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Shop Talk: The Real Estate Show

 

 

 

Shop Talk Episode 1 - Michael McAllister

 

 

August 15, 2018

Episode 1: Michael McAllister

Michael McAllister, Founder and Co-CEO of The CE Shop, talks about the importance of entrepreneurship, giving back, and building community in real estate.


 

 

 

Anything we can do - I can do - to inspire entrepreneurship in any format is really, really powerful because entrepreneurs do a lot for our world, and our country, and ultimately our community.

Michael McAllister

 

 

ABOUT THIS EPISODE

On our inaugural episode, we chat with Michael McAllister. He discusses growing up helping his mom in her real estate business, and how that initial spark of interest in the industry blossomed when he became Colorado's youngest licensed agent. From his time at CU Boulder, he developed a passion for entrepreneurship, and in time both interests coincided to become The CE Shop.

The conversation takes us to the importance of giving back, why community matters, and how much the industry has changed since The CE Shop's inception 13 years ago. Michael argues for the human aspects of the business, and believes that no matter how much technology becomes integral to real estate's existence, building and cultivating human relationships will never go away.

 

 

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EPISODE TRANSCRIPT

JON: Hello and welcome to Shop Talk: The Real Estate Show. I'm Jon Forisha and today my guest is Michael McAllister, Founder and Co-CEO of The CE Shop. Founded in 2005. The CE Shop is the industry leading provider of online real estate education with courses in all 50 states and DC. Hey Michael, how are you doing today?

MICHAEL: Great, Jon, how are you?

JON: I'm doing pretty well.

MICHAEL: Thanks for having me.

JON: Yeah, absolutely. So I thought we'd start just by talking a little bit about your background. So can you tell us a little bit about your upbringing?

MICHAEL: Sure, sure. Not a licensed practitioner in the field you'd say, but had been licensed since I was 18. I was actually the youngest real estate license broker, um, and the state of Colorado back in the day. It was a long time ago, was a long time ago, but really just rooted in the real estate industry. My whole family has. So my mom raised three of us as a single parent here in Denver and that was the way in which she supported us all the way through our childhoods. So as soon as I was really safe enough to walk the neighborhood and put flyers on doors and run signs around, we were doing so, um, that was back in the eighties and really became a family business, so understood at a, really appreciated it, saw the entrepreneurial aspects of it. And then, um, upon going to college, I had a finance degree from the University of Colorado Boulder. Go Buffs, love the Buffs. And was really interested in technology. So got involved in technology startup companies. I'm pretty much right out of the chute and learned a ton, learned a ton, always knew that I wanted to do something on my own, but also knew that I had a lot to learn. I had a lot to learn and was fortunate to learn from some really great entrepreneurs in the technology space. I'm here in Denver and in North Dakota I moved to North Dakota Kinda mid, early career and met some fantastic people there as well.

JON: So what was the draw of real estate? I mean, starting out, it sounds like you were raised sort of in that world, but what inspired you to stay in that world?

MICHAEL: You know, real estate is from a macro economic perspective, certainly in the United States are really powerful force. It's an indicator, a leading indicator of a lot of things to the overall economic health of our, of our country, and it's very foundational I believe, to communities and the impact and health of a community. So, you know, having grown up in it, it's a little bit like the, you know, the shop keeper's kids, like when you grow up in an industry, it sort of gets ingrained in you early on and you enjoy it. I've always been fascinated by it. My mom would say that when I was a kid I used to always just draw houses, like I would draw floor plans and so it was either probably a career in architecture or technology, but something around real estate was always something that I loved. The connection for me was that technology was really, really powerful, but there were major gaps as it related to the real estate industry regarding technology. Now, since we started the business, which was back in 2005, there's been a lot of advancements in technology relative to the real estate industry. A lot of really cool technology applied to the transaction itself and all kinds of consumer data that's out there, but generally the real estate industry kind of lags behind as it relates to technology and certainly real estate education did, which was really where I saw an opportunity to come in and disrupt and transform what happens within real estate education. Because I've always been a big fan of of education as well. I was never a superstar student, honestly. I loved school because of the social aspects of it and again, the community aspects of it. I'm always fascinated by learning and so the ability to blend together real estate and technology and education. To me in starting The CE Shop was really the trifecta of kind of all the things that I loved, which, I think our career should be that. I think our careers should be a mix, a melting pot of all the things that we love because then it's not work. It's really just an extension of your life, which makes it that much more satisfying and I do believe that as business people and as professionals and as human beings, if we're really well aligned with what we'd love to do and what we love with our work, you're just that much more successful. So you're not pushing up hill, you know, you actually have the momentum of what you're here to do working in your favor, which is fun.

JON: So how did you get into entrepreneurship? You said it sort of arose from different tech context you had made in school.

MICHAEL: Well, I think it was probably my roots. You know, my mother, having raised three of us as a single parent in the real estate industry, and that's as entrepreneurs, that's as much of an entrepreneur as it gets. I often talk to the team here at The CE Shop about how a career in real estate is one of the true last entrepreneurial opportunities with very few barriers to entry. So if you have the base level of education that you need in order to take your real estate education and licensure exam and then you're willing to work really hard, it's a great opportunity and there's no limit to earning potential. There's tons of ability to build a frankly kind of a recurring business, you know, as you develop relationships with clients and resale, etc. But my first exposure was certainly in my family. I mean, I just saw the power of that and the ability to create something from nothing is something that we're more blessed with in this country. You know, there aren't any barriers. We can do whatever we want, if the mind can conceive, the man can achieve, or the woman can achieve, so lots and lots of opportunity there. And then shortly after I finished school, I did have an opportunity to work for some really sharp entrepreneurs. That kind of fine tuned it for me. I was never a great employee, I always had my own ideas and I always thought that I could do things better, probably over arrogant as a young person because I certainly didn't have all the answers and didn't do it better than everybody else, but I always thought I did. And so I wanted an opportunity to prove that within my own career. And I also am a big believer in a risk reward. So I think this life is about making big bets, taking big bets and reaping big rewards. So when you start a business, just like if you start a career in real estate, there's tons of opportunity, but there's risk attached to that. Nobody's writing you a check every week, every two weeks, however often. And your success is really up to you. So I was always intrigued by that. I was never afraid of that because I always had confidence in my ability and shortly after we started the business, the team's ability to execute and get the job done. So I think entrepreneurship is just one of the coolest things in the world. We actually had dinner last night with some new friends of ours who just started a company of their own and they've done everything from research. It's actually a standup desk company and they had to research all the production, design, patent, all the legal pathways to take a product from conception to market and it so fascinated to me, all the tenacity and willpower and strength and just chutzpah it takes to do that is phenomenal. I actually forgot it's been 13 years since I did that and I was so inspired and we had dinner last night when they were telling their story. Anything we can do - I can do - to inspire entrepreneurship, in any format, I think is really, really powerful because entrepreneurs do a lot for our world, and our country, and ultimately our community.

JON: Yeah. That's awesome. So you mentioned how much real estate has changed since 2005 when The CE Shop was founded. How have you seen it change, from the education side of things?

MICHAEL: Well, the education side of things, I'd like to think that we've blazed our own trail, but I certainly don't want to toot our horn too hard here. You know, the time that started was a fascinating point in 2005. We were stIll running super hard across the country and the real estate industry. It was really, really strong. And then shortly thereafter the bottom fell out in the largest recession we've ever seen. Our business grew through that because we were adding states and adding curriculum and doing all those things. But we saw a lot of turmoil in the real estate industry and I think that was the impetus to where the broader industry really reinvented itself. So the traditional brokerage real estate business wasn't necessarily what the industry wanted to continue with. And that was when you saw companies, the big tech companies in the industry, really begin to flourish and take off because there had to be some economies in it, there had to be more efficiency in it. And we had to empower the consumer to really have control here because back in the day when my mom was selling real estate, when I was a kid, I remember that every week a new big fat MLS book would show up; the Multiple Listing Service book where they printed it every week. And it would look like a big old fashioned Yellow Pages book. And we had some neighbors that were always curious, you know, it's kinda like, you know, a lot of us pull up Zillow or Realtor.com or all these portals all the time, just because we're curious when we're traveling what the house is worth.

JON: Yeah. We want to see what our neighbors sold their house for.

MICHAEL: Right. So I remember the neighbor was always wanting to get his hands on this book. And back in those days, as you know, the data really belong to the brokerage community. You know, the book was distributed to those subscribers, those agents that paid for it. And so it was really this proprietary piece of data and real estate professionals are licensed realtors. Depending on the state, you have to be a realtor. You don't have to be a realtor to have access to the MLS, but those that have access to the data had the data. I mean they had the book, they literally had the book and all the information, and now I think one of the biggest things that's changed clearly is the fact that anybody and everybody has the data, so it's really around how do you interpret the data. So in a world inundated with data and big data and bigger and bigger data of which there is some kind of a mechanized intelligence being derived from it. But I think the big change in the real estate industry as a whole is the fact that real estate professionals really have to fine tune their skills to learn how to interpret the data. Because you and I as consumers, we can find all kinds of homes and all kinds of information. You know, what it sold for a price per square foot. All this kind of data. But we need that professional, that trained professional who's on the ground in the neighborhood, in the community. Talking to people that can help us interpret it because real estate has been and always will be super local. Just as, real estate education wise, things have moved a lot. When we first started the business, there was very little distance learning going on. Part of that was because of the demographic; it was just a demographic or a sociographic, whatever you want to call it, kind of problem. There wasn't necessarily a trend to turn in towards technology first, but it was also an industry that was rather relatively antiquated. It was populated and dominated by publishing companies, big publishing companies, textbook companies, and so when we started our product, we really wanted to turn that on its head and say, you know what? We've got a mobile professional who wants to learn when and where they want to learn and we need to take it from the cerebral, kind of a scholarly kind of written fashion with hardcore rules and so forth, to a more contextual learning environment to where they can really understand it. Because as an entrepreneur you need to understand, okay, I've got a lot longer list of things that I can get done when I'm going to go learn. I want to make sure it's contextual so I can grab that piece of information. I hit the ground running. I think we've done that pretty well with our CE product and certainly that's the feedback we get with the Pre-Licensing product, but it's come a really long ways. I think it's gotten better and better and better and you know, those of us that are pioneering will make sure it continues to get better.

JON: Absolutely. So I imagine that's a the new barrier to entry. I mean you were saying the book meant you were serious back in the day, that if you had access to the MLS, you know you were a real real estate agent. But nowadays when everyone has that data, it's more what to do with it. That seems to be the new focus on the education side. Right?

MICHAEL: Well, I think it's certainly critical. You know, an agent can't succeed in today's market unless they can understand the data, interpret it themselves, and then be able to communicate that through the lens of a buyer or a seller. So all of us as human beings want to know what's in it for me and what it means. So I think the most successful real estate agents do a really good job of understanding their clients' needs, wants and desires. What's happening in the life of that consumer that's prompting this transaction, and then to be able to take that massive world of data and be able to distill it down to the things that really matter to that consumer that are going to guide them from point a to point b. So yeah, things have changed a lot. It truly used to be that, you know, the real estate professional had the book, had the MLS data and they were a glorified tour guide, you know, because the consumer kind of learned as they went, where now the consumers are just inundated with information. So I think the most important role a real estate professional can play is one of a counselor and guide, you know, to really help them discern and also bring that local market. Local market knowledge, as I mentioned before, real estate is just hyper, hyper local.

JON: So do you think the job of a real estate agent has gotten easier or harder in the last 30 years?

MICHAEL: Well you always have been and always will be working with consumers going through major life change. You know, on average a consumer moves five or six times really in their life. So you know, consumers having babies, babies leaving the nest, getting married, getting divorced - major, major life changes. So a real estate professional's job has always been to kind of help guide through this major life change. I think it's gotten more challenging because it's very competitive. Technology is something that you have to be comfortable with and you have to be willing to work with it and you have to, as we've talked about, you have to be a good discerner of the data and interpreter of the data and that's complicated. It's more complicated than it used to be and we also have more data on all the properties. Now you pull up the listing online and it's telling you all about the schools and the shopping and the transportation. Certainly in some of the tools that NAR has put together, it shows a lot of the demographics and the socioeconomic environment in the area, and all kinds of layers of data. So as a real estate professional today, you could really get caught flat footed by a consumer if you're not immersed in the data and understand what it's all about and be able to interpret it. I think there was a day when real estate folks could work a very large geographic area and I think now success comes in really a hyperlocal market. Growing up, my mom always called it her farm area. She worked in a 450 home farm area. It was the neighborhood we grew up in. That was the one that we walked flyers through and I mean she owned that neighborhood. Certainly you don't need to narrow your scope to 450 homes, but do have to have a certain geographic area to which you're really comfortable with all those local nuances and know what's happening. You know, you want to be connected enough to the community as a real estate professional to know that, oh, so and so's kids, their youngest child is just about to graduate from high school. Maybe this is the time that they're thinking about downsizing and moving to something new. So there are a lot of advantages to staying very hyper focused in a geographic area and certainly a number of clients in the business.

JON: So I think I already know your answer, but as AI gets better, what do you think of the belief that real estate agents will go the way of robots and there won't be a job for humans anymore?

MICHAEL: You know, it's interesting and there's certainly a lot of capital going into those ideas, not necessarily to the robot idea. Certainly to automating and making the real estate transaction much more efficient, which I think is good. I think that's good. That human element is in the relationship element. I have a really hard time imagining that, for someone to want to purchase from a machine or help them move through what is typically the largest asset they own. Real estate that's owned by people is their largest asset. It's worth their nest egg. It's where the the bulk of their things sit. So to turn that over to anything other than a human being, it would be a little bit like what we see in the financial services industry, where there's certainly been a lot of automation put into stock trading and so forth, but for most people that have enough equity or enough cash or enough of a nest egg that a piece of real estate would represent, they'd probably go sit with a human being to at least counsel them on how to use the tools. Which I think provides a relatively familiar analogy for people. So I don't know. I'm a relationship person. I think the real estate industry is a relationship business. We as human beings thrive with human interaction. So I think our world in a way has gone so far to technology and kind of isolation within technology, which is an interesting paradigm because people turn to social media to, quote, connect and, quote, be friends with each other, but we're learning that it's very isolating and the human spirit needs that human interaction. So I think when you come to, when you take those forces, I think success in business going forward is going to be how can we bring that human element back into the interaction with people, and when you look at a transaction the size of a piece of real estate, I don't see it being totally automated. I certainly see there's increased efficiencies that could be part of the process. And we've seen a lot of that already and there's a lot of that and there are certainly companies out there that are working really hard to try to make that happen and I think that's good. But the actual relationship between consumer and trusted, educated, good professional, I think we'll always go there.

JON: How do you see that on the education side? Because The CE Shop offers only online courses. They don't do any in person classes. So how do you see still trying to humanize something like education from a distance?

MICHAEL: That's a conversation we have all the time because frankly about 50 percent of those who studied to get a real estate license still do it in the classroom. Then my question, Jon is, what is it, and this is something we're applying resources to because we want to better understand this. Why is it that they're choosing the classroom? What is it about that classroom experience that's having them choose that route as opposed to an online learning environment? Now some people just think they're predisposed to a certain type of learning methodology. Others I think are are subject to or influenced by a referral from someone who just did it that way, so what we're working on is better understanding how can we take the learning environment, the online learning environment, and infuse those characteristics that make people want to go to the classroom. In other words, how do we create something that has the very best of all the convenience of a distance learning program with all the warm fuzzy of what the consumer wants in the classroom environment? So that's an evolution for us. I think that's an evolution for our industry to figure out, not necessarily are these online and classroom environments two separate worlds, but what's that middle ground look like? What's that new world look like that has the best of both characteristics in it? And I think that's going to be a really fun thing to explore here.

JON: Yeah, absolutely. Hmm. Lot of room for growth there. So giving back is obviously a huge part of your business philosophy, with The CE Shop Foundation. How do you think giving back can help grow a business?

MICHAEL: I think it's foundational, frankly. I paused because I don't want to sound too philosophical or theoretical about the whole thing, but I do believe as humans we have a desire to give back. I don't have the quote handy, and you don't want me to use google in the middle of our conversation here, but there's a great quote out there about, you know, basically the richness of life comes from what we give, not from what we get. And I think that's just a human element. I think everybody feels good. It's a little bit like during the holidays when you give a gift, it oftentimes feels better than having received them. So I think it's foundational and I do think that enterprise business enterprise has a responsibility to do it. We started the foundation in 2014 when we had a national presence with our business and I was always raised that to whom much is given, much is expected. And I believe that. So as leaders in our industry, I felt like we needed to give back to the communities that have taken such good care of us. So I think it's foundational and then anybody who wants to begin giving back, there's got to be an emotional connection, there's got to be an emotional connection to make it worthwhile, you know? For us it was health and education and kids and that makes sense. It's probably a little self serving, you know, I think we got to take care of these kids who are gonna take care of us, right? If they're not healthy and well educated, we're in trouble.

JON: You've already spoken on it a little bit, but how do you think real estate helps to build community, not necessarily a community, but the mental idea of community as well?

MICHAEL: Well, foundationally, you know, it's a pretty big investment for a consumer to purchase a home, right? So there's an investment there, not only finances, but also the emotion and life. So in neighborhoods, you've got individuals and families that have chosen to plant their family in that community. I think that certainly way, way back before we all had detached garages and garage doors and fences and all these things. Certainly a community was made up of the people that all live together. They lived in close proximity. They had probably common resources and common gathering places. So I still think that opportunity still exists. And back to what we talked about, technology and robots running the industry someday, I think that there's a longing for that and there's a longing, especially within a generation of, you know, Gen Yers and beyond that to connect as people, and where you live is really important. We see that in many of the multi-dwelling or apartment communities that are being built, they create these community areas, barbecues outside and intentional places, games or game rooms, places for people to convene and connect. And we're also seeing that certainly here in the Denver area, a lot of investment in parks. A small fact: Denver has the highest percentage of parks per capita than any city in the country. And I think that real estate is foundational to that. So if you and I invest in a piece of property and we're neighbors together, that automatically creates a common interest, a common bond. We have a common interest. It's kinda funny, common interest communities, that's a real estate term, but an HOA kind of an association of people that come together to live in one place. I think it's powerful. I think it's really powerful. The statistics that we see again here in our own community around home ownership is a little bit disturbing. Our prices have gotten so out of control that we're seeing the latest statistic was that only about 50 percent of families can afford to buy a home. It's not to say that wherever they're renting a home they can't create community as well, but I think that investment helps to kind of raise the intensity of that and the interest in it. Speaking personally, we're just getting ready to move to a new home this coming Friday and I'm really interested in who my neighbors are. We've made an investment in the neighborhood. We want to get to know them, we want to build community. We're not some of those people that just pull in the garage and shut the door and never talk to our neighbors. So now it all depends on the people involved and so forth, but I think real estate's just foundational to it in that real estate professionals used to go out and knock on doors and meet people and talk to them and that we're actually seeing more and more do that, kind of the old fashioned way of building relationships in generating business.

JON: Alright, so this is my last question here. If you could go back to the beginning of your career, what is one thing you would have done differently?

MICHAEL: You know, this is kind of a complicated question. Not a complicated question, but a conflicted question because I've always lived my life with no regrets, because I think that however it plays out, it's really quite perfect and I'm grateful for that. But then there's the critical kind of perfectionist side of me that looks back and says if I'd just done that a little differently or a little sooner or whatever, I probably would have taken more risks sooner. So I spent the first 10 years of my career working for other people and learning, which was an informal kind of advanced degree, if you will, but I probably would have taken more risks, more risks sooner, because I had the capital available to me, but my regrets and things that I wanted to do differently or would have done differently are very, very short. I can't think of anything really that jumps out besides that, and this would certainly be the advice that I'd give to anybody listening to our conversation today: act boldly, take risk. Nothing ventured, nothing gained. The risk reward equation if you have confidence in yourself is a pretty fun one to play with. We did a bicycle ride in the mountains this last weekend and I went by this woman, she was probably 20 years my senior. We're riding up Fremont Pass, which is a brutal pass. It's actually a 13 mile climb straight out of Copper Mountain and she has this pair of socks on that says, "Do epic shit." And I thought that is so cool. I went by and I was like, I love your socks. and she said, we're doing it, we're doing it. In other words, we're doing the epic shit and I just, it really stuck with me. I actually saw a bumper sticker earlier today with that on it, so I need to order some of those, but I think that's the key. Get out there and try things and stick your neck out and do bold things and don't be afraid to trust yourself and trust the support system that you have around you and get after it.

JON: Awesome. Well that's a great note to end on, so thank you Michael.

MICHAEL: Yeah, my pleasure. I'll come back anytime.

JON: Awesome. Thanks.