Anne Hartnett
Hi, welcome to Seattle Agent Magazine’s Brokerage Culture feature, where we do a deep dive and talk about the qualities and characteristics that distinguish different brokerages and what sets them apart from their peers. I’m Anne Hartnett with Seattle Agent magazine, and we’re here today with Dean Jones, CEO of Realogics Sotheby’s International Realty, and Tadashi Shiga, co-founder of Realtie and executive director of the land division for Realogic Sotheby’s International Realty.

Tadashi, what is House Bill 1110 and why do brokers need to understand this legislation?

Tadashi Shiga
I’m so glad you asked this question, and I hope all you brokers out there are listening carefully because House Bill 1110, it’s the largest opportunity that we have in our lifetime. It’s the biggest upzone, and not only in Washington state history, but in U.S. history across the whole United States, and literally it’s happening right now, right here in our backyard. And what this means is this: It was a bipartisan bill that was signed by Governor Inslee in May of 2023. Bipartisan. You know why it was something that we can all agree upon is because of this — we all agree that we need more affordable housing and options for housing.

So this bill is one of the amazing things that going to help solve this. This is how — they’re getting rid of the traditional single-family zoning, and what’s taking its place is up to four to six units in cities that are 75,000-population or more. That means like your Seattle, your Tacoma, your Bellevue, your Kirkland, your Federal Way, your Renton. All these cities are going to have many opportunities that all you brokers out there can help your buyers and your sellers understand what they can actually unlock in their backyards.

Hartnett
Well, Tadashi, how does the Realtie platform work and how are you training brokers to work with the opportunity?

Shiga
We’ve been working on the Realtie technology, and also our network, for about eight years, and we were waiting for all the stars to align for this moment, which is House Bill 1110. Also, the brokerages and the technology to catch up to our vision.

What this allows us to do is this: Let’s take an example — you broker out there, you’re going to — in July, when all the municipalities have to comply to House Bill 1110, they’re going to release their specifications, their requirements, and then your buyers, if you’re representing a buyer, and let’s say they said this to you. We would like to purchase a home, but we also would like to figure out if we can put a DADU in the backyard, or a duplex in the backyard. What are you going to be able to say to them? Well, you have the answers, because normally you would have to try to find an architect to do the feasibility and if that architect is busy, you may have to wait a while and then they’re going to charge you a couple thousand dollars and to figure this out. On the flip side, also for the seller, if you are representing a seller who has a piece of property and it’s in the upzone, what answers are you going to be able to guide them through the whole process?

We knew that this was going to be a big challenge for everybody because it’s state-wide. So that means each different municipality, all the city’s regulations are going to be completely different. So that’s the opportunity our technology at Realtie where you’ll be able to type in the address, it will tell you exactly the ability of that piece of property. Could you DADU? Can you do a duplex? Maybe it’s better to save the house and build something in back. But it’ll give you an idea of what is possible, but also will give you the idea of, “It’s just not the right fit.”

Hartnett
Dean, how is Realogics Sotheby’s International Realty uniquely positioned to serve this need in the industry, and what are your plans to scale into the future?

Dean Jones
First of all, I’ve been waiting what feels like a lifetime for this kind of legislation. I came from Vancouver, B.C., 30 years ago where we have had very progressive upzoning of most of the arterials. So I believe history is going to repeat itself. As a former developer, I understand the whole journey from dirt until done, from initial concept to final closing. So it’s familiar to me, and we are vertically integrated with a new developments division, a land division, and with our Clay agency, to allow for micro-branding and brilliant marketing execution on the retail side of all these developments. So, I would much sooner be part of 250 $1 million investments in the municipalities that we work in, instead of one $250 million tower like we have in the past. This is the right legislation with the right team at the right time. And I just feel like a kid in the condo store.

Hartnett
So, Dean, tell me, what has compelled you to start this new division at Realogics Sotheby’s International Realty?

Jones
Well, it’s an incredible market opportunity to go to where the market’s going next, and get there first. We are curating a certification program for our brokers that may not have had any experience in land transactions, in underwriting developments, and the unique talent of being able to interpret the data off the Realtie platform is exclusive to our company and does require some training and certification.

But effectively, through a number of weeks, these new brokers are going to be deployed to the market, as the municipalities have announced their bylaws, and they will be uniquely qualified, in the living rooms of their future home sellers, to present the opportunity that might be available to them at that time. They will also have access to an incredible think tank of builders. We have their pro formas, we have their test fit designs, we understand how to play with the “Tetris” units, if you will, and how they might manifest in these municipalities. And it’s only through the Realtie program that we’re able to articulate the future potential of the land development. And then, of course, the training that was required to allow our resale agents to get into this business. I could see many of them developing teams themselves and preferring to go down this line of the opportunity in the future versus the resale opportunities that might have been their past.

Hartnett
Well, Dean, given that municipal governments are distinct entities and their policies may differ, what sort of pressures might we see as brokers and developers compare and contrast zoning bylaws?

Jones
Well, let’s be honest, these municipalities are in competition with one another, and the competitive nature of our municipalities are really predicted by how many developers are going to invest in those cities. And will the consumers follow in the brokerage community as well? So knowing that we’re in this modern-day space race where municipalities want to see their development, those permit fees, increase population, to help fill the schools, to support the local businesses. I mean, this is policy that is going to be competitive. And it could also change. You know, so far, only Redmond has complied. There’s been some criticisms of some of the taxation that they are attaching to, the legislation. It’ll remain to be seen whether that stays the same all year or gets pivoted at some point after other municipalities are sharing their bylaws and guidelines.

But at the end of the day, just like consumers have the choice of where they invest and where they want to live, municipalities, these governments, have now the mandate to reprogram what single-family zoning looks like in their jurisdiction. And of course, that could be different from Mercer Island, to Bellevue, to Kirkland, to Woodinville, and so on and so forth. So it’s going to be extremely interesting to monitor the situation over the coming months as we get to that July 1 conformance date. And I do think this space race is going to play out with some competitive mindsets, from the governing, leaders of these municipalities.

Hartnett
Tadashi, what kind of sales volumes do you see in the potential development pipeline?

Shiga
Specifically for Washington state in general? Huge, huge amounts. For Realogics Sotheby’s International Realty, we did about $2.1 billion of real estate last year. And if we took the same amount and say that we’re going to apply that to this year, we feel that there is going to be about 10% of those deals are going to be great for new development. So that’s going to be about $200 million in land acquisitions, but that which will turn into about $1 billion in sales within about two years. So that’s an amazing amount of opportunities that are right here for us to unleash.

Hartnett
And how can agents best position themselves for this gold rush of development?

Shiga
Please listen, all you brokers out there. It’s so important that you get educated on what is happening right now. Is your brokerage talking to you about this? Are the people that you’re associating with? Do they know what is coming? Because if they’re not talking about this, you’re at the wrong brokerage. You need to figure out what this opportunity means for you. Because let me tell you, every single one of your buyers, every single one of your sellers, are going to be asking you this question.

So go out there, get educated, start trying to figure out building up your team on whose architects who are going to do your feasibilities. Who’s going to be able to guide you through this whole process? Title and escrow will also then be key, because there’s going to be a lot of title issues on the Covenants, Codes and Restrictions on each one of these projects, if they will allow or not. This is a lot to take in, of course, but this is the opportunity to be able to actually separate yourself from all the rest is by getting all this knowledge that you can help your clients help you stand out.

Hartnett
So what sort of commission income might be available to a broker that joins your collective and works through the certification process?

Shiga
We feel like you will at least add one or two more deals for our brokers a year. If they normally do about ten deals a year or 20 deals year, they’ll add between one or two more deals of that, which is very nice. But if they actively go out there and use our system and find opportunities — which they’re going to be plenty out there — we feel you can double, triple the amount of money that you’ll be making in two to three years.

Jones
And I would submit to you, Anne, they should have called it House Bill 1099, because 1110 is that important to the bottom line. This is the trend line that is going to lead to new headlines. And, you know, we’ve all experienced peak to trough corrections of around 35% or 40%. You know, the average agent is seeing a third less production because the volume of agents competing over a dwindling amount of transactions means more competition.

But this is where the industry is going next. This is the need to serve the missing middle. Developers, at your ready. They are playing out the policy of the government that Washington state has mandated on these cities, and they are going to be doing great public service by delivering hundreds of micro housing projects in neighborhoods that, you know and love. It’s changing the landscape, and it’s going to be our job to take those that might be NIMBYs into YIMBYs — Yes In My Back Yard.

Hartnett
So, Dean, I have to ask you, you’ve suggested that you are “bringing the band back together” after several market cycles. What do you mean by that?

Jones
Well, it’s fascinating to work with some developers, from decades ago. And as Tadashi knows, we’ve been courting this program for six years together. Certainly the AI experts that are behind the scenes have got decades of experience. We’re working with Matthew Gardner, leading economist for our region. He goes, you know, 25 years past, in my experience with him, and it’s fun to be collaborating. He was actually on Governor Jay Inslee’s rolodex for curating House Bill 1110. So I think it’s fascinating to see all these minds coming together. Today we just had a meeting with a major Chamber of Commerce that’s actually inquiring with us and our experience to model different scenarios that could impact policy for House Bill 1110. So, it’s fun for me because, you know, I get to play developer a little bit like I did in my beginning of my career.

Now I’m focused on developing where this industry is heading next and, making sure that we’re resourcing our brokers. So that they can be on the ready as part of the certification program through Tadashi’s company, Realtie. And that’s exclusive to Realogics Sotheby’s International Realty.

And I’m just having fun again, you know? Real estate is becoming creative. These are progressive policies, and it feels, for me, almost like a slice of my hometown of Vancouver, B.C., because I watched all this play out over 30 years, and we can finally see the future of the missing middle for our region.

Hartnett
Tadashi, what are your unique real estate experiences that have prepared you for Realtie and House Bill 1110?

Shiga
Anne, I’m celebrating my 36th year in real estate. Unbelievable. And first of all, I love real estate. I love Seattle, and this is what I wake up every single morning to do. Twenty years ago I’ve been helping builders find opportunities, and then in 2008, I had to reinvent myself, which is I started a company called Evergreen Certified. I had this little dream out of this broker in Seattle of trying to make the most sustainable homes in the world, right here in Seattle. Everybody thought I was just crazy, but I really thought it would be possible. And if I could help builders do that, that would be very meaningful for me. That became my journey and my mission. And since that time, Evergreen Certified, we became the largest third-party verification company for build-green sustainability in the Northwest. We worked with over 300 builders, and we had thousands and thousands of units that we walked the site, verified, got to understand that builders, got to understand all the different municipalities and jurisdictions, and the city leaders, and helping them make Seattle better, the Northwest better, one house at a time.

From concept to closing, I feel like I have a very unique perspective on the marketplace, from land acquisitions to helping the builders build a better home — a more sustainable home, more attainable and affordable home, then marketing, branding and sellout. I was fortunate to have an amazing team that I lead and have this perspective that will help all my builders for this next chapter. Because it’s important to identify all the challenges that the builders have to go through, and also the brokers and the sellers. We’re taking all this knowledge, and the team, and the network, and being able to take advantage of this incredible opportunity, to bring different housing options to the northwest, to help brokers out there understand it so that they can best serve their clients. And this can only be done under the umbrella of the combination of Realtie and Realogics Sotheby’s International Realty.

Hartnett
Thank you so much, Dean and Tadashi. This is a great reminder that when the climate changes and policies pivot, brokerages and brokers need to innovate, and I’m excited to see where Realtie and House Bill 1110 takes Realogics Sotheby’s International Realty.