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HOMESMART UNDER THE HOOD
October 2019 $7.95
Matt Widdows, HomeSmart CEO and Founder, Talks Revolutionizing the Industry Through Tech and Building the Brand That Will Change the Game Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
HOMESMART UNDER THE HOOD Matt Widdows, HomeSmart CEO and Founder, Talks Revolutionizing the Industry Through Tech and Building the Brand That Will Change the Game by Maria Patterson
2 SeptemberReprinted 2019 RISMedia’s REAL ESTATE with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
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ust shy of its 20th anniversary, we asked HomeSmart International’s tech visionary, CEO and Founder Matt Widdows, about the rapid growth of the Inc. 5000 Hall of Fame company. Here’s what he had to say:
‘WE’VE HAD THE TECH THIS WHOLE TIME!’ “We always hear about new technology entering the space, or funds raised to develop back-end systems and more tech. We read articles about ‘firsts’ in the industry, and we shake our heads, as we’ve had a full proprietary tech stack this whole time,” says Widdows. Maria Patterson: How did you know tech was going to be so critical to the future of real estate?
Matt Widdows: I spent years working for various real estate brands and felt technology was lacking in the industry. I started HomeSmart in 2000 because I knew there had to be a better way to serve agents. The traditional way of reviewing a file was antiquated and inefficient. As a small brokerage with one broker and a receptionist, I needed a way to eliminate redundancies and give real-time status updates to agents. This need led to my first web app. It was rudimentary, but it did the job. I then hired developers to continue what I had started.
MP: How has your technological approach to real estate provided long-term growth and stability for the brokerage?
MW: My vision was to utilize technologies that supported systems and services to make both the agent and brokerage successful. By using tech in our day-to-day processes, we can be more available for answering calls and helping our agents. The software reduces the number of team members needed, therefore allowing the brokerage to be profitable with a flat-fee model. In short, we hire people to service agents. We build technology to serve the business.
MP: How is HomeSmart’s technology driving the company’s success?
MW: HomeSmart is an industry leader in innovation. Our proprietary technology provides an efficient and systematized structure to the real estate brokerage. It allows for operational excellence through efficiencies and enables agents to have successful careers without paying high fees. We provide our franchisees the systems
Left: HomeSmart International employees celebrate 20 years of amazing culture. Right: Matt Widdows answers agents’ questions at the 2019 HomeSmart International Growth Summit.
and support they need, from marketing to transaction management to training. This allows them to function with low overhead. Franchisees in almost 30 states wouldn’t be able to leverage our Centralized Services team, which provides a national level of consistent service and support, if they weren’t all running on the same tech platform. Investing in creating technology that moves us forward is part of what makes us successful. MP: Why did you build RealSmart Agent and RealSmart Broker?
MW: I knew allowing agents to keep more of their commission was the model of the future. Technology was the only way that could happen while still being profitable. I built RealSmart Broker and Agent as a way to differentiate HomeSmart from the rest of the industry and innovate the way real estate was being done. In general, if it’s a repeatable task—or something that can be forgotten or prone to human error—I program it. Our technology stack has allowed us to do just that and made it easy to scale due to the automa-
Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
market, we build it and integrate directly into our existing platform. And because we developed it in-house, we provide most of it for free across our entire brand. This provides a consistent experience and offering for every HomeSmart broker, agent and consumer across the nation. When I see other brokerages who are just now rolling out proprietary tech, I think, “Good luck!” We’ve been doing this since 2002, and it’s not easy. MP: What sets HomeSmart’s culture apart?
Matt Widdows launches SmartReception technology in 2002. tion built into our systems. I wanted a way for agents to manage their entire business in one place, using a single login. That philosophy remains today, and when you look at our tech, it isn’t just a bunch of fluff that slows you down. It makes the jobs of our agents and brokers easier and more efficient, while allowing them to provide outstanding customer service in a consistent, repeatable and profitable manner. MP: What does it mean to be fully integrated, and what does an end-to-end platform look like at HomeSmart?
MW: Fully integrated means not bolted together. No APIs, no multiple logins or windows, no double entry. Just seamless workflows. Our systems are built in the same platform and are inherently integrated. On top of that, we aren’t held hostage to a third-party company and its development priorities and contract renewals. Our technology is in-house and end-to-end, from the listing or buying appointment to post-closing. MP: How do you use technol-
ogy to improve service to your agents?
MW: Often, technology is created for the sake of creating technology, not to solve specific problems. We
create technology to imitate human processes. If we’re doing something manually, we take those “human” steps and translate them into an automated solution. Our goal is to remove manual processes for our agents and make it simple with a more error-free digital experience, saving them time and making them look better in the eyes of the consumers. Through automation of tasks, what one person can do manually in 120 hours, they can now do in 40.
‘WE’RE POISED FOR EXPLOSIVE GROWTH OPERATIONALLY, TECHNICALLY AND CULTURALLY.’
MW: Our focus on outstanding customer service for everyone we serve. We’re heavily motivated by metrics. They’re part of our company fiber. We expect a lot from everyone at HomeSmart, but we also give back and take care of our people. I want a place where people come to work to work hard, have fun and make an impact. I never want to dread coming to the office or working with people that I don’t enjoy being around. It never ceases to amaze me when I go to functions and everyone is relaxed, casual and fun to be around. HomeSmart is not a place for stuffiness or egos, and those qualities generally don’t last long within our culture. I love that! We treat each other as family and
“We’re business first, real estate second. We understand what it takes to accomplish our goals. We focus our team in four key areas: growth, operational excellence, technology and culture,” says Widdows. MP: There are a lot of brokerages and technology companies in real estate. What makes HomeSmart different?
MW: Integration and adoption. Our end-to-end technology is built in-house, allowing HomeSmart to seamlessly integrate every aspect of our tech stack, from transaction management to CRMs to marketing tools. If we see a tech need in the
Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
with respect. Preservation of that culture is hugely important, and we protect it with a vengeance. It took a long time to get here, but it’s real and company-wide.
MP: I get the 100-percent
MP: How can HomeSmart
MW: It’s all about scale and smart business. We run a business that happens to be in the real estate industry. I think that’s a unique viewpoint. We build business processes that allow us to be efficient and lean without sacrificing service. Then we scale it. The technology is what enables us to do so at a profit.
brokers manage such a large volume of transactions with such a lean staff?
MW: Technology allows our departments to maximize their output by focusing on their specific roles within the transaction. This keeps our brokers on high-level calls, file review and legal matters while the rest of our team handles the other aspects of the transaction. We also have a dedicated support team to answer calls about anything non-transactionrelated. When each team is hyperfocused, we can do more with less. That’s the beauty and one of the key differentiators of our proprietary end-to-end systems. As the fifth-largest brokerage in the United States, we’re able to manage a 9,788-plus agent brokerage with 100-percent agent tech adoption. We processed 36,064 transactions last year, answering our phone 92 percent of the time before going to voicemail with a team of only 38 brokerage employees. We’ve figured out a smarter way to run a brokerage.
model and why it’s a benefit to agents, but how can you run that model, still make a profit and provide leadingedge technology?
‘HOMESMART IS THE COMPANY TO WATCH THE NEXT 20 YEARS.’ “We’re not interested in a few key stories or wins. We’re in this for the long game. We know the industry, brokers, agents and consumers. We’re here to ease the path to homeownership while revolutionizing the industry as we go,” says Widdows. MP: Why push yourself so hard? What are you trying to accomplish?
MW: I’m working to revolutionize the real estate industry. I want HomeSmart to be the brand that does so—the brand that made real estate better for brokers, agents and
consumers. HomeSmart will stand the test of time and will continue to innovate through the ever-changing industry landscape. MP: What is your day-to-day involvement in HomeSmart’s tech and systems?
MW: Technology is one of my passions. I’m heavily involved in the design, development and implementation of our software. I meet with the team regularly and strategize with our leadership group about what’s needed to improve our technology. I have a clear vision of the different areas in our business that have processes that can be made better and faster for clients. As the industry continues to change, brokers, agents, buyers and sellers all experience different pains, so we adapt our technology to keep up and relieve them. Creating productive and useful tech is my most significant focus. It’s the biggest impact I have on the company
Left: Matt Widdows and Development Team Manager Gina Ippolito collaborate on advancing HomeSmart’s in-house technology. Below: HomeSmart International Senior Leadership team plans strategic corporate initiatives.
Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
today—and has always been a large part of what I do. MP: What are some of the recent changes to your proprietary technology?
MW: We recently rolled out a complete rewrite of our RealSmart Broker and Agent platforms and released the RealSmart Agent Mobile app, which allows agents to track transactions, listings, contacts and documents, and perform anything they would do on their desktop in the field. We will soon incorporate our eDocs and signing platform into RealSmart Agent, creating a completely server-based transaction for both HomeSmart agents as well as agents with other companies. Our newly released tools provide an upgrade from our previous offering and strengthen our foundation. We’re working on building technology for the consumer to connect all aspects of the transaction. We want to take the same positive impact our tech has had on our brokers and agents and bring it to the consumer. This means not only providing the typical home search capability, but also better insight into the transaction process. Integrating with other vendors such as title and mortgage will allow our platform access to past transactions and electronic documents with any of our brokers or agents. It’s all about thinking of tomorrow and implementing today. That’s how we will win with our disruptive model in a rapidly changing industry.
MP: There are critics of the 100-percent model that call companies who use it “discount brokerages.” How do you respond to that?
MW: Most of those critics are now scrambling to figure out how to either switch to our flat-fee model or maintain a value proposition with high fees. We’re seeing a shift away from the traditional model. We provide the
Matt Widdows discusses HomeSmart International’s next franchising opportunity with Chief Counsel Susan Watson and Senior Vice President of Franchise Sales Bryan Brooks. tools you get at a split-fee brokerage, plus proprietary tech that makes it easier for our agents and brokers to run their businesses at maximum profits. We’re agile and efficient, and no matter if the market is good or bad, the model is profitable...and it’s working. Twenty years ago, we were looked down upon in the industry, but that’s not the case anymore. I invite anyone to come by our headquarters for a tour. HomeSmart offers everything a traditional brokerage provides and then some. We have beautiful offices with conference rooms, technology and private workspaces. We have broker support seven days a week and a department approach to servicing our agents quickly and efficiently for their specific needs. We provide mentoring and training, including CE, and offer community impact events for our agents to participate in. Our agents receive excellent support, training, marketing tools and free technology—and keep their commissions. MP: Next year marks the 20th
anniversary of HomeSmart. Two decades later, how do you see the company today?
MW: What started as an idea to offer a low-cost, technology-forward
real estate company has grown into a technology company operating in the real estate space. For us, this is a substantial competitive advantage. HomeSmart’s technology is the best-kept secret in the industry. Other companies are getting billions of dollars in valuations for technology that we have had for years and that our agents and brokers are currently using to streamline their businesses. They’re focused on bells and whistles, whereas HomeSmart focuses on technology that makes people’s lives easier. Agents need technology that helps them move faster and increases their transaction velocity. Other companies want it and are trying to get it. We’ve had it and continue to improve it. It’s important to understand that we’ve always been about continuous innovation. We created virtual reception technology in 2002 to allow for scale of service to multiple branches. We went paperless in 2008 when everyone said it would never happen. A year hasn’t gone by where we haven’t created or improved what we offer from a technology perspective, or any perspective, for that matter. I think that’s part of the secret to our success. The status quo has no place in our organization. RE For more information, please visit www.homesmart.com.
Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
2. Keep Vendor Commitments to a Minimum. The fewer long-term vendor commitments you have, the better. Acquisition negotiations can get very bogged down when the seller has multiple vendor contracts that need to be untangled. Ultimately, this usually costs you as the seller. That discount for signing a three-year term may not be worth it if you want to sell in the next one to two years.
Advice for Brokerage Owners Getting Ready to Sell Commentary by Bryan Brooks
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ew York Times best-selling author and award-winning innovation expert Jeremy Gutsche has predicted that by the end of the decade, only 40 percent of the Fortune 500 companies we know today will still exist in a meaningful way. The rest will essentially disappear. If this trend holds true in the real estate industry, of the 80,000plus U.S. brokerages currently in business today, only some 32,000 will exist in just a few short years. That’s a lot of brokerages that’ll go out of business or be acquired by other companies. The industry headlines already support this trend. In recent months, we’ve seen many noteworthy brokerages sell. Four of the largest brokers in the country—Pacific Union, Allen Tate, Long & Foster and Ebby Halliday—were acquired last year. This year, the trend has continued with the recent announcement from Alain Pinel REALTORS®. The vast majority of brokerages in the country are small to midsize businesses, not the mega brokers mentioned above. If you own one of these businesses, your exit may not be as headline-grabbing, but it’s
still a major life event for you and your agents—and one you want to maximize. If you’re thinking of selling your brokerage, here are three things you should consider immediately to position yourself for the market. Just like homeowners need to stage their homes to maximize value, you need to stage your business. 1. Do Not Sign a Long-Term Lease. You want to keep your office space commitments as flexible as possible. Keep the terms short and, when negotiating, try to coincide the lease expiry with your optimal sale date. The potential purchaser will then have the option of keeping your space or merging your office with another location they may already have. This flexibility will give you, as a seller, a stronger negotiating position.
3. Declutter Your Profit and Loss Statement. When you’re a small business owner, you want to minimize profit to minimize taxes. In this case, it’s common to be generous with the expenses that run through the business. When you’re a seller selling a business that’s often valued based on the bottom line, this strategy can backfire. If you’re looking for a valuation that’s a multiple of your earnings before interest and taxes (EBITA), you want to make the calculation of this number as simple as possible. Long discussions over adding back expenses and exercises of normalizing profit and loss statements only complicate negotiations. By working on these three areas of your business now, you’ll be making yourself a more attractive seller. Whether your timeline is immediate or in the near future, a little business house cleaning will optimize your curb appeal for potential buyers. The landscape of the residential real estate brokerage is changing at a faster pace than ever before. Now is the time to make a move to strengthen yourself for the future. If I can help, please let me know. RE Bryan Brooks is the senior vice president of Franchise Sales for HomeSmart International, responsible for spearheading the company’s domestic and international franchise growth initiatives including mergers, acquisitions, roll-ins and conversion opportunities. You can contact Bryan directly at BBrooks@ hsmove.com. For more information about HomeSmart International, please visit HomeSmart. com/Franchising.
Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019
{Broker Best Practices} Tools, Training, Technology by Paige Tepping
What do you like most about the region in which you work? I love Long Island because it’s close to everything. A true bedroom community, we’re within an hour of New York City and a short ferry ride to Connecticut. With Long Island Sound to the north and the Atlantic Ocean to the south, we offer the best of both worlds. In my opinion, there’s no better place to live.
Richard Raspantini Broker/Owner HomeSmart Premier Living Realty Williston Park, N.Y. www.HSPremierLiving.com Region served: Long Island, Queens and Brooklyn Years in real estate: 5 Number of offices: 4 Number of agents: 92 Favorite part of your job: Mentoring agents. I love the look in their eyes when they do their first deal. Who has most influenced your success? West Coast real estate professionals. Long Islanders tend to be slow in terms of adapting to new and changing technology, so when I got into the business, I followed the lead of those working on the West Coast. This led to my becoming a top-producing agent within my first six months in the business.
Please describe some of the current trends you’re seeing in your market. We’re seeing a sweet spot when it comes to properties that are listed at $500,000 and below. In fact, anything in that price range is currently flying off the market, while properties listed at $800,000 and up are sitting a bit longer. How does your company make its agents’ jobs easier? By offering them all the tools, training and technology they need to be successful. Through our backend system, RealSmart Agent, agents have the ability to work anywhere, anytime— as long as they have an internet connection. Taking this one step further, agents can access flyers, manage their website and download listing presentations all from the backend. They can even upload paperwork to RealSmart Agent for broker approval. In the end, the higher commission they’re earning
allows them to make more money on any given deal, which leads to them having more money to spend on marketing. In what ways do your agents use technology to better serve their clients? In addition to our large social media presence, I recently built a TV studio in the office so that our agents can get in front of their clients through a variety of different mediums. Whether they’re talking about market conditions/trends or highlighting a new listing, video is a great way for agents to showcase themselves. While some of our more experienced agents shy away from the TV studio because it’s different, it’s a great way for newer agents to launch their business and help it grow. What sets HomeSmart Premier Living Realty apart from other brokerages? Our culture. We’re a non-competitive brokerage where we all learn from each other and are always available to help one another. In fact, it’s not uncommon for experienced agents to take newer agents under their wing and show them the business. Because we offer a unique brokerage model, we appeal to a different kind of agent. For more information, please visit www.homesmart.com.
Reprinted with permission of RISMedia,Inc., publisher of REAL ESTATE magazine • (800) 724-6000 or rismedia.com • October 2019