been bullish on for quite some time.

Linux in Azure

Since its inception, Linux has been a supported server choice in Azure. Now, Microsoft has been cagey about exactly how much of the overall server population in Azure is Linux, but we do know that it makes up over 50% of the population. The real number is most likely higher when you consider that Linux is used very heavily worldwide on the server side.

Why the love?

So, you might think, “Why the change of heart, Microsoft?” That’s a legitimate question, and the answer is somewhat simple. Market changes.

Azure has taken off since its inception. As Azure’s success has risen, the desktop versions of Windows have made up less and less of Microsoft’s bottom line. Since so many Azure instances are Linux based, it would be foolish not to be more friendly toward that base. Additionally, embedded systems like game systems, voice assistants, smartphones, etc. are gaining popularity. Almost all of those systems run some sort of Linux. At this point, it’s sheer pragmatism, if nothing else. Redmond realizes it can’t dominate every market, despite its best efforts.

Where’s it heading?

Microsoft has gotten neck-deep into the Linux and open-source community for the betterment of Microsoft. I’m a big open-source fan, but I’m a bigger fan of the right tool for the right job at the right time. That varies from organization to organization at different times as they grow and contract. Anytime the tools, whether open source or proprietary, work together, it’s better for the user.

My favorite MS/Linux rumor is that Microsoft is moving toward scrapping the traditional Win32/64 code base and moving to a Linux-based Windows OS. This is definitely interesting and technically possible. Microsoft has its own Linux distro, Mariner, created mainly for Azure use. Microsoft has introduced systemd into WSL, which won’t make it easier to make a Lunix-bas Windows, but it does introduce a way for Windows admins to get more use to using systemd. The bit of information that lends the most credence to this rumor is the supposed “Windows Mode” in Linux.

Windows mode is a Windows subsystem for Linux that allows Win32 API into a Linux distribution, which is brewing. Until recently, the only way to run Windows applications on Linux was to use Wine, which has never been a great experience. I’m not trying crap on the efforts of the Wine developers. They did good work for many years, but it would never be as good an initiative as Microsoft threw its support behind if it came to fruition.

Do I think we will be looking at a Linux-based version of Windows? Probably not unless something major shifts at Microsoft. However, if we do see development and support for the Wind32 API on Linux, then there’s no technical reason it couldn’t happen.

What’s your take on Microsoft cozying up to the open-source community?

Disaster Recovery: Securing Your Data

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Intro

Data is the foundation of any brokerage, just as it is for any business. What would you do if you started your workday, be it in an office or from home, and files or data that you expected to be present was gone? What if your organization was a victim of Ransomware?

You need to have a plan in place should, more accurately, when a data disaster happens to your brokerage.

Disaster Recovery vs. Business Continuity

Let’s start by discussing what disaster recovery is and isn’t. It’s often used interchangeably or in conjunction with business continuity. While the two terms are related, they both serve different functions.

Disaster recovery, at a fundamental level, is defined as:

The process of reestablishing vital infrastructure and systems
following some form of a disaster event

Disaster recovery focuses on keeping your data and systems safe when a disaster occurs. Business continuity focuses on keeping your systems and data at a minimum functioning level during a disaster.

What is a disaster?

So, let’s talk about what a disaster is. When the term disaster is used, most people think of things like hurricanes, floods, earthquakes, or wildfires. All destructive natural events fall into the category of disasters, and certain types of disasters may be more prevalent in your area. For example, in Florida, you must contend with hurricanes; in California, you must worry about wildfires.

As destructive as natural disasters are, there are two other types of disasters that people don’t always consider arguably more common and potentially more devastating to an individual business: hardware failure and human action.

A hardware failure disaster occurs when equipment that supports your information infrastructure stops functioning or malfunctions. This can be a server becoming unresponsive from a failed drive or system board, a network switch or firewall failure, or even an outage from your Internet Service Provider. Any hardware failure that prevents you from accessing data or the system to perform business operations is considered a disaster event.

Human action is the most common and potentially most damaging form of disaster. This category covers many situations, but they are all human-induced. This type of event could be Tom from accounting accidentally deleting a financials folder from the server, a ransomware attack, or deliberate sabotage from an employee.

Does this really affect me?

In short, yeah. It affects everyone. Because you don’t live in an area typically subject to natural events, be a disaster victim. Every company can have a fire break out at their office, have their server/network room flood, or be a victim to a bad actor. So let’s look at some numbers to consider the frequency and impact of disasters on businesses today.

  • 75% of data loss is due to human error
  • 2 out of 3 midsized businesses suffered a Ransomware attack in the past 18 months
  • The average cost of downtime is $1,410 per minute
  • 93% of companies that experience a major data loss do not have a plan for recovery
  • 60% of companies that suffer a major data loss will be out of business within six months

Data disasters, in some form or another, will affect every company, regardless of size or type of business. You need to ensure your company is ready for the inevitable.

But…But…the cloud!

I know what many of you are thinking. “but I use the cloud!” I have some good and bad news for you.

Don’t let cloud-based solutions give you a false sense of security. Those applications are still running on the same type of systems as traditional on-premise systems and are subject to the same hardware failures and human errors as those systems. Cloud providers suffer data loss and cloud outages too. However, there’s one major difference when it happens to cloud providers….

The shared responsibility model

Amazon, Google, Microsoft, and most other cloud providers have some form of what’s called a shared responsibility model that you agree to during your service’s setup. The exact name and terms of the model vary by provider, but the general premise that we’re concerned with here is that they make you, the user, responsible for the data stored on their platform.

They agree to ensure the platform is stable and available, and you agree to take responsibility for the data you input into their platform and its integrity. That doesn’t mean they don’t have fail-safes to prevent data loss on their platform; they do. However, the agreement absolves them of responsibility should the worst happen.

What to do to protect your data

You can do a few things to ensure your data is safe should you suffer a disaster. Work with your technology staff and partners to determine how your data is protected and recovered. Review your agreements with your cloud vendors to discover exactly what your responsibilities are for the integrity of your data.

If you’d like a simple checklist to start building your disaster recovery plan, you can find one below.

DR-ChecklistDownload

The broadband problem in America

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Disclaimer: I’ve known a lot of people, both personally and professionally, that work for various carriers. They’re hardworking people that take pride in their work, and they go above and beyond for their customers. This is not a critic of their work. This is an examination of the providers behavior, performance, and actions.

The COVID pandemic has exposed something that we already knew was a problem, and that is Internet coverage and competition in America. It’s especially problematic in rural areas, and even some not so rural areas. We’ve known this was a looming issue for a while now, but when workers and students were forced to work from home, it became a glaring and immediate issue.

This has been further complicated by recent carrier actions, making the new work-from-home norm more difficult or impossible. In June, about two or three months into the pandemic, Cox throttled the bandwidth of an entire neighborhood due to the bandwidth use of one user. One thing to note is that the user was scheduling their high data use at off-peak hours(between 1 AM and 8 AM), and they were paying an additional monthly fee for “unlimited data”. Cox has also given notice to their users that they will be limiting their upload bandwidth to 10Mbps on their plans.

At the beginning of October, AT&T announced they were ceasing sales of DSL, along with other carriers. This is a major problem for rural areas where DSL was the only option. DSL has been a sub-par option for broadband Internet, but it’s a better option than nothing at all.

In a lot of markets consumers only have one option, and now may not have an option at all. I live in an area with about 320,000 people between the two main counties. That certainly doesn’t qualify as a major metropolis, but we’re also not talking about a one traffic light town in the middle of nowhere, yet roughly 97% of those 320,000 have one option for broadband internet. AT&T has a small fiber footprint, but it’s very small.

I get that expanding a provider’s service area isn’t cheap. I was talking to an acquaintance with a cable internet provider and asking about their plans to push their footprint out beyond our two most populous counties. They flat out told me they weren’t planning anything. They’d thought about it, but aerial fiber costs them about $40k a mile. When they crunched the numbers the population density just wasn’t high enough to justify the cost, and like any business, if they can’t turn a profit then they aren’t going to do it.

So, you may say to yourself “maybe the state or federal government could subsidize that buildout to make it more feasible for the provider.” That would accomplish a few things 1) it would bring stable broadband internet to underserved areas and 2) it would, theoretically, create some jobs. The only problem with that idea is that it’s already been tried. The FCC has given subsidies to providers to do just what was just described. Do you know what happened? The providers half-ass the expansion, fudged the numbers, and pocketed the cash, even though ISPs are claiming that they can’t afford to expand unless the government antees up more cash. They’ve done such a stellar job so far, why not?

Maybe Internet access should be treated like a public utility. That would make it easier to regulate and the government could oversee its rollout. That would solve some of the problems, right? The ISPs think that’s a great idea too, but don’t make it a real utility. Give them all the benefits of a public utility, but don’t make them conform to any of those pesky requirements like pricing regulation or coverage requirements.

Ok, here’s another thought, let municipalities roll out their own service. If ISPs don’t want to spend the money to provide service to an area, then let the city deploy their own solution. A lot of cities have done just that, and we’re not talking about major metro areas either. Ammon, ID(pop 16,000), Monticello, MN(pop 14,000), and Bristol, TN(pop 27,000) all have successful municipal Internet offerings. However, in 22 states there are legislative roadblocks, or outright bans, on cities creating their own broadband solution.

When municipal broadband is available studies show that access is more affordable and reliable. It’s time to put an end to letting the lobbyist for big carriers stifle the expansion for broadband services to underserved areas of the country. They’ve clearly demonstrated that they don’t see it being worth their time.

I’d prefer a solution that isn’t heavily regulated. I’d prefer a competitive market that keeps pricing fair and sees the superior service excel. However, if the commercial providers don’t want to service an area, then we have no choice but to look at alternatives.

Climb: the death of a brand

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A few years ago I was attending my first Inman Connect San Franciso. This was 2015, I believe. During that conference, Climb hosted a networking event at their offices for the conference attendees. At the time, Climb was an up and coming indy brokerage in the bay area that prided itself on its unique culture and offices. As a member of the indy brokerage segment, it was great to see a new, vibrant brokerage and brand thriving in an ultra-competitive market.

Let’s fast forward to the fall of 2016 when Realogy/NRT announced they had acquired Climb for an undisclosed amount in order to add that brand to it’s stable that includes Coldwell Banker, Better Homes and Gardens, and Corcoran. After the acquisition, things fell silent and no big public statements were made about what was going on with Climb. What were the plans, if any, for Climb? Realogy’s stock had been struggling, so was the purchase of Climb a play to make it appear as though Realogy was preparing to make some innovative changes or position a brand to appeal to a younger demographic?

Let’s jump again to the fall of 2018 when Realogy announces that they are going to begin franchising the Climb and Corcoran brands along with their other franchise opportunities, stating that both brands are critical to Realogy’s growth. So, after 2 years of relative silence about the brand, we finally have confirmation of what the plan for Climb is, and this makes perfect sense. Some of the other Realogy brands, like Coldwell Banker, haven’t been seen as a hip, urban, progressive brand. Climb looked like Realogy’s option to tap into not only younger buyers, also younger agents entering the industry. We were all on the same page now.

Let’s move the calendar forward a mere 14 months or so. We haven’t seen any Climb franchises, and all has been quiet. Realogy then makes a surprise announcement that they will be making a 180-degree turn. It will not be franchising Climb, it will actually be shuttering the brand and will be absorbing all Climb’s agents into the local Coldwell Banker offices. Ummmm…..Huh? Furthermore, Ryan Gorman goes on to say that Climb’s DNA is all over the new Realogy. Really? After basically a year Climb’s culture, which is vastly different from Realogy, has been integrated into Realogy’s corporate DNA? Yeah, no. Not buying it.

Climb was a great, urban, progressive brand that had a lot of potential and appealed to a younger agent demographic that Realogy could use. Only time will tell if they can replace that brand with one of their other lines, but I doubt it. Climb was a wonderfully unique option that could’ve been a great asset for Realogy that was abandoned too soon.

Real Estate 2020 Predictions

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As we start another year in the real estate industry we look forward to what the new year might bring. Some of us want to continue the success we had ending the decade, and some of us want to learn from the missteps we made and make improvements for the new year. I’ve always looked forward to the inevitable prediction posts that come in the waning days of each year, so this year I decided to share my own predictions.

We probably won’t see a 100% accuracy rate on these predictions, but that’s part of the fun about forcasting. Sometimes we’re right on target, and sometime we look back and ask ourselves what we were thinking. However, regardless of the accuracy, it’s just plain fun. So, let’s get to it.

Compass Deflation

Compass has been the golden child and media darling of the real estate world for the last couple of years. They’ve experienced round after round of VC funding, that’s filled their coffers to brimming. Most notably in the form of their initial round funding of around $800 million from Softbank. With that funding, they’ve been able to buy their way into a lot of the most competitive markets in an effort to achieve their 20/20/20 goal(20% of the top 20 markets by 2020).

A lot of the hype and buzz is starting to die down and the VC money hasn’t been flooding in anymore. 2020 is the year that the rubber is going to meet the road for Compass. They’ve got to get to the nitty-gritty of brokerage management and deal with the everyday issues every brokerage does: agent retention/recruiting, commission compression, and customer acquisition.

Compass has some very intelligent people on their roster, and they have the potential to do well. However, they’ve ridden the tide of positive hype and flush wallets. Gone are the days of the 100K agent signing bonuses and here are the days of investors asking what the profit plan is. Will Compass be the next WeWork or the next Realogy? We may very well find out in 2020

Agent Job Shift

The role of the agent, and customer expectations, are changing. This isn’t a new concept, but it’s one that’s going to become more and more prevalent. There are a lot of agents that still believe their job is to help their clients find and home, and while that’s technically part of it, it’s not an accurate statement. Yes, agents often know about listings that may be coming soon or off-market deals, but these make up a very low percentage deals that actually happen in most markets. The modern consumer doesn’t need help finding houses they’re interested in. There are more sites that have more listings, and listing information, than ever.

I don’t need an agent to help me find a home. What is need is someone to advise me on the transaction. I need someone to tell me that if the house was built before 1978 it might have led based paint or if it was built in the 60’s or mid-70s it probably has aluminum wiring. I need someone to explain to me how the transaction works, because buying a home isn’t like buying a TV, or a computer, or even a car. It’s an extremely critical transaction that can have extraordinary repercussions on a client’s life. See available inventory is not what customers need help with anymore. The devil is always in the details, and that’s what customers need and want.

Agents are no longer salespeople, or at least not just salespeople. They are consultants and advisors. Customers are hiring an agent to advise them on their home sale and purchase. How to stage the property, what repairs to make or request, how the heck the offer/counter-offer process works. That is where the agent’s value lies and that’s why customers will turn to an agent.

The iBuyers Are Coming!

iBuyers market share is growing! Now panic, scream, and run in circles. I’ll wait….Have that out of your system? Good.

The number of iBuyer transactions per year rose and rose quite a bit in certain markets. Are iBuyers going to kills off agents? No. There will always be a market for iBuyers.

Think about it for just a second. There are certain types of sellers that are willing to take below market value for a quick, guaranteed sale. Sellers who inherited property have no investment in the property, so anything they get is pure profit. Sellers that have a lot of equity, need to move their house quickly, may take a lower offer if they get offered a short close window with no contingencies. However, most sellers are going to want to get the most they can for their home.

This is another scenario that agents are going to have to adapt to overcome. Agents are going to have to demonstrate their value and how they’re going to procure the highest price for a seller’s home, shifting more to that adviser role than simply a salesperson.

Smart Home Technolgy blows up…..

…in agent’s faces. Ok, maybe that’s a little dramatic, maybe not. Smarthome technology, or Internet of Things, implementation is booming. The exact numbers vary, but current estimates put in-home voice assistants at around 36% and all estimates have those numbers climbing at a high rate. The adoption rate of Google Home and Alexa devices has been a gateway to other connected devices, like smart light bulbs and smart plugs.

The bulbs and plugs are easy to take with you when you leave. However, we’re now seeing “smart” devices of a more permanent nature getting installed in homes. Smart Thermostats, fixtures, light switches, outlets, fridges, and even smart HVAC vents. These kinds of things aren’t easily moved when the home sales. So, how do these items transition from one owner to the next? That’s the problem agents are going to have to deal with. Is it the agent’s responsibility? Not really, but how many times to agents get a call for advice or guidance about any number of random things to do with a house that a client recently bought or sold?

Where it’s going to be problematic for agents is that the smart home market is a mess right now. There are no real standards for how these different devices integrate or, more importantly, how to transition them from one owner to another. How happy do you think a new homeowner is going to be when they realize that the previous owner still has access to the thermostat, locks, lights, and cameras in their new home? Not please at all.

The good news is that there are plans in the works to put standards in place to make working with these devices easier for the layperson, but the bad news is that until those standards are in place the smart home revolution is going to be a problem for agents.

Agent V. Customer Focused Brokerage

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There is a debate amongst real estate brokerages recently about their role in the real estate world: Are we here to service our agents or are we here to service the real estate customer?

The answer depends on how you want to define that servicing. Some brokers, and agents will tell you that agents should be the sole focus of the brokerage and the agents should be focused on the customer. I think that’s shortsighted and dangerous. Everything comes down to one key piece of the transaction and that is the customer. The customer is the linchpin to the transaction. Without the customer, nothing sold or purchased.

Customer Service vs Agent Focused brokerage

The broker/agent relationship is a partnership. The agent should be working with their broker to provide the best service to the customer that either can provide and vice versa. It’s a symbiotic relationship at every level. It’s near impossible for an agent to perform all the various tasks they need to perform to keep sales flowing through the funnel: marketing, prospecting, lead nurturing, transaction management, sphere maintenance, listings, showing, and on.

The brokerage should be focused on the support of those agents to ensure that the customer is serviced correctly. It’s the sales and service process that the brokerage’s heavy lifting comes into play. Transaction management, technology, marketing, training, brand promotion(both brokerage and agent), and accounting are all roles that the brokerage should be filling to allow the agent to focus on the service process and ensure that the customer has the best experience possible. When your customer base is happy that is mutually beneficial for brokerage and agent.

Brokerages need agents who are customer focused and understand that the needs of customers shift depending not only on their financial situation, their experience with home buying, and the market health; but also the channel that the customer arrives through. Sphere customers initial expectations are very different that Zillow customers.

Agents need brokerages that are customer focused and understand the needs of both the agent and the customer so that everyone’s needs are met in the sales process. Brokers need to make sure they have the infrastructure in place to ensure their agents succeed.

Agents: if your broker doesn’t understand this concept and isn’t actively working to make sure you have a partnership whose goal is to service the customer then you need to start looking for a partner and not an office.

Brokers: if your agents don’t understand this concept and aren’t working with you to service your communal client base then you have two options: 1) Train your agents to understand your respective roles or 2) start recruiting agents that understand the brokerage partnership and don’t just want someone to hold their license.

The Zillow Conundrum

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Zillow is one of the most polarizing, if not the most polarizing, topics in the real estate industry over the last decade or so.  If you ask any given agent or broker you’re just as likely to get a gushy declaration of love as you are a venom-filled tirade. So, what’s a broker/team/agent to do?

I understand why Zillow is disliked. I don’t like it from a marketing perspective because it makes my job harder. It’s harder to produce a site that can compete with Zillow from both a capability and SEO perspective.  They’re cutting into the traffic and leads that my site would’ve produced otherwise. They are guilty of inaccurate data on several fronts. Then there’s the old argument that Zillow is selling agents their own leads back to them. That statement is somewhat true. Zillow’s channel of leads is based on the listingIs Zillow good or bad agent’s inventory, but they’re actually selling leads to the paying agent an not necessarily the listing agent. That fact makes them even less popular with successful listing agents.  It’s a competition without being direct competition since Zillow isn’t a brokerage itself…….yet.

However, let’s look at the other side of the coin. Zillow does provide a valuable service to its customers. Under Premiere Agent 4 Zillow qualified and scrubbed leads before handing these leads over to members of the PA4 network. A lot of PA4 agents haven’t been too happy with that change, but that’s a different topic. If you’re an agent or brokerage that doesn’t have a strong SEO or organic lead generation program than Zillow is a legitimate source to get leads from to drive business. I’d argue for some if it weren’t for buying into the PA program then those agents or brokerages could find much less success generating leads on their own.

Any brokerage can choose to not put their listings on Zillow.  There’s nothing stopping them unless there are some MLS boards that have voted to unilaterally publish the listings in their feed. So, if you don’t want your listings there pull them. Here’s the rub, pulling listings from Zillow is only going to work at scale in a given area.  Sellers expect their house to be on Zillow. I’d be willing to bet most sellers check Zillow’s site before the site of the brokerage they listed with. If the entire MLS doesn’t pull the listings from Zillow it hampers those individuals that do.  If we take into account my earlier comments that a lot of smaller brokerages use Zillow to level the field, what’s the likelihood that they’re going to agree to the whole MLS stopping syndication?  I’d be willing to bet that likelihood is zero.

Like I said earlier, Zillow makes my job more difficult in some ways. However, I don’t think Zillow is going anywhere. If anything Zillow is digging in and finding new ways to generate revenue from the real estate transaction.  If that’s the case then why not use them to your advantage?  If you have to play their game at least get something out of it.

Compass’ Technology Ruse

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Compass is real estate’s latest industry darling and investors are falling over themselves to sink cash into the company. These guys have raised $800 million since starting in 2012, with the latest infusion being a big check from Softbank for $450 million.  If rumors are to be believed Softbank is looking to double down by throwing another $400 million or so their way. That would bring their VC investment to roughly $1.2 billion. I don’t know about you, but where I come from that’s a lot of liquidity to play with.

Compass announced at Inman Connect San Fransico that they will begin leasing their coveted technology stack to other brokerages.  Agents are completely enthralled by Compass’ tools, whether they’d actually use them or not.  If there’s a brokerage struggling to get their own tech tangle sorted out then Compass’ offer could be a boon for them. That begs the question: Why would Compass lease access to its biggest advantage? I can tell you that it’s not because of any altruistic goals of Robert Reffkin. I think it can be summed up in one word: Acquisitions. I think more specifically acquisition of independent brokerages. Compass wants in the door, behind the curtain, and its tech stack is its gateway drug.

If a brokerage implements Compass’ technology stack then all of their data is running through that system.  They’ve just pulled the curtain back to all of their critical performance data. Compass knows how the brokerage is performing, who’s producing, who’s not, conversion rates, etc.  Some, if not all, of the most critical data it would need to do what? Acquire said brokerage.  Who do you think is going to lease Compass’ system? ReMAX, CB, or Keller Williams franchises? I would think that’s not likely.  I keep hearing that “systems” are why agents go to franchise shops. Why would these franchise shops pay for two systems? I can guarantee you that CB and Keller will get their pound of flesh. Why would a franchisee pay CB for their systems AND pay Compass?  Well, they wouldn’t. It’s the independent brokerages are the shops that most likely don’t have solid “systems” in place.

Let’s consider a scenario. There’s an independent brokerage in Charleston, which is a market that Compass currently doesn’t have a presence in. They lease Compass’ systems because they believe that it’s the best solution for them and will give them a leg up on everyone else. Fast forward 12 to 18 months. Compass has been able to look at essentially all their production data, from the inside, and know exactly what their numbers are what their profits and losses look like and how they might approach them. It shortcuts 90% of the footwork and due diligence required for an acquisition.

Compass has already snapped up a couple of indy shops this year.  They grabbed Platinum Drive Realty in February, Colon West in April, The Hudson Company in June, and Paragon Realty in July.  Who’s gonna be next? Reffkin has already publicly stated he’s willing to pay 4 to 6 time EBITDA for a brokerage and that can be a pretty attractive offer to a lot of owners. Take that on top of the fact it looks like the former owners stay on as either managing brokers or sales managers.  They see it as a win-win. For Compass there’s not a downside either. If they can use their tech stack leasing to find valuable acquisition targets then it’s served its purpose, but even if the leasing brokerage isn’t a good acquisition Compass still makes money from the tech lease.

Compass has got to spend all that sweet VC capital somewhere.  Where do you think it’s gonna go?

Millennials prepping for a real estate move?

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A lot of millennials haven’t been in a great position to realize one of the largest parts of what most people identify as the American dream: homeownership. They came out of college often with
large amounts of debt, particularly if they continued to a postgraduate program. When they did finish school the job market was the worst it had been in decades, the housing market had
completely tanked, and then rental rates began to rise. 

None of this lends to financial stability or the ability to have the resources to come up with a down payment or get financing to make, what will be for most, the largest purchase of their lives. However, a new study shows there may be a shift in that logic. A study done by Bank of America (one of the largest culprits behind the crappy economy that millennials found themselves in the
middle of) shows that at least 47% of millennials have at least $15,000 in savings and approximately 16% have over $100,000 in savings.

So, that begs the question what are they saving for? That Ferrari they always wanted? Hardly. I know a lot of people like to think of millennials as kids, but I’ll remind you that half the millennial population is in their 30s. They’re getting married and starting families. They are, in some ways, following the same path the generations before them have. They want a home to call theirs. They
want to build that life and a future for themselves. For 60% of millennials that still means owning a home, according to a Bank of the West study.

Part of those savings are going to be put into home purchases. The housing market is tight, but there’s a growing pent-up demand. Rents are continuing a several-year trend of rising, builders have started to move again, and banks seem to be lending realistically. We’re at the beginning of a very healthy point in this real estate cycle. Millennial will start making more and more moves to become homeowners.

If you’re part of the real estate industry are you ready? Have you given the guys and gals the credit that they’re due as a viable demographic? I’m talking to you brokers, agents, mortgage bankers, and builders. If you haven’t you’re in for some tough years ahead because they’re not coming, they’re here. They’re here and there’s a lot of them. If you don’t correct your views now you just might not be around for the next generation.