How To Crash Proof Your Real Estate Business – Interview with Mike Ferry
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The Mike Ferry Interview
In this episode of Founders Club, Oliver talks to real estate legend, Mike Ferry, at his home in Newport Beach about how you can crash proof your real estate business in any market.
Real estate is a cyclical market, and we are due for a normal dip. Nevertheless, you will succeed by committing to be more aggressive. What does that look like in practice? What steps can you take to grow in spite of a natural decline in the market? What can you do to crash-proof your real estate business?
Mike Ferry is the “OG” of the real estate coaching space.
He founded The Mike Ferry Organization in 1975 and continues to serve as CEO. Mike’s company provides real estate coaching, specialized seminars and training workshops for agents and management alike. For 43-plus years, his proven approach has generated more real estate millionaires than any other coaching system, and Mike is recognized by NAR as one of the most influential people in real estate.
On this episode of Founders Club, Mike joins Oliver to explain how to crash-proof your real estate business. He discusses the market dip that is likely to materialize in the next 12 to 18 months and what you can do to win despite the decline. Mike also shares the surprising origin story of his coaching business and the way continuous learning keeps him at the top of his game. Listen in for Mike’s advice around improving your sales skills and get his bullet-proof plan for thriving as an agent or broker.
From knowing the “playbook” to knowing when to simplify your life, this interview is as real as it gets with the #1 real estate coach and training in the world.
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Here is how the interview breaks down:
10:56 Mike Ferry on Using Your Real Estate Playbook
18:19 How Mike Ferry became a coach (The Mike Ferry Coaching Story)
24:48 Mike Ferry’s biggest challenge growing his business
28:59 Mike Ferry on the state of the 2019 Real Estate market
35:31 How to deal with rejection in real estate
37:01 Mike Ferry on the “disruptors’ in real estate [purple bricks, exp, compass]
44:30 What to do if you are “stuck” at a certain level of production
49:29 . Mike Ferry vs Tom Ferry [what is it like competing with your son?]
51:40 What did Mike Ferry do with his yacht?
54:30 What is a good mix between listings vs buyer sides
56:59 Mike Ferry on Zillow IBuyer and Open Door
59:31 Mike Ferry on closing gifts 1:01 Mike Ferry on making money over the age of 50
1:04:08 What Mike Ferry investing in?
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Listen Here:
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Key Takeaway:
Real estate is a cyclical market, and we are due for a normal dip. Nevertheless, you can succeed in the next 6-12 months with a commitment to be more aggressive. What does that look like in practice? Today, real estate coaching legend Mike Ferry joins Oliver to explain how to crash-proof your real estate business.
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Full Transcript Below:
Welcome to Founder’s Club, the show for real estate entrepreneurs…
Oliver: Well, I’m out here today in Orange County in New Port Beach about ready to interview Mike Ferry which I’m really excited about. We’re gonna be talking about all sorts of stuff that you can implement right now in your business to grow and take your business to the next level. And we’re also gonna be talking about a bulletproof plan to crash proof your business. Let’s get started.
Excited to be jumping in here in a minute and what we’re drinking today is actually cream soda since Mike is a non drinker and I actually haven’t had one of these since I was a kid. And it’s going down really good so I appreciate it. IBC Cream Soda. Thanks a lot.
Mike: That’s right.
Oliver: Very excited to be here today with an extremely special guest.
Mike: Thank you.
Oliver: A long time friend, a coach, a mentor, someone that has done a lot for me and Sam in our business and not only that, I don’t even know if we’ve told you this story but one of the main reasons that we got into real estate initially, so me and Sam, we were selling phones at the mall. We were those guys that stopped everyone, this is before everyone had a cell phone. Stopped them, tried to get them a free phone and all that. And so we were looking for different types of sales training. And a friend of ours went to one of your events and he was like, “Man, you guys gotta hear this sales training, it’s related to real estate but I think you guys would take a lot away from it.”
So we ended up going to one of the events in LA at I don’t remember what hotel it was but this is probably I wanna say 2005, 2006. And we left that seminar so excited about real estate that we were like, “All right, we’re gonna implement everything.” We’re still doing phones at the time, we’d end up selling a couple of houses to a couple of the people that we worked with and a couple different friends. Got a couple commission checks and all of a sudden we thought we’d hit it big. We were the real deal. And then, from that moment on, we kind of took the plunge in the real estate.
Mike: Good for you guys.
Oliver: And that’s kind of how it all started for us with Mike and so I just wanna thank you for that. I don’t know if I actually ever told you that story.
Mike: It’s a good story, thank you.
Oliver: Yeah. So I just wanna start with-
Mike: First of all, it’s nice to know we have an influence.
Oliver: Yeah, so it’s working. And I’m sure that-
Mike: Tell you why I say that because in Las Vegas where we live part of the time or most the time and going to all the restaurants in the nice hotels in the Strip, it’s very common that the waiter will walk up and say, “Mike Ferry, I’m also in real estate. And I’ve been to your seminars.” And when they walk away, I always say to Serena, “Obviously it didn’t work because now you’re a waiter doing some table.” So it worked for you.
Oliver: Yes, it worked.
Mike: And so good for you.
Oliver: Thank you very much. We greatly appreciate that and all the guidance that you’ve given us over the year.s
Mike: Thank you.
Oliver: So just to kind of jump right in. You’re kind of the undisputed heavy weight champion of the real estate coaching space.
Mike: I’ve lasted.
Oliver: You’ve lasted. Yeah, and you’re an OG of the coaching space. So why do you think that is?
Mike: Probably because, number one, I’m very persistent, I don’t quit. I’ve been doing it now for just under 44 years. The work that you and I have done together. Second is I teach common sense. You know, there is no magic formula, no magic bullet and I think what attracted both yourself and Sam to me and myself back to you guys is you guys understood common sense. And the industry is always looking for a way for people to get rich without having to work. And as the industry claims, and the market gets good which we both experienced the last six or seven years, more and more people that teach the magic formula … Let’s face it, the industry, you understand this, you guys have, what? A thousand, 1,100 agents now in your company. Half of them don’t even know what selling is. The other half are trying to figure it out. And that’s a normal real estate company.
So common sense then become really important to an agent. And what we teach is if you don’t know how to talk to people, you’re not gonna do deals. And that stuff’s most done at the door. So I think it’s just common sense.
Oliver: And you’re exactly right, that is what attracted us to you at the beginning is I have always appreciated the no nonsense approach and the things that you teach are things that anybody can do and there is all these gurus that have the magic pills. But at the end of the day, no matter how many leads you get, no matter how many leads you buy, no matter how many leads you generate, if you can’t close, if you can’t follow up, if you can’t present-
Mike: That’s right.
Oliver: You’re not gonna get very far.
Mike: That’s exactly right.
Oliver: You’ll end up spinning your wheels and probably spending a whole ton of money.
Mike: Or, you’re going to be another number of people that came in and left.
Oliver: Right.
Mike: And I always say people, the turnover is not caused by financial independence, the turnover is cause by the fact they can’t make a penny. So we can teach them how to make money if they’re willing to learn to do that. And the problem you and I face and Sam and I talk about it all the time is that if half the people come into the business with no sales experience at all, and I mean, not even a retail, standing in the story, doing anything to take a person 35, 40, 50, 60 years old and then get them to change that behavior better, if I’m not persistent, it doesn’t work.
Oliver: Yeah. And I’m sure battling all the nay sayers doesn’t help either.
Mike: If I had an extra dollar for every nay sayer, you and I wouldn’t be talking ’cause I’d be on an island I owned in Hawaii.
Oliver: Yeah, you’d own the island in Hawaii. Why do you think that sales piece is missing from a lot of the things that people teach in real estate?
Mike: Well, I think the biggest thing in sales is confrontational. You have to meet somebody, you go, “Hi, my name is Mike.”
Oliver: Great to meet you.
Mike: You have to be able to do that and if you can’t do that, you have a problem to start. Second, if you don’t know what to say beyond the hi my name is Mike, you’re at a loss and very few people understand that sales can be very confrontational. It can also be very confusing, it can also be a lot of fun and obviously, very profitable.
So the reason the sales segment is so difficult, I believe, is that most people … Well, if the average age is 57, real estate agent today in the US, okay, how old are you now, Oliver?
Oliver: 38.
Mike: Okay, so and Sam is probably about the same?
Oliver: 36.
Mike: All right. So you guys are young enough to understand that if you don’t change your behavior, you’re not gonna change the result. At 57, getting a person to change their behavior is a much bigger challenge because they’re set in their ways. So the sales piece is missing because people are not willing to change and second, brokers are afraid to teach it ’cause they’re afraid agents are gonna get mad and quit if they have to teach them how to sell.
And if they get mad and quit, then they have to go recruit and recruiting is back to selling. So the challenge is the fact that I don’t wanna change my behavior and I find a broker, I certainly don’t want to lose you, even though you may never do anything.
Oliver: Even though they haven’t done a deal in 24 months.
Mike: Yes, I don’t wanna lose you ’cause if I lose you, then I have to replace you and that means I have to prospect, present and close. So it’s an interesting dilemma this industry has faced for the entire 50 years I’ve been in real estate and that is that complete almost irregular, maybe even unethical behavior pattern of not saying to an agent, “If you wanna sell real estate, you have to learn to sell.”
That groovy thing that’s online all the time, a real estate agent is a match maker. I’d bring a buyer and seller together for the wedding. I mean, I’m not gonna be crude but I could be crude with that kind of a statement.
Oliver: Yeah, you know, it’s interesting, too, because we obviously experience that as well in trying to teach agents how to grow their business on the sales side and there is almost like a block to it which I can’t fully understand because I look at it, like I have fun with sales, I look at it like it’s a dance and you gotta dance with the other person and you gotta make the rhythm and not step on each other’s toes.
Mike: That’s right.
Oliver: And so what do you say to the people that want to learn how to sell better or want to figure out that gap and how to close it.
Mike: Well, the biggest thing, bringing an agent into real estate today is do you have the financial wherewithal to last that first six to eight to nine months? Because, let’s face it, if we take in the US today and average sales price of what, 300, 325, average commission may be 5% divide in half, 2.5 and the average agent, in most of the countries are gonna start on the 60, 70% split. We’re not talking about that much money. It looks good on paper but it’s not good in reality on the check. So if they don’t have the financial wherewithal to last, that’s the first thing.
And then second, are you willing to do the things that I say as the broker to make money in this business soon? And if they can’t commit to that, there’s really very little chance. I mean, the turnover, it’s so high. And of course, the problem is, a lot of them have turned over but nobody told them. So the broker’s never said, “By the way, you haven’t sold a home in 24 months, adios.” So you know, there’s the never ending challenge of financial ability to last.
And then second, the ability of a person to change. Because if I say to you, “If you take this script and use it, you’re going to get listings.” I don’t like it, you can’t make me, I don’t want to, that person said I didn’t have to say that. So, technically, you and I who are in the business of training people how to produce, we have to work on a series of obstacles to get them to produce. And if they will get on our side, they can leap over those things a lot faster.
I tell people, “Real estate is such a hard business to succeed in and that’s why that many do.” They won’t overcome the obstacles that are in front of them and Allan Dalton, who I’m sure you probably know, a really smart guy, he used to say all the time that if the industry would ever tell the agents the truth about the business, we would only have 200,000 agents in the industry. But the industry won’t tell the truth about the business, so we have 1,200,000 agents.
Oliver: Yeah, you’ve got the TV shows and all of that, that make it look so easy.
Mike: Oh, get rich quick.
Oliver: Yeah.
Mike: Buy your home, flip it, make 60,000.
Oliver: Exactly. They are all winners.
Mike: Yeah, that’s right.
Oliver: So, I think you hit on one of the things that does block people in terms of sales and that’s the not knowing what to say. One thing that Mike’s done a really good job, I was putting together scripts for almost every type of situation, all the objection handlers, so if not knowing what to say is something that is a challenge for you, I would say go to Mike Ferry’s site and download all the script and start getting familiar with them. And start learning what to say and we tell people this a lot. And one of the things that we hear back is that they feel robotic or they don’t want to work off of a script. So how do you … I’m sure you hear that all the time as well. What do you say to them?
Mike: I’ve only heard it every day for 44 years. Well, you better hope, if you’re having surgery, the doctor has a script. If a commercial flight flies over you, you better hope the pilot has the script. The flight attendant has the script when they stand up and say, “Fasten your seat belts,” it’s a script. The accountant doing your tax records better follow the script or you go to jail at some point. Obviously, a professional golfer, tennis player, football, basketball, baseball, college sports, it’s all scripted. There’s a playbook. IBM has a playbook, Xerox has a playbook for teaching their sales people. That’s two of the long-term better training courses in sales. Toastmasters has a playbook, Dale Carnegie has a playbook. If your wife is cooking a meal it’s called a recipe. It’s a playbook. And what I don’t understand is why-
Oliver: Are you guys picking this up? It’s a playbook.
Mike: It’s a playbook. So what we did, for myself, or I did for myself back in 1970 is I recognized that if I didn’t have a playbook, I couldn’t succeed. So, all I did was listen to other agents, listen to buyers and sellers and then start writing the scripts to proceed and to get them to move forward. And what’s interesting is most the scripts that they can find today, I wrote in 1970 and they are as prevalent today as they were in 1970.
Oliver: And that’s because the objections don’t change. The needs of the seller don’t change, the basics of the business don’t change.
Mike: That’s right.
Oliver: And so having that playbook is an important part of the toolbox.
Mike: And what’s interesting, and you guys know this as well as anybody, Oliver, is that the industry is not going to say, “You need to learn the script.” And yet, it’s the president of the local board or of a major franchise or even NAR stands up to give a speech, it’s always a script. At one of the national conventions, the president of the company was in front of 2,000 people. And I was watching him from the back and I thought, “This guy is really good.” And then I looked up and way up on the ceiling was a giant monitor, he was reading the whole thing.
And I complimented him on how well he read it. He goes, “I had to practice it 100 times.” It’s a script. And you have a script you’re following and my answers aren’t gonna change, so it’s a script. If we could ever get them to understand that knowing what to say gives them the confidence to go and do what they’re supposed to do. If they don’t know what to say, they’re not gonna do it which is why the fail rate’s so high and why your top agents succeed at such a high level.
Oliver: That’s right. That’s exactly right. And just to bring your point full circle, that is exactly why I’m sitting here with the yellow pad which I learned from you, I’ve never seen you speak without a yellow pad.
Mike: That’s right.
Oliver: And it’s just the way to keep everything together, makes me just go right down the list, it makes me more efficient, we’re not wasting time, we’re not BSing, talking about other things that don’t fit the narrative. So, very cool. Learn the script, learn what to say, learn how to close.
Mike: But may I interject something?
Oliver: Yeah.
Mike: Over Thanksgiving weekend, they had the big match between Tiger and Phil, professional golfers. And I read an article, I watched it and I’ve played with both those guys, I’ve played in tournaments with both these fellows and they’re phenomenal. Everything about them is so practiced and routined. If you yelled at them in the middle of the night, “Hit a Niner,” they stand up and swing it perfectly, okay? Which is what you want.
But it’s interesting because that day, Phil spent, from what I read, the entire week at Shadow Creek, practicing on that golf course. The day of the event which was a 12 o’clock Pacific Standard Time, Tiger got through at nine and started practicing for three hours prior. Phil got there 45 minutes later. These are the best in the world so the key to the scripting is not just having it, it’s practicing it so it becomes part of you. I don’t want you to use Mike Ferry’s script, I want you to take the words and make them you because each of you’re gonna say them in a manner that is better for you and that result for the customer.
Oliver: That’s right. That’s exactly right.
Mike: So without the practice, it’s a waste of time.
Oliver: So, just to touch on the practice part, how would you recommend that people practice these things like that because I agree, the objection handlers, if you read them, they can come across very robotic but once you practice them and internalize them and you can just spit them out as soon as you hear, “Oh, I don’t wanna list for 90 days,” or, “Oh, I’m not ready for this or that reason,” then you can go into your question base objection handling and kind of take them through the process.
Mike: That’s right. I use the example because we live in Las Vegas full-time and we live in High Rise, right on the Strip, so my wife and I go to a lot of the shows and we enjoy seeing all the different types of entertainment and there’s every kind you can imagine. A couple of times, we’ve seen Tony Bennett who’s now 92, 93. And we saw him 10 years ago, he was 80. And he walked out on the stage and of course, many of the young people may not know that name but he’s legendary in the industry of singing and he’s singing his most famous song which is I left my heart at San Francisco. And he’s singing a acapella, there’s no music behind him. And it’s just stunning, there’s 2,000 people in the audience.
And as he’s singing, he’s got his hand on the piano and in the middle of the sing, somebody in the audience yelled out, “Sing it.” He stopped, looked in the audience and said, “What do you think I’m doing?” Went right back to the word he stopped on and continued the song.
Oliver: Amazing.
Mike: Well, as a real estate agent, if you can’t perform at that level, somebody else can. And that only comes through practice.
Oliver: And those are the people that are gonna come and get the deals.
Mike: That’s right. You’re going to get beat if you don’t know what to say. And watch, you can say, “Well, I don’t like the robotic side.” Well, then don’t be robotic, be yourself but learn what to say so you can be yourself.
Oliver: That’s exactly right.
Mike: It is not natural to swing a golf club with the power of a Tiger Woods or Phil Mickelson. It is natural, that is a learned process as it is not natural to do what Michael Jordan did as an NBA player. That’s a learned skill that comes through thousands of hours of practice. So the answer, really, Oliver is they start every morning with 30 minutes of script practice. I did it in 1970, the agents thought I was crazy until I outproduced them all. Interesting, isn’t it?
Oliver: It’s amazing what happens once they see it working. Let me take that a step back now. I now wanna talk about Mike Ferry in the early days and how you kind of ventured into the coaching side and then at what point did you realize that this is what I wanna do, this is my thing, I’m good at this?
Mike: I wasn’t that good at it but I’ve ventured anyhow. I don’t know if I shared this with you and Sam, Oliver, but in October 1988, at the Fairmont Hotel in San Francisco which is the top of Nob Hill, beautiful place, I had 400 agents in a four day action workshop. And I am telling you, there was a total disconnect between me and that audience. And that happens. I mean, I’ve done this almost 7,000 times in my career. And sometimes, it doesn’t work. So I’m the first to say to you, believe me, you’re looking at a guy where it doesn’t work.
This day, it was not working. So at the end of the second day, I was young, and I was getting angry at the lack of response. You can’t get angry at a customer and expect to win. So I said to the audience, “I’ve got a great idea. Everyone of you should write me a check for $5,000, bring it to the seminar tomorrow. And if you bring me a check, I’ll call you every week for the next year and tell you what to do. And if you do what I tell you, you’re gonna win big.” And then I just walked off the stage.
The next morning, I walk in and there was a table at the front where I had my notes. There were several hundred business cards in a big stack. So I said to the audience, “Anybody know what these cards are?” And a guy said, “Those are the people that wanna give you a check for $5,000 if you’ll call them every week.” That’s how the coaching started. So, I said, “I’m gonna call 50 of you in the next couple of days, so first 50 that sent me the check, I’ll start.” That’s how the coaching started and quite honestly, all I did was I would call, “Hi Oliver, it’s Mike, are you ready?”, “Yes,” “Good. I want you to do this and this for the next seven days, talk to you next week.” Sometimes, the coaching calls were three or four or five minutes.
And that’s how it … It evolved to today. We think that we’re pretty good at helping an agent. But the catch, and you know this better than anybody. The catch with the coaching, as with the training is if they’re not willing to do what the coach says, the only one that’s gonna win is the coach.
Oliver: Right.
Mike: And we don’t wanna win. We want us to win. You and Sam, when we talk, you guys have to win to make this relationship work. You have to know what to do so your customer wins and if the customer wins, you win. So it really evolved and Tim Wood, Bob [McKennon 00:21:04], my son, Matt and my son, Tom, there were four or five of us that I brought on as coaches at the very beginning. And we would talk almost every day at the end of the day, “What did you say, what did you say? How did you handle this? What did you say there? What did they do?” And we would work on it every day to help this coaching evolve to what it is today.
And now, when I started the coaching, we were the first coaching company for probably six or seven years. People say to me, “You know, I was coaching with so and so back in 1996 and they were the first coaching company.” You mean the one that started eight years after I started?
Oliver: So how do you stay at the top with all of these other people trying to-
Mike: I’m not at the top. I don’t even know where on the ladder I am anymore, okay? But, and I don’t think I’ve ever shared this with you and Sam and probably late 70s, I had written a goal, be the number one real estate speaker in the United States. And I’ve pinned that up in my office which was only about a mile from here at that time where we’re sitting. And I had that up for a year and I’d look at it every day and then one day, I walked in and I took the pin out, I ripped it in half and threw it away. And my assistant said, “Why did you throw that away?” I said, “Because if I am number one, how do I know? Am I gonna get an award, am I gonna get a letter, am I gonna get a trophy?” You can’t identify. There’s no way to hold me accountable to that. So I gave up on that whole thought.
Today, every speaker, every coach, every trainer, every real estate company is number one. I’m trying to make the guy just number two ’cause I’m probably number five. Okay?
Oliver: That’s a funny way to look at it but I get what you’re saying, 100%.
Mike: So what I try to do is I try to be the most knowledgeable in the market I’m dealing in. And this will bother some of our viewers and if you’re bothered, it’s okay ’cause you can turn it off. Come back to him but don’t come back to me and I’m okay with that. What I have to say is, “I don’t think there’s anybody that does the work I do that has a better understanding of the real estate industry day to day operations, day to day recruiting, day to day sales and management.” I can talk to agents about things my competition can’t discuss ’cause they don’t have the experience. So, I can stay abreast because I keep learning every day.
And you know, today it is what, 1:10 on a Tuesday, and this morning at 5 o’clock, 5:30, 6 o’clock, 6:30, 7 o’clock, 7:30, 8 o’clock, 8:30, 9 o’clock, 9:30 and 10 o’clock, I did 11 coaching calls with 11 top producers this morning.
Oliver: Wow.
Mike: Yesterday, I did 16 coaching calls. I do them on Monday and Tuesday. And I deal with the best brokers and the best agents and even if I don’t wanna learn, I’m learning. And then I try to pass it on. I pass on what you and Sam will say to other good brokers like yourselves. So, if I’m near the top it’s because my mind is open. Open your mind.
Oliver: And keep learning ’cause I think that’s an important part, too.
Mike: That’s right.
Oliver: You’re learning from all the best people as you’re coaching them and then you’re able to share that information but all of us, collectively, learning and sharing with one another, I think that’s how everyone ride this together.
Mike: That’s right.
Oliver: So, I love that, that’s great insight on the whole sales process. And kind of need to hear how you kind of started the coaching thing from scratch. What would you say, as you were building the company, was your biggest challenge or biggest hurdle that you had to overcome?
Mike: In the beginning, there was very few hurdles. The hurdles were internal helping me learn how to coach so I read probably 100 books on coaching. I went and found every book written by every professional sports coach, ’cause every professional sports coach that wins whether it be hockey or football or baseball or basketball or college, they write a book. I love that ’cause I read them all.
So, the biggest challenge was not external versus external. Then the second challenge was being able to find, and I was very lucky to have five or six key people that I trusted to become coaches. Then the challenge was trying to get the companies. Okay, so now watch this. You and Sam had never had a challenge with me having your people at my seminar because if your people were at my seminar and they went back and produced more, your people won, you and Sam won and the customers won.
So the biggest challenge I faced was trying within all the major franchises to get the training director not to screw up the program ’cause the training directors became the hurdles between myself and the company allowing me to train.
Oliver: Mike:Very interesting. Like they would come back and say, “Oh, don’t do that.”
Mike: Oh yeah. They wanna edit everything I say. So, I would say if a customer says, “I want you to cut the commission,” I say, “Smile and say no, any other questions.” Oh, don’t say it that way. They could get mad. Well, how are you gonna say it? How much do you want me to cut it? So, the biggest hurdle then was the training directors. So then, what I realized is I had to quit relying on the organizations, I had [inaudible 00:26:44] on individuals. So then I started accumulating a databAse of individuals that accepted what I had to say so like today, we have 400,000 names in our database and of those 400,000, we probably have what, 86,000 what we call real customers. A lot of your agents, obviously, you and Sam.
And people say, “Well, God, that’s a big group of customers.” There’s 1.2 million agents in the country, we have 86,000. We’re that big. So the next hurdle was really accepting the fact that most people are never gonna do what I was gonna say. That was probably the biggest hurdle ’cause I believe so strongly, as you and I know, in what I say that for people to openly criticize me every day, whether it be in the news media, in the newspapers and newsletters and company banning me. I mean, I got banned by everybody. I still have companies today that ban me from speaking, 40 years later, and the people that ban me don’t even know why they banned me.
Oliver: It’s amazing. So that’s gotta been mentally draining for you, it’s gotta be mentally challenging. How do you continue to fight? How do you continue to keep swinging?
Mike: If you don’t believe in yourself, the vote is unanimous. Okay? And I believe in myself, and I believe in what we do and I believe in my customers and the success they have. But, you know, and I have shared this with you in the past but you know, I wasn’t the brightest bulb in the pack going to school here locally. Flanked out of college in my freshman year which I did. Barely made it out of high school, okay? I went to a Catholic high school in San Ana. But, I got lucky to have a couple of guys that said, “If you don’t read 300 books a year every year for the rest of your life, you’re always gonna be stupid.” I’ve never done it. But I’ve read about 200 books a year for the last 50 years.
So, I still … Just before you folks walked in, I was reading. And my wife says, “If you watch
Mike Ferry, if he’s not engaged in an activity personally or in the business, [inaudible 00:28:49] on purpose, he’s reading.” I read all day long, every day. And that keeps the mind active and it blocks all the crap.
Oliver: Now, I wanna transition a little bit.
Mike: Sure.
Oliver: I know that there’s a lot of fear out there and paranoia about the market changing and different technologies that are coming in so I just wanna talk about that a little bit.
Mike: They call them the disruptors.
Oliver: The disruptors, exactly. So, before we get to the disruptors, what do you think about the current state of the real estate market and what kind of we can expect for the next 12 to 18 months?
Mike: As I shared with you, we’re publishing today and all of your people, if they go online, your customers will see-
Oliver: Yeah, we’ll put a link to that to the market report that you guys put together.
Mike: It’s called Mike Ferry’s 2019 Market Report and its title is A normal versus abnormal real estate market. And all I talk about is the fact that if you follow our industry which you guys do carefully, every five to six years, the market takes a dip. So we had 1998 to 2006, market going like that, a little glitch in 2000 but pretty minor. 2007 to 8, 9, not a little glitch.
Oliver: Fell off a cliff.
Mike: Fell off a cliff. And pretty much died, I mean there was almost a sign of resuscitation, the whole time, life support. Didn’t come back till 2012, so that was the longest dip we’ve ever experienced and that was world economy, not just real estate. 13, 14, 15, 16, 17, market went like that. Well, if you believe that the market is cyclical which it is and it runs in five to six year cycles, we are completely due for a normal dip.
Oliver: Fall back.
Mike: So the challenge that we have in December and I probably shouldn’t be saying what month because you’ll probably publish this in January, the problems we have in December is, every October, November, December, we have a normal decline. It’s just history.
Oliver: Business.
Mike: So we have a normal fourth quarter decline along with a five to six year decline simultaneously along with some financial unrest in the financial markets, look at the stock market. The fact that as many people hate Trump as like Trump creates a lot of concern financially for people. So you take all those factors, we had the mid-term elections which the Democrats were happy, the Republicans were mad, depending on which side you’re on. We’re in for a little recession, it’s called normal. And when you have a normal market, it’s either gonna go flat or it’s gonna decline 12, 15%. If you look at most of the country, except for the Midwest ’cause the Midwest is stable, they don’t have appreciation, therefore they don’t have depreciation. Don’t get mad but then you have to live in Iowa.
My parents are from Iowa so I can say that, Iowa stands for Idiots Out Walking Around, that’s from my dad, he’s from Iowa so don’t get mad.
Oliver: You’ll get a nasty letter on that one.
Mike: I’m sure. I’m from Iowa. Where do you live now? California. You moved, you walked out. So I have fun, too, by the way. Well, if you look at that and you say, “Okay, we’re gonna have a 15, 20% decline, and we go from five million to four million sales in 2019,” we’re back to a normal market. It’s no get rich quick, it’s no taking a listing having three offers in 24 hours. Listings will expire, owner’s not gonna sell, interest rates will go up. All these are happening as we speak.
So, what we’re training our customers is to be more aggressive because if you look at the fact that the average agent does seal four deals a year, every four that you add to your production, you’re putting one of the bad agents out of business which helps the business. So I’m a huge fan of the recession because our customers win at a much higher level.
Oliver: ‘Cause it just cleans out the industry.
Mike: Yeah. There’s gonna be at least four million transactions in 2019, probably 4.4, 4.5. For goodness sakes’, how many do you want?
Oliver: I’m excited as well. I think there’s gonna be a lot of opportunities, a lot of things are gonna shift which is usually good if you’re on top of things and you said, you mentioned being more aggressive in this coming market. So what does that look like on a day to day?
Mike: Well, first of all, really knowing your scripts. So you can outperform the people that are performing. But it’s being more aggressive in your lead followup. If the person doesn’t have to sell, don’t get mad. Don’t talk to him. Why waste your time? If you walk into a doctor’s office and the doctor says, “What’s the problem, Oliver?” And you say, “Nothing.” He’s gonna say, “Well, then what are you here for?”
Oliver: Yeah, exactly.
Mike: Move aside, I got patients. So, that’s being a lot more aggressive in the lead followup, being much stronger in prequalifying because with interest rates edging up, buyers are gonna have a tougher time which means sellers are gonna have a tougher time. So prequalify for motivation of the seller, prequalify for the ability of the buyer. Be stronger in your presentation skills because those that are standing are gonna be better than they were in the past. So it’s just a matter of upgrading what you do. Okay? So in January, Caesar’s Palace we’ll have 2,000 agents for our annual production retreat. And it’ll be the strongest presentation ever made because we’re in a declining market so I have to be stronger with my audience who are my best customers. Be stronger and you win. That’s what I mean by aggressive.
Oliver: Okay. That’s great advice.
Mike: Probably more than you wanted.
Oliver: No. At the end of the day, I think that’s a really important soundbite because if, again, back to the initial point. If it doesn’t matter how many leads you generate or buy or whatever, if you’re not able to aggressively follow up-
Mike: That’s right.
Oliver: And, to your point, weed out the people that aren’t ready to go, so that you’re not spinning your wheels and just continuing to grind until you get to those people that are raising their hand and are ready and are motivated. And just clearing everyone else out of the way.
Mike: Well, as you’ve heard me say, when I’m prospecting, I’m not looking for the nos. I’m looking for the one yes. I may have to go through 30, 40, 100 nos to get to the yes but it’s out there. So it’s aggressively pursuing it.
Oliver: And so, to the people that are out there, and they’re doing that and they’re getting punched in the face every day by the nos, what is your advice to them to stay strong and stay committed?
Mike: It’s called life. Okay? I mean, I do a seminar with 100 people or 500 or 2,000 and I’m gonna have 25% of the audience long-term customers and they’re usually sitting in the front. That’s where you and Sam were always sitting. And I feed off that and then I have 75% of the audience that probably are just wondering why they are there and I always kid, I’ll say, “Some of you were sent here by your broker and you look like you were sent ’cause you have the deer in the headlights look.”
So I’m used to massive rejection. Okay? It’s just part of the job that I have. But again, see I’m not looking for the no, I’m looking for the no. So I’m gonna say to all of your great listeners and viewers, the one person that lists or buys from you, that is the win in your day, your week, your month. Cherish that.
And remember, you had to go through 10, 20, 30 nos to get to that cherishing moment. Enjoy the experience. If you can enjoy the experience, guess what?
Oliver: That’s the win. That’s worth celebrating.
Mike: Yeah. Now, some people pat themselves on the back and they dislocate their shoulders. Okay? Because they’ll have one win a year.
Oliver: Or they’ll celebrate the win and go on vacation for 2.5 months.
Mike: We see it all the time.
Oliver: So don’t do that. Be more aggressive and stay on top of what you’re doing. Now, let’s talk about the disruptors.
Mike: Sure.
Oliver: I’d love to get your thoughts on the people that-
Mike: But I know your company’s the disruptor.
Oliver: We’ve been called that before, yes.
Mike: You were a disruptor before it was a word being used.
Oliver: Yeah, yeah. Thank you I guess, I think that’s good.
Mike: It’s a compliment.
Oliver: I’d love to know your thoughts on companies like Purple Bricks that are trying to basically seems like eliminate the agent from the equation, compress commissions, things like that. What are you saying to agents on how to prepare for that?
Mike: First of all, it’s not new, okay? I started in the residential side as an agent, 1970, prior to that, I was working in the title insurance field and the escrow business. And what we have to understand is, there’s always gonna be innovators and I prefer to call them innovators versus disruptors.
Innovators meaning they’re going to try to bring ideas to us that make us uncomfortable or they use those ideas to recruit us. And either one of those is good. However, unless they are completely financed at the highest level, they usually come into the market going like this and don’t get mad at me if you’re with one of them, they usually go away when it starts to dip down. Now a couple of them today like Compass seems to be incredibly well financed. If you’re with Compass, congratulations.
However, I wonder how long the technology money behind you is gonna stay with you if the market takes a 4% dip. Because those investors, the private equity-
Oliver: They need to see returns.
Mike: They want a return. So, I’m concerned about some of my friends that go to some of these disruptor oriented companies because if they’re not financial … Now, they all claim they’re financially stable but everybody says they are. Including the guy-
Oliver: Until they’re not.
Mike: Yeah, including they guy who’s credit card is maxed out. So, I’m not concerned. I support anybody that is willing to help an agent succeed at a high level. However, at the same time, I’m very critical of almost everybody ’cause if they’re trying to do it with a magic formula, then I’m concerned.
And if I look at EXP which has done a great job or even KW at the level they operate at or Compass or Purple Bricks, they all have advantages but you have advantages. So it’s not the disruption, it’s how well can you present your advantages to those people, whether it be the agent you’re trying to recruit or the public you’re trying to list. If you’re better at your presentation, it doesn’t matter who you really work for. But if you’re not good at your presentation, who you work for becomes a factor. Don’t get mad at me. I don’t want the label on my card to be the reason they list with me. I want the extension of the service I offer to the company I work for to be the reason.
Oliver: Right.
Mike: And that’s hard for people to understand.
Oliver: And, I really love that perspective, too, because the way I look at it is the market is so big that I personally believe that there is room for-
Mike: Everybody.
Oliver: Disruptors, innovators to come in and get a piece of the pie. But at the end of the day, Rolls Royce is not worried about Kia coming and taking their business.
Mike: That’s right.
Oliver: And the Ritz Carlton is not worried about Motel 6 taking their business because they offer different things and they have different advantages.
Mike: And they both win.
Oliver: And they both win. And there’s room for everyone.
Mike: And probably the biggest home on New Port Beach is owned by the guy that founded Motel 6. It’s upon the hill.
Oliver: Is that Tom Bodett?
Mike: Tom Bodett.
Oliver: We’ll leave the light on for you.
Mike: And at night. His mansion is … You can see it from outer space.
Oliver: He leaves the light on for you.
Mike: He leaves the light.
Oliver: I can appreciate that.
Mike: But see, I agree with you. The Mom and Pop shops are never gonna go away. The traditional agent is never gonna go away and probably some of the disruptors will go away because some of the Mom and Pop shops will retire, get purchased, merge, get tired. So it’s that ebb and flow. It’s the balance, okay?
You know, somebody said to me one time, if all the sinners go to hell, which is what my church, the Catholic church believes in, does that mean all the ones that aren’t sinning go to heaven? I said, well, there has to be a balance, we call it purgatory. So in real estate, there’s always gonna be a balance and if you understand the balance, you can work for the worst company and succeed and work for the best company and not succeed. So the label, don’t get mad, isn’t gonna be the difference. It’s the relationship between you and the company and you and your client that’s gonna make the difference.
Oliver: And the value that you’re at the end of the day providing.
Mike: The value the broker provides for the agent and the value the agent provides for the buyer and seller. And if you can’t present that value, you can’t win. I had surgery on my ear, couple of months ago, I had cancer, so they cut off a third of this ear and I remember saying to the surgeon before the surgery, “So, tell me again, how does this work?” She goes, “It’s really simple.” I said, “Oh, is that right?” She goes, “Yes, what we do is we’re just gonna take a little slice out of your ear, then we’re gonna pull it together and stretch it up. Believe me, you’ll be out of here in 45 minutes.” I went, “Okay, that’s great.” Holy [inaudible 00:42:18], it wasn’t that easy. Okay?
And of course, I had a patch on the side of my head this big for about three weeks. However, she was so reassuring to me. Your sellers and buyers wanna be reassured that you can do the job.
Oliver: And not only that, she’s had the schooling and the preparation and the skills to be able to do that in 15 minutes or whatever, an hour, whatever, however long it took to just be able to cut it out and stitch it back up again.
Mike: Yeah.
Oliver: And it sounds so simple.
Mike: And supposedly I’m clear. So that’s the name of the game. It’s funny because a couple of weeks later, I met my regular GP doctor and he goes, “Wow, that surgeon did a good job.” I said, “How did you know?” He said, “Mike, I’m a doctor, I know.”
Oliver: Exactly.
Mike: Well, is the house price straight? Yes. How do I know? Because I’m an expert at pricing property. I know.
Oliver: Great distinction. Love that. Great thoughts, too, on the disruption and all that stuff because I know, it’s a big concern for a lot of people out there but at the end of the day you just gotta add more value and present it in a way that makes people wanna work with you. And use your advantages.
Mike: My son Matthew is just a real smart young man and he loves to sing and he loves to write music. And as he and I taught for many many years, if, in Hollywood, you wanna find a great actor or actress, you just say, “Hey, waiter.” Okay? ‘Cause they’re all there. Well, Matthew understands there is millions of people with great voices and millions of great songwriters. It’s that little percentage that perfects the presentation that get on the stage.
Oliver: Yeah, yeah.
Mike: It’s tough.
Oliver: It is. It’s what do you always say? I love your line about it’s simple but it’s not easy.
Mike: Simple but not easy, that’s right.
Oliver: Because the concepts are simple but it’s a grind, you gotta get out there and pound the pavement and do the work. So, I’ve got a couple of questions from Facebook, actually, when I announced that we were gonna be interviewing you.
Mike: Good.
Oliver: And this one is coming from Wes [Ives 00:44:29], so shout out to Wes. He said, “What should agents that are stuck at a certain production level do to beat the funk and do what they need to do to get to the next level?”
Mike: And what’s interesting, Wes, as they get stuck at two deals here and they get stuck at a 100 deals here. Several years ago, Kim [Bernardi 00:44:56] who you know, called me and she said, “God, I’m so complacent.” I said, “Karen, you’re making two million dollars a year.” She goes, “I know, but I’ve been at that level for three years.” Okay? What do I do? It’s the same question at every level of productivity.
You’ve gotta expose your mind to ideas that make you uncomfortable, Wes. You’ve gotta expose your mind to people that make you uncomfortable. You gotta expose your mind to getting yourself out of your comfort zone physically, mentally, emotionally and financially. So at the retreat last summer in Las Vegas, I just went right down the front row about 50, 60 people and asked each one of them in front of the audience, “What kind of car do you drive?” And they would tell me and I would say, “Come on, get a real car.” And then I’d go to the next one, “What kind of car do you drive?” And I challenged them all, I said, “You folks all make a million dollars or more a year as real estate agents. Why don’t you buy a real car?” Okay? Buy a Bentley, buy a Rolls Royce, buy a Ferrari, buy a Maserati. Well, a bunch of them did and now they’re all going, “Man, I’m making way more money now that I did it.”
I’m never one to try to suggest you go into debt, Wes, but if you don’t challenge yourself financially. So we had an agent, and I apologize, I can’t remember his name, from Phoenix, sitting in a seminar here in New Port Beach. Been in my seminars all over for years. And one day I said to him, in front of the room, “How many deals do you do?” And he told me. And I said, “How do you live on that?” I said, “You’ve been coming to my seminars for years, and you’re at the same place for five years. So I’m gonna tell you in front of this audience that if you don’t go out and earn an extra $60,000 this year, you’re never gonna be allowed to attend this seminar again and to hold you accountable, you have to send me a statement every month on the extra 5,000 and putting it in a savings account.”
Oliver: I love that.
Mike: I did this in front of 500 people and everybody cheered for him to do it. Well, a year later, he had sent me statements, he had put an extra 60 grand into a savings account. Came to the seminar, he was all excited, he told us the story, we all applauded. I said, “Okay, let’s go a step further.” I’ve seen that sportcoat now for five or six years. So at lunch I took him up to GARYS Men store in Fashion Island and I said to my sales guy, “He’s gonna spend 10,000 in the next hour.”
Oliver: Get him decked out.
Mike: Deck him out and bring back the receipts. His eyes were this big. I said, “You got the money.” Well, he comes back an hour later and he had spent about 9,000. So in front of the audience, I said, “Now, you have to go and do the same thing for your wife when you get home tomorrow.” Well, he did. So, a year later-
Oliver: The girls like that one.
Mike: A year later I said, “What kind of car do you drive?” Well, he had like a Honda. At lunch, I took him to the Mercedes dealer and I said to my sales guy, [“Lorna 00:47:43], sell him a Mercedes put it has to have at least a five in the number on the back.” He got the car. A year later, every year, people are cheering for him. A year later, we went from his $200,000 home to a $600,000 home. If you’re not willing to commit, Wes, you’re never gonna change your life. Sometimes, it takes outside accountability for it.
Oliver: Yeah, and now is great. I love that piece of advice because it’s not necessarily about taking on expenses you can’t afford. It’s more having the mindshift of how do I go about affording this and taking my game to the next level. It’s the same way when, I just recently had kids, I have a one and a three year old and before you have kids, there’s always the mental game of, “Oh man, how am I gonna afford this, diapers and food and clothes and this and that.” It’s an extra thousand bucks a month per kid, whatever, whatever. And then all of a sudden, you’ll replay that thought in your mind over and over again and how am I gonna do this, how am I gonna do this, how am I gonna get to the next level and after a while, you just start noticing opportunities in your business that maybe were a little bit hidden or maybe you didn’t find initially. Or you’re just willing to make those extra phone calls or close that extra one more time to be able to get those things.
Mike: So I give you my other side to what Oliver just said about … One and three?
Oliver: One and three.
Mike: Somebody said, define your child. I said, “It’s a 50 year mortgage at a high interest rate.”
Oliver: Yeah, exactly right.
Mike: So you gotta find a lot more people.
Oliver: And you got a ways to go.
Mike: So, Wes, upgrade.
Oliver: Yeah. Upgrade, challenge yourself, buy new things, do cool stuff, set big goals.
Mike: That’s right.
Oliver: All that. So, I got another Facebook question. This one is from Josh [Merce 00:49:35] and it says, “What’s it like competing with your son Tom?”
Mike: Fun. ‘Cause we’ve been competing ever since he was a child. He’s very competitive. And his father is as competitive. We just played golf on Sunday here, we had so much fun, we played in front of our good customers, George Morris and you know, we had bets on every hole and bets on every shot. It’s fun. Tom’s really bright. Okay? And Tom is very enthusiastic and Tom is very inspirational, motivational. I’m much more logical in my approach to what we do than Tom is.
But you know, somebody said to me recently, “It’s Tom Ferry versus Mike Ferry and Mike Ferry versus Tom Ferry, who’s the best?” I said, “Who’s ever in front of that audience at that time.” Because the truth is, I have always felt, Oliver, if I’m not in front of that audience, somebody else would be in front of that audience and the audience is gonna like that person. ‘Cause it’s a matter of who’s ever in front at the moment is the one the audience likes. So, we’ve had a contentious, we’ve had an exciting, we’ve had a combative father son relationship. And the truth is, he’s really good at what he does and I’m really good at what I do. And he thinks he’s better and I know I’m better. So it’s fun.
Oliver: It’s good fun in competition, it’s fun watching you guys kind of go head to head in that department.
Mike: And Tom, he’s great ’cause he will say to me on a regular basis, “How close are you to retirement?” I say, “Well, a long time, I’m always 73. And if I retire, I have to live on social security.” And that’s $3,100 a month. And that wouldn’t even pay two days of the rent on this place.
Oliver: Yeah, exactly.
Mike: So don’t look for that.
Oliver: Good, good. Well, we look forward to having you around a lot longer then.
Mike: I’m hoping.
Oliver: Definitely. Let’s see. Oh, this was actually one that came up a lot which I was amused by and this is Cathy, Bethel, Daniel, what did you do with your yacht?
Mike: Sold it. Which most people don’t know. We were up in the Hamptons on our yacht, we took-
Oliver: No big deal.
Mike: We took four months off and cruised from Fort Lauderdale up to the Hamptons, it was a spectacular four months and right towards the end of it, in the middle of the night, Sabrina woke up very ill. And she’s young, she’s 20 years, 19 years younger than I am so only one of us is supposed to get old and tired, not her. And she was sick, so we took her to the hospital.
And they had within the next weeks diagnosed her with cancer and gave her 90 days to live which was pretty traumatic as you can imagine for those that have suffered through that.
Oliver: Yeah, wow.
Mike: So we actually celebrated Christmas in October. So, I’m sitting here saying, “Well, okay we got a house in Hawaii, a house in New Port Beach, we have a house in Virginia, we have a house in Las Vegas. We have yachts, we have cars, crap.” I gotta take care of this, so she dies. So we quickly started getting rid of some the excess we had to make my life a little easier. And then blessedly she lived. So I’ve been trying to convince her now for the last several years to buy a bigger yacht so we can do more of that. She’s
still fighting me on it but we’ll see what happens.
Oliver: Good luck.
Mike: And it was kind of funny because usually, if you buy a big yacht, we paid 6.5 million for that yacht, you’re gonna take a 50% loss within an hour. Our captain, we flew back from the Hamptons back to Las Vegas to take her to some specialists and the captain took the boat back to Fort Lauderdale and he calls me a week later and says, “Some guy just walked up and said, ‘Is the owner here?'” And the captain said, “Oh the owner is in Las Vegas.” “Well, could you get him on the phone.” “Hi, this is Mike, can I help you?” “Would you sell your yacht for $6 million?” I thought, of course, it was a joke. I said, “Only if you can close in a week.” He said, “I can close in a couple of days.” That was one of the best days in my life.
Oliver: Wow.
Mike: So we got lucky, we sold it for almost what we paid for it a couple of years later.
Oliver: What a great day. ‘Cause that would have been quite a haircut, 3.5 million bucks.
Mike: That’s what you take on a big yacht. And I just was … It was 90 feet so it was big by standards but in Fort Lauderdale, it was a dingy. ‘Cause in Fort Lauderdale, they had the big yachts.
Oliver: How big are they making them now?
Mike: Oh, gosh. You’re talking about 250 to 350 feet. We’re talking three to 400 million dollars for a boat.
Oliver: Yeah.
Mike: And I guess they don’t like it when they call them a boat.
Oliver: It’s a ship.
Mike: It’s a ship.
Oliver: So see that, we’re gonna set our goals higher.
Mike: That’s right.
Oliver: Need a $300 million boat in my life. So the next question is from Tim Barker, so shout out to Tim, “It seems you’ve softened your stance a little bit on buyers’ agents and coming into the next cycle, what do you think is a good mix of listings to buy your side transactions?”
Mike: Well, depends whether you’re gonna be a team or not.
Oliver: Okay.
Mike: Tim, no matter what you say, the money in real estate is listing property. If you look at the profile of the highest paid agents in the industry, they’re all listing agents. The advent of KW is pushing team so hard and God Bless Gary ’cause he’s a genius, Gary Keller, the start of the company. I would say in the majority of all cases, team don’t work because an agent tries to get four or five people to work instead of the agent working which, in essence, makes you a mini brokerage inside of a brokerage.
So, I’ve never been a big fan of buyers’ agents unless a listing agent can take enough listings to feed the buyer calls to the buyers’ agent. Because they can’t take enough listings, they then go to Zillow et cetera and buy leads. It’s expensive and their closing ratio is probably 1%. So I’ve never been against buyers’ agents, in fact, we’ve trained thousands of them. The misconceptions about me, there is more misconceptions than there are people in hell. Okay? I mean, it’s always been that way.
So Tim, I’m all for buyers’ agents, provided you can generate leads to the listings you take. I coached three of the best agents in the nation today, Josh Berker, John Aims and Bernie Gallerani. And we have an upcoming starter [inaudible 00:56:04] out of the East Coast that is gonna be in that same category very soon. They all understand what I’m saying so they all have buyers’ agents but each one of them will list 100, 150, 200 homes a year and that supply of leads go to those buyers’ agents to sell their listings.
Oliver: To your point, what a lot of people do is they start, they get a little transaction momentum and then they want to start a team and then all of a sudden, they bring on four people but they slow their production down and now all of a sudden, they’re really just a manager to these four people and they don’t have the transaction volume to support it and then now you have to buy leads. And now you’re in a completely different business. You’re not in the I’m a person that sells houses business, now you’re in the I manage people and I motivate people and train people.
What are your thoughts on Zillow, seeming to enter the iBuyer market with the open door style, like we’ll buy your house cash.
Mike: Well, I mean, how many flippers are there on TV? They’re a bigger flipper, okay? And I think, in essence, what they are, they’re gonna play a part in that flipping of homes. Okay? I mean, Blackstone, one of the richest companies in the world, I don’t know if what I’m gonna say is 100% correct but I’ve told they own 80,000 residential homes. 80,000. And even if I’ve screwed up and it’s only 70,000. So, that type of thing has been around forever.
My concern with Zillow has always been the same. They’re gonna be in the mortgage business, they’re gonna be in the house flipping business, they control tens of millions of names of potential buyers. When are they gonna flip the switch and start saying, “You can just list your home with us?” And everybody says it’s never gonna happen. Richard Smith, who is one of the geniuses of the industry, the chairman of Realogy retired, I said to him a couple of years ago, “It’s only a matter of time, in my limited small minute opinion that Zillow flip the switch.”
And he looked at me and said, “It’s never gonna happen in 100 years,” and walked way. Well, that was before they went into the mortgage industry. That’s before they started buying properties. It’s the evolution, okay?
Oliver: And to your point earlier, it’s about the investors, right? If flipping the switch is what they need to do to make the investors the make that they need to make them.
Mike: Publicly held companies, stock holders, demands, the stock has dropped recently pretty substantially but so has Realogies which is in the listing and selling business. So you know, it’s another one of those things we have to look at. Now, let me ask you a question, Tim, are you concerned about Zillow buying a property that you’re trying to list? And if you’re not, who cares what they do? I care about my goals.
Somebody said to me, “How concerned are you about your competition?” I said, “I’m not.” They said, “Why?” I said, “I’m concerned about achieving the goals that I’ve set.”
Oliver: What a great way to look at it.
Mike: I work in my business but not yours.
Oliver: Yeah.
Mike: I can’t control what I do most of the time, much less what you do.
Oliver: So just block out the noise and focus on your own business plan.
Mike: That’s all you can do.
Oliver: I love that. That’s great, sound advice. This was kind of an interesting question from Eric Gilman, shout out to Eric. What are you thoughts on gifting and best gifting practices?
Mike: If you wanna send me a gift, I’m an extra large. Are you talking about gifts for buyers and sellers?
Oliver: I think more just gifting as a general practice in business.
Mike: Well, I would have to ask you to be more specific. People used to say to me, “Do you give closing gifts to your buyers and sellers?”
Oliver: Okay, let’s use closing gifts, that’s a perfect example.
Mike: I never gave a closing gift. I felt the quality of the service I offered was the best gift I could give. And I would kiddingly say, once in a while to somebody that I knew well that was a buyer or a seller or a client of mine that was also a friend, they’d say, “Am I gonna get a closing gift?” I’d say, “I don’t know, what are you gonna get me? I did all the work and you had the luxury of me handling your transactions.” So we always made it fun. But I never gave a gift. Okay? And I don’t give gifts to them.
Sitting in New York City, at the NAR convention, many years ago, and I’m sitting with a wonderful guy who is a competitor and a friend and just a wonderful person. And one of the big shots from NAR sits down with us and my friend reaches over and takes out this box and says, “I wanted to give you this gift.” And the guy opens it up and it was a $200 pen. And the guy goes, “Thank you, that is so nice of you,” “Well, I wanna give that to you.” And the guy looked to me and said, “Do you have a gift?” And I said, “Yeah, I’m gonna be the best speaker at your convention.” My gift is to your audience.
Oliver: And how did that go?
Mike: He didn’t like it. But I’m not a big believer in gifts. I will lavishly give gifts to my family and we give away a lot of money to charities that we think are important. So that’s the kind of gift giving I believe in.
Oliver: Okay. Fair enough.
Mike: Hey, you never told me this was gonna be this much fun.
Oliver: Okay, good, I’m glad you’re having a good time. I’m having a good time, too. This is very insightful, too. So definitely appreciated.
Speaker 4: You guys okay on drinks and everything, can I get you some water or anything?
Mike: No.
Oliver: I think we’re good. Yeah, we’re almost done, I’ve just got a couple more.
Mike: Some days I have to speak for eight hours without a sip of water. Remember, I’m 73, then I have to go to the bathroom. I can’t be drinking while I’m speaking.
Oliver: So one thing, you said a while back that you’ve made most of your money after 50.
Mike: Yes.
Oliver: And I always found that interesting. How and why do you think that happened?
Mike: I had a conversation this morning with one of my coaching clients who just turned 50. And really, a successful agent out of a little tiny town in the mounts of Arizona. And she said to me, “Why do you think we’re more successful after age 50?” I said, “Because time is now working against us. You’re on the other half of your life and your time is limited.”
Oliver: Wow.
Mike: I said, “You had from zero to 50 to learn how to do what you’re gonna do and now you have 10, 20, maybe 30 years to execute.” So I said, “I think that anybody that is thinking,” and this lady is a great thinker like yourself and Sam, “You’re going to execute at a higher level because you built up enough knowledge to now go out and execute,” and if you look at all the fortunes with the exception of a couple of the technology fortunes, almost all the monies were made after age 50 by everybody forever.
So I kid with my children and I kid with my friends that you have to look forward to being 50 ’cause now you’re smart enough to do something with your life. You know, when Sabrina turned 50 a couple years ago, it was one of these yeah, I’m now smart enough to do something. And you know, Matthew turned 50, my oldest son, a couple years ago and he said, “Dad, I’m now smart enough to do something.” Because I believe that it takes a lot of knowledge to make a lot of money unless you do something lucky. I’m not talking about winning a lottery, I’m talking about going out and creating and earning.
You and Sam are so far ahead of the curb and you’re learning for your age but you’ll really discover that when you get into that late 40s and early 50s, all that you’ve learned can now be put into effect. So don’t stop learning. Just because you think you’re smart.
Oliver: Yeah, I love that. I think that’s been a good theme of this episode, too, is the continuing getting better and improving and learning more and just getting better at your craft and your business and earning, learning the whole game.
Mike: And by the way, if you’re a real estate agent, and you’re not setting aside 30% of the money for taxes, start. Because every year, there’s a certain number of agents that have to leave the industry because they’re being chased by the IRS because they forgot to pay the tax.
Oliver: 7,000.
Mike: A $7,000 commission check is not your money until your taxes have been paid. Okay?
Oliver: Yeah, amen to that. That’s one bill you’re not getting out of. Okay. So what about, I wanna talk about real estate on the investing side. What is Mike Ferry investing in on a real estate perspective?
Mike: Well, we invest in a lot of odd things which most people would not agree with. We have about 200 original pieces of art that we own, worth millions. I decorate my wife like a Christmas tree with expensive jewelry and I love doing it. And that stuff, the art and the jewelry goes up in value. In many cases, it’s gone up in value more than some of our real estate. We buy antique books, we buy first edition books. I probably have about 40 first edition books. I have first edition of Think and Grow Rich by Napoleon Hill. Okay? It was very expensive and it’s a treasure that goes up in value.
We also own a couple of very … We used to have four homes but as I got older, two is enough. And I’m kidding, I said, “I feel like a porpoise, now I have two houses to live in. Right? But you know, they’re not bad places to live.
Oliver: It’s beautiful.
Mike: So my theory on investing and all of our investment properties, my theory is, how quickly can you get them to be free and clear? So all of our properties are free and clear, no mortgage. So if there’s a debt, my cashflow continues. And if there’s a vacancy, it doesn’t make any difference ’cause I have no expense on those properties. So I tell all of our clients, buy real estate ’cause you’re never gonna lose. Okay? And if you lose, it is such an exception but then pay it off because it’s not whether you own a 100 properties, it’s how many properties do you own that pay you a lot of income?
Oliver: How much cashflow is coming in?
Mike: How much cashflow. So I’m very old fashioned in that area. So we invest, for example, I haven’t owned a car since I was 20 ’cause I don’t buy depreciating assets. And I have Rolls Royces and Bentleys and we have nice cars. But I lease them. The only stupid investment I ever made was the boat and we got lucky and got out of it.
Oliver: Yeah, you sure did.
Mike: You know, that was very lucky. So if you’re gonna invest in real estate which you should be doing, you should also set up a plan on every property, how fast can you pay it off?
Oliver: Love that. Great piece of advice.
Mike: And create the cashflow.
Oliver: And I didn’t know you weren’t such an art buff. So now I’m curious as to what’s you’re favorite piece that you have in your collection?
Mike: There’s an artist out of Spain named Royo, he’s probably the only living master in the world today. And we’re his largest individual collector, I think we have about 30 of his pieces in our office building and in our homes. And so I’m a big fan of Royo. He only paints his daughter. And I had dinner with him in Laguna Beach a couple of years ago, we’re the same age. He looks like he’s 100. He’s a real handsome little Spanish man, probably five foot tall, long, gray hair, long stringy beard and smokes about three packs a day and drinks coffee and wine all day long. And I said, “I’m gonna send you a gift.” “What’s that?” “I’m gonna send you a carton of cigarettes.” He said, “Why?” I said, “‘Cause you keep smoking, you’re gonna die and my artwork will [inaudible 01:07:51] value.”
Oliver: It’s gonna go through the roof.
Mike: So I don’t have a single piece, we collect a lot of different artists. You know, I buy art because I like it, but because it has a name. But because the stuff we buy keeps going up in value, I keep buying more of it. And I don’t talk about that in, most people don’t know that we have a pretty substantial … I mean, substantial, we have 200 pieces. There’s museums, for God’s sakes, of one person that has 5,000 pieces. But for us, it’s a lot of art and we enjoy it. And so it’s just a personal thing.
Oliver: Yeah, that’s very cool. I never knew that about you.
Mike: Yeah. Many secrets.
Oliver: I like that little [inaudible 01:08:29]. Yeah, look at that, they’re all coming out. Okay, cool, so I wanna wrap up with just what would be a state of the union advice for the real estate community, moving forward?
Mike: I said to Oliver when he arrived a couple hours ago, Mike Ferry’s 2019 Market Report, this will go online probably in the next five to six days, we’ll send it out via email to all of our customers first.
Oliver: Cool. And we’ll put the link in with the video, too. So you can get that.
Mike: We’ll send it to all of our broker customers to share with their agents. It’s only six or seven pages. But it really discusses this whole concept of what a real normal market looks like. And I’ll just refer to it for a second, I’ll say, normal. Listing inventories are growing again, meaning buyers have choices. When buyers have choices, prices go flat or decline. That’s normal. Okay? Normal. We’re moving quickly from a sellers market to a buyers market which makes sellers unhappy and buyers very happy. Who do you wanna be with? Happy or unhappy people? Normal.
Listings that used to never expire now expire every day because we overpriced them for the last five years. Normal. Listings been on the market for extended periods of time, so I give about 15 examples of what a normal market is and then I give eight examples of what anybody can do to counter that if they want to. So, the market report will be online and they can download it and hopefully, they’ll understand it ’cause I put it in pretty simple language ’cause I’m a simply guy. And they can that to their advantage.
This is your time if you’re good. If you’re no good, get good fast.
Oliver: I love that. I’m gonna put a pretty, little bow on it, right there because I think that was the perfect way to end it is get good fast, improve your skills, continue down the path of lifelong learning and have some fun while you’re doing it. So, really appreciate this interview, I appreciate you having us over at your house.
Mike: Of course.
Oliver: And just being able to have a great conversation with a man I have a lot of respect for.
Mike: Thank you.
Oliver: And has given us a lot of great guidance over the years and we’ll look forward to doing this again and really appreciate it, Mike.
Mike: Thank you Oliver.
Oliver: Now you’re in the know, thank you for watching Founders Club.
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Pullout Quotes:
“I recognized that if I didn’t have a playbook, I couldn’t succeed.”
“The key to the scripting is not just having it, it’s practicing so it becomes part of you.”
“If I’m near the top, it’s because my mind is open.”
“If you don’t believe in yourself, the vote is unanimous.”
“The average agent does, say, four deals a year. Every four that you add to your production, you’re putting one of the bad agents out of business—which helps the business. So, I’m a huge fan of a recession because our customers win at a much higher level.”
“Be stronger and you win.”
“If you’re better at your presentation, it doesn’t matter who you really work for, but if you’re not good at your presentation, who you work for becomes a factor.”
“This is your time, if you’re good. If you’re :no good, get good fast.”
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Mike Ferry and the Mike Ferry Organization provides Real Estate coaching, sales training programs and multimedia educational materials for Real Estate agents. Each year, we help thousands of Real Estate professionals maximize their productivity and increase their income. We continue to develop our library of educational materials and cutting-edge seminars that meet the needs of a changing market.Learn more about Mike here: https://www.mikeferry.com/
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Resources
The Mike Ferry Organization
Mike Ferry’s Market Report
Tom Ferry
Blackstone
Big Block Realty
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Other episodes of founders club you might like:
Kent Clothier – How To Find Off Market Properties
Cory Boatright – How to Make Big Profits Wholesaling Real Estate
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Thank you for watching!
If you’d like to see all the episodes go to: www.OliverGraf.tv/FoundersClub
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