CEO Connect: Steve Johnston talks housing market, failures and more
Ideal Agent is a Tampa-based company, established by Steve Johnston in 2016. The company uses the latest technology to make the home selling and home buying process less stressful. The process, from start to finish, is made easier and will cost you less in the long run. .
This fast-growing company has the numbers to back it up. In 2021, the company sold 8,000 homes, valued at $3.2 billion, and locked in $15 million in revenue. In 2022, that revenue number will more than double, with expectations closer to the $40 million mark.
Bridgette Bello, publisher and chief executive officer of Tampa Bay Business & Wealth, interviewed Johnston in front of a live audience at DPR Construction, in Tampa. This interview has been edited for length and brevity.
Tell me what it’s been like to be Mr. November 2022.
Well, a lot of social media. High school friends have reached out. And [the outpouring of messages] has been awesome. I’ve been asked to sign a couple centerfolds from my buddies here. And I actually did my first autograph tonight. But, most important, I was at the hairdresser today, if you can’t tell, and this guy came up to me and goes, ‘Hey, I recognize you.’ I thought maybe it’s the TV or billboard [ads]. And it was an agent from Coldwell Banker, and he said he read my story and thought it was awesome. True story.
We’re in a weird housing market. What’s going on in the market now?
That doesn’t affect us, totally, because we’re nationwide so the ads you see are everywhere. But there’s some bad stuff going on right now. In 2021, it was a record year for selling real estate. It was the hottest seller market in history. And that was caused by COVID[-19] and there was a pent-up demand for homes and interest rates were at an all-time low. That was a perfect storm for having that perfect year.
Since then, there was high inflation and the Fed had to raise its rates to combat that. Now, what you’re seeing is the sharpest incline in history. Rates reached 7.2, in early November, and I’m not sure they’re going to top out there, as they might go up to eight. Things aren’t going to change. We have a stall in the market right now. Sellers aren’t going to sell because most of them are 3% or lower, and they’re not going to move to a 6% because that’s a whole lot less house, and then the buyers have zero motivation right now. They’re waiting it out to see home prices fall, not too much, probably 10% and interest rates need to get to low 5s for the market to start moving. I expect that to come back in the March or April timeframe.
That’s optimistic. Somebody [in the crowd] said, ‘That’s not happening.’ So since 100% of what you have done, historically, is in the housing market, has that had a tremendous impact on your business?
Absolutely. We had a great ride. So, we’re the fastest-growing, privately held company in America. And with that fast growth also comes to the company rightsizing, so we had to adjust for the current market. So, we downsized a little bit to adjust for that. But now, we’re going to make up for that with our ancillary services. Last year, at this time, we had one revenue source: seller referral commission. Now we have over 10—mortgage companies, title, property insurance, home warranty, and everything included in one deal. We have all these different opportunities to outpace the market.
It’s been about two months since we did the actual interview. We love it when the people that we interview have some big, exciting news to share. Do you have something that you can share in this room that hasn’t been shared with anyone else?
I’ve got a couple of things. The day after the rightsizing, we hit the Deloitte 500, fast technology, and ranked 34th in the nation. We didn’t find that appropriate to publicize yet. But it’s very important, it’s very prestigious, we’ve always been trying to be a technology company from Day 1. I’m a big believer in sales first and building technology around it. That’s been a hinder to our progress. So, this is a very prestigious award. And we’re excited about it. Also, we just signed our joint venture to our new mortgage company with the largest purchase lender in the country, United Wholesale Mortgage.
You talked about being a technology company. People might not think of you as being a technology company. Talk about why you call yourself a technology company.
I’ve been in this business a long time, almost 20 years now. Ideal Agent is relatively new, but it started 20 years ago and even my mother, here, is a real estate agent, so I was born around this industry. I had the opportunity at Home Discovery, in the early 2000s. I had a mortgage and title company. And then we knew that refinance boom was going to end, we went out and created a 2% brokerage model, we were the first one stop shop early on, with a lot of technology.
We did great until 2006 hit and it was almost like dead silence. We faced a lot of adversity, we had to close that down. And I lost everything and basically had to start over. But during that process, I realized that real estate was my passion. I had a chance, and an opportunity, to innovate this business with technology, a one-stop shop, and everything in one place.
I’ve gotten into a few other businesses along the way and I just realized, after a few years, that those ventures weren’t what I wanted to do. So Ideal Agent was created in 2016, we’re not so new. But it was an extension of that business. What we learned is, it was a very successful business, but it had some fatal flaws in the business like soured real estate agents. We had to fix those with Ideal Agent. Today, we have 3,000 of the top 1% real estate agents, in every single market across the country. We’re building a technology platform called Connect because we’re connecting all the parties of the real estate transaction, mortgage, title, property insurance, home warranty, and everything in one place where everyone’s communicating. It’s why we call it Connect.
We want to be the Domino’s Pizza Tracker for real estate. Every part of the real estate transaction when that event happens, it triggers, “Hey, do you need this service? Do you know your house is going under contract? Do you need a pause now? Do you need a moving company? We can help you with that.”
When your house sells, you need moving services like internet cable satellite. So, we have that and even home security. That’s what we’re building and very excited about that.
Talk about the timing of the Airheads Trampoline Park and how you knew it was time to go.
It was the first one I got right. It was 2016, we got out at the right time, and I was really done with the business. And that business, COVID shut it down, it’s no longer in business, right? I have to thank this entire crew right here because they let me follow my dreams. They let me go out and be a crazy entrepreneur. I can never go get a real job. They let me do this. I said, ‘Hey, I want to get back into real estate.’ And we did that. And we started the real estate company.
I’ll tell you what, we probably had 34 cents in the account. It was not good. And we had all these pitfalls of adversity. But from failure, you learn.
This team has stuck with me through the last 20-something years. I have the best support group ever. ♦