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Google Listing Partner Files Bankruptcy: HouseCanary Chapter 11 Explained · This Week in DFW Real Estate

• 0:00
  Speaker 1: I don't even know what we're freaking talking about today
• 0:02
  Speaker 1: because there's fraud going on. The We Buy Ugly Houses guy.
• 0:07
  Speaker 1: People are going to jail. Yeah, for 188 months, which
• 0:11
  Speaker 1: I just had to ask because I couldn't. I was like, Brian,
• 0:14
  Speaker 1: how long is that?
• 0:15
  Speaker 2: Sounds like an eternity.
• 0:16
  Speaker 1: It sounds like forever. Then you're like, it's only 15 years. Yeah.
• 0:20
  Speaker 1: And for a $ 40 million scam.
• 0:22
  Speaker 2: Do you think if rates stay this high, then you'll
• 0:24
  Speaker 2: be able to finance a car for 188 months soon?
• 0:28
  Speaker 2: It sounds like so long. And then we've got a
• 0:32
  Speaker 2: big story coming out of the Google ecosphere. Their partner,
• 0:37
  Speaker 2: I guess partner, House Canary, filing for Chapter 11 bankruptcy.
• 0:45
  Speaker 2: That's an interesting story as well. We're going to dig
• 0:47
  Speaker 2: into both of those and some other fun stuff this week.
• 0:50
  Speaker 2: in DFW Real Estate.
• 0:52
  Speaker 1: DFW! Turn it up! This is This Week in DFW
• 0:54
  Speaker 1: Real Estate! A weekly podcast built for agents who actually
• 0:58
  Speaker 1: get paid! Market moves, listing heat, closing streets! DFW Agents!
• 1:19
  Speaker 1: We don't do openers. We don't. Jesse's not going to
• 1:21
  Speaker 1: use that. Well, he might use it, but this is
• 1:23
  Speaker 1: going to be part of the opener, and then it's
• 1:25
  Speaker 1: going to go into it, and then it'll be like, oh,
• 1:27
  Speaker 1: welcome back to the show. Hopefully you watched last week's show,
• 1:30
  Speaker 1: and if you did, you need to make sure that
• 1:32
  Speaker 1: you're hopefully using our sponsors of this show, which is
• 1:36
  Speaker 1: they give you cool shirts like this one right here. Homeward, well,
• 1:39
  Speaker 1: you don't use them, Jesse. Yeah, refer them some property management.
• 1:44
  Speaker 1: Homeward Property Management, Dana Wynn and her team over there
• 1:47
  Speaker 1: are taking care of all the leasing needs, all the
• 1:50
  Speaker 1: management needs for rental properties. She is knee-deep in it. Knee-deep. Yeah.
• 1:56
  Speaker 2: You know who's knee-deep in home warranties? Theron Smith.
• 2:00
  Speaker 1: Is it Theron or Theron? Theron Smith.
• 2:01
  Speaker 2: I don't know why I said Theron. That's maybe fancier.
• 2:04
  Speaker 2: over at Armadillo Home Warranty with their one-page agreement. They
• 2:09
  Speaker 2: are the leading home warranty company, I think, nationwide now.
• 2:12
  Speaker 2: They're fantastic. I use them on my rental properties. So
• 2:15
  Speaker 2: go to armadillo.one for all of your home warranty needs.
• 2:19
  Speaker 2: Give Theron a chance over there to keep your properties covered.
• 2:22
  Speaker 2: And then make sure you check out ProCare Home Solutions. ProCareDFW.com
• 2:28
  Speaker 2: for all your home maintenance and remodeling needs. And if
• 2:31
  Speaker 2: you want to sound like this on the microphone and
• 2:34
  Speaker 2: look all good on camera, check out TOR Studios, T-O-R-E
• 2:38
  Speaker 2: Studios dot com.
• 2:39
  Speaker 1: And Jesse will hook you up. Can we do a
• 2:41
  Speaker 1: quick AI segment? Yes. Like, I know we're AI to death,
• 2:46
  Speaker 1: but there are some right now. There are some I'm
• 2:48
  Speaker 1: playing around with some cool ones right now. Muse, which
• 2:51
  Speaker 1: is Meta's AI, which feels like it's more of an
• 2:55
  Speaker 1: AI agent that. It actually can go and do things
• 3:00
  Speaker 1: right out of the gate.
• 3:01
  Speaker 2: That's not the original name of Meta's.
• 3:04
  Speaker 1: AI, though. It started with an M. Manus. Manus. Manus.
• 3:10
  Speaker 1: This is way better than Manus. Okay. One, right out
• 3:14
  Speaker 1: of the gate, you can connect Muse to your Instagram
• 3:18
  Speaker 1: and to Facebook to then go read your messages. It
• 3:21
  Speaker 1: can respond to messages. It's very human-like. Oh, cool. If
• 3:25
  Speaker 1: you're looking at wanting to increase your reach, it will
• 3:28
  Speaker 1: help you with making some postings, give you ideas and
• 3:32
  Speaker 1: strategies and stuff like that. It will start to pull
• 3:34
  Speaker 1: down your likes and comments and just give you some
• 3:38
  Speaker 1: research behind it. I've connected to my Google Gmail, and
• 3:43
  Speaker 1: it added stuff to my calendar, and then it will
• 3:45
  Speaker 1: automatically remind me what's going on. And then there's another
• 3:49
  Speaker 1: one called Instinct. Instinct. Yes. Okay. Instinct.ai. Okay. It's not
• 3:56
  Speaker 1: a– you either open it through your iMessage or you
• 4:00
  Speaker 1: open it through WhatsApp. Okay. And I haven't– I've just
• 4:03
  Speaker 1: started playing with it. Maybe it's not Instinct.ai. Yes, it is.
• 4:06
  Speaker 2: I think you just type Instinct.ai instead of going to Instinct.ai
• 4:10
  Speaker 2: because it could be a different domain.
• 4:12
  Speaker 1: Yeah, let's see.
• 4:14
  Speaker 2: Maybe it's Instinct with an X.
• 4:17
  Speaker 1: Instinct.com. Boom, yeah. Maybe it's not Instinct.ai, but Instinct.com. Click
• 4:21
  Speaker 1: on it, Jesse. Okay. It is a personal assistant that
• 4:24
  Speaker 1: understands what you're working on and what's important, connects to
• 4:27
  Speaker 1: your applications. I don't know. It was something that one
• 4:30
  Speaker 1: of our place, Ben Kenney actually talked about it, said
• 4:32
  Speaker 1: it saved him, it saved the company like $ 1. 5 million somehow.
• 4:36
  Speaker 2: And it says that the owner is now Mark Zuckerberg's nemesis.
• 4:40
  Speaker 1: That's cool.
• 4:40
  Speaker 2: Business Insider said that. Wow. What do you guys honestly
• 4:44
  Speaker 2: think social media is going.
• 4:45
  Speaker 1: To look like in five years? Hopefully we go back
• 4:49
  Speaker 1: to Polaroids and you scan it in. So it's going
• 4:51
  Speaker 1: to be a scan of the scan so that we stop.
• 4:56
  Speaker 1: I'm just guilty, but we stop seeing the over. Look,
• 4:59
  Speaker 1: it went to like the over filter just for your phone,
• 5:01
  Speaker 1: and now it's just not even filtered. It's just AI.
• 5:04
  Speaker 1: That's what I think.
• 5:05
  Speaker 2: It's going to fishtail and crescendo at a point where
• 5:08
  Speaker 2: there starts to be some sort of rejection of social
• 5:12
  Speaker 2: media in general because of just the false nature of it.
• 5:15
  Speaker 1: I think that that's going to happen, right?
• 5:17
  Speaker 2: It starts with this idea of optimization where it's like,
• 5:20
  Speaker 2: What if AI can do my posting for me? And
• 5:21
  Speaker 2: then it's like, what if AI can actually just be me?
• 5:24
  Speaker 2: And then what if AI can just make a video
• 5:27
  Speaker 2: of me that's me, but I'm not doing... And then
• 5:29
  Speaker 2: you get to a point where it's like everything is
• 5:30
  Speaker 2: just AI and there's got to be something human about
• 5:33
  Speaker 2: us where we're like, I don't like looking at this
• 5:35
  Speaker 2: fake world all day. It's desensitizing. And then it just
• 5:38
  Speaker 2: becomes noise. And then people, I think, will start to stop.
• 5:40
  Speaker 2: I think you'll see users.
• 5:43
  Speaker 2: I think you'll see like utilization start to go down
• 5:46
  Speaker 2: at some point because if everything is just fake, people
• 5:49
  Speaker 2: will be less interested in the doom scrolling aspect. Like
• 5:54
  Speaker 2: even right now when you're doom scrolling and you see
• 5:56
  Speaker 2: a lot of AI videos, like those are mostly not
• 5:58
  Speaker 2: interesting to me.
• 5:59
  Speaker 1: Half the stuff that we delete in the DFW real
• 6:01
  Speaker 1: estate network and collaborate is now just over centralized, like
• 6:06
  Speaker 1: sensationalized AI, like crap.
• 6:11
  Speaker 2: I agree.
• 6:11
  Speaker 1: Like I, I will say I'm very disappointed in real
• 6:14
  Speaker 1: estate agents because all– especially in our Facebook group. Like
• 6:17
  Speaker 1: if you want to join our Facebook group, come do it, please,
• 6:19
  Speaker 1: but stop spamming and then don't complain when we remove
• 6:22
  Speaker 1: your post. Yeah. Because the self-promotion spam, there's a reason
• 6:28
  Speaker 1: why you don't have any business. This is absolutely insane
• 6:32
  Speaker 1: that you would think that you could just– it's almost
• 6:34
  Speaker 1: like going to Vegas and you're just seeing those guys
• 6:37
  Speaker 1: on the corner that always are slapping the cards of
• 6:39
  Speaker 1: whatever the club, whatever type of club Jesse likes to
• 6:41
  Speaker 1: go to. Yeah. And they just throw it in your face. Like,
• 6:45
  Speaker 1: I wasn't asking for that. No, a hundred percent.
• 6:47
  Speaker 2: And it's with AI being able to do so much
• 6:50
  Speaker 2: of the copy and ads and even video now, like
• 6:54
  Speaker 2: originality and humanism are at a premium.
• 6:57
  Speaker 1: And I think people get really.
• 6:58
  Speaker 2: Tired of just the AI slop because it's very uninventive.
• 7:01
  Speaker 2: It'll continue to get better. But I still think there's
• 7:05
  Speaker 2: always going to be a human recognition of what's real
• 7:07
  Speaker 2: and what's not in most ways. And I'm curious to
• 7:10
  Speaker 2: what The engagement with social media when most of the
• 7:14
  Speaker 2: content is AI driven going forward. I think AI is
• 7:19
  Speaker 2: phenomenal for its utility and your ability to be more productive.
• 7:22
  Speaker 2: But when you're just using AI to remove the lack
• 7:26
  Speaker 2: of humanism from your output, like your content creation, all
• 7:29
  Speaker 2: that type of stuff, I think that gets super old
• 7:31
  Speaker 2: really fast.
• 7:32
  Speaker 1: By the way, we didn't use AI to look at
• 7:36
  Speaker 1: the show reviews. Usually we do. And I just had
• 7:39
  Speaker 1: it pulled up and We were supposed to open if
• 7:42
  Speaker 1: we were going to be just AI scripted. That 7%
• 7:45
  Speaker 1: rates are back, Brian, and so are the scammers.
• 7:49
  Speaker 2: Is this from today? Didn't we talk about this last time?
• 7:51
  Speaker 2: The 7% rates are back. The scammers, though.
• 7:53
  Speaker 1: They've never left. They've never left.
• 7:56
  Speaker 2: So we have a big, yes, they've never left. This
• 7:59
  Speaker 2: is interesting, though, because we have the story that I
• 8:02
  Speaker 2: think dropped early this morning or yesterday that the– The
• 8:07
  Speaker 2: We Buy Ugly Houses gentleman. He's the founder.
• 8:10
  Speaker 1: Is he the founder?
• 8:11
  Speaker 2: Yeah, he is going to go to jail for 15
• 8:14
  Speaker 2: years or 188 months. I was just interested when Jesse
• 8:19
  Speaker 2: sent me this story. I thought, oh, it's definitely something
• 8:21
  Speaker 2: involving like the wholesaling space and like contracts and stuff
• 8:25
  Speaker 2: like that. No, he was just scamming investors. uh, for
• 8:28
  Speaker 2: personal game, pretty classic American greed move. Uh, that was really, really,
• 8:34
  Speaker 2: really interesting. So, um, I didn't dive too much deeper
• 8:37
  Speaker 2: into the story, but it sounds relatively straightforward. Jesse, he
• 8:40
  Speaker 2: was just essentially embezzling funds from his own company and
• 8:44
  Speaker 2: scamming investors out of, uh, out of money for a
• 8:47
  Speaker 2: very long time.
• 8:48
  Speaker 1: 67 year old Charles Carrier, the former president of Dallas
• 8:51
  Speaker 1: based real estate firm, um, was sentenced to over 15
• 8:55
  Speaker 1: years in federal prison on Wednesday. He pled guilty to
• 8:58
  Speaker 1: wire fraud last October in connection to a multimillion-dollar real
• 9:01
  Speaker 1: estate investment fraud scheme using HomeVestor's We Buy Ugly Houses brand.
• 9:07
  Speaker 1: Prosecutors said Kerry intended to defraud investors out of nearly
• 9:10
  Speaker 1: $ 40 million through the scheme, and he used their money
• 9:14
  Speaker 1: for personal expenses.
• 9:17
  Speaker 2: So this is– So the carrier is a former HomeVestor's franchise.
• 9:24
  Speaker 1: So from 2018 to 2024, carrier solicited funds from investors
• 9:30
  Speaker 1: and falsely claimed that their money would be used to
• 9:32
  Speaker 1: acquire and renovate residential properties. So he assured investors their
• 9:37
  Speaker 1: loans were secured by liens, even though he failed to
• 9:39
  Speaker 1: record the promised deeds of trust, issued multiple deeds of
• 9:43
  Speaker 1: trust at the same properties, concealed overlapping encumbrances. Man. Yeah. So, okay.
• 9:51
  Speaker 2: So there was, there was definitely, I suppose, so this
• 9:54
  Speaker 2: is getting a little deeper into like the nuts and
• 9:56
  Speaker 2: bolts of how he did it. Right.
• 9:57
  Speaker 1: So, so.
• 10:00
  Speaker 2: Fraudulent paperwork, multiple deeds of trust at the same property.
• 10:05
  Speaker 2: So investors, whoever the investors were that he was soliciting
• 10:09
  Speaker 2: money from, he tried to paper it up in a
• 10:10
  Speaker 2: way that it all looked legit and it eventually all
• 10:12
  Speaker 2: fell apart. That's probably so much more common in this
• 10:16
  Speaker 2: business than.
• 10:17
  Speaker 1: We even realize. Yeah.
• 10:18
  Speaker 2: I mean, it's a big story when guys like this
• 10:20
  Speaker 2: get popped for millions and millions of dollars. But I mean,
• 10:23
  Speaker 2: I'll even tell you in the property management space, we
• 10:25
  Speaker 2: see fraud more now, I think, than ever.
• 10:28
  Speaker 1: But there was a group back in 2008. Their company
• 10:34
  Speaker 1: name was the nickname, the University of Texas, their mascot.
• 10:39
  Speaker 1: So it was that investment company named after that. And
• 10:44
  Speaker 1: what they would do is... And I have a feeling
• 10:47
  Speaker 1: that we may unfortunately see more of that because of
• 10:49
  Speaker 1: the way that we're seeing a lot more desperate, financially
• 10:53
  Speaker 1: motivated sellers where the investors come out. And even if
• 10:58
  Speaker 1: they don't have money, they put a home on a contract,
• 10:59
  Speaker 1: they raise funds, et cetera. But this group in 2008,
• 11:03
  Speaker 1: they were buying houses. And so what they would do
• 11:07
  Speaker 1: is they were a one-stop shop. They would buy foreclosed
• 11:10
  Speaker 1: or distressed houses. They would then renovate them and then
• 11:14
  Speaker 1: lease up a property- at a high rate, like at
• 11:17
  Speaker 1: a high monthly rental rate. And, but they were doing
• 11:21
  Speaker 1: it not with their own money. They would get investors
• 11:24
  Speaker 1: to come in and say, Hey, Brian, you want, this
• 11:26
  Speaker 1: is a turnkey investment. We'll find the property, but we're
• 11:29
  Speaker 1: going to do the renovations. So we'll GC it. We're
• 11:31
  Speaker 1: going to put up for lease. We're going to put it,
• 11:32
  Speaker 1: we're going to put it in there and then we're
• 11:33
  Speaker 1: going to turn it over to you. And what they
• 11:35
  Speaker 1: were finding is that number one, that they were just
• 11:39
  Speaker 1: putting any renter in there at a high rate. And
• 11:41
  Speaker 1: then they were that obviously the renter defaulted very, very quickly.
• 11:45
  Speaker 1: And so that, That started to have a domino impact
• 11:51
  Speaker 1: and they ended up having– they were frauding investors.
• 11:54
  Speaker 2: Out of millions and millions of dollars. So the whole
• 11:57
  Speaker 2: game plan there was like in that scenario, they could
• 12:01
  Speaker 2: go buy deals that were not really deals. because they
• 12:04
  Speaker 2: were artificially inflating the rents. Putting somebody in there could
• 12:08
  Speaker 2: never really pay it. Probably doing some sort of concession
• 12:11
  Speaker 2: or deal or no very low standards of approval to
• 12:15
  Speaker 2: get this renter in there. And that's the only way
• 12:17
  Speaker 2: they convinced the investor that, yeah, this is worth $ 3, 000.
• 12:19
  Speaker 1: Yeah, they set out a higher inflated price because of
• 12:24
  Speaker 1: the higher rent numbers. And unfortunately, they were targeting foreign investors.
• 12:29
  Speaker 1: So they were flying people in from China and Japan
• 12:32
  Speaker 1: and And targeting them. Yeah. And it just fell apart.
• 12:36
  Speaker 1: And I don't remember how bad the criminal case was
• 12:42
  Speaker 1: against them. But you don't hear about those people anymore. No.
• 12:46
  Speaker 2: Man, that's another little scheme that people have had.
• 12:49
  Speaker 1: There's a lot. We see a lot.
• 12:50
  Speaker 2: And in the property management space, in the investment space specifically.
• 12:53
  Speaker 1: We see a lot of fraud.
• 12:54
  Speaker 2: I think that the actionable item, the takeaway there as
• 12:57
  Speaker 2: an agent is if you're working with investors, one, Don't
• 13:02
  Speaker 2: ever become a property manager if you're not going to
• 13:04
  Speaker 2: fully become a property manager if you're an agent.
• 13:06
  Speaker 1: Please do not. I just want you to hear this.
• 13:09
  Speaker 2: Hear this, hear this, please hear this. If you are
• 13:11
  Speaker 2: a real estate agent, you are not a property manager,
• 13:13
  Speaker 2: do not tell your clients you will manage their property.
• 13:15
  Speaker 1: I don't care what they are paying you.
• 13:17
  Speaker 2: You really shouldn't even be doing lease listings, in my opinion,
• 13:21
  Speaker 2: running applications and that type of stuff. There's so much
• 13:23
  Speaker 2: fraud out there. It's totally different than selling a house
• 13:25
  Speaker 2: and definitely do not volunteer to manage the property. I
• 13:28
  Speaker 2: don't care what they're going to pay you. If you
• 13:30
  Speaker 2: go into the property management space, Be an actual property manager.
• 13:32
  Speaker 2: Get to know that business. You will get sued. Even
• 13:35
  Speaker 2: if you're the best property manager in the business, you'll
• 13:37
  Speaker 2: get sued pretty regularly. It's just part of the game.
• 13:39
  Speaker 2: It's just like any other industry. So one actionable item,
• 13:42
  Speaker 2: don't become a pseudo part-time property manager if you're an agent. Two,
• 13:46
  Speaker 2: if you are working in that space, in the investment space,
• 13:50
  Speaker 2: Just be very, very, very, very cognizant that when you
• 13:53
  Speaker 2: have other people's money on the line in a deal,
• 13:56
  Speaker 2: you need to make sure you verify everything because fraud
• 13:58
  Speaker 2: shows up in a whole lot of different ways. I
• 14:01
  Speaker 2: think we're saying this specifically right now because in a
• 14:03
  Speaker 2: high-rate environment where deal flow is a little bit lower,
• 14:08
  Speaker 2: you see a lot of fraud show up in places
• 14:10
  Speaker 2: where it didn't show up before because, like Nick said,
• 14:13
  Speaker 2: people just get a little bit desperate. It's a way
• 14:15
  Speaker 2: to make a buck, and you find a lot of
• 14:17
  Speaker 2: these different schemes start to come up. And it's really, really,
• 14:20
  Speaker 2: really unfortunate. So protect your clients as an agent. If
• 14:23
  Speaker 2: it seems too good to be true or too easy,
• 14:26
  Speaker 2: just make sure you're not getting the wool pulled over
• 14:28
  Speaker 2: your eyes.
• 14:29
  Speaker 1: Another thing is that Zillow, so I'm reading this, Zillow
• 14:34
  Speaker 1: loses their first round against Compass. So the future of
• 14:41
  Speaker 1: Zillow and Compass as the see it first goes live.
• 14:44
  Speaker 1: So a recent ruling in Zillow's lawsuit targeting the broker
• 14:48
  Speaker 1: giant's exclusive listing strategy. So these private strategies is that
• 14:55
  Speaker 1: Zillow loses round one against the Compass's launch of see
• 15:00
  Speaker 1: it first on September 15th, so last week.
• 15:03
  Speaker 2: U.S.
• 15:03
  Speaker 1: District Judge John J. Thorpe denied Zillow's request for preliminary
• 15:07
  Speaker 1: injunction against the Chicago's MLS. So we're still continuing to
• 15:14
  Speaker 1: see these kind of MLS lawsuit battles happening and still
• 15:19
  Speaker 1: playing out over this private listing feed. So we talked
• 15:24
  Speaker 1: about this a while back.
• 15:25
  Speaker 2: I made a very interesting point about how Zillow, rather
• 15:28
  Speaker 2: than Realtor.com or Redfin or anybody else was involved in
• 15:31
  Speaker 2: this lawsuit. So it sounds like they've, you know, let's
• 15:33
  Speaker 2: say round one, they've lost round one. Compass immediately relaunched
• 15:37
  Speaker 2: their whole website around the idea of the see it first.
• 15:40
  Speaker 1: Let's go capitalism.
• 15:45
  Speaker 2: Look, I don't want to say on here and then
• 15:46
  Speaker 2: somebody's going to try and cancel me later. I have
• 15:49
  Speaker 2: not looked into the details of this specific antitrust suit
• 15:53
  Speaker 2: enough for me to say this is a good thing,
• 15:55
  Speaker 2: a bad thing. I err on the side of efficient markets,
• 16:00
  Speaker 2: and less regulation. So this idea that Zillow that thinks
• 16:04
  Speaker 2: they own the entire real estate space being involved in
• 16:07
  Speaker 2: a suit that says another company can't do see at
• 16:09
  Speaker 2: first listings without them being on Zillow as well, I
• 16:12
  Speaker 2: just think is bananas that this even got to court
• 16:16
  Speaker 2: in the first place. And I am generally glad when
• 16:20
  Speaker 2: one giant company can't tell everybody else in the market
• 16:25
  Speaker 2: what they can or can't do would be my position.
• 16:27
  Speaker 2: It sounds like we're heading in that direction.
• 16:29
  Speaker 1: Well, that, so again, so just to recap, so Zillow
• 16:33
  Speaker 1: lost its bid to force Illinois' largest provider of real
• 16:36
  Speaker 1: estate listings, so the MLS, to provide access to its
• 16:41
  Speaker 1: data for homes for sale, right? So U.S. District Judge
• 16:45
  Speaker 1: John Thorpe Jr. in Chicago dissolved a previous order that
• 16:48
  Speaker 1: required Midwest real estate data, the multiple listing service for
• 16:51
  Speaker 1: the Chicagoland area, to temporarily maintain Zillow's access to listings.
• 16:56
  Speaker 1: Thorpe ordered Zillow to engage in arbitration over its listing's
• 17:00
  Speaker 1: over its listings contract with MRED. So this ruling basically
• 17:05
  Speaker 1: is a key win for Compass, the largest residential brokerage
• 17:08
  Speaker 1: and major source of listings for that MLS feed. So
• 17:12
  Speaker 1: Zillow had sought– wanted to exclude Compass listings from its
• 17:15
  Speaker 1: site basically. So look, the way that I see it is,
• 17:21
  Speaker 1: like I said, yay for Zillow. I look, I don't
• 17:27
  Speaker 1: want more rulings. I don't, we don't need more regulation.
• 17:30
  Speaker 1: We need to, in my opinion, I'm, I'm not even
• 17:34
  Speaker 1: against compass setting up their own, their own private feed. Why,
• 17:39
  Speaker 1: why should we be?
• 17:40
  Speaker 2: It's like, we get so in the weeds on these
• 17:42
  Speaker 2: things where we're really talking about is like what a
• 17:45
  Speaker 2: business should be focusing on and doing with their time, energy,
• 17:48
  Speaker 2: and resources as if we should have any fricking control
• 17:51
  Speaker 2: over that whatsoever. Like I don't have a problem with
• 17:53
  Speaker 2: Compass doing just about anything Compass wants to do. The
• 17:55
  Speaker 2: market's either going to like it or the market's not
• 17:57
  Speaker 2: going to like it. But if Compass decided they no
• 18:00
  Speaker 2: longer want to have their listings on a certain website
• 18:02
  Speaker 2: and they want to start their own portal and they
• 18:04
  Speaker 2: think that that's some sort of competitive advantage, who are
• 18:07
  Speaker 2: we or who is Zillow or who is even the
• 18:10
  Speaker 2: MLS to say, no, you shouldn't be able to do that?
• 18:13
  Speaker 2: At the end of the day, all we do in
• 18:15
  Speaker 2: this business is try to connect a willing buyer to
• 18:17
  Speaker 2: a willing seller in the most efficient way possible. And
• 18:20
  Speaker 2: there's just a bunch of human beings in the middle
• 18:21
  Speaker 2: deciding is that the most efficient way possible?
• 18:24
  Speaker 1: And is it good for me and my company? You know?
• 18:27
  Speaker 2: So I, I have very little opinions on these things
• 18:30
  Speaker 2: other than that. In general, I believe that less regulation
• 18:33
  Speaker 2: and more freedom is better.
• 18:35
  Speaker 1: Well, and the only time we'll tell, is it better
• 18:38
  Speaker 1: for the consumer or not? So you just said something key.
• 18:41
  Speaker 2: I believe that it's better over the longterm because anytime
• 18:45
  Speaker 2: we have these things, somebody could point to short-term disturbances
• 18:48
  Speaker 2: and be like, see Brian, it's not better. Well, over,
• 18:50
  Speaker 2: over a long enough time horizon, uh, I generally believe
• 18:53
  Speaker 2: that markets are efficient.
• 18:55
  Speaker 1: 100%. And that the consumers will eventually be the ones
• 19:00
  Speaker 1: that will say they prefer it or not, right? It's
• 19:03
  Speaker 1: kind of like who– how did Zillow get started, right?
• 19:06
  Speaker 1: Zillow's owner, founder were the people from Expedia. Expedia. Expedia
• 19:10
  Speaker 1: is the guy out of Southlake, right? Rich Barton and–
• 19:13
  Speaker 1: was Expedia from Southlake? Yeah, I think it was a
• 19:15
  Speaker 1: local guy here. Yeah, Rich Barton, Expedia guy, and then
• 19:21
  Speaker 1: founded Zillow. When my understanding, and hopefully I'm not fracturing
• 19:24
  Speaker 1: the story, but he started Zillow because when he was
• 19:26
  Speaker 1: looking for houses, he was tired of basically the paywalls.
• 19:29
  Speaker 1: And so he's like, wouldn't it be better just to
• 19:31
  Speaker 1: offer this for free? It's the freemium version that will
• 19:34
  Speaker 1: then lead to everything else, and that's how Zillow was born. Yep.
• 19:37
  Speaker 1: And so as you think about this, it's like consumers
• 19:39
  Speaker 1: flock to these types of things, the same way for Expedia.
• 19:42
  Speaker 1: People flock to these ideas and strategies, and over time,
• 19:47
  Speaker 1: you can build a massive business, and then it becomes... hey,
• 19:51
  Speaker 1: you can give away the farm and still win the business. Yep, 100%.
• 19:56
  Speaker 1: Here's the thing.
• 19:57
  Speaker 2: This will not be the last lawsuit that we see.
• 19:59
  Speaker 2: Are we kind of getting tired of these like portal
• 20:03
  Speaker 2: MLS battle type things? I know this is not the
• 20:05
  Speaker 2: last lawsuit we'll see, but like it just seems massively
• 20:08
  Speaker 2: disruptive with everything else going on in the business, right?
• 20:10
  Speaker 1: Who would need us to have one massive portal? It's
• 20:13
  Speaker 1: called Claude. Is it? Yes.
• 20:17
  Speaker 2: Jesse and I were talking earlier on all the different
• 20:19
  Speaker 2: things you can do with AI now and all the
• 20:21
  Speaker 2: companies that don't exist because AI in its current form
• 20:25
  Speaker 2: is already a better company. You know, we're talking about
• 20:27
  Speaker 2: the multifamily underwriting space. And a few years ago, all
• 20:30
  Speaker 2: these little startups popped up that were going to be
• 20:32
  Speaker 2: the AI multifamily underwriting software. And you could just upload
• 20:36
  Speaker 2: all your docs, your T12, all these different things. And
• 20:38
  Speaker 2: like you make your parameters and we'll just do the
• 20:40
  Speaker 2: multifamily underwriting for you. Like now, if you just create
• 20:42
  Speaker 2: a cloud project, it's just better than anything two years
• 20:46
  Speaker 2: ago that somebody was trying to run as a startup
• 20:48
  Speaker 2: and get $ 100 million in funding. And I wonder what
• 20:50
  Speaker 2: other industries will not exist now. But better stuff will exist,
• 20:55
  Speaker 2: but like these little widget industries, I call them, where
• 20:58
  Speaker 2: it's just like you make one little widget for like
• 21:01
  Speaker 2: one little niche. Yeah, these little SaaS widgets because I
• 21:05
  Speaker 2: can just go create an artifact or a project or
• 21:09
  Speaker 2: code it myself, and it'll be better in two days
• 21:12
  Speaker 2: than something that took six months of dev work a
• 21:16
  Speaker 2: few years ago.
• 21:17
  Speaker 1: Before we dive into– Talk about Google's partner who just
• 21:22
  Speaker 1: filed bankruptcy, Chapter 11. What does 4.6% mean to you? Yeah, well, 10-year.
• 21:32
  Speaker 1: So Jesse just said what I wish interest rates were
• 21:35
  Speaker 1: and are.
• 21:36
  Speaker 2: What is the current federal overnight funding rate?
• 21:39
  Speaker 1: No, I'm sorry. It's the current 10-year treasury. So right now,
• 21:43
  Speaker 1: there was a survey that was done. What is it?
• 21:47
  Speaker 1: There was a survey that was done recently, and the
• 21:50
  Speaker 1: reason I was researching this is that I have this
• 21:53
  Speaker 1: thought process. I've talked about it on our other shows,
• 21:57
  Speaker 1: is that my belief is that when buyer sentiment is
• 22:02
  Speaker 1: against buying houses, that's actually the best time for a
• 22:04
  Speaker 1: buyer to buy a home. Agreed.
• 22:06
  Speaker 2: And by the way, that goes for all asset classes,
• 22:08
  Speaker 2: not just homes.
• 22:09
  Speaker 1: Correct. When it says it's not a good time to buy,
• 22:13
  Speaker 1: then it's a good time to buy, in my opinion.
• 22:17
  Speaker 1: And the report or the survey is that the magic
• 22:21
  Speaker 1: number that buyers would say that would get them off
• 22:25
  Speaker 1: the couch and ready and activated to buy is 4.6%.
• 22:30
  Speaker 2: That's the rate environment that they want? Yes. This is
• 22:33
  Speaker 2: why surveys are dumb.
• 22:37
  Speaker 1: So obviously, they're a lot higher right now. The survey
• 22:42
  Speaker 1: also said that... Gen Zers are more willing to compromise
• 22:46
  Speaker 1: on lifestyle spending to be able to go and buy
• 22:51
  Speaker 1: a home. Can you imagine asking somebody at the grocery store.
• 22:55
  Speaker 2: What would the average credit card rate need to be
• 23:00
  Speaker 2: for you to buy a carton of eggs? How do
• 23:04
  Speaker 2: you think they would answer that question? They probably wouldn't.
• 23:09
  Speaker 2: They would Probably just walk off, I would imagine, because
• 23:12
  Speaker 2: it's a very strange way to ask a question. But
• 23:14
  Speaker 2: we do this in the home buying space. We're like,
• 23:16
  Speaker 2: what rate would it need to be for you to
• 23:17
  Speaker 2: buy a home? Rather than like, how much do homes
• 23:20
  Speaker 2: need to cost?
• 23:22
  Speaker 1: Right?
• 23:22
  Speaker 2: Like if I walked up and I was like, at
• 23:23
  Speaker 2: the grocery store, I was like, how much does bread
• 23:25
  Speaker 2: need to cost for you to feel comfortable buying bread?
• 23:27
  Speaker 2: You give me a much more straightforward answer, right? We
• 23:30
  Speaker 2: ask around the housing market in terms of rates all
• 23:32
  Speaker 2: the time. And it just befuddles me that we don't
• 23:37
  Speaker 2: talk about asset prices so much.
• 23:38
  Speaker 1: You know why?
• 23:39
  Speaker 2: Because it's taboo to talk about asset prices. Because anytime
• 23:42
  Speaker 2: asset prices come down, we feel like the world is
• 23:44
  Speaker 2: falling apart rather than markets just being efficient over long
• 23:47
  Speaker 2: enough time horizons.
• 23:50
  Speaker 1: 4.6 though. I also don't believe that 4.6 is what
• 23:54
  Speaker 1: truly gets people motivated to buy home.
• 23:56
  Speaker 2: Well, you know what would have to happen for us
• 23:58
  Speaker 2: to get 4.6 in the short term? We'd have to
• 24:00
  Speaker 2: have some sort of serious economic decline for the Fed
• 24:04
  Speaker 2: to actually want to You know, take action that would
• 24:06
  Speaker 2: eventually get treasuries down to where 4.6 is even viable.
• 24:10
  Speaker 2: And then when we got there, we'd be like, oh.
• 24:11
  Speaker 1: It's a really bad time to buy a house. Look
• 24:12
  Speaker 1: around you. The world's falling apart. So here's the survey
• 24:15
  Speaker 1: in a little bit more depth. The buyers say their
• 24:18
  Speaker 1: magic number is 4.6. The median across generations is Gen
• 24:22
  Speaker 1: Zers are saying they would go as high as 4.9, Brian.
• 24:25
  Speaker 1: So they're willing to compromise a little bit and go
• 24:27
  Speaker 1: to 4.9%. They got more time left. They're living the view.
• 24:31
  Speaker 1: Boomers are holding out for the 3.9% risk. Yes, they are.
• 24:35
  Speaker 1: I knew it was coming. It's just so unrealistic. Boomers
• 24:39
  Speaker 1: are like, nope. Look, I don't get excited unless it's 3.9%.
• 24:42
  Speaker 1: So good, dude. Yeah. So good. Boomers back then were
• 24:46
  Speaker 1: behind at 10%, 14%. Now they're saying nothing. If it's
• 24:52
  Speaker 1: higher than 3.9, I ain't doing it.
• 24:54
  Speaker 2: Is there a section of the survey that just says,
• 24:56
  Speaker 2: I don't care about rates? Was there a percentage of
• 25:00
  Speaker 2: people that actually answered it with some intellectual honesty?
• 25:04
  Speaker 1: That's the problem again. Like you said, that's why you
• 25:06
  Speaker 1: hate surveys.
• 25:07
  Speaker 2: Do you remember when Stephen Colbert, when he ran the
• 25:12
  Speaker 2: Daily Show, he was like, do you think so-and-so is great?
• 25:16
  Speaker 1: Or the greatest?
• 25:17
  Speaker 2: And that's the only two choices he would give to
• 25:19
  Speaker 2: the question. That's how surveys go.
• 25:22
  Speaker 1: So people are saying this is what would motivate them.
• 25:24
  Speaker 1: But life events beat interest rates two to one. 46%
• 25:26
  Speaker 1: of recent buyers bought a home because of a life event. Marriage, baby,
• 25:33
  Speaker 1: job move, divorce. And only one in five bought because
• 25:36
  Speaker 1: of a specific rate. So the whole waiting for rates
• 25:39
  Speaker 1: narrative is just something that they're telling themselves. And so
• 25:42
  Speaker 1: this is what I... When agents are like... Agents are
• 25:46
  Speaker 1: the ones also like, we need rates to get lower
• 25:48
  Speaker 1: because these buyers, that's the only way they're going to buy.
• 25:50
  Speaker 2: Well, 46% of them, that's half the market say no.
• 25:53
  Speaker 2: I'd be interested around the other 34% because in that
• 25:56
  Speaker 2: survey you just said was that 46% of buyers said
• 25:59
  Speaker 2: they bought for a life event. Only one in five,
• 26:03
  Speaker 2: which equates to 20 more percent bought because of rates,
• 26:05
  Speaker 2: that equals 66%. I'm curious as to why other 34%
• 26:09
  Speaker 2: are buying houses if it doesn't have to do with
• 26:11
  Speaker 2: your life.
• 26:12
  Speaker 1: Well, only one in five. Only one in five bought
• 26:14
  Speaker 1: because of a specific rate. So the whole waiting theory
• 26:17
  Speaker 1: is kind of null and void. Right. So maybe they
• 26:19
  Speaker 1: just didn't know they were buying a house. They were like,
• 26:22
  Speaker 1: I mean, haven't you ever talked to, haven't you done
• 26:24
  Speaker 1: your follow-ups? You're like, I know. Brian's like, he's got
• 26:27
  Speaker 1: this one in his hot sheet. He's like, I know
• 26:30
  Speaker 1: this one's ready. You call him, they're like, Brian, I
• 26:32
  Speaker 1: don't know what happened. I slipped and fell into a contract,
• 26:35
  Speaker 1: and now I'm in this house and paying a mortgage.
• 26:37
  Speaker 1: I can't even tell you how I got there. Yes, 100%.
• 26:39
  Speaker 2: You made enough prospecting calls that does happen.
• 26:42
  Speaker 1: That is the 34%.
• 26:42
  Speaker 2: They didn't even realize they were moving.
• 26:46
  Speaker 1: I did read a story the other day about this
• 26:48
  Speaker 1: lady who went to the hospital, and she didn't know
• 26:50
  Speaker 1: she was pregnant with her seventh kid and just popped
• 26:52
  Speaker 1: on out. So it's like that same call. I feel
• 26:55
  Speaker 1: like by the time you get to seven, that's a
• 26:56
  Speaker 1: little more understandable. Yeah, maybe so. But it was... I
• 27:01
  Speaker 1: can tell you in all the years we've been doing this, unfortunately,
• 27:03
  Speaker 1: it's been more than one where they're like, I don't
• 27:05
  Speaker 1: even know how I got this contract. I just so
• 27:07
  Speaker 1: happen to sell the house, just so happen to buy it.
• 27:09
  Speaker 1: I can't tell you how I did it. Those are
• 27:11
  Speaker 1: the people that have multiple timeshares, not even just one.
• 27:15
  Speaker 1: We should do a timeshare show because there's some people
• 27:17
  Speaker 1: that know how to just use it and it looks awesome.
• 27:20
  Speaker 2: Yeah.
• 27:21
  Speaker 1: And then there's everyone else. Those are the one in
• 27:23
  Speaker 1: five people.
• 27:25
  Speaker 2: Yes. I do know people that have them, and they're
• 27:28
  Speaker 2: quite happy. But they also love that one or two place,
• 27:31
  Speaker 2: and that's what they do, and that's their thing. So
• 27:34
  Speaker 2: I get that. Not bagging on anybody.
• 27:38
  Speaker 1: So House Canary. House Canary is Google's listing partner files
• 27:43
  Speaker 1: chapter 11. It's a voluntary filing, too. They weren't forced
• 27:48
  Speaker 1: into it.
• 27:49
  Speaker 2: Well, it says that they were going to get one
• 27:50
  Speaker 2: of their assets foreclosed on, so they voluntarily filed bankruptcy instead.
• 27:55
  Speaker 2: They supplied listing data for Google's home listing pilot in
• 27:58
  Speaker 2: May for San Diego, MyStateMLS, eXp, also sending listings through ComeHome.
• 28:06
  Speaker 2: In June, Google and House Canary announced a national expansion
• 28:09
  Speaker 2: to all 50 states, letting consumers connect with agents directly
• 28:13
  Speaker 2: from mobile search results. This is an interesting story. There's
• 28:17
  Speaker 2: got to be more to this, right? In June, which
• 28:19
  Speaker 2: was three months ago, you are Google's preferred listing partner,
• 28:24
  Speaker 2: which Whenever Google wants to get in that space, here's
• 28:27
  Speaker 2: the thing that I would be warning Zillow about. I
• 28:30
  Speaker 2: won't because they're bigger and smarter than I. If Google
• 28:34
  Speaker 2: ever did want to get into this space on a
• 28:35
  Speaker 2: massive level, Zillow's days would be relatively numbered if they
• 28:42
  Speaker 2: wanted them to be. But it's also like stay in
• 28:44
  Speaker 2: your lane. It's a lot of dev work to do
• 28:46
  Speaker 2: all that type of stuff. It's easier just to partner
• 28:48
  Speaker 2: with someone like House Canary. I got to feel like
• 28:51
  Speaker 2: that's the biggest opportunity. they could possibly have conceived of
• 28:56
  Speaker 2: in that type of partnership. So this is a very
• 28:58
  Speaker 2: interesting story. I have no idea what else is behind
• 29:00
  Speaker 2: the wall, what happened or anything. I'm just very interested
• 29:03
  Speaker 2: in learning more about how this all unfolded.
• 29:06
  Speaker 1: Well, here's the background of the company. They were started
• 29:08
  Speaker 1: in 2013. They're a San Francisco-based company. They're a real
• 29:12
  Speaker 1: estate data and analytics platform. So it's an AI-powered home valuations.
• 29:17
  Speaker 1: Their automated valuation model covers $ 136 million. plus US properties.
• 29:23
  Speaker 1: They do market forecasting, neighborhood analytics, rental estimates, off-market lead generation.
• 29:29
  Speaker 1: Their customers are the big money. They're Wall Street loan buyers,
• 29:34
  Speaker 1: institutional investors, lenders, single family home rental companies. They also
• 29:39
  Speaker 1: run an AI powered national brokerage through a platform called
• 29:42
  Speaker 1: Come Home. And this past June is when they made
• 29:45
  Speaker 1: the big news. So this is a recent partnership where
• 29:49
  Speaker 1: they became affiliated to power home listings directly in Google's
• 29:54
  Speaker 1: search results nationwide. And so the chapter 11 comes... House
• 30:00
  Speaker 1: Canary plus five affiliates with over $ 50 million in assets
• 30:03
  Speaker 1: and at least $ 50 million in liabilities filed their Chapter 11,
• 30:09
  Speaker 1: is that immediately they defaulted on a $ 30 million loan
• 30:13
  Speaker 1: that came due back in January.
• 30:15
  Speaker 2: It sounds like it is possible that they were doing
• 30:18
  Speaker 2: a lot.
• 30:18
  Speaker 1: Of things all at once and not doing them all
• 30:20
  Speaker 1: super well. Yeah. That's starting to make a little bit
• 30:25
  Speaker 1: more sense. And House Canary has been in a decade-long
• 30:28
  Speaker 1: legal war with Amrock. which is now called Rocket Clothes,
• 30:31
  Speaker 1: and that's Rocket Mortgage's title arm. Oh. So House Canary
• 30:36
  Speaker 1: says Amrock stole their home evaluation technology and trade secrets
• 30:40
  Speaker 1: back around 2015. A jury agreed in 2018 and awarded
• 30:47
  Speaker 1: over $ 700 million, but that got overturned on an appeal. Jeez.
• 30:52
  Speaker 2: So they went from.
• 30:52
  Speaker 1: Putting $ 700 million to now they didn't get it. They
• 30:55
  Speaker 1: were stolen from, but then they weren't stolen from. And
• 30:59
  Speaker 1: now they have to file Chapter 11. The retrial this
• 31:03
  Speaker 1: past March awarded them $ 175 million with interest and costs.
• 31:09
  Speaker 1: House Canary says it could collect over $ 260 million. So
• 31:14
  Speaker 1: they just need to get it. They just need to
• 31:16
  Speaker 1: get it. So they're really- They're waiting for a rocking
• 31:18
  Speaker 1: mortgage to pay. They're waiting for that.
• 31:19
  Speaker 2: Man, what an interesting time just to see all of
• 31:24
  Speaker 2: the players in the space when you have So many
• 31:28
  Speaker 2: different companies and widgets and technologies and all these types
• 31:31
  Speaker 2: of things. I mean, we are really watching. Does it
• 31:34
  Speaker 2: feel like we're watching the bubble burst kind of dot-com
• 31:37
  Speaker 2: style in the real estate tech space right now? I
• 31:42
  Speaker 2: think we're watching a lot of money that flowed into
• 31:44
  Speaker 2: this space in between 2018 and 2022 starting to come
• 31:47
  Speaker 2: to a head.
• 31:50
  Speaker 1: I mean, this is inevitable in any space, right?
• 31:52
  Speaker 2: When you have a run-up, people are going to build
• 31:54
  Speaker 2: companies and new technologies and all types of things.
• 31:56
  Speaker 1: There's going to be winners and there's going to be losers.
• 31:57
  Speaker 2: But I'm feeling like between the brokerage consolidation, the technology lawsuits,
• 32:04
  Speaker 2: portal wars, software companies going bankrupt, it's starting to feel
• 32:07
  Speaker 2: like we're getting to the precipice of something here.
• 32:10
  Speaker 1: Well, and then it's kind of unfortunate with them. And
• 32:13
  Speaker 1: I want to touch on a point you're talking about,
• 32:15
  Speaker 1: brokerage consolidation here in a second, is that they were
• 32:19
  Speaker 1: in a decades-long– like lawsuits. So it's like, you know, you,
• 32:23
  Speaker 1: you partner with Google again, everything, you would think everything's
• 32:26
  Speaker 1: going well. You become, you're doing something well enough that
• 32:29
  Speaker 1: Google says, Hey, I want to be an affiliate with you. Um,
• 32:33
  Speaker 1: you know, house canaries, uh, customers went quiet. So, you know,
• 32:36
  Speaker 1: you know, house canaries sells to lenders. They sell to
• 32:40
  Speaker 1: the wall street loan buyers, big investors. And so the
• 32:43
  Speaker 1: interest rate spikes, transaction volumes, collabs, all of the costs,
• 32:46
  Speaker 1: all of those customers pull back on their spending. Yeah. Um, So,
• 32:50
  Speaker 1: they're doing fewer originations means that fewer valuations are needed. So,
• 32:54
  Speaker 1: the lenders are doing less valuations. So, again, House Canary
• 32:57
  Speaker 1: is doing less revenue as a whole. And then I
• 33:00
  Speaker 1: guess the Google deal came a little too late. And so,
• 33:04
  Speaker 1: you kind of time that with the decades-long legal battle
• 33:10
  Speaker 1: plus the loan maturing at the worst time and interest
• 33:14
  Speaker 1: rates up and revenue down. It's kind of like that
• 33:16
  Speaker 1: death by– Hells and cuts. Yeah. A hundred percent.
• 33:21
  Speaker 2: It's so much longer story there than just, you know,
• 33:25
  Speaker 2: what it appeared on the surface of the house canary.
• 33:27
  Speaker 1: So you talk about, um, you talk about all these
• 33:30
  Speaker 1: consolidations and I saw a post and today about, it
• 33:35
  Speaker 1: was a couple of, it was from a couple of
• 33:36
  Speaker 1: days ago, but they were basically talking about all the
• 33:39
  Speaker 1: consolidations that's happening in the new construction space. And I just, I,
• 33:44
  Speaker 1: I just asked, I was like, you know, how many
• 33:46
  Speaker 1: in the last 25 months have been consolidated? And so basically,
• 33:50
  Speaker 1: Berkshire Hathaway took over Taylor Morrison. We talked about that
• 33:53
  Speaker 1: on one of our previous podcasts. So they took, you know,
• 33:57
  Speaker 1: Taylor Morrison was the sixth largest builder in the country.
• 34:00
  Speaker 1: And you combine that with Berkshire's Clayton properties. They now
• 34:04
  Speaker 1: cover 21 states and 52 markets. In Japan, you have
• 34:07
  Speaker 1: the tri-point, you know, Sumitomo Forestry. Takes over TriPoint Homes, $ 4. 5
• 34:15
  Speaker 1: billion all cash. That was a huge deal, if you
• 34:17
  Speaker 1: remember that one. Oh, yeah, I do remember that. That
• 34:19
  Speaker 1: one was like- That was like a few years ago, though, right?
• 34:21
  Speaker 2: How long ago was that?
• 34:22
  Speaker 1: It's still going on, but that- Two years ago? Yeah,
• 34:24
  Speaker 1: but that kind of rocked their economy. I remember. DreamFinders
• 34:28
  Speaker 1: Homes takes over Beezer's Home in a $ 915 million cash
• 34:31
  Speaker 1: with $ 2. 2 billion with debt. And it just signed August 26th.
• 34:37
  Speaker 2: Oh, it's a few weeks ago. I didn't even realize that.
• 34:40
  Speaker 1: Right? So combined, there's 13,000 closings a year. They're a
• 34:43
  Speaker 1: top seven builder in America. And if you really think
• 34:47
  Speaker 1: about it, so Dream Finders Homes was built in the
• 34:51
  Speaker 1: 2008 crash. Right? Wow. And they just bought Beezer.
• 34:56
  Speaker 2: Dang. Right?
• 34:57
  Speaker 1: The top, a number seven. Yeah, top 10 builder. Right?
• 35:00
  Speaker 1: Then you go into Japan, there's Tsukushi House takes over
• 35:04
  Speaker 1: MDC Holdings. for $ 4. 9 billion. And then you have some
• 35:09
  Speaker 1: of these midsize rollups, like Stanley Martin Homes buys United
• 35:13
  Speaker 1: Homes Group. Stanley Martin buys Holiday Builders in Florida. That
• 35:17
  Speaker 1: added 10,000 plus- That was a pretty big deal when
• 35:19
  Speaker 1: it happened. Yeah, 10,000 plus lots in 40 communities. New
• 35:22
  Speaker 1: Home Company, backed by Apollo, buys Land C Homes for $ 11. 36
• 35:25
  Speaker 1: a share, all cash. Lenard, it takes over Rosh Coleman Homes,
• 35:32
  Speaker 1: late in 2024, they were the number 21 builder in
• 35:35
  Speaker 1: 16 markets across Southeast and Texas. And then you have
• 35:38
  Speaker 1: Guillen Homes takes over Wonderland Homes. And then She Homes
• 35:43
  Speaker 1: out of North Carolina. So if you see this, the consolidation,
• 35:47
  Speaker 1: just like in the brokerage space, you're seeing these brokerages consolidate, consolidate,
• 35:50
  Speaker 1: seeing teams starting to consolidate.
• 35:52
  Speaker 2: Yep.
• 35:53
  Speaker 1: Like, man, what's going to come out at the end
• 35:55
  Speaker 1: is there's, there's, you've got the larger conglomerates now and there's,
• 36:00
  Speaker 1: it less of the smaller players and midsize players. And it,
• 36:03
  Speaker 1: then what it does, it makes it harder. Yeah. For
• 36:06
  Speaker 1: the smaller and midsize to eventually start to compete.
• 36:08
  Speaker 2: It builds momentum. And then what do you just get
• 36:10
  Speaker 2: to some point of singularity? Well, eventually we'll just have
• 36:14
  Speaker 2: one company. That's a brokerage builder title.
• 36:18
  Speaker 1: Bed, bath and beyond.
• 36:20
  Speaker 2: Right.
• 36:20
  Speaker 1: Yeah, might be. That's a.
• 36:22
  Speaker 2: Depends on how much they have to pay out to... Well,
• 36:24
  Speaker 2: it's like these things ebb and flow. That's why they're cycles, right?
• 36:26
  Speaker 2: So we're in the consolidation phase of the cycle. If
• 36:28
  Speaker 2: you study, you know, there are a million books on this, right?
• 36:31
  Speaker 2: We are in the consolidation phase of the business cycle.
• 36:33
  Speaker 2: What happens after the consolidation phase? And there's a phase
• 36:35
  Speaker 2: of a little bit of stabilization and dormancy.
• 36:37
  Speaker 1: And then what? disruption.
• 36:39
  Speaker 2: You just start the next phase of the business cycle,
• 36:41
  Speaker 2: and that's always the new players coming into the game
• 36:43
  Speaker 2: with a new idea and a new business model, and
• 36:45
  Speaker 2: that's what gets lost in the consolidation phase is we
• 36:48
  Speaker 2: all start to gobble it up and say, this is
• 36:49
  Speaker 2: now the way we're going to do business, right? But
• 36:51
  Speaker 2: then when you do that, you start to lose disruption
• 36:54
  Speaker 2: because there's nothing that a company wants to do less
• 36:56
  Speaker 2: than disrupt its own business model, right? If there were
• 36:58
  Speaker 2: no other competitors in the space, then you would never
• 37:00
  Speaker 2: need disruption. You just continue to do your thing, right, forever.
• 37:03
  Speaker 2: Disruption is is bred by consolidation. So you consolidate, that
• 37:07
  Speaker 2: opens up market opportunities to do things a new and
• 37:10
  Speaker 2: different way. And we'll eventually see that. So no, we
• 37:12
  Speaker 2: will not reach a point of singularity. We'll be in
• 37:15
  Speaker 2: the consolidation phase for a while. It'll seem like, oh
• 37:17
  Speaker 2: my gosh, these big corporations are taking over the world.
• 37:19
  Speaker 2: Everything's consolidating. And then you'll see some new idea, some
• 37:23
  Speaker 2: new disruption. Maybe Rich Barton will do it again. We'll
• 37:26
  Speaker 2: be like, you know what?
• 37:27
  Speaker 1: This time.
• 37:28
  Speaker 2: It's refrigerators or whatever else.
• 37:30
  Speaker 1: Who knows, right?
• 37:31
  Speaker 2: But you'll see some new form of disruption. It'll start
• 37:33
  Speaker 2: the business cycle all over again. When you hear MRI,
• 37:38
  Speaker 2: and we're not talking about- Like medical? We're not talking medical. Right?
• 37:42
  Speaker 1: When you hear MRI, and we combine that with real
• 37:45
  Speaker 1: estate agents, and what I want to touch on here
• 37:48
  Speaker 1: next is why are agents so hesitant? Why are just
• 37:52
  Speaker 1: people in general so hesitant to add MRI to their world?
• 37:56
  Speaker 1: And what I'm talking about is monthly recurring income. Oh, yeah.
• 37:59
  Speaker 1: So we have a friend, Rebecca, who her Instagram is resultswithrebecca.
• 38:06
  Speaker 1: She just hosted and you weren't able to make it there.
• 38:10
  Speaker 1: So myself and Jeff Street went earlier this week. She
• 38:14
  Speaker 1: hosted a compounding your commissions. Okay. And- Something that really
• 38:20
  Speaker 1: got me thinking this week as I– she asked us
• 38:23
  Speaker 1: to go speak and when I went up there to
• 38:24
  Speaker 1: speak and Jeff Street was speaking as well is like
• 38:27
  Speaker 1: why are real estate agents, number one, so hesitant and
• 38:32
  Speaker 1: reluctant to add MRI, so monthly recurring income, residual income
• 38:37
  Speaker 1: to their world?
• 38:38
  Speaker 2: Sure.
• 38:40
  Speaker 1: When you bring something up to them, they're like, nope,
• 38:42
  Speaker 1: I'm just going to focus on this.
• 38:44
  Speaker 2: Yeah. They like ideas, but they think that when you
• 38:46
  Speaker 2: make them real, it's execution and they're afraid of execution.
• 38:50
  Speaker 1: That's what I think. I mean, but at the same time,
• 38:52
  Speaker 1: you go in a world where, again, we eat what
• 38:55
  Speaker 1: we kill. Every day is zero. You know, you can
• 38:59
  Speaker 1: go to zero really, really quick. Yeah. Like you could
• 39:03
  Speaker 1: have all your deals fall apart and then that money
• 39:05
  Speaker 1: that you had disappears. I agree. And, you know.
• 39:11
  Speaker 1: There are some things that I also think that feels
• 39:14
  Speaker 1: beneath them. Like when we introduce like, hey, I'm at
• 39:18
  Speaker 1: a revenue sharing brokerage or I'm at a– we have
• 39:20
  Speaker 1: an opportunity for essential services and they're like, oh, is
• 39:24
  Speaker 1: this network marketing?
• 39:25
  Speaker 2: That's probably the biggest– you just made the best point
• 39:28
  Speaker 2: is that it seems beneath them. or like it's too small,
• 39:32
  Speaker 2: and they don't realize how these things add up. And
• 39:34
  Speaker 2: that's just true with people and their finances in general.
• 39:36
  Speaker 2: They just don't play the long game. They don't understand
• 39:40
  Speaker 2: the idea of compound interest or monthly recurring revenue over time, right?
• 39:44
  Speaker 2: So they– They don't see the big flashy Instagram style
• 39:48
  Speaker 2: dollar signs right.
• 39:50
  Speaker 1: Away and they go, oh, this isn't worth it.
• 39:52
  Speaker 2: That's what I think the mindset normally is, which is
• 39:55
  Speaker 2: so against reality.
• 39:57
  Speaker 1: There is something that Jeff Street had shared about when
• 40:02
  Speaker 1: we– what do we do a good job as real
• 40:04
  Speaker 1: estate agents? We do a good job. of one, you know,
• 40:09
  Speaker 1: connecting with our clients, becoming a valuable resource to our
• 40:15
  Speaker 1: clients and being a connector. If they need something, hey,
• 40:17
  Speaker 1: I got a guy, I got this, I got this.
• 40:20
  Speaker 1: And you know what Jeff, Jeff Street had made a
• 40:22
  Speaker 1: comment when we were at this event and he said, those,
• 40:25
  Speaker 1: you've just lost customers. You've just lost clients. Those clients
• 40:28
  Speaker 1: were already yours and then you handed them off to
• 40:30
  Speaker 1: someone else that you didn't earn an income from it.
• 40:33
  Speaker 1: Good point. And, you know, we kind of talk about
• 40:37
  Speaker 1: If you're going to make a connection, why would you
• 40:39
  Speaker 1: not make a connection and connect them with people that
• 40:42
  Speaker 1: could get them turned on with services? There was a
• 40:46
  Speaker 1: lady there. She is part of the Canales family and
• 40:51
  Speaker 1: Canales Furniture. She's a mortgage person and then works with
• 40:55
  Speaker 1: the family's furniture business. And this is where it's starting
• 40:59
  Speaker 1: to reminisce like 2008, 2009, 2010 all over again, which
• 41:02
  Speaker 1: is she said, hey, one thing that what we want
• 41:06
  Speaker 1: to do is we want to help reward the real
• 41:08
  Speaker 1: estate professionals because you know when your clients are buying
• 41:11
  Speaker 1: a home, we want you to bring them into Canales
• 41:15
  Speaker 1: and register them. And then you get 3% of whatever
• 41:20
  Speaker 1: they spend, you're earning 3%. So if they buy $ 10, 000
• 41:23
  Speaker 1: worth of furniture, you get a check for $ 300, which–
• 41:26
  Speaker 1: You know, they were like, again, some people would say
• 41:29
  Speaker 1: that's not big enough. But I'm going to tell you
• 41:31
  Speaker 1: right now, I just filled up my truck with diesel
• 41:33
  Speaker 1: and it cost me almost $ 200. I would love to
• 41:35
  Speaker 1: have that little $ 300 check. Are you kidding me? In 2008,
• 41:38
  Speaker 1: I remember agents that were getting by by doing Sensi
• 41:41
  Speaker 1: or doing some other stuff. And it held them on
• 41:45
  Speaker 1: long enough that they were able to survive the recession
• 41:50
  Speaker 1: and market downturn. And in some cases, they actually started
• 41:53
  Speaker 1: making more money in that industry. And that's what they
• 41:55
  Speaker 1: focused on. Mm-hmm. And, you know, we got to get out,
• 42:00
  Speaker 1: we got to stop thinking that things are beneath us.
• 42:03
  Speaker 1: A hundred percent. If we were to think that, by
• 42:04
  Speaker 1: the way, the real estate professional is right below or
• 42:08
  Speaker 1: right above an attorney on reputation and car salesman. So like,
• 42:13
  Speaker 1: if we think that this is beneath us, like. We
• 42:15
  Speaker 1: should be out of this industry.
• 42:17
  Speaker 2: This is like a lesson that we've taken away for
• 42:20
  Speaker 2: a long time from people that have been mentors and
• 42:23
  Speaker 2: guides to us for a very long time. We started
• 42:25
  Speaker 2: several new businesses and we started at the bottom again.
• 42:28
  Speaker 2: We've gone back into the cold calling and prospecting days
• 42:31
  Speaker 2: for the new business that we're starting and stuff.
• 42:33
  Speaker 1: And that is true.
• 42:33
  Speaker 2: It's like You know, the idea of real estate is
• 42:36
  Speaker 2: we get one good bull run for a few years
• 42:38
  Speaker 2: and it's like we want to think everything is beneath
• 42:41
  Speaker 2: us going forward. And this is a cycle-driven business, right?
• 42:46
  Speaker 2: We're going to have up and down markets and... As
• 42:50
  Speaker 2: a business owner, you need to be always looking at
• 42:53
  Speaker 2: how do you drive more revenue per client? How do
• 42:55
  Speaker 2: you open up vertical streams with little effort? And what
• 42:57
  Speaker 2: Nick is talking about, he's hitting the nail on the head.
• 42:59
  Speaker 2: We tend to not do those things because we think
• 43:01
  Speaker 2: it's beneath us. Solid business owners, they just think about
• 43:05
  Speaker 2: return on time, energy, and effort. And it doesn't matter
• 43:07
  Speaker 2: what the dollar sign looks like. If it's a good
• 43:09
  Speaker 2: enough return on time, do it. Plain and simple.
• 43:12
  Speaker 1: Well, usually the ones that fight it the hardest, there's
• 43:16
  Speaker 1: two things that I see. Number one, they're usually.
• 43:19
  Speaker 1: They still have time on their side. They're like, oh,
• 43:21
  Speaker 1: and they're 30s, 40s. And they don't fast forward to
• 43:24
  Speaker 1: them being 65 and still having to do this. Yep. Exactly.
• 43:28
  Speaker 1: We always think we have more time than we really do. Right. And, and,
• 43:31
  Speaker 1: and we also, we're not fighting burnout at that moment typically. Yeah.
• 43:36
  Speaker 2: Right.
• 43:36
  Speaker 1: Like how hard is it to keep pushing forward when
• 43:38
  Speaker 1: you're burnt out and you're sick of it and you're, you're,
• 43:41
  Speaker 1: you know, you're. One phone call away from saying, screw it,
• 43:44
  Speaker 1: I'm just driving to the border and I'm just going,
• 43:48
  Speaker 1: I'm finding an island that I can figure out how
• 43:49
  Speaker 1: to be a bartender at. If you haven't been there
• 43:51
  Speaker 1: yet in your real estate career, just wait. And the
• 43:56
  Speaker 1: other thought process is usually the ones that are fighting
• 43:58
  Speaker 1: it the hardest are the agents that are one bad
• 44:00
  Speaker 1: quarter away. Right. To being financially ruined. Yeah.
• 44:04
  Speaker 2: They're looking for a quick fix too.
• 44:05
  Speaker 1: Right.
• 44:06
  Speaker 2: And then building these vertical revenue streams seems like more
• 44:10
  Speaker 2: work than it's worth. And it's not going to be
• 44:12
  Speaker 2: a quick fix for their business right now. And that's
• 44:15
  Speaker 2: a terrible mindset to have. It just truly is.
• 44:17
  Speaker 1: Yeah. Well, we've created a solution for that, by the way,
• 44:21
  Speaker 1: at our partners at utility direct utility dash direct.com and our,
• 44:26
  Speaker 1: our partnership with the ACN network. And so if, if, One,
• 44:31
  Speaker 1: it's essential services. If you're looking at, and you're at
• 44:34
  Speaker 1: that point where you're like, hey, I'm at a point
• 44:35
  Speaker 1: where I know I need to, today's my day zero.
• 44:39
  Speaker 1: I'm ready for day one to start building that monthly
• 44:41
  Speaker 1: recurring income, that MRI into my business so that I
• 44:45
  Speaker 1: don't have to do this over the next 10 to
• 44:48
  Speaker 1: 15 years. I mean, how great would it be if
• 44:50
  Speaker 1: you had an extra $ 5, 000 to $ 7, 000 coming in every
• 44:52
  Speaker 1: single month?
• 44:53
  Speaker 2: I think it would be great no matter who you are. Yeah.
• 44:55
  Speaker 1: Yeah. I've never had, I've never met anybody that would
• 44:59
  Speaker 1: complain about making $ 5, 000 in a month. And so just
• 45:02
  Speaker 1: go to utility-direct.com and connect with Brian and I, and utility-direct.com
• 45:07
  Speaker 1: is a, uh, it's a, it's a servicing company that
• 45:11
  Speaker 1: helps turn on, you know, essential services, internet, electricity, alarm systems,
• 45:15
  Speaker 1: you name it, we can do it, uh, for your,
• 45:17
  Speaker 1: for your customers and clients, and you get to earn
• 45:19
  Speaker 1: the residual income off of that. So Just reach out
• 45:22
  Speaker 1: to Brian and myself and get connected over here at utility-direct.com.
• 45:27
  Speaker 2: Boom. And then make sure you head over again to homewarddfw.com
• 45:31
  Speaker 2: with all your property management needs. Do not get into
• 45:33
  Speaker 2: the property management game yourself. Refer that business to an expert.
• 45:37
  Speaker 2: They will pay you a fantastic referral fee. When that
• 45:40
  Speaker 2: seller eventually does want to sell that house, you'll always
• 45:42
  Speaker 2: get the listing back. We make sure to take care
• 45:45
  Speaker 2: of you. So go to HomewardDFW.com, Armadillo. 1 for all of
• 45:51
  Speaker 2: your home warranty needs. Go talk to Theron Smith over there.
• 45:56
  Speaker 2: And then swing on by TOR Studios sometimes at TORestudios.com
• 46:00
  Speaker 2: and get you a sweet podcast set up like this.
• 46:03
  Speaker 1: You know what you do need to do, Jesse? I
• 46:05
  Speaker 1: was on the McKinney podcast last week. And there's a
• 46:08
  Speaker 1: couple of things that you should do. You should always
• 46:10
  Speaker 1: take photos at the end with your guest, Jesse, and
• 46:13
  Speaker 1: you should give them a tour studios mug. Cause I
• 46:15
  Speaker 1: have a green McKinney podcast, um, coffee mug at my
• 46:19
  Speaker 1: house now.
• 46:20
  Speaker 2: I got tour studios mugs, but I just think that's
• 46:22
  Speaker 2: cause we're VIPs. I don't know if everybody gets one.
• 46:25
  Speaker 2: I think we're still on the board of directors here.
• 46:27
  Speaker 1: Yes.
• 46:28
  Speaker 2: So that's how you get a mug.
• 46:31
  Speaker 1: All right. We'll see everyone next week. Bye guys. DFL,
• 46:35
  Speaker 1: turn it up. This is This Week in DFL with
• 46:37
  Speaker 1: your real estate. The weekly podcast.
• 46:39
  Speaker 2: Built for agents who actually get paid.
• 46:43
  Speaker 1: Market moves, listing heat, closing streets. DFL with your agents.