Archive for the 'Realty Reality' Category
A follow-up to an article on syndication I wrote just a short time ago. Keep in mind that I’ve never even met Jim Abbott, and am not promoting his company. But I’m listening harder now to him, and as he speaks his words continue to etch a path that I really believe warrants all of our attention.
At the end he does make a request. In San Diego you can actually withhold syndication on a property by property basis. On the MLS form simply check “No Syndication.” Try it. I discussed it yesterday with a client, and I’m listing her home without giving away all the info to you know who. Oh, and I truly believe if buyers come to my site to learn about this property, even if they don’t want this particular home, it will greatly increase the likelihood of my working with them in the future.
Want to skin some cats, anyone?
Are you the ‘go to’ guy/gal? Do you list a lotta property and do it well? Are you a leader? Though I’m sure many will say charisma is required, I beg to disagree. It never hurts, but in the end, the Lord created the ultimate equalizer to charisma:
Today, let’s have a serious discussion about what combination of approaches would slaughter what’s currently goin’ on in the national brokerage community. First, here’s my perception of the major ‘schools’ I see in operation.
Variations on the Agent-Centric brokerage model
Between us we can come up with a myriad variations. Let’s limit them to very high commission splits, and the desk fee approach.
As I’ve written before, not long ago, that the agent-centric (A-C) model is failing everywhere it’s been tried. It’s ability to fail at pretty much every level is becoming legendary, regardless of the Titantic-like practicianers now lookin’ to technology to save them. Listen guys, if buying ownership positions in title companies, lenders, and starting your own escrows isn’t prima facie evidence of the desperate reach for lifejackets, I don’t know what is.
Let’s directly compare the currently popular A-C model with what I’d open in today’s — or any — housing market.
But first, a word from the Disclosures Department.
My biz model, though it pains me to admit, would indeed work exceptionally well if completely buyer oriented, listing few if any homes. However, when compared to my model — Broker-Centric — the firm primarily based upon listing homes will annihilate the buyer based company. This isn’t theory, or even bias on my part. As anyone should readily be able to discern, it’s a matter of sixth grade arithmetic.
Also, I’m loosely basing my ‘virtual’ A-C company on a brokerage I know of in a northwestern state. The size, and commission split are the perfect example of the results one can expect when using this model.
Let’s first construct a virtual company built upon the A-C model.
Let’s give ’em a lotta agents, but not make it a big box setup. We’ll hire 35 full time agents. None of ’em will have less than three years full time experience. They’ll be hired due to various levels of success, but mostly cuz they don’t require major babysitting. They’ll all be paid 90% commissions, and will be responsible for a $50 per transaction fee for E&O insurance.
We’ll even stack the deck for this brokerage. They’ll have no brick ‘n mortar office. They’ll have whatever technology they wish, but no physical place to go every day. No lease payment, or all the other things that factor in to having office overhead.
We’ll grant them 250 closed sides for a calendar year. The average sales price will be $150,000 with a 3% commission/side. Yeah, I know many will likely be 2.5%, but making my math easier has higher priority.
The same number of closed sides, average price, and 3% commission/side will be used by my virtual brokerage. Wanna keep as close to a level playing field as possible. Wait — I take that back. Only gonna give my virtual brokerage 100 closed buyer sides and 36 closed listing sides. Seems I should at least appear to be makin’ this fair, right?
The numbers for our A-C brokerage guy.
This broker/owner grossed about $1.125 Million for the year. We’ll say he has no overhead for the sake of this comparison. That nets him about $112,500 in pre-tax income. On one hand he didn’t hafta show one home, or make one listing presentation. He grossed six figures for the administration duties assigned to the broker in charge, by the state. We’ll also make the assumption this broker did everything possible to generate a reliable source of leads for the company at large. Assuming a typical 2,000 hour work year with a couple weeks vacation, this broker made just over $56 an hour.
Trust me, they earned it.
Now for my virtual brokerage — using the Broker-Centric model.
I’m the owner/broker. I don’t handle buyers — ever. I set policy. Decide commission splits. List properties. Generate buyer leads.
Out of the 36 closed listing sides, my agents sold (double-ended) 10 of ’em, which are accounted for among the 100 closed buyer sides.
We have an office. I have three buyer-agents. A traffic cop for incoming leads. When the traffic cop’s busy, the buyer agents answer the phone. The overhead for office, traffic cop, phones, lead generation, and general geek expenses run me around $100,000. In point of fact, it’s probably FAR below that, but still, we’ll use it in order to increase the gloat factor when we’re finished.
Let’s look at my numbers now.
The firm’s gross income was around $612,000. Net of all overhead it quickly becomes $512,000. From that figure my buyer-agents, paid 40% commission splits, made $180,000 between them — about $60,000/yr average. With the exception of referrals or family/friends, they don’t expend any efforts on generating leads themselves.
That leaves around $332,000 — for me. Barely less than triple what my agent-centric counterpart earned.
Triple the earning for the firm’s owner/broker. Let us not conveniently forget that I gave myself a handicap. The ‘other guy’ was allotted 114 more sales than I was. What if my firm did the same? What if I listed 50 homes, while my buyer-agents racked up 200 sales?
That’s an additional $270,000 to me from increased buyer sides.
Then, there’s the additional 14 listing sides, which add another $63,000 to the till.
That would bring my take to roughly $665,000 for the year. Let’s subtract another $65,000 in operating expenses arising from the additional sales. That would bring my total office overhead to around $165,000/yr — expenses we haven’t made my agent-centric competitor bear.
Net of all expenses my take then becomes around $600,000 for the year.
To put that in relative terms — the broker-centric model produced approximately 5.3 times more pre-tax income for the broker/owner than the agent-centric counterpart. That’s $300/hr if you’re keepin’ score.
This could be done in my own office in the San Diego area. ‘Course, if done there, it’d take just 100 closed sides of any combination of listings/sales sides to gross over $1 Million. But I digress.
If you’re gonna go for the brass ring, why on the Lord’s green earth would you even consider using any version of the agent-centric model? Any way ya wanna look at it, it’s foolish to the nth degree. Teams everywhere are doing business using the broker-centric model. In many instances the team leaders are making more money than the brokers for whom they work — embarrassingly more in some cases.
If you have a team now, consider opening up your own operation. If you’re pondering the creation of your own firm? Ditto — Duh.
What I can’t figure out to save my life, is why, with all the empirical evidence of virtually guaranteed mediocrity, if not outright failure, the brokerage community at large continues taking long walks of short piers.
The Good news/Bad news joke in all this if you’re the broker/owner of an agent-centric operation.
The good news is that you made six figures for the year — major congrats!
The bad news? The guy next door, you know him, the one with less than 20% of your agents? He did exactly the same sales volume your firm did, but paid more income taxes than you made BEFORE taxes.
Bad news indeed.14 comments
Those Entering the Arena Daily Know the Secret To Skinnin’ Cats – And It Ain’t About Tryin’ Really Really Hard
What I love about our business is that there’re no points awarded for effort. With rare exceptions, it’s a heartless, merit based culture. Trying really really hard is for first time T-Ballers. Real estate owners don’t sign contracts promising to pay us for our efforts. They agree to pay when we produce 100% of the results outlined in that contract. 99% = go fish, no paycheck. The rest qualifies as ‘the dog ate my homework’ crappola. Coincidentally, this is why the vast majority of new agents make like steam and disappear in their first year or two. They found out the hard way, that in the real world, the world refusing to pay for anything less than the bargained for results, attempting never equals achievement.
Apparently, to buyers and sellers of real estate, results matter — they matter big time.
I write this post to those agents who’ve been workin’ like dogs, without much reward. Been there, lived that. I sympathize and empathize. You’ve already demonstrated what’s most lacking in our industry, a consistently OldSchool work ethic. Allow me to gently redirect your energy.
Join the Brother/Sisterhood of Gladiators — enter the arena of those who value achievement, read: results, over the culture of ‘Participation Trophies’.
There are two kinds of licensees. Those who enter the arena daily, and those who work their asses off to avoid the arena at all costs. The former generally make an excellent to elite living. The latter either struggle from year to year, or find what we often refer to as a W-2 job. The key factor in the new career is that they get paid whether they produce optimum results or not. There’s no arena involved.
In real estate, we’re more or less bounty hunters. No skinned cat, no paycheck. No exceptions.
We’re almost at the halfway point of 2012’s first quarter. If you’re able to look at your activities since January 1st in written form, do so. What percentage of your time were you either prospecting, belly to belly with a prospective client, or, like one of my mentors used to say, ‘out among ’em, talking’?
If you, like the bulk of your colleagues, are spending most of your time doin’ things disguised as productive work, but in reality designed to avoid having folks tell you ‘no’, I have some advice. Leave the business now. You’ve already embarked on your exit strategy — and I’m here to tell ya it’ll work like a charm. It’s been a tried and true game plan for generations now. It’s the surest way I know to make minimum wage as a real estate agent.
The hundreds of thousands of agents who’ve been told this before, thought they could Gump their way to the big money too. They were just as outa touch as the majority of today’s agents are.
To Repeat: Those unwilling to enter the arena daily are doomed to abject failure.
Your only hope is to join a team whose leader is a gladiator. They’ll do all the fighting for you, hand you leads they’ve generated, then show you how to convert them to closed transactions. Tragically, most agents have shown over time that they can’t succeed even when spoon fed directly by a gladiator. Ask any team leader. They’ll roll their eyes in agreement — and astonishment.
The #1 reason 70-80% of agents are outa the business in a couple years or sooner is cuz they simply refuse to do what’s known to work — what they must know in their heart of hearts will work. There is no #2. Proof of their fear of rejection? They tend to fail at nearly the same rate even when ‘protected’ by a gladiator. Therefore, they’re limited to transactions fallin’ outa the sky.
If the perusal of your 2012 schedule/activities shows you’re playin’ dodgeball with what really works, be honest. Ask yourself why? Then ask yourself what’s stoppin’ you from quickly morphing into a gladiator. Then ask yourself, why not? It’s not magic. It’s a decision. A decision you can easily choose to make — or not. If all else fails, ask yourself how your current strategy has been workin’ out for ya lately.
Those makin’ the good money are battling in the arena every day. They do it with OldSchool methods, high tech ‘systems’, blogs, you name it. The common denominator between them, the elephant in the room for those avoiding it like the plague, is they embrace the possibility of rejection. Unlike Rome’s gladiators, they learned rejection doesn’t mean certain death. It’s a million dollar epiphany.
In fact, and here’s the takeaway, experienced gladiators will tell ya that rejection affects them the same way the death of an anonymous cockroach does. It literally means nothing to them. That gives them a monstrous advantage over their competition. It always has, and it always will.
And that, ladies and gents, is why tryin’ really really hard, doesn’t matter a whit to your success, when all you’re doin’ is workin’ yourself to death avoiding what actually puts cat skins on your wall.
Let me help you get started. The arena is just around that corner over there. The gate’s always open. Anyone is welcome to enter.13 comments
Here it is…a diagnosis that’s supposed to bring us back to reality. Lawrence Yun might be certified as something, but he’s done quite enough “doctoring” for me.7 comments
Recently I was asked to participate on a speaker’s panel at an upcoming real estate conference in Columbus. It’s always nice to be asked to participate and I even had a disturbing but fleeting Sally Fields moment. Conventional conventions are not my thing, but I got to thinking about the subject of the panel- Online Reputation Management and while in the end I demurred, I knew I had much more to say about the subject than my share of a speaker’s panel would allow. Here then, is what I might have said about ORM in 15 minutes or less:
Online Reputation Management. Interesting concept. I know what it means, I’m just not sure it gets to the root of the problem and the problem isn’t that people can post horrible and hideous things about you online, because if you spend enough time online speaking your mind, not hiding who you are, well then girlfriend, someone, somewhere is bound to say something hideous and horrible about you. The focus should not be that you cannot control what other people say, that’s reactive thinking. The focus should be on the only thing you can control- your own thoughts and actions.
It occurs to me that once upon a time a Realtor’s reputation was theirs to control through advertising alone. They wrote smarmy or vague advertisements about being the Neighborhood Expert, and who knew any better? What were you going to do- go around to each of your neighbors for verification? “You know this guy? Is he the expert?” It’d take for friggin’ ever to get a consensus on whether or not Joe, the Friendly Neighborhood Expert (FNE), was in fact, a) Friendly, or b) an Expert, but the interwebs changed all that, sort of. I mean you can still say whatever you want about yourself, but now your clients can turn to the ultimate FNE, aka Google, and in the blink of an eye, all is revealed.
This is a good thing. It’s good for us. It’s good for our industry. But most importantly it’s good for our clients because now you really do have to be an FNE if you are going to call yourself one. If you talk about customer service, you’d better deliver the goods. If you claim to be a top producer, you might want to make sure that jives with the facts. This isn’t bad, but it might be a different way of thinking.
We’ve been having some amazing conversations about privacy here on BloodhoundBlog, mind-bending conversations about a world where privacy doesn’t exist and why it shouldn’t. I confess I was not on board with this at first. I’m sure there is something in my lily white bread past that I’d be horrified if you knew. I’m sure there is something in my Midwest, middle class, psuedo-Catholic upbringing that you’d be horrified if you knew. Like… I once cheated on an Algebra test. Okay, you caught me, I did it twice. And… I would, on occasion, buy booze at the local drive-thru when I was only 16. Heard enough? No? Okay, how ’bout this- I own an entire Time-Life collection of Cowboy Songs. On cassette! Think what you will, think less of me if you must, now you know my deepest secrets.
What does that have to do with ORM? Transparency. Did you ever read Greg’s post on the Implied Accusation? He suggests that you treat your clients as transparently as possible, something like this:
“I make my living effecting real estate transactions, and I don’t get paid until every step of the process is completed. But my legal and moral obligation to my clients eclipses every other interest in my life, including my own self-interest. I want for you to be happy at the end of this process — no matter how it ends. I want for you to be delighted with the work I’ve done for you, even if we end up not buying or selling a house. You are my client now, and I want you to be my client forever. I want to do everything that is right for you, first and always. And I want for you to bring me all your business — you and everyone you know. And I want for you never to feel the need to sue me. The moral is the practical, always, no matter what business we do — or don’t do — right now.
“Why am I saying all this to you? For two reasons: To make it explicit, and so you can feel comfortable holding me accountable to it. These are the terms on which I do business with everyone, and this little speech is your warranty that I will do business with you this way, as well.”
I bring this up because this gets to the heart and soul and brains of Reputation Management. You must be honest, open, transparent, throughout every aspect of a real estate transaction- hiding nothing, revealing everything, working in a completely open manner in real life, otherwise your online reputation is worth the paper it’s written on. In other words, how we conduct ourselves offline is really the only way to manage our reputations online. Last week, Greg Swann wrote in an email about privacy:
“Transparency means never having a motivation you hope to conceal from discovery.”
Our clients are not idiots, we must stop treating them as if they are. The transparency needed to earn your client’s trust and keep your reputation polished will not come from the top down in this industry so don’t look to the NAR for an example on how to conduct business that minimizes your risk of reputation damage. The past few years have done nothing to elevate the reputation of the real estate industry, but we can move beyond that by considering how we conduct every detail and aspect of our own business and our own dealings with our own clients. “Transparency means never having a motivation you hope to conceal from discovery.” If you do this one thing, or make every attempt to do this one thing, it won’t matter what anyone says about you because in the end, the truth will always speak for itself. Want to know how best to manage your online reputation? It begins and ends offline, with this: Mind your motivation and your reputation will mind itself.23 comments
I suppose it’s pretty rare that a seller actually hands their listing agent an invoice during the course of a listing, but it shouldn’t be. Based on what I see, the vast majority of listing agents should be billed by the seller, same as they would be by any other third party vendor. The fact that it doesn’t happen simply means most sellers don’t understand what is really going on during the course of a listing and, I’d wager, neither do most agents – or if they do they certainly haven’t informed their client.
Here’s a question every seller should ask their listing agent: “Why are you going to put up a For Sale sign in my front yard?” Standard answer: “A sign is just one part of my ‘Handy-Dandy, Super-Duper, 24 Point, 7 Step, Maximum Sales Price Marketing Plan’ or HDSD-24/7-MSM Plan… which I offer to all my clients completely free of charge.” (The standard answer is impressive, wouldn’t you agree? We agents are very creative indeed.). Of course, given the use of internet these days, I suggest to you, dear reader, that most For Sale signs are more directional than informational, but let’s not split hairs. Okay, so the sign is a part of the marketing plan. Next question by an informed home seller: “If that sign is part of your plan to market my house, why doesn’t it mention anything about my actual, you know… house?”
This is old Greg Swann stuff, but I’m rehashing because it needs to be taken further. There are actually two correct reasons for placing a sign in someone’s front yard:
- Sell the actual home. (The primary objective from a fiduciary standpoint.)
- Attract future home sellers from the neighborhood. (Secondary objective, but a legitimate expectation of work well done.)
So why is it then, that the vast majority of signs fail both of these objectives? Because they are designed with a different purpose altogether; they are designed to advertise the brokerage (hence the uniform colors, logos, big brokerage name and phone number). To a smaller degree, they are also designed to advertise a brokerage’s presence in a neighborhood (hence the requirement that most agents not deviate from the standard issue signs). Wait a minute, I thought we were hired to sell the client’s home; did we also contract with them for advertising and marketing allowances? Put another way: next question from informed seller: “Do you expect me to allow a company (even a one-man real estate company) to erect an advertising billboard on my property without charging them a fee?”
Yes, a fee. If we are going to advertise our business on someone’s property, we should expect to pay them for use of their property. And please don’t insult anyone’s intelligence by suggesting the contract signed by the sellers gave us permission to do this. We have a fiduciary obligation with our client. The fact that we have not explained that we are going to erect a small advertising sign on their front yard – a sign for which they would be paid were it any other business – is a breach of that obligation.
(Note: we see this played out in the home remodeling world as well. Signs in the window or yard. But these signs are, generally speaking, negotiated into the contract for what they are: advertising. Whether or not the homeowner is smart enough to ask for a discount or fee does not impact here because general contractors do not engage their customers in a fiduciary relationship.)
So, what should an agent do? For my small little band of rebel agents, the answer is easy. First, we explain what’s actually happening. Then, we can either offer to pay our client for the right to advertise on their property, or we can create a sign that satisfies its two stated purposes. We find it cheaper and more appropriate to actually do our job and create a custom sign. For many agents, however, and many reading this article right now, that is not an option; you are required to use the sign the broker wants you to use, rather than a sign that actually helps the client. That’s alright; once the seller understands what’s happening and passes along an invoice, maybe you can bill it to your broker…
Here’s a second question every seller should ask their listing agent: “Why are you going to hold my house Open this weekend?” Standard answer: “To attract buyers.” Yes well, that is an honest answer, isn’t it? But it’s more than a bit misleading too. Statistically speaking, Open Houses don’t sell homes. According to NAR, when asked, less than 1% of eventual homebuyers first found their home through an Open House. But then, that’s sort of the point, isn’t it: to meet new buyers who, while not buying the house we’ve held open, will probably buy something. Wait a minute, I thought we were hired to sell the client’s home; did we also contract with them for lead generation? Put another way: next question from informed seller: “Do you expect me to spend time cleaning and prepping my house, then spend more time and money keeping my family and I busy all afternoon while you use my home to build your business, and not charge you a fee?”
Yes, a fee. This is no different than the sign business. If we know that the primary (and secondary and even tertiary) purpose of holding an Open House is to meet new buyers who, more than 99 times out of 100, are not going to buy our client’s home, then we have a fiduciary obligation to inform them. Did they think we were actually trying to sell their home rather than increase our client base? Do they have any idea we are using their house as bait? Do they realize they are, in fact, acting as a third party vendor at that point and entitled to the same fee? If they don’t… who’s not doing their fiduciary job?
Again, my little band tries very hard at the beginning of the listing to disabuse the seller of various beliefs and chief among them is their misunderstanding of Open Houses. We will certainly hold one (ONE) if they request it. But if we request it – and there are properties where we are definitely interested in attracting similar property buyers – the client should expect payment for their time and money. Wouldn’t you?7 comments
Don’t ya love it when a new way to call something old catches on? Smallish independent real estate brokerages are now often referred to as ‘indies’. Due to lower operating expenses, more agents working at home, and a perceived technology gap the size of the Grand Canyon, they’ll be an important factor in the death of the so-called BigBox (BB) mega-brokerages. In essence, by being meaner, leaner, and effectively leveraging their edge in all things hi-tech — the dinosaurs die the death of a thousand cuts.
And Al Gore invented the internet.
Been hearin’ this for so long I was shocked earlier this month when the phone at the 250 agent Keller Williams office was answered when I called. I consider the lead recruiter of that office, a longtime friend, a legit superstar. Also, I’ve known their new Designated Broker since the late 90s or so. When I spoke with ‘Jane’ the recruiter, she laughed at the thought of indies sending her company to the boneyard.
In fact, in her firm’s experience, they’re the ones who’ve not only ended several indie firms’ existence, but absorbed them into the cavernous BigBox operation — often swallowing them whole. Indie owners don’t like hearing that, but it’s a fact about which I no longer become amazed, as it happens too often these days.
Much of the discussion on this topic is skewed by, what are in my opinion, false premises, wishful thinking, and putting the emphasis on the wrong syl-LA-ble much of the time. GM didn’t go off the rails cuz they’re too big, or that other, smaller, more tech-savvy carmakers beat them. They simply didn’t make cars as well as most of their competition.
The false premises used for arguing the imminent demise of the BBs is their ponderous nature, hiring practices, low tech approach, basic inefficiency, and out of control operating expenses. Paradoxically, those are merely the result of the real reason some BBs won’t be with us soon, if they don’t change their ways.
It’s the business model, not the size.
Those who insist on hiring newbies by the gross, while paying so-called top producers 90%+ will get what that model is virtually guaranteed to produce — a slow death. It reminds me of the business genius who once said they’d make up the nickel lost on each sale through volume.
Still, that’s not the issue underlying the conversation, in my opinion.
Access to the MLS by the public is also a false issue. The heated debate about hoarding the information has some merit, but isn’t the game changer from where I sit. (And please don’t try to draw me in on that issue, as I’d hafta go up three rungs on the ‘I Care’ ladder to be apathetic.) The public can have all the access it wants, but if your firm is the listing agent, you control things. Whether through the MLS, some website, or strings and cans, they’ll hafta go through you to make a sale. My first several years as an agent were spent in a firm that wasn’t a member of their local board or the MLS from Day 1. It was the most prolific house selling brokerage in San Diego County for five years running, closing 1,000+ sides per year, every one of those years. The Board/MLS begged the broker to join, but that’s another story. Bottom line? They needed him, not the other way around — and they knew it. Especially those firms who listed little if any property.
Listings are the only thing that keeps indies afloat.
Most indies adopt models making them the real estate industry’s version of Pilot Fish. They feed off the big sharks. As long as the shark lives, so do they. (The analogy falls apart a bit when one notices they also help sharks by eating parasites. But that’s a difference conversation altogether. ) Though many of them, admirably, make big bucks, they often look in the mirror each morning and see the big proud Shark, instead of the dependent Pilot Fish they really are.
As long as there are prolific listers in a given area, indies based on the buyer agent model will do well, all things being even. There are BBs who are listing machines in their local markets, and they’re thriving. My buddy at KW has literally closed the doors on many buy oriented indies cuz the owners saw the gold mine of listings available to their buyer focused approach. In other words, they decided to attach themselves to the biggest baddest Shark in the area. Predators keep their distance, and they’re on the inside of the listing gold mine with a pick and shovel.
The loud bellowing you may be hearing are the indies who specialize exclusively in buyer representation. They’re gettin’ upset cuz they think maybe they’re about to be bashed. Not true. Some of my best friends are buyer agents. In fact, they do whatever it takes to be my friend, cuz without listers like me, they’d die on the vine. But listers don’t need you, you need them. They can choose to exist without you, while you simply don’t have that option. Yell all ya want.
As Grandma often observed, “Point weak, shout loud.”
Sharks not only feed themselves but the Pilot Fish who feed on their leftovers. An inelegant way of phrasing it? Perhaps. But true nonetheless. The BBs that consistently list properties as the predominant source of their income, and lead generation, will survive, sometimes in spite of themselves. Those who list AND raise their hiring standards, modify their compensation policies, and give more than lip service to technology will not only survive, but thrive.
Pilot Fish are only safe and secure as long as the shark lives. Own a smallish indie and don’t cotton to the idea of working for a BB? Headhunt some listing agents and watch your firm explode. Create your own in-house Shark/Pilot Fish operation. Only at that point will you be truly self proficient.
Please, don’t hold your breath waitin’ for all the BigBox companies to die. It simply ain’t gonna happen. Furthermore, when (if?) the ones still using the flawed models pull their heads out, and become listing machines, they may decide to do what my first employer did, at least in a modified fashion.
They’ll list the property, gettin’ the seller’s permission to delay MLS participation for 2-4 weeks. With 100-500 agents, how many of those listings do you think will sell in that time period? Once they start succeeding there, they’re begin to realize how overvalued the MLS is to them.
That’s when the fun might really begin.
BigBox brokerages are all gonna die? Not in my lifetime. Yours either.12 comments
Let’s begin by agreeing on the proposition saying those who try to live on sizzle, not steak, end up losing weight, till, in the end, they’re dead. Sizzle in many contexts can be fun, sexy, interesting, even impressive, but never substantive. In sports, sizzle is often lookin’ spectacular while seldom winning. The strikeout pitcher who barely wins more than he loses. The .300 hitter, 40 homer, 100+ RBI guy who hits below the Mendoza line with men in scoring position, with most of his homers and RBI coming when his team is eight runs ahead or hopelessly behind.
Sizzle ain’t results.
As a baseball purist and a lifetime member of the OldSchool in real estate, I appreciate sizzle, but get pretty damn agitated at those given more or less equal standing with big time producers, based upon a buncha glitter and multi-colored smoke.
As Exhibit A I offer Nolan Ryan
He’s a first ballot Hall of Famer. He threw the ball harder than Zeus threw lightning bolts. He struck out every third person on the planet earth. He threw eleventeen no-hitters. Then there were the stoopid number of 1-hitters. That’s what we purists call sizzle. I’ve done extensive research, and no-hitters still count as only one win. Strikeouts? Apparently they’re the same as all other outs. The winning team in any given game must get the other guys out 27 times in a nine inning game. The rules say an out’s an out. Go figure.
27 years in the major leagues, and he barely wins more games than he loses — 52.6%. He was the Dale Carnegie of pitchers, as he never met a hitter he didn’t walk. Try almost 5.25 every nine innings. If as a hitter you faced him more than five times, he walked you at least once.
His claim to fame from where I stand, is that his freak of nature body, combined with his superb work ethic and his luck with health and injuries, allowed him to pile up pretty much every stat but the one that mattered: Far more wins than losses.
Compare Ryan to Sandy Koufax. The man was cursed from Day 1. Drafted at 18, he was literally barred from the minors cuz he was paid too much of a bonus, so he never got to learn his craft the way his peers had. Most think he hurt his pitching elbow on the mound, when in fact, it was hurt while foolishly diving back head first on a pickoff attempt at second base. Doctors told him it was the catalyst for the arthritis that eventually felled him.
Let’s compare Ryan and Koufax during their best consecutive six year stretch. For Nolan is was 1972-77, while for Sandy is was 1961-66. Here’s where you can clearly see which one is the steak and which is the sizzle.
Wins: Koufax 129 Ryan 113 Win percentage: Koufax 7.33 Ryan .546 Losses: Koufax 47 Ryan 94. There was only a 12 game difference between the number of games each started. I could go on and on, but you get the idea. In their best six year stretches, Koufax’s winning percentage was almost 35% better than Ryan’s. Career vs career, Koufax’s winning percentage, including his completely fruitless years in Brooklyn, was a tick less than 25% better than Ryan’s.
You wanna win a game that makes the difference? Pick Koufax 10 times outa 10 vs Ryan. Ryan couldn’t carry Sandy’s jock, when all the sizzle is disregarded. Last time I checked, it was about winning. OK, I’ll stop pilin’ on.
For the record, I love Nolan Ryan. The guy’s the epitome of what a sports role model should be. As a man, he’s a giant. As a Hall of Fame Pitcher? Hell, most of the pitchers in the Hall were better than he was. That is if winning more while simultaneously losing less is a factor.
In real estate, you can’t bank sizzle, and there’s no Hall of Fame for those who showed the most properties, or took the most listings, or have the most prolific lead-producing website.
Unsold listings, property showings with no sales, 50 lead-a-day websites, and the best direct mail, social media, or what have you in the known universe, doesn’t impress your banker one iota. In fact it bores ’em.
Banks are a no-sizzle zone — a fact of life of which most real estate agents appear happily ignorant.
I don’t buy the 60+ hours that most agents claim as their typical week. The difference between Nolan Ryan and top real estate agents, is that buyers and sellers insist on winning. We either sold their property or we didn’t. We found them the place they were lookin’ for or we didn’t. The closing of escrow is the only known win in the real estate universe. Anything else might as well be a rotting steak on the grill, givin’ off that great sounding sizzle. All sizzle and no steak is what failure is all about.
No win = no paycheck.
Success in baseball is ultimately measured in terms of wins. In real estate success is ultimately measured in terms of closed escrows — skinned cats if you will.
Pretty websites, hi-tech marketing, IDX magic? All are real estate’s version of strikeouts and no-hitters. If they didn’t eventually lead to more wins, you’ll still need to add about $1.95 for a Grande cuppa coffee at Starbucks.
Am I touchin’ a nerve?
5,714 is how many hitters Nolan Ryan struck out, more than anyone else who ever donned a major league uniform. Same with no-hitters. Yet with all that impressive sizzle, he still couldn’t figure out how to win even 53% of the games in which he pitched.
Think I’m being harsh? The Angels lost more games than they won in 2010. Yet, they had three starting pitchers with equal or better winning percentages than Nolan Ryan. None appear to be future candidates for the Hall.
Sandy Koufax pitched a buncha no-hitters too. He struck out WAY more than his share of hitters. But instead of barely winning more than he lost, he won nearly two of every three games in which he toed the rubber. In his six best years? He won almost three of every four. Ryan’s best six? Still couldn’t reach the 60% win level. Where’s the steak?
All this to ask you these million dollar questions.
Do buyers and sellers want sizzle, or do they want results? Would they want Koufax or Ryan to be their agent?
The Hall of Fame for producing agents is based on nothing more or less than closed escrows — cat skins on the wall. The voters are the folks who’ve benefited from the results you produced. Sizzle — it’s for those constantly in search of the mythical magic button. There’s more than enough sizzle to go around. You can have my share.
I prefer winning. Make my steak medium rare.39 comments
Disclaimer: If your business is humming along, I doubt you will get much useful information from this post, however, please do feel free to share any productivity hints in the comment section. Thanks!
I made a public commitment, and so I thought I share where I was and where I’m going. To Jeff Brown: I have yet to do one single 6 hour prospecting day. Haven’t done one. I’ve gotten to the point where I can do 3 hours most days of the work week, but even that isn’t consistent, so that’s still a goal, and I’m still committed to hitting that goal, and I will, but it’s a tough one for me. Which brings me to my first point: Real estate is not an instant gratification business. And the church says, “Duh!” Right. Old-timers are laughing their arses off right about now and I am too. I really like instant gratification, but unfortunately, I can’t use it to pay bills, so if you are seduced by that, as I often am, be careful. Don’t lie to yourself about what is “working”.
Working requires thoughtful planning and focus. If you want to brainstorm an idea, give me a call, drop me an email. I am very very good at brainstorming. Making a goal, making a commitment to that goal, doing the basics, this focus comes less naturally to me, but that’s where the money is so that’s what I’m learning to do. Know thyself: Hands down, best thing I’ve done to help me focus was to secure a private office. I had been “working” out of a desk in our family room. Oh, I know, my broker supplies a desk at the office, I could use that but my stuff is at home. Unfortunately, so are our dogs, our cats, our kids, the laundry, food, you get the point. Here’s my solution: My broker owns our office building and this being the Rust Belt circa 2010, we have a few empty suites in the building which he has been trying to lease. I’ve taken over an office on a month-by-month basis. If he finds a tenant, I get kicked out. I moved into this new office in September, and it took me about a month to weed out paper, organize for efficiency, and learn how to maximize time at the office- more about that in a bit.
Working from an office has done a few things for me. The drive to a separate building allows or forces me to make a mental shift in attitude: I’m driving to work, I’m there to work. I don’t have all day to spend there so I must stay focused on accomplishing what I’m there to do, and I am very proud to say that I’ve learned to do that. Took awhile, wasn’t easy, but I can do it. And an inexpensive office is probably easy for you to find as well. My Plan B for securing an office was to offer a nominal fee on a month-by-month basis to any number of vacant offices in town. Someone will prefer something to nothing and giving the owner the ability to continue to search for a more permanent tenant sweetens the deal.
The fact that there is an entire industry devoted to organizing calendars and To-Do lists shows how difficult it is for most people to get things done. My husband Jamie is an engineer and project manager, his boss is an off the charts D personality, they share a secretary who is amazingly organized. They all use spiral bound notebooks- you know, the kind you can buy for .10 cents during the back-to-school sales? They each use cheap spiral notebooks for their To-Do lists. As I mentioned before I’m an idea-generator which means I’m a note-maker. I write stuff down, doodle, etc, all day. Writing all this on a spiral notebook To-Do list makes for one big mess at the end of the day. If I write these bits and pieces on scraps of paper or sticky notes, they end up all over the place, which sometimes means lost. Now, I’ve taken an idea from Rands in Repose and use both a To-Do list and what he refers to as a Parking Lot. I use a steno pad for the To-Do list. Its smaller size is convenient and prevents me from writing notes all over it, keeping it clean and easy to read. The Parking Lot is a legal pad that I keep just to the right of my computer– I’m right-handed– with a pen on top. That’s the place I can make notes, doodle while on hold, write down phone numbers and names, dates, etc. Each page is dated so it’s easy to track down notes later, and at the end of the day anything useful or important gets transferred elsewhere- my To-Do list, a calendar, my files. I have yet find a calendar that is useful to me. Suggestions?
I’ve just this past week created a spreadsheet for tracking numbers. No more guess work for me, but also, there’s no way to lie to myself about what is really happening. Yes, I’ve lied to myself. I’ve got a whole bundle of bad habits to undo. Numbers can’t be improved if you don’t know them, but the added bonus of tracking numbers is that they are just numbers. I’ve removed the emotion- it’s just numbers. This is important- it’s crucial for me. So I’m tracking number of contacts and the sources, as well as work in and work out. What do you track that’s improved your productivity?
For the past year and a half I’ve been referring business out, so in one sense, I’m starting over. I’m starting from a stronger place, but it’s a very new beginning. On the other hand, I don’t think I’m any different from any one else in the business. I’ve been listening to Floyd Wickman, and he said something that really struck a chord with me: “Every day in this business, we wake up unemployed.” Once that sunk into the gray matter, it put things into perspective. I wake up every morning thinking to myself: I’ve got to find a job today. And to be honest with you, instead of a frightening thought, it’s kinda where I get my kicks. How many other jobs hold so much opportunity?
I have a favorite quote from Ohio president William Howard Taft,
“Next to the right of liberty, the right of property is the most important individual right guaranteed by the Constitution and the one which, united with that of personal liberty, has contributed more to the growth of civilization than any other institution established by the human race.”
Combine that with the thrill of the job hunt? I got it bad. No other career is going to do it for me. I’m going to make this work.27 comments
My company’s checks have a typo on them. I’ve left it uncorrected for years, in order to remind me of my lean beginnings. The company name is on the first line, followed by what should be Jeff Brown — Broker on the second line. Instead, it says, Jeff Brown — Broke. No, really, it does. Hardly anyone notices. In fact, we’re in the year’s last quarter and nobody has said anything this year. I think a couple people told me about it last year.
Every time I write a check it’s the first thing I notice. Much like muscle memory, the first picture that pops up is me, grabbin’ a commission check, (with much blonde hair blowin’ in the wind) and runnin’ down to deposit it in the bank. Back in those days, if it wasn’t for the backbone of the real estate industry, the working wife, I wouldn’t be where I am today.
Real estate is, as I was told before California informed me I’d passed my first license test, the highest paid hard work, and the lowest paid easy work around. I’ve found that to be true, but not all-inclusive. As I’ve said a few times recently, .150 hitters can work as hard as they want, but if it’s not at the right things, nothing changes.
Here’s a thought to ponder. In real estate there are no minor leagues. In baseball kids learn their craft there. In real estate? Gimme a break.
There was a seven year period in which I worked for one of the biggest real estate firms in all of CA. The office sported 150 agents. They had a mentor program that graduated newbies as experts in protecting the company’s ass. Their career life expectancy was almost measurable. The office manager aspired to have that program bat .150 someday. The worst kept secret ever was the real reason that program was not axed. The newbies weren’t allowed in the ‘main office population’ ’till they closed three transactions — and their split was 50%.
24 trainees X 3 deals a year, at $500,000 median price, X 3% X 50% = (Insert drum roll here) over Half a Million Bucks to the office. Ta da!!
Now you know why they trumpet their so-called mentoring programs so often and so loudly. Newbies are nice enough to pay the company’s bills, then politely and quieting fade away, so the next group can take the bit and plow the fields.
So, how can you make $100,000 a year in a $200,000 a home market? So happy you asked.
If you’re new, pay attention to what they tell ya about paperwork. Sure, cuz it’s the right thing to do, but mostly cuz if ya don’t get it right in a deal, they’ll hold back your commission ’till it’s the way they want it. Give courtesy nods to their tips on generating business. If they’re in management, it’s almost always due to their inability to do exactly what they’re urging you to. There are exceptions of course, including the office manager mentioned above. But she merely proved the rule. In fact, it was directly due to her previous experience as the partner in a successful real estate firm that made that office so successful.
Bottom line? Most office managers are like college business professors, in that they teach cuz they could never do it in real life — or worse, were afraid to even try. Don’t get me wrong, good office managers are worth tons. But only for their management skills, not their ability to teach agents how to be successful.
If you’re one of the exceptions to this rule, God bless ya, and I apologize for paintin’ you with this broad brush. But you of all people know I’m dead right on this point.
So, you’re doin’ about $30-40,000 a year, and would love to get that up to six figures. Here are a few suggestions toward that end.
1. Unless you’re Dale Carnegie, your ‘sphere of influence’ will only get ya so far. But then you’ve found that out by now, right? Keep tappin’ and expanding it, but stop drinkin’ the Sphere of Influence Kool-Aid. It’s what office managers tell their newbies. They sell/list a few houses to Aunt Mary, the song leader at church, and an old high school chum, then they’re gone. Meanwhile, the office made 50% per deal.
2. Bite the bullet and stop avoiding the trenches. The longer you insist on doing open houses on others’ listings, etc., the longer you’ll be doing a deal a quarter. If you don’t like the process of generating something outa nothing, find a team and become a buyer’s agent. They’ll allow you to pony up to the lead generating buffet without you having to lift a finger.
3. Pick a slice or two out of the market, and go after them with a vengeance. Since you’re not tryin’ to do 18 deals monthly, this will work just fine. Your menu of options? Expired listings — FSBOs — smallish farms — maybe a modest website with your own IDX — and always your trusty sphere of influence, regardless of what two slices you choose.
4. To make $100,000 in a 100% office, you only need to close 18 transactions. This assumes an average home value of about $200,000 at 3%. That allows for some expenses. That’s 20 if your expenses are a bit higher.
5. Quietly research your office’s top agents. Approach one you like, and who will give you the time of day. You already know how they’re getting business. Ask them for some mentoring, with the promise you’ll not become a huge time suck. If you’re smart, you’ll be able to apply some of what they pass on. Pay attention.
Let’s say you decide having a very doable smallish farm, and will diligently prospect expired listings in areas in which you have knowledge. As always, you’re also gonna be faithfully mining your sphere of Influence.
We’ll assume you’re actually working 40 hours weekly, and that those hours aren’t AgentHours. They’re the hours Grandpa worked every week. By your consistent and conscientious plowing of those fields, here’s what will happen — I promise.
You’ll do about a transaction a quarter with your sphere. Some will do more or less, but that’s about what should happen.
By working expired listings, you’ll list about a property a quarter, probably more. But count on the one.
Those listings will generate about one buyer-side transaction a quarter, probably more. It’ll also give you the chance to hold an open house on your own listing, allowing you to lose your virginity with dignity. You should do that at least once, if only for how it’ll make you feel.
Your farm, no larger than 500 homes, will generate, in one form or another, one transaction a quarter. (See a trend developing here, do ya?)
So far, that’s 16 transactions for the year — probably more. That leaves ya two short of making six figures. Here’s where they’ll come from — referrals. If you can’t do 2-4 transactions a year from referrals, get out — cuz you must really suck.
Note: You’ve likely noticed I didn’t say to get a website with an IDX. If you can afford it, try it out. But understand, most agents aren’t making a lotta money that way. It’s pretty much a boom or bust approach, depending upon the quality of effective GeekWisdom behind it.
Look, everyone doesn’t hafta do 100 deals a year, and frankly, most don’t want to. But if you pay attention, focus on just a couple three slices of the market pie, and work eight hours a day — you’ll make $100,000 a year fallin’ off a log. Well, maybe not quite that easily, but you get my point.
With huge and obvious exceptions, (1994 is an example. A couple years ago too, probably.) the potential for the average agent to earn six figures has been very real, at least in this century, depending upon price points in different markets.
You don’t need huge, or even moderate marketing money. You can be a card carrying TechTard. (Say hi if ya see me at a meeting.) There’s no need for anything special or expensive.
The fact is, you can make $100,000 from Halloween this year to Halloween next year. To those who take the bit and make it happen, I have this quote for ya.
Not sure, but I think it was John D. Rockefeller who was once asked, how much money was enough for the average person. His answer?
“Just a little bit more.”
I had my first six figure year in the 80’s. It shocked, elated, and scared me to death. I didn’t know it ’till the CPA called, sayin’ my return was ready. I picked it up, brought it home, and opened it for signing. And there it was on the top line — $108,232.
You can do it. Once you do? You’ll begin to wonder what it might take to make that much in a quarter, or even a month. Then it’ll hit you like a ton of bricks.
You wouldn’t be thinking like that if you didn’t know it was an option on your menu. It’s a life changing epiphany. It doesn’t happen for most — only those who take their game to what I call BigBoy level. Use your own measurement. Mine was a six figure year.
Even when I had my first six figure quarter, then later, my first six figure month, nothing has equalled the thrill of seeing those numbers on that tax return for the first time. Not even close.
Go for it — I promise you, that feeling is worth far more than the hundred grand.25 comments
So now that it’s time to think big and act on those thoughts, I went door knocking. Oh yes I did. I have made a public commitment to prospecting, and no, I do not have an unbroken chain of red X’s, and no, I don’t feel good about that. Okay so now that we have that covered, let me tell you about door knocking.
Another Realtor and I have on occasion been partnering up for the past year. She’s just gone full time so I recently suggested that we go door knocking. Not only has she never done this, but when I suggested it, she was sure that: a) she’d hate it; b) she’d have people cuss her out and slam the door in her face; c) she’d promptly be kicked off this planet; or d) all of the above. What she didn’t count on, couldn’t believe, and was tickled to find out was, e) none of the above happened. Here’s what we learned about door knocking: The hardest part is getting started. No really. Once you set a time, drive to the neighborhood and get yo lazy booty out the car, the hard part is over, and once you knock on that first door, the rest is a cake walk down Primrose Lane.
We picked a practice neighborhood. A neighborhood that we have a listing in, giving us something to talk about, but we really wanted a neighborhood in which we wouldn’t be too horrified to make some mistakes. It’s a forgiving neighborhood that I’m familiar with. Hard-working, blue collar, friendly people who are used to door-to-door sales people. They will either open the door to be polite, or kindly tell us no thanks. Sorry BawldGuy, not one person told us to go to hell- not one! The houses are close together allowing us to quickly move on to the next house, and we went in the afternoon, 2pm, our thought being the only people home at that time are either retired or SAHM, and both would be receptive to having a quick face-to-face with a friendly adult to break up the routine of the day, plus, retired folks always know what is going on in the ‘hood, and the SAHM are likely to be moving on eventually, and are plugged into the kid’s activities and other mobile families. But mostly, we just wanted practice and to overcome our unfounded fears.
We armed ourselves with business cards a’la Bloodhound Realty. An unobtrusive thing to hand across the threshold, and I know they’ve never seen anything like it before so there’s some novelty involved. Our script? “Hi! We are with Exit Realty and have listing on the corner. Can we give you this wallet-sized property card? If you know of anyone who might be interested in moving into the neighborhood, would you pass it on to them?” Suggestions for improvement are welcome.
So what was our experience? Our very first door, we were invited in to “look around at what I’ve done with the place!” Oooo’s and Ahhh’s and she’s not moving, but she’s retired and knows who is, so that’s a great contact in the neighborhood. At another house, a little old lady, all of 4 ft nothing, holding a child almost as big as her, stepped on the dog to open the door. ::Keep smiling:: Her son just got a divorce, she’ll pass the card to him. Thanks, (although what son wants to live around the corner from Mom?) and uh, sorry about your dog. In all, we made contact with only about 10 owners which in some ways was hardly worth the trip but we needed the practice and mostly we needed to stop being afraid to knock on doors.
Here’s the thing: I just got off the phone with Jenn. She went back to that neighborhood on her own today and met a wife who would like to sell. This was about an hour and a half total time invested over two days. Only one person who answered the door said “No thanks.” No one got angry or even rude, so, if you are hesitant to do this, take heart. People need to hear from and meet good Realtors who really care. They need you to make contact with them. They might not be sure about what’s going on with real estate in their neighborhood and they want this information. Better to get it from you who will treat them well, than someone else.
Jenn and I have already made plans to hit the neighborhood of another listing on Saturday morning, good lord willing and the creek don’t rise. Soooo. How about you? Need to drum up some business? Go out and hit a neighborhood yourself this weekend- we’ll be brothers in arms- and then I’d love to hear from you about what worked and what didn’t.28 comments
To some in real estate brokerage, hearing the ‘R’ word — that would be results, causes them the same stress as my son’s mom felt the first time she read his lips on the mound, and didn’t like it one little bit. She didn’t buy my explanation that he was talkin’ about the umpire’s new truck. Go figure.
When agents are talkin’ about what they’re doin’ to generate business, helpin’ more clients to achieve their goals, things get quiet when some jackass wants to know how it’s workin’ out for them. In other words, has any of their prospecting or marketing, you know, produced empirical results? Are they helping more people?
I’ve been writin’ a lot lately on the changes in marketing, and strategy I’ve been implementing this year. It generally breaks down into two broad brush categories — my local market — the rest of the country.
I’ve now been back in my local market for three weeks. Cat skins are now adorning my special wall. It’s a new wall, specifically set aside exclusively for local cats. In the few weeks in which talkin’ has turned into walkin’, my firm has put $500K into escrow. Considering I’m not even outa second gear yet, $15,000 ain’t bad for the first month.
I’ve had to adapt to what I’ve described as the new normal, (don’t like sayin’ paradigm shift) in the real estate investment world. It’s gained traction big time with thinking investors who realize, in fact, we’re not in Kansas any more, and unlike Dorothy, it’s pretty unlikely we’ll return any time soon. Some of what I’ve been sayin’ the last year or so about the general real estate investment arena might be considered tough love. Still, the folks with whom I love doing business, believe what I’ve been saying is universally true.
The takeaway here is that I’ve had to adapt — many times, on many fronts in the last seven years. Not all of my changes have been successful, but the ones that failed pretty much showed me where the right path was.
I’m already thinkin’ my new office is too small, and will expand when/if any adjacent space becomes available. I think it will, probably by the first of the year, which will be just in time.
Also, though I won’t expand upon it here with any specifics, I’m doin’ some other things that should allow me to expand even more. There is a God, and He loves me.
My prediction is that by no later than Halloween I’ll be forced to bring on a full time assistant — ah, the good ol’ days. Though 80% of their work will be generated by what we do locally, the conservative projections show two assistants by spring if not sooner. The ‘Assistant’ business model is still my favorite, as it allows me to do the $1,000+/hour work as many hours as is reasonably possible. You can check it out in this post, written several weeks ago.
The ability to adapt to changes, especially the extreme changes of recent years, is critical to our success. Regardless of how hard we work, if we’re playin’ by the rules no longer applicable, we’re doomed to fail miserably. I know, cuz I’ve seen me do it.
What’s always helped me be able to adapt more quickly to relatively extreme changes has been my ability to assess my results with a brutal lack of mercy. We’re either producing results or we ain’t. If it’s the latter, adapt quickly or die. If we’re not armed with the right tools, applying the right concepts in the context of the current reality, those cats will eat us alive.
What have you done to adapt to all that’s happened in the last several years?7 comments
Note: This post isn’t aimed at the (IMHO) 10-20% of the real estate agent population who, day in and day out, work hard, effectively, and with massive purpose.
Dad, ‘FDB’ to some of his friends and family, said those exact words to me a few months after I’d gone from part time agent/student, to real estate full time. He wasn’t one to sugarcoat his words. Silly me, I not only protested like a stuck pig, I gave examples of how hard I’d been workin’.
22 year olds can be exceptionally clueless at times.
Mind you, in 90 days of hard 40 hour weeks I’d produced exactly one damning goose egg on the listing/sales board. I now know what Dad was talkin’ about, cuz a 14 year old C- student could put something on the listing/sales board after 12 hard working 40 hour weeks. It’s seriously not possible to get shut out workin’ that many rigorous hours week in and week out for a full quarter.
The trick is to be honest about how you’re defining hard, effective, work.
It’s not what you tell everyone else either. Imagine your husband/wife is in the room with you. Now how hard are ya workin’?
I’ve never understood this, even though I was guilty of it myself. Dad busted me for constantly gettin’ ready to get ready, to do something really lame, that wouldn’t produce squat anyway. Why do people get licensed only to pretend to work, then complain about how bad the market is, or the rest of the litany we’ve all heard — or uttered ourselves.
Lord knows I’ve put in my share of overtime over the years. But I’m hear to tell ya, with rare exception, those who work at doing what gets them in front of serious buyers/sellers and/or doing what gets those buyers/sellers where they wanna go, don’t hafta work wicked long hours to make an exceptionally good living. If you like working longer hours for whatever reason, good for you — and your bank account. But you can earn six figures workin’ 40 hours.
It’s like diggin’ 4′ X 6′ holes, 6′ feet deep, for sump pumps. If you’re gettin’ paid $1,000 a hole, you’ll press hard to learn just how many you can dig in 40 hours of real work. You won’t be spendin’ time cleanin’ your pick and shovel, or takin’ an hour to lay out the hole’s dimensions. You won’t spend hours upon hours searchin’ the internet and bookstore for books on how picks ‘n shovels are made.
You’d be creating holes as fast as you possibly could. You’d be figuring out ways to dig more efficiently, without wasting energy. You’d learn about what tools might work better.
All of which begs the central question.
Why are you consistently screwin’ the pooch when it comes to diggin’ all the holes you can as a real estate agent? What is it that stops you from swingin’ that pick high in the air, bringin’ it down hard, and repeating that ’till yet another hole is dug — and another $1,000 earned?
Once and for all, ask yourself: Whom do you really think you’re kidding?
After I’d flailed and stuttered my way into a corner, Dad laid down what I’ve since called the FDB Challenge. If this post even pretty much describes you, consider growin’ a pair and take the same challenge.
Get a notebook, create a spreadsheet, grab a legal pad — anything on which you can document every single hour of your 40 hour workweek. Keep this journal for the next 12 weeks. If a task takes less than an hour — note how long it took. Leave no minute unrecorded. Don’t make a big deal about it. Each entry should take a few seconds. There’s no whining in real estate.
1. At least six hours a day must be spent prospecting. Not marketing — prospecting. Pick a method(s), but do it. All prospecting must include direct contact — phone, email, custom written letters, FSBOs, expireds, etc. You know the drill, so don’t pretend you don’t.
2. You must stand in front of a mirror repeatedly callin’ yourself a wuss if you don’t strictly adhere to rule #1.
The over/under for most agents is lasting ’till around 2ish on the first day. See, it’s not that we don’t know how/what to do, we just don’t wanna do it. So stop with the excuses, you sound like a 10 year old girl who’s skinned her knee at recess.
I promise you’ll be a completely difference agent if you take the FDB Challenge to heart. There’s no way you won’t generate tremendous new business working 40 hours a week for a dozen weeks with this much prospecting. You’ve got nothing to lose since you’re not producing much now anyway, right? Keep your eye on the ball. Don’t let up for the entire 12 weeks. Become driven.
Here’s what happened when I took the FDB Challenge
I’m goin’ from memory here, but I remember the numbers fairly well.
90 days later I’d listed eight properties. Four were already in escrow by the 90th day. I’d put five buyer sides into escrow. Two had closed by the last day. I had numerous potential listings in the pipeline, along with many who were referring to me.
Using today’s values, (in San Diego) those 90 days would’ve fattened my bank account by roughly $120,000 or so.
I was 22 years old, and couldn’t find my ass with a map, two guides, and a GPS. Yet those 90 days of seriously hard work, almost all of it prospecting, changed by life forever. It stripped me of ever having an excuse, regardless of market conditions, for not making a decent to magnificent living. It also caused me some acute embarrassment for a few days. I almost couldn’t be in the same room with Dad, I was so ashamed of how I’d been such a pathetic, excuse making slacker.
All that vanished in an instant when he allowed one day that I might have a future in the business after all — a huge AttaBoy comin’ from him.
Are you flailing around, wondering if you’ll be in the business next year?
Is theFDB Challenge for you?18 comments
In almost every baseball game you’ll ever see, there comes a point when the starting pitchers run into a situation on which the game’s outcome will likely pivot. Take last night for instance — the Padres/Cubs game in Chicago. Padre’s starting pitcher Keven Correia had a rocky first inning. The first two batters hit safely, resulting in men on 2nd and 3rd with nobody out, and the heart of the order now due up.
Kevin went on to pitch shutout ball ’till lifted for a pinch hitter in the seventh inning. That first inning could’ve gone either way. But he skinned that cat in short order. He’s not Bob Gibson, in that he can’t overpower hitters. He gets batters out the old fashioned way — by pitching, not throwing. When the season’s over, Kevin will have won 13-15 games, a total which is distinctly in the upper echelon of major league results.
HIs fastball can be hit by high school players if not located well. His curveball reminds nobody of Sandy Koufax. Yet he keeps skinnin’ more of his share of cats. Why? Cuz even though his ‘stuff’ ain’t hall of fame caliber, he knows how to make the best of what he has, and consistently does what all winning pitchers do, regardless of what they’re throwing. He disrupts batters’ timing. I know this first hand, as I had the pleasure of havin’ the dish once when he was a junior college pitcher in San Diego.
It ain’t rocket science– but a helluva lot easier said than done. It’s analogous to success in real estate brokerage. Those who do what produces consistent results — skin the most cats — win. And to quote all of our grandpas, ‘there’s more than one way to skin a cat.
Last Thursday I wrote a post about a guy on the east coast who’s been skinnin’ cats at a pretty impressive clip, almost all on the buyer side. (He’ll close 70 sides this year.) Exclusive of any referrals, 100% of his business comes directly from his online efforts, which generate about 7-8,000 leads yearly, give or take a thou.
Greg Swann made an astute observation and asked a question directly related to all those ‘leads’. In fact, he was unwilling to even call ’em leads.
Here’s my question: If he’s converting only 1 out of 100, why do you call them leads? Those aren’t potential clients, they’re names — some of them with working phone numbers.
If you hear from 8,000 people a year, that’s 22 a day, every day, including Christmas. It’s got to take at least a half-hour per each one to connect, forge a relationship, gather details, set up searches, isolate likely properties and then decide whether or not to proceed. That’s eleven hours a day, eleven of the best money-making hours of the day.
This doesn’t make any sense to me, Jeff. If I had to talk to 22 new people a day, I would shoot myself before the end of the first day — especially if I knew I had to do that five days in a row to get to a paycheck.
Whatever. My thinking is they’re not leads. They’re obligatory sign-ups to an IDX system.
His comment made sense to me, so I said I’d be talkin’ with the guy to find out how he’s skinnin’ all those cats when the quality of almost all the ‘leads’ suck like a turbo charged Dyson.
The answer had me grinnin’.
He doesn’t call anybody with the hen’s teeth rare exception of the buyer wishing to purchase a home in the $1.5 Million range and above.
Not only does he not call 99.999% of those 7-8,000 IDX leads, he has so many of ’em call him, he has to have a full time assistant to handle the cherries that aren’t cherry enough for his time.
In other words, he let’s the serious buyers filter themselves onto his phone line through their effort, not his. By the time they do that, I imagine the conversation is relatively fruitful.
No drip marketing in the sense that he’s not sending periodic marketing messages to them in an attempt at building relationships. Just an automatic system givin’ them the listings they wanna see on a regular basis. When they’re serious, they call. Enough to close 70 sides this year.
Surely there will be buyer agents out there who will critique this M.O. Fair enough, to each their own.
70 closed sides, and they’re all callin’ him first.
Works for me.
Once upon a time, maps were marked HIC SVNT LEONES to denote unknown territory. Hic Svnt Leones means “Here are lions”. Scary. Uncharted territory is scary.
I’ve been paying very close attention to how I accomplish things: What I do and what I don’t do. Why some things are easy and I embrace them and why are somethings harder and I avoid them. I’m trying to improve my business and my productivity so it’s kind of nice useful critical to understand what makes me tick. Or tock. I need to figure out the internal roadblocks that keep me from achieving my goals. I want to recognize them immediately so I can overcome them as quickly as possible rather than letting them pile up to barricade levels.
There is stuff, for lack of better word, that I dislike doing, but when it’s up to me to do everything, and in real estate it often is up to me to do everything, I have to learn to just get on with it. I know this but still, there are things that I don’t like doing so I begin to waste my own precious time, using procrastination as motivation. An epiphany: It recently occurred to me that I would be furious with anyone else who wasted my time the way I so carelessly waste my own time.
Some of the habits I have fallen into are now clear even to me as red flags that I’m avoiding something. Twitter of course, is one example. What? Is it that obvious? Okay, so I use social networking to avoid doing some things that I find difficult. I recognize it now so I can overcome it, and that’s the thing. I once thought this was pain avoidance, but now I see it as fear. Of the unknown. As in Hic Svnt Leones. What is going to happen if I do this thing? What unseen beasties lie in wait to pounce on my soft under belly? I have a very fertile imagination and sometimes it grows weeds in the garden of the mind, but the only way to pull the weeds is if you can recognize them. You have to know which plants are the flowers and veggies, and which plants are like kudzu in Georgia. I’ve been paying attention. Now that I can recognize a red flag going up, I only have to ask myself- what am I afraid of? The answer is typically, no- it’s always something minor, or it’s easily handled, or it’s easily overcome. I may have to break it down into bite size pieces but, quite honestly? There’s nothing I can’t do. You neither if you think about it.
Humans are productive by nature. It’s in our DNA to be working, accomplishing, solving problems, setting goals and achieving them. The best part of learning about what I’m afraid of is that it gives me more opportunities to be productive, to make and meet bigger goals, and accomplish those whispers of dreams that I sometimes barely dare to recognize. Those explorers who ignored the warnings and those intrepid travelers who step into uncharted territory today are the only people who get to stand on the top of the mountain and roar. I want to be one of those people and I’m on my way. See you in that uncharted territory where Hic Svnt Leones.12 comments