LEADERSHIP CORNER
Home-buying different from buying investments, Coldwell director says
Interviewed by David Butts
Advertiser Staff Writer
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Title: Managing Director
Company: Coldwell Banker Pacific Properties
Age: 51
High School: Casady, Oklahoma City, Okla.
College: Oklahoma State University
Breakthrough job: "How I got to this job and this position was based on genes. Dad got terminal cancer. He called one day and said, 'Son, I don't know how long I'm going to be on this earth and I need you to come be part of the family business.' "
Little-known fact: Conley had long hair and played organ in a rock 'n' roll band while in high school and college. "If I had the talent, that's what I'd be doing today."
Major challenge: "At the moment, the major challenge is trying to figure out how to give our agents and staff a well-rounded life because when the market is this strong everybody tends to work 24 hours a day ... there is more to life than just that. You want them to succeed in all areas of their life, so how do you get them to take time off. How do you get them to relax."
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Q. Interest rates are starting to rise and home prices are at or near all-time highs. This industry always says, "Now is the best time to buy." Is this really the best time to buy?
A. The hedge answer is this: How long are you going to hold the property. As long as you hold through one complete cycle, you are always going to win. At some point it will be higher than it was when you bought it.
Another way to look at that is ... most people buy homes differently than they buy investments because a home has utility value. In 1994 and 1995 when we were at the bottom of this marketplace and home prices had dropped significantly, you didn't find people waking up and reading the paper and seeing home prices at all-time lows and the husband turning toward the wife and saying, "Honey, we've got to sell this place. The bottom is falling out." No, they just live in it. They enjoy it. It is always a good time to buy if you have a need, and the need is driven by the utility. I've got more kids. I need a bigger house. The kids have gone to college. I need a smaller house.
Q. Are more people buying homes now for investment only?
A. The investors have actually just come back into the market in the last couple years. ... In the last couple of years we've seen a tremendous number of local guys and foreign guys all investing. I'm not talking about the zillion dollar oceanfront in Kona. I'm talking about condos in Waikiki ... condos out in 'Ewa that they're investing in because the rates of return are positive.
Q. Does it concern you at all that prices are getting too high?
A. You got to understand when you get into our business you have cycles. We're going to have ups and were going to have downs. But I see this cycle very different than the last two. I was here for the 1978 to 1980 market rise that was somewhat fueled by Canadians. I was here with the Japanese at the end of the 1980s. The amazing thing about this cycle is I can't find the outside influence. Yeah, the dot-com guys bought a few things, but they didn't do what has happened in the past.
I think what has occurred is housing prices going up too fast, too high for the marketplace. All of us that own houses love that, but for the marketplace to have stability, that's one of the things that can shut it down.
The fact that the interest rates have gone up in the last month by a pretty good amount should actually slow down some of the price increases and potentially keep that market from overheating too fast. So it may stretch out our cycle.
Q. Currently the image is real-estate agents are rolling in dough. Is that true?
A. Yes, there is more volume in the marketplace. At the same time we've invested more in computers in the last year than in the history of the company. We've invested more in the physical plant. What it is enabling us to do is do the things that all businesses want to do during the business cycle, which is expand in terms of their infrastructure and their offerings to customers.
People have the feeling maybe that the real-estate guys are rolling in the dough. I think that could be true for those that don't necessarily work the market wisely. The business cycle is eight to 10 years. If you have two or three real strong years out of eight or 10, you should be investing that wisely.
Q. Is it tempting to overbuild and find yourself overextended if things go south?
A. That's obviously the concern. There's a lure to do that when the market gets strong. There's more money there to do that. This time ... we have done more re-investing in R & D and programs, as opposed to opening new offices. In 1995, before the market took off we went from 12 to five offices. Today we have five offices. We have not succumbed to the "Oh, my gosh. Look at this market. Let's put a store on every corner." Instead we've invested more in infrastructure: the Internet, the computer side, the marketing programs to help the clients and agents, the support staff to help the agents.
Q. You charge between 3 (percent) and 6 percent commission on transactions. Now there are companies that offer to sell your home for a flat fee and save you thousands off the commission. Are they a threat to your business?
A. We consider ourselves a full-service firm. We charge a fee and we take care of everything. I think there is room in the marketplace for all different models. There's room for a Motel 6 and there is room for a Ritz-Carlton. It's really going to be up to the consumers. ...
Q. Is it true that real-estate agents are working for the deal — get the contract signed and get to their payday — even if it may not be the best price or house for the client?
A. I'm sure there are agents out there that do that. We don't think that is an appropriate strategy. It is not our strategy. It is not our culture. Hawai'i is a real small place. We live and die by how people talk about us in the marketplace. As the firm that does more transactions by double than any other firm in Hawai'i, our reputation is just a key.
Q. How many real-estate transactions today don't involve the computer?
A. It's shrinking by the day. I've heard that 40 (percent) to 60 percent of the buyers go to the Internet before they talk to a real-estate agent just to get educated. Agents can't operate without the Internet today. We've developed an Internet site where the agent can be at the office no matter where they are.
Q. Do you still consider yourself a sales company or are you becoming a computer company?
A. That's a real danger. You can't lose sight of the fact that we help people buy and sell homes. That's a tool. A real-estate transaction is such an important financial situation that most of us want a guide and a computer is not a guide. A computer gives me information. A computer can maybe even analyze things. We have found a machine that can give the client the comfort level that they are making the right decision at the right time for the right house.
