Real Estate Agents Are Looking for Jobs
It was the hot career switch for a while, but getting started can be tough. And then mortgage rates took off.
Here are today’s highlights:
The average price of a new car hits a record high.
Mark Zandi expects inflation to continue to moderate.
A Philadelphia mac-and-cheese shop is looking to franchise.
Going fully remote may not save your business money.
Gene Marks, who has been running a fully remote office since 2005, says it’s even worse than you think: “First, closing the office should have cut my overhead. It has and it hasn’t. I no longer have to pay rent and utilities, nor do I have to maintain a coffee machine and pay a cleaning service or all the other expenses required to maintain an office. Instead I’m forking out endless, ever-increasing subscription fees for countless cloud-based applications, tools, services and platforms and for security software. Then there is the ever-evolving list of tax issues. What forms should that remote employee or contractor be filing to be in compliance with all the local rules? What are my responsibilities? What are my liabilities? These are headaches I never had in 2005.”
“There are additional employment costs, too. I’m reimbursing my employees more for their travel as their need for human contact has increased and for the costs of their own home offices, for which I have assumed responsibility.”
“I’m paying extra if they’re located in higher tax locales. I’m paying more for their paid time off and expanded flexibility which comes hand in hand with a virtual organization. I may be paying more for their lack of productivity but I have no way of knowing this.”
“My team never — never — sees each other, except rarely at clients’ offices. That’s strange. I have workers who I’ve never personally met face to face. I’ve met other employees at clients’ and had to do a double-take to make sure it was really who I thought it was.”
“Given that turnover has been pretty low, I’d say [my employees] are happy with this arrangement. Maybe things would be better if I opened an office. I’ll never know.” READ MORE
A lot of real estate agents are going back to their other jobs: “The number of Realtors rose alongside home prices in 2020 and 2021. When the Covid-19 pandemic eliminated millions of jobs, especially in service industries, career-switchers piled into the housing industry. By late 2020, the number of Realtors surpassed the number of homes for sale. But existing-home sales dropped last year to the lowest level since 2014. Data from the National Association of Realtors shows monthly membership peaked in October at more than 1.6 million members before dipping over the past three months, with 1.5 million members in January.”
“Brokers at Lamacchia Realty, which has almost 500 agents in six states, noticed over the summer that some of its new agents were struggling during the market slowdown, said Chief Operating Officer Jackie Louh.”
“‘A lot of them seemed to think it was going to be quick, easy money,’ she said. ‘This is not an easy market to navigate for even a seasoned agent.’”
“To ensure Lamacchia’s agents are committed to real estate, the firm rolled out new requirements. Agents must make real estate their main career within six months of joining the company and regularly attend trainings on real-estate fundamentals and sales techniques. Between 30 and 40 agents left the company in response, Ms. Louh said.” READ MORE
The average monthly payment for a new car has soared to a record $777, nearly doubling from late 2019: “At the root of the problem is automakers’ new mantra: Keep inventory lean and price tags fat. Three years after the pandemic triggered a global shortage of semiconductor chips and crippled car manufacturing, Ford Motor, General Motors, and their overseas rivals are notching big profits. Even as the chip crunch shows signs of easing, they’re pledging to keep production in check. And because electric vehicles cost about 25 percent more than the average car, the shift to plug-ins is about to make the affordability crisis even worse. Add soaring interest rates to the mix, and new cars — like home ownership and a college education — are fast becoming the domain of the rich.”
“The average price for a new vehicle in the U.S. has jumped to almost $50,000, up 30 percent since 2019, according to JPMorgan. Though prices have retreated somewhat in recent weeks as production recovers, the pullback isn’t enough for most consumers to comfortably buy a new car.”
“Manufacturers are reaping the benefits of selling fewer but more expensive cars. Last year, automakers sold about 13 million vehicles in the U.S., down 8 percent from 2021 and the lowest in a decade. But Ford’s gross profit rose 4.4 percent in 2022 from a year earlier, while GM’s adjusted earnings grew by about $200 million to reach $14.5 billion.” READ MORE
Retail sales rebounded sharply in January: “U.S. retail sales jumped 3 percent in January as consumers broadly boosted spending on vehicles, furniture, clothing and dining out, adding to signs that economic growth picked up at the start of the year. Last month’s seasonally adjusted spending increase was the biggest since March 2021 and followed two months of declines at the end of last year, the Commerce Department said Wednesday.”
“The unexpectedly strong employment report last month and still solid wage gains bode well for consumer spending, and some economists think economic growth could be picking up.”
“Retail sales grew broadly across the economy in January, including at restaurants, car dealerships, department stores, and furniture and appliance sellers. ‘Consumers are in pretty decent shape,’ said Joel Naroff, president of Naroff Economics. ‘When people are comfortable in their job situation, that translates into consumer spending.’” READ MORE
Mark Zandi expects inflation to continue to moderate even without additional rate hikes:
New York is pausing a small business loan program because of unexpected demand: “On Jan. 23, the city, in partnership with Goldman Sachs Group and Mastercard, unveiled what it pegged as the largest public-private loan fund for small businesses in New York’s history. The program expected to fund 1,500 businesses but since its debut, New York City’s Department of Small Business Services received over 10,000 applications. The department is not clear on when it will resume accepting applications but said it is looking to expand the program. ‘As we pause intake of applications, our partners are working at full speed to process those in the pipeline and disburse funds to eligible small businesses,’ said Kevin D. Kim, commissioner of the New York City Department of Small Business Services in a statement.”
“Loans ranging from $2,000 to $250,000 at a fixed below-market interest rate of 4 percent, regardless of the loan size were offered via the program, which arrives at a time when many small businesses continue to struggle to bounce back from the pandemic.”
“More than 4,000 private businesses, including chain stores and retail banks, shuttered in New York from 2019 to 2021 during the height of the pandemic, the city comptroller’s office said.” READ MORE
A Philadelphia mac-and-cheese shop is looking to franchise: “[Marti] Lieberman founded Mac Mart in 2013 alongside Garrett Jablonski, who was her boyfriend at the time and is now her husband, and her sister Pamela. The business started as a food truck that operated on Drexel University's campus and expanded gradually, first traveling to other areas of the city and then taking on catering opportunities and operating stands at the Pennsylvania Convention Center. Mac Mart describes its macaroni and cheese as ‘a classic American comfort food with the volume turned up.’”
“The menu features numerous twists on the dish, such as the Fat-n-Happy (topped with bacon, crunchy fried onions and buttermilk ranch), Heart Attack (topped with caramelized onions, bacon, and potato-chip panko crunch) and Corn Dog Cup (topped with grilled hot dog bites, cornbread crunch, and ketchup drizzle).”
“The franchising fee for a Mac Mart location is currently around $35,000 with a 6 percent royalty fee and a 1 percent marketing fund. The first term for a franchising agreement is 10 years.”
“Mac Mart has had customers come from Staten Island and Connecticut to sample its food, all because of what they've seen on social media, Lieberman said. The other day, she served a family who had traveled more than two hours after finding the eatery on TikTok.” READ MORE
A California startup is attempting to upgrade meal kits to Michelin status: “Moveable Feast — founded in 2022 by CEO John Stubbs, Jon Sybert, and Ricardo Reyes — partners with award-winning chefs at restaurants nationally to develop menus that can be turned into deliverable meal kits to serve four, eight or 12 people. Stubbs owns New Orleans-based restaurant Jewel of the South, Sybert is the chef and owner of D.C.-based Tail Up Goat and Revelers Hour, and Reyes is a former communications executive at Tesla. The founders wanted to help higher-end restaurants recapture the demand for at-home dining experiences that flourished in 2020. In the early months of the pandemic, many restaurants that had never previously offered take-out quickly pivoted toward limited edition to-go menus.”
“In December, they began a limited rollout in the Bay Area and the service is launching nationally in March.”
“Every month will feature a different chef's menu, and the service currently costs around $96 per serving, including shipping. That works out to $385 for a box for 4 people, $770 for eight people, and $1,155 for 12 people.”
“The restaurants will get a 10-percent take from the revenue. It's essentially a licensing fee to use their brands and intellectual property (aka the menus).” READ MORE
Homebase encourages its employees to run businesses on the side: “Homebase, an end-to-end HR platform for small businesses, is known for offering its clientele every service it needs to successfully run a business, from timesheets and payroll to intercompany messaging systems and shift trades. But these resources have also helped Homebase employees launch their own small businesses on the side. Terence Williams, the engineering manager of the mobile team at Homebase, is also the creator of Moxy Messenger and Quik Card, two apps that help facilitate communication between team members while at work. He was already developing his businesses when he started working at Homebase four years ago, but it was never a point of contention with management — it was the opposite.” READ MORE
21 HATS: LIVE FROM CHICAGO
Join us for the very first 21 Hats Live event: This intimate, three-day gathering will be limited to 20 business owners/CEOs. It starts with dinner on Wednesday, May 17, and runs through lunch on Friday, May 19. It will feature lots of opportunities to engage with other owners on similar journeys. We’ll have two deep-dive peer group sessions, for which you’ll help choose the topics. Bring your own challenges! You’ll also get to hang with 21 Hats Podcast regulars including Paul Downs, Jay Goltz, Liz Picarazzi, Sarah Segal, and Dana White. And you’ll participate in the taping of a podcast episode.
Plus: Tour Jay Goltz’s retail operation. Take an architectural cruise on the Chicago River. And make connections that will last a lifetime.
When: May 17-19.
Fee: $2,750. (All meals, activities included. Travel, hotel not included.)
Sign up: Reply to this email with any questions or to reserve your spot.
THE 21 HATS PODCAST
ESOPs Are Great. But Not for Me: Last week, Jay Goltz continued his exploration of employee ownership, flying to Portland to meet up with Shawn Busse and Jim Kalb, a friend of 21 Hats who has already sold a portion of his business to his employees. The three owners planned to attend a conference promoting employee stock ownership, but things went somewhat awry. Jay and Shawn left the conference early, Jim canceled his flight, and as has happened before in his brushes with ESOP professionals, Jay walked away feeling convinced—convinced, that is, that an ESOP probably isn’t right for him. Two days later, we taped this podcast episode, which quickly turned into one of the more raucous conversations you are likely to hear about a somewhat technical business topic—although we did manage to find some clarity in the end. In Jay’s words, we agreed to agree.
Along the way, we confronted quite a few relevant questions, such as, do ESOPs have to be so confusing? Are the professionals who pitch ESOPs trying to make them seem complicated? If Jay wants to sell 30 percent of his business to his employees but continue running it, how much control would he have to give up? Will an ESOP make life easier or harder for Jay’s two sons in the business? Instead of an ESOP, could Jay accomplish most of what he wants to accomplish by setting up a profit-sharing bonus plan through his 401(k)? Hanging over the conversation was a larger, more philosophical issue: What exactly do business owners owe their employees? And whatever those obligations are, do they extend beyond the sale of the business? Do they extend beyond the grave?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren