How 2% Realty Disrupted Canada’s Market

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TRANSCRIPTION WITH SPEAKERS
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[00:00] SPEAKER_01: Welcome to Canada's Entrepreneur, where we talk to the entrepreneurs who are making it happen
[00:05] SPEAKER_01: across Canada and deliver the news, trends, knowledge and opinions from entrepreneurs and business
[00:13] SPEAKER_02: influences across the country. Hello, I'm Mario Tanaguchi, managing editor of Canada's Entrepreneur.
[00:21] SPEAKER_02: Joining me today on Calgary's podcast is Roy Almog, who is founder of 2% Realty, 3% Realty,
[00:29] SPEAKER_02: and ABC Law Office, which we'll get into all of them shortly. Thanks, Roy, for joining us today.
[00:35] SPEAKER_02: Yeah, of course. Thanks for having me. Okay, let's start first of all with the 2% and the 3% Realty.
[00:42] SPEAKER_02: Sir, maybe explain a little bit to our folks out there. Just what exactly are you and what do you do?
[00:51] SPEAKER_00: Sir, so we're a full service real estate brokerage. We take care of everything for our clients from
[00:57] SPEAKER_00: start to finish. So it's not a due to yourself. It's not a for sale by owner or hybrid model of any kind
[01:03] SPEAKER_00: where traditional brokerage through and through the big difference is just in our rate of commission
[01:08] SPEAKER_00: at the end. It's 2% or 3% depending on the market and we've got offices kind of separated
[01:13] SPEAKER_00: East Coast and West Coast and the two brands basically offer all of the services you'd expect.
[01:19] SPEAKER_00: So photography, laser measurements, showing, MLS, everything is handled on our side.
[01:25] SPEAKER_00: What's a typical commission? There's no typical. There's ranges. The one thing that's very
[01:33] SPEAKER_00: unique about Saskatchewan, Alberta and BC is something that's called the split where some
[01:40] SPEAKER_00: realtors would charge 7% on the first 100,000 and 3% on the remaining balance. So as a blended
[01:47] SPEAKER_00: average, that works out to just around 4%, where 2% in those markets. When you go into the
[01:53] SPEAKER_00: meritimes, at least, we've seen rates that are 6% flat without that split. So those markets
[02:00] SPEAKER_02: were under the 3% banner. Now, just a couple of factual stuff. Roy, your first office was open when?
[02:11] SPEAKER_02: 2007 in Edmonton. 2007 and how many offices do you have currently? We're in 42 different markets.
[02:19] SPEAKER_02: Oh, mine. Yeah. Wow. I've been busy. We've been busy, Mario.
[02:26] SPEAKER_02: We realized that because we did talk way back. Yeah. First started.
[02:31] SPEAKER_02: Why do you think the concept has grown to such a level? I think people are happy to have options.
[02:41] SPEAKER_00: There's lots of other options in the market. It's not always the traditional brokerages that
[02:46] SPEAKER_00: have been around for 100 plus years. There's a lot of different models out there. I think
[02:50] SPEAKER_00: ours kind of may as the sweet spot that we're still a full service brokerage. So it's not a
[02:54] SPEAKER_00: do it yourself. It's not a for sale by owner, which some people just don't want to do it themselves.
[02:59] SPEAKER_00: They don't want to start taking on this pretty big challenge as they sell a home and not be
[03:06] SPEAKER_00: trying to figure it out on their own. So if they're looking for a realtor, but don't feel like
[03:11] SPEAKER_00: there's the value in paying somebody, some of the fees that are out there, we're sort of in the
[03:15] SPEAKER_02: middle there, bridging that gap. So take us back in time. How did you come up with this and why?
[03:22] SPEAKER_00: Yeah. So it came out of a personal need that I had when I was looking to sell a home in Edmonton.
[03:27] SPEAKER_00: I contacted the realtor that helped me buy that home. And I said, look, I've markets doing well.
[03:33] SPEAKER_00: I've made a good return on the purchase and I want to sell it. And I don't really know what the
[03:39] SPEAKER_00: fees were on the selling side. I don't know. It's just been on the buying side. So on the buying
[03:43] SPEAKER_00: side, I didn't have to pay anybody anything. The realtor basically worked not for free, but they
[03:48] SPEAKER_00: got paid by the seller. So I never had to come with money at a pocket. And when he quoted me my rate,
[03:55] SPEAKER_00: which then was seven and three, I did the math. I was like, it's going to be almost, you know, close to
[04:00] SPEAKER_00: $16,000 that have to pay him in fees. And I knew the market was hot. A new property is back then.
[04:07] SPEAKER_00: We're selling in days, if not hours. Yeah. And it didn't find that there was value in paying
[04:13] SPEAKER_00: this guy that almost $16,000 for the work that he was going to do. So I looked around and I found
[04:20] SPEAKER_00: the for sale by owner on one side of the spectrum. Do it yourself. You pay them a few hundred bucks.
[04:24] SPEAKER_00: They throw you up on some website. KGJ those types of vendors on the other side of that spectrum
[04:31] SPEAKER_00: were all that brokerages that had been around forever and ever and ever. But nothing quite in the
[04:35] SPEAKER_00: middle. And my proposal to my then realtor was if he would be willing to do it for half, I would give
[04:43] SPEAKER_00: him my listing. And he said, nope, can't do it. Won't do it. And he helped burn to it. So I decided
[04:49] SPEAKER_00: to go to real estate school and kind of do it on my own. And then from there, kind of snowballed into
[04:57] SPEAKER_00: there's other people out there that were just like me who are wanting the assistance and wanting
[05:02] SPEAKER_00: a realtor. But wanted to pay a lower fee. And that's where it kind of all came together.
[05:09] SPEAKER_02: So what were you doing before becoming a part of this whole real estate industry?
[05:14] SPEAKER_00: I was at Telecom. My back in the telecom I'd worked for tell us I worked for Bell. So nothing to do
[05:19] SPEAKER_00: with real estate or the space at all. I always had an interest in real estate but never made the
[05:25] SPEAKER_00: full move from Telecom to real estate is a pretty big shift. I'm glad my realtor then wouldn't budge
[05:32] SPEAKER_00: on his commission if he had it probably would still be doing something in the tech space. But it worked
[05:39] SPEAKER_00: out in the end, yeah. So before I forget, what has ABC law? So we just launched that earlier this
[05:48] SPEAKER_00: year. We opened up our own law firm that does our own closings. So an every real estate transaction
[05:55] SPEAKER_00: primarily here in in Calgary where we're serving the market here first. There's always two lawyers
[06:01] SPEAKER_00: involved. Once for the seller, once for the buyer. And I was looking over the last 18 years of
[06:07] SPEAKER_00: business and how many millions of dollars in legal fees that we've been referring out every time
[06:12] SPEAKER_00: a client buys or sells. Hey, do you have a real estate lawyer? It's not a very broad sort of, you
[06:17] SPEAKER_00: know, legal field. It's pretty narrow and there's not a ton of players in that space.
[06:23] SPEAKER_00: So I contacted the loss of study, worked with them, it took almost just over two years to get
[06:28] SPEAKER_00: approval because I'm not a lawyer. So we got approval through what's called the innovation sandbox
[06:35] SPEAKER_00: and we're now operating a law firm separate from the real estate side. And we do have a lawyer
[06:42] SPEAKER_00: and parent legals and all the stuff that any law practice has. It's just one more way for us to
[06:49] SPEAKER_00: kind of look, you know, if you're looking for a referral in the legal space, we have this sister
[06:54] SPEAKER_00: company that they would be happy to help you on the closing of your purchase or sale.
[07:00] SPEAKER_02: Hmm, interesting. What what do you like about real estate?
[07:07] SPEAKER_00: I like how no two transactions are ever the same. Doesn't matter if the market's hot or not,
[07:14] SPEAKER_00: doesn't matter if it's in the west coast, east coast, no two transactions are ever the same.
[07:20] SPEAKER_00: There's always, you know, the human element that plays into every transaction, which
[07:24] SPEAKER_00: kind of takes you in a different direction. I still trade in real estate, although not like I used to,
[07:29] SPEAKER_00: I still do, you know, a couple of transactions here and there just to kind of keep my hands in it,
[07:34] SPEAKER_00: not be too far removed. Yeah. And I really enjoy that part of the work. I think that's
[07:39] SPEAKER_00: that's the fun of it. That's what I pursued early on was the deal making part of it. Yeah.
[07:44] SPEAKER_02: What do you think is the key for realtor's, I guess, in terms of their success?
[07:54] SPEAKER_00: They definitely need to find an edge, something to differentiate themselves from the thousands
[07:59] SPEAKER_00: of other realtor's that are out there. You know, just some numbers from the Toronto real estate
[08:04] SPEAKER_00: board, for example, 55,000 realtor's. Why would you pick this one versus that one? And there's 54,998
[08:13] SPEAKER_00: other ones to interview. So what's the edge? What's the hook? What makes you different? Why would somebody
[08:18] SPEAKER_00: want to work with you versus all of the other realtor's that could possibly work with? And the ones
[08:23] SPEAKER_00: that figured out the why me, why work with me are doing very well. The ones that are kind of like,
[08:28] SPEAKER_00: I don't know, because I'm a nice person. It's great that you're a nice person, but there's probably
[08:34] SPEAKER_00: lots of other nice people out there. And it's tough to get the clients when that's all you have to go
[08:39] SPEAKER_00: off of. So figuring out that what makes you different? So strictly from a business standpoint,
[08:46] SPEAKER_02: what was the biggest challenges that you faced when you started off and started this kind of entity?
[08:54] SPEAKER_00: I mean, yeah, I think the biggest challenges were adapting technology, which really wasn't at the
[09:02] SPEAKER_00: forefront of real estate when I started. It was very paper driven, fax machines, or still a real
[09:09] SPEAKER_00: valid thing. And it was like, there's got to be a better way because we're doing a ton of volume.
[09:15] SPEAKER_00: And we can't do a ton of volume when you're having to drive and fax something one page at a time.
[09:19] SPEAKER_00: And then the fax jams. So all these little things that were never really around. I mean, I remember
[09:27] SPEAKER_00: programs that came out early on, which we use now till today, like DocuSign,
[09:32] SPEAKER_00: which is now kind of like a standard electronic sliding platform. But we were one of their very first
[09:37] SPEAKER_00: clients ever to test it. I remember I had a laptop with a pen with a stylus. I paid a fortune
[09:44] SPEAKER_00: for it back then. There was no tablets. There was no iPhones. I had a blackberry. And nowhere for clients
[09:49] SPEAKER_00: to sign. So I got this laptop that was crazy expensive. But it helped. People are like, wow,
[09:55] SPEAKER_00: this is pretty cool. Like I can just sign on your screen and I can't give it a try. So adapting the
[10:00] SPEAKER_00: X out of the business, which is kind of my background was on the tech side and bringing it into
[10:05] SPEAKER_00: real estate, into streamlining the process to a point where we're able to turn through the volume
[10:10] SPEAKER_00: that we do. That was a big shift for us from manually pen and paper and faxing to electronic
[10:16] SPEAKER_02: and digital. Interesting. Yeah. When you look at your entrepreneurial journey,
[10:26] SPEAKER_02: what would you say? Where did you learn a lot about business and doing business?
[10:33] SPEAKER_02: There were on the go, on the fly. Were there people that you looked up to in terms of
[10:38] SPEAKER_00: in the industry or were there books? I didn't know anybody in the industry. And me starting the
[10:46] SPEAKER_00: business that I did was certainly didn't make friends in the industry. I now have really good
[10:49] SPEAKER_00: friends and all the different brands and we vacation with them and we talk shop and it's great.
[10:55] SPEAKER_00: But early on, I was the the black sheep. I was kind of doing something that wasn't really
[11:01] SPEAKER_00: done in challenging the commission model that hasn't been really disturbed or challenged for many,
[11:08] SPEAKER_00: many years. And so it was all on the go. It was all on the fly every deal. Just I learned something
[11:14] SPEAKER_00: to and every deal made me a little bit sharper and quicker and helped me kind of shape our
[11:19] SPEAKER_02: our growth plan. Any books that impacted you? No, I'm not a reader except for your column, of course.
[11:29] SPEAKER_02: What about people like either famous business people? Anybody you admire there?
[11:39] SPEAKER_00: Not in the real estate space, per se. So yeah, I wouldn't kind of parlay over. There wasn't
[11:46] SPEAKER_00: anybody. I have family that's always been on the entrepreneurial side. So I learned a lot
[11:51] SPEAKER_00: from family from an early age. But we weren't in real estate. My parents weren't in real estate,
[11:56] SPEAKER_00: but still entrepreneurial and kind of figuring out self employment. It's in my opinion, the best
[12:03] SPEAKER_00: gig in the world. It's just not for everyone. We have a lot of realtors that join the real estate
[12:11] SPEAKER_00: world. Take it. Yeah, this is going to be great, but that's a really hard time structuring their
[12:16] SPEAKER_00: day. There's no set scheduling saying, okay, now at 10 a.m. you got to do this. If you don't do it
[12:22] SPEAKER_00: on your own, it's hard. A lot of people get drawn and sucked into Netflix vortex for hours and
[12:27] SPEAKER_00: hours and the next thing you know the day's gone. Yeah. So I wouldn't do anything else,
[12:33] SPEAKER_00: having been doing this already for 18 years, but it's also not for everyone. Self employment is,
[12:40] SPEAKER_00: you really have to be able to stomach, hey, or no pay it into the months, just because you worked
[12:46] SPEAKER_00: on a deal for clients for 40 hours that week. Doesn't guarantee you a paycheck at the end of the week.
[12:52] SPEAKER_00: And so for some people, they can't get around that. So they come into the industry, they give it a
[12:58] SPEAKER_00: try, they give it a good try. It's just a personality clash that they need that dependency of every
[13:03] SPEAKER_00: two weeks that paycheck coming in steadily and being 100% commission based is can be challenging.
[13:12] SPEAKER_02: I wonder from your perspective, when you go back, if you don't mind, let me ask you,
[13:18] SPEAKER_02: how old were you when you started this? I was 27.
[13:25] SPEAKER_02: Well, okay, so yeah, 27 to start something new, you know, how difficult was that
[13:35] SPEAKER_02: to go from my quote unquote secure job, although an old boss, an old boss of mine, I always said,
[13:41] SPEAKER_02: there's nothing's safe and secure, but you know what I mean, right? Yeah,
[13:46] SPEAKER_02: a place that, you know, probably good salary, good better, etc. Absolutely. Doing it on your,
[13:54] SPEAKER_00: that's a pretty simple. Yeah, it was. I had a lot of support from family and they encouraged me,
[14:00] SPEAKER_00: and they said, look, give it a try, we're here with you, whatever you need, we'll support you in
[14:05] SPEAKER_00: any way we can. And I gave me a really big sort of comfort and the safety net to know that
[14:10] SPEAKER_00: if I try and it doesn't work out, I still have something to fall back onto.
[14:17] SPEAKER_00: My previous employer at the time when I left said the same thing was like, look, we'd love to
[14:21] SPEAKER_00: have you back. I hope it all works out for you, but if it doesn't, you're always welcome back.
[14:25] SPEAKER_00: So that can help me feel a little bit better that if this didn't kind of take off, like I thought
[14:30] SPEAKER_00: it was going to take off, I'd be welcome back to my past job in telecom and the field that I'd
[14:36] SPEAKER_00: worked in for many, many years. And the family support, it was, it was a easier sort of leap to take.
[14:44] SPEAKER_02: Now, obviously running the company on a bigger scale, I'm just wondering how much time
[14:51] SPEAKER_02: or do you actually do the real estate side of things?
[14:57] SPEAKER_00: Yeah, so I try not to do too much on the transactional side anymore. So my time is more now focused
[15:03] SPEAKER_00: on growing the business, developing new territories and strengthening existing territories.
[15:09] SPEAKER_00: But I still love that part of the work and I've done two transactions so far this year. So I'm on
[15:13] SPEAKER_00: part to do my score for the year, so one per quarter. And I try to work with a buyer, a seller,
[15:20] SPEAKER_00: a house, a condo, just to kind of see what it is that my realtor's had gone through
[15:25] SPEAKER_00: out in the field. It's nice to be able to experience the market firsthand, not get it second,
[15:31] SPEAKER_00: you know, secondhand sort of storytelling of, oh, it was this, it was that not that I don't believe
[15:36] SPEAKER_00: them, but it helps me when I'm transacting to kind of say, okay, yeah, I totally understand what
[15:42] SPEAKER_00: you guys are are talking about because I did a deal two weeks ago or I'm working on a deal right
[15:46] SPEAKER_00: now and it helps just going to stay sharp and on my toes. Yeah, yeah. When you look at the market
[15:57] SPEAKER_02: these days, what can you tell me about how the market, you know, obviously it's different in every
[16:03] SPEAKER_00: year. Yeah, I think our our category market is still very strong, you know, it's not for all
[16:09] SPEAKER_00: property types, it's not all price points, those have kind of, you know, fluctuated like any market
[16:15] SPEAKER_00: goes up and down, but we're finding that listings that we have or clients that we have that are
[16:20] SPEAKER_00: looking to buy that first home or sell their first home and buy their second home.
[16:25] SPEAKER_00: And a certain price bracket, if you're in that 650 to 700,000, if you're single family detached
[16:31] SPEAKER_00: house, it's tough out there. Things are moving quickly. Things are really cooking and I hope this
[16:40] SPEAKER_00: you know, this feel good message gets out there that this guy is not falling.
[16:44] SPEAKER_00: Certain price points, you know, the market is slowed down. The million plus in certain areas,
[16:49] SPEAKER_00: they've kind of slowed down, condo markets, a bit saturated, so that's going to slow down.
[16:55] SPEAKER_00: But we're finding that sellers who are realistic in pricing it for today's market, not for a year
[17:00] SPEAKER_00: and a half ago or two years ago, saying, oh, my neighbor sold for 850, two years ago. So, well,
[17:08] SPEAKER_00: I'm sorry, he weren't on the market two years ago and you could have gotten 850 all the same,
[17:12] SPEAKER_00: but the market of today, here's the price, here's we can expect, and they're still making a really
[17:18] SPEAKER_00: good sort of, you know, return if they bought it, you know, six, seven years ago to where they're selling
[17:23] SPEAKER_02: it now, markets still very healthy. Yeah. What about just doing business and being a business owner
[17:33] SPEAKER_02: in Calgary? And in Alberta, you know, what benefits do you think a business owner has by being here?
[17:43] SPEAKER_00: We have, although we're a very regulated industry, real estate and now the legal world also heavily
[17:51] SPEAKER_00: regulated, I find Alberta to still be the most free to do whatever you need to to get the deal done
[17:58] SPEAKER_00: within reason, of course. But our governing agencies, our governing bodies are very forward thinking
[18:05] SPEAKER_00: I find in comparison to some other markets that we're in that are very close and saying, no,
[18:11] SPEAKER_00: this is how it's been for the last 50 years. This is how it's going to be for the next 50 years and
[18:14] SPEAKER_00: don't even try or say or invent something different. Alberta is a very welcoming entrepreneurial
[18:22] SPEAKER_00: market and we're finding Calgary specifically. We have a lot of clients that are self-employed
[18:28] SPEAKER_00: and business for self and it's nice to see that they're all, you know, living their dream and
[18:34] SPEAKER_00: doing what they want to do as their career, not because they have another choice and they're stuck
[18:40] SPEAKER_02: in a hamster wheel somewhere. Yeah, exactly. What advice would you give to a young, a young,
[18:48] SPEAKER_00: firing entrepreneur? Get comfortable being uncomfortable because even today, I still,
[18:57] SPEAKER_00: I'm not 100% comfortable, it's just my personality and what was going to like, you had to know
[19:01] SPEAKER_00: about this month, we'll see how it closes out and it's all fine but it's still always in the back of
[19:06] SPEAKER_00: my mind that we're in a 100% commission business. Instead involved in every facet of the company,
[19:15] SPEAKER_00: early on when I was starting out, I wore all the different hats. I was marketing sales, HR,
[19:20] SPEAKER_00: payroll, administration, training and now that we've grown, we've got people in those positions
[19:28] SPEAKER_00: but I'm still very much involved with every department and I sit right across the hall for me
[19:33] SPEAKER_00: is the gal that does all the money movement and we go over everything all the time and so I'm not
[19:39] SPEAKER_00: too far removed from it where I just kind of feel like I really know what's happening in my business.
[19:45] SPEAKER_00: I like to stay in it and have my hands in it at all the different facets.
[19:51] SPEAKER_00: I just have to, I guess, to let go, right? I just, it is. Yeah, it's one of those things that I find
[20:00] SPEAKER_00: just helps us just stay sharpen on our toes. If I know what the accounting people are going through,
[20:05] SPEAKER_00: I can somewhat maybe segue that into maybe what some of the marketing and advertising people are
[20:10] SPEAKER_00: going through and be that goal between us and look, you know, I just sat with so and so in this
[20:15] SPEAKER_00: department and here's our plan and here's what we're going to do there. So, do we're going to take
[20:18] SPEAKER_00: here that and just being involved in all different departments, I find really helps me anyways kind of
[20:26] SPEAKER_00: be a better sort of steering of the ship. So, when you look at, I guess entrepreneurs, they're
[20:37] SPEAKER_02: pretty much, you know, working all the time, right? Yeah. You're not working like literally working,
[20:44] SPEAKER_02: you're working in your head. Absolutely. And so I'm just curious, are you able to find time to
[20:53] SPEAKER_00: get that quote unquote balance in your life? Absolutely. I've made sure and I've put a lot of heavy
[21:01] SPEAKER_00: lifting and hard work early on to build it to a point where it's now writing on auto pilot.
[21:08] SPEAKER_00: And we're very particular with who we hired, who we bring on just because you have Realtors
[21:12] SPEAKER_00: License, those of me will just take you on. And so, yeah, sure, come on over. We've built a great
[21:18] SPEAKER_00: ecosystem and every time you add something new to that ecosystem, you want it to have a positive
[21:22] SPEAKER_00: impact, not a negative impact. And so, that thing just happened on its own. It happened by design,
[21:30] SPEAKER_00: and it happened with the selection and sort of the steering of where one of things to go. And
[21:35] SPEAKER_00: now that we're there, it's great. I could take as much time as I want to not feel like stuff is
[21:41] SPEAKER_00: falling apart or there's things kind of being, you know, left hanging up there. We have a fantastic
[21:47] SPEAKER_00: team, our Realtors are all doing phenomenal work out there for us. So I'm never losing sleep
[21:51] SPEAKER_00: and I'm wondering, oh, what are they up to or what's this person up to? I kind of have a really good
[21:56] SPEAKER_00: understanding of who they are, what sort of work they do in the quality that they deliver,
[22:02] SPEAKER_00: which enables me to go get up and go whenever I feel like. Yeah, exactly. And what do you do?
[22:11] SPEAKER_02: What do you do beyond work that you have special interest in?
[22:18] SPEAKER_00: Traveling. Traveling is a big one. Try to get to see as much of the world as we can.
[22:25] SPEAKER_00: Sports, you know, the winter sports more than summer sports. I don't particularly enjoy the
[22:29] SPEAKER_00: super hot weather like we have today. I prefer cooler sort of days.
[22:36] SPEAKER_00: That's it. Paying over to family and the the rest of it, like you said, it's always something
[22:41] SPEAKER_00: brewing in the back of my mind and my wife always gets tired of it is, you know,
[22:46] SPEAKER_00: it doesn't matter what we're driving in the car and all of a sudden say, hey, grab my phone,
[22:50] SPEAKER_00: jot this down. It's like a one word thing. To me, it means everything. She's like, I don't know
[22:54] SPEAKER_00: what you're wanting me to do. I'm like, just write this word. But in my notes, I'll explain later.
[23:00] SPEAKER_00: And that's kind of how, you know, this thing with ABC, for example, came around is looking for
[23:06] SPEAKER_00: ways to continue to integrate and evolve and grow and not just say, okay, well, we've got one.
[23:11] SPEAKER_00: It's producing. It's working. Let's just pick back now and do nothing. We went on to start 3%
[23:18] SPEAKER_00: realty and now ABC on the legal side. So always looking for something exciting and new to get
[23:25] SPEAKER_00: into that can complement the existing businesses that we're already in. All right, wonderful.
[23:30] SPEAKER_02: Well, thanks so much Roy for joining us today. Absolutely. Thanks so much, Mario.
[23:35] SPEAKER_02: I'll talk soon. You bet. That was Roy Elmock, who is founder of 2% realty, 3% realty,
[23:41] SPEAKER_02: and ABC law office. I'm Mario Toneguzi, managing editor of Canada's Entrepreneur.
[23:48] SPEAKER_02: Thanks for joining us today.