Biz Model Schmiz Model — It’s About Quality — The Rest Is Happy Noise

NASA hasn’t invented the device sensitive enough to measure the apathy I harbor for what business model other real estate firms use. In fact, taking it a step farther, I’d probably have to climb up several rungs on the ‘I care’ ladder to reach apathy on that subject. Fair enough?

Whether you like the model Grandpa used in 1951 or any of the new ones currently in beta testing, there’s one concept from which they all could prosper.

Old School mentoring. And before you stifle that yawn, ask yourself a question.

As a kid playing youth baseball, would you have been a better hitter if your coach had been an ex-pro ballplayer?

I coached under four former pro players, and trust me, the difference ain’t real difficult to discern. One of ’em had been a catcher in the Japanese minors a few years before hangin’ ’em up. Guess who always had the best catchers in the league? In the 13-14 league the pitcher with the hands down best change-up was the kid whose dad went to the ex-pro pitcher for help. Duh.

I wonder what Rodney Dangerfield would say if he was a newbie agent with an assigned mentor in the average real estate brokerage? I think I know.

“Hey — Take my mentor, please!”

For the years I spent as a broker-associate with a huge San Diego brokerage firm, I was able to observe first hand what passes for mentoring. Long story short? The office manager quietly pulled me into the office one day. Seems the agents in charge of the mentor program (usually around 24 new agents) were complaining to her because their charges were beating a path to my office for help. 🙂 Not being schooled in politically correct speech, I asked her why she was talking to me, and not grillin’ her ‘mentors’ as to why their students consistently ignored them so as to get the scoop from me.

She explained how I was undermining the mentor’s position of authority. I replied that their authority was possibly a figment of their imaginations. This was not well received. And for the record, I never in any way, shape, or form, directly or via implication ever solicited the attention of any newbie. They slowed me down, OK?

I then asked the manager why they’d come to me in the first place if they were already getting what they needed? Crickets. I was told in no uncertain terms I was to send all newbies back to their mentors, and with a stirling endorsement. The gauntlet had been thrown.

I found out through the office grapevine which newbie was about to be booted from the program, and struck up a conversation. Turns out they’d been mentored for nearly 13 months and had closed one whole escrow. I then marched my BawldSelf back to the manager’s office and said I wanted that guy as one of my assistants. She said if the mentors signed off on it, it’d be OK with her, but why would I want an agent who’d only closed one deal in over a year (2000) after being trained so intensively? I wanted to prove a point: They weren’t mentoring anyone for success in real estate.

Side note: The mentors agreed, but had the gall to demand a piece of his first two deals. Unbelievable.

I don’t know how to say this any other way, so I’m just gonna say it. I made that kid (25) my bitch for eight months. The first month, Dan was given every crap job there was. Then the real training began. He was excited the only investment guy in the office was training him. He had severe dyslexia, which meant he had to learn everything verbally and by watching me do it, as reading just slowed him to a crawl.

By the end of three months he was the best of three assistants, and my hatchet man for ‘problems’. At first he’d ask me how I wanted him to handle something. Then he’d tell me the ways he was thinking of handling something, what way should he use? By the end of the fifth month he was telling me how he’d solved the problem. By the end of the seventh month he was solving problems of which I wasn’t yet aware, leaving little notes on my phone — smart ass.

After eight months I deemed him ready to act as an investment agent under my close watch, but more or less solo. Meanwhile, back at water cooler central, some of the house agents had been offended by Dan becoming my assistant after failing so miserably in the mentor program. “Who does he think he is? What’s he tryin’ to prove?” Indeed.

In his first 30 days as an agent Dan booked just over $30,000 in gross commissions.

As do most offices, this one had a centrally located ‘whiteboard’ where agents would post their new sales or listings. I never used it because nobody cared about what I listed or sold, as they weren’t homes. I made an exception in Dan’s case. 🙂

You should of seen the constant stream of newly silent critics looking at Dan’s very impressive numbers. I swear Dan must’ve ‘casually’ walked by that board a dozen times that day before lunch. The mentors avoided me for the rest of the year. 🙂 For the record, I liked the mentors, who were an older couple, and extraordinary agents. It’s just that they couldn’t train a grizzly to catch fish.

Taking an inexperienced agent under your wing and truly training them is what long term success is all about. Everything else is elevator music. For Heaven’s sake pick any local carpenter’s union in the country, and you’ll find they mentor their apprentices orders of magnitude more effectively than does the real estate industry with their new hopefuls. Does anyone reading this doubt that?

I’ve been over practicing what I preach with my son, Josh. Since November of 2004 I’ve been mentoring him within an inch of his life. He has more first hand experience in more aspects of investment real estate than most 10 year vets. Remember though, I threw him into the deepest part of the pool from Day 1. He went straight from college to investment real estate brokerage. Try that sometime.

He’s sat in on countless dozens of counseling sessions — first as the ‘speak when you’re spoken to’ trainee, then as a near equal as time passed. You could tell when he was rising to the next level — as I’d predicted to him, clients begin asking him questions with me just three feet away. Nice.

He’s appraised income properties in half a dozen states. Coordinated many multi-state multi-property tax deferred exchanges. Analyzed countless properties. If I wasn’t happy with his conclusions? “Sorry big guy. Nice effort, but here’s where you went astray. Try again with this in mind.” Cash flow analysis, negotiating in all kinds of markets — sometimes as the guy with the gun, sometimes the schmuck with the knife. Real life, especially in the real estate investment arena, ain’t always fair.

Literally hundreds of hours have been spent explaining the how and why of what we do. The intricacies of the tax code and how they should be looked upon as tools of the trade. Imagine an apprentice trained for over four years, 40+ hours a week first hand by the real life ‘go to’ guy. You think he might be ready for some freestyle action?

I realize four years is a long time. But there are good reasons. First, I’d removed the company from the local market as he came through the door. He had to learn everything kinda sorta backasswards, geographically speaking. Looking back, I think it was a blessing in disguise. In four years he’s done everything you can do on the investment side of the business, hands on, and in real time. He’s also had the advantage of learning while doing in other regions. He’s never generated a client of his own, which has been by my design. His learning experience has been in the lab 80% of the time, with only 20% being ‘theory’.

At this point though, he knows more with four plus years of experience than I did after 10. How is that possible? I had to go find and pay for my mentoring. Dad was a house guy, not an investment broker. Meanwhile I had to Gump my way through the maze of knowledge required to do business on the investment side. I had to stitch together a virtual mentor, made up of the giants of the industry back then. Fortunately most of them could be found in SoCal. Then I had to spend precious time and money going through the CCIM program. Josh will now go through it too, but most of it, because of his training will be review. I was constantly forced to reinvent the damn wheel.

Investment real estate resides in a whole different universe. You simply cannot fake your way in that world. It runs on a pass/fail basis — and failing isn’t an option. How would you respond if your ‘investment real estate agent’ cost you six figures in capital gains taxes because he really didn’t understand what he was talking about? Yeah, me too.

Josh has been almost literally chomping at the bit to get started. Since we’ve made the decision to again do business in San Diego, (price correction) he’s ready to role with our 1.0 marketing program. Of course that’s when Dad decides to relocate the office within walking distance of home. Then the phone company takes forever to hook us up. Blah blah blah. Now Monday is the day of reckoning. His tires will hit the pavement solo for the first time.

This means his first calendar year as a stand alone agent will be just less than 10 full months.

I’m treating him just like any other new agent — that is if I hired other agents. To hang your license with me you either have to share my DNA, or change your last name to Brown and look good in a skirt. 🙂 His first six transactions will be at a 50% commission. His next three will be at 70%. From that point on he’ll be an 80% guy.

Speaking of 80%, that’ll be the ratio of 1.0 vs 2.0 marketing for Josh. My prediction is he’ll easily surpass six figures in personal earnings for the year. Frankly, I think he’ll get it done before Halloween, but that’s probably Dad talking, right?

What would you give to have an operation with half a dozen Josh’s working for you, with that kind of in depth training under their belts? You’d have a lean mean money printing machine on your hands. Yet what passes for mentoring these days is an insult to serious rookies searching in vain for real teachers.

It’s relatively cheap to create your own new dynamos. As I told Josh the day he came on board, “I’m paying you real money even though you’re not worth it yet. Frankly, you should be paying me.” I paid him so little he rented a room from a long time friend to make ends meet. You earn your way at Brown and Brown. Blood only gets you through the door. As he became more and more valuable, far surpassing the aforementioned Dan, his pay increased. After a couple years he was virtually indispensable. I’m also pretty sure It helps that he’s smarter than I am.

Our clients now treat him as if they’re talking with me about 90% of the time. I don’t care how well they’re trained, 40 years can’t be passed on in four years. That 10% is me having been there, done that, in just about every circumstance you might conjure. He’ll get that last 10% in the next several years by doing, listening, and watching.

Seasoned pros? How much better would your operation or team be if you mentored them that intensely? If you’re a new agent, might it make sense for you to find a mentor who’ll commit to that kind of quality? Remember, most of those showing you the ropes concerning all the paperwork are doing two things. They’re earning extra money for themselves, and they’re insulating the brokerage from legal problems by ensuring you know a listing from a purchase contract. A monkey can teach you those things.

You want to make money, and you want to earn it as a professionally trained real estate agent. The good news? Becoming a real pro in the home selling side of the business doesn’t have to take years. It just takes a mutual commitment.

Back to the baseball analogy. Real estate ‘mentors’ these days, if teaching baseball, would be teaching their players what kind of wood the bats were made of, how many stitches are in a baseball, and how to properly wear their uniform. All the players wanna do is learn how to play baseball, and play it well. Even a 10 year old knows happy noise when he hears it.

A real mentor will show you how to become a well paid professional real estate agent — and he’ll do it in about a year.

So, where are the real mentors? Also, where are all those who complain about inferior training? Are you willing to sacrifice a year in return for the rest of your career? Or are you only interested in happy noise?