Episode 427 - Norma Rawlings, President - BrokerVMA Inc.

You're listening to the Real Estate Sessions and I'm your host, Bill Risser. With nearly 25 years in the real estate business, I love interviewing industry leaders, up-and-comers, and anyone with a story to tell.It's the stories that led my guests into careers in real estate that drive me in my 10th year and over 400 episodes of the podcast. And now I hope you enjoy the next journey. Hi, everybody. Welcome to episode 427 of the Real Estate Sessions podcast.As always, thank you so much for tuning in. Thank you so much for telling a friend. Today we travel north to Sudbury, Canada.No, I didn't know where that was either when I first started doing my research.However, we're going to learn a lot about Sudbury and we're going to learn a lot about what goes on in the world of mergers and acquisitions, valuations, all this great stuff, because we have with us today Norma Rawlings. Norma is the founder of Broker vma, doing some wonderful stuff in both Canada and the States. And so it's gonna be fun. Let's get this thing rolling.Norma, welcome to the podcast.

Thank you, Bill. It's a pleasure to be on.

Yeah, I'm very excited. You know, one of your. Someone you have an operation that kind of helps you locate podcasts that you might want to appear on.And I'm always looking for interesting people with interesting stories, and this is gonna be a lot of fun, so I can't wait.

I appreciate your faith in me.

It'll be. It'll be easy, trust me. My wife and I, we actually honeymooned in Canada. You're Canadian? Live there now? We.We started in Vancouver and we ended the trip in Edmonton, but along the way we got to go through the Rockies. And so, you know, huge fans love what goes on up there. And. And I have been to the Rogers center back when it was called the Sky Dome. Yes.My wife and I stayed in the hotel that overlooked the field because I worked for the Padres at the time, and it was easy to kind of get a little help on things. And so just a fantastic city, Toronto. But you're not in Toronto. You're. You live a few hours north, correct?

I do. So my husband dragged me kicking and screaming in 93 from London, Ontario, to Toronto, Canada. And Toronto is about double the size of San Diego.So it's about 6.4 million people in the greater Toronto area. And we actually marched in the first or in the second 93 Blue Jays victory parade.And my husband was articling at the time with a firm that was close to downtown. And Bill, we were out till 2 or 3 in the morning and we couldn't get a cab and we could. And the subway stopped running.So we slept on the couches in his employer's office after the victory.

Wow. This is Joe Carter's home run in the. Oh, Nelly.

That was 93. So that was, that was my. That was Toronto for me and then. But now I live in Sudbury.So Sudbury is the third largest basin for nickel and copper and precious metals in the world. An asteroid hit it about 1.85 million billion years ago. And it's this mining center.It's an integrated mining center where we produce all sorts of nickel and copper and precious metals. And so I came there because I have four kids and my two oldest are twin boys. They're a minute apart, Bill. And they are both hockey players.Not baseball players, but hockey players. And so they were both drafted to the Sudbury Wolves OHL team. So it was after Covid, my.My career is completely digital, meaning I can do it from anywhere. And so we followed them three hours north of Toronto to Sudbury. And it is a, it is a city of 330 lakes and only 200,000 people.So there's a lake for every 600 people.

Wow. So obviously they're still. They're playing hockey now, right?

They. They are. We've been there, we've been here for three years now.As luck would have it, my youngest by a minute was traded to Windsor, just across from Detroit, 13 months in. So he billets during the hockey season, but both of them are still in the ohl. And actually last night they.I know you're, I know your Padres experience. You'll appreciate this. Last night my eldest had his first five point game ever and my youngest had, he's a defense. He had two points.And they, they're just, they're, they're doing really, really well. So it was. I'm, I'm delighted that we moved out here.

Oh my gosh, that's great. I, I've become a hockey fan now.Back in Arizona, we had the Roadrunners, but it was different than being with the Lightning here especially we moved here in 2017 and lightning were just kind of getting it fired up.

Oh yeah. Tampa Bay is like amazing. Yeah.

Yeah. Tell me. So Maple Leafs, is that your team.

When it comes to. No. So what's funny is my eldest was drafted in the, in the NHL draft two Junes ago. He was drafted by the Winnipeg Jets.So he's been Signed to an entry level contract with them. We're hoping he'll play in Winnipeg next September. And he's, he's got one more year with Sudbury ending in April.And my younger guy, Bill, Winnipeg invited him to their rookie tournament to play with his brother in September in Montreal in front of 21,000 crazy Montreal. No, there were 20,900 crazy Montreal fans and 100 Winnipeg jets fans in the building.

So maybe that saves you some heartache not having, not having to be a Maple Leafs fan, because I know. That's great. I love that.

So we're definitely jets fans.And, and my, my younger guy is hoping for an entry level contract as well, but if he doesn't, he has a, he has an offer from an NCAA school and he's hoping to generate a couple more this season. He's with the W. With the Windsor Spitfires, who are an excellent club this year.

I, I can't wait to watch for the Rawlings name.

It's actually Walton. So they, they.

Walton. Okay, sorry.

Walton.

So I'll be watching for Walton.

Okay, good.

On the baseball side, you mentioned that, right? I have a history there. Big Blue Jays fan, I'm hoping.

Because yes, we are, we are very, we're not very happy that we're going back to LA with. To do three games in a row with only one win. That is not a good thing.

It's going to be tough. I think it's still going to be tough, but man, there's like Bichette and Vlad. Unbelievable. And then pitching coming out of nowhere for Toronto.Look, I'm with, I support the Rays because I live here. I'm actually a 10 minute walk to the trop. Right. So I love the following.The team where I live I think is critical to me because I grew up in a place where everybody rooted for the other team. When you live in San Diego, so many people come there, they root for their, they don't root for the home team. And it bothered me.So I support the Rays and I, you know, it was fun to watch them through that, the World Series. They played against the Dodgers themselves back in 2020, lost in six games. Then we saw the Yankees lose to the Dodgers last year.And now there's another, which is always fun.

When the Yankees lose. It's always fun.

Another team in the East. This time it's going to be the Blue Jays gets a shot at the Dodgers and hopefully they can, they can, they can complete the job.

Well, it's been 32 years. It's been a long time.

Long time. Cool. Well, so that, like, we, you and I could sit here and talk for the next hour about this stuff. So.But there's somebody listening somewhere that says, I thought she was doing valuation and merger and acquisition stuff. So we're going to get there. But I like to find I always. It's a question I ask maybe too many times, but at 15, Norma, what are you thinking?Like, what's your plan? And I know it's hard to have a plan at 15, but was it in real estate and was it doing what you're doing now?

Oh, no, no. I was. I was going to be a. A basketball player. The fact that I was a woman at that time, you know, didn't really cross my mind, Bill.It was all about basketball. So I. I played basketball. I won the award for the best basketball player in my senior year of high school. I went on to play varsity basketball.I. I thought there was a career there for me. So I suppose. And my husband is. Is very athletic as well. So my two girls play volleyball, my two boys play hockey, and I play basketball.

You are very busy, I'm guessing, nights and weekends with all kinds of things you must attend, right?

I feel lucky every day. Yes. All four of them are healthy and happy, and it is a pleasure to follow them around. Yes.

That's great. That's awesome. You know, as I do basic research to kind of trying to find something out about my guests.And for you, it definitely was the list of degrees you've obtained over the years. And I would love for you to maybe just share the stories of each one. I won't say how many there are because it's kind of cool.But I'll let you continue from here.

Sure. So my mom grew up 10 minutes north of the New York Quebec border in Quebec, so she was bilingual. I grew up in London, Ontario, a very English town.So French called me. And I did two years of university in French before I was accepted into law school. So I finished my French BA While in law school in the summers.And then in law school, I liked law because I wanted to work for myself and I love to read. So the two kind of went together. And I graduated with a law degree and practiced for a while, and it was not a passion project for me at all.And so a little later I went back and got my executive mba and that was it. I fell in love with the business education and the people.So my current business partner, Bill, who lives in Bradenton, Florida, he was a classmate of mine, and I remember sitting beside him during the mba. And he has a great sense of humor. And I swear I laughed more in that class than I learned. But it was, it was a phenomenal experience.And my two best friends, my two best girlfriends, I come from the mba. So business school was, was definitely a boon for my relationships in life. And that, that, that ends the three degrees that I have now.

First of all, what was your first kind of job? As you know, in with the mba? And second, how does real estate enter the picture?

So I actually was a family law lawyer and I wrote a book on family law when I was 28 years old. And I helped people mediate their disputes as a family lawyer. That's what I did before I went back for my mba.And then with my mba, the challenge was that I learned how to use Excel and that allowed me to pitch lenders on lending me money to buy real estate. So that's what started the real, the, the love of real estate was.I remember one year, Bill, we had toiled and sweat and earned maybe $150,000 from the law, and we bought a building and within a year we had increased its value by a million dollars. And I remember thinking, this is way more fun. It's the leverage, right? It's that, it's that sense of.And of course it can go the other way, as you and I know, but at that point it didn't. And so that started the love affair with, with real estate.

So now we gotta talk about broker vma. This is the company you, you own now. I think there's a couple of others too. We're gonna have to find out about that.But broker VMA stands for valuation and merger and acquisition.So obviously one of the things that in the world of real estate, the last thing people think about, especially a layman, is gonna be the fact that one day somebody might sell that company or they might want to acquire other companies and, and even how the recruiting works with all that. It's such a behind the scenes kind of thing. Would you agree with that?

Yes. In fact, one of. So my best friend married a German and he told me a story where he started his company as a nonprofit.And about three years in, someone said to him, matthias, how are you going to ever sell a company that's a nonprofit? And, and he thought, you know what, you're right.So he created a profit arm and a nonprofit arm and ended up selling it about 15 years later for a nice price. And so you're absolutely right, people, when you first start out, you're just so confused about what you're doing.

True.

That you just grow organically and try to figure things out. And so what our company, Broker vma does is it says, okay, you've now created something of value. How do you then exit a winner from that endeavor?Right.How do you exit in a way where you sell to someone who shares your values, is going to continue your legacy and give you money for what you, what you made?

We talk about that, you know, at the, at the agent level. Right. I mean they should be creating a business.It's a much different business than a brokerage, but there's some piece of that that could be transferred to somebody else for some money down the road.

Yeah, but look at, look at Compass where they're offering a high powered aperture. The same, they're higher. They're offering high powered real estate teams and agents money to move to their brand. Oh, definitely.When you think about it, anything that creates repeatable cash flow has value.

Yeah, absolutely. Was there at the time that you started this, your, this company, was there a specific need or gap or something that you, you saw?Especially because it might be, you know, I know you work in both work all across North America, but maybe did it start in Canada first and then get to the United States? How'd that work?

It actually started in the States first. So my business partner, Wayne Einhorn, has been in the real estate business since he was about 16 years old.So he has a large group of real estate brokers that he coaches and he and I went to the NBA together.And so in 22, he said to me, norma, he said, I've got all sorts of people asking about valuations and mergers and acquisitions and, and I'm so busy coaching, I can't deal with it. I, I'd really like you to partner with me. And so over a couple of lunches and again, he's a very humorous, entertaining person.I decided, you know what, this sounds like some fun. So that's when we started Broker vma. And since then, Bill, we've done all sorts of valuations for companies looking to sell.We've run sales processes for brokerages who want to retire or exit. And we, and we've got a few clients who love to buy.So we, we actually have two clients right now, one in South Carolina, one in New Jersey, who own over 30 different franchises.

Wow. They like to buy.

And, and to, you know, when we look at the Compass anywhere merger, you and I were chatting about it a little bit earlier, they're very good at operating. Right. Like so many real Estate brokers struggle to operate the business because oftentimes they're the best salesperson in the place.And so they put out their own shingle, attract people, but somebody who's great at sales sometimes is not as good at sort of operations. And so being able to operate these two fellows who bought so many locations, they're very good operators.

Yeah, well, they, I'll bet you they know the answer to this question maybe as well as you do.I'm gonna, I wanna, I wanna know what is the single most common question that a real estate broker owner asks you when they first are thinking about this process? There must be one question. You just go, I know this is coming.

Oh yeah, what is my business worth? That is the most popular question, Bill. And what they'll do is they'll call me up and they'll say, Norma, I've got 40 agents, I'm in Tucson, Arizona.I have, you know, 250 or $300 million sales volume. What am I worth? And I always say, okay, I can give you a range, but to actually know what you're worth, we need to do a proper valuation.So that is a very common conversation. And I've had, I, thankfully, I think like you, I really enjoy people and I especially like entrepreneurs.And so I always enjoy those conversations and many of them lead to a professional evaluation being done and then we run a sales process for them.

I'm gonna, I'm not, not trying to put you on the spot, but what percentage of those conversations do you have an owner that's, I'll just be, I'll say it this way, slightly unrealistic.

Oh. So we had an interesting conversa. We had an interesting situation a while back.So we had a Florida brokerage and they had a hundred agents and they were, they were very productive, independent. And the owner, Bill, had his son in law value the brokerage. The problem was the son in law was in tech.So of course tech companies are valued based on their top line and it's a much higher multiple. Whereas real estate brokerages are valued based on their EBITDA and a smaller multiple.So he had told his father in law that the business is worth at least $3 million. And I had to deliver the message that it was actually only a million once I finished my valuation.So that was probably the toughest conversation that I had with an owner. And he was bitterly disappointed.And I had to explain to him that real estate brokerages, they just, you know, all your agents, the day after you sell can leave. So they just don't have the same value in the same multiples as a technology company. So, yeah, that was.Now, he ultimately ended up selling for about 1.6 million. So it worked out well. But. But my value was sitting at a million.So he, what he did is he found a strategic buyer that was wanting to enter the Florida marketplace. So it all worked out well.

Yeah, like anything being sold, it's what someone willing to pay ultimately, definitely.

And so when we do evaluation, we always say we're not doing it as a listing document, we're not doing it as a positioning document. What we're trying to tell you is this is what we think it's worth looking at both buyer and seller.And so it acts as sort of a CIM for them when we then. And the other difficulty with selling a brokerage, Bill, is you think about it.If I own a brokerage and I call you my competitor and I say, bill, are you interested in buying my company? First of all, you might say yes. Great.But if you say no, then the next day, potentially you're on the phone with all my agents saying, norma's selling. You know, you may want to come to my. You know, you may want to come to my place.And so what we provide at broker VMA is we give you that confidentiality and that anonymity where you can try out seven different properties purchasers without know anybody knowing who you are. So it's, it's a valuable process. For that reason, it maintains that confidentiality, which is critical because I remember we, we dealt with a.A real estate broker in Toronto.And I always tease that if you wanted everyone in the industry to know what was going on by dinner time, you told him at breakfast something that you said was a secret.

Oh, my. So the conversations with that gentleman were few and far between. I'm just guessing.

He was Irish, he was very charming. He was lovely. But you just knew if you told Kevin, this is a secret. Every single person that you know in the industry will know by dinner time.

That's great.I mean, I'm fascinated by your world because it's such a unique there, you know, there's not like thousands of people running around doing what you do in the country, I would guess.

No, we. So. So we broker vma. We do. Mark Lucas does some at rima. Steve Murray does some over at Real Trends. And that's like, that's sort of. Those are.The three of us sort of do the bulk of it. T360 is doing some as well, although they sort of act more as a consultant technology piece.

Right.

But yeah, there's about three or four of us that do it and we, we all get along well because there's just so many, there's so many potential clients. Right. There's, there's like 13, 14, 15,000 brokers with 25 or more agents across the, the U.S. and Canada at least.And so there's, there's lots of business.

And it's, you know, you mentioned it before that more than likely it's going to be someone in the area that's going to acquire and. Yes, and that, that would be the most common response. But then you, you shared one, your other story.The gentleman who was not happy with the true valuation, he actually was able to find someone who wanted to enter a market.

Oh, 100.So, so he, he sold to IAD and they're, you know, they're a French company coming in with a totally different model and they, they don't have offices and they wanted a foothold in the Florida marketplace. So God bless both of them. The fact that they found that win win.But it's, it's interesting most of the time if you're looking like if you, you know, you, I know you spent a lot of time the San Diego Padres, and I know now you're in, in Florida and you've been in Arizona and we've done business in all three of those states.When you look at someone in Arizona, for example, we recently did an independent that was bought that we arranged to be purchased by Engel and Volkers. And it's, it's perfect when it's a win win. Right. So you always want it to be mutually beneficial on each party's side.And in this case, the principles were so compatible that it was just easy. Right. They, they met, we facilitated the introduction, and when they got together, they just connected.There was that compatibility right out of the blocks. And so it makes it a really nice transaction because the person selling receives their money.They receive the ability to sell at the new brokerage, and the buyer expands their reach tremendously and has the benefit of the local knowledge. So it was, it was, it was a good transaction.

I know there are differences, you know, in the real estate world between Canada and the U.S. right?

Yes.

One is the way our MLS system in the U.S. is definitely a lot weirder than something very uniform you have in Canada, which, which I would, I long for down here. How about in your world, in your very specific world, are there differences between the countries that you have to. Kind of.Obviously you have a lot of experience. But early on, did you have to kind of figure that out?

Oh, I still have to figure it out. So Canada and the U.S. are different.And one significant difference is in the U.S. you guys do a fabulous job of taking a real estate brokerage and adding all sorts of ancillary revenue sources to it. So that even if the brokerage itself doesn't make money, your title, your mortgage, your relocation, those make money.And, and that's, that's a brilliant way to bundle things because as you and I know, if you control the customer, then you're able to control the revenue source for those ancillary services. In Canada, it's much more, more regulated and we are not able to do that.

Ah, so there are some negative things.

Oh yeah. I mean, I'm, I'm a very proud Canadian. I, I, you know, I bleed red and white. I, I absolutely love our country. I feel very fortunate to live here.Sudbury, as you and I said, has, you know, 330 lakes. It has all sorts of forests, as you mentioned. You were out to Vancouver and Alberta. It's spectacular, right? The, the country is spectacular.That being said, I'm a huge fan of America as well. I have, I have a client in Wyoming. We just did a phenomenal transaction for the Prescott's in Wyoming. Salsa.The earth people, they live in a beautiful part of the world. Their son's playing varsity football at college and we found them a buyer who shared their, their values of family and faith.And so it's like a perfect connection. And I adore them, so, and, and I love the part of the world they live in. We have another client in Washington State.It's just, I'm, we are so lucky to live in North America like it is. It is so vast and so full of wilderness and so full of places you can just sort of get away.

The way you talk about your business, first of all, I know you love what you do, but there have to be, there had to be a time where you said, no, we don't really fit. We don't, we can't work together.

Has that happened? Yes, it has. It's usually when. So we always strive for win, win and sort of mutually beneficial.And that may come from the mediation I did as a family lawyer. I don't know, it's, it's. But I always figured that this isn't like I'm trying to sell you a used car bill and then run away, right?It's, it's a long term relationship. So. The Prescott's, for example, they sold to Dennis Schick and Chad Ochner.Well, they're going to be together for at least the next three years because the Prescott's going to continue to sell. You know, Dennis and Chad are going to be running. They're going to be moved their, their head office to Wyoming. So it's a relationship. It's.It's a three minimum, three year relationship.And so if you aren't in it for a mutually beneficial deal, if you're trying to pull one over on someone, then we, we can't help you because it just doesn't work. Right. You, you, you try to screw somebody and it's just, it's just a very negative type of transaction.So, yes, we have, we have turned people away when they did not appreciate that it's in their best interest for the deal to be mutually beneficial.

Yeah, no, I, I mean, I, I ran a. I ran an escrow branch for 10 years and I turned. Usually it was an investor doing something shady, but, you know.Yeah, well, they just don't play by the rules or just don't understand, you know, that there are, that there are things you have to do and things you can't do and you have to say no. And that's weird because that's turning away potential revenue, potential referrals, all kinds of stuff.But ultimately, I, I kind of thought you would be the same way.

Well, it, it's, It. I think it goes back to that whole good people. You want to do business with good people. Right? You want. I, I mean, I, I love my business partner. He's.He's one of my best friends. He's a good person. And, and so it's a pleasure to work with them. And you, you, you want to raise good people. You have a son in D.C. i have four.Four kids. I have two boys and two girls. Like, you want them to be good people.You want to be kind and good and try to make the world a better place, because those are the people you want to spend time with.

Norma, this has been amazing. I knew this was going to be a great episode. So is it Katarina who helped us connect?

Yes. Okay.

Yeah. So you should give her my thanks. This is what.

I thanked her already. I'll thank her for you, too.

Great. So this is the same question I've asked every guest since Jay Thompson back in 2015. Jay's an interesting character, good guy, and it's, It's. You're.Even though you're not a practicing realtor, I'm going to guess you have a great Answer for this question. That is, what one piece of advice would you give a new agent? Just get enrolling in the business.

So I love that you end with the same question every time, like in 10 years. The consistency is quite impressive.

Yeah.

So my, my, from what I see and from valuing so many real estate brokerages and getting a sense of what agents are the most valuable, it's about expertise, it's about a specialty.So if you think about it, what do you, if you're getting into the business and I know a couple of younger people who are, I think the way to look at it is, okay, what do I know best? Am I a former hockey player and I know lots of professional hockey players.Am I so familiar with the neighborhood that I can tell you, every bakery, every butcher, every tea shop, every, you know, every place there. Is there a mortgage lender that I'm close to who's going to send me all sorts of power sale clients?Is there a new home builder that I know well and I can sell his lots? Is there an ethnic community that I'm part of that I know intimately?And, and to me, it's that level of expertise and intimacy with a neighborhood Bill, where you can become the go to person for that neighborhood. Because as, as we know with real estate, it's so local, right. It's so focused on the corner of Maine and State.It's, it's, you know, it's where it's what you know and what you know intimately and better than somebody else that I think gives you a tremendous advantage. So that, that is my humble advice.

It, it may be the first person to be that specific about that answer. I'm always, you know, that's pretty cool because it's hard, it's hard to come up with something different after 400 plus responses.But that's awesome. Norma, if somebody wants to reach out to you, what's the best way for them to do that?

So brokervma.com is our website and all my contact information is on there.

Great. Well, look, continued success to your children and to you and your family. I mean, it's, I am so excited for you.Slightly jealous as well that you have a couple of boys playing at the level they're playing at. I'm sure your daughters are fantastic in volleyball as well.This has been wonderful and thank you so much for finding some time this morning and I appreciate you very much.

Can I say go Js?

Yes, you can.

And hopefully by the time this airs, we will have won three in a row.

Fingers crossed. Thanks, Norma.

Thank you very much, Bill.