Talking Real Estate with Brett Swarts & Jon Dwoskin

November 11, 2021

Expert CRE Secrets Podcast

“There are so many people that I've seen get into the business, and no matter how many times you tell them how difficult it is, they don't get it until they're like, three, four or five, six months in, and they're like, this is really, really hard, and so you've got to be fulfilled.”

When Jon turned 43, he made a career out of being himself. He is an executive advisor, business coach, sales coaching, training, and management coaching, training keynotes, and Founder/Chief Executive Officer of The Jon Dwoskin Experience.

He's been called the “business whisperer” because he can see what you cannot see and hear what you cannot hear at your company. His passion extends to myriad non-profit organizations including sitting on the board of Hebrew Free Loan and, as an 18-year cancer survivor, being a mentor with Imerman Angels.

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Talking Real Estate with Brett Swarts & Jon Dwoskin

Jon:

Welcome, everybody.

Brett:

Hello, this is Mr. Jon Dwoskin.

Jon:

What's up Brett.

Brett:

Am I pronouncing your last name correctly?

Jon:

All right, most people do.

Brett:

We are here today, we're on our regularly scheduled program. Every Friday, we're doing some Commercial Real Estate Training, and we are talking all things kind of commercial real estate brokers and both long times have an extensive background in commercial real estate. So we're gonna be talking a little bit about the brokerage industry a little bit about the marketplace. , and ways to two brokers can add value and grow their business in today's market. So john, what do you think is the biggest obstacle facing commercial brokers in today's market?

Jon:

I think the biggest obstacle is the consistency of execution. I think the market is saturated with a lot of brokers, a lot of agents, and staying consistent, especially once your pipeline starts to get to a flush point with the execution of prospects and metrics every day, is really challenging. Because in the business, you’ve pulled in so many directions on a daily basis, and so however you plan a day, in many cases, the day gets away with you, because a deal blows up a deal dies, you have to work on something from the outside in, it looks like it would take one minute, but it really takes two hours or four hours or six hours, and it can be very mentally taxing. But getting back to center and figuring out how to execute consistently is what is the difference is a huge differentiator, huge.

Brett:

I have a thing that I picked up from somewhere, I don't know who but maybe a piece of a few things together, I call it the kind of the Successful Fulfillment Formula, and it's using your highest and best gifts whatever that strength is, and let's apply it to commercial real estate. Is it tracking? Is it is it? Is it the presentation? Is it the underwriting? Is it the? Is it the building of the systems? Like what is it that's your highest and best gift to move your business forward? That's identifying that and what you're strongest at times, maximizing the potential of that gift? Times the number of people you can impact. That will equal the fulfillment and the success, right. But I think it's when we're not in our lanes, or like you're saying we're not doing the necessary things like, cold calling, or the prospecting or, getting enough of the meetings and doing the metrics there that we that the business can become stagnant? Is that a fair summary of what you think about that?

Jon:

Well, I love what you're talking about. I mean, one of my favorite line quotes is Anthony Robbins “Success without fulfillment equals failure.” I mean, I think everything the foundation of everything is fulfillment, and I think as an as a to be in the commercial real estate business, I think you have to be fulfilled, it's got to be something that fulfills you because it's too hard. You know, from the outside looking in. There are so many people that I've seen get into the business, and no matter how many times you tell them how difficult it is, they don't get it until they're like, three, four or five, six months in, and they're like, This is really, really hard, and so you've got to be fulfilled. One of the questions I always used to ask when I was interviewing people, because I was a broker for six years, and then I ran an office for six years, was at a scale from one to 10 how badly do you want to be in the business? And what I found was, if they answered anything less than nine or 10, it didn't typically work out because that passion, that fulfillment, that inner drive, had to come from something deeper than they could even really can, that they could connect with? I really

Brett:

Resonate with that, because I got in the business the first time, and I was 10 11 12 like, I was like, I love and want to succeed in the business of commercial real estate brokers like everything about it. I loved underwriting I love the financing part. I love the competition. I love the challenge. I love the properties themselves and the architecture and the understanding of the tenants and the rent rules. I mean, I couldn't get enough of it. Like is it because as a new person, like, whatever, like, let's go, I want to learn. I think that's really powerful to tap out on a scale from one to 10 asking yourself how badly do you want to be in the business? If that inner drive is not there, also think about sports. growing up. There was a difference between the high school player and the college player, and I'm sure there's a difference between College and the pro player where I had the fortune to be able to play in college on scholarship, but not my first year I was a walk-on. So I came out of high school, a six-foot white guy who could shoot, pass and play, and I walked on, and it was, it was tough. But I made the traveling team, I was one of 10 players to actually travel with the team, and this is at Point Loma, in San Diego. But I was just growing and learning and my game was getting better and better because I had a great competition or people that were better than me, and so that leveled me up to go to a junior college, and then the now and then I had a chance to win the scholarship, earned the scholarship. So I think there's a lot of correlation between let's even say sports from let's say high school to college to Pro, or even like commercial real estate, it really felt like I was in the pros when we, Marcus and Millichap.

Jon:

But when you talk about the pros, if we just stick on the whole idea of pros, athletics athletes to me what I hear you talk, I think about fundamentals if you just go back and you look at a guy like Larry Bird, who is not a natural athlete, but fundamentally sound worked on his fundamentals day in day out. Somebody asked me yesterday, I was actually a guest on a podcast, and they said if you could have dinner with anyone who's living, who would it be? I said, Michael Jordan because I would just want to talk to him about the fundamentals of everything the fundamentals of, of practice, athletics, life, and just has to me, he really defined fundamentals. I mean, we can point to a lot of people and people may judge that I'm not saying someone that's like, whatever culturally. I mean, or political. I mean to me, life is about fundamentals, life is about showing up. There are the Michael Jordan commercials that they show now, I mean, there's just there's nothing more powerful than mastering fundamentals on a daily basis, and I mean, we're talking commercial real estate, but that applies to anything, any business. Can you be more fundamentally solid than the next person? Can you show up an hour or two, before practice starts? before the day starts? I mean, everything I study and read and have admired about Michael Jordan, he does that. I don't know about every element of his life, but the part that I'm privy to, and to me, I think fulfillments, execution, passion drive, to be successful in any business, but I know we're talking commercial real estate, you've got to be disciplined to the hour to the minutes to make it in this business to really really make it.

Brett:

Let's talk about that. What do you think are some of the key fundamentals, maybe we can touch on one, we can touch on cold calling? We could touch on closing for the meeting? You touch on the listing presentation. We could touch on even conditional close. Now, that would be a good one. The conditional close. What is the conditional close, Jon? How does that how does it help you in your business?

Jon:

The conditional close is a really hard one, and I think it takes a lot of practice a lot of skill, a lot of roleplay, it’s really got good at it, because it's so uncomfortable initially until it's not, and once it's not, you realize how beneficial it really is, and that conditional close is that thing you say at the end, where it's, Brett if we can agree on price and terms, is there any reason that we, you wouldn't want to do business with me in my company, and typically nine times out of 10, or eight times out of 10, the person will say. Well, because of this, and then, what to kind of touch. Alright, I understand that's and then you kind of dive into that issue, and then you kind of solve that issue, at least in conversation or what the next step would be, and say if we can resolve that, is there another reason maybe you would do business with me for my company? They say, No, if we can resolve that, where, where it goes, and so I think that is, those are really, really difficult things to do. Because they require a lot of courage and confidence, and you got to really know what you're doing. Because you got to be ready. Here's the vulnerable part, you got to be ready for someone to come back and say, I went to business because of this, and then you have to be ready to discuss that. Right to dive into it, to question it, to disagree with it to know what the next step is to solve it.

Brett:

So much wisdom there. Write down some notes here and I want to touch on that because I remember learning about this, and yes, assuming we can carry on Pricing terms, there's any reason you wouldn't, list exclusively list a property with my company or do business with me, It's scary because you met this person for the first time perhaps. This is typically after you set a meeting, you've gone through, you build some rapport, you uncovered some needs and some challenges. You've talked about perhaps your track record, and now it's gaining towards the end of the meeting, and you're looking to see if a proposal is warranted to do full pricing and financial analysis right to again, try to solve or the challenges that they're facing, as well as get an actual price of what the property's worth and this is like, the kind of like the grand Cricinfo, It's the last thing that you want to say, to really hone in on about where you're at, it's something you're testing, you're throwing it out there, you're throwing the net out, and you're saying, I really, really dig in this, are they just meeting with me? We're having to be over? You asked that question, and then they say the thing, what is your fee? Or? Well, I'm talking with somebody else, or actually my brother-in-law, he's a broker. Whatever the thing that isn't the back of their mind from saying yes, typically, they'll tell you, right and right, it's okay. Let's talk about that, and let's unflushed out a little bit. Jon, what they're missing here. What else would you add?

Talking Real Estate: “Real estate is an imperishable asset, ever-increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.” – Russell Sage

Jon:

Well, I think the reason they'll tell you is that you're raising the consciousness of the meeting at that point if you've done everything and it's not a perfect science, but if you've done everything and you're putting yourself in that vulnerable of a state, then the person will most likely be vulnerable with you, and so I think it, a lot of times people don't talk about they, they people will teach that, but they don't talk about the energy behind it. The energy behind it is, this is something that, like, I'm really putting myself out there, right there, I'm raising the frequency, I'm raising the vibration, I'm raising the level of consciousness of this discussion right now, and I'm getting deeper, and that to me, is that to me is the essence of, of the quote-unquote, conditional clothes. I've been studying that since I was 18 years old when my dad got me it's all of these tapes and things of that nature, and so in listening and studying all of these people from Brian Tracy, to Tony Robbins, to Jim Rohn, I could name tons of others. But it's the but nobody I've ever heard anybody really talks about that. That's a vulnerable state to get to. I can ask that with the right tone, the right cadence, and I've done things that kind of is a simulation of if I've done everything right, up into that point. If they won't open up to me, then I have to look back and say, where did I not build the relationship capital along the way for them to be real and honest with me. That's a very defining moment.

Brett:

Let's roleplay now, let's bring this home for folks. Are you ready? Jon, do you want to be the buyer or the seller? The seller, or the agent? Or do you want to?

Jon:

I'll be the seller?

Brett:

Sure, you're the seller. All right. We sat down, we built some rapport already have uncovered some of the needs, john is considering listing his property and I've come to the kind of the end of the meeting. Jon, assuming we can agree on pricing terms, is there any reason why you wouldn't allow me to exclusively list a property with you, for you and sell this and do a great job and meet all of the things we just talked about?

Jon:

I just need to decide if I ultimately want to hold on to the asset over the next, year or so, and it really depends on if I think I can just sell it myself.

Brett:

You're still considering whether or not you're going to sell? If I'm hearing you right and whether or not it might be a good idea to list it yourself? Is that a fair summary? What do you mean by the list that you could you or sell it yourself?

Jon:

What is put it on loop net?

Brett:

Just you could buy that thing, for about 120 bucks, put it on a loop and see what happens. The market is pretty hot. What is your experience with that? Or have you done it in the past?

Jon:

No, I have not.

Brett:

It'd be the first time, the question I have for that is do you think competition can really help you get a higher price? In other words here at XYZ company and what I do one of my passions, Jon is creating competition and getting people to bid up on your property, you’re dealing. Is there do you think you might be missing a chance to get more competition if I can bring every single buyer He's bought in the past that I've talked with and by the way, I've done my homework. I know these people, I've closed with them, These relationships. Do you see how that might be able to outlast just putting a live net? Probably. If I could come back to you and show you that, by the way, I don't want to just tell you that I want to show you my track record, I want to show you our marketing effort, I want to show you the entire plan in our second meeting, and if I could resolve and overcome the thought of you a lute do it yourself, and by the way, if if I come back and you and you feel like you can do it yourself, I will respectfully say greatly listed, go for it, I'll give you high five, you get that price. But if I get back and show you and our second meeting, to your satisfaction, that our marketing plan will do XYZ get you a higher price, better terms, more competition for your deal. Is there any other reason why you wouldn't allow me to exclusively list your property?

Jon:

No, I think it's pretty great.

Brett:

Excellent. Alright, so I'm gonna set a proposal. I'm gonna do it in two weeks, I'm gonna do a full detailed analysis, rent comps, sales, comps, everything. We'll meet back here in two weeks and present it to you How does that sound?

Jon:

Sounds great, good job. I just wanna I just want to highlight, I just want to highlight the cadence of keep going. I think a lot of times people start, they fumble, they sound hesitant, they don't know what to do. It's like you, that's one of the reasons that roleplay and practicing are so important because you just want to keep on going, and you want to have confidence. Because when you do that, in real life, the person is looking over you looking at you, and you're interpreting what their stare means versus what it really means your insecurities come out, you're fumbling, it's practicing to kind of get through that, which is so important, and I know we're talking about commercial real estate right now, but it's really any field, you have to just keep on going, and I have a question for you, Brett, because we're talking about commercial real estate. There's all of this stuff going on right now with Biden talking about, the 41 $42 billion fixes of potentially getting rid of 1031s. That is going to have a massive ripple effect in the industry if that happens. Talk a little bit about, what you do and how you do it, where it can really help people in the commercial space, when they don't have the option, assuming things happen if they don't have the option of 1031. Or even if potentially one option still exists. What can you do for people? Because it's pretty, what you do is pretty interesting.

Brett:

Thanks, Jon. We do offer an alternative or a backup plan for a failed 1031 exchange called a deferred sales trust, and what's interesting what Biden's proposal, it's tied to IRC. 1031 was the part of the tax code, and the tax code that we use for deferrals, IRC 453, is completely separate. It's not on the proposal to be taken away, and I do think that if they do limit the 1031 exchange, so essentially $500,000 per person, If it's a married couple, potentially a million, there are a couple of other iterations of that, and if you're making other things that are going on, but if that gets taken away, we believe the Deferred Sales Tax is, is already we think it's the best deal in town, because the three storms that are going on, john, so the first storm is the buyer and proposal of taking it away or limiting it right. The second part of that storm with Biden is they're actually taking it from 20 to 40%. That's also the proposal.

You're looking at a California 30 to 50%, and capital gains tax depreciation recapture, going to 50 to 70. It's commercial brokers, we need to be able to solve problems, and one of the biggest problems is always what's my upleg? What's my next opportunity? Go find me that deal. That makes sense, and then I'll list and sell with you. Because why have this Capital Gains Tax and Appreciation Recapture. If you can't solve for that big expense, guess what, they're not probably going to list or sell it to you. With the deferred sales trust, we saw that right away, we don't have to use 1031. We have no timing restrictions. You can essentially sell high and buy low and steel we have for that. We just helped the client, we saved their failed 1031 exchanges sold about an $8 million deal on the beach, and then if they had zero bases, and they don't have for 25 years, and they are overlong, and I think it was about 30 years, it fully depreciated, and they had about a $2.6 million liability instead of the set as selling and not having anyone use the Deferred Sales Tax. That's what we do.

Jon:

It's great. I love it. I love it and and and why do people sometimes (A) not know about this option and (B) may be, because maybe they don't understand it? Don't pick up the phone and just call about it.

Brett:

I think it's two things right. By the way, I learned about it at Marcus and Millichap in 2010. So at 1.9, I didn't know about it, and then my manager brought in my business partner to speak about it and then all of a sudden But even then that was over 11+ years ago, it takes a while to get the false belief of people actually doing it, right. So, you see 1031 exchanges happen every single day, and I'm like, oh, he did it. I can do my mentor did I can do it my office, we're always doing it. It's just a foregone conclusion, that is the way to do it. It's kind of like a blockbuster. You never thought 10 years ago that you couldn't rent a movie from a store, then all of a sudden, Netflix came out, and there are people who were like, what's his Netflix, I'm not doing that in the mail or online. But now it's the foregone conclusion that everyone has Netflix and they use Netflix.

That's where I feel the Deferred Sales Trust is just there are only a few people are actually doing the deals, and until you see someone actually doing the deals, I think we closed six or seven in April alone, and then we closed a couple this month in May, and then we're closing another like five or six, and as I'm doing these deals and training brokers on how to do it, the false belief of a can't work kind of falls apart, because these are the deals that are happening. I think there's over 2 billion collectively last year that is closed for DST transactions across the nation. 1000s billion. I think part of it is the 1031 exchange companies don't want you to know about it. They want to beat the drum of 1031. Part of it is the commercial real estate broker houses, I think part of it is they’re in the business of doing 1031 exchanges for clients to get more transactions to be really honest. In fact, by Marcus and Millichap broker who brought us in and brought him in, he was fired. A couple of years later, the market crashed, everything was tough.

The new guy, the new guy who came in didn't want me talking about it, and there's this weird part because they're like, but I mean, it's getting meetings, and I'm getting listings. They see it as potentially taking away from business, but it's just the opposite. I'm getting more deals like I have a listing right now that they would not be selling if it wasn't for the Deferred Sales Trust. Like literally, they get calls from three brokers a week. It's a beautiful property, B property B plus location. I think that's really the answer, Jon until they have someone they can trust and know to guide them through it. They're not gonna want to touch it, because it's just out of their comfort zone.

Jon:

All right. Well, I think this is actually a good topic to end on. One of the most important things in any business, especially real estate, is spending a minimum of five minutes a day, researching and studying your craft and your skillset, and growing your skillset doing research, whether it's reading, listening to a podcast, reading an article, listening to I mean, you could it, the list goes on and out of reading a book, reading a magazine reading, reading anything is so important, and so we really, really have to commit everybody to the growth of knowledge, because the knowledge I really do believe is power, and being able to educate somebody on all 3, 4, or 5 10 indicators that you're seeing in the marketplace based on lists, publication lists, publication lists, or someone you talked to, etc, really positions you as an authority figure to be known in the business.

Brett:

The last thought I'll hop to is, we were also taught to not play the principal, As commercial real estate broker is for your client to make the decision on selling or accepting the prices right, you are here to present the options and solutions, right challenges, whether that'd be like a reverse 1031 exchange, whether it'd be an opportunity zone, whether it be a charitable remainder trust or a Delaware statutory trust or Deferred Sales Trust. It's not your job to be the CPA attorney, playing principal, say here's a potential option. I'm not a CPA, tax attorney. There are some really smart people who are closing these. , perhaps this is a solution, and if they say yes to that, guess what, you provided that connection, they're more likely to list and sell with you. . Which, ultimately, is what as a commercial real estate broker you want to be doing?

Jon:

I love it. This is great.

Brett:

By the way, Jon is my coach for anyone listening to this personal coach, and he's amazing. you can go to think business? Or jondwoskin.com and we're gonna be doing this every Friday having some fun, and so please rate review subscribe to our YouTube channels. capitalgainstaxsolutions.com, and Jon where people can find you.

Jon:

jondwoskin.com, everything's there.

Brett:

That is Dwoskin with crazy spelling D W O S K I N. Jon by the way no H just JON. You might listen to this on not seeing the video.

Jon:

Thank you, Brett. This was great. Thanks. I always enjoy talking with you. A sort of service that you're bringing. Because it's not as well known as it probably should be in the ears and minds. But it needs that exposure. People have that option, and I know you're helping a ton of people. Good work. Thanks for everything you do, and thanks, everybody, if Brett can help you, I gave you all the contact. information for both of us, and that's it. Thanks, everybody.

Brett:

Thank you, Sir.