Tell us about John L. Scott.
John L. Scott is a third-generation real estate company founded in 1931. We service Washington, Oregon, and Idaho. There are over 2,700 brokers in 110 offices—mostly franchises, but 35 are owned by J. Lennox Scott, grandson of the company founder. We handle residential real estate, including new construction, luxury homes, and relocation services.
How did you end up at the company?
I started out doing commercial real estate. I initially worked at Morrison & Foerster’s Tokyo and Palo Alto offices. Then I moved to Seattle and joined the Foster Pepper law firm. At heart, I like the big-picture role that legal plays in a business—namely, the operational and strategic sides. This position at John L. Scott was a natural fit.
How would you describe your role as general counsel?
My responsibilities fall into two buckets: corporate and risk management. Corporate involves operations and strategy—things like our office leases, HR, and franchise issues. I work with the COO and VPs. Risk management involves professional liability insurance and, most importantly, training. I work with the office leaders and brokers on transactional legal questions.
Tell us more about the training.
A priority of the company is what we call “transactional excellence.” We provide support and training directly to our brokers. We have a mentor program and a VP of professional development who trains new brokers and brokers specializing in areas such as new construction and relocation.
In addition, in Washington and Oregon, each month, I do a webinar called Legal Lunch. I talk about legal issues and trends. For the program in Oregon, I pair up with Oregon-licensed attorneys. New legal issues—regulatory and transactional—are always coming up. The Legal Lunches are a good way to keep everyone current, even the experienced brokers.
Are the challenges of residential and commercial real estate different?
Commercial clients clearly understand the role of the broker. In residential, clients often rely heavily on their brokers. Residential clients don’t usually know an inspector, title officer, or lender, so they look to the broker for referrals.
As a risk manager, I have to make sure our brokers comply with licensing and agency law but also with RESPA [the Real Estate Settlement Procedures Act], which says brokers can make a referral but can’t get anything of value in return. We train our brokers to respond to client referral requests by giving three options that are licensed and in good standing so [that] the client can make an informed choice.
How did the economic downturn affect your company?
I joined John L. Scott in 2012, so I wasn’t here for the worst of it. Sales were down, and short sales and foreclosures complicated transactions. But, we’ve come through it a stronger company. The last two years were robust, and we expect 2015 to be a great year.
What are your favorite—and the most challenging—parts of your job?
What I like best about this job—and what is also the most challenging—is that it is not just real estate. Everything impacts real estate. You have to know so much more than just real estate.
For example, changes in marijuana laws in Washington and Oregon have raised disclosure and other issues. And now drones are a huge issue. The FAA says you don’t need a license for hobby use of a drone. But taking aerial photos for real estate listings is considered a commercial use. The FAA isn’t issuing any licenses for real estate use yet. We expect final rules in the fall of 2015.
Another example is the Dodd-Frank Act, which, among other things, put very tight regulations on seller financing. And then there’s the Biggert-Waters Act, which initially caused flood-zone insurance rates to go way up. Every time you turn the news on, there’s something that impacts residential real estate.