At ROOST Real Estate Co., we try very hard to communicate our core values as clearly, concisely, and as often as possible. Here is how we approach the business of helping people make the big moves in their lives:
We work by referral
We know that relationships are infinitely more valuable than transactions
We understand that to succeed magnificently we must always provide more value and expertise to our clients and customers than they can find anywhere else
We provide continuous support for every person in the organization with a desire to expand their individual skills and capabilities
There is great strength in the intentional identification, and exercise, of the unique talents and abilities of everyone we work with. When everyone is free to do what they do best, we all do better
There is joy in the consistent application of documented best practices and processes when serving the needs of our clients, team members, agents, and partners
Behaviors and Attitudes We Look For In Realtors™ and Staff Members
Have an Ownership Attitude / When there is a problem, step up and take responsibility. Never report a problem without bringing a solution along for the ride
Create Value / Continuously look for new ways to be of greater use to our clients and fellow team members. Look for new ways to contribute and help our clients realize their goals
Take Initiative / Don’t wait to ask permission to do the right thing when it comes to exceeding the expectations of a client. We expect you to do what is right
Focus on Results / The road to ruin is paved with good intentions. At ROOST® we trade on performance, not promise
Have Patience and Compassion / We serve a diverse client base with varied educational and socio-economic backgrounds. Not all of our clients will handle problems and conflict the way you or I might. Regardless, we will treat everyone we serve with the utmost dignity and respect
Take a Partner / Some of our challenges are bigger than we are, or at least seem that way. Take a partner with another team member or team leader. Don’t hide bad news thinking it will go away. If something feels wrong, it probably is
Never Give Up / Mistakes and breakdowns in performance are learning opportunities in disguise. You will make mistakes – our hope is that you will do all you can to never make the same mistake twice
Does This Sound Like a Real Estate Company You Could See Yourself Belonging To? If our aspirations match up with your, you owe it to yourself to check us out. Give us a shout. We’d love to hear from you. www.AllAboutROOST.com
Like you, we here at ROOST Real Estate Co. aspire to be heroes to our clients day in and day out. We know that only by providing exceptional value, we can expect to earn the referrals we need to grow our businesses for the long term.
Being a hero can also take a lot out of you. That’s where The ROOST Good Life for Realtors Promise™ comes in. We can help you find the freedom, income, and purpose you know you deserve. We want to help you live the life you always wanted to live.
Here are some facts about agents who live the good life:
The agents who live the good life know that relationships are infinitely more valuable than transactions.
The agents who live the good life have a broker that supports their business and their career goals.
The agents who live the good life know where every dollar of their commission split goes and how it supports their business.
The agents who live the good life take the long view, create advocates, and work by referral.
The agents who live the good life are in tune with the rhythm of their businesses and go with the flow, taking personal time away throughout the year.
The agents who live the good life have an advantage other agents do not – The ROOST Good Life for Realtors Promise.
ROOST Real Estate Co™ Professionals are some of the most productive and well paid in the industry. They are free to focus exclusively on their clients because we take everything else off their plates. Give us a shout to find out more. You’re just one career move away from the good life.
I’m writing this post to offer some insight into one of the ways we approach our relationship with our Realtors® – our compensation strategy. Your Pay Your Way™ is designed to be transparent, easy to understand, and most of all flexible. It is designed to support both the goals of the agent, the brokerage, and the ROOST Real Estate Co. mission and brand values.
We want to be the first and last brokerage our agents work with.
ROOST Real Estate Co. is a full service brokerage that strives to offer the highest level of service possible to both buyers and sellers. We are a relationship focused business eager to create clients and referral sources for life.
Anytime an agent puts themselves through the emotional upheaval of changing brokerages, they are taking a leap of faith that their new broker has their best interests and goals at heart.
Over the course of a career an agent is going to pay their brokerage tens of thousands of dollars in the form of expenses, fees, and splits. Personal, emotional, and financial commitments of this magnitude deserve the very the best the broker owner and ROOST Real Estate Co. can offer.
We at ROOST™ are always looking for ways to express our gratitude and appreciation to our agents for choosing us. Ours is a relationship with our agents. We are not interested in a simple series of transactions.
What are the actual costs of doing business at ROOST?
The first commitment a broker has is the ROOST Monthly Franchise and Marketing Fee. This money is used by ROOST Real Estate Co. to continue to expand the brand through social and other electronic media, upgrade our marketing materials, and to keep the brand fresh and forward thinking. This fee is equal to 5% of sales and is payable by the broker monthly to ROOST Real Estate Co.
This fee is capped through year 2022 at 5% of gross agent sales or a maximum of $5,000per agent per year. And, unlike the national franchises, ROOST does not collecttransaction fees or annual dues of any kind.
The second commitment the Broker has is The Shared Office Expense. This fee is collected to cover the overhead of the physical office space including, rent or mortgage payments, office equipment, phone services and all of the things required to maintain a business. This fee is equal to 5% of sales and is retained by the broker.
This fee is also capped through 2022 at 5% of sales per agent per year to a maximum of $5000.
The third commitment the Broker has is to the Administrative Staff including the Agent Business Manager(s) or ABM’s. Whether an office has 50 agents or 5 agents, administrative functions have to be completed by someone and even if this is done in the early days by the broker himself, there is a cost involved. This fee is equal to 5% of sales and is retained by the broker.
This fee is also capped through 2022 at 5% of sales per agent per year to a maximum of $5,000.
The fourth commitment the Broker has is to The Basic Agent Service and Technology Package. We want our agents focused on working with buyers and sellers. We do not want our agents doing basic marketing and promotion, setting up showings, or filling out contracts with pen and paper. The Basic Service and Technology Package is a commitment from your broker to provide the following:
Ongoing support for agent training and development. Our brokers are Buffini and Company Certified trainers for Peak Producers – quite simply the finest working by referral training program in the world.
Up to 100 personalized monthly item of value mailers to the very best referral sources in agents’ databases.
Buffini and Company Referral Maker CRM – The best contact management software in the real estate industry. If an agent elects to pursue personal coaching with Buffini and Company – which includes Referral Maker – the brokerage will help pay for it up to the cost of Referral Maker as a stand-alone product.
Dotloop paperless office. Create contracts and get them signed from anywhere there is an internet connection. Save time and better serve your clients.
Presentation Brochures – Branded items to reinforce your place with your clients and customers.
Professional Showing Services – Never have to stop what you are doing again to set up a showing. (Your MLS may already offer this service.)
Dedicated personal cloud based telephone number integrated with the corporate phone system.
The actual cost of these services to the brokerage runs from $400 to as much as $600 per month per agent depending on location. There is also a tremendous amount of time involved in working with agents to get the full benefit of the Basic Agent Services and Technology Package.
This fee is also capped at $5,000 a year or 5% of sales through 2022. In our experience agents who take advantage of these services see an immediate increase in productivity of 15 to 20%.
The Fifth Commitment is to the Broker/Owner Herself – The Broker Service Fee. Every fee we have defined so far exists to cover the cost of owning and operating a brokerage. Every entrepreneur expects a return on their investment of time and capital. ROOST broker owners are no different. This is where the Broker Service Fee comes in.
As you will note above, the monthly Franchise and Marketing Fee, the Shared Office expense, the Administrative Staff fee, and the Basic Agent Services and Technology Package add up to 20% of every commission dollar earned by an agent. However, the most an agent will ever pay in any calendar year for these fees is $20,000 regardless of how much they earn. These fees are capped to cover actual costs and no more.
The Broker Service fee is equal to 10% of every commission dollar earned by every agent. There is no cap on this fee. Whether an agent earns $100,000 or $1,000,000 over the course of the year, the brokerage will retain 10%. We structured our fees this way to ensure our broker owners are rewarded and motivated to support elite producers regardless of their volume.
Our Financial Goals For All Of Our Agents
We want to see every one of our agents earn at least $100,000 in commissions each year. If that agent is on a 70/30 split, they are paid $70,000 and the brokerage retains $30,000.
What if this agent has a great year and hits their $100,000 sales goal at the end of September and still has several closings in the last quarter of the year? Once the brokerage gets to $30,000 the agent keeps 90% of every dollar they earned for the rest of the year. This compensates the agent at or above the industry average and allows the brokerage to continue to grow, upgrade, and offer new services over time.
For the New Agent
For a new agent just starting out, we offer full service and support with a 60/40 split. 60 percent of every dollar the agent earns is paid to the agent and 40% is retained by the brokerage. The agent is responsible for their monthly MLS(s) fees and a monthly Errors and Omissions Insurance fee.
The ‘Power’ Agent
Agents with a proven track record earning in excess of $150,000 per year may negotiate up to a 90/10 split with the monthly Franchise and Marketing Fee, the Shared Office expense, the Administrative Staff fee, and the Basic Agent and Technology Services Package covered with an additional monthly payment. The agent is responsible for their monthly MLS(s) fees and a monthly Errors and Omissions Insurance fee.
The Team Leader
ROOST Real Estate Co. is also the best place for teams to set up shop. 10% of commission dollars earned by team members are retained by the brokerage and the Team Leader pays a negotiated monthly fee for the Franchise and Marketing Fee, Shared Office expense, Administrative, and Basic Agent Service and Technology Package fees to the broker/owner. The Team Leader is responsible for their team members’ monthly MLS(s) fees and monthly Errors and Omissions Insurance fees.
Whether you are new to the business, an experienced professional, or a team leader looking for the best possible brokerage to build your business with, ROOST Real Estate Co. has a compensation plan and fee structure that grows with you as your business grows.
Chris writes to make sense of the world and get his thoughts as clear and precise as possible. He has written books for home buyers, home sellers, investors, real estate agents, and real estate brokers.
Chris’s unique ability is creating business opportunities and strategies designed to support and add value to the lives of real estate professionals and their clients. Chris created ROOST Real Estate Co. as his platform for helping people get the most out of their real estate investments whether they are investors, owner occupants, or tenants.
If you see something below you like, please tell a friend. Better yet, tell us and we’ll get you a copy to pass on.
Let’s imagine that after years of building your professional bona-fides, and a lot of trial and error, you realize you really understand the things that support and grow your business and are ready to turn your back on the shiny object distractions and crap that really never worked, but you felt obligated to continue.
Money is No Object
Here’s the hard part of this exercise. Assume for a moment that money is no object. Assume that you have at least one of the following two things going for you – and maybe both. One, you have the cash on hand – the capital to invest – in your ‘sure thing’ business plan, or two, you have enough excess monthly cash flow to fund your new investments month after month. And please make no mistake, spending money on your ‘sure thing’ is an investment, not an expense.
Crap That Didn’t Work
When I think about crap that never worked, meaning, any return on investment I enjoyed at all was nowhere near the money or time I put into it, I think of these greatest misses:
Paying for leads – Yes, I’ve tried paying for leads on Zillow and Realtor.com too. It was a waste of money and no way to live. Who the hell wants to respond to a buyer at midnight because “I didn’t want to bother my agent after hours.”
Personal marketing/building awareness. Hey, I’m a great guy, you should know that. Let me remind you of that by throwing some money at Facebook ads. It’s easy, they have my credit card on file.
And how about those mass emails to purchased mailing lists that nobody opened?I’m looking at you MailChimp.com.
Bringing on new agents ‘for the money’. Back in the day broker owners brought new agents into their companies because they had more work than they could handle. They needed help to field incoming phone calls and get their listings shown. If they happened to make a little money – like half – on any business that new agent generated, it was considered a big fat bonus. Now most of us aspire to get a cut from whatever income an agent generates. We’ve become body shops for anyone willing to hang their license with us.
Working with people I did not enjoy working with because it’s my job.
Really? Did I really want this job? WTF? Lousy hours, no health care, inconsistent paychecks and everybody, including my broker, has their hand out. What I needed to do was build a business on my terms that worked for me.
Things That Worked
Working by referral and the ongoing investment necessary to execute my after-unit marketing plan.
Creating a before-unit that offers potential buyers and sellers exactly the information they need when they need it.
Investing in the training necessary to ensure that my team members offer a during-unit service experience that is second to none.
Bringing on team members/agents because I had more incoming work that I could handle.
Collaborating with other business owners and service providers to add greater value to my clients.
Focus on listing multiplier goals.
People love and will wear free t-shirts.
Nurturing a database and staying in touch.
Becoming a savant about the neighborhoods I work in.
Coaching and training for my team.
Coaching and training for me.
Things I’m Willing To Bet On
As a broker owner and entrepreneur I know I have to add greater and greater value to my clients, agents, and collaborators every year. Often, I may never be paid directly for the value I provide, but if I don’t offer the tools, education, and perspective my clients and future clients require, then I am no better than the broker down the street.
I am always willing to bet on ‘education marketing’ with quality content that is exclusive to my company.
We have to be the go-to resource first and foremost. However, I will always look for ways to become part of the fabric of the neighborhoods we serve with community involvement that promotes our agents as real estate experts and complete human beings.
I know my clients, and I know where they live. Our property management division markets directly to people who will need us someday. We know where these owners live, we know what real estate they own and how much they own.
Every broker wants to build a business around listings. I, however, want to dominate whatever geographic area I, or one of my agents, want to specialize in. We do this through a ‘Getting Listings’ strategy based on the fact that we know who owns these houses and just about everything there is to know about these houses. (Thank you internet!)
We make our own markets. We attract buyers because we go deep into our neighborhoods. Our job is to put buyers and sellers together. Duh.
As a broker, I want to add team members because I have too much work to do. However, I also know there are agents out there who can be superstars if they want to be. At the risk of sounding overly boisterous, I know how to help motivated agents, regardless of where their business is today, level up dramatically over six to thirty-six months. I know the names of every agent in our market areas, I know where they live, I know where they work, and I know how many houses they sell a year. I know who to talk to and the value I provide.
It’s Really About Confidence
You, as a broker owner, have your own list of hits and misses. Are you conscious of them? Are you putting your experience to good use? Or, are you doing what everyone else is doing? If you are like me you are sick of playing the same game everyone else is playing. You want a new game and a new set of rules. Get after it.
I Really Said This Out Loud…
“I see our company as a beacon of light in an increasingly dark and complex industry. “
I agree this is a bit melodramatic but let’s look at what many of us are up against.
The ‘Portals’
Zillow and the rest of the listing portals have their hands in our pockets. They are skimming our listing information from the MLS and using it to create leads they can sell back to us.
Relationships With Our Fellow Realtors®
Increasingly competitive and often just plain mean cooperative relationships with other agents and companies is another challenge. These are not bad people on the other side of the table – they are simply frustrated and scared and sometimes it shows.
I Might Hate HGTV More Than Zillow
Buyers, sellers, tenants, and investors are getting bad information from hundreds of different media sources making our lives that much harder. Enough hours watching HGTV will make a Realtor® out of anybody, right? (NOT!)
Realtors® Are All Alike
And worst of all, potential buyers, sellers, tenants, and investors are painting all of us in the business with the same brush. At best we are seen as a necessary evil with any one of us as good (or bad) as the next. At worst, we are seen as interlopers with our hands out and are held in contempt.
So how do we make our way in the world?
We make our way by becoming trusted partners and sources of good information and counsel. We do it by continuing to get better at what we do. We do it by expanding our capabilities as individuals and as companies. Our job is to look for more and more ways to add value to every buyer and seller relationship we are lucky enough to be a part of.
What we don’t do
We never sit back and complain and pine for the old days. We are honest with ourselves and figure out what we need to do succeed in today’s market. It’s not easy. If it were more of us would be living The Good Life.
Speaking of The Good Life…
If you would like to learn more about how we work with real estate professionals like you, check out The ROOST Good Life For Realtors Promise™ at www.CareerWithROOST.com. If you like what you see give us a shout.
We will make sure you are never seen as just another Realtor®.
A few years ago, I started working with a new accountant. In the first year, she saved me several thousand dollars. When I asked her how she did it, she simply told me my other accountants forgot to check a few boxes.
Before we dive into how this method works, let’s first cover some tax terminology.
“Real Estate Professional” Defined
To take advantage of this method, you must be a “real estate professional” according to the IRS. To qualify, you must satisfy both of these requirements:
1. You must spend more time in real estate activities than non-real estate activities.
2. You have to spend at least 750 hours per year in real estate activities.
The IRS doesn’t care about your real estate license. They’re only concerned with how you spend your time. And, if you are filing your taxes jointly with a spouse, only one of you must meet these requirements to use the benefit.
Passive vs. Active Income
There are two types of income according to the IRS.
Active income is money that you physically work for. Generally, these are W2 or 1099 wages.
Passive income is the money you earn without working. It’s the interest on your savings account, dividends on investments, and rental income.
As a real estate professional, you can deduct all of your rental losses against your active income.
Depreciation and Amortization.
Depreciation is taking a tangible asset—in our case, buildings and improvements—and expensing it over its useful life. To put it simply, the IRS doesn’t allow you to buy a property for $100,000 and take $100,000 worth of expenses in the first year. You have to spread them out over the life of the property.
According to the IRS, land does not depreciate. It always holds its value because there is a finite amount of it.
There are two ways you can take your depreciation expense.
1. Straight Line Depreciation: This means you expense a set amount every year over the life of the property.
2. Accelerated Depreciation: This means you get to take some or all of the expense up front, instead of spacing it out every year.
Finally, amortization includes intangible assets like loan closing costs. It’s the stuff that you have to pay for in order to make the transaction happen. You can only take these expenses as straight-line depreciation.
Let’s Put It Together
Now that you understand the terminology let’s look at an example:
You buy a residential home for $50,000.
The IRS standard is that 10% of that purchase price is land. So $5,000 of the $50,000 is land, which you cannot depreciate.
The building needs $5,000 in improvements: a new roof, a new coat of paint, etc.
The closing costs are $5,000, and you’re taking out a 15-year mortgage.
Other important factors to keep in mind:
The IRS says that all residential property has an expected life of 27.5 years. (39.5 for commercial buildings)
The IRS says that improvements have an expected life of 15 years.
Amortization costs are spread across the life of the mortgage (in this case, 15 years).
Therefore, we can do some quick math to figure out the amount you can expense for depreciation each year.
True price of the home:
$50,000 – $5,000 (cost of land) = $45,000
Building depreciation expense:
$45,000/27.5 years = $1,636
Improvements depreciation expense:
$5,000/15 years = $333
Amortization expense:
$5,000/15 years = $333.
Total depreciation and amortization expense:
$1,636 + $333 + $333 = $2,302
Using straight-line depreciation, you can expense $2,302 off of that $50,000 property every year. But let’s take a look at accelerated depreciation using the same numbers…
When using accelerated depreciation, the only thing that changes is the improvements expense. Instead of spreading it out over 15 years, you get to take the entire expense up front.
So that means, in the example above, your improvements depreciation expense is $5,000 instead of $333. That’s an extra $4,667 in expenses up front, meaning your total is now $6,969. The annual expenses after that first year will be $333 lower, but you’re getting far more up front.
The Reason It Works
Real estate professionals can deduct ALL of their passive rental losses against non-passive income. The same goes for any additional losses, like if you had a rental property sit vacant for several months.
Looking at the example above, let’s assume you have $9,000 in rental income losses because the property sat vacant for a portion of the year. With a total income of $150,000, you can then subtract the $9,000 in losses plus the $2,302 in depreciation and amortization expenses.If you went the accelerated depreciation route, that $2,302 turns into $6,969.
That comes to a total of $138,698 or $134,031 in taxable income, depending on whether you go for straight or accelerated depreciation.
The non-real estate professional, on the other hand, is still at $150,000 in taxable income in both scenarios. With a tax rate of 22%, the real estate professional is saving $2,500 or $3,514, respectively, on their taxes compared to the non-real estate professional.
If you are not a real estate professional, excess losses are called “passive losses” and carried forward for you to offset rental income or capital gains on your property in future years.
So, how do you gain this tax advantage? Just check the “real estate professional” box on your tax forms, assuming you are in fact a real estate professional. This applies to each individual property and it works retroactively. So if you bought a property three years ago but forgot to check the box, you can check it this year and get the savings you missed.
My friend Ryan Ingram wrote this book to simplify the process of purchasing just the amount of insurance you need for your investment properties.
Rental Property Insurance: An Investor’s Guide to Insurance bridges the gap between insurance and real estate investment.
It walks you through the most important things you need to know about insurance, and pairs them with every style of real estate investment. The result is a thorough guide that every serious real estate investor should have in his or her tool kit.
Once you have the tools in this book, you’ll never have to worry about over or under-insuring your properties or purchasing the wrong policy for your investment strategy again.
Last year at this time the consensus predictions were rising prices and rising interest rates. The expectation was that we would return to a more ‘normal’ market with houses sitting on the market longer than they did in the last few years.
What Actually Happened
What actually happened was that in the hottest markets the frenzy of limited inventory and multiple offer situations continued because interest rates stabilized over the course of the year, and for all but the most challenged buyers, actually dropped. So, while prices continued to head higher, the buying power of well-qualified buyers went up as well.
More Of The Same in 2020
Based on my personal experience and research, 2020 will essentially be a continuation of what we saw in 2019. I expect low interest rates, high demand, and limited supply. The limited supply and high demand will be particularly acute in the lower-priced and entry-level markets where new construction is limited. It is generally more profitable for builders to focus on more expensive higher-priced homes than starter homes.
People Are Staying Put Longer
Prior to the 2008 housing crash, people stayed in their homes for an average of eight years. Today, the average is 13 years, and in some cities, it is much higher than that. This is another contributing factor to tight inventories. You can’t buy what is not for sale.
Other Contributing Factors
Thanks to the historically low interest rates buyers are able to lock in today, there could be less incentive for home-owners to move in the future as well. Further compounding the problem, data from the National Association of Realtors and Reatlor.com show that Millennials are very active in the market, while Baby Boomers and members of Generation X are sitting tight. This could be a short term anomaly or it could be a long term result of people living and working well past traditional retirement age.
The 2020 Election Year Wild Card
2020 is a presidential election year. While I have not seen independent data, since earning my real estate license in Ohio in 2001, I have worked through four presidential election cycles. This year will be my fifth. Every year I have seen markedly less activity in the second half of a presidential election year versus the first. There is good reason to believe this will happen in 2020 as well. Consciously or unconsciously, buyers are less likely to sign up for a new 30-year mortgage when potential political and economic upheaval is in the air.
An iBuyer is a company that uses technology to make an offer on your home instantly. iBuyers represent a dramatic shift in the way people are buying and selling homes, offering in many cases, a simpler, more convenient alternative to a traditional home sale.
How iBuyers operate varies, but the underlying idea is that a company estimates the value of your home and makes an offer. If you accept, they take on the burden of owning, marketing, and reselling the home. Depending on the service you choose, the benefit is the certainty of an all-cash offer and more control over when you move.
As you can imagine, the advent of this reality has a lot of real estate agents in panic mode. My take is that iBuyers and online mortgage lending are trends that are here to stay. I don’t think these will ever be the majority of transactions closed, however.
I’m going to throw a wild guess out there that within 10 years these will be no more than 20% of all sales. And, they will be the easy ones. There will always be a need for a skilled professional, advocate, and advisor to guide buyers and sellers through the life transitions that include buying and selling real estate, The iBuyer trend will ultimately thin the ranks of the Realtor community, leaving only the true professionals to thrive.
My Advice
As real estate professionals, we must work to improve our personal capabilities and the capabilities of those on our teams. We must continue to add value in the marketplace in order to remain relevant in an increasingly digitized world where everyone wants to do the easy stuff. Learn to do the hard stuff. Your clients will appreciate you all the more.
I was at a Strategic Coach workshop recently with Lee Brower and the ice breaker exercise for the day was about living in abundance vs scarcity. Lee asked us for our description of what living in abundance looked like.
After a few minutes of listening to the discussion in the room, I remembered a Bruce Springsteen lyric that has stuck with me since his album Darkness On The Edge of Town was released back in the late 1970’s. On the title cut Badlands, Bruce sings:
For the ones who had a notion, a notion deep inside, that it ain’t no sin to be glad you’re alive. I want to find one face that ain’t looking through me, I want to find one place, I want to spit in the face of these badlands.
This for me epitomizes the struggle between living in abundance vs living in scarcity. Living in abundance means being glad you’re alive. Badlands represent scarcity.
I want to be the leader that spits in the face of scarcity as I celebrate life and those living it with me. I am not always successful, but I am continuously mindful of the leader I aspire to be.
