Nick Bailey: 5 lessons for leaders of public real estate companies
Bailey, the former CEO of RE/MAX, discussed the keys to success when leading a business that is accountable to both customers and shareholders.
Key points:
- One of the unique challenges for publicly traded real estate companies, said Bailey, is operating within an industry that is notoriously hard to forecast.
- He also noted that because the industry and market moves slowly, executives need to be focused on the long game.
- Companies that become bogged down with bureaucracy risk losing sight of what matters most: customers. “The paycheck comes from the customer,” Bailey said.
Predicting the performance of residential real estate companies can be tricky for Wall Street analysts, said longtime industry leader Nick Bailey, because ultimately "this industry is hard to forecast."
While an agent's success or failure comes down to relationships and experience, he explained, success for public real estate companies means keeping customers top priority and keeping internal bureaucracy in check — even in the face of external market forces.
Bailey most recently served as president and CEO of RE/MAX, a position that earned him the No. 10 spot on the 2024 Swanepoel Power 200 list of the most powerful people in residential real estate. Previously, Bailey was the president and CEO of Century 21 and held executive leadership roles at Market Leader and Zillow.
Reflecting on his experience, Bailey told Real Estate News that for a public company to succeed in residential real estate, its leaders should observe these five guiding principles.
The business of real estate moves slowly
"The run up to a good market or great market takes a year, and the downturn of a slowing market takes a year," Bailey said. "The reality is our business moves very slow."
However, coming to terms with this reality is not a pass to "kick your feet up, put your hands behind your head, and sit back and relax," Bailey said. Rather, it's important to understand that the impact of changing market conditions can lag.
"The market controls how many agents are in this business," he explained. "But I think if you realize that the business does move slowly, you can take advantage of it and make decisions to help the market react fast."
You need to play the long game
Because the industry moves slowly and is difficult to accurately forecast, leaders who are focused on longer-term gains versus short-term wins are the ones who will survive, Bailey said.
"There are so many different companies that can juice what they're doing to radically change something in a 90-day period of time, but if you're only focused on quarterly results, your business will go nowhere in this industry," he explained.
"The companies in the public environment that I've seen be successful really look at the long game and make the right investments."
Numbers matter
The idea that revenue, traffic, agent count and other metrics matter "sounds wildly obvious," Bailey conceded, but it's not always that straightforward. For instance, there has been a high-profile dispute among portal leaders about which home search site is in second place after Zillow. For a publicly traded company under intense scrutiny from investors, where you rank relative to competitors can matter greatly.
Additionally, it's crucial to be consistent in reporting during a downturn, Bailey said. "Numbers matter, and they matter more when you see contraction in a market versus expansion, because people start paying attention more," he explained — a theme that Redfin CEO Glenn Kelman has also previously highlighted.
You can't 'cut your way to greatness'
Ultimately, publicly traded companies are beholden to many masters, and making short-term cuts to bolster numbers can backfire.
"Make the right investments for the long term in this business," Bailey said. "Because if you're focusing in a public environment on cutting your way to greatness, quarter by quarter, Wall Street will sniff it out and not reward you."
Know your customer
Once a company goes public, Bailey said, it's not uncommon for the legal or finance divisions to slowly start taking control of the business. But losing sight of the scope and mission of the business — and who that company is meant to serve — can spell disaster for large companies.
"You can't have shareholders and you can't have employees if you don't have a customer," Bailey explained. "The minute that you no longer place the customer as your first priority, I believe that your growth is impacted, and you stop growing because you stop taking care of the most important thing that pays the bills: the customer."
And the importance of the customer should be understood at all levels: "You should train your employees that the paycheck doesn't come from the CEO and it doesn't come from the board. The paycheck comes from the customer."