How Michael Weigand Increased His Price Point by 60% in 18 Months By Putting Quality Over Quantity (Sell Less Homes & Make More Money!)

This is Real Estate Team Builders, and I'm your host, Lars Hedinborg, the founder of Real Estate B School. The real estate team building world is driven by big egos who boast about how many homes they've sold or how much GCI they've earned. We don't hear much about their low profit margins, the long hours they put in each week, or the unbearable stress they endure. In fact, I discovered that most real estate teams are losing money when you consider the amount of personal production their owners must do to make ends meet. I believe that if you want to profitably scale your real estate team without working crazy hours, enduring unhealthy levels of stress, or coming up short at home, then thinking like a business owner, building sustainable systems and empowering your team are absolute musts. You won't find any smoke and mirrors or hype here on my podcast, just the real world tools, systems and strategies that work. So if you struggle to balance growing your real estate business with focusing on the areas of life that truly matter, then this show is for you.

All right, y' all are in for a treat. For today's episode, I've got the CEO of Culhane Premier Properties, Michael Wigan. And these guys will do about 125 million of volume out of Austin, Texas. And we're going to unpack today how these guys increase their business by 60%. So essentially increasing their business by 60% just by making a decision on the clients they serve and going from a 499, $35,000 average price point with which any team would love to have. Right. Our average price point in my market is like 275. So to go from 435 to average $700,000 price point. And we're going to break down that conversation today. It's this conversation of quality over quantity. So, Michael, give us a couple minutes on your background, your position there, and what do you do day to day? A little bit about, like, how long you've been in real estate, kind of lay that, lay the groundwork for us.

Yeah, for sure, man. I'm excited. Thanks for the invitation. So my history is a little interesting. I was a golf pro, PGA professional for 15, 16 years before I get into real estate. We always joke in the golf world that if you ever get out, you're either going to do insurance or real estate. And I couldn't do insurance. So real estate. Here we are. Started out with kw, like a lot of folks, great training, went through the whole process over there, got out on my own, started kind of seeing some challenges, had some ideas about how to run a team and how I thought, you know, a team that I wanted to be a part of. And by, just by total happenstance, ended up going, coming across one of the guys here at Culhane Premier Properties and talked for a while. I talked with Scott and Sean, the owners, and we just hit it off and so joined the team, became one of the top producers in the first two or three years. In fact, at one point I had a couple of the team records for highest volume deals, four or $5 million houses, stuff that we had kind of just gotten into. And so that was, it was fun. And then I started asking the guys about, you know, if there's ever an opportunity for me to help lead in some way, I'd love to do that. And so we kept talking about it, kept working on it, and then about almost two years ago, they asked me to be the CEO and it allowed Sean to go do some other things. We have a sister company now that does mortgage brokerage, and then it allows Scott to start a different division of our land development. And so I spend most of my days, I joke that I spend most of my days herding the cats, but as any of you who run a team, you guys know, that's how it is most of the time. So we've got about 25, 26 people on our team now and all different marketing, concierge agents, client management, field coordinators, all that kind of stuff. And. But my, my day to day is really strategic and then trying to work with our sales team lead to try to help encourage the sales team keep the ball moving forward.

Awesome. So before we get in, I want to, I want you to break down, you know, how others, you know, so. So we are consuming this today and we're running a team. How can we do this in our own business? So I want to, I want to go into that and we talked about three things that we could do. But before we do that big picture, what was the problem you were trying to solve? How did this conversation about, you know, what would it look like to maybe focus on the higher end, Lay the groundwork for the conversation?

Yeah, it kind of came out of sort of a joke at first. Sean and I used to have these conversations about we would be doing Back in the day, we did everything like most people, right? Anytime a real estate deal comes your way, you're happy to do it, especially when you first start. And so we were doing 25k lots out in the middle of nowhere, and we were doing 400k houses here in Central Austin and everything in between, and then a few big ones along the way. And so I used to joke with Sean, you know, we would see a 25k lot out in some rural area and we'd be like, okay, does that really look like a premier property to you? And he would say, well, it's cash flow. I said, no, I get it. But over time it started making me wonder about, okay, every time we send somebody out, drive an hour out in some rural area, list some piece of land and then hopefully sell it. And the amount of return we were getting on that, it made me wonder if it was really worth our time. So I started doing the math and started figuring out that there were some deals that we were doing and because of our structure, we were losing money essentially because of time and because of all the expenses that we have on the front end for marketing and staff and office, everything else. And so we figured out that there was just some stuff that was like, okay, this is very clearly not the best use of our time, so how can we better quantify and define what would be an actual good use of our time? So that was the genesis of the idea, kind of led us to a bunch of discussions from there.

Awesome. So let's lay out this three step action plan and how we can implement this in our real estate teams. And you kind of touched on the first one, but lay out the three things we're going to talk about and then we'll dig a little bit deeper into them.

Yeah. So the first thing that we had to do is we had to kind of take a little different mindset and we had to, we had to start looking at ourselves a little differently. Rather than just a traditional real estate company where you're going to do every deal that comes your way, anything that comes across your desk, you know, your brother in law wants you to sell his 10k lot in the middle of nowhere kind of thing. And it then forced us to start doing the math and looking at our budget and our expenses and all of the pieces of the puzzle that really in a manufacturing world you would know like it costs us this much money for staffing, materials and all these things. So therefore we have to sell all these widget, it's at a certain price in order to either break even or make a profit. And so we started doing that in our world and knowing that we had a certain amount of expenses to cover, then we started figuring out, okay, well on every deal if we're going to do X number of Deals. We think on every deal, we need to make some certain amount of money. And then from there, it allowed us to back into a price point that we knew, okay, we need to start selling properties, on average, at least at this point, in order to make sure we're covering our expenses every time. And so that was the first step is we definitely needed to make sure we understood the math of everything and the budget and economics of our model.

Okay, so let's just go deeper on this, since you kind of opened it up here, and then we'll get into the other two steps. So let's talk about what did the process look like? So you're opening up your books. You're thinking about economic model. You're looking at where you're spending money now. Like, what's. What's the actual tactical process that we need to follow to do this?

Yeah, it's actually simpler than you think. You know, we. Back in the day when I was running golf courses, I had to manage. I had to create and manage these budgets, right, as far as carts and food and beverage and buying and selling clothing and how many rounds, all that kind of stuff. Well, I started looking at our real estate budget, our model, the same way. Started understanding, you know, what it costs for staff, what it costs for office and expenses and everything on the expense side of the budget, and then figuring out what we're kind of targeting as far as cost of goods, like basically how much money we need to make sure that we pay the agents each time. And we did a bunch of research and actually talked to you a little bit. Bunch of other folks that we knew had kind of walked that road a little bit. So we understood all the math of all of that. And then we figured out, based on the number of team members we had and the bandwidth that everybody seemed to have over the years, how many deals we thought we could do. And so that number divided by the other number gave us average money we needed to make on each one. Like, we figured out we needed to make around 12 grand or so every time we sold a property. And this was 18 months ago.

And this is. This is gross margin after you pay your agents.

This was gross before.

Okay.

So then we were splitting out from there.

Got it.

We needed to generate that much GCI on each deal around 12, 12, 5. Somewhere in that rang to back then to make it work. And so then once you start figuring out price points from there, backing into that number based on 3% commission here in Texas, that kind of thing, we figured out what price we needed to sell at each time, which turned out to be about that time was like three. No, it's four something. It was around four, 400 grand, that kind of thing. And so that pushed us to start saying, okay, well then we definitely need to make sure we're marketing to that and that we're talking to those kinds of people and that our website is generating those kind of leads and that kind of stuff. So figuring out those numbers was crucial to get the conversation started.

And at, at that time. So, so did, did you consciously. So, so the Delta between that 400 number and, and this is only. I, I forgot to mention the beginning. This is in 18 months, you guys pivoted from 435 to 700, which is, which is unbelievably awesome.

Certainly easier to do in a market like Austin where it's going like this every day. But you're exactly right. It was so.

But how'd you arrive? Did you guys envision. Okay, so we want to increase that math. That 400 number. We want to get it to over 600, you know, and that delta is that $6,000 additional per. Is that the second part of the calculation?

Yeah, yeah. We made this decision 18 months, two years ago. We were having these conversations a little before that, but we were starting to build budget for 2020. And so trying to figure out how we were going to do it. And so we decided in 2020 our goal was. That was the numbers I just mentioned. And then for 2021 we said, well, why can't we take it a step further? We're starting to do more million dollar plus deals. Knowing that really our niche has grown into a little more higher end property. We're going to do 40 plus deals this year at a million and up and some of those at 2, 3, 4 million and up. So, so we started thinking, okay, if we made this jump first. And obviously it worked fairly well. We, like I may have mentioned earlier, we had one of our most profitable years last year after making this quality over quantity commitment. So then we said, well, maybe we can take it a step further. And so we started looking at how many deals we wanted to do. And we, and we settled on, we thought we could do 200 deals this year at around 625 or more. And the good news is we've exceeded those. We're on pace to do around those 200 numbers. 200 transactions. And our average sale price has earlier in the year was up around 800k. But we've done some recent stuff that's kind of Brought it down a little bit, but we still feel pretty Solid at doing 200 deals at 3% or more commission at an average sale price of, you know, 625 or more. But right now it's around seven.

Yeah. So this is about the most counter cultural thing, that conversation that you'd ever have in the real estate industry. What, what does every team want to be able to say? They want to be able to say, I sold 500 homes. Right. And you guys are making the decision like, we have a team and great people that could service 200 deals. How can we put the most profitable 200 deals through this machine that we built, which is. That's the magic of this whole thing. I just sort of put it together as we're talking, and I know that's what you guys have done, but. And that's just counter to everything that's in the real estate industry, right?

Yeah. Well, and the funny part is we kept talking to you and some other folks along the way who were doing lots and lots of, you know, 500 transactions a year, and we kept hearing the same things, which was like, man, I'm doing it and we're making a bunch of money, but man, I'm losing years off the end of my life. Like, it's, it's just. You're pulling your hair out half the time. And so we thought, okay, there's got to be a better way to do this because that, the road that you just mentioned was the road that we were on three or four years ago. Like, let's see if we can do 300, 350, 400, 500 transactions. And we just felt like, for us, we had a unique opportunity to make a shift, and it's played itself out pretty well.

Yeah, that is very, very cool. All right, so I think we've got. The first part of this is understanding your expenses, economic model, doing some of these average price points calculations, knowing your GCI per deal, your gross margin per deal, what your overhead, your marketing. So let's move on to the second step here. So now that you guys are like, man, you know, this, this thing sounds like it's gonna, it's gonna be something that makes sense economically. What's the second thing that you focused on?

And so once we did the math, we kind of knew what we needed to do. Then I had to pitch our. Our ownership on it and to make sure that they were on board with it. Because, remember, like I mentioned earlier back in the day, Sean and I were talking about we did everything right Just for cash flow, just to do every deal that came across the desk. So I had to get them on board. And then once they were on board, and it actually took a couple PowerPoint presentations to get them to a point where they started seeing the light of what the truth of this situation could be. So we got them on board and then we had to get the team on board. And I'm not sure that I could tell you which one of those conversations was harder. You know, like ownership tech, you know, they usually know the numbers, right? And so they typically have an understanding. And when you start talking about profit and those kind of things, then, you know, their eyes light up and they start to understand things. But trying to tell an agent, hey, you're going to have to say no to some stuff down the road. Sometimes that's hard, especially for newbies, right? You know, a lot of folks who just got their license and they're so excited and their brother in law says, hey, come help me sell my property for 190 grand. You're just happy to have a deal. So that took a little, it took a lot of, a little salesmanship maybe on my part to try to get them up to speed and help them see the big picture and help them grasp the notion of where we were trying to go.

And so as you're describing the dynamic, it makes me think that, you know, most team owners don't, don't have even part of their own personality or someone in their, in their life that can think strategic and like step back a little bit, you know, and, and guys, let's, let's think about this thing a little differently. We're killing ourselves to sell 400 homes. What would it, you know, so there's just, there's something to be said for, you know, someone like you that part of your compensation, as I understand it, is based on profit of the company, you know, so you're, you're aligned with the owners. Yet our whole industry is this like just sell, you know, 400 homes. It has to be better than 300, you know, and 500 has to be better than 400, you know, and a thousand is going to be twice as good as 500, you know, and it's not. And there's, because there's 500 deals in that thousand that are completely crap and not profitable. And you guys just identified it early. So, so anyway, I thought it was worth mentioning that as you went through it. So anything more with the team, any conversations that you can remember, or team meetings or people getting upset and like I can't walk away from $3,000. It's 50% of six grand is a lot of money to me. What did that look like? Like, what were those conversations like?

Well, it's. So the front end of the combo is kind of easy. When you say, hey, we're making this shift and we're going to focus more on doing higher end properties and we're going to do more million dollar sales than we've ever, you know, at a team meeting. That's a pretty easy sell. Yeah. Everybody's like, oh, that sounds great, I'd love to sell more million dollar houses. So everybody gets on board with that notion fairly quickly. The real challenge is probably step three to the whole thing, which is when someone comes to you and says, hey, Mike, I've got this deal and I haven't had a paycheck in a while and you know, yes, it's only 240 and I gotta drive an hour to get to the property. And it's gonna take some extra marketing on our part for us as leadership to stick to our guns and say no to that was probably the hardest piece of that puzzle. Right. Because it's one thing to know the math and then get everybody on board to say, okay, yeah, we're going to do this and it's going to be a great step for our company. But then when push comes to shove and someone's sitting across from you and saying, man, I really would like to do this deal and I have to say no, and then try to shift them to the mindset of, okay, I'm going to tell you no on this one only because I think we have some other stuff coming down the pipe that is going to be a little more worth your time and getting them to trust you enough. And then, you know, actually seeing those deals come to fruition and so then, you know, the trust gets built even further and the investment that we're making gets validated. So that last piece of the puzzle is obviously really where the rubber meets the road.

Yeah. And that's. And there's a couple things that I want you to speak about there. So it sounds like, you know, there's for you guys, you have opportunity, you guys do market, you know, so it's almost like, trust me, I'm going to make sure that I replace this deal. Is it almost like you need to make sure you're going to. There's a gimme there. And then I want to talk about the alternative is that you've now freed up 20 hours of this agent's time to go find a $500,000. But let's talk about the first thing. It almost sounded a little bit like, I'm going to give you another deal here in the next couple of weeks. Is it that or is it more? Now you have all this free time and you're going to find a better deal or a combination?

It's combination. It's a little of both. You know, one of our agents is a guy, he's just a bulldog. He's one of those agents. He's been doing it for a while. He knows what he's doing. And he did back in the day with another brokerage. He was doing 60 to 80 transactions a year with our brokerage. He started doing around 40. And this year he and I had to have a very. It was a great conversation about, like, hey, I don't want you to do 40 this year. I'd rather see you do 25 or 30, but have them be at a higher price point. Because he was doing 40 at around 4, 450 somewhere in that range. It was actually kind of below what we were hoping. So he was a great example of somebody that I had to say, hey, man, you've been driving all over creation and doing all these deals, and I know you feel like you're bulldogging this way all the way to the finish line, but here's the amount of money you're making on this. If I can get you some more appointments and some more leads and some more opportunities here at this price point, I think it'll be worth your while. And so he saw, obviously the logic of it, but he had to see the actual paychecks come in, the actual deals come in. You know, our group is a little unique in that we spend, like a lot of groups, we spend between 50 and 75 grand some months marketing, generating opportunities. And then our concierge team works them first, and they set appointments for our team, and then the expectation is they're going to go turn that into relationships and close deals. But our agents had to see those actual appointments and those actual leads and deals come through before they were really going to buy into, I think what we. What we had been pitching them on. Yeah.

And then I think the. The flip side of it, and maybe you can talk a little bit to this is, you know, I think you mentioned earlier, like, we. We all have an amount of time that we would ideally want to work in our business, you know, and if. If it's, let's say it's 50 hours a week times 50 weeks, you know, and there's only so much an agent can get, can get done in that time. So when they take on an opportunity that's going to pay them three grand versus five grand, it's the same amount of hours you're putting into it. And most agents never think in terms of units of time. I'm going to invest 2,500 hours this year in this craft. And what would it take to go from 50 to $100 per hour? I think that's part of the conversation for agents is that on a well run team you could make $100 an.

Hour.

Or you could make 40 or 50. And it's decisions you make with your time and who you spend your time with and the price points you focus on versus ignore. So anything to add on that?

Yeah, I think I mentioned it briefly earlier, but like, you know, you've been doing this longer than I have. But I figured out really quickly that the only commodity we have any control over in this business is our time. And one of the best things about our business is I'm not really limited to how much I can make per hour. That's up to me how much money I make per hour. And so you mentioned going from $50 an hour to $100 an hour. In most people's minds it's like, well, I'm just going to do more deals. And I think the general logic of it is, well, maybe I can do a deal that's worth more to me. Because after you do this job for a while, you figure out that often a 600k deal takes just as much time and effort as a 300k deal. So why would I spend the same amount of energy and in some cases more? Because first time home buyers and new home buyers, there's challenges to that. Whereas maybe a 600k buyer might be in a different place in their life and they've done this before and it doesn't take as much effort, different challenges of course. So that logic is really hard to buy into when you're first starting because you're just trying to make a paycheck and you're just trying to have somebody to talk to. But as you go along you figure out like, okay, I just drove and I spent all these hours and did all this stuff dealing with all the contract issues and I made X. I wonder if there's a better way to spend all that time and make. Yes. And that was a big, big. I mean, at the end of the day that's what everybody's trying to do. And that's just a big piece of what we just committed to as a group.

Yeah. And it makes me think of in my first part year in real estate, I sold a $600,000 home where they had already identified the house. And then I worked with a first time buyer literally an hour and a half away from my home in the 100 to $125,000 price range. They went through three properties this low price point because they were all crap. The seller had not maintained it. These are all crap properties. And then this other property there no repair requests like just super smart. Luckily the hundred thousand was a HUD property. So I've made 5% back in those days, 5 grand versus $18,000. I remember getting that $18,000 check. And there's no way this is legal. And so this is just really powerful. And most team leaders, honestly, they bring the mentality they never shift their mindset into business owners. They're now just a busy agent with their bulldog head down and they're just doing deals. And so anything to in light of this and this is perfect. Everyone is going to get, we're going to all value, you know, be able to implement some of this, tying all this together. What are some final thoughts you have?

I think the, okay, so for us, knowing that we had X amount of dollars to spend and we have X amount of expenses on stuff and then knowing that we have X amount of time that we can commit to all of this and then also knowing that I don't want to have 100 agents on my team. Like I got enough gray hair. There's no way in the world that I want to get into that world where I want 100 agents and try to do a million deals. Like that's just not, I think, I think a lot of us reach that moment in time where you can see that out in the horizon and you're like, that's not for me. I think there's a better way to do this. But once you understand all of those pieces and you understand you've been doing this long enough to know that like we just said, a 600k deal takes you as much time or sometimes less than the 300k deal, then it's about committing to it. And I will tell you that the like you can know all of the logic of everything I just said, but in that moment where you have to say no, that's where it's the most important. And there are a couple of moments in time where yeah, it's painful and you're like, man, I really wish I said yes to that or I don't know because I don't know where the next deal is coming and that kind of thing. But committing to it, just like anything else in life, committing to it and staying patient with it and seeing the long term goal will pay you literally in the end. Yeah.

And it makes me think of, you know, blood and guts, you know, so you all went essentially, and not knowing the exact numbers, but from 300 deals at 400 to 200 deals at 700 or whatever the math ended up being. And the first business that's blood and guts, like it's taking everything, it's listing those, it's driving over, you know, God's creation to get to every deal. And then just the elegance and ease. You can just decide that we're not going to be everything to everybody and it's going to be totally okay when we're going to run this, this premier business with high margins and our agents aren't burnt out and I don't have to spend as the guy running the team. I don't have to spend time with people that suck the life out of me. So that's. That, that, that's actually the other takeaway that unforeseen for me hearing you talk us through this and is it's, you know, you can be around five agents, you know, versus 10 agents, and y' all can make this commitment and still have an amazing, profitable business.

That was the road. So three, four years ago, we were on the road to trying to get 30, 40 agents and it was driving everybody crazy. And I'm not sure in the end that it really did anything other than make us crazy. Now we figured out that, you know, we can do, we can hit the numbers we need to hit and do it with about 10 agents. And one or two of those are newbies. We've got guys who are doing 20 million-plus in close volume. We've got a couple others who are doing 3, 4, 5. All of that together helps us hit our goal, but it also helps us do something where we're able to find the right kind of agents. It helps you figure out really quick, like, who can really do it and can't. And I think that made our recruiting efforts easier and it helped us kind of streamline everything and made theoretically makes my life easier.

Yeah. That is awesome. I'm going to spring a question on you that I did not prep you for. And this, this podcast is not the EXP show. I only bring up EXP when I Talk to someone that has played and is playing the game of the real estate at a very, very high level that I bring on the show. So my one question about you guys pivoted into exp 6, 4, 5, 6 months ago, roughly.

Yeah. In March.

And you had a career with another brokerage with two initials, rhymes with J, whatever W. Rhymes with. And you love that company. And I was part of that company. And it's a premier company, and Gary has a place in the hall of fame, so there's no dig against it. But talk to me in, like, a minute. Like, now that you're on the other side of the shift and the shift in platform, and you guys were independent before, but you. But you have a background with another company. Talk about exp. And why would you guys go from independent into exp?

Yeah, you know, we had been. Our whole existence had been a successful independent brokerage here in Austin, and we were on the right road and doing all the right stuff, but there were some things that we could never offer our team. Obviously, if we've got a team of 25 people and we want to make sure that we take care of them and they make a great living and it's a good lifestyle, we wanted to make sure we could offer them all these different benefits. And there were things that we could never do as an independent brokerage that EXP allows us to do between stock options, between revenue sharing, between different insurance availability, between some tools that we think we can leverage above and beyond what we do on our own. It just grows our scale tremendously in terms of what we can provide to our team. And I think the other thing that was really attractive to us was that we feel like the way that we do things, maybe it's a little unique. I don't know that it's tremendously unique, but we feel like we kind of know what we're doing a little bit, enough to be able to help other people. And if our group can coach other teams or bring other people to the table and try to teach people how to do real estate, what we feel like we've learned is a pretty good way, then we're benefiting the people around us, we're benefiting our industry and using what we've learned to the good.

Yeah, that's awesome. So what's a way that someone can reach out to you to have a conversation? I mean, I have conversations all the time with people that are considering exp, but I'd love for people to reach out to you to have conversation about EXP and why you guys made the move in.

Yep. So our website is probably the easiest place to find me. It's Culhane Properties dot com. So that's C U L H A N E properties dot com. My my face is on our team. Our team page, my cell phone number, email is on there. Otherwise it's just Michael Wigan exp realty.com awesome.

All right, brother, so this was awesome. The value and the ripple effect of our time together is really, really going to be awesome. So for anyone that is at a point in their journey where maybe you need help putting pieces together, maybe economic model hits you and you don't even know what Michael was talking about, or maybe you're launching a team and you're sputtering and you're not even at the point where you can consider a conversation like we had today. One resource I can offer is I put together a report called Real Estate Business Growth Navigator. There's no obligation whatsoever. Just go to realestatebusinessgrowth.com I just go through the six stages of growth. Some of the questions you need to ask yourself as you navigate growth in your real estate team. Maybe you missed something at one stage and that's why you're struggling and stuck in the stage that you're currently in. So to go to realestatebusinessgrowth.com and we'll talk to you soon. Thanks again, Michael.

Man, I sure appreciate the time. Thanks.

Awesome.

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