Category: Help-U-Sell

Cool Stuff From Success Summit!

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There was so much NEW at this year’s Summit!  The large group of attendees brought an energy that sustained us for three days and made it hard to say goodbye to Las Vegas.  In no particular order here are SOME of the  cool things that happened:

  • Mr. Westman attended!  Head of our parent company, Infinium, Ron Westman tends to stay in the background usually letting his team navigate the important Help-U-Sell meetings that occur from time to time.  Not so this Success Summit! He was present and involved for every minute of meetings and social functions as well.  It was a wonderful opportunity to interact with the man that got us through the worst real estate market in history.  Thank you, Ron Westman!
  • A new CI followup program was unveiled.  Working with Mike Paholke and Excel Print/Mail, Jack Bailey, John Powell and  the home office team developed a series of 8 customizable postcard mailers for staying in touch with past clients and other Centers of Influence.  The program is remarkably inexpensive and provides automatic followup to our most important friends.  Watch your email and attend the weekly Power Hour meetings for details.
  • A partnership with Movement Mortgage was presented.  This rapidly growing mortgage banker comes with an interesting proposition.  Instead of waiting to process a loan application until the closing date is imminent, they process everything immediately, completing the package in 7 – 10 days regardless of closing date.  This enables buyers and sellers to close early if they choose but more importantly, exposes problems EARLY so that there is no last minute panic.  In addition, Movement Mortgage has agreed to undrewrite 25% of the cost of the new CI program mentioned above!  Now it is an even better bargain!
  • Robbie Stevens showcased our new corporate website, slated to go live around the first of the year.  It knocked my socks off!  Really:  clean and sleek, very forward looking and modern, it makes our competitors’ sites look ancient.  And the functionality – rich in video and short on verbiage – is superb.  There is a great new home search function that includes a drawing component where any customized geography can be searched.
  • OMS Lite was presented.  This is a new app available at the Apple Store for Iphone and pad that enables Help-U-Sell brokers to add a new listing on the fly.  It includes the ability to upload photos and even phone-shot video directly into OMS.  An Android version is running through the approval process and should be available soon.
  • Platinum Edge got a dusting off and an update.  This tool for use with luxury properties has a new look:  stunning black and silver.  Guidance on how to use this tool when working with the top of the market will be a feature of future Power Hour meetings.
  • Ron McCoy presented a revamped awards program that recognized top listing offices, top buyer side offices and  top closed side offices as well as a new Don Taylor Award of excellence.  Congratulations to Jack and Cheryl Bailey and Help-U-Sell Greensboro for being tops in Buyer Sides with 59,  and to Richard Cricchio and Help-U-Sell Honolulu Properties for being tops in New Listings with 151.  Honolulu Properties was also #1 in total Closed Sides with 167.  The special Don Taylor Award went to Brenda Fischer at Help-U-Sell Options Unlimited in Terre Haute, Indiana. In a smaller market with a lower average sale price Brenda, through some aggressive and very creative marketing has captured a BIG share of the market and shown us all there is more to parades than marching!
  • Maurine Grisso, back from almost two years of illness, delighted the group with her newly published book ‘Before You Sell Your Home.’ Available on Amazon.com and Kindle, it will be on SPECIAL for one day, October 22, for the ridiculous price of $.99.  Mark your calender, buy the book and then give Maurine a favorable review on Amazon.

If there was a theme about this meeting is was that marketing – particularly core marketing to your geographical target market – is supremely important today and that no group deserves more attention than our CIs.  Systems to get those two things done automatically (and others) are key to growth.

Having missed last year’s Summit, I have to tell you I spent many months hungry for the kind of interaction that only comes when Help-U-Sell brokers from across the country come together to share and learn.  I am delighted that I could attend and if I ever miss another – I’ll probably be dead!

Gearing Up For Summit

The Help-U-Sell Success Summit takes place next week in Las Vegas.  It’s an annual event where family members from across the country gather to energize and plan.  I love this meeting because it is the time when I get to interact with a sizable group of really good real estate people.

I’ve been working on my opening comments and it seems this year I have a lot to say.  I believe we are on the verge of big change in our industry.  I can see everything shifting rather quickly leaving all but the bravest and most forward thinking out in the cold.  I believe what happened in the securities business after Charles Schwab and what happened in the travel industry after Expedia Orbitz and Travelocity is about to happen in the real estate industry.

Empowered consumers, armed with information that used to be available only to Realtors and with increasingly intuitive tools are doing more and more of the job for themselves.

When Schwab put information and tools once reserved for stock brokers online for anyone to use, he also slashed commissions.  Because his clients were doing a lot of the work on their own, he started charging a Low Set Fee for trades.  The industry was transformed.

Not so in real estate.  Consumers have the information, they continue to get the tools and today do more and more of the work that goes into buying and selling on their own.  What hasn’t changed are the fees ordinary brokers charge.  My yoga teacher said it best:

I don’t know what our agent did.  We found the house, we negotiated the sale, we did all the running around.  She opened the door and collected a commission check that was bigger than our down payment!

I’m not saying Realtors aren’t important.  In truth, they provide a good and valuable service.  It’s just that the service provided is not worth 6% of the sale price.  With consumers increasingly able to do the work themselves we’re just moments away from the tipping point where they decide the good and valuable service real estate agents provide is not worth the price.

It  is then that ordinary real estate agents will become irrelevant.

Add to that dynamic the fact that affordability is becoming a huge issue . . . and you have a near perfect storm.

Affordability?  Yes.  Today, fewer Americans can afford to buy a home than in years gone by.  Prices have continued to slowly rise while median household income as fallen.  Yes, it has.  Today’s families earn less than they did 5 years ago and that fact has pushed many out of the housing market and  into the rental market.  In parts of California, fewer than 30% of the population can afford to buy the average home.

So on one hand we have these dinosaurs, these Realtors, clamoring for their 6%.  On the other hand, sale prices (which include that 6%) are getting out of reach of consumers. Something has to give.

My guess is that the guy who can’t sell his $300,000 house and  pay his $18,000 real estate commission will opt to get rid of the ordinary agent, drop the price to $285,000 and list with a Help-U-Sell broker charging, say, $5,950.  That’s how we make homes affordable AND restore the value-for-value relationship between real estate services and fees.

Coming Soon to a City Near You: The Affordability Crisis

It’s starting to show up in pockets across the country – growing pockets.  Most people can’t afford to buy a home.  We are becoming a nation of renters.

In parts of California, fewer than 30% of the population makes enough money to afford the average home.  The effects on the real estate market are predictable and real.

What has caused this situation?  Two things.  First, the slow but steady increase in values after the real estate collapse. After plummeting between 2006 and 2012, values have been rising.  We had a brief period of huge increases but that has settled back to a more sane 3% – 5% a year.

The other factor – the one nobody wants to talk about – is a corresponding FALL in wages.  All across the country, median household income is down from where it was five years ago.  Here, in San Diego, the decline is 6.3% – $61,426 vs $65,575 in 2009 – while in Phoenix the decline is closer to 10%.

The only metro with positive growth is Pittsburgh.  Those lucky Pennsylvanians experienced a 2.1% increase in median household income over the past five years.

It is an election year and it would be easy to become very political in a conversation about why wages in the U.S. are falling, but that is not our purpose here.

Looking forward you have to wonder if we’re not headed toward another drop in prices.  If people can’t afford to buy houses and houses need to be sold, something must give.

But this is also the type of climate that sometimes produces innovation.  Perhaps a new wrinkle in real estate financing will enable people making less to afford more.  That’s what happened back in the early ’80s.  Houses became un-affordable because of a huge run up in interest rates.  Lenders responded with Adjustable Rate Mortgages, marketed as temporary financing.

In addition, there would appear to be a big market for affordable housing, and the construction industry will certainly respond.

But for the average American needing to sell a house . . . the future looks murky at best.

Of course, the way to make your home MORE affordable is to reduce the price.  And one way to mitigate the impact of a price reduction on your net proceeds is to drop your high priced, percentage based real estate broker in favor of one charging a much lower Set Fee.  Clearly, a price reduction is going to hurt a whole lot less if, instead of paying your broker $18,000 to sell your $300,000 house, you’re paying a low set fee of, say, $4,950.  Where do you find such a broker?  At Help-U-Sell.  Use the link to the right to find an office near you.

Us, Them and You-We-They

Sometimes I think the way we market ourselves reinforces all of the bad rumors ordinary real estate agents spread about us. By ‘WE’ and ‘US,’ I mean Help-U-Sell.

There is a great book by Al Reis and Jack Trout called ‘Marketing Warfare.’ Really:  it is an absolute MUST READ for anyone trying to establish a real estate company (or any other kind of company, really).  One of the principals they advocate is studying your competitor’s strength, and then finding the weakness within the strength . . . and exploiting that.  I think our competitors have done a pretty good job doing it to us.  We offer home sellers the option of finding their own buyer and thus saving tons of money.  That’s a strength of our program.  Our competitors turn that against us by telling sellers we are a For Sale By Owner company and they will have to do all the work.  That bad rumor is further reinforced by our name:  Help-U-Sell.

Our primary marketing message – which is:  we are here, people use us, it works, and they save money – does a pretty good job of opening many doors.  However, I think it sometimes falls on deaf ears if the bad rumors have become established as if they were fact.

I wonder if one of our key tools – The Seller Savings Comparison (you know:  the You-We-They chart) – doesn’t further reinforce the mis-information about us that is out there. We all know it’s a perfectly logical document that sellers can have difficulty understanding because it flies in the face of what’s normally done in the industry. We know we have an educational challenge when we use it to explain our fee structure;  and the first thing we usually talk about is how they save the most money by finding their own buyer.  I think that taps into the well of bad information the other guys have installed in the general psyche, reinforcing that false picture of us.

Maybe the YOU option should just be a footnote.  Maybe we should stop talking about a showing fee or buyer agent fee.  Maybe we have only two options:  WE find the buyer or THEY find the buyer.  For example:

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Discussion about seller participation and saving even more ends up being a conversation, a footnote, not the featured attraction.

One of the things I find interesting about this ‘Two Way’ approach is that it shows we have an incentive to find the buyer ourselves that ALSO increases the seller’s bottom line.  They save MORE and we make MORE.  In the traditional ‘You-We-They’ chart, the fee is seen as going up, not down.

NOW HEAR THIS:  this is not a change I am advocating (yet).  I’m putting it out here to see what you think.  Are we feeding into the mis-information about ourselves that is out in the marketplace by over-emphasizing seller participation and finding your own buyer?  Would this kind of presentation be easier to explain and easier for sellers to understand?  Please, click the ‘add a comment’ link below and tell me and everyone else in the company what you think!

They Don’t Call ’em BROKErs Fer Nuthin’

You are a real estate broker, an ordinary real estate broker – which means you charge sellers something like 6% of their homes’ sale prices and hire a bunch of agents to work in your behalf.

Since the day you started learning about this ordinary business, you understood that the way to build your business, the way to grow and make a healthy profit was to recruit more and more agents.

Agent’s, you learned, come to you with their own sphere of influence, their own un-tapped client base.  Every time you add an agent you acquire the ability to pocket some of the dollars that will fly when he or she sells something to their family, friends or neighbors.

You attended seminars where you learned you weren’t actually in the real estate business, you were in the people business; and your single most important task was to recruit!

You lusted in your heart over 500 agent offices!  You bought mahogany desks and Herman Miller chairs in hopes of attracting more and more agents.

You also made adjustments in your commissions splits to make your office more competitive on the recruiting front.  You started brand new, ‘green’ agents at 65%.  After 3 closings, they went to 70% and then more as they did more and more production.  You even had a 100% program that kicked in for the balance of the year once an agent generated $24,000 in Company Dollar.  Your average commission split to agents is 75%.

All of this emphasis on recruiting has netted you 30 agents!  Very good!  So . . . how’s that workin’ out for ya?

Because you have a mix of new and experienced agents, your average per person productivity is 8 closed sides a year (about industry average).  That’s .67 closed sides per agents per month.

Since your average sale price is $300,000 and your average commission % per side is 2.65%, your gross per closed side is $7,950.

Because you average paying your agents 75%, you get $1,987.50 of that!  Since your agents average .67 closed sides per month, you can count on $1,332 per agent per month and since you have 30, that’s almost $40,000 in company dollar each month!

Here’s a breakdown of your monthly expenses:

Franchise fees (6%):      $9,587

National Ad Fee (2%):  $3,196

Office Rent:                      $6,500

Dues/Memberships:        $300

Office salaries:                $6,500

Your salary:                     $5,000

Insurance:                            $500

Equipment/supplies:      $800

Utilities:                               $600

Vehicle Expense:             $800

Miscellaneous:              $1,000

Marketing:                      $4,000

Total:                              $38,783

All of your hard work has netted you $1,217!  That’s a 3% profit!  I know that sounds really low.  Any reasonable business person would be looking for 15% at least, right?

Well . . . I’ve looked at the profitability of ordinary real estate companies for years – 30 years to be exact.  There were 10 years at the end of the last Millennium that I looked at balance sheets a lot.  The very best offices I saw made between 3% and 5% in profit.  Most made 0% and many lost money every month.

But the solution to your problem is right before your eyes!  Obviously, you just need 3 – 4 new agents!  Your costs will not go up significantly and 3 more agents will add almost $4,000 to your bottom line!

But, wait a minute.  Currently 35% of your gross is being generated by your top producer, Sally.  She’s been with you for years and loves you!  But your biggest competitor just converted his office to a new franchise that pays agents a residual based on the production of the agents they recruit.  Sally’s just announced that she’s leaving – she’s going over there and is planning to build a nice team of agents.  And where are most of these agents going to come from?  Right:  your office.  That’s where her closest friends are.  I think you can expect your gross to drop by 50% in the coming months.

You might need to start looking for a second job.

This nightmare is sooo common in our industry.  I’ve seen it over and over again.  And the problem is right up there at the top.  The ordinary broker believes that he is in the recruiting business, that hiring agents is the way to expand his business and profitability.  History clearly shows that that’s simply not true.

If you want to be successful in the real estate business, GET OUT of the recruiting business.  GET BACK INTO the real estate business.  Expand your business by:

1.  Having a superior offer for consumers.  It can’t be nebulous stuff like professionalism, quality service, a personal touch or anything like that.  You have to give them MORE than your competitors and charge them LESS.

2.  Becoming a Marketer.  Market your superior offer aggressively to homeowners in your target market.  Track meticulously, adjust constantly, and own the leads that are created.

3.  As your business grows (and it will), hire agents ONLY when you have more business than you can handle with your current staff.  Hire them not to save you, but to help you take care of the business you have created.  Pay them accordingly.

And if you’d like to make this shift easily and with excellent support, become a Help-U-Sell broker.  That’s who we are and how we operate.

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