ROD SANTOMASSIMO: This is Rod Santomassimo of the Massimo Group. Welcome to our next session of the Massimo Monthly. This is where we talk to some of the best and brightest industry leaders in regards to what they are doing in today’s marketplace to be successful.

Today we have the extreme privilege of having Mark Myers of Marcus and Millichap’s Chicago office joining us. Mark, welcome.

MARK MYERS: Thank you, Rod, I appreciate it. It’s a pleasure to be here.

ROD: Mark, maybe some of the people out there don’t know you, believe it or not. Certainly, I know of you because of your level of consistency throughout your career, especially, at Marcus. I don’t want to embarrass you, but I want to list a couple of your accomplishments… you’ve had a Sales Recognition Award for seemingly forever. A National Achievement Award of Sales, again, 10 or 15 years…Chairman’s Club…Chairman’s Circle of Excellence…top 10 investment professionals… all have been Marcus and Millichap. Mark, certainly, you’ve had some great consistency throughout your tenure. Can I have a little indication of how long you’ve been doing this commercial brokerage practice, Then, how long have you been with Marcus?

MARK: I’ve been with Marcus and Millichap 17 years, approximately. I started with them after being an asset manager for a small real estate syndicator. I had my rough spots like a lot of other folks in the industry. I would just encourage people just to keep at it. I graduated from Wheaton College, a small private school in Illinois after growing up in Arizona. I met my wife there and her family is from the Chicago area. So, I stayed here. I, literally, could not find a job in 1983. A friend of mine whose sister was an accountant hired me as a bookkeeper. I started off in a small real estate vacation shop. Then, I went to a real large shop. That was just before the tax changes, TRA86, when they changed the depreciation laws. Two of the three companies I worked for went bankrupt, because of the tax laws themselves. I worked for a small real estate investor for 6 ½ years. I went to Kellogg Business School during that time and met a broker who had sold a couple of properties to us and really liked what he did for a living. Frankly, I saw the kind of money he made. It really wasn’t that big of money at the time. Compared to what I was making, it was. I decided that’s what I wanted to do with the rest of my career. I interviewed with a few brokerage companies. I picked Marcus and Millichap. I felt that they were a good fit for me. They were a very entrepreneurial company. I wanted to be an entrepreneur…in essence a company within a company…I liked that very much about Marcus and Millichap. They’ve allowed me to spread my wings and grow a team here and it’s been very profitable, very successful. I thank God for it and it has been great.

ROD: That’s fantastic and certainly you have the same hurdles, challenges, success over the last 17+ years. You’ve seen a lot of cycles to say the least. We use to say “Stay alive until 95”, then, we had 2001. Recently we thought it was going to be “heaven in 2011”. Tell me about this, you used the magic word where you said, team. A lot of brokers today are working in teams. What’s the depth? Tell us about the team you’ve built, give us a quick review of what their responsibilities are.

MARK: I know this call goes out to a broad audience. I want to encourage people if you’re just starting off in the business and you’re with a medium to large size company, you can’t afford to have your own marketing person and your own business development people, like I have. What you can do is utilize the resources of the firm. Typically, you’ll have a regional manager, a managing director, that will support you or they wouldn’t have hired you. If they don’t support you, find another firm, obviously. Ask that person to go on appointments with you, train you, teach you what a cap rate is, what a gross rent multiplier is, get you involved in the right real estate courses and use the resources of your company. When you sell to clients, make sure you’re selling your company, not your own track record because you don’t have one yet. If you’re a veteran in the industry, I would encourage you to offload everything that is not making you money to an administrative or a support person or a person that can help you lift…you know, you’re not Atlas, you’re not trying to lift the world yourself…you want a team of people around you. What people have encouraged us to do over the years is to form teams and actually, there’s an exercise that you can do where you take what you want to make or what you do make on an annual basis divided by the hours you actually work. Figure out what your hourly rate is and ask yourself this question, “Whatever I’m doing in a certain task, would I hire somebody for that amount of money to do that task”? If your calculation works out to $200 an hour, would I pay someone $200 an hour to make copies for me? Obviously not. Would I pay them $200 an hour to answer the phone? Obviously, not. So, hire somebody at whatever market rate it costs for those functionalities and then, you do the things that have to do with meeting clients, creating proposals, presenting proposals, negotiating transactions because that’s where the dollars are made that translate into $200 an hour. Otherwise, you’re underpaying yourself for tasks that you shouldn’t be doing.

ROD: Perfect, Mark. I’m a great believer in that delegating and outsourcing. I’d love to hear this is working with you. Mark. Let me ask you, how many folks are on your team? It is just yourself and it’s a flexible team or do you have a structured team in itself?

MARK: We have three people on a team here in my office. But, then, we are part of a looser team, if you will, where we do some deals together and some deals apart from one another that consists of about 20 other people in various offices around the country.
Then, as a part of a national platform we have, if you will, a team of 1,300 other real estate agents around the country in 76 offices that are part of the national Marcus and Millichap firm that are all licensed real estate agents, many of them brokers themselves. They also help us find buyers for our properties. We do the same for them. There is a good networking system. Marcus and Millichap has a corporate policy as part of their culture that you have to share information. You cannot pocket listings. You have to put them in the Marcus and Millichap system and that’s one of the big advantages of our firm for the other agents in the firm…especially, the newer people that can work on anybody’s listing and it’s also an advantage to the sellers. We always represent sellers. We are a seller’s representation firm and the seller wants the property exposed to as many potential qualified buyers as possible. That sharing of information helps. So, in effect there’s a small team here that’s part of a larger looser team where we do some deals with them, they do some deals with us. They do deals with others. They do deals themselves. We’re part of a very large team at Marcus and Millichap…the support people, too.

ROD: What type of product do you focus on? Did you focus on a product there in Chicago or more regionally?

MARK: Yes. We sell senior’s housing properties in our group. Anything ranging from senior’s apartments all the way to sub-acute or even long-term acute care hospitals to what they refer to as LTAC. Again, when I was an asset manager before I was a broker, I had a general partner who encouraged me to specialize, specialize, and specialize. He had been a broker himself. He learned that whether you’re selling senior family homes…in which case you want to concentrate on a specific market area…a specific product type…a specific way of marketing yourself or commercial product…whether you’re in self-storage or industrial office, retail market family, you want to be a specialist. You should become such a specialist that in the first 10 minutes of meeting a client, they should be able to say to themselves, “This person knows more about my business, than I do. They know what its worth. They know how to market it, how to position it in the market. They understand my weak spots”. You really want to not just put yourself out there in words, as they say, but in deeds and have actually done it, have actually learned it. So that they have the confidence that when they give you their…you have to understand some people, at least that we work with, are giving you their life savings in their hand. It is a very serious matter. It’s not as serious as, obviously, being on an operating table with a surgeon. But, in a financial sense, it’s about the same. Someone is giving you a 5, 10 million dollar asset to sell…sometimes a 20 hundred million asset to sell or group of assets. That represents 90% of their net worth in most cases. They’re handing that to you to maximize the value of that and that’s why it’s a very important function that we serve in the economy. We are creating liquidity and we are getting people the most amount of dollars that we can. There’s a process to do that and it takes a team effort and it takes a lot of different skill-sets. The sellers have to feel confident that we possess those skill-sets and can execute them.

ROD: Fantastic, Mark. Let me ask you one final question. You touched upon being a specialist. You touched upon valuing your time and delegating and outsourcing where ever possible. You talked about utilizing your company resources and, yes, we talked about you being a consistent performer for almost 20 years now. But, here’s the question I have for you and the final question. The market has obviously changed the last several years for a lot of folks out there. Most of the brokerage community has not been through a cycle like this. You and I have, but others haven’t. Have you adapted, have you changed at all, what have you done in regard to today’s marketplace?

MARK: Initially, we did not change. I’ll admit, we didn’t change as much as we should have because I don’t believe any of us who were even senior in the industry realized how deep this dip was going to be and how many troubles we were going to have particularly, in the area of obtaining financing. I would say 6 of 10 deals we do today or 60% of the deals we do today are done all cash, believe it or not. Even 14 or 15 million dollar deals, people are stroking a check for that. They are not going out to get financing. There just is not a great deal of financing in the marketplace. Are there lenders? Of course, there are. There are specialty lenders, and senior’s housing, I’m sure there are some for self-storage and multi-family and office and so forth. There are lenders out there. Also, in the multi-family sector, in the senior’s housing sector, there is the government entity financing group, Fannie Mae, Freddie Mac and HUD. But, nonetheless, we didn’t adapt to that initially. What have we done since we figured out that we need to adapt even further. We’re testing motivation a great deal more. No longer should you take an engagement or a seller who seems to be motivated or they might list the property at 10 million dollars but you think they might take 8 million. You really need to know on the front end. Will they conform to the market? If you bring them four solid offers after talking to a hundred qualified buyers, and all those offers are in the 8 to 9 million range, are they going to sell the property? Can they sell the property? Make sure you understand what the debt-loan was on the property. Was the debt pre-payable? You need to understand if the property is deliverable, if the seller will conform to the market and then you need to think ahead of time what buyer is going to purchase this asset and are they going to be able to obtain financing because it pencils out, it underwrites, there’s that coverage. Or if it doesn’t pencil out, are there buyers out there that will for whatever reason want to pay cash for this property or put down a fairly hefty down payment? If you cannot answer those questions on the front end, you’re just going to end up taking a lot of engagements like we did and expired some listings because we just didn’t do a good enough job checking motivation on the front. We are doing a much better job of that now. Sellers are also conforming to the market much better. I think sellers were waiting to see if the market was going to fall further. I think buyers were waiting to see if people say don’t try to catch a falling knife like in the stock market, same in real estate. Buyers were trying to figure out how far is the market going to go? I think they finally gave up and said, “You know what, there are bargains out there, let’s go out and buy something”. So, test motivation, visit your clients, block and tackle, execute, but at the end of the day, test motivation. Don’t drive 300 miles to go see somebody until you know for sure they are a seller and they have something that’s sellable.

ROD: Wow. All those reasons are why you are one of giants in commercial real estate brokerage. Mark Myers, we thank you so much for your valuable time. We appreciate you not outsourcing this interview. Mark, any final words for our audience?

MARK: Again, I would just say keep putting yourself under the tutelage of people like Rod and his company and others who will train you how to block, how to tackle and just go out there and execute it. Use your own personality and your own skill-set and your own business history and take all of those talents together, which are God-given. Just keep at it. It’s a long process. It takes a lot of effort. If you want to be a professional athlete and can make a million dollars a year, how much effort does that take? Well, that same amount of effort it’s going to take to make a million dollars a year in any field including brokerage.

ROD: Mr. Myers, we thank you so much for your valuable time. Until next time, this is Rod Santomassimo of the Massimo Group with this version of our Massimo Monthly.

Next time, we’ll try to get someone…I don’t know if we can…who is as gigantic as Mark Myers, himself. Until then, we’ll talk to you soon. Thank you.

MARK: Thank you very much.