30 Minutes with Spyglass Lending

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Harma Hartouni

October 13, 202230 min read


Unknown Speaker 0:02
Hi, everyone, welcome to 30 minutes with Spyglass lending. This is a special one, and this is incredible. I have someone today on great admiration for really, really appreciate him being here. He's a busy man. Why? Well, because he's a CEO. In fact, he's the CEO of a very fast growing real estate brokerage. He's the CEO of equity Union. But he's taken 30 minutes to discuss his story with us and tell us a little bit about where the market is heading. Please welcome to the show, hormone Martini Harma. Welcome. Thank you for being here.

Unknown Speaker 0:33
Thanks, Aaron. Thanks for having me.

Unknown Speaker 0:35
Absolutely. Well, I want to start with this because something you've done really jumps out of me. I mean, amongst all the things you've done, we're going to talk about that today. You wrote a book. And that is no small feat. You wrote a book called Getting back up, which I believe was was published and put out there in March of last year. Is that right?

Unknown Speaker 0:52
All right, you're in Africa. Correct. Tell us

Unknown Speaker 0:55
a little bit about that. The title and where it came from, and why you felt compelled to write it.

Unknown Speaker 1:03
I have kids, as you know, and I thought my life lessons should be somewhere because you know, I had an interesting life growing up in different countries and having a tough that and being insecure about who I was trying to come out to myself coming to another country, being a US citizen, and yet, you know, be treated completely as a new immigrant to build a business from scratch, proving everyone wrong and all the you know, I have a story like everyone else has a story. And I thought my kids should know that. So I started writing little bit. And it took me three and a half years of writing. And it was very actually empowering, because it allowed me to heal through the process. And I never thought I will publish it. I didn't think you know, the small success I had on it. I didn't even thought about that before. But my partner who I will say Smarty marketing, he made it, he named it getting back up, it was over a real three minutes, he came up with a name. And it's not a real estate book, it's a story of someone who has gone through things and how I made it kind of fun. And every chapter has a lesson that you take the negative and you turn it to positive. And I ended the book where my career was, you know, with another company previously, and I had 2.5 billion in volume between three offices. And that's it, I maybe will be another book and maybe that one will be more on leadership and not personal. But I voted for not to have anything to do with my current business, but it has helped me so if anyone is thinking about writing a book, first of all, you should know you're going to lose money, you're going to you're going to change life. So do it if you want to do it that for that reason.

Unknown Speaker 2:59
I'm going to back you up here because I also wrote and self published a book a few years prior to you and it's the same thing. I mean, it did it it just before 40 years old, and it's like what why? Why did you do that? Why'd you write a philosophical manifesto in the middle of your life? You know, and something that like your memoir is usually towards the end right? Or the need to get out there and it was like it's so interesting what you're talking about with children because that you know, my son was on the way at that time. And I think that's what compelled me to do it and to your point has started writing down some anecdotes something a legacy to leave right. And is that is that what you're saying? That you had written this stuff down with the with the notion maybe you weren't gonna publish it?

Unknown Speaker 3:36
Yeah, I didn't think I will publish it. I didn't realize he might you know, how to cover page with my legs broken. I didn't think that will be the you know, I just didn't think about it, but and then my I met some certain people, you know, I do believe I don't believe in coincidence. I don't think things I believe everything happens for a reason. So as my book was coming to the end, I met someone who was involved in publishing not an agent. Then Then I met someone who says, Oh, I do the cover pages for a book and then someone says I do copyright for was just like happening and and then I got an PR team, I interviewed 40 people. And I actually tried to get an agent and I will say out of 400 people that I send letters and some chapters that are rejected me write the

Unknown Speaker 4:30
query letters are hard and those agents are looking for stuff right? They're so specific, and in that nonfiction world, especially it's like either you're helping billions of people or you know, they don't want to hear from

Unknown Speaker 4:40
anyone and that dad got rejected left and right and so well, thanks to Amazon, I will and then that alone, it was like a learning lesson. I was just so fed up with a process. But anyway, so I had great team to help me. Copywriting editing and cover page design and then publishing it and then selling Get an getting a PR team who really did a good job I was in so many places, I was very overwhelmed. And then I got messages and calls from people that they could relate to my stories, and I'm talking about people, I had a Korean woman, but you know, I never been in Korea, it has nothing to do with that. But she was relating her story to my mom's story. And just was, it was beautiful, and I think allow people in my own company to get to know me, because you don't get to talk about your story as much openly and, and um, I think I'm pretty blunt about it, what I've gone through what life is all about. So it's all out there. And hopefully my kids one day will grow up and read and they know that I don't want them to have a tough life. That's not the intention, I just wanted them to know, they are people in that they go through worse than you and you'd be grateful for what you have, because it's easy to focus on what you don't have right.

Unknown Speaker 6:00
Now. So such a great lesson. And to your point, I mean, again, that just feeling of legacy. They'll read it, their children read it everybody, you know, as the family grows, and everybody whose lives they're impacted will know that, you know, their father did something like that. And then they'll have a little, little bit more of an inkling of who you really were. And you just touched on something that was also interesting, your agents, right, your extended family, the people who work for you, as you said, Who who might know you but might not know everything about your world, here's this chance, if they've read the book, or want to talk to you about it to do that. And let's talk about that. Now. I mean, how many agents do you have in the brokerage is

Unknown Speaker 6:35
that you have a little bit less than 600? Wow,

Unknown Speaker 6:38
it's a big number. It's sizable. Is that where you wanted to be? Did you want to land at that? Or are you hoping to grow to much bigger?

Unknown Speaker 6:50
Many years ago, someone told me how come you never get satisfied with what you do? You always want more. And I used to think that's a curse. And that's horrible. Why can I just learn to calm myself down? And I learned that 7% of people have the ability to have that. And so I changed it from being a curse and negative to it's an ability. So I don't think I am done. But we were in an event and a lady asked me how did you attract 600 agents, I said one at a time. So I'm not sure how long it will take to go double or go bigger. But I want thing I won't do anything I don't like so and I will don't want to be in business with someone I don't like. So if that means one at a time. I'm gonna keep doing it until one of my passion is gone. The moment you don't have the passion. There's like I wake up at 430 I'm just so excited. I used to wake up at 730. And it's like, oh, God, I just don't want to get out of my bed. Now. I'm like, I don't I can't wait. Right. So

Unknown Speaker 8:00
what changed? I mean, what you know, that's a big three hour difference right there. And a big deal in difference and feeling about it. What What changed in your life that made you feel that it's funny,

Unknown Speaker 8:08
I used to have gut issues, I was depressed, or I didn't know I was or sad or whatever the right board is for that. And I'm just I don't know, I feel like new care. I'm so excited. And I have learned real estate, I've learned how to run a business. I've learned p&l, I learned recruiting, I've learned retention from my previous company that I used to be with Keller Williams, who is you know, they're gonna amazing job out there. And they've been the number one in so many categories. And it was time that something in me and I instead of pointing out to others, I realized I'm the one change, no one else around me change. So or maybe they have as well, but we just didn't change in the same direction. I really don't know the answer to that. But I know there's something I internally and you always have to fix inside to before you fix outside. So I said okay, we're what do I want to achieve? What do I want to do? So the number one thing was like, I want my son to drive in LA and tell people that Oh, that was my dad. And what does that mean? That's the that's the real estate mark that I'm going to leave behind. And simultaneously, right where I was struggling with this. My dad came back and within 40 days of coming back to the US he passed and so it triggered something in me that what am i What is What did he leave? For me as a legacy? What did you know? So what would I do for my kids so so I got that power that I'm going to do something different and bold and but I was in peace if it's not what it is today. If you asked me seven, eight months ago, this is where it will be I will be like no Aaron I don't think so. But I'm very grateful during

Unknown Speaker 10:01
the size and scope that it is.

Unknown Speaker 10:04
I just thought, you know, we had 500 agents and I said, you know, even if half everybody was like, Oh, no one will stay with you, and expectations should be very low. And I was like, okay, 200 people, I just, it's okay, I will be just have a different life. Go through this phase by myself. But then 463 Agent chose to stay on. And they

Unknown Speaker 10:29
have, this is the switch, you're, you're talking about the switch from where you were previously decided

Unknown Speaker 10:33
to, you know, go independent and build something, I will say from scratch. And and I was just agents I get every agent had that option. They're all business owners. You know, I don't we don't I believe our agents are our clients. I don't believe it's others. And buyers are my, my personal and my leadership's clients are our agents. And, and my word goes far. So I have to promise I have to deliver. So what when we noticed a foreign 63 chose to stay considering how much money that we're getting, and they from other competitors and they chose to stay. I really looked into it more. I said, Okay, what is that? And the constantly we've heard the support, the environment doesn't change to support the environment. So I said, Okay, we've got to always keep that our center. So we continued building what that is. And we, we have 450 people per month joining us. And I always say don't judge me with who I recruit with judgment with who I keep. And, and it's been great. It's been a great drive. We have eight locations right now. And the locations, each locations has 10 core groups that they belong to the market share. We have Palm Springs, Palm Desert, Brentwood, Santa Clarita, and then to look against, you know, Sherman Oaks and woodland hills. And it's been amazing.

Unknown Speaker 12:08
You know, I appreciate you just listing those off. And that's great. I mean, obviously the the core ones you'd started with, and I think maybe maybe you could just touch upon the three with Keller Williams that you had initially right, but those were Encino, Sherman Oaks. And where was the third again,

Unknown Speaker 12:21
Calabasas and Sydney City

Unknown Speaker 12:24
right next to the city? And And now as you mentioned eight locations? And what do you hope to grow to?

Unknown Speaker 12:35
What I have in front of me what I have with my coach and what I have with my leadership, it's each has a different numbers. So I don't overwhelm people, but definitely grow with the right people. Because one bad apple can damage my entire basket. So I won't do it. I just won't do it. But I think eventually the goal will become will be to be the number one independent boutique agency in California. I don't know. I don't know how to get there. And I don't know how long will take to get there. But

Unknown Speaker 13:11
right. And from what I'm hearing you say I mean, that's the number that's most important, not hundreds, or 1000s of agents. But number one independent brokerage, and whatever that is right, wherever that lands.

Unknown Speaker 13:22
I don't even know who it is now, because I don't I don't focus on what everybody else is doing. I have a friend of mine, who I admire is very big agent, very, very big agent. And he he's not even with us yet. And he said to me, so you just I was driving from Palm Springs. And he said, Why would you just open an office in Palm Springs? And do you know who's the number one company out there? And I said, no, actually don't. And he goes like, well, don't you feel as a CEO, you should know your numbers. I said, You're absolutely right. I'm like really ashamed that I don't know, who has the highest market share there. And who has the most agent count? I don't know. And then a week later, we had different companies agents joining us and calls were coming in. And I met two people who said no, we're not a match. And, and I was like we went to 55 agents in three weeks. So then I called him back driving back from Palm Springs. I said, Hey, you remember you said who's the number one because I said well, I'll find out today who it is was like Oh, three weeks later, but you'll find that I said Yeah, but I have 55 agents so if I find out who's the number one after I've accompany I'm okay with it. So I don't focus on what everybody else is doing. Maybe I should I don't know. You know, I just know that. I have always in my life had some many people doubted me. Or they're like, you know, or I'm doing it wrong. I hired the wrong manager. I booked rent the wrong location all. But I'm still standing. So it's kind of hard to listen to everyone, please everyone you have to learn, go with your gut, whatever it is you're doing goddess books on wherever this internal voice is telling you

Unknown Speaker 15:16
love it. I mean, it served me well, so far, of course, obviously. And it sounds like you're going to keep going. And like you said, you're getting up at 430 every morning with that great feeling of where this is going and what you're building here. And that's amazing. I think we all strive to have that. But it's also interesting that you're doing it and how fast you're expanding in a market that is shifting so rapidly beneath our feet. And maybe we could touch a little bit upon how you're feeling about that, you know, has anything changed with those plans? Or are they ever evolving? Or what are the plans now that we're looking at very different marketplace, I mean, I think, you know, even those who don't follow real estate, religiously, can probably hear, you know, or read the tea leaves a little bit about what is going on out there. And obviously, you know, just just to kind of paint a quick picture of it. Obviously, all of the euphoria has stopped, and everybody's buying every house that just comes on the market demand has dried up in certain areas. You know, people are talking about price drops, a recession, potentially on the horizon, and the Federal Reserve, just raising rates so rapidly this year, just to touch on a few of the big points. Let's hear your thoughts on those.

Unknown Speaker 16:28
Well, I have right before COVID I used to say market is shifting get ready. And I said this for so long. And I became a liar right for four and a half years I was like market is going to change market is gonna change, get get ready. And he did it. And people made more money at one point I remember agents are like karma, stop saying it. Yeah, so I have been waiting for this market change. You know, when COVID hit, I didn't miss one payment on my we on some buildings, and we leased some building. And we miss one payment. Because I prepared not for I prepared for a changing market. But COVID came, although I didn't know COVID will help us but the first three months everybody I'm sure was like, oh my god after bankruptcy. This is it. So I didn't miss one payment, I prepared myself for the worse. And I also think that if you go back to when I when I was selling 150 transactions a year as an individual agent selling Oreos, if I know what I know, today, even in this market, I would have bought every listing I had, I just did it. So that's the part that I remember, I would say three and a half percent commission, free termite, free closing costs, write down 1%. And no one will write an offer. So there's one thing very powerful that I always said, and people listen and then walk away. You always want to do what people are not doing so you can have what they don't have. I'm online trying to find and marketing people. And you should see the quality of people applying for a job right now for much lower than they were getting paid. Yeah, that I couldn't find anyone nine months ago, no one will just will even laugh at me for the budget I had. I was like you it's okay. And so I think finding talent agents are wonderful right now. They they all got lucky with their 2021. They don't know what the basics are they forgot. And this is not a not the first time we've always gone through this cycle. And you don't have to live in this country or being in business 100 years to know. But act that didn't never happen before. So so I'm just I'm just preparing as a company to remind them, what is the basics? You don't have to spend the money to do business? Yes, the rates are high, and he will most likely go up again in February. I know. He will. We just went up too much. So we're just getting an adjustment, but there are people literally waiting for today to purchase. And and it's a numbers game. If you took 10 listings and you sold nine, you just have to take 25 listings to sell nine. Right? Well, so I'm focusing on that we're doing a lot of business planning with the top producers with me directly. And then. And the business plan is not like oh, tell me about your goal. And that's exciting. We've got like, Okay, what you did last year to have those transaction is not the norm. What is your skill set? What is how are we going to get you more transactions. And what I noticed this fear in agents is that they're so scared or it's an opportunity so on my job as a company owner, I'd like to shift the mindset of my agent that, and it's always about how much you keep is not about how much you make, they don't know, they don't have a budget, they don't know what balance sheet is trying to keep our company's value proposition based on teaching these people run their business, like a business and, and gain their loyalty.

Unknown Speaker 20:18
Well, and such a great point, because, you know, again, I really do admire you and follow you. And I hear something from you all the time think like a CEO, right? I mean, you are a CEO. And, to your point, you know, each agent you have, it really is their business, right? I mean, it is, it's their individual business. So if that's what you're saying that you're focused on helping them keep rather than make it this, you know, at the same time, and, um, obviously, they've got to go out there they've got to produce and what that looks like, but we all know that, but you know, to turn around and, you know, being able to look at their overhead or being able to look at their own p&l, and say, Well, how am I gonna make this work for me if I'm going to continue to be an agent or make this the main job? Right? Is that Is that really what you're saying?

Unknown Speaker 21:02
Yeah, absolutely. It's, you, you can do 10 things, you know, at the same time. One thing that I read all the time is Gary Keller wrote this book, the one thing, and I always suggest to read that, it's very important to know that you, you're not going to be good in everything. And if you think real estate is your career, you better be good at it or otherwise we'd be out. And I said this before market change. This is when people writing an offer no contingencies, no appraisal, no as is we name our, our next kid on after your dog like all this to get the offer accepted. And I was like, you have to prepare for what's coming. And doing. Even doing real estate. You know, when someone says I do commercial residential two to four units I sell in LA, I sell in West Hollywood. And it's like, you're not an expert in anything. So when market share, right? No one knows. I think farming, connecting being an expert in one thing, whatever that is, it's going to keep you aside from than everyone else. So you can survive the next 18 months. The nice thing, I think this market is going to be much shorter than 2006. In the period of the but when the recession is over, when media will talk about it, we will have consequences. And people will think Oh, it's over weekend, it's like, well, still, you gotta use that skill set. And so I love brand new agents right now, because they don't know that they don't know. So they get in. They're like, Oh, I have to knock 100 doors to get one appointment. I'm like, yep. You know, you asked him. Like, when was the last time you're not doing like, I'm not talking? I did 35 million last year. Okay.

Unknown Speaker 22:48
Guess what you're knocking?

Unknown Speaker 22:51
If you want to hit 30 Yeah, you'll be you'll be knocking.

Unknown Speaker 22:56
And such an interesting point. I mean, you know, and look, I'm not going to hold you, I don't think anybody should be holding you to what you said pre pandemic, nobody was really expecting it to to blow up the way that it did over 20 and 21. But hey, let's let's be realistic, the money was free. I mean, you're talking to a guy in finance. So you know, when you see sub 3% The money was free. And when the money was free, that just changes the landscape. And yeah, you're gonna see an explosion of equity. And, you know, especially if, you know, quantitative, quantitative easing was still the mantra through that time and flooding the marketplace with trillions of dollars and giving away free money to people. Yeah, the mindset was going to be an explosion of equity, even if not everybody predicted it, and knew it. And I'm not going to hold you to this, either. But what do you see, really, in the next two years, I mean, you know, you just kind of touched on the fact that maybe this won't be that long, but how long do you see kind of the recession taking hold? Or, you know, a shifting of the listing prices? If they have to go down at all? If there's a market and let's just hear your thoughts, maybe you don't feel that they will?

Unknown Speaker 23:58
No, I think we're gonna have an adjustment. And first six months, which we already gone through three, four months out of it, the adjustments are fake, meaning you're just have a house that is worth 2.1% or 2.1. And the seller says, I want 2.5 It should have never been 2.5. Right? So when does that should be 2.19 months from now that house on 2.1 will be 1.8. So that's the first price reduction, it's not part of the price adjustment. In a county. That's not fair because we had an unrealistic a seller or a horrible agent, whichever. So we're going to have a clean that up right now. Then we're going to have price reductions on to adjust 510 that some places maybe 20. I don't think it will go that far. I think 20 from the wrong pricing. Yes. But I don't think if you price it right. And then 10 months from now will be 20% Less I really don't see that, because there's still people that they can purchase. Now, the buyers will be, always will be three kinds, right? The ones that have cash, and they've been waiting, the ones that they could never compete with all the other offers, but they're first time homebuyers. And then the ones that they have to sell it or downsize or upsize or moving to California to Texas or back to LA, whatever that is. Sure. For a job, they will be always they will be less transactions, but they will be transaction but we always have too much trends, too many transactions before. So it's not like we're dropping. If you look at the norm, it's okay, what is going to happen. Now, I think if a homeowner cannot purchase a property with 5% interest, and if the rate goes to six, it doesn't matter, you couldn't do five that one person should not be the reason if they like no five person I can add five and a half. I cannot it's like no actually, I think you just cannot you just didn't realize it. So I think if anyone who purchased a property for three person and they're like six person is too much. They most probably have no money to purchase. I know people put 10% down I know people that they put money out of that. What is the loan that they were getting SBA loan, and they put a strain on it they purchase a condo as an investment property, which is technically 100% financing. So that's not these are not normal transactions. I do think we will have good transactions, I think we will see the median home prices. The median home price homes will be actually moving emerging markets will like you know Santa Clarita, the Riverside the valley, we will have movements, the high end properties which they will suffer the most. And I think I remember Airbnb also had a big part, right people thought I'm gonna buy I'm going to do Airbnb and people will research we will not go places the way they used to. So angry. Listen, the bottom line comes to consumers fear of spending once the fear is not there, more media will talk about it, the fear or more will be placed. So our job as an agent is to educate them say, this is a condo that you have to pay 880,000 And today you can buy it for 650. This is the moment, right?

Unknown Speaker 27:32
I mean, if that if that becomes the new number. I mean, that really is a sizable shift, obviously. I mean, if you look at the percentage of what ADHD is down at 650, but you said it best, I mean that first time that first go round, it feels like the pandemic equity is kind of what I've been calling it, this notion that hey, you know, again, you made all this money, this run up of equity in your home over 2021. That wasn't real. And to your point, you were saying you thought it would shift before we hit the pandemic? Well, okay, the black swan event happened, it hit the world and all of that, but it was probably time that we were going to make a shift, right that we were going to see something, right. Yeah. And instead, everybody thought, oh, this will accelerate it when the pandemic hit. And instead, it was the complete opposite. And not only was it the opposite, it was insane. Right? You know, we like to use the term left Planet Earth on one of these words. So that should ultimately come back to the norm. You lose the pandemic equity first, and then really see what the that's

Unknown Speaker 28:25
exactly what I meant a condo that is 880,000, that should have never gone for negligence now has already gone to 790. Right? So that was just never done, like

Unknown Speaker 28:38
750. And then you're saying the shift will come and it'll be at 616. And that percentage is really what we're talking about here, right? Like somewhere in that 10 to 15% range of 750 down to 660. You're really looking at it closer to a 10 to 15% range, which is probably what will end up happening. I mean, it's still Los Angeles is still desirable. Obviously, there are still, as you said, the three types of buyers cash. And it's interesting, because it's still close to a third of transactions right now are exactly cash buying. I have

Unknown Speaker 29:04
an agent that I'm coaching and I told she was going to buy something a month ago, I said no, you buy it in January, because this other would reduce and there you go. She, the seller did I said by I want all my agents, I want them to buy properties in 2023 every agent should own it. You know how sad it is that 60% of agents don't have a home on there. They don't even have a home and then the other 40% that they do 50% Don't even have more than one they only have one property that's not in retirement that's not an investment right. Your primary residence is not an investment.

Unknown Speaker 29:41
Oh by the way, I'm so I'm so happy you said that. You know there are not a lot of brokers and not a lot of agents who will say that, you know, and really appreciate you kind of putting it out there because a lot of people I mean that's what a lot of agents will sell a homeowner on the idea Hey, this is the best investment you can make. But please say it again your primary residence. That's not your This

Unknown Speaker 30:00
may create wealth for other people not for themselves right and I was told this many years ago your license is not designed to create wealth for someone else it's for you first. And I couldn't understand it the first 10 years and but but the most important thing is 2023 Focus on purchasing something and if whatever that is but as a if you want an investment for have a retirement you can't focus on your social security right you buy then I don't even know if we will have any So focus on buying a property and but this is the time to buy not today. I mean we're in September October right now I'm talking about six months from now is the time when no one is buying it you do have to have a good credit score and by the way you can use you know this you can buy a five years arm and just buy something for a year rate will not be six and a half forever 7% Forever wants to drop you refinance. But if yes, do you have to suffer 12 months of higher payment yes don't go to Costco don't eat sushi don't go to Starbucks. You know just cut those out. I promise you you will find that $1,000 That you couldn't afford and but you're you have to cut the pattern because if you do like everything everybody else you just become rich like everyone else a new portable everyone else. You just have to jump in the middle and you just did the opposite because the you create wealth when no one else is doing it.

Unknown Speaker 31:22
Love the advice love the thoughts love the predictions really appreciate it hormone cartoony CEO of equity union, author, father, husband all the above. Appreciate your time. Really. Thank you. Thank you. Thank you for joining us, and we'll have you back. Thanks again.

Unknown Speaker 31:37
Thank you have a great day. You too.

Aaron Pfeffer

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