Within 48 hours of notice that coronavirus was going to impact real estate in Pennsylvania (and all over the U.S.), Jack Fry, broker-owner of RE/MAX of Reading, rebuilt his entire budget for the year. Find out what other actions he took to minimize loss during this pandemic.
Tracey Velt:
In this special edition of the Real Trending podcast, we’re speaking to real estate leaders on what they’re doing to minimize the impact of the coronavirus on their businesses. We’ll talk about actions they’re taking, lessons learned from 2008, and more. This is Tracey Velt, Editor in Chief of content for Real Trends. Today we’re speaking to Jack Fry, broker, owner of RE/MAX of Reading in Pennsylvania. Welcome, Jack.
Jack Fry:
Hi, Tracey, how are you?
Tracey Velt:
I’m doing great. So, I really want to know how you’re doing. Tell me a little bit about how you’re feeling right now. Setting the numbers aside for a moment, just tell me what you’re feeling and what you’re hearing from other brokers.
Jack Fry:
Well, our state of Pennsylvania, our governor last week actually shut us down as far as doing any real estate activities, especially ones that don’t follow the social distancing protocol. So, there’s a lot of things we can do that we can do from afar, social media and such, FaceTiming and the like.
So, we’re really trying to stay focused on that. They’re anxious times right now. There’s so many things that we don’t know or truly understand, not only with the virus, but with how to conduct or what we can conduct in business.
Jack Fry:
So, the challenges we have right now, everybody’s anxious. Everybody’s really a little bit at the end of their wits, and they’re trying to figure out and ascertain what can they do and how do they stay safe. So, this is new territory. So, there’s a lot anxiousness, but I think we’re doing a pretty good job of dealing with it because we are in their face all the time with some information. That’s what they’re looking for. They want the voids they have to be filled. So-
Tracey Velt:
Yeah. Yeah, definitely. So, let’s talk about some of the steps you’ve taken immediately to lessen the impact on your company and to meet the requirements of the local government.
Jack Fry:
… Well, the first thing we had to do, I had a look at, and within 48 hours I went back in and rebuilt my entire budget for the rest of the year. I call it the coronavirus budget new edition, and with that I looked at everything that I can strip away from the budget and reduce. The two largest pieces that I think all of us have are going to be our facilities, our space, and our human resources.
Jack Fry:
That makes up 80% of my expenses, and I have to focus on those two areas. So, I went in and renegotiated the rent with my landlord who happens to be me. I’m going to reduce the rent. We have removed five part-time people from our business on temporary leave, and we are looking at putting three more full-time on temporary leave until we get through this.
Jack Fry:
So, we’re very much being aggressive in what we have to do to reduce expenses because I want to go back to my agents and reduce their monthly expenses to me. This is the way I can do it, and hopefully I get through all of this in good shape. So, the first thing we’re doing is really rehabbing our budget and going back to all the vendors that we have and renegotiating with every one of them.
Jack Fry:
In particular, I mean, another thing that we actually are still doing newspaper advertising on a Sunday in the real estate section, and I just called the newspaper, renegotiated with them, and got a 50% discount for a month until we see what the next month looks like. So, go out and talk to your vendors right now. See what you can do to reduce your budget and your overhead. Don’t wait, got to do it now.
Tracey Velt:
Yeah, definitely. So, let’s talk about what you’re doing with your agents. You said you’re giving them all types of information and staying in contact. How are you doing that? And give me more specifics about that.
Jack Fry:
Okay. We’re doing videocasts and then sending them out, Vimeo, IM. My managers are and my HR gal is doing a great job… I’m sorry, my IT gal is doing a great job of teaching everybody how to use FaceTime, how to use Zoom, how to use GoToMeeting, and how to do business with their clients.
We’re face-to-face but with using technology. We are training every day, multiple times a day, and with technology face-to-face, and doing seminars, if you will. I don’t even want to call them seminars. They’re just group meetings where we’re giving them information.
Tracey Velt:
Okay.
Jack Fry:
We’re giving them information how to use it, and we’ve been doing that for a long time. A lot of our agents were advanced in that area, but some lag behind. Now, all of a sudden they see the need for it, and so we need to be in front of them telling them how to use FaceTime in front of their clients. For example… And we’ll put examples out to our agents.
Jack Fry:
One of our agents did… There’s the seller that did FaceTime, walked through the house with the agent doing FaceTime and the buyer doing FaceTime, and the buyer actually physically walked through the house, not physically walked through their house but walked through the house virtually, and with the seller answering questions and telling them about the property.
They hung up, and then the agent and the client talked a little bit. They didn’t come to a transaction, but there was a showing that happened. It was purely by technology, and no physical contact, social distancing completely in place.
Jack Fry:
So, it’s a way to do it, and those are the things that they want to know specific how to still do business within the framework of what the governor’s mandates are. And the mandates are, don’t do real estate activities that don’t have proper social distancing.
So now, how do we figure that out and do proper social distancing and still do closing settlements, still do agreements of sales, still do showings, and the like? How do you list a property if you have social distancing? So, they want to know the how-to’s on all specifics, and we’re giving them to them.
Tracey Velt:
Okay. That’s great. Have you seen a huge drop in your listings right now, or haven’t you felt that effect quite yet?
Jack Fry:
Well, actually, we were going to lay somebody off that was directly in that wheelhouse inside our office. I just got a text before our conversation that said we’re going to hold off of one of them because we got 28 more closings til the end of the month, and we have 11 new agreements of sale that came in this week. This is all during “the shutdown.” So, let’s talk in another week or two, and I’ll tell you.
I’m sure it’s going to diminish because the one thing that has happened is the amount of showings had dropped in our office from on our properties from 550 down to 250. So, when you have less showings, it’s going to generate less agreements and settlements and sales and such.
Tracey Velt:
Yeah, and what about the closing side? What are you finding as far as, how are you handle closings?
Jack Fry:
Okay, so our title company obviously is very much affected, and we put a statement out to all our agents as to what our policy is. We worked one out as to where our title closers do not have to be in contact with the consumers. So, we have a policy now that you drive up to the title company. You sit out in the parking lot. You call us. We come out and in a manila envelope hand you the packet of information.
You sign it. Everybody has gloves on. You give it back. We’ll review it, make sure you’ve signed and have done everything. You’ll give us your IDs. We’ll make copies of them. You will give us the check you need to give at the close, and then the seller comes up a half-an-hour later and does the same process. Then once we have the whole package complete, then we’ll disperse funds within a day or whenever, as soon as we can.
Jack Fry:
Your challenges with that are all mortgage companies need to be accepting electronic signatures. If not, you’ve got to have wet signatures, which means you have to come by and do the protocol I just followed. Our courthouses are shut down to the public, but we can still do title searches electronically and file things electronically.
There is a question about if our recorder of deeds is going to allow notaries that are eNotaries, and we now found out that they will. So, these are all the details you have to figure out, the nuances behind the curtain to get the deal, not only closed at settlement, but also recorded then.
Jack Fry:
There’s a gap insurance out there that you can get for your insurance policy. From the time you insured the policy til you go to settlement, that gap, there’s something out there called gap insurance to get that covered. So, we have figured out how to close the deals yet. So, the title company piece is put together, and the mortgage company piece is the more that move to electronic acceptance of electronic signatures, the better and quicker we’re going to move forward with this.
We do mandate that the mortgage company must give us the documents at least 24 hours in advance, so the consumer has time to review them and ask questions of the mortgage company before they come to the drive-up appointment for the closing at our company.
Tracey Velt:
Okay, great. So, obviously you’ve been through the 2008 downturn. So, what did you learn or do that you find is helping you lead through this current, chaotic time?
Jack Fry:
Well, there is a difference, and the biggest difference is the 2008 downturn, you could kind of see it, you could kind of feel it, but it wasn’t really in your back door. It’s happening some other place and eventually, eventually, eventually it got to you and bang, there you were. It was kind of like the old frog sitting in the pan of water.
You turn it up really gradually, he doesn’t even know he’s dying, and all of a sudden he’s cooked you. You throw him into a hot pan of water, he jumps out right away. Well, I feel like I’m in a hot pan of water right now. Instantly we have this upon us, and now we got to figure it out.
Jack Fry:
This isn’t something we can doddle around and think about. This is something we got to stay focused to immediately and address how to reduce your costs of operation, how to continue to operate within the realms of the law and the mandates that are out there, and how to use technology at a greater way that we’ve been using it already and just really implementing new strategies.
Jack Fry:
And I said this earlier, but I need to say it again. One of the most important things that you as a leader of a company can do is you must communicate what is on your mind and the policies and give them leadership. Fill the voids of questions they have and be on it immediately.
Read, absorb, listen to everything that’s going on, and then come down and make some decisions. I had one of my agents, and just a little anecdote here, texted me last night. And I felt like it was a really great compliment. He said, “You would’ve made a fine Marine field commander with the way you’re handling this situation.” And in fact that’s what we are.
Jack Fry:
We’re a commander in the battlefield, and we are getting thrown so many different things at us, not daily, not hourly, but many times upon the minute, I get things fired at me. You got to be able to adjust to what’s going on in your environment, and if you’re the leader and your whole platoon behind you, you’ve got to tell them what you’re doing, how we’re going to do it, what direction we’re going in, and be specific with them because there’s way too much out there that doesn’t give them any guidance.
So, guide your people. Be a leader. This is a great opportunity to step up and be what you want to be inside your company, the best leader you can.
Tracey Velt:
Yeah, definitely. And do you see it impacting the way real estate is conducted in the future longterm? I don’t mean the market longterm. I mean how real estate is conducted, open houses, relationships, closings. Do you see it having a longterm effect on that or back to business as usual once the crisis is over?
Jack Fry:
Well, I think, the longer this draws out, the more familiar and comfortable all our agents will be getting with technology, and so will the consumer, that they will find a comfort level in doing it because they’re forced into doing it. They can’t do anything. They can’t look at houses. Consumers can’t look at houses unless they virtually or FaceTime or something like that. So, they’re going to all of a sudden find that, “You know, that wasn’t so bad. We can maybe do it.”
Jack Fry:
So, I think, proof will be in the pudding when it sets. In another six months we can go back and visit this and ask the same question, and we’ll see just what’s in place. But I do think, in the longterm, technology is really going to play a new role, a higher, more intense role, but it’s never, ever, ever going to replace the human relationship and that bond we have between us and people. You still need it, and they need our advice. So, it’s going to help us maybe do it a little more efficiently. I guess that’s how I look at it. Time will tell.
Tracey Velt:
Yeah. Yeah, definitely. And RE/MAX International has done some things as well, haven’t they? Didn’t they cut or they allowed a deferment of payments or something like that? I thought they would have.
Jack Fry:
They have. They’ve allowed a deferment of the management fee they collect and the institutional ad fee they collect. They allowed for a deferment of it. They also have a product called First, which is a phenomenal AI product that searches our agent’s database and tells them who’s most likely to sell their house. They put that product in our agents’ hands free for the next 90 days. They’re giving them ways to generate some business and fill the pipeline for down the road to form their database.
Jack Fry:
So, that yes, they’ve added things, and I got to do the same from my end. I know I’m taking it and all of my leadership staff and all my staff are taking 20% reduction in salaries. Then we’re also going to try to reduce many more things inside the expenses. So, we feel and know the pain they’re in because their income is going to be reduced.
There’s no two ways about it, and it’s not going to get recovered real quickly. So, we’re going to jump in the boat with them and be right there with them, and we’re going to show them that we’re right there in the ranks with them.
Tracey Velt:
Jack, thanks so much for sharing your experience with Real Trends. We really appreciate you taking the time to talk to us.
Jack Fry:
Absolutely my pleasure. Always love talking with you.
