Gary Keller

I have recently participated in a couple of fascinating meetings this month. The first one was with Susan Davenport, spokesperson with the Austin Chamber of Commerce and the second was with the owner/creator of Keller Williams Realty, Gary Keller. So much information was discussed that I will supply multiple entries to cover the high points. I will offer a quick study on each presenter so you can understand their approaches to our markets here in Austin. Once I have outlined each presenter, I will cover their presentation. Gary Keller wants to keep his offices profitable by knowing exactly what is going on Nationwide with real estate and lending. Susan Davenport focused on ‘’selling Austin’’, moving business here and the favorable future Austin has. This first entry will be focused on Gary Keller.

Mr. Keller is a graduate of Baylor University, late ‘70s I believe, with a degree in Real Estate. He calls himself a ‘’black hat’’ (possibly referring to some views of a pessimist?) and says he proves it by always wearing black. The day of the seminar, he proved it wearing black shoes/slacks/dress t-shirt/sports coat. He came to Austin and began selling homes with JB Goodwin (at that time JB offices had the dominance that Keller Williams has now).

Gary is not so much a ‘people person’ as he is a ‘thinker’ and he is the first to state this. Mr. Keller is more into operations, systems, strategy, ‘’x’s and o’s”. Keller is not wired to sit in a living room and offer tons of empathy if a house is upside down (worth less than what they owe a bank). Gary Keller pursues information, seeks to apply the information to prove its validity, then stands behind the proven results regardless of how it makes someone ‘’feel’’. I make this point because of what is happening in California and some other markets where the housing prices are falling 10% to 20%. I also believe Gary was wise to move into management as the profession of being a Realtor requires empathy at all levels and times.

During his entry into the real estate business when rates where 17% plus, and Sellers were having to pay TONS of closing fees to sell their house, Gary states he did not provide any empathy because that was just the market he was working in. Gary believes it was helpful to be young and new to a ‘’tough market’’ when he entered because he did not know any better. From selling real estate, he moved into management with JB Goodwin in what was then a very desolate part of Austin – Round Rock in the early 80’s. While Austin was BOOMING, Gary was growing an office in Round Rock, and he was successful.

Gary’s next move was his own office in 1983, with partner Joe Williams. Sometime around 1987, Gary acquired some information regarding the strategies of a multi-level marketing involving vitamins. Gary took pieces of that business model to revolutionize the residential real estate industry as we know it today. Gary’s changes blew the usual models of a real estate office by allowing the top 10% of his Realtors in the office to decide where the money was spent, when new computers were needed, and other office policies.

Gary also offered his Realtors a beneficial commission split, so Realtors could chose how to allocate their expenses rather than pooling money and spending as a group. In the 70’s & 80’s, Brokers operated ‘’top down’’, telling their office what would happen and also having closed financial books, opposite Gary’s model of Keller Williams.

Keller Williams Realty is now nationwide and ranked 4th in North America. Interested in going global, Gary’s main focus is taking over the #1 spot in North America first (supposedly the growth in the other top 3 real estate franchises is coming from China and Europe and that is of no interest until Keller Williams Realty is #1 in North America).

Nationwide, Gary noticed in 2005 that listings sold versus listings taken jumped dramatically. He believes this was the first sign of what is going on in markets like California. Gary reminded us that if housing prices shoot up 120% like they have in California over 5/7 years, and income does not stay with that growth (rarely does), a crash is coming. Real estate values only go up while income stays down, if people are buying and selling with tremendous loan incentives. And we have had some incredible lending opportunities for Buyers to chose from – bad credit with zero down, etc..

Austin did not rise like the markets mentioned above. From 2000 to around 2004, our average price hovered around $197k/$198k. We began to see an increase in 2004, and today we are around $248k average sales price (close to a $190median price).

Gary Keller is a “Realist’’ on the market, he wants to know the numbers and stick to a strict set of principles that will survive in any economical atmosphere. Gary is also very opportunistic when it comes to opportunities in our market. Gary is also closely watching what the result will be after years of extremely lose lending practices. In the 80’s, our market folded followed by California’s market. Gary, wearing his ‘’black hat’’ wants to make sure he and his offices are on top of any market should California ripple our way.