Michael Paul is the owner and managing broker of Discount Realty Works. He takes great pride in having grown his business from nothing to being a major player in the Eau Claire, Wisconsin real estate market. Michael has been a licensed Realtor since 2006 and specializes in assisting with buying and selling residential properties.
Where did the idea for forming Discount Realty Works (DRW) come from?
The idea came from the notion that the internet has fundamentally changed many other business models. Think about how we bought things 20-25 years ago. Purchasing books and music bears no resemblance now to what it did before the internet. The internet has taken the place of so many middlemen in so many different businesses. Travel agencies, stockbrokers, car dealerships, and more have had to adapt to the internet or face failure. They have had to adapt or die. In many cases the internet has reduced prices for consumers, which is a good thing!
Strangely, real estate has been less affected by the internet’s cost-cutting power. Before all the listings were on the internet, having a well-connected agent actually meant something. When the MLS was a book that came out twice per month, it was worthwhile to pay a professional 6% or 7% commission to spread the word about your listing through networking. It is DRW’s position that nowadays, that networking just isn’t as important. Real estate has become more about gathering the data accurately than schmoozing people. Real estate is no longer about who you know, it is a market driven more by listing data and people’s greater access to listing data. When all MLS listings are aggregated on broker’s sites, which brokerage listed the home that fits a buyer’s needs is unimportant. DRW uses the power of the intent to market homes aggressively across the internet at prices that can save sellers thousands of dollars in real estate commission costs.
Similar websites were operating in other parts of the country and even within Wisconsin. There was nothing similar in Eau Claire, and so the seeds of DRW were planted.
What does your typical day look like?
Well, every day is different! On any given day there are dozens of tasks to be completed depending on how many buyers and sellers are active and where they are in the process.
6 – 8:30 am: Wake up, breakfast, get the kids ready for school
8:30 – 9:30am: Respond to emails that came in overnight and follow-up with prospects via email
9:30 – 11:30: Client meetings, paperwork, data entry
11:30 – 12:30: Lunch. Often brought from home and eaten at the computer. Try to have lunch with other people once every two weeks.
12:30 – 3:30: Client meetings, client follow-up via phone calls, returning phone calls, taking pictures, installing yard signs
3:30 – 5:00: Showings with buyers
5:00 – 8:00: Family time
8:00 – 10:00 Communicate via email, prepare for tomorrow, and relax
How do you bring new ideas to life for DRW?
Many of our ideas come from clients. When a client suggests that we make an improvement or offer an additional service, we take that request seriously. If the pros outweigh the cons, the new idea is tested on a small scale and then rolled out full-scale.
What is one habit of yours that makes you more productive as a business owner?
Responding to emails, texts, and phone calls as quickly as possible. Ask clarifying questions. Don’t put it off, do it immediately!
What was the worst job you ever had and what did you learn from it?
Mr. Paul states that the worst job he ever had was running a new satellite television sales office. It was a situation where he was promised big paydays that never seemed to come to fruition. After a few months it became clear that territory which was supposed to be protected was being infringed on by other offices, which cannibalized sales. The satellite provider company was also in decline, so sales forecasts based on the previous years’ sales were way off. Two lessons were learned by this experience: 1.) Be skeptical of people offering you the moon…if something sounds too good to be true, it probably is. 2.) You must be passionate about your business. Mr. Paul states that looking back on it, he didn’t care much for television one way or the other, which should have been an indication that it was not going to work on a long-term basis.
If you were to start again, what would you do differently?
There was one person from whom Mr. Paul says he took business advice early on. This person was a trusted advisor because the first two bits of advice he gave were great! In fact, among the sea of naysayers, this person was a lone voice urging Mr. Paul to go in the direction of offering MLS listings, which turned out to be a key to the success of the business. However, before too long he saw a pattern that whenever he took this person’s advice, it ended poorly. Mr. Paul says he finally had to sever ties with the advisor because he felt he had outgrown whatever advice that person had to give. Mr. Paul says he certainly would have saved himself a few headaches had he noticed this a bit sooner.
Mr. Paul is proud that he got most of the major steps of starting a business right. There were no huge loans; the entire business was started on a shoestring budget of about $8,000. He worked full-time in an unrelated position until the business was big enough to replace that income. He studied hard and learned how to sell real estate from the ground up, with very few mentors or advisors. If he had to do it all over, Mr. Paul says he would do 95% of it the same way.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
Create a system, fine tune it, then repeat it as often as possible.
What is one strategy that has helped you grow your business? Please explain how.
Under-promise and over-deliver every day. Don’t promise people the moon. Rather, be humble in your words and be outstanding in your actions. People are consistently surprised that although our name contains the word “Discount” and we charge much less than other brokerages, we write narrative descriptions and take photos that are often better than those provided by full-price brokerages. This leads to positive experiences, which clients tell their friends and family about, thus growing our business.
What is one failure you had as an entrepreneur, and how did you overcome it?
When DRW first started in 2005, it was strictly a for-sale-by-owner site with no MLS. It was called EauClaireByOwner.com. Mr. Paul was not yet licensed as a real estate agent and had no intentions of being licensed. Within the first 6 months it became clear that the website was not being very helpful to sellers. They would pay a $175 fee to be listed on the site and to have a nice yard sign, but the failure was that not enough potential buyers were seeing the listings for the site to work properly. Mr. Paul reasoned this was the problem because sellers would sign up, fail to sell their house, then list it with a full-service broker at the same price and the house would sell within a couple of weeks. So he took the next logical step of earning his broker’s license for the sole purpose of listing sellers’ homes in the MLS to find out if the additional exposure would be helpful. He found that the additional exposure offered by the MLS made all the difference in the world, and the business has been growing every year since 2005.
What is one business idea that you’re willing to give away to our readers? (this should be an actual idea for a business, not business advice)
Educational iPad apps for kids that let them explore different core subject areas and learn at their own pace. Topics should supplement what they are learning in school and encourage accelerated learning. Parents should also have access so they can learn what topics interest the kids more and where their strengths and weaknesses lie. This could be an annual- or monthly-fee service.
Tell us something about you that very few people know?
Michael Paul ran his first ½ marathon at age 38 in 1 hour 43 minutes.
What software and web services do you use? What do you love about them? How do they help your day to day job?
Bookashowing.com. A former work colleague wrote this great piece of software which acts as a message center for agents, sellers, buyers, inspectors, and appraisers. It eliminates the need to make phone calls to other agents when setting up appointments. Showing agents can set up to 10 appointments online, and the Bookashowing system sends out showing request messages to all the listing agents (and the sellers, if the listing agent has created an account for them). Everyone is kept in the loop as to whether the showing has been approved or denied, and the system also asks buyers to provide feedback on each home, which is useful for sellers and listing agents. Finally, the Bookashowing system also provides a great record of who has toured which homes, which is very handy when reminding sellers of protected buyers if the home has not sold at the end of the listing term.
If it weren’t for this software (or something similar) as a productivity tool, DRW could not exist because we are based on a low-overhead business model which minimizes the need for administrative personnel.
What is the one book that you recommend our community should read and why?
“Outliers” by Malcolm Gladwell. The book’s main thesis is that experts are not born, they are made. Along with the proper background, it takes 10,000 hours of practice to become an expert in a given field. That is an optimistic message for anyone looking to change careers – with perseverance and ambition you can go from nothing to highly successful expert in just 5 years of full-time work!
What was the most difficult house you’ve sold and how did you do it?
One home we sold last year was a difficult sell for several reasons. For one, the owners bought it as an investment. It was purchased as a foreclosure with the intention of remodeling it and flipping it for profit. The home had an in-ground pool, which is not necessarily a good thing in this climate because it can only be used a few months per year. The home was on the corner of a fairly busy street. Also, the sellers were asking about $100,000 more than the assessed value of the home because they completely finished the lower level, doubling its’ size and making the public tax record inaccurate. Finally, one of the sellers was renting the home, and he was comfortable there, so they wouldn’t sell it unless they achieved a certain level of profit.
The first offer we received was simply too low for the sellers. We counteroffered but the parties were more than $20,000 apart, so it did not come together. However, this offer served to communicate to the sellers that maybe the home wasn’t worth quite as much as they thought.
A second offer came in, again lower than asking price. Protracted negotiations ensued. To make a long story short, a deal was finally reached after much frustration and TEN counteroffers. However, the home inspection revealed that there was an issue with a bay window in the living room. The window did not open as it should have and the inspector feared there may be deterioration under the window. The buyers had a well-known company come in and give a $5,000 estimate for replacing the bay window and wanted the sellers to pay for the new window. The sellers thought $5,000 was ridiculous and offered to repair the window themselves. Buyers did not agree and the deal fell apart.
A third offer came in and we negotiated a price fairly quickly. Buyers were informed of the window situation and were fine with the sellers making the repairs themselves. Finally, everything went smoothly with the third offer and we reached the closing table without further incident.
This one definitely took more time and hand-holding than any other home we’ve sold recently. The keys were perseverance and always making sure we are looking out for the client’s best interests. It might have been more expedient to try to convince the sellers to accept a lower offer or eat the $5,000 window repair, but in the end we knew that was not the best thing for the sellers given their particular situation. It all worked out in the end. And as a bonus, after the closing, one of the sellers found a new home, paid with cash, and used DRW as his buyer agent!
What is your opinion about the housing market? Do you think it has fundamentally changed since the bubble?
Our area of Western Wisconsin didn’t really have a large run-up in prices, so we didn’t have a big corresponding drop like the sunbelt. We saw prices drop by 10-20%, bottoming out in 2011, and they are already rebounding.
One thing we have seen has been a slow but steady migration into cities and away from small surrounding towns and exurbs. This may be a result of people adjusting to $4 per gallon gasoline since 2008 or so. When gas was under $2 per gallon, commuting an hour to work made financial sense…people could live out of town where the homes are cheaper and the taxes are lower and gasoline was a relatively small part of the budget.
The combination of higher gas prices and a decrease in home values just killed some areas of Western Wisconsin which were essentially exurbs of St Paul, MN.
The same effect (on a smaller scale) can be seen just 20 miles outside of Eau Claire. It seems that people are much less willing to commute more than 20 miles these days.
What are three tips you have for someone looking to buy a home? Someone looking to sell a home?
For Buyers:
- Talk with your lender. Discuss debt ratios and down payment amount, and different loan options available to you. Get a preapproval letter from your lender.
- Differentiate between wants and needs. Then search for a home that meets all of your needs and most of your wants. Existing homes that meet all your needs AND wants are rare, so expect to compromise.
- If you need to sell your current home, put it on the market and accept an offer on it before writing offers on other homes.
For Sellers:
- Declutter! Rent a storage space if you need to. Empty the house of all personal pictures and make sure horizontal surfaces are bare for showings.
- Price the home competitively. Your first 30 days on the market may be the most active time of your entire listing.
- Don’t pay more than 4% commission to agents!
What do you believe sets you apart from other realtors and how have you differentiated yourself so well?
Discount Realty Works’ entire reason for being is to offer sellers options and low commissions that they cannot receive through traditional real estate brokerage companies. DRW differentiates itself from other companies based on price. Sellers can see that our listing packages are radically different from what other brokerages offer. When sellers have success with Discount Realty Works, they tell their friends and family. Over half of our business comes from word-of-mouth.
How can people contact you if they need real estate help?
They can reach any of our agents using our Toll-free number at 877-395-2060. My office phone is 715-836-7772, and my mobile phone is 715-559-2942. Email works great as well; mike@discountrealtyworks.com.