Today REAL Trends is speaking with Jim Fite of Century 21 Judge Fite in Texas. Since taking over the company from his father in 1977 he and his sister Jan Fite Miller have grown from one office with eight affiliated agents to 30 offices and more than 800 affiliated agents and industry practitioners. His company also ranked 89th in the REAL Trends 500 brokerage rankings by size. As a seasoned veteran Fite has learned a few things throughout his real estate journey. Today, he shares his lessons learned. So welcome, Jim.
Jim Fite: Thank you very much, Tracy. Good to be here.
Tracey Velt: Yeah, so you’ve been in the real estate business for 47 years, so during that time, I’m sure you’ve seen and learned a lot. Tell me what industry events and trends have surprised you the most over the year. The years.
Jim Fite: Years. Like a lot of years. Well, let me see. Historically, my father was a pioneer in technology. Now you might say, well, “Wow that, that’s really interesting. How could that be?” Well, he had the very first answering machine installed in his office. And they actually… In Dallas, Fort worth, this is a true story. In Dallas, Fort worth and back then Southwestern bell, now AT&T, actually flew a technician down from Washington, I believe it was Seattle. I’m not 100% sure or to install the answering machine into his phone system. So that leads me to things that have happened in the real estate business in my 47 years that are off the top of my head. Well, I remember well, the sitting on the edge of a log with my wife and two friends before the Internet was sent out to the public.
They were both, he was head of HR for a standard accelerator laboratory in Palo Alto and she was a librarian for all the physicists in that facility. And they were talking about this thing called the Internet. And we were going, “Wow, how does that work?” And they said, “Well, in a couple of years it’ll, it’s not just government, it’ll be out there for all of us.” So that was my introduction to the Internet long before we had it in the real estate business or the world. And of course you know where it is today. So definitely when the Internet was coming on board, we in the real estate business, and I’ll say me too were concerned that it was the lion coming over the hill. That our business would change. Would there be a need for realtors in the future? And of course the answer is now history. Absolutely.
As a matter of fact, I think Steve Murray with REAL Trends knows the answer better than anybody. There are more people using real estate professionals today after the Internet came onboard than, than before. So that was one major thing. The other major thing that I recall was when the corporate folks got into the real estate business and when I mean corporate folks I’m talking about, and most of the young realtors don’t even know this, there was a time when Merrill Lynch at a real estate company. There was a time when MetLife owned a real estate company and there was a time when Sears and Roebuck owned the real estate company.
So we were wondering what that would lead to in our industry with these corporate giants coming in with all their savvy, and money, and all that stuff. Well, the rest is history. Where are they today? Not one of them are in the real estate business today. So then looking at today’s world, bringing that forward, don’t we all wonder how these venture capitalists and [inaudible 00:06:34] buyers are going to work within our industry in the next two to five years. It will be interesting and fun to watch.
Tracey Velt: Yeah, definitely. And we did do a recent consumer study, that did show that more people use a real estate agent today than they have over the past 10 years. So that has not changed. So in your years as an owner, I’m sure you’ve made a lot of phenomenal decisions and maybe some not so successful ones. So tell me about one of the best decisions you ever made and how it impacted the company.
Jim Fite: Well, the one that definitely… I call that the power of moments. If you haven’t read the book Power of Moments by Dan Heath and his brother. You ought to read that. It’s a great book on those monumental moments in all of our lives. And so without a doubt we were an independent real estate company for 60 years and we were one office and then we went up to four offices. We had about a hundred people in 1996.We were a very difficult size, four offices, a hundred people, and we generally couldn’t make a profit. We made a nice living for my sister and I and our families and the people that work with us, but we couldn’t make a profit. And so we knew we either had to sell or grow. It was one of the two things.
So as we looked at the real estate climate in Dallas-Fort Worth, Texas, we decided we were going to grow. And we actually had two offers on the table by the way. But we decided we were going to bite the bullet and we were going to grow. And so the way we would grow, because nobody knew Judge Fite from a man in the moon except for one 8th of the market area at the time. We decided to join the Century 21 brand and we did 22 years ago. That was a monumental decision, because my father, and Jan and I both had said no to franchising all of our careers for 60 years. And yet we finally bit the bullet and we did it and without a doubt that gave us the household name throughout the Dallas-Fort Worth area.
We learned how to buy companies. We’ve purchased over 50 companies. We bought multiple brand companies, pretty much every franchise out there. Not all of them, but almost every franchise, we bought one of their franchisees companies through these 22 years. We’ve bought Independence, we bought property management companies, we bought a mortgage company. So because of the affiliation we were then a household name. But on top of that we learned a lot about acquisitions, and mergers, and how to do them successfully. Some of them not so much. All that comes along with growth. And so I would say that was the moment that we made that decision. And I know there’s a lot of talk today about is franchising the way to go or not the way to go. Every business owner has to make their own decision. For us, it was the right thing at the right time and still is today. So that’s my power of moment.
Tracey Velt: Okay, well there are no bad decisions, because even decisions that don’t go well, you learn from them. Is there one that sticks in your mind that you made, that you learned and ultimately succeeded because of what you learned?
Jim Fite: I quit counting at 50, at 50-plus mergers. But acquisitions that we’ve done, we actually… I look back on three of them and say, I wish I hadn’t done, hindsight 20/20, and for different reasons. There was one we did and two weeks later we find out the people were going to stay with the company and so forth. And two weeks later we find out that the husband and wife who were owners of the company are getting a divorce.
And of course we didn’t know that through the due diligence phase. They were always smiling each other. They were always happy, happy. Well, I guess so, I bought their building and their company. And got them out of jam probably. But anyway, that divorce ended up being a struggle internally in our office, because that turned into not friendly, friendly, but unhappy, unhappy. It was a pretty ugly situation that we had to work through. And of course they tried to put us in the middle of their problems. And so that was interesting. There was another one where, quite honestly, the owner didn’t tell the whole truth and nothing but the truth and we were misled in a lot of situations. And so obviously the trust factor went down pretty quickly after we did the deal. And so, hindsight 20/20.
Hey, could we have avoided it? I don’t know, but certainly it was not a good deal. And then we had another one where, quite honestly, the first thing we learn about M & A’s is you’ve got to have the right cultural fit. And so we acquired an independent and in hindsight 20/20 and even though it was… We kind of knew it on the front end, but we thought we could make the culture fit. It was a very, very difficult cultural fit and very, very difficult transition. And it’s over now, we learned a lot, and we’re moving forward.
Tracey Velt: Well, those are pretty good odds, though. Three out of 50.
Jim Fite: Yes.
Tracey Velt: So that’s pretty darn good. So, obviously, you have a wealth of experience in the industry. What are some of the lessons you’ve learned along the way that can maybe help other brokerages who maybe are just starting out?
Jim Fite: Well, I have an open invitation to anyone who wants to open their own brokerage company, primarily within our company, because agents get a wild hare or they get their broker’s license. They think that’s the next step in their career development. But I have an open invitation that I’ll give anyone two hours of my time. They can bring in any question they would like, ask any question. I kind of opened my books up to them. It’s kind of interesting, fun time. And what they perceive leadership of the brokerage company and management of a brokerage company is. First thing I tell them is it’s something 90 degrees different or maybe even 180 degrees different. It’s not what people expect it to be and their perception versus reality is totally different. So through the years, some people have gone ahead and opened their own shop and most of them have not. After I talked with them for a couple of hours.
And by the way, after two hours I charge a consulting fee and I’ve had a few of them take me up on it and good investment of their money. So anyway, I would advise them to learn all they can about the three legged stool of broker ownership. And the three legged stool that I call brokerage ownership comes from Earl Nightingale’s tape series Lead the Field. Tapes came before podcast, by the way. Anyway. And it’s one you’ve got to have financial strength. More real estate firms will dissolve in the future, because the recession hits, which it will or a downturn hits and it will, and they don’t have financial reserves. They haven’t planned ahead, their overhead grows, they start looking for the silver bullet of success and there isn’t one except for good hard work and a lot of other little things and so they aren’t financially secure.
The second one is recruiting. You go from listing and selling real estate to you’ve got to recruit, you’ve got to build your business. You’ve either got to be small or large. That’s my opinion. And by the way, I think that’s what other gurus like Steve Murray would say as well. Being medium size is a very hard place to be. And so you’ve got to grow or you got to die, that’s it. Or a small boutique can make it depending on their market segment.
And then the third one is training and retention. They go hand in hand, although they are different. Research and development that goes into training. Research and development in our business is keeping up to date with the trends, keeping up to date with what’s going on in the industry, and the marketplace. It’s a constant knowledge and learning experience for a good real estate broker who’s out there to compete, and grow, and develop. And so if you break any one of those legs on that stool, your business will crumble. It’s just a matter of time.
Tracey Velt: Yeah, definitely. So my last question is the easy one, I hope. Obviously there are always going to be challenges and opportunities in real estate. The market’s changing quickly, but it always has. So what are the opportunities that you most look forward to in the near future?
Jim Fite: Well, in our company, because we’re 82 years old and my sister and I acquired our dad’s company 42 years ago. We’re of the age where we won’t be around for another maybe 30 years maybe. And I’m 66, so maybe I’ll be here 30 years more. That was a joke, ha ha.
Anyway, an 82-year-old company, we have to plan for succession. And I think that’s one of the issues in today’s real estate brokerage world is owners and brokers do not have a succession plan. They don’t know where they’re going. They don’t know how they’re going to leave their legacy to someone else, or how they’re going to gracefully bow out, or they’re going to have to sell. I mean, it gets down to some very basic questions. In our case, we have implemented a process of succession planning and we’ve been working on it for a long time now, but specifically for the last three years. And we now have a leadership team that… Matter of fact, the president of our title company said just this week, he mentioned to me, he said, “Jim, I want you to be around forever, but if you’re not, I know we’re in good hands.”
And that’s the greatest compliment that I could have. And he didn’t even know he was giving me that compliment or us a compliment when he said it. But what greater compliment is there then for one of your people, one of your leaders to say we need you, we want you, but on the other hand, this company is set to live forever. And that’s what we’ve been working on for three years. For one of our leaders to be able to say that with confidence.
Tracey Velt: Well, Jim, thanks so much for sharing all of your knowledge with us and I really appreciate it and thanks so much for joining us.
Jim Fite: Our pleasure. My pleasure. I hope you do well in 2020. We look forward to another great year, whatever it holds for us. It’s going to be great and we’re going to have fun working together with REAL Trends and all of our real estate partners out there.