J. Lennox Scott is ready to grow: 'This is the start of the next 10-year cycle'
Scott, chairman and CEO of John L. Scott Real Estate in the Pacific Northwest, said the market is poised to enter a new period of growth.
- Lennox Scott is the third generation of leaders at the brokerage founded by his grandfather in 1931.
- More than 30 years ago, the company decided to remain a regional, family-owned brokerage to "control our destiny."
- The company continues to add agents and pursue acquisitions in anticipation of growth in the next real estate cycle.
Editor's note: Each year, the Swanepoel Power 200 recognizes the most powerful and influential leaders in residential real estate. In this series of SP 200 Inside Look interviews, we're diving deeper and learning about these top leaders' aspirations and accomplishments, and the opportunities they see in the year ahead.
J. Lennox Scott isn't phased by the current slowdown in the market. Having seen similar cycles in real estate over the past several decades, he is optimistic about where things are going next.
Scott is chairman and CEO of John L. Scott Real Estate, the Seattle-based brokerage founded more than 90 years ago by his grandfather. Scott is the third-generation leader of the brokerage, overseeing more than 3,000 agents and more than 110 franchised and company-owned offices in Washington, Oregon, Idaho and northern California.
Scott was recognized as one of the 200 most powerful leaders in real estate in 2023, ranking 26th in the Swanepoel Power 200.
Although the company saw fewer sales in 2022, John L. Scott continues to add teams and agents. And after landing several acquisitions last summer and fall, Scott anticipates more in the year ahead.
It's all in preparation for what's next — a consistent market cycle that Scott has seen repeated since the 1970s.
"This is the start of the next 10-year cycle. Last year was the first year, and that is always the adjustment year. This year the market will solidify and then we'll grow for seven years after that," Scott said.
While sales remain in the doldrums due to rising interest rates, Scott said they are still seeing strength in new listings, which can sometimes get multiple offers, particularly for homes in the middle price tier. That's even true in markets like Seattle, where technology companies have been dealing with layoffs.
"The intensity of the market is still very strong," Scott said. "The layoffs have not affected the housing market. These individuals have so much equity in their homes, they have skills, they will be picked up by other companies because of the labor shortage. It's just a rotation of the workforce at this stage of the economy."
The current economic conditions have created a real dichotomy in the real estate market. While Scott sees pockets of strength in some neighborhoods, it's also a tough market overall, with many buyers priced out due to affordability challenges. To tackle this split in the market, Scott said his brokerage has one major priority for 2023: relationship database engagement, which involves helping their associates tell clients about current market conditions.
"People wanted a trusted, experienced broker. We are that information source," Scott said.
Fending off competition from the bigs and the boutiques
As a midsize, regional brokerage, John L. Scott is in an interesting position: It's not part of a huge, national firm with substantial resources, but it's bigger than the boutique brokerages that emphasize customer service.
For Scott, the decision to remain a family-owned, midsize brokerage firmly rooted in the Pacific Northwest is one of the firm's strengths.
"In 1990 we made the decision that we wanted to control our destiny," Scott said. "We're large enough to do that but also local enough to know what's going on in the market and make a decision at the moment. That's where our unique advantage is."
And while they don't have the technology resources of the major national brokerages, Scott said they've been fortunate to employ good technologists within the company, noting that they were the first brokerage of their size to post all of its inventory online with photos.
"We're in the technology hotbed of the nation, we just adapt the new technologies as they move forward because they provide extra service," Scott said.
He added that while the technology keeps changing, the core part of the business — building relationships — hasn't.
"All the speed around the relationship has changed, but relationships trump technology, marketing, everything out there. The technology supports the relationships," Scott said.
Innovating through tech to 'right the wrong' of racist covenants
The company is also using technology to help address one aspect of systemic racism in the real estate industry. As reported by the business technology website ZDNET, John L. Scott and Amazon Web Services are using AI to find and remove old racist language in covenants from property documents.
In support of the initiative, the company has built a website that is expected to launch later this year in Washington state, but is currently overcoming some hurdles in what is a challenging project, said Phil McBride, executive vice president of strategic initiatives for the company. One of the challenges is that only about 60% of the deeds in the state are digitized.
Once the website is operating, a homeowner can check their address to see if there are old unenforceable covenants and start the process of redacting or updating the deed.
McBride said there is national interest in the project, so they are using open-source code so it can be replicated elsewhere.
"This is a do-good project, not a strategic enterprise for us," McBride said. "As an industry, we owe it to the country to right the wrong."
It's not the only area in which the company leans into doing good. Its motto is "Living Life as a Contribution," and through its foundation, the company raised more than $15 million for children's healthcare through sponsored events in 2021.
Looking to the next generation
John L. Scott is expected to remain a family business, with Savannah Scott, Scott's daughter, taking on more responsibilities as she gains experience. Savannah Scott has worked as an agent for several years and is now helping Lennox Scott move some new programs forward for the company.
"She's way further along at her age than I was when I was her age. That's what is so exciting," Scott said.