1. The Transformation of the Real Estate Industry: Clayton Collins, CEO of HW Media, describes his personal journey in evolving the real estate industry through strategic acquisitions and effective use of data. From a perspective of the real estate market's growth and changes, it is evident that there is a pressing need for platforms like HousingWire. Under Collins' leadership, it has become a critical source of market insights for real estate agents, investors, and mortgage servicemen.
2. The Complexity of Localized Real Estate Markets: Collins asserts that the real estate market isn't just a singular national entity but comprises hundreds of localized markets. As the industry experiences swift changes, with interest rates transitioning from historic lows to multi-decade highs, it becomes even more crucial to provide a comprehensive picture of the market. This includes localized data and insights that HousingWire aims to deliver.
3. Real Estate Commission Structure under the Lens: There is a growing examination of the real estate commission structure with a class action lawsuit that challenges its current form. Allegations of price-fixing are leading to potential shifts in the industry, like the possibility of buyers having to pay their own commissions. This development could instigate significant changes in how real estate transactions are conducted and possibly pave the way for technological innovation in the industry.

00:00 - Vikas Gupta (Co-host)
This is the Hacking Real Estate Podcast, Season 2 Episode 2.

00:04 - Clayton Collins (Guest)
I think investors need information, but so if you're buying real estate or buying companies, make sure you have access to the best information and the full picture of information out there. I think, in a market that is rapidly changing, that you can't have enough data and understanding and reports and analysis to understand the decisions you're making. I find that every time I'm at a lack of information, it puts me in a kind of paralysis zone where we don't make decisions and, as an aggressive business operator, the thing I can do best is continue forward, continue making deals, continuing investing in organic growth and existing operations. That only happens by me understanding the environment that I operate in. So have information, make decisions. Don't get paralyzed.

00:49 - Brandon Hall (Co-host)
Welcome to the Hacking Real Estate Podcast, where we dive into the stories of seasoned, hands-on and tech savvy real estate investors. We'll learn the strategies and tools they use to maximize returns and minimize hassle, all while navigating the rapidly changing real estate market. I'm your co-host, brandon Hall, and managing partner of Hall CPA, and I'm sitting alongside my co-host, vikas Gupta, ceo of Azibo. With our combined 15 years of experience in real estate investing and entrepreneurship, we're here to help you up your real estate game. Let's get hacking.

01:21
Welcome back, everyone, to another episode of the Hacking Real Estate Podcast. Today, I'm joined by Clayton Collins, who's the founder and CEO of HW Media. He leads HW Media's corporate strategy and content roadmap while building a world-class team of business media professionals. He's also the managing partner of Ryomar Capital, an entrepreneurial investment firm that acquired HousingWire in 2016. Prior to founding his capital group, clayton worked at RBC Capital Markets in the Mergers and Acquisitions Group and served as vice president of national sales and marketing at Citibank, and Clayton holds a degree in business administration from Elon University and completed his MBA at Duke University. Clayton, welcome to the show.

02:04 - Clayton Collins (Guest)
I appreciate the full bio there, brandon, and it's quite the resume.

02:10 - Brandon Hall (Co-host)
And did I pronounce your capital group correctly?

02:14 - Clayton Collins (Guest)
Ryomar, Ryomar.

02:15 - Brandon Hall (Co-host)
Ryomar, ryomar. I like was reading it and I was like oh, didn't clarify that one.

02:22 - Clayton Collins (Guest)
But as you read that and knowing that you live in Raleigh, I'm usually met with a little reluctance or reservation to chatting with a Duke person, because I feel like there's usually some UNC or NC State ties that kind of put up a wall there.

02:42 - Brandon Hall (Co-host)
If my VP of operations was a co-host, I don't think that you'd be invited onto the show, unfortunately, but my loyalties are not with UNC or Duke. But thanks so much for coming onto the show Now. We were talking, before we pressed record, about housing wire because I was asking you well, what's this HW versus housing wire? So talk to us first about just who you are. What is housing wire? How did you come to acquire it? I think that's a really interesting story for our listeners to hear, and then we'll get into the real estate stuff. Yeah, I appreciate that.

03:13 - Clayton Collins (Guest)
So my story in real estate information services began in 2016 when I founded HW Media as an acquisition entity to acquire housing wire. So housing wire was initially founded in 2008, trying to connect to the single family residential housing industry with information and news. So we kind of look back to pre-housing crisis, pre-gfc. There's a pretty disjointed information flow between real estate agents and investors mortgage originators, mortgage servicers, mortgage capital markets and housing wire was founded to help kind of connect the housing ecosystem with news and information and then tell stories and deliver content in a way that's interesting to like. All these different parties that you know might range from a first year kind of aspiring real estate agent to a very senior executive in mortgage servicing or capital markets, and that's what housing wire was founded to do. I really believed in that mission and at that time I was coming out of the, starting my career on Wall Street. I were, as you mentioned in the bio, worked at Citi during the GFC, then worked at Royal Bank of Canada, an M&A advisory, and you know it's kind of seen firsthand the financial crisis from the Wall Street side and really believed in the vision of more symmetrical information flow and real estate and housing news.

04:43
So we acquired housing wire in 2016, spent a lot of time building the business to prepare it for scale and it was a pretty relatively small business at the time and we needed to build a sales team and sales leadership and product leadership and kind of redo the tech stack to kind of match up the needs of a modern media company and get a lot of work done before kind of stepping into the growth mode. And but since then we've been able to really put our foot on the gas and growing the audience to continue to cover housing with depth and breadth, so like being able to go deep on topics but also wide enough to attract professionals from across the housing industry. And we've done that partially through acquisitions. So in 2020, we acquired Real Trends, which is a real estate focused media brand serving brokers and team leaders. It's been around for 35 years and is most well known for its agent and broker rankings. We do performance data for real estate brokerages.

05:45
In 2021, we acquired Reverse Mortgage Daily on the theme that we see a lot of housing wealth building up in this kind of retiring baby boomer segment that's underfunded on the 401K and IRA side but sitting on significant wealth inside of their primary residence and last year, in 2022, we acquired Altos Research, which is a phenomenal data and research business that covers all active listings in the US, and Mike Simonson, who founded and has built Altos, joined us to lead Altos as part of our HW media business and work on integration strategies of bringing more housing market data into our news, into our content, and also helping evolve HousingWire, which is our market facing brand as an information services destination and a data destination for folks across the housing industry and when we historically served brokers and mortgage professionals, we are seeing opportunity in the investor and the developer and the builder arenas and we see them coming for data and information and we won't wanna be able to serve them.

06:54 - Brandon Hall (Co-host)
That's fascinating. A lot of what you said is fascinating. The interesting thing that I find here is that you it seems like you're very well connected to the real estate markets and you're acquiring media companies that are effectively going to be able to serve the next market wave, like the reverse mortgage daily, for example. We can get into that, but before we do, how did you go from banker to acquiring housing wire? Like you mentioned, there's just disjointed communication and housing wire was doing a good job pulling all together, but what made you say I'm going to go buy it?

07:31 - Clayton Collins (Guest)
So my last role at RBC I was in a generalist mergers and acquisitions group but I fell in with a group of advisors in our technology, media and telecom practice. I just got along with really well and enjoyed working with them and in my last few years at RBC worked on a lot of media sell side engagements and loved that work. Look what thought the businesses were fascinating, thought the dealmaking was fascinating, but ultimately was more excited by, like what happens after a deal and like you know, all these projections and strategies that you pull together as an advisor. How does that actually come to fruition and does it?

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08:48 - Clayton Collins (Guest)
As I spent a lot of time with operators and CEOs and founders. As a banker, I just, you know, saw myself as I looked forward in the future like being more on the entrepreneurial side than staying on the on the Wall Street side. So in 2014, I left RBC, which was a phenomenal place to work, and I learned a ton from the senior bankers and my peers at RBC and took that knowledge. I raised a little bit of money to go out and hunt for deals. So I was looking for a business to acquire and operate, hunting around kind of information services and content businesses around the financial services industry, of which I consider real estate, kind of falling into that realm. And during that process I met the founders of Housing Wire Way back machine. Look on, this is my dad's a mortgage originator. So I knew enough about like housing and mortgages to like go into that conversation and have an educated conversation and we clicked. It was a great fit between the founders and myself. They were looking for an exit that gave them the opportunity to transition out of management, and that's not always common.

09:58
I think a lot of private equity firms and strategic investors want management and founders to stay around and I was offering something different. I was offering like hey, my wife and I lived in New York, we spent a short amount of time in Charlotte, but we closed this deal Like I'm going to move to Dallas, I'm going to run this company and I'm going to help you transition out and go on to do your next thing. That was a that was unique offering at the time and it was a perfect fit for this situation. So Housing Wire kind of matched that. Like it makes a lot of sense now and I tell the story that way, like media and I grew up around the mortgage industry. I mean like that's fortuitous, but it made this a very unique opportunity to fit, to fit me as an entrepreneur, that's that's an awesome story.

10:41
Now.

10:41 - Brandon Hall (Co-host)
I know that, as the owner of Housing Wire, you have quite a few talented analysts, one of which I follow. His names Logan Motashami. He's awesome, so he's on the Housing Wire Daily Podcast and I also follow him on Twitter where he tears it up. So my question to you is you know, if you hire all these housing analysts, do you get like some special inside track and, if yes, can you share that with us? What's going on in the housing market?

11:08 - Clayton Collins (Guest)
Yeah. So I mean that's. I'm happy you framed it that way I have the chance to hire great people. I mean I'm I didn't go into this saying like I'm going to buy a media company and become, like, the lead personality. I think my like biggest charge is how do I build a business? How do I recruit the right people? How do I bring in the smartest voices, the people like Logan, who are willing to have a view and go out on a limb, and he's been phenomenal at that. We recruited Logan in and at the end of 2019, which, like, was right around the corner from when the market got really interesting in March of 2020.

11:45
And, brandon, I'm sure you like remember, like some of those like nights and weekends as like the world's locking down and like this fear around what's going to happen in the housing market, what's going to happen with home prices or other real estate asset prices, what's going to happen with forbearance and how that can impact cash flow and landlords.

12:06
Logan made some big calls at that time when people were were fearful. He immediately, in April 2020, wrote a pretty long paper and article called the America's Back Recovery Model and, like made a call with, like what the Federal Reserve is going to do, what was going to happen to interest rates, how that would impact demand, where people would go, and it all. Like it all came to fruition and like people think people thought he was a crazy person when he like talked about like what could happen in home price appreciation and you know how. There's that group of real estate people who are always like dying for like the next GFC, where they're going to like pick up single family rentals for 50 grand and like everything's overpriced and the market's going to fall out. Like you can imagine the response from that group of real estate investors when Logan comes out and says, hey, prices ain't dropping, they're going up and like hold on tight.

13:07 - Brandon Hall (Co-host)
Yeah, no, that's actually what originally turned me on to Logan, because I was. So. I run a CPA firm and all of our clients invest in real estate Right. So, as all this turmoil is happening in the market, I'm sitting here. Like you know, I'm young. I haven't led my firm through the global financial crisis, so this is my first foray into leading a business, into economic turmoil, and I need to start following some pretty serious guys and gals that are you know, find, that are in the data, so that I can understand what to do with my business.

13:40
Yep, and following Logan, I actually like breathe a big sigh of relief because I was like oh yeah, it makes total sense. Like there's just no supply, so it really doesn't matter what happens or how far demand drops. There's no supply, so your prices aren't going to tank either, and maybe you know if demand goes low enough. But it was really, it was really nice following somebody that just no matter what because he gets some people on Twitter that come after him, right but like no matter what, he always has like these charts and data to back it up, and you don't see other people doing that, and even the people that are like the, you know the market is going to crash and it's going to be like the GFC. Their data that they produce is always. You can always tear it apart and there's always people that go in there and tear it apart. It's just really interesting.

14:30
So I've got mad respect for Logan. One day I'll hopefully beat the guy. But that's cool that you're in the position to hire real estate analysts and talk to them and kind of get like that inside insider view. I think that's amazing. So tell us, you know what? Do you own rental real estate yourself?

14:50 - Clayton Collins (Guest)
I own one rental house, but I mean it's not a, it's more of a family thing than a. I'm not, I'm resting real estate for companies, so like I would say I've got a. I am very long on the real estate asset class, but it comes through buying and operating media and data businesses that serve the housing industry. I've definitely, like you know, done a little bit of real estate investing and speculation on the on the side, but by no means do I like look for, look to real estate as like my primary source of income or an important source of income To indirect real estate exposure yeah.

15:26
Inder. I mean, yeah feels pretty direct, but maybe even more direct. Owning the services, businesses that serve the industry kind of gives you the same exposure as actually owning assets, just of a different flavor.

15:41 - Brandon Hall (Co-host)
Well, so, with transactions like way down, does that impact your business? I presume if there's less brokers, right, there's less subscribers in theory.

15:50 - Clayton Collins (Guest)
Yeah, so it would be different business segments. So if you think about a business that's doing media and data content, business as a whole tend to be more increasingly needed in times of change. So we see pretty significant peaks in audience and traffic and demand when markets are going through fluctuation and rapid periods of change. Counter that to a market like One Room Right Now where volumes are down for real estate brokers, agents and loan originators. There's less resources to go around in terms of cash. So we fight against hey, our ICP, our ideal client profile. Their wallet is thinner than it was 18 months ago.

16:38
So you get pricing pressure and you have some people leaving the industry. But the ones that are in the game are relying on information and demanding information and more on a higher frequency that you do in a more boring market cycle. So it's a pretty counterbalance. So you definitely feel the most cyclical ride in terms of how the industry doing and how our business is doing on the advertising product side. But our subscription products, like HW Plus, which is membership on housingwarecom, or Altos Research data product, those are pretty cycle resistant product areas as industry professionals are using our information and data and Altos software to navigate the harder market.

17:26 - Brandon Hall (Co-host)
Interesting. Okay, thanks for explaining that. I would not have thought that, but it makes sense as you're walking through it. So what sort of things can we expect? So most of our listeners are investing in real estate. Most of them are in the technology sector. That's where they earn their main incomes Based on owning. I mean, you said your media companies are very closely tied to real estate. When you were kind of doing the intro, you mentioned that you are basically watching for trends and then you're making acquisition decisions based on those trends. So what trends should we all be looking out for over the next 12 to 24 months?

18:11 - Clayton Collins (Guest)
Yeah, I mean I can tackle that from, like my business investment philosophy perspective and then we can talk about, like some of the perspectives that we're seeing from our Altos research team and Logan and talk about some of the market dynamics. So like from a as a CEO and investor in businesses like I'm watching a few key trends right now. One thing that's sustained for 15 years is information silos are not effective. So our strategy at HW becomes increasingly focused on providing our users and readers the full picture, so helping connect daily news and breaking news with data, with research reports, with in-person events that help them bring context and understanding to some of the changes that are happening in the market right now. So we're all aware that interest rates have shot up from all-time lows to multi-decade highs, like we went from a two and a half, two and three quarters interest rate environment and, as we're recording this conversation now, brandon, I think in the last 24 hours we've seen interest rates surpass 8%. That is a massive change. It's been very hard for the single family residential housing professionals to stomach, but it's not enough just to say interest rates are 8%. So, like last week, we hosted our housing or annual event. We bring analysts to the stage. We give context, we provide Q&A, then we bring up Sandra Thompson Director Thompson, who leads the FHFA to talk about their views on repurchase and some of the capital markets impacts that are driving the spread between the 10-year and the 30-year fixed-rate mortgage average, and so we're trying to bring that type of context and understanding to the audience. They have the full picture about what's happening in housing. Sort of providing the full picture isn't just staffing a room of reporters and analysts, it's also having access to proprietary and analyzed data sources like Altos, which we can acquire as operators and build through partnerships or licensing with other data partners and sources.

20:16
So, as you think about what we're doing at Housing Wire and where I'm putting my money in time right now is how do I build out more data sources to pull into HousingWire? How do we invest in user experience and product execution? So professionals all the way, ranging from the mom and pop investor to the institutional, to the mortgage originator, to the real estate agent they can access that information that historically may have only been accessible to, like true enterprise investors or enterprise level mortgage lenders, something that the corporate team would have but like the you know, the feet on the street like the loan originator, the agent or the investor might not have access to. So we're trying to bring more transparency and data and that takes investment, so we've done that.

21:03
On the active market real estate side, there's some industry data sources in terms of pricing and lender performance and brokerage performance that we're investing in right now. That, I think, will help industry professionals better understand what their competitors are up to, but also understand, like, who they need to build partnerships or relationships with. That will help create opportunities in specific marketplaces and like I'll caveat that with we're talking about a national real estate market right now which, like doesn't really exist. We're talking about hundreds of local real estate markets and that's part of what we're like working toward is not always talking about at a national level, but being able to go deeper into neighborhoods and zip codes.

21:51 - Brandon Hall (Co-host)
That would be cool, because that is the conversation today. It's always national right, but whenever you have that conversation, there's always detractors that are like well, that's not what I'm seeing at the local level, which is true, right, it's totally true. Yeah, interesting. So Altos, altos research.

22:07 - Clayton Collins (Guest)
Yep Altos research.

22:08 - Brandon Hall (Co-host)
How did you come to find Altos research? And I mean, tell us a little bit about it.

22:13 - Clayton Collins (Guest)
Yeah. So the funny thing is I actually met the founder like seven plus years ago and we had maintained a relationship Like over that time, had taken part in housing wire webinars and contributed content. So when we started having deal conversations, there's already like a. There's already a relationship there. But Altos, like the reputation for the research and data, was really built in a similar way to how you discovered Logan.

22:40
Mike Simonson has been pretty prolific on Twitter and definitely subscribes to a give to get and like teach type mentality. He shares a lot on social and has developed a ton of followers. I don't know how to handle him from right now. I believe it's just Mike Simonson on X or Twitter, but Mike's been pretty prolific at sharing housing market data and being incredibly unbiased. So like where Logan will make calls like Mike is like this is the data, like this is the number. Like there's no negotiation, there's no argument, like say what you want, that's the number, and an incredible like factual and clear lensed view of what's happening in housing.

23:25
So what Mike and our team at Altos have built is a software product that real estate agents use to send out local level market reports of what exactly is happening in a zip code or a city and it's primarily adopted by real estate agents, title professionals and we're starting to bridge that over to mortgage. We also licensed the data to some real estate investment firms and home builders who want access to more real time information and more holistic information than they're able to get through the multiple listing services. So if you were to go to every MLS in the country and license all the active market data want to be incredibly expensive and two, you'd only end up about 95% national coverage. Through Altos we're at about 99.5% national coverage at a services price that, like most investors and real estate professionals can stomach very easily.

24:19 - Brandon Hall (Co-host)
So how are you able to pull this data or aggregate this data more effectively than other platforms?

24:25 - Clayton Collins (Guest)
It's like a 15 year process of building, like a really thoughtful aggregation process, so like we're aggregating across like 180,000 websites every week so we're able to go directly to real estate brokerages and in FISBO sites and aggregate through other portals to pull together kind of a full view of what's happening in housing where if you're just looking at kind of the MLS data, you're gonna miss some of those FISBO listings and things that are operating off market.

24:58
So we've been aggregating from a lot of different sources to bring up a more holistic view together and have a team of analysts who's pretty data analysts who are like behind the scenes cleaning up, finding irregularities, like if there's a I mean, we're talking about hundreds of thousands of lines every week and if there's a house that's listed with four bedrooms and a half bath, that's an issue like that's not real, like, so, like how do we develop methodologies to like spot those irregularities and go in and say like hey, there's clearly like a full bath that's missing here, and not like and not throw off data sets with irregularities?

25:33
So the accuracy is just freaking phenomenal and it allows us to have insights into what's happening in price reductions or in prior markets, price increases, a total active listings by market and at a national level. What's happening in prices, like it's a really cool data set that we've been able to develop some practical applications for the real estate professional and then been able to work with licensing clients on bringing that into their workflows. It's, if you're gonna compare to what you see from MLS reports or other data aggregators, we're 60, 75 days faster and I see a lot of local market folks sharing this is what's happening in the South Florida market, like right now, and you look at like the footnote and it's like per local MLS, august 2023, it's like October is operating a little differently than August did. So maybe they should check out Altos.

26:33 - Brandon Hall (Co-host)
Interesting. Well, that's great. I know that a lot of our listeners probably probably get a kick out of that piece. Now, between Altos and your analysts, I presume that, and I could be making a false assumption here, but I presume that you have lots of conversations around just where we are nationally, so are we doomed. I know that the conversations around affordability are we toast here.

27:01 - Clayton Collins (Guest)
Yeah, no, affordability is definitely a major issue. One of the things that's changing right now is there's been and we'll get into it. So one of the things that's changing right now is we've been talking about the supply and demand imbalance for quite a while, meaning that demand has been outstripping supply Over the last several months. We've seen a consistent climb in inventory and one of the things that we're watching right now very carefully is one a fall increase in inventory is very seasonally normal. Like this is what we're used to seeing in this time of the year. Now, if you start doing year-over-year comparisons to the COVID years, where all seasonality was kind of thrown out the door, some of those comparisons start to look pretty funky and I think those can send false signals into, like, mainstream media headlines. It's tough for a media executive to say that, but I will look across at like some of the non-real estate outlets and say you don't understand the exact comparison you're making. Not my job to go in and correct your editors. That's why we exist, because we understand that year-over-year, month-over-month comparisons aren't the same in every market. So, but that aside, we are seeing a steady increase in inventory, which means that some of the demand supply demand imbalance is subsiding and when we compare that to what's happening in the mortgage market we start to see a very direct correlation, not between inventory and mortgage rates, but inventory and rapid changes in mortgage rates. So between Altos and our housing war analysts we've been able to kind of uncover is the market, the buyer can stomach higher mortgage rates Now 8%, we'll see it's a new territory but they can stomach the increase in mortgage rates.

28:56
It's the rapid change that just freezes the market. So six months ago or four months ago we saw rates pop down to 5.99, and there was like a flood of buyers back into the market, like that. One day we had a five handle. Now in the two weeks after that rates shot back up north of six and a half and in that climb period mortgage applications just froze entirely. We normalized and we held still around six and a half for a bit and applications started to come back into the game. But the minute we saw some more volatility the applications just stopped.

29:33
So what we're seeing is that there is a like a massive sensitivity to change from the home buyer and the rapid change in mortgage rates is what puts the prospective buyer on the sidelines. And let's talk about who most prospective buyers are. They're sellers. So the first time home buyer gets all the attention, the affordability topic gets all the attention, but most housing inventory is gonna be sucked up by repeat buyers and the repeat buyer doesn't wanna sell right now because they are not. They don't know where rates are gonna be when they lock in that new product and they, even if they can wrap their head around and like psychologically get to a place where, okay, I can pay a 7% mortgage rate the prospect of that 7% might be 8% is too risky for most sellers.

30:25 - Brandon Hall (Co-host)
Yeah, it's been actually really interesting. One of the takes that I appreciate that Logan puts out is that there's no such thing as a rate lock, and I know that that's like a big debate, but he explains it eloquently where it's not about like I don't wanna sell because I have a 2.8% mortgage, it's I don't wanna sell because I can't afford 8%, and that's a different. It's kind of the same thing, but it's a different conversation and it's a different problem. It's the problem's not I have a low rate, the problem's I can't afford the next one, right? So it's interesting, an interesting take, but yeah, anyway, that's cool.

31:01
So you mentioned the reverse mortgage daily, which tells me that you're keeping an eye on various sectors and you're going into the media. You're going in with that media angle on sectors that you believe will, I guess, create more demand, more media related demand, which perhaps means that those markets are running up. I'm making assumptions here. So what other sectors are you looking at right now or do you think that will be fruitful to pay attention to over the next 24 months?

31:32 - Clayton Collins (Guest)
Yeah, so we're like today we're entirely focused on residential real estate and the biggest focus that we have right now is ensuring that we're serving buyers, agents sorry, listing agents as well as possible, as we go through this commission lawsuit that the National Association of Realtors is going through right now.

31:53
So we think there's a massive opportunity in serving real estate listing agents in a very meaningful way. If there's change in the way that the commissions are paid on residential sale and purchase, it's gonna be the listing agent that aggregates power and aggregates resources and so, in terms of focus, very focused on the listing agent. On the real estate side, we're also, as we kind of look a little bit more toward the horizon and where we wanna go, we're very interested in starting to serve the real estate investor and the multifamily owner operator. Over time. We think that the pressure on affordability is gonna have continued kind of positive impact on the number of people who choose to rent for a prolonged period of time. So as a marketplace, we think there's gonna be an attractive long-term narrative there, but we understand the short-term or near-term or immediate-term pressure that multifamily owner operator is under today as we see interest rates shoot up and probably way too many people with floating rate financing in their existing cap stack.

33:14 - Brandon Hall (Co-host)
Bridge debt kills them. Yeah yeah. We've seen a lot of that in our in our conversations as well. There's a lot of multifamily operators that acquired assets in 21 and 22 with bridge debt. You know, fannie Freddie wouldn't lend on the assets, or wouldn't lend on pro forma, only historic and so the bridge debt is lending on pro forma and you can get another 25%, so you can offer more, which is not necessarily a good thing if rates spiked to 8%. So kind of interesting to watch from our perspective.

33:49
Now you mentioned the real estate agent commission lawsuit. Tell us a little about that.

33:55 - Clayton Collins (Guest)
Yeah, so we're in the lawsuit. They were actually in court. Now in Kansas City One of the class actions against national association of realtors and some of the large national real estate brokerage brand brands is going on right now. The pressure in the class action is on the buyer's agent part of the commission. So the class action lawsuit is claiming that there's like price fixing around, like kind of the national association of realtors code of ethics which requires the listing agent to split commission with the buyer's agent and that the home seller is paying that commission.

34:33
I think there's industry is pretty aligned that like this isn't price fixing and like this is a structure that needs to exist. It creates fair market dynamics for buyers and sellers and if you change that dynamic you have the risk of home buyers being underrepresented in terms of expertise and what that looks like. So like does the seller have to? I'm sorry. Does the buyer have to pay their own commission, which essentially takes all first time home buyers off the market? Right, like you already come up with the money for a down payment. Can you also afford to pay a 3% fee to the real estate agent? Like this is not going to happen. So there's a mortgage lender say, okay, now we start financing commissions. That puts more pressure on mortgage products, but there's definitely people talking about that. Or does it create a new door for innovation and buyers are represented by technology or auction platforms. Or does the listing agent need to have like dual agency and be able to like negotiate on behalf of both sides?

35:37
Like pretty messy types of outcomes if this like class action lawsuit is successful, but we're in court now. But the big brokerages in the National Association of Realtors, I think, have already come to terms that it's not going to be a cut and dry win for them. So several of the large brokerages have already completed settlements and paid paid fines and are changing the way they operate internally between buyers and sellers agents. The code of ethics from the National Association of Realtors has been updated to require to change the requirement that listing agents have to list their commission in the MLS listing and like that can be listed at zero now. So like what does that mean? If it's listed at zero, do any buyer's agents actually bring forward buyers to those properties? We're in this this is live right, brandon? Like this is happening now. So like I don't know if we know exactly how it's going to play out or exactly what the impact is, but the fact that there's been two settlements already and the National Association of Realtors has changed their code of ethics means that the case is strong.

36:44 - Brandon Hall (Co-host)
Wow, I did not. I did not know it was that strong. I mean, there's always challenges with the commission structure, but I didn't realize that this case was making some what sounds like headway.

36:56 - Clayton Collins (Guest)
So we're going to be, we're sending editors, they're going to be on site in Kansas City covering the covering the case over the next three weeks. It's pretty we haven't done this like type of reporting in a while. So we'll have like a reporter in the trial, like in in the courtroom you have to turn your phones into the door, no computers so like, and have like a reporter there like taking notes, running out, like quickly, like doing a recording, getting it out to an editor and like it feels like a wild, like old school type of reporting that we're doing. But it's kind of what has to be done to cover this case because it's happening in a closed door courtroom. Follow housing wire.

37:33 - Brandon Hall (Co-host)
I'm curious has anybody, has anybody, advanced any sort of fee theories that that maybe are more modern? Take on the commission structure that we're all used to.

37:43 - Clayton Collins (Guest)
I don't think so. I don't know. Are you referencing, are you is pure question, or have you seen, read anything?

37:48 - Brandon Hall (Co-host)
Yeah, just just in general, like I I know that there's like always. I mean I I'm in the, the investor space, right, so there's always talk on like should they earn 3%, should we do fixed fee, all that stuff. But I'm just curious, like on your side, being close to this case or following this case closely, I just didn't know if you had been privy to any of that type of conversation.

38:10 - Clayton Collins (Guest)
There's an investment bank, kbw Keith Bretton Woods, who has equity analysts who cover the real estate and financial services space pretty closely. They've been covering market stock market impacts of like how this case can play out and they've made some calls on like who the winners and losers could be. They are pretty bullish on the potential benefit of this lawsuit to benefit listing aggregators. So some of the websites that are making listings like available that would enable buyers which they already do through ZillowInvitalcom to discover listings on their own but then transact without bringing a buyer's agent into the into the space. There's also some bullishness around auction platforms and like. Does that become a more common way to sell a home which creates a more, a more fair market dynamic because the listing agent doesn't have control over picking a, picking a buyer. It's truly like who had like has the best price in terms and there's also some.

39:07
There's an equity investment case around home listing advertising because if you don't have buyer's agents who are like bringing buyers to the listing, the listing agent now has a new responsibility of marketing the property, which has historically been done through MLSs. But if you append the National Association of Realtors, if you append state and local associations, you have the chance that not as many. You're not required to be a realtor to to put listings on the MLS, so less people will become realtors, less listings will go to the MLS, so there might be another way that that homes are discovered. That could be a major impact on the investor category, because it it it's not a great thing for information transparency and, at least in the beginning, so it creates an edge for people who have access or local market intelligence. Wow.

39:59 - Brandon Hall (Co-host)
It seems like there could be like, if you remove the I'll probably classify this incorrectly and maybe potentially even unfairly monopoly, then you open up a lot of other avenues for, like you mentioned, innovation, which could be technology. So interesting. I mean, I think you've sold me on using housing wire. I've, I've been listening to the housing wire daily and then I like click through the articles and it's like, ah sorry, you got to be subscribed, so maybe I'll just pull the trigger.

40:27 - Clayton Collins (Guest)
Yeah, we'll pull you in.

40:28 - Brandon Hall (Co-host)
Hopefully we're providing $30 a month worth of value to our readers, but you know, I don't think I realize you guys were like like covering that that much though. So that's, I'm gonna have to go check it out. This is not supposed to be an ad, you know, for everybody listening, but it's just. It's cool. You're on the media company. We haven't had media. A media exec, come on. A media CEO, come on. So it's just interesting. But I want to jump into our three closing questions. After that I'll give you the last word on where can people contact you and stuff like that. So the first closing question is what is your favorite book? It does not have to be real estate.

41:03 - Clayton Collins (Guest)
You're gonna see the. You're gonna see like the former banker come out and make. I think my favorite book is Barbarians at the Gate, which is like an 80s book on the fall of RJR and Abisco and a really dramatic take on on deal making and M&A. That was one of the I think, the first books that got me really excited about like the investor and private equity and M&A deal making world Overly dramatized, dramatized, but it's still a book that thrilled me in Gets you amped up.

41:33 - Brandon Hall (Co-host)
I love it. Now our second question is typically what's more important? Cash flow appreciation, but I want to actually change this up for you what do you feel is more important as the CEO of various businesses? Do you feel media or software is more?

41:55 - Clayton Collins (Guest)
important. If it's okay, I'll quickly hit both of those. So, like I look at, if you think about buying businesses, underwriting businesses in a very similar way that you underwrite real estate assets, you have to underwrite cash flow. So like the value that I can create is rarely gonna come just through like appreciation, which I would correlate or I would like say is synonymous with multiple expansion in M&A or businesses. So like I don't bet on multiple expansion, just like you shouldn't bet on appreciation, I underwrite on cash flow and then have a plan for how I'm gonna grow the business, grow that cash flow and then, like have an outsized outcome because of that. So underwrite cash flow, mission critical can underwrite just like a hopes that there's gonna be appreciation or multiple expansion.

42:38
So, on businesses, the whole strategy at HW media isn't media or software and data. It's building at the intersection of the two. So we think it's incredibly important that we have news and content and social media distribution and newsletters and events. That helps us attract audience and provides value to that audience, which, in turn, that audience may find value in some of the data and software products that we also have. So like I think of it as an ecosystem play. We are serving housing professionals. We do it every single day with news and content and that news and content helps us build trust to bring people over into our funnel for software and data. So it's a good overlap. The software and data informs our content strategy. It makes our content better, but the content attracts people that ultimately become clients on the data and software side.

43:31 - Brandon Hall (Co-host)
It's a beautiful flywheel. Well said, well said, all right. Last question what is one last piece of advice that you'd like to leave our listeners with?

43:40 - Clayton Collins (Guest)
Last piece of advice this is the self-serving one, like the full picture. I think investors need information, but so if you're buying real estate or buying companies, make sure you have access to the best information and the full picture of information out there. I think, in a market that is rapidly changing, that you can't have enough data and understanding and reports and analysis to understand the decisions you're making. And, as an operator, I subscribe to a lot of data and information sources as we buy media and data companies, and I find that every time I'm at a lack of information, it puts me in a kind of paralysis zone where you don't make decisions. And as an aggressive business operator, I think the thing I can do best is continue forward, continue making deals, continuing investing in organic growth and existing operations. That only happens by me understanding the environment that I operate in. So have information, make decisions. Don't get paralyzed.

44:41 - Brandon Hall (Co-host)
Love it. Clayton, thank you very much for coming on. If people want to connect with you and or check out HousingWire, where should they go?

44:50 - Clayton Collins (Guest)
Yeah, so last part, HousingWire really easy, housingwirecom. That's our hub for everything we do for reverse mortgage daily and real trends and all those research. You can access everything through HousingWire. If you want to contact me personally, I'm most accessible on LinkedIn. So, Clayton Collins, CEO of HW Media, shoot me a DM and I would love to connect. And finally, Brandon, I also host a podcast, like you do. It's called Housing News. We interview executives in real estate and mortgage every single week. So if anyone wants to check out that show, it might be a good place to learn a little bit more about us and what we do.

45:24 - Brandon Hall (Co-host)
Thanks for coming on the show today, clayton, appreciate you sharing.