My Friend Bought Her Own Real Estate Company (Here's How)

My friend Lisa didn't want to just be a realtor. She wanted to have ownership in the real estate business. She was one of the top producing realtors at a local firm here in Las Vegas. And instead of just earning more and more money that way, she was like, how could I buy into a franchise in order to make money? Not just when I sell a house, but when other people sell houses and when everybody sells houses at the firm? So that's what she did. We're going to check out her place called Engel Volkers. This one's all about being an owner, not being owned. But before I show you you about Engel Volkers, which is the real estate firm we're at, I got to do one thing. Well, I had to put on adult clothes. And you'll see why in a second. Come on. One of the reasons I think this.

Is a cool story is how to.

Think about ownership when you are in a segment or an area, whatever that area may be. And so you had progressed as one of like, let's say the top agents at Sotheby's, right? And then at some point you're like, I want to learn the business side and I want to have sort of equity in the business beyond just my deal making. Talk to me about that and how that happened.

I initially got into real estate by accident. I was working at the law firm doing business, litigation business, bk we had clients that had real estate needs and we were just referring that out. And I thought, what if I get my real estate license and just team up with a full time broker? And here I have this steady pipeline of business. And so it's exactly what I did. So I approached my previous real estate partner at the time and I said, hey, I've got this book of business. I don't know anything about the industry or like being an agent, can I team up with you? Let's split everything 50, 50. And I will bring a ton of business. And I will also, like help learn the business too. I want to learn. So we ran a team at Sotheby's for five and a half years and it was an incredible experience. Literally learned what it's like to be an agent, right? I know what it's like to go sit at some weird $90,000 condo and hold the open house and go door, knock and run around with your buyers all day. Been there, done that. And I'm so glad I have that experience because I know what that's like. As a brokerage owner, I thought it was really important for me to build a culture of collaboration and healthy competition. I know what it's like to compete against your broker for business. And as a result, as a brokerage owner, I didn't want to compete against my agents. I wanted them to have an where I can help build them up to be top producers. And then from the business side, the house takes their cut, right? The house gets a cut on every single transaction that's done. Whether it's my transaction, your transaction, your transaction, whoever's part of the brokerage, the house gets a cut. So my thinking was it's a longer play, but let me build up every single one of these agents to be a top producer. So that way my role now is to help train, mentor, support our agents so they can go out and, and be top producers and build teams under them.

How's this for a branded shot? You got your branding in here and everything. How does one go about buying into a brokerage? I don't know very many people that have actually owned a real estate brokerage firm.

You can get your broker's license and just open up your own shingle, right? Cody Sanchez, Real estate Right. And now you're a brokerage owner. The powerful part about these franchises is that you have access to a global brand. So Angle invokers is a privately held company based out of Germany, where across over 30 countries, we have over 250 locations just in North America alone. So it's an incredible network that you immediately gain access to and it's a huge wide referral base.

The benefit is basically if I'm a wealthy person and I buy a house in Aspen and then I want to go to Vegas and buy a house, my Aspen broker isn't going to be able to take care of me in Vegas. And so they call up Lisa who owns this place and basically you get referrals and you do the same for them.

And you sort of have a process.

Of saying, oh, you buy real estate here and there, where else do you do it? And trying to keep them in network, for lack of a better word.

That's exactly right. And the other nice thing about Engel and Bokers is that not only are we able to service with the real estate, but we can also service with yachts, with other high end luxury goods.

When I want to buy my yacht, I'm going to call Lisa.

Hi, I'm Lisa, attorney turn entrepreneur, real estate investor and part time taxi driver. Aren't we late? Anyway, seriously, the bitch flies in for an interview and now all of a sudden I'm A freaking Uber driver. The color's pretty sick.

What else do you guys sell?

Obviously all high end luxury real estate. And then they're on the commercial side as well. They have ev commercial collectibles, goods, wine.

Weird. Let's say that I'm an aspiring Lisa and I want to buy into a franchise. How much capital do you have to have? And like, what do you have to feed to convince them to sell to you? Because I think it is.

You have to convince them. Yes.

Right.

So there's several components. One is obviously the cash part of it, Right. They want to see the financial wherewithal that you have the ability to not only carry the brokerage, but also to carry the brokerage for five years, 10 years, however long it's going to take. Right. Secondly, and most importantly, they want to know that you have the ability to lead a team to success.

Tell them about the time that you went to go convince another brokerage. You were like, why isn't this brokerage in Vegas?

Like, you should be.

You should be one of the top ones. And you, my friend, should have the lucky honor of having me, Lisa Song Sutton here as your franchise head.

The brand that I owned for real estate before this one did not have a presence in Las Vegas. And I was like, they should have one. So I contacted them and they routed me to their New York headquarters. And I said, why are you not in Vegas? And they said, we only enter Tier one markets. And I said, well, we're a very affordable city, but we have great stuff on the way. And at that time, the Golden Knights had just gotten started, which is our NHL team. The Raiders were still a rumor at that time. Amazon had just worked out of warehouse steel, so there was few things in the pipeline that were starting to come up. And I said, let me just come meet you and explain to you why Vegas may not be tier one to you yet, but it's on its way and you should get in now, get in on the ground early. So I flew to New York and then I flew to London and I pitched their board on why they should enter the Vegas market. And it ended up working out. It was just a crazy, crazy time and it was a lot of fun.

Okay, let me tell you the part.

That I like about. Hello?

Are you following my face? Yes, you are. Okay, let me tell you what I like about this. Lisa basically had big, big balls. Can we say that on YouTube? I think we can say that on YouTube. And the part that's cool is she was like, I'm not taking no for an answer, you don't do tier one cities. She basically put together this whole pitch deck about why she should be the one to run it.

And I think half of being successful.

In business is deciding that you are the architect of fate and not letting somebody else do that. And now she's got a fancy office here with a bunch of different people that are responsible to her. And that was only because she took a big, huge risk with her big, huge balls.

That's it. Huge ball.

New tagline.

In this woke environment, they're going to be like, oh, is she. You're going to start a rumor, Cody. Raising the interest rate to raise interest rates.

Inflation in 40 years about real estate is. What do we think is going to happen? Let's ask her. I think we should take the hard questions.

Well, here's the thing. Everyone's scared and talking about inflation right now, which is absolutely a reality that we're going through, but one of the best hedges against inflation is actually putting it into real estate. Now, sometimes you hear some people chatter about what happens if another 2008 happens. 2008 happened for a myriad of reasons that actually are circumstantial circumstances that are not on the table right now, at least here in Las Vegas. And from what I'm hearing around the country, there is a severe lack of inventory in order for us to see prices dramatically decrease. Is if there is a flood of inventory that hits the market. How would a flood of inventory hit the market? We just don't have it lined up in the cards for that to happen. At the moment.

I feel like I'm negotiating against you. I actually would not want to negotiate against you. Like, these things aren't. I don't think copy paste, you know, you have to negotiate. You have to think it for yourself. How do you think about negotiating as an owner of a business as big as Engel Volkers and negotiating with big players like them? Any secrets that you think about?

The first thing I take stock into is what value can I provide? Of course they have something that I want and they have several things that I want. What do I have or what can I get or what do I have access to that is valuable to them that makes me interesting enough for them to hold an audience with me and want to do business with me.

Figure out your leverage points, essentially.

Yes, exactly right.

So it has to be about more than money. Oh, hey, I hear this worked out kind of well for Coinbase during the Super Bowl. You know, totally crashed their sites. Millions of people downloading it. I Think the same thing's going to happen with you guys today. Minor item about crypto now being a fire sale. So we partnered with somebody that hasn't lost, I don't know, 26% of its value in the last six months and like half of that yesterday. You want to see it? Oh, see this QR code? There it is.

Yeah.

You guys see it again?

You get it? You get it.

If you're into real estate, check out the sponsor of this here video. It's Fundrise. Drop in the comments what you think. Actually start investing with them in April of 2018. So it's kind of wild that now a company that I invested in for a long time sponsors this video. How cool is that? Check it out. So when you came to Engel Volkers and said, I want this franchise and give it to me, what was your pitch?

There was an existing Engel and Volcker's office already in Las Vegas and Henderson, and I happened to know the owner again, having been, you know, having ran that team at another brokerage, having owned the previous brokerage that I did, and having good community relations. So I picked up the phone and just called him and I said, hey, do you have time to meet up for a coffee? I'd love to chat with you. And I just asked him what his plans were for his existing business. And that's when I learned some details and circumstances that ended up being a perfect fit for the type of value that myself and Kathy, my real estate partner, can bring.

Why did you decide to buy into one here as opposed to bring one in?

Looking at what the options were on the table, when you look at global brands, especially within real estate, there's only a handful, and that pool gets even smaller. If you don't want to own one that's owned by a large publicly traded company. Sotheby is Coldwell bankers, Corcoran, ReMax, Centro 21. All those brands are owned by Realogy, which is large publicly traded company. I didn't even know that that's what they. Yeah, it's out there. The previous brokerage that I owned was privately held at the time Angle and Volkers is privately held as a small business owner. As an American entrepreneur, I enjoy supporting privately held companies. I think it's important from an aspect of being entrepreneurial. Usually they're more nimble. They don't have to go through all the red tape and all the board decisions that these large publicly trade companies have to go through.

You are one of the top real estate firms in veg and you have A killer team like luxury based, super high end producing team. And you held onto a lot of conviction of not changing that. I think a lot of people would have bowed and been a little. It would have been hard for them to walk away, buy a new firm. And you said, no, I'm gonna do it anyway.

Do you have a way that you.

Think about conviction or how to stand by your guns? In that instance, what made you not just sort of kowtow to what was wanted by the other company?

For me, I have to look at what the long term goal is. I want to own this real estate brokerage for the next 40, 50 years of my life. So as a result, I don't want to be tied to a brand that may end up changing ownership again through a publicly traded company or some sort of VC firm in 3, 5, 10 years when they build it up and sell it. I want to stick with a global brand that has the wherewithal to stick with me because I plan to blow it out of the water and just keep building and growing here in Nevada.

So you basically were like, long term plan, I'll take short term pain because I know that long term this will be the most lucrative thing for me. It's kind of a common theme for you, why you decided to own the business instead of being an agent. Theoretically you could go sell a bunch of houses, make more Money in day one, probably 100% being the owner of a brokerage and also have no risk, no skin in the game. But you were like, no, I'm going to think long term. Tell me about how a brokerage works. I want to see the numbers.

Yeah. So if you get some sort of like mailer in the mail and you have this brokerage talking about 500 million sales volume, 100 million sales volume. Right. So that's great. 100 million sales volume means that's the total amount of gross sales volume in homes that they have sold in that set period of time. Right. So when you hear these giant numbers of a $22 million house or $15 million house, that's the price it's sold at. That's not necessarily the price that the commissions are paid out at. So the way the brokerage model works, the way our model works, we're what's called a 6% brokerage. So we make 6% on the sale price. If we double end both, if we bring the buyer and seller, we strive for that. Sometimes it ends up being broken down in 3 and 3. You have other brokerages where they'll do a 6% and they'll do a 4 and 2 or they'll do some, you know, they'll mess around with the decimals. We want to be fair, we always do a 3. We always offer 3% to the buyer side if we're, if we're doing 6% on the listing because we want to make sure that that listing gets maximum exposure number one and number two, that that other agent on the other side of the table is going to be vested in working on the deal with us to get it to a smooth transaction.

What does the agent make of that?

So this is where, if you are a real estate agent or thinking about going into real estate, this is where your negotiation chops come on the table. When you're talking to a brokerage and you say, look, I'm a top producer, this and that, here's what I want my cut to be. That cut is totally 100% negotiable. It doesn't matter what the brokerage tells you what they have to abide by whatever it is. Even in franchise models, the agent cut is totally negotiable. So as a top producing agent, my cut when I worked as a top producing agent at another firm was in 90 10, I negotiated 90%, I kept 90% of my commission and 10% went to the House. Now for that 10%, I want to know what you're doing for me. I'm not just giving you 10%. Right. I want to know that maybe my marketing is taken care of. Maybe there's a stipend that goes towards my marketing. Maybe you have resources that are available to me. So for our agents, because we're a 6% brokerage and we want to retain and attract top producing agents, we start them at a 70, 30 based on sales volume and they can increase and get up to a 9010 eventually. So as an agent, just know that you can always negotiate whatever the split is. And I've seen some, the Keller Williams and those guys, they'll do a 50, 50, think about it. If it's as a business, not only do you have the commission splits with the agents, but you also have these like monthly fees, all kinds of stuff. And so with us we don't nickel and dime our agents because we want top producing agents who are incentivized by the, they work. And the more they produce, the more sales volume they have, the more they take home. Right, that makes sense. There are other models, other brokerages out there that will charge, let's say $100 a month desk fee and you get 90, 10 of your commission split. They don't care if you're producing because they're making a hundred. So they sign up every person with.

A pulse that has a real estate license.

Do you see what I mean?

Yep.

And that model is based on volume, and that's fine. But that's massive risk as a brokerage owner because our E and O insurance is out there, our business insurance is out there. Right. Our liability is on the line. Our brokerage is on that contract with the client. I don't want 500 agents with a pulse who work part time or do transactions sometimes paying me a hundred dollars a month to work for our brokerage. I would much rather have agents who are incentivized by these types of tiers. And I don't nickel and dine them and collect a monthly payment from them. And I only get paid when they get paid.

I love that. So I think the most important thing is what you just talked about. How do you hire, how do you fire? So how does that work here for you? Do you have frameworks to think about hiring and firing?

Yes. So in relation to hiring, of course, the easiest thing to look at is that sales volume number and then also learning what were they actually making at their other firm? Because if they were at a 70, 30, but still a top producer, you're like, well, we have some wiggle room here to discuss to make it more attractive to you. What I do like about hiring, though is that you'll see a lot of firms that will go poach the absolute highest top producing agents and offer them signing bonuses and an office and all kinds of stuff. I like looking for agents that have maybe two, three years in the business and they've got a sweet spot that they're really good at and maybe that's turning around $500,000 homes, $600,000 homes. But they have grit and hunger inside them that they want to take their business to the next level. Our role then becomes supporting them in that and like really encouraging them and mentoring them to take their business from $650,000 median sale price in their portfolio to 1.2.

Then when you fire somebody, this can.

Be a lot of different reasons. The first thing I look for is how they're performing. Right? And we keep very close track of that one. We look at the metrics, we look at what they're producing, how they're producing, what roadblocks are they having. Are they roadblocks that they keep having? And then we have a discussion around what's going on Right. How do you go from here to now? It's decreased a little bit now what's going on with you? And oftentimes it's gonna be a personal matter. It could be their heart's not anymore. All kinds of different reasons. And so I like to have that discussion around, why are you doing it? What's important to you? What's motivating you?

Yeah, I dig it. All right, so you might think that luxury real estate is all about wearing things like this. And it kind of is, because look at the rest of our team. But it's also about things like this. What the heck is this closet? And what is. What is what actually goes into luxury real estate? Because I think it's not always that luxurious.

This is where we store our open house signs, obviously, Christmas decor that comes out seasonally. Boxes of our Engel and Voker's Gigi magazine that we use for marketing.

Hot off the bus, I'm sure. Basically, I think the moral of the story here is everything's a hustle. I mean, this lady owns cupcake companies and, you know, pack and ship companies and bikini companies. And, like, this one's 100% your highest revenue business and probably your most profitable business, I would guess. But simultaneously, it's still a hustle, man. You just, you know, you choose your game. One thing that I think is interesting about how you do it is all of your businesses are sort of these ripple effect, right? Like, your real estate business also helps you find, you know, new customers in your community for your pack and ship. And you also use your cupcakes for real estate events. And then you also used both of those for, like a congressional run or, you know, you were Miss Nevada, which means, you know, a lot of people in the community wanting to buy and sell. And so I think one of the things that's most interesting to me about you is just you take whatever your unfair advantage is and you apply it to business, and you create incredible things and you allow people to live incredible lives through you taking a ton of risk as the owner of the business. And I think that's what this is actually about.

Yes.

It could be about making millions of dollars as a brokerage owner, which you have over the years, and you're going to continue to. But it's also about a little bit more than that.

I think it's about getting ingratiated in your community.

Right.

I mean, my talked about this before about my time as Miss Nevada. I did nearly 500 community appearances, volunteering in schools, raiding in hospitals, working with countless nonprofits. I did a boys and Girls Club tour, the whole state. All of that took me away from my businesses during that time. But all the businesses actually saw an increase in the bottom line. And it was because I was out meeting people, talking to people, and they saw that I was out supporting the community, and so in turn, they wanted to support me.

That's it.

It.

See you later. Bye.