Becoming a Top 1 Percent Realtor with Scott Rome (SS #14)

Welcome, Spotlight Series number 14 with Mr. Scott Rowe. Let me tell you something about Scott. Scott is such an inspiring leader. I'd say one of his biggest strong suits is his ability to, um, paint the picture of the vision, because he had me considering so hard if I wanted to be a realtor or not early on in my career. I couldn't make the decision because Scott sold the dream of that team so well that I was paralyzed. But, um, ultimately we ended up kind of doing our own thing. But I just always remember that about Scott, is like his, his ability as a leader to paint that vision is probably why he's, you know, had the success he's had up to this point. But, um, either way, excited for the conversation. How you doing, Scott?

Excellent. Good to see you, Jake. Yeah, I almost sold you down the river, but, uh, yeah. Before the waves.

I know, I know. Um, gotta make my own— gotta make your own waves sometimes, you know?

Yeah, I know. You're doing great.

That's awesome. Um, but, uh, love it. So I want to get right into it here. I know a lot of things that you've done in your career, from being a realtor to building a brokerage to, you know, building and scaling one of the top new development teams in the country there. Um, I wanted to start it off, uh, with the question here: what do you think is the biggest misconception people have about becoming a realtor or real estate agent in general?

Yes, it's a, it's a good question. And I, I, I come up with this, uh, I'm confronted with this, with this question a lot, uh, because I have a lot of people who are asking me about getting into real estate, uh, and it's, it's not for the faint of heart. I mean, people get into real estate for a variety of different reasons at a, at a variety of different stages in their lives. We see really young people out of college looking to get into real estate. We see retired people who, you know, are looking to do something in, in their, you know, later years. And we see people who have a change of careers midway and like, hey, real estate's great. The good news about real estate is that it's a very low barrier of entry to get into real estate. The bad news is it's a really low entry of barrier of entry to get into real estate. So Um, so anybody could really do it. You need to be 18 years old and you need to be able to take a 40-hour course and, and pass a test, and you're a real estate agent. Um, and there are a lot of them. And so the success rate of real estate agents is really, really low. The failure rate is very high. So, um, one statistic that a lot of people don't know is that 87% of real estate agents after their first year in real estate stop selling real estate. So Jake, if I said, hey, you know, we were talking a few years ago, I'm like, hey, you know, I have this really cool profession, it's real estate, but there's an 87% chance after the year you're not going to be doing it anymore because you won't be able to sell anything and make a living. You'd say, well, I don't want to do that. Now, who would go into a profession where there's an 87% failure rate after the first year?

I'm in that 87%.

So there you go, right? It was like, no, there's, there's got to be a different way to make money. You don't get— there's no benefits, there's no salary, and, and, and it takes a long time to ramp up. Um, last year in 2023, 46% of real estate agents in this country didn't sell a single house. And so people get into real estate thinking, this is really great, you know, I'm gonna sell houses. And it's going to be glamorous. And I just saw season 6 of Million Dollar Listing, and, and I can do that, so why don't I just get into it? Um, and so, uh, now I think it's a great profession. Uh, I'm not, I'm not, you know, slamming the profession of real estate, but I have, uh, my team and I have found a way, after many years of experimentation, of how to onboard and support real estate agents. So they have an acceleration to success much, much quicker than if a real estate agent just got in, hung their, their, their license at a brokerage and just started from scratch, uh, trying to break in. There's, there's over 6,000 real estate agents in the state of New Hampshire, uh, and there's only 16,000 properties that sold last year, uh, and so there are so many people who are trying to find a way in to make money, and there's just, quite frankly, too many people for not enough opportunity.

Yeah, that is a phenomenal response. Of the statistics in there, those are baffling, baffling statistics about, um, being a realtor. I think because it is largely entrepreneurial, that's a hard thing to do because when you really boil it down, it's just being consistent over a long period of time, which is not sexy, it's boring, and no one wants to do that. But what you're saying, it sounds like, is some of the key things that would be able to have someone cut down that time frame is tapping into an existing network or framework. Is that what you're saying?

Yeah, that's, that's right. So, so we, we start— I started a brokerage, uh, when I got into real estate 7 years ago called Brick and Barn Real Estate Group. Uh, I founded the company in Vermont in a small little town, in one little village, and had a vision to build a brand and expand and grow. I was living in Portsmouth, had a house in Vermont, but I, I quickly moved the company to Portsmouth, New Hampshire. And, uh, and then my thought was, let me just get agents, let me just get bodies, because the more bodies, the more houses will sell, and the more houses will sell, the more cut of commission I'll get from owning the brokerage, right? So let me just get bodies. And so for the first, you know, 2 years, we got up to about 74 agents at one time, uh, after just 2 years. And for a while I'm like, oh my God, this is— look, look, there are so many faces on my website, this is awesome, like I'm really growing a big brokerage. And then we reached this inflection point where, where I was looking at the analytics and I said, you know, there's really only 10 of the 74 people or so that are selling anything. And all the other people were barely selling anything, but they were sucking up the resources and our broker's time. And I said, this isn't a good model, but it's a model that is a universal model in real estate. You know, other brokerages, uh, they just want fees from agents and they just, they want more people. Uh, but those, those, those larger brokers will tell you that the statistics are still the same, the same ones I gave earlier, that, that they expect a very high percentage of those to wash out. But when they wash out, a new class of agents comes in, and it's just this revolving door. So at one point we said, we're not going to do that anymore, we're going to only hire full-time agents, because there were a lot of them that were part-time. They sell a house in the fall, maybe they come back after the spring, and And we just didn't want to invest in agents that weren't full-time agents. So we mandated that they're full-time agents. That's, that was one thing. And then we have to, we had to put a process in place for them to follow. So, and to help them to be successful because we had a lot of people who were grasping at, at leads. And so we, at one point we were, you know, using triple dialers and we were, buying leads from Zillow, and we were doing these things, and, um, and we were chasing after all this business that everyone else was chasing after. It was like a feeding frenzy. So, uh, at one point we stopped doing that, and we said, let's, let's just focus on nurturing the people around us, our sphere, our relationships, the relationships that our relationships have, and, and, um, and really, really focusing on that, and stop chasing the shiny object of, uh, somebody who, you know, called in, or someone that we bought from Zillow. So, um, once we did that, uh, and we cut our agents down to, you know, 15 to 20 that we could— that were really bought into that system, that were really open to a new system and a new way of doing things in real estate, that's when we really started to get traction. At that point, uh, we were still independent, but I struck up a conversation with Compass Real Estate Compass is a 12-year-old company now. They're the number one real estate brokerage in the country by sales volume. And what we liked about Compass is that they shared the same marketing vision that we had, the same emphasis on quality and people and technology and brand. And so we became— well, I became the founding broker of Compass in New Hampshire. And, and we launched Maine as well. Uh, and we, uh, they highly incented us to affiliate with them. Uh, and from there we really, really accelerated because we had now a, a big company behind us helping us with all the things that a bootstrapped smaller brokerage really can't do. And the reach that we've— without the connections that we were able to, to, uh, to find through that partnership has been really great. So we're 2 and a half years into Compass. We built an experience center which is behind me that we bring clients and, and people who are interested in new developments, and they see things on a really large movie screen scale. And, and, uh, we have in-house videography, and we, we really organized around the model of a company, a company structure that has various people and various functions in it to make sure that every point of the process is being handled in a systematic, uh, and process-oriented way, uh, and that's really helped our agents. So you had to take a couple steps back in business a lot of times to advance and progress, and we did that. And now we have agents that are, you know, 300%, 400% year over year from last year because they did the academic things that a sales and marketing and business person would do to to set up their business for success. We're really proud of that.

Yeah. That's phenomenal. It sounds like you initially, I know you had worked corporate for a while, I think, and you wanted to start your own business, do your own thing, right? You had that entrepreneurial spirit. That's what started Brick Barn. Initially, you were thinking, "Hey, let me get a bunch of bodies because a bunch of bodies equals a bunch of sold houses." Then you quickly realized, if you ever heard of the 80/20 principle, Pareto's principle, 20% of the people produce 80% of the results. So literally what was happening in the brokerage, and you're like, we have all this overhead, I'm bootstrapping this whole thing, only 10 people are really doing the deals, and it's just a headache with the other 60 people, right?

Totally.

So you, you cut the team down, and then I guess the catalyst for going to Compass was really the resources that they provided. Because you had been bootstrapping, you're like, hey, let's take the best agents that we have, go to this new company with a similar vision, similar marketing strategy, utilize their resources, it just boosts everyone's. Because before then though, you hadn't even thought about new development, right? When you first went to Compass, there's no new development on the table.

Yeah, well, look, look, I, I, uh, and you mentioned my background, I, I have a, a sales and marketing background, uh, for, you know, almost 3 decades I was a marketing and sales executive. I started out, uh, my career with Paramount Television, Paramount Pictures in Los Angeles. I sold syndicated television shows for 6, 7 years. And then I helped start up NBC's internet division in New York. I was the first sales executive they had hired to help monetize their digital assets as the internet was, was just, just being born. And I did that for a couple years. And then I, and I went out to Silicon Valley for 15 years and helped companies start up their sales and marketing divisions, always being based on the East Coast. So I was flying back and forth. And launching new digital marketing, uh, video optimization, uh, content management software applications for, for those companies. Uh, and then after a lot of time working for other people and learning a lot of things, I said, geez, I'd like to do something on my own. And somehow, you know, uh, there's a story for another day, but I, I happened upon, you know, uh, real estate as that, as that choice. So I came into real estate with a sales and marketing background, a corporate background, a process, knowing how companies operate. And I tried to adapt to real estate at first versus real estate adapting to my background, uh, of how to run an organization. And that's why I made the flip. I said, this isn't really working terribly well because I wasn't really being different. I, I, I, you know, you know, somebody can sell the house and put it on the MLS, and so can I. Uh, and so, you know, I could do some cool marketing things, but, you know, I guess so could someone else, even though they weren't doing it. Um, so I was always looking for that differentiator, which is what I learned and honed in the 30 years of corporate marketing, is The field is cluttered, so how are you going to differentiate yourself and penetrate into that market? And so once we came to Compass, we were kind of looking for that, and, um, but really happened into new development. Uh, we had somebody who was looking to build a fourplex in Portsmouth, and we helped them with that. And there was a— they referred us to someone else and someone else, and, and so we started having conversations with builders. And, uh, what we found was that a lot of builders felt underserved by real estate agents. And so we're like, well, why is that? What, what are you feeling? And they felt as though there was no marketing, there was no process, there was really no strategy, and that the realtors would come in once kind of everything was built, or once they had all the plans set out, and they would just put the sign in get the stuff on the MLS, and then they'd wait for people to come and show the properties. So, um, and they were just satisfied by that, and they were churning through real— through agents. And so we looked at that model in a different way and said, well, what if we got involved from inception of the project to the sellout, and we helped you develop the strategy early on, um, brought to, to the table our knowledge of what is selling and what's not and why, what's important to people We'll help build out renderings and plans and websites and logos, many of which are on the wall behind me. And we will ride the whole wave through you and with you. And if it takes 4 years to do it, that's fine. We'll just be with you as partners for 4 years. And then we built this experience center to be able to see things in a just a more clear, more larger format way. And one development after another, uh, people were really excited about our fresh approach. Uh, and you know, right now we've got about 18 different projects roughly going on at any one given time. We've got about 400 to 500 homes that we're either listing or being prepared to list over the course of the next 2 to 18 months. And we built out a real practice. And so, um, you know, why don't people replicate this? And there's really two main, main reasons. Real estate agents aren't trained as marketers, right? They don't think of real estate as marketing. They think of it as selling. And we don't really sell anything. We're showing properties. I can't sell somebody into a property if it's not, not a good fit for their family or for them or for their investment. I can just facilitate the process.. And from a listing perspective, um, I, I, uh, you really have to market these properties and cast the widest net in the best light to bring the most people in and then get offers. And so people who are getting into it at those various stages that I talked about inherently are not marketers and they're inherently not business people. So they just got into real estate because they thought it would be like a fun thing to do. And so there's a skill set that lacks— I don't say anything negative about real estate agents because of it. It's just that it's just not trained to do that. Um, and then they're also, uh, what they are trying to do is just put stuff up in the MLS. Uh, and, and they're, they're, uh, they also— real estate agents don't really have a lot of money that they spend on their real estate business, right? So, uh, and it's very transactional. So you get a commission check and you keep it, and then you just like, you hope for the next deal, and then you So, so there's, there's not a, a real, uh, concerted effort, thoughtful effort to put a portion of that money into their own real estate business. Uh, some do. I'm not, I'm not putting a complete generalization on it, but, but the majority of them don't. And so when they have to actually shell out money for a logo or a sign or rendering or an an advertisement or a video, they're not quite very loose about doing it because it costs them money. And the brokerages that they affiliate with don't give them money to do that. So that leaves these new developments that require money unless the developer is paying for it, and some do, some don't. It leaves them out in the cold with no marketing. And that's one of the reasons that they were so frustrated. And that there was a gap that we ultimately filled. And so the ability for me to come in and say, hey, look, our broker is at a stage where we need to grow, and the only way to grow is to partner. And a lot of broker owners are still very, you know, they still hold on really tightly to their independence, um, and, uh, we kept our independence but were savvy to say— to pick the right partner in Compass to allow us to, to grow, to facilitate the growth versus hindering us and putting us in a, in a different box. And, uh, and that's one of the reasons Compass was such a great pick for us.

Yeah, that is— that I couldn't agree more with all that. So there's a couple important business concepts. I think the fact your business background from Paramount in those 30 years really allowed you to view the entire real— the retail real estate industry, right? The realtor side of things in a completely different lens than anyone else did. You're looking at it like a business, not as like a job. So you're able to identify the different aspects of that marketing and sales and all these things, and ultimately identify that gap in the, the new development space that you were able to just absolutely, you know, hammer and really exploit it, um, with your experience. But Couple key business concepts I think is one, that big is not always better. If, if you are going to try to grow a brokerage, it's going to do you much better to really focus on recruiting and getting the best talent and running a small team that does a lot of volume versus trying to get a bunch of heads, right? And then also getting into the space, maybe you are a newer agent, you should be going with someone either one who is that small group of A+ players you can learn from. That's one thing, okay? You come in, you get some of their leads, or choosing a company like Compass who has a ton of resources for you to use that you wouldn't be able to afford on your own. Having those marketing materials and they give you a partial marketing budget, things like that. I think those are two really important things. One thing I want to transition to, and you had to know this question was going to come, but how are you guys going to handle all the buyer commissions getting slashed and all that?

Yeah. I mean, at a high level, and we've talked a lot about this, and I was on a panel at Compass last month talking about it, um, and, and, and no, not— no knock to you, but just the way you pose that question is the misperceptions that we're trying to overcome. Uh, commissions aren't slashed. Uh, there was never a mandate for a seller to, to pay 6%. There was never a rule. It was always negotiable. Uh, so what they're saying is that, hey, now it's negotiable. It was always negotiable, uh, and, um, and it was never 6% across the board. It really always varied. Um, and so, uh, the only change that is— the only major change is that we can't advertise in in the MLS specifically that were— that there's a— that the seller is offering a buyer commission. It can't be stated in the MLS, but we're still doing a lot of deals, and I can think of 1 out of probably 60 deals that I've seen come and go where a seller didn't want to pay the buyer's commission. And so the dynamics of the industry and how we operate are largely the same. Hey, look, uh, buyers are not used to paying their realtor's commission. Sometimes they just can't, uh, you know, they're really thin on their down payment. And, and, you know, a lot of these first-time home buyers, it's just like they're, you know, they can't afford to pay another $15,000, $20,000, and then they have to go unrepresented. And And, and real estate agents, you know, want to be— or sellers, I should say— want to bring the most qualified people to their property. Well, look, if you say, hey, I'm not, I'm not paying a commission, it kind of de-incentivizes people to come and bring people to your property. Um, and so, so the conversations we're having with sellers is so, so far, because it hasn't, you know, fully gone through yet, that, um, sellers are willing to do what they need to do to bring the most buyers in to get the highest price possible. And that is to offer up a buyer commission. And so, but this whole thing that we're going to lose real estate agents, by the way, we're losing 87% of them a year anyways. So, you know, this isn't going to like collapse the real estate model. It puts some nuances and changes in there. But, um, it's, uh, and it was never that, that, that we're, you know, that, that buyers won't get paid, buyer agents won't get paid anymore. It's really none of that. And unfortunately, when the news hit, New York Times and a few publications wrote some articles that were really inflammatory without really positioning the, the, you know, the whole situation in the right light. And so we've had to do a lot of damage control. But, um, so far has not affected us and we're not worried about it.

I think that's great. That's a great perspective. That's good to know, honestly, because obviously you, you read the stuff in the news. So I think the misconception here too is like there's a false assumption that just because it's no longer required, it's not going to happen. But people miss the underlying fundamentals of how this works, right? Which is the fundamentals are if you're not offering a commission, you know, it's going to be less incentivized to bring people to your house. And if I want to sell my house, I'm just going to end up doing that anyways, right?

But, but, but, but even, even the, the thought that it was required before, it wasn't. Nobody mandated that I had to charge or pay 4%, 5%, 6%, uh, I have, you know, I have to give the other buyer 1%, 2%, 3%. There was no rule around that.

So there's no, there's no rule for, um, what paying the buyer's commission?

There's no rule in paying any amount of commission at any number. That was always negotiable. It was always—

it was just a thing that everyone did.

It was like everyone spoke the rule, but it wasn't required. That was the standard. Everybody pays 5 or 6%, and some states pay the buyer agent 2%. So in, in, in Maine, for instance, it's very customary for the selling agent to keep 3% and give 2%. Well, who do you think came up with that? It wasn't written in any book. That was just a precedent that was set. You know, in New Hampshire it tends to be a little bit more 50/50. I sold in Vermont for a while, it's 6%, 3 and 3, no questions asked. Is— does Vermont require that? No. Does the commission require it? No. That's just what people did. So, so there was never this requirement like, oh, now They're not required to do it. It never was a requirement. It was always flexible. And so that's what we're trying to say is it's still flexible.

So ultimately not much is going to change realistically.

We don't believe so.

That's great. That's great. You know, that's why you can't read the news.

Uh, well, you know what, you can read the news, but you just, you have to measure it with some real-world common sense and conversations and if, you know, just like anything else. But, uh, yeah, I'm not trying to put a, you know, overly positive spin on it. I'm really giving you just the facts. And, and so far we have seen no change and no disruption to our business.

That's, that's phenomenal. I think that's great. I think people should— I think that's good for people to hear and hear from someone who's doing a lot of business in the industry about how it really isn't affecting things and how things get twisted, you know. Um, so I think that's a really good perspective. So I'm glad that you all are out there preaching that. It sounds like you did it on a panel the other week. I think that's great. Um, but that's good news though. I mean, at the end of the day, at the end of the day, rules, no rules, the top players, they find a way to make it happen no matter what happens, you know. So totally, if you're a top team, then you just make it happen. Those— that's the business environment, you know.

Well, look, I mean, you know, the markets, there's no inventory, the interest rates are high. Uh, you know, things are tough— they're all excuses, right? Yeah, people are selling a lot of real estate out there. So, you know, if you want to use the excuses and wait on the sidelines for things to get better, you're going to have a lot of people pass you by.

Yeah, absolutely, absolutely. Scott, I appreciate you coming on. This was great. I think we touched on a lot of things from your, your journey to the market and some of the controversial things, which is always, always good to talk about. Yeah, quickly. Yeah, I know. Where can people find more about you? Where are you most active?

Uh, so you can just go to our website, brickandbarngroup.com, and, uh, you can look me up on Instagram. Scott Rome Compass, uh, is my handle. And, um, if you're, you know, looking for real estate in Maine, New Hampshire, or Massachusetts, or Florida, we do have a team in Florida, uh, that is a great active team there, and we have a great collaboration with them. So, uh, Uh, we can also help you there.

Okay, love it. You're pretty— you do stuff on LinkedIn too, right?

You can— I do, yeah. You can find me on LinkedIn as well.

Okay, great. And lastly, okay, so for— what would you say is the number one action step that someone needs to take today if they have no experience in real estate whatsoever and they want to get started?

Uh, so I, I don't encourage anybody to get into real estate cold unless you find a— and you mentioned this before— find a team or a mentor or somebody that you can attach yourself to, to learn the business firsthand and learn it in the right way. And there are people out there, uh, and there are teams out there like us, even though we're really not recruiting or really hiring right now. But there are— you, you really need to just hook yourself to to a really solid team or person, uh, that can help accelerate you— your integration into real estate. Otherwise, it's going to be a longer, tougher road. I'm not saying it's impossible, but it's going to be a longer, tougher road.

Absolutely. It's just going to be harder to stick with.

So, yep, absolutely.

Amazing. Incredible, Scott. I appreciate your time. Uh, for everyone else, we got Spotlight Series number 15 coming up with, uh, Justin Tubinowski, I think, in, in a couple weeks.

So till then, yeah, thanks, Jake.