Jeff Paxson is the owner of Jeff Paxson Real Estate, a team that led Indiana in sales volume from the years 2014 to 2018. A maverick who built his career going against conventional wisdom and twice making all-in bets on himself. For anyone interested in stepping away from corporate life and building something of their own, Jeff shares his path.
Jeff Paxson Accolades:
Based on sales, Jeff Paxson has been named Wall Street Journal’s Real Trends Top 1000 Realtors aka
Annually top 5 Realtor in entire Indianapolis Metro Area
Annually top 5 Realtor in Indiana
Top 50 realtors in Midwest US
Named one of Indianapolis Business Journal’s top Realtors each of the last 10 years
Johnson County Realtor of the Decade 2020
There are now 4 office franchises of Jeff Paxson Real Estate.
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Jeff Paxson – From College Dropout To Indiana’s #1 Realtor
“I became a manager of a real estate office years ago and I called my friend Ian as they just put me in charge. I’m in charge of about twenty real estate agents. What do I do? Ian had read the Jack Welch book of how to be a CEO in 100 days and he said, “Go in.” He doesn’t quote the book, Frank. He tells me like it’s his idea. He says, “Paxson, go in tomorrow and fire the bottom 10%.” I think there were eighteen people in the office and I thought, “How am I going to fire 1.8 people?” I started with one.”
That was Jeff Paxson, a friend of the program and Indiana’s most notorious realtor, also happens to be Ian’s college roommate. This is one of the best episodes we’ve done that Jeff tells us how he went from a college dropout to being an average realtor. To becoming Indiana’s number one realtor in sales volume, a fascinating episode for anyone who wants to start a business to start a book of business who’s in sales and the sacrifice that you have to make and the bold moves that it takes to be number one at something. I hope you enjoy it as much as we did.
We got a guest, our second guest.
That’s incredible. What a treat the world is in for this time.
Our readers, you have no idea what a treat we have for you. He’s been begging to get on an episode. It took him 37 episodes to get in here. We have the man, the myth, the legend. We’ve talked about him a million times on this show. Jeff Paxson, Mr. 4.5%, public enemy number one in the realtor space in Indiana. Welcome, Jeff.
Ian, Frank, thank you. I love reading the show. Congratulations on all your success.
Jeff says he’s read at least 12% of 7 episodes that we afforded to him out of 35. We appreciate it. That makes him our second biggest fan aside from Nichol so far. Nichol refuses to come on here because he still has a career that he cares about.
I do hope that you will have the impact on my career that you did on the twelve-year-old you interviewed.
Does it hurt your feelings, Jeff, that you are the second guest behind a twelve-year-old from London that we never met before?
I would’ve picked him.
He was just too adorable. You’re an adorable guy. He was pretty adorable, Yoni Katz.
He was perfect. I did listen to that one all the way through.
For our readers to give a little introduction to who we are talking about. First and foremost, he is my old college roommate but more importantly and lately, Jeff Paxson is one of Indiana’s most profitable realtors. In fact, from 2014, through 2018, Jeff Paxson was the number one realtor in the state of Indiana, which is pretty incredible. If you get to know his arc a little, it was incredible the way he was able to go and do that. For a lot of people that knew Jeff in college, that might have surprised them if you’d have told them that back then. That’s not an insult to you, Jeff but I’m excited to have you on here. For anyone who wants to start something on their own, start something from scratch, who wants to go all-in, his story is a powerful one of betting on yourself and in multiple ways. Frank, I’m going to start. When’s the first time I introduced you to Jeff because I have known Jeff for many years. When’s the first time I introduced the two of you?
Pax, do you remember?
Where is a better place to meet than Detroit, Michigan? It was the first time we have the draft. Maybe a different trip before that.
It was the summer of 2014, the baseball game.In real estate, they don’t teach you how to sell, they don’t teach you how to generate leads. Click To Tweet
It was at Comerica, I think. What I thought was neat about the time that I met Frank was that Frank and I had never met. I’ve never met Nichol but I feel like I know him because Frank and Ian talk about him all the time. When I first met Frank, it was as I thought I already knew Frank and it was as though Frank already knew me. I remember we were walking down the street in Detroit in the middle of the day and a young kid came up to us and was selling demos CDs and Frank said, “Come on, Pax. Let’s go help this kid with his sales pitch.”
Frank pulls me over. Frank knew that I was a realtor to my knowledge but didn’t know that I sold. That was where I excelled. He immediately included me in we took this eleven-year-old kid trying to sell his demos CD on the streets of Detroit and Frank was like, “Get your shoulders back and tell us why we need to buy this and that’s what you got.” I said, “I think you’re doing great but do not be afraid to talk to people. Keep it up.” That was my first real interaction with Frank and it’s been a joy ever since.
It’s been a fun ride and we were in a four-man fantasy league. If you’re looking to get on this show, you probably need to join our fantasy league first so we’ve been playing fantasy for years together.
Importantly, there are four entry fees but it’s like you’re competing against two people. It’s a three-person competition with four entry fees. We love having Jeff in our league contributing. He calls it the friendship fee that he pays once a year.
Each of these guys only has two children. When you get to three children, your fantasy skill depletes. That’s a huge disadvantage. Ian, you brought me on and Frank, we were talking a little bit about where I was at age 19, 18 and 20. I know those aren’t in order but it’s where I am now. Honestly, Ian and I were running around the college campus meeting people and being friendly. I knew Ian was driven but he has hammered it out and going to school. I was not interested in the classes that I was taking. I didn’t have a goal as to what I wanted to be when I grew up so that made college hard for me as far from checking all the way in. There were years where I think my blood alcohol level was higher than my GPA.
In fairness, Ian’s too but Ian’s blood-alcohol level was high so was his GPA. Mine was lower. Also, what I used college for was to meet people. I didn’t know this. I didn’t have a plan but what it taught me in meeting guys like Ian and the other guys that we ran around with was the world was bigger than where I lived. That was a huge impact that I got from college. I wish I had gotten out of there in a timely manner and with all the degrees I wanted. What unfortunately happened was I found myself at age 22 and Ian saying, “Get your ass back to class and I’m saying, “I don’t know. It’s not my thing.” It wasn’t because I wasn’t smart. It wasn’t my interest. I then found myself at age 22.5 working at a restaurant. No shame there, Frank. I started painting houses and I wasn’t proud of what my brand was. I got dared into going to real estate school.
Let’s start with when you knew college. Jeff was my roommate in a fraternity at Purdue University. What was your last major?
I would say that my major was English.
What did you think when you went to college that you might do with the degree? Were you undecided when you came to college?
I was the guy that you have talked about before. I was the leader in high school, that fun, athletic comedian kid. That’s how I’d gotten through school. I was smart. I didn’t need to study. I didn’t know what I wanted to be when I grew up. Maybe I was good at high school. Maybe I’ll be a teacher but then I didn’t think that would be the route that I would embrace. I didn’t know. It wasn’t general studies but it might as well have been. I loved the intro classes.
Ian, let me ask him a different question. As an older person who we tend to reflect more back on our lives, if you asked me the same question, I could point to a moment that was way earlier than college. My question is when did you know that you are someone who is comfortable swimming against the tide or doing things that were not with conventional wisdom?
I don’t know that I’m comfortable with it but I know that I’ve certainly found myself in those spots a few times.
Did you embrace it before, during or after college?
A big part of my personality, Frank, is trying to be the guy that everyone likes. I would rather have you like me than anything else. If that means being funny, sincere, genuine, what was important to me was to be liked by the people. Going against conventional wisdom. I’m embarrassed about it. I’m still embarrassed about my college career. I don’t love to brag about it or anything. None of my friends in college or outside of college were going through without a good college degree or a good career that they were starting right as soon as they got out. I was embarrassed by it.
I was embarrassed that I was different than them. I wanted to get married so I stumbled on a few guys that were doing real estate and I thought, “They are driving a nice car and their hands aren’t dirty,” I wonder if I could do that. I went into real estate class and I remember the first day Pete Peterson was the licensed sales course instructor. He said, “This is a career where if you do it well, you can make more money than a doctor and then an attorney.” It was a 6 or 9-week course. I thought, “That’s great,” then I found out immediately that’s true but not guaranteed and certainly a very small percentage of people succeed in this business.
I was 23 years old and had a real estate license. They don’t teach you how to sell and how to generate leads. I was learning the hard way and trying to gain the trust of all of those people that Ian mentioned that didn’t think that I would ever amount to anything. It’s hard to say, “Can I be your realtor for life now?” I had to prove myself as a realtor. A lot of times, the way you prove yourself is not too different from what Yoni does, which is advertising. I started by writing letters and little stories about myself to have people get to know me and have people to get to know that this is what I was doing for a living. For the first time in my life, I did everything that they told me to do and they, meaning the managers at my office.
Were you listening to them because you saw that it was working? You weren’t listening to teachers and to your peers that were students who hadn’t done shit yet other than pass classes. Did you listen to them because they were making money, you saw it was working? It was like, “These are the first credible people that told me to do something. I’m going to listen.”
I was out of options. I felt like my other plans I had abandoned and this was my way to have a career with a business card. That was always a big motivator to me. I listened to them and we fast forward. I was doing it and they would ask me to charge 7% and I would. They would ask me to cold call people and I would. First of all, this was also the first time in my life that I had responsibilities, bills and things like that. That was the driving factor and I was a good soldier. I had a good personality and I would network. I was working hard at it because those guys were older and they’d done it. They said, “If you follow A, you will get to B.”
I’m interested in this because the bigger narrative for everyone growing up is to get good grades in high school, go to college, get a degree, get a good job, start your career. Those four things, every parent in the country says, “That’s what you’re going to do. You’re going to go do it,” everyone that you’re surrounded by growing up. It always stressed me out because I love Jeff. He’s a great friend of mine. He’s a great talker. He taught me a lot about how to be social, how to go into a room and start shaking people’s hands. He’s naturally gifted at starting conversations. I learned a ton from him being his friend, his roommate, watching the way he interacted but I was always stressed for him when he said like, “College isn’t for me.” What’s interesting is we even talked about this, Jeff didn’t just leave college. He stayed in the fraternity house. Imagine being me. I had seventeen credits in Mechanical Engineering in one of the hardest years I had. I’m taking Thermodynamics. I’m taking these insane Statistics classes.
I had fluid dynamics, all this stuff. I’m getting up before the sun’s up to go to the library to study and Jeff’s still up listening to music or still partying. You’re kicking back having a good time and this was my roommate who’s not taking any credits and hanging out. He didn’t want to end the college experience but he knew he was done with college. I was always so stressed for you that you had completely wiped out that safety net that we were all there to get because I was still very much in the mindset of getting a degree and get a good job. Engineering will pay more. You’ll be marketable. That was the only option.
I didn’t have a plan B. That plan A was to get a good job at IBM, Ford or Procter & Gamble, whatever. You completely obliterated that and said, “I’m going to figure out something else.” It stressed me out when we had these discussions. I would try to talk you into like, “Why don’t you take a few credits? Maybe the major wasn’t right.” You were always like, “That’s not it. I’m not going to do this.”
To answer Frank’s question, the way that you can describe it is accurate with the exception of I didn’t have a plan either. Frank, if I could go back to my 18 to 21-year-old self, I would say, “Don’t sit idle and party. Try to find what you like and then go after it,” because I didn’t have a plan either. My plan was no further than I’m going to cold call the dorms and see what girls would come over to the room tonight. That was my plan. I wasn’t thinking past that afternoon or evening ever. That was a shame. I just grew up later. I didn’t grow up until I was 22, 23. If I would’ve gone to college then I would’ve graduated in two years.
How did you resist all that? You had so many voices saying, “Get back in class. Take college,” and you didn’t buy the whole college mindset.
I didn’t find the thing that interested me. If you remember colleges at Purdue, some of them were 300 to 600 people in the class. There was no way to stand out with personality. I couldn’t succeed as well now in this virtual world of online classes or anything. I excelled the most in the classes where the teachers knew me, I answered questions and I was better in a small group. By luck, that’s what real estate was. It was a small class.
I want to ask you the questions. The first question is this when did you know your personality set you apart?
Early on, I heard you talk about this on an episode and you asked something about when did you know you were funny. I knew that my personality set me apart. I remember third grade. I remember the teachers liking me, trusting me. I remember the kids turning to me to be the leader. We graduated elementary school in sixth grade and my mom was telling the story that out of all the elementary schools, I was the sixth-grader commencement speaker. All of these kids were going to go to junior high the next year and I was immediately picked by my teachers not because of my grades but because I could emcee. I was known by every single incoming seventh-grader at the end of May. “Who was the kid that gave the hour-long commencement?” It was me.
I would say it like 3rd to 6th grade but then when I was in junior high, all of a sudden I was the only kid that everybody knew the name of the first day of school. It went on and then I was the student body president when I was older. A lot of it was just on personality. I was never in charge of the science club or anything like that. It was on being nice, friendly and a little bit funny in the appropriate way. The teachers knew me and I was good at high school.
You were good at college aside from the class part. You were great at college. Frank, everyone knew this son of a bitch on campus and he didn’t even go to class. When I had breaks and I’d come back for lunch, I’d come back to my room, my glasses and backpack would be missing. He’d pull the books out but he would take my backpack out on campus. It’s Jeff’s way of saying I got to keep up appearances because no one knows I’m not in class. It was this lie that we all live. No one told any of the sororities that Jeff dropped out a year ago. Everyone still thought he was going to class. He would go out on campus and walk around and say hi to people so he’d be seen. He put my glasses on to make it seem like he’s been reading. Every single person knew Pax. He was universally liked. No one disliked you either. He was an inherently likable guy.
We talked about you realize early your personality sets you apart. You realize the school wasn’t for you and we can get into spinning tales of college high jinx for hours. Let’s talk a little bit about real estate, when you got into it and when you decided to go forward. Is it a fair question to ask or was it the first time you felt like maybe your back was against the wall? Maybe there were real consequences. Is it a fair way to say? Ian asked you the question like, “Why did you decide to listen for the first time?” What was it? I don’t say this to somebody in any way disrespectful but for me, when I’ve done incredible things, there’s always a little bit of desperation or survivability. I’m curious if you’ve tapped into that and then you realized the way forward.
All those stories in college, that was the time when my mom and my dad stopped thinking that I was cute and funny. I was without a safety net and on my own merit. Any dollar that was spent was going to have to be conjured up by me. I had a college sweetheart and all my buddies were getting married. All my buddies were getting a good job and if I was going to keep up appearances, I had to have a career. I wanted to be liked and real estate was that. In my desperation to be liked by my peers and by my friends and their parents, I had to put a tie on, go to work and have a business card. That was a big driving factor for me. I know that doesn’t sound like desperate times but in my mind, that was what my driving force was. I got to those managers and they said, “Do this,” and I did it.
It’s funny because, in my life, I’m incredibly disciplined with many things. Ian will immediately go to, “You’re not disciplined with the refrigerator,” and he’s correct. In addition to that, I’m not very good at getting myself to the gym. I will tell myself I want to get to the gym but I have a trainer meet me at the house. When I don’t want to get out of bed, I know he’s pulling up to the house in six minutes and I got to get down there. He’s going to be out front. When I use the terminologies, I have to get leverage over myself. For me, leverage, I know how to do it. I know how to manipulate it. When I was in my twenties, I wasn’t as good at it but what you walked into is, “How do I get leverage over myself?” For you, I heard you say it. “If I was an outcast, I probably wouldn’t be as likable. If I wasn’t as likable, that would be devastating to me because I’m not looked at as a professional. I can’t fit into that crowd and you’re such a genuine guy.” You couldn’t fake that. You knew you had to show up and have a job in order to have the social credibility, which gave you all your juice.
Ian and Frank probably know this about me too. When I got started, I hammered it out. I had to get started. I’m still the same person that I was all my life. I got good at it. I started doing some things. Now, I’m a known brand. I caught myself getting back on cruise control. By this time, I was married, having kids and then the real estate market got tough. All of a sudden, I had to get back to the discipline that I had at the very beginning. There was a real estate market crash of ’08, ’09 and believe it or not, in 2010. I had a house, two small children at home and a wife that was on maternity leave.Never hesitate to do the work that leads to the finish. Click To Tweet
I had a rental house and the tenant hadn’t paid in 2 or 3 months. I remember I had to borrow $1,000 from a buddy of mine to make the rental house payment. It was right around Christmas. That was in 2010. I thought, “Here I am again, Paxson.” Everything that I’d been doing was fine except deals weren’t closing. There was the mortgage crisis, things that you have talked about on your show before. For the first time in my real estate career, just because you got the accepted offer didn’t mean that the home was going to close. I had to recreate myself and my discipline but I didn’t do it on my own there. I got leverage over me as you talked about.
I put an ad out because I wanted an assistant and God was looking out for me. He sent a gentleman that had been at a crossroads in his life and had been a very successful realtor in his career. I was selling 40 houses a year at my peak and he was selling 200 houses a year but he’d moved to Indianapolis to be near his daughters. He semi-retired at age 50 and said, “I think I can take you and build your business to what I had been doing in my market,” and it was controversial. At the time, I was charging 7% or 6%, just like all people that liked me had said to do. He said, “I want you to take your commission structure from those percentages and start charging 4.5% to sell the house.” I called Ian, the engineer and I asked him, “That’s less money.” He said, “That is.” Joe Musgrave was the gentleman’s name and his personality is, “What do we care what people think? I thought, “Gosh.”
Polar opposite personalities. People care about what everyone thinks.
He said, “We’re going to start advertising. This is what you’ll charge and we’re going to advertise it at an obscene amount.” I was desperate. I’d paid back my buddy the $1,000 by then but I didn’t want to suffer. I put some money into the advertising and we started being pretty blatant about it. We were at a big real estate firm that was not charging that. They thought, “This would be cute for now but we think that we can train him back to charging more. Let him get his feet under him.” I quickly became the number one broker in that 100-agent office then the number one broker in Indiana for Keller Williams.
You’re a Keller Williams. They’re the big dog of all of Indiana. There are 100 agents in his office of which 99 are charging 6% to 7%. One is charging 4.5% with the same branding, same office, same logo, the same everything except your ads are undercutting all of them. I imagine people started asking the other agents, “Are you at 4.5% now? I heard you’re 4.5%” All these realtors had to then explain themselves, “We’re not 4.5%. We’re 6%. That was just a one-time promotion from Paxson or whatever.” How quickly did the other 99 start getting pissed at you or calling you and saying what are you doing?
There was grumbling right away. Frank’s business, the way he generates leads is through advertising and 10, 11 years ago, when I started advertising, I started advertising what I charge. At that time, realtors were not advertising what they charge. You found that out on the appointment. I was in their face. I was on every grocery cart in our suburb here. I was on the back of the phone book. I had television commercials. I was blatant about it, Mr. 4.5%. It wasn’t like I was doing it in a cute, quiet way. The industry outside of Keller Williams turned on me. It’s part of the reason we kid and say that I’m public enemy number one. Inside the 100-agent office, we’d get complaints from the guys outside.
They would get complaints from their clients, “Why don’t you charge what he’s charged? I thought he works there.” I finally pissed off the right person. There was this lady and I used to call her Big Red. She was the head of that Keller Williams office along with two other people. The two other people had gone to bat for me for a long time. I ended up having one of her past clients work with me. I didn’t know that it was her past client and it wasn’t anything illegal. Her past client called me. They were not in a working relationship at the time and she just made it her absolute mission to get me out of the door at Keller Williams.
You make a living on someone’s going to buy 3 to 5 houses in their life and you’re going to get all of them if you do a good job on the first one or a referral. When someone has worked with Big Red for two commissions and the third then goes to someone in her office, it’s sacrosanct. It doesn’t happen unless you piss someone off.
It was a big deal. The client told me some things but she’s not doing anything to lose the business but I will say that I was younger and a different generation.
She wanted a deal. She wanted to save some money.
Big Red started head-hunting because I hadn’t done anything to not deserve to be there but my volume was growing. I told you that I sold 40 houses the year before I switched to what I charge now. This was 4 to 5 years into what I was charging. By that time, I’d sold 370 houses in one year.
What did that do? When you’re selling 40 houses in a year, you’re barely scraping by. With 370 houses, even less per house, you’re making a ton of money.
Forty was six figures but not quite.
What was the average sales pricing?
$175,000 to $200,000.
I’m going to use $185,000 for the numbers. Keep going.
What happened was I grew so quickly in volume and units that things would fall through the cracks. My customer, Ian Matthews or Frank Cava, may call the office and not get a call back right away. Mainly, if Frank Cava, the other real estate broker from the other company, wasn’t getting a call back right away. There was no income in me telling Frank, “What the utilities are for that listing? Figure it out yourself, Frank.” I got a little, not big for my britches but I couldn’t handle while I was working until 11:00 at night to sell those 370 houses.
We’re getting what they paid for knowing you weren’t making as much per house. You didn’t have the time to give them as much love per house.
They weren’t riding in the car with me and we weren’t going out to dinner. At the time, people would ask that. We would say, “If you think that Jeff’s going to be at your Super Bowl party, he’s probably not. If you want a realtor to be your friend, you’ll like Jeff. He’s friendly but he’s not going to be that handholding,” I’ll tell you, that’s against my old business plan. I used to go to four Super Bowl parties at Super Bowl Sunday to go touch hands and be friendly with everybody but the volume and the number of clients got big that I lost that personal touch.
This is where I was starting out with going against the tide. Let me come back to it. You had to change the fabric. There was probably a point in your time where you would have rather gone to the four Super Bowl parties than do 375 deals. Why did that change?
Hats off to Mr. Musgrave. What he said would happen did all the way down to I said, “What are the other realtors going to think?” It was because I was apprehensive. He said, “Are they paying your mortgage?” I thought, “They’re not.” He got me into a position of being uncomfortable and it worked.
What I heard is a necessity, Jeff. When you got to borrow $1,000 from a friend, that’s embarrassing. You got a third kid on the way, you’ve got a wife, a house, a mortgage and you don’t even have money to cover a month’s rent for a tenant. What I heard is you were forced into changing. Joe came along at a time where you were down on yourself and feeling like, “I’m going to let some people down that I care about here. I need to make some big changes because I’m skating along. I’m not growing.”
In order to get from where I was, I had to get uncomfortable. I still don’t love that, Frank. I pride myself. Even at 370 deals, I still know the people. I meet every customer. I don’t always know their kids’ names and things like that but people do come up to me all the time or when I get repeat business, which is another big part of my business.
I think this is important, Jeff. Talk about how sacred that 6% was. I feel like realtors have been holding onto that for decades even though their value goes down less per client with technology. You can go find prices now. You can go get the listings yourself. A lot of places you can get into and see yourself. Their contracts are all boilerplate. It’s cheaper to advertise. The value that a realtor can give versus many years ago is much less but they’re all holding on to making the same percentage. Talk about how sacred that number is in the realtor community. I feel like realtors are scared to death of that compression happening and their livelihoods changing.
Especially the old dart, the suits, the guys that have been doing this for 40 years and are in charge of brokerages. If Ian or Frank make a sale, they get the top portion. People in companies come up to me and say, “Jeffrey, I left a sales meeting at our brokerage where we had all of your marketing material on the table. We had a whole meeting on how our brokerage was going to combat what you were doing?” I would go on appointments and I’ve had sellers that I’ve met with say, “The guy that left here said that you’re a convicted felon,” and it wasn’t remotely true. These guys were so hanging on to what they charged because that was what they were taught and what I was taught too but they would say the nastiest things. They would say that I was going out on my wife, I was getting kicked out of the business, all these horrible things that weren’t true. All because they were angry about what I advertised that I charged.
Joe told you that was going to happen because it happened to Joe. He told you all of that will happen and he told you that you will be hated. People will lie about you. They will make up stories. They will do everything they can.
I was the president of the realtor board when we started doing this. I told Joe, “That may have happened to you Joe but they like me.” The truth was they didn’t. They liked me when I was like them.
They liked you until you were a disruptor. As soon as you became disruptive, they disliked you.
Frank and I did a whole episode on Jeff Bezos from Amazon and a lot of what you did. Bezos was hated by book publishers when he started getting into digital, when he started making everything cheaper because Bezos, like you, focused on what customers wanted. You grew volume because you gave customers what they wanted. A portion of customers said, “We don’t see a ton of value in being friends with our realtor. We just want to save some money, sell our house or help us buy a house.” You said, “I’m going to service you and give you what you want,” but it pissed off everyone else. All these other realtors to me were like all the book publishers that were slandering Amazon because Bezos wanted to give them what they wanted. What happened to Bezos? He got all the volume because he gave customers what they wanted. He wasn’t a pig about what he did.
We always knew that units would take care of themselves.
You started this in 2010, 2011. Was the broader context of the market on your mind? Was it survivability for Jeff?
I was going on appointments and asking to charge 6% and 7% and the people owed as much or more than what the home was worth at those times. If you think Frank will know those years so will Ian in the mortgage business. There was a big need for the customer for that savings. I was saving each family on average $5,500 a house.In some instances, you have to disenfranchise yourself to what other people think you need to do and do what the market says you need to do. Click To Tweet
$175,000 a house, that’s a big deal for those folks.
If I went up to you and I said, “I’ll sell your house in the same amount of time with the same amount of marketing but you get to keep $5,000 of it,” deal. That was a big reason for the volume.
Even just qualifying for the mortgage, Jeff. I haven’t been in that business. We were always fighting to try to scrape together 1% reserves a few months to qualify for a government loan. When you can cut that cost down, that’s the difference between qualifying or not for some people.
How many times does the negotiation between the buyer and the seller come down to $3,000 to $5,000?
It’s a small number but that number makes a big difference. There was a point in my career when I had a conversation with my mom, a school teacher. I had to fire a bunch of people and she asked me if I felt bad. I said, “I do. I feel bad. I feel terrible.” I was like, “I’ve come to the realization that if I don’t do it, I will be the one being fired.” A friend of mine uses this quote all the time. It’s like, “Self-preservation is undefeated.” Even though your main driver is likeability, being friendly and doing things with people, there’s that uncomfortable point in time. It’s like when you’re changing the gear on a bike. There’s that crunch. That crunch was going from 6% to 4.5%.
Once you got there, got comfortable and got into the new gear, you settled into, “I’m getting deals. I’m providing value. I’m allowing people to do things they couldn’t have done before. I’m preserving myself and my family.” I ran the numbers. On 74 in volume charging 3%, your cut’s $222,000 before marketing and before anything. On $185,000 on 375 deals, that’s roughly $70 million in volume, ten times the volume. At 1.5%, you’re making over $1,000,000. That’s before marketing everything like that but those are the things that you start to look at. You’re like, “That’s a big deal.” I think what’s missed is their service there. You did this at a point in time where $5,000 really mattered.
The difference there is being liked, swimming in the same lane like everyone else, barely scraping by and being in trouble if another recession hits or making five times the revenue and not being liked in some circles. Truthfully, those aren’t people you were inviting to your Super Bowl parties. Your friends are coaches of Little League football. They do other things. Your friends are not realtors.
I think it’s a distinguishable pointing and that we should talk about for a second. I had an interview with someone who’s in traditional real estate. We have a good reputation but we do non-traditional real estate. We do things that other people don’t do. Our services are often for people who can’t afford to sell their house retail. They won’t even go to Jeff because it’s falling apart or something like that. We service a different part of the market. Police will treat them like human beings. We’re still friendly. We’re still good to them. If we sign a contract, we do what we say we’re going to do and we provide value.
What I think has to happen in some instances is you have to disenfranchise yourself to what other people think you need to do and need to do what the market says you need to do. I think what’s a repetitive theme in this show is that you didn’t go the traditional route in elementary school through high school. You didn’t go the traditional route in college. You didn’t go the traditional route this way. That’s the theme but the theme was always, “I want to be likable. I want to do things for others,” and you are. There are some people who are pissed but you can’t please everybody. You get to that point in your life.
I’m a little more comfortable with that now, Frank. When did I realize that? I was like, “Maybe just now.”
Talk about the top dog realtor. You snatch up one of her customers and all hell breaks loose. At this point, how long had you been Mr. 4.5%? In his ads, he started calling himself “Mr. 45%.” It’s amazing. You could not have been more brazen and in your face about it. It was like when Hulk Hogan turned over to NWO when he fell in love with the black beard. Hulk Hogan leaned into being the heel. You leaned in to be in the enemy immediately. Mr. 4.5%, it’s not just touching your toe in the water. How long were you Mr. 4.5% before Keller Williams said, “You got to get the hell out of here.”
Two years I’d been under their regime as Mr. 4.5%.
Talk about how it all blew up or how you got kicked out.
Stuff would fall off the plate. I sent an ad out. I sent it to a whole neighborhood but it didn’t say, “If your home is being advertised by another broker, this is not intended as a solicitation.”
I’m a realtor so this makes sense to have a second here. This is sacred. In the real world, you must disclose this and if there’s ever another realtor involved, like on all my advertisements, we put, “This is not a solicitation for your business if you’re represented by a realtor.” It’s almost a perjury charge if you’re an attorney. You cannot do this.
All my ads after said that but they got a complaint that they could get me into a grievance.
You were sloppy. It just got missed.
Off it went and the protocols realtors were supposed to call, see if we can settle the dispute on our own but that was probably a realtor that didn’t get called back right away either. I ended up in the grievance committee down at the Board of Realtors.
They were looking for an excuse and you were somehow sloppy. You gave it to them. Unlike in the fraternity house, you didn’t know someone who was the grievance chairman.
The grievance committee down at the Board of Realtors was also ready to try Mr. 4.5%. I got a $500 fine but more than that, that was the cultivation but Keller Williams was just like, “We’ve hit an impasse here.” I was bringing them main income but not compared to the headache they were facing, which was the calls from the agents in the office. Calls from outside agents to them saying like, “We can’t compete.” What was cute was they ushered me out, I want to say, on May 9th of ‘14. They asked me to move that week. I had 70 listings and 40 pending transactions. It was the busiest month of the year. I had started a company that week. Otherwise, I probably wouldn’t have left. I would have been content and chugging along at Keller Williams.
Did Joe predict this was going to happen with Keller? Did he say at some point they will kick you out and you’ll have to do this on your own? You thought you could smooth talk that you disagreed with him?
He did. Joe didn’t want to go to Keller Williams in the first place.
You want to do this, start immediately with your own LLC, your own team, get rid of Keller. Why didn’t you listen to that at the beginning and say, “I’m going to do this. I’m all in from the beginning.” It was a safety net.
It was fun working at a big office like that. We would have pitch-ins and all that stuff. That was important to me.
I want to go into this, Ian, real quick. Hopefully, no one from the legal department of Keller Williams read this. I got kicked out of Keller Williams too. They did the same thing to me that they did to you. Keller Williams is a fun place. It’s the right place for a lot of people but for people that live on the fringe, as you and I, it’s the wrong place.
Which is funny, Frank. Gary Keller, the head, is on the fringe.
He promotes it but he’s the guy who owns it. He gets to do it where other people don’t. One of the things that I think is critical is this. Did you lose anything tangible besides time and just heartache? Were you able to make that shift when you had to do it?
The biggest thing was I bought 100 new signs that said Keller Williams on it.
You are fairly fortunate there were probably some soft costs we’re not factoring in.
If we’re granted access here, Keller Williams did call my current listings. They own the listings as the broker. Some of them stayed there, which they honored the percentage I was charging. I lost some income on the switch. The following year is when I went to the 375 houses.
He’s booted out of an office. He’s having the biggest month of his entire life. He has one week to start a company. You would have never done this. This is not your forte, the administrative side of starting a business. You have to form an LLC. You probably had to get an attorney. You had to get your own bank. Who’s helping you do all this? I’m trying to picture you doing this. Having worked on deals with you, Frank and I are well aware of your administrative skills. How did you pull all this off in a week?
Get a bank account. I had a cordless phone. We were about a 3 or 4-man office. We didn’t have an office. I went out. One day, I went down, set up an LLC and my membership with the Board of Realtors. We’d rented a house that was on the main thoroughfare and put a decent-sized sign up that said what we charge but then it was 3 to 4 weeks to get a phone system in. We were walking around the rooms with a cordless phone like, “Hold on, Mr. Matthews. Jeff Paxson Real Estate. This is Jeff. How can I help you? You’ve got a call for Frank. One moment, please. Mr. Matthews, can I give you a callback? I sure will. Thanks.” I’d click over and I’d say, “Sally, it’s Frank Cava on the phone. I’m expecting a call back from Mr. Matthews.” We would walk it around a house phone. We didn’t have a phone. We had a crate set up in the living room. It was crazy how it started but I wouldn’t have been able to do it if I ever was like, “In one year, we’re going to move.” I would never have moved.Self-preservation is undefeated. Click To Tweet
The only way that can work for Jeff was you were kicked out and you had no choice.
You asked me to go to dinner in Chicago and you asked me two months ahead of time. I would have probably said, “I don’t know. I’m probably busy that weekend,” but you asked me the day before and I met you guys in Chicago. That’s a little bit of how I run. I’m not a planner.
The goal here is for everyone not to live with their hair on fire even though it does motivate most of us. What I was driving out with the Keller Williams thing is this. It was the wrong fit for me from a jump. It was the wrong fit for you when you made that change. I’m probably a little bit more proactive than you and I still had to get booted before I left. What I’ve started to learn about with myself and when I’ve gotten truth in what I do business-wise because you get ahead of that stuff. At the brokerage where I work now, 2 or 3 times a year I get in trouble. He’s got my back. If he ever needs anything from me, he knows I do it. Sometimes you settle for the wrong relationships. It’s easy but if you’re going to live on the fringe, the thing you must have is support. Also, you’re already on the fringe. It’s not like you’d be on the fringe and you have no support. You got to have that back office.
Jeff was undercutting realtors. Frank got kicked out because he was eating everyone’s lunch in the refrigerator at Keller.
The guys that support me honestly are you two. You guys have been great for my career, my business and a great sounding board for me. Joe Musgrave without a doubt would take a bullet. He allows me to still be the guy. I’m always at work like, “It’s fine by me but let’s do what Joe says.”
Jeff, tell me about Big Red. You leave, she still hates you. She’s still lingering and still trying to slander you at every chance. Talk about how that progressed once you had the Jeff Paxson team on your own?
I still had friends at Keller Williams. I hadn’t put up anything on the Keller Williams building when I charged but when we got our own building and I’ve shown it to Ian, “Jeff Paxson Real Estate,” across the top. “Sell your home for 4.5%.” It’s near the busiest McDonald’s drive-through in the city. It’s seen at all hours of the day. It lights up at night. Reportedly, people went back to the Keller Williams sales meeting and said, “Did you see the sign he put up?” I had a little bit of an advocate there. It wasn’t Big Red but I had a little bit of an advocate there on the ownership panel. She said, “What did you think he was going to do? We had him a little bit corralled here.”
There were people within Keller, Frank, that were saying, “The devil we know that we control is better than if we make an enemy. He’s going to go out.” Jeff put his sign pretty much right by Keller Williams’ building. Big Red had to drive by the office, this huge picture of Paxson, Mr. 4.5%, the big smile on his face. He did not pull up but the location for sure.
It’s been a multimillion-dollar sign. I’ve been thrilled about it.
You’re the number one realtor from 2014 to 2018. That’s an awesome run. You go from dropping out of college not knowing what you’re going to do after. We’re all getting jobs, making great money, you’re working at a restaurant too. You’re number one for 5, 6 years, working your ass off, closing 350 to 400 homes a year. Why weren’t you number one in 2019 or ’20?
On my side of town, my sale price is not as high as the North Side. I’m consistently top 3 or 5. I still am going to brag and I’ve been the number one realtor in my hometown and my home county for the last few years but it’s hard to compete with the sale prices of the North Side. I was not a very good dad during those years. My kids were getting older and I started reprioritizing. Most of my schedule is real estate but then beginning at 4:30, 5:30 my son’s got a track meet then baseball practice and my daughter’s got cheerleading practice. I’ve been focused on being a way better dad and that’s worked great too.
Being number one is great but it comes with a price. Ninety percent of the text messages I get from Jeff are pictures and videos of his kids playing baseball and football. He’s sitting there in the front row at cheerleading competitions, which I would never picture Jeff doing many years ago but he’s there. He’s cheering and he’s excited. I love that because we talk about balance all the time, what it’s all worth. There’s a price to pay.
I’ve got two short stories that I think relate to the show and I’d love to tell them if I could. The first one was I became a manager of a real estate office years ago. I called my friend, Ian, as they just put me in charge. I’m in charge of about twenty real estate agents. What do I do? Ian had read the Jack Welch book of how to be a CEO in 100 days and he said, “Go in.” He doesn’t quote the book, Frank. He tells me like it’s his idea. He says, “Paxson, go in tomorrow and fire the bottom 10%.” I think there were eighteen people in the office and I thought, “How am I going to fire 1.8 people?” I started with one. “Young man, get in here.” He’d had a killer year right before and then in the last 1.5 years had been lousy. His priorities were different.
This took you one year to do this, for the record, from the time we had our initial discussions.
I think you got me all psyched up and I’m ready to fire this guy just like my manager expert told me to do. I brought him in, sat him down and I fired him. We had a conversation for about 45 minutes to an hour. I stood up, shook his hand, had him leave the office. It was around lunchtime. He goes out to his car. He starts driving away and he calls back. He says, “Jeff, it’s so and so. Am I fired?” I was like, “No, were you not listening? If you don’t get in here tomorrow with a new spirit and attitude, that’s what could happen. You are not fired. I don’t know how you even got that out of that conversation. I’ll see you tomorrow.” That was when I knew I needed the Let Me Speak To A Manager show years ago.
The other one is my old networking. I was a young kid realtor. My friend Ian had just got married to his beautiful wife, Jenny, and we had the rehearsal dinner in Chicago the night before the wedding. I was so thrilled that I had business cards. I’ve got to see all my friends from college and I got business cards and I would hand them to anybody.
I’m handed out business cards, “Mr. Cecillo, how are you doing? Jeff Paxson. I’m a realtor. I have not a house.” “Mr. Mathews, Mrs. Mathews, I’m Jeff Pax. If you ever need real estate here in Bargersville, Indiana, I am your guy.” I’m handing out all over, homeless people up and down the streets of Chicago. What a powerful weapon to hand out a picture of myself with my phone number on it to girls. It was my glamour shot picture too, on top of like, “This is what I could look like.”
I handed it out to this girl. I started getting phone calls for 3 or 4 days from this girl. I thought, “Take a hint. Stop calling me.” I press ignore but we had our moment. She calls on a Tuesday in the middle of our sales meeting. I’m the young kid at this very small office and Deidre, the secretary, comes in. She says, “Jeff, there’s a call from Susie. She says it’s important. I’ll send her to the phone.” I’m thinking, “She called my office line.”
This is a random girl that Pax had met in a bar the night of my wedding.
I said, “Hello.” She says, “Jeff, it’s Susie. I’m sorry. I’ve been trying to get ahold of you. My sister and my brother-in-law are trying to buy a house right there in Indianapolis. Would you be interested in helping them?” I’m like, “Yes. How’s it going? I’m so glad you called. My cell phone must not be working. Thank you.” That wasn’t my first sale. It was my second, Frank. That was my way from Chicago to Ian’s rehearsals dinner to Indianapolis. Always take every phone call. That’s another Let Me Speak To A Manager lesson. Never hesitate to work that leads to the finish. I don’t know if this accomplished what you wanted but I had an absolute blast. I cannot wait to rub it in Nichol’s face that I made it on here.
I think you did a fine job.
I did have my godfather gear here. Here’s the public enemy magazine that they put out here. Public enemy number one. If we were doing The Godfather episode, I was all dressed for it there. It’s been something I’ve had to embrace but I could not have done it without you guys always coaching me and pulling me along. I appreciate all your help. I do love your show. I kid about it but I want you to know that I do read it. Hopefully, you press like and subscribe.
One thing knowing about you, you will go back to this episode at least twenty times. You do like to read about you more than anyone I’ve ever met in my life.
I love you guys. I’m proud of you. Tell your family as I said hi.
We appreciate you, Paxson. Great job. We’re proud of you.
Good job. It was great to see you.
About Jeff Paxson
Jeff Paxson is widely recognized as the Broker and team leader of the Top Real Estate Teams in Indiana and the entire Midwest, specializing in the entire Metro-Indianapolis area and beyond. With the invaluable help of his business partner, office managers, the experienced Brokers of the office, referrals from past clients, friends, and family and a state-of-the-art marketing plan – Jeff and the team have reached real estate summits that have not been commonly known in the area. Since Jeff became a Realtor in 2001, the company business plan has been simple and strategic – placing clients’ real estate needs and clients’ finances as the company’s best interest.
Away from work, Jeff’s passions include spending time with Colleen – traveling if their schedules’ allow. His children – Terryn, Trew, and Lauryn – also keep him entertained and active, and Jeff is devoted to his community and the Jeff Paxson Team charity – Jackets for Joey – as well as St. Jude’s Children’s Research, The Ronald McDonald House and Wounded Warrior Project.