Looking up Side’s take on Bay Area residential market

Side’s pitch to high-volume residential agents is simple: Your name is what’s important, not your agency’s. The San Francisco-based company helps agents run their own boutique business supported by Side’s technological backend.

In the last year, the white label brokerage with a $2.5 billion valuation grew rapidly, before shrinking by 10 percent in June, with CEO Guy Gal citing market volatility and overexpansion as reasons for the layoffs.

TRD spoke with Side’s California Managing Agent Casey McLoed at the end of September at the company’s Market Masters event in Napa, a few weeks before Side confirmed a new round of layoffs in mid-October, which it said in a statement would not focus on its product, engineering or agent growth teams.

What do you say about the assessment of Redfin’s chief economist that the Bay Area market will be “irrevocably changed” by remote work?

Nothing will ever be permanently remote. Yes, you’re going to have some downsizing of how often you need to come in, but decision-makers aren’t going to be staying at home forever. I have already had several Bay Area clients who needed to relocate because they’re doing that super commute from Sacramento and it’s not fun.

I live in the Sacramento foothills and I come into Side’s San Francisco office — and this seems to be the case of everyone who I know who is a super commuter — the traffic is getting worse and worse every time. The first time I went about six months into the pandemic it was like a ghost town. It was eerie. But every time since there’s more traffic and more people.

What challenges do you see for the industry as the market slows?

Really it’s just a market correction. Interest rates were held low way too long, COVID had a lot to do with not keeping rates on track. Yes, it’s going to slow down a little bit. In the Bay Area, especially in San Francisco, it’s not going to last long. If you look at the last recession, San Francisco hit a speedbump, they didn’t have a recession. It’s always going to be sought after and values are always going to be up, more so than it will be in other parts of the state and in other states where we will see more of a slowdown. All the economic indicators don’t show a bubble; it’s declining slightly but it’s not going to burst. It’s a stabilization.

How will it affect agents?

When markets do slow down, that’s when people who got into the business because they thought it was so easy get out. And that’s when good agents become great agents.

Side’s business model is to bring in agents who are already established. Is there a volume threshold?

It varies by market. In markets such as San Francisco, which is where we started, it’s going to take somebody that already has quite a bit of production because we do have so many partners in the area already. They also have to be a fit within our community. So many brokerages will hire anyone who can fog a mirror, and we’re not that brokerage.

Is there a dollar threshold?

In Sacramento, where I’m based, it’s probably about $20 million and for most markets that’s the case. In bigger markets like San Francisco, it’s more.

Where are most of your Bay Area agents located?

We have about 75 partners in the Bay Area, with the bulk outside of San Francisco.

Do agents need to be extra entrepreneurial to be a good fit for Side?

Every agent is an entrepreneur, but I think those that have a really strong entrepreneurial spirit are the ones who tend to reach out and have interest in us. It’s bringing their brand and their business, not creating Side’s brand. Most people have never heard of us. That’s by design because it’s not about us. It’s about these boutique brands.

Why is creating a boutique brand appealing to agents?

It doesn’t exist anywhere else in the marketplace. If you go to any of these franchise brokerages, it’s about their brand and their brand awareness. Their value proposition is “You have our brand.” For agents, it’s about building their business. And where does their business come from? It comes from their activities and their involvement in the community. Let them be the focal point. We’re just in the back office side of it making sure everything works smoothly.

With the return to offices, is Sacramento still bringing in Bay Area buyers like it has in the past?

We’re still having a lot of referrals from our partners in the Bay Area to our partners in Sacramento. But even outside of our referral network, so many buyers are coming from the Bay Area because that commute from Sacramento to San Francisco is really not that bad if you don’t have to do it every day.

The earlier you leave the better. I usually commute at 3:30 in the morning. Most people aren’t that crazy, but I like to make that drive in an hour and a half, not three hours. I’m a big believer in getting up early, focusing on the things that make you money and make you successful, and then you can spend the rest of the day dealing with issues. But don’t get trapped in those at the onset.

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