Category: Management

The 10 Most Important Things I Know About Running A Successful Real Estate Company

I’ve been doing this for 34 years: helping real estate brokers be more successful. I’ve worked with ordinary brokers whose lives revolved around recruiting and I’ve worked with extraordinary brokers who put the consumer first and built real businesses.  Over time, I’ve learned a few things that are powerful and true for any real estate company.  Here are my top 10:

No leads means No listings.  Really, I can’t tell you how many times I’ve had a real estate broker kavetch that s/he is not getting any leads.  In time I discovered that there was a direct correlation between lead production and listing activity.  Think about it:  why would you have leads if you have nothing to sell?  So, got no leads?  Go get a listing.

The inquiry is where the rubber meets the road.  Dramatic improvement in the bottom line is possible if you focus on the intake process.  A 3% to 10% increase can usually be achieved in a matter of weeks if you just tighten up how you respond to inquiries, how effectively you procure contact information and permission (real or implied) to continue the conversation.

Incubation is essential.  Going hand-in-glove with the previous point, you must have a way to maintain, track and interact with your leads going forward.  Our business is very different from what it was ten years ago.  Rarely does anyone contact you, needing to get their home on the market by the weekend.  Now, most leads take 3 – 12 weeks to mature, sometimes more.  Without a lead database that you massage regularly, you will not be competitive. It’s critical.

Face-to-Face always wins. We may have leapt into the digital information age, may have transitioned to online and less personal marketing, but this has only made face-to-face contact more powerful.  Never email or text when you can call or see the prospect in-person . . . and in-person is probably 40% more effective than calling. This is most important when working around one of your listings.  A mailed Just Listed or Just Sold card is not nearly as effective as one that is hand delivered with an attempt at a brief conversation.

Key Performance Indicators (KPI) are . . . KEY.  In our business, the most important KPI are: Days on Market, Sale Price as a Percent of List Price, % in-house sales, and Seller Savings.  If you will gather this data on your company and then gather the same data on your MLS – you will always come out way ahead! If you don’t, there’s a problem and we ought to talk about it! Using this kind of information in listing consultations and marketing can make the difference between getting the listing and not.

The most important thing you can do with online marketing is to become findable.  That means:  Claiming your business on Google and Yelp, building out your listing with photos and information and getting some five-star reviews on each site.  It means creating a Facebook Business page, posting relevant and important information and occasionally boosting your posts to expand your reach. It means updating your Zillow and Realtor.com profiles and building out your ‘Meet the Team’ page on your Help-U-Sell website with photos and bios on all staff.  And, a little icing on the cake:  it means dropping a few bucks each month into Google AdWords.

Differentiation is essential.  It’s why you became a Help-U-Sell broker. And differentiation doesn’t end with low set fee pricing; it should radiate into all areas of your consumer offering.  People contact you because they think you might save them some money; but they will do business with you because you have a better marketing plan, a more savvy approach to the business, and the skill and experience to get them to and through closing.  Build your difference in all areas, and then brag about it!

The function of a listing is to create another and another.  Yes, we market to get listings.  But when we get one, that’s when we pull out all the stops.  If you plan your outreach in the neighborhood to go into high gear the moment a sign goes in a yard, you will often find another listing or two.  Marketing around a competitor’s listing is also powerful (Arounds), but nothing works better than marketing hard around your own.

Every Help-U-Sell Marketing Plan should include:  FSBOs, Expireds, Arounds, Just Listed and Sold, and Cis.  There is no flexibility here.  This is essential.  Beyond this you can pick and choose from things like EDDMs, newspaper ads, radio, online campaigns and fake tatoo logos.

There is a direct relationship between your marketing budget and your revenue.  In other words:  you have to spend money to make money.  If your marketing plan is designed correctly and faithfully executed, you should generate about $10 of revenue for each dollar you spend.  So if your revenue goal for the year is $250,000, you probably need to be spending $25,000 a year on marketing:  about $2,000 a month.

Involvement: Part of being a Help-U-Sell Broker

I’ve been looking at the numbers lately.  The one that keeps coming up is 30.  We have 30 offices in coaching right now.  We usually draw about 30 offices to the Wednesday Power Hour calls.  Our annual Success Summits have drawn about 30 offices each of the last few years. That begs the question:

Where are the other 70?

When you join a franchised organization, you have a choice about how you will interact.  You don’t have to do much more than correctly use the brand and operating system, pay your royalties and don’t break the law. The opportunity to become involved, to learn and grow, is just that: an opportunity.

But, we’ve found that those who take advantage of the opportunity to interact are the ones who grow and thrive in the Help-U-Sell family.  The 30 above – and there are variations in each of those lists – are the offices that show the greatest percentage growth in production year over year.

I’m not going to preach too much here.  Truth is:  there are about 30 regular readers of this blog and they tend to be in the lists above, too.  In other words:  I’m probably preaching to the choir! Still, let me remind you of the opportunities you have to engage with the Help-U-Sell Family, opportunities that have proven to have a positive effect on your bottom line.

Power Hour:  Second and Fourth Wednesday each month at Noon Eastern time (9am Pacific). One hour of strategies, best practices, and what’s new. Really:  not to be missed.  Here is a registration link:  https://attendee.gotowebinar.com/register/813923762165244931
Webinar ID: 685-513-379

Help-U-Sell Facebook Family page: our own private conversation.  Only Help-U-Sell people can get access, so we speak freely about our challenges and successes. If you need something or want to share something that’s working, this is the place for you! But you must be a member: request that on this page: https://www.facebook.com/groups/helpusellfamily/

Success Summit 2017: December 5 – 7 at the Golden Nugget hotel in downtown Las Vegas. Half Day – Full Day – Half Day.  Get the scoop on new programs and initiatives, automated and predictive marketing as well as best practices, networking, social time and overall excitement! This is always a GREAT MEETING! Register here: https://connect.helpusell.com/help-u-sell-success-summit-registration/

Help-U-Sell Connect: Our internal newsletter.  Meet top producers, get reminded of deadlines and marketing intiatives.  All the news you want to read in a quick and easy format.  https://connect.helpusell.com/

Coaching Groups: Currently we have 7 groups running. Members meet once a week for an hour and help brokers stay focued on what’s most important as they juggle the many commitments that drive their businesses.  These are real, gritty, how-to meetings with lots of interaction between members. We match new members to the appropriate group based on production, stage of growth and goals.  Don’t operate in a vacuum! Join a Coaching Group by contacting James Dingman or John Powell.

There’s more: things like this Blog, support@helpusell.com for quick help with tech issues (or anything else), formal online training classes, one-on-one help and consultation on operational and tech issues, and so on. But I think the most powerful opportunities are above.  You owe it to yourself and your business to PLUG IN. Make the commitment today by clicking on any or all of the links above.

Measuring Success

We measure the success of our businesses in lots of ways and each tells us something different about how we are doing.  Some, though important are not quantifiable;  personal satisfaction and sense of accomplishment come to mind.  You can’t measure them numerically but you know when they are present and when they are not.  From a pure business standpoint, however, there are really only three metrics that establish the success of a business:  Profitability, Market Share, and Market Value.

Profitability:  Tells us how efficiently we are operating the business and whether we are building a business worth having.

(Let me digress with an example!  Suppose you are an ordinary real estate broker.  You have 20 agents and gross on average $90,000 per month.  That’s 20 agents doing half a side a month in a $300,000 neighborhood with you charging, say, 6%.  However, month after month you look at your bottom line, and you see $500 or $1,500 or $2,000.  It seems very little return for closing ten sides a month!  Obviously you are not running very efficiently!  So you do a little analysis. You look at your expenses, and right there you see it:  75% on average going for agent commissions.  It is the single biggest item in your operating statement.  You’re not really operating on $90,000 Gross, you’re giving away $67,500 before you even begin to pay expenses.  Fughetaboudit!  This is definitely a business not worth owning!  Shut it down!)

Market Value:  What is your business worth?  What could you sell it for?  Truth is, most residential real estate businesses are not worth much.  That’s because the business is being built by independent contractor agents who can leave at any time for any reason.  Therefore the value is really the office location, signage and fixtures plus the listing inventory at the time of purchase.  Your Help-U-Sell business is different.  It is a business built on marketing and replicatable systems.  It is not personality driven (like most ordinary real estate businesses).  If you’ve done it right, a new owner should be able to step in, take  control of your marketing and office systems and continue to produce just as you have.  That’s a business worth having and one that has value.

Market Share:  This is where I want to focus because it is a much bigger topic than you might think.  Technically, when we talk about market share we’re talking about what portion of the business in your target market you are getting.  In real estate, that means closed sides.  So, last year, how many closed sides were done in your target market, and how many of them were done by you?  Is it 2% or 5%?  Is that percentage growing or shrinking?  What is a reasonable goal for next year?  And what are you going to do differently to achieve that?

Close Sides market share is a wonderful metric, however there are problems with it, too.  First, it’s a big number that fluctuates a lot in our business.  It wouldn’t make sense to measure closed sides monthly; in our business we have big closing months and not so big ones.  It makes more sense to measure it annually or semi-annually, and you should.

What makes more sense to measure your effectiveness month in and month out in your target market is Listing Share.  This month, how many listings were taken in the target?  How many of them were taken by you?  What share is that?  20%? 50%?

Not only does Listing Share give you a metric you can track from month-to-month, hopefully seeing growth throughout the year, it measures your success at getting your key message into your target market.  You are in the business of teaching home sellers that they can ‘Sell Fast and Save Thousands’ with your Help-U-Sell office.  If your Listing Share is growing, so is your effectiveness in marketing that message.  I think you should be measuring Listing Share every month and cumulatively throughout the year.

Going one step further, there are a couple of Key Performance Indicators that don’t really demonstrate the success of your business but rather your ability to deliver on the promises you make your home seller clients. They are Days on Market, Sale to List price ratio, and % of in house or seller generated sales.

To me, Days on Market is from Listing to Pending status.  We don’t really control how long it takes to get from contract to closing and that’s why I don’t like to include it.  However some MLS’s don’t report the under contract date, so you have to work with the data you can get.

Sale to List price ratio shows how far off list price sellers had to come to make a sale.  Did they 95% of list price on sale?  Or was it 97%.  This does indicate your effectiveness at helping sellers set a realistic price but can also demonstrate the power of your marketing to generate a flow of buyer prospects.

% of In House Sales and/or seller generated sales is important to Help-U-Sell Brokers because these are the situations where sellers save the most.

All three of the KPI can be used as powerful marketing ammunition.  Compare your results on the first two against the MLS in your target market.  You will almost certainly find that your performance is far better than the MLS, and that’s something to share with potential sellers.  The third KPI is valuable in helping a seller decide to participate in the selling process by holding their own open houses.  It says, ‘You really can do this and save a lot of money!’

Before we leave this topic I want to hammer home one point.  Most of what I’ve talked about here involves your Target Market.  That’s probably NOT a Zip Code or Codes (too big) or the entire MLS (WAY too big).  It is that town or collection of Carrier Routes you have analyzed and chosen to plant your flag.  It’s where you focus your marketing, where you are the expert.  Measure your Market Share, Listing Share and KPI there, where your program is aimed.

A Must See For The New Year

Help-U-Sell Brokers, you know we talk about list to sale price ratio and days on market all the time.  We use those metrics to show that our production is far superior to that of the average broker/agent in the MLS.  And, honestly:  I have never seen a Help-U-Sell office that did not beat the MLS on those two metrics!

Well . . . you need to see this 10 minute video.  It documents how a Coldwell Banker mega-team in Miami manipulated that important data to skew the ‘truth’ in their own favor.  What they did is truly devious and has big implications for decision makers in lots of industries.

So, grab a cup of coffee and settle back, maybe toggle to full-screen view, and close out the year learning how NOT to do it.

What Does 1/4% Increase in Interest Rates Mean to You?

With the Fed raising interest rates for the first time in almost a decade this week, there are a lot of questions about what it means to home buyers.  People want to know how much that kind of increase might impact their anticipated mortgage payment and how much it might affect the amount they can borrow.  I’ll attempt to give some guidance in those areas in this post.

First, understand that this is a tiny increase.  The Fed didn’t want to shock anyone.  They wanted to signal that we are beginning a period of gradual increases.  Most experts believe we will experience several small increases in the rate during 2016, which should be a motivating factor for anyone thinking of buying.  Every time the interest rate inches up, so do anticipated mortgage payments; and as payments rise, the amount one can borrow decreases.  Add to this the fact that prices are slowly rising and soon many may find themselves priced out of the market.

1/4% is not much; but to give you an idea about how this small bump up affects payments and the amount you may be able to borrow, I prepared the following chart.  You can see just how small the increase is:  at 3.75% interest, a 30 year fixed rate mortgage costs $4.63 per month per thousand borrowed.  At 4% it is just 14 cents higher, $4.77 per thousand borrowed.  I’ve shown the principal and interest payment at 3.75% and 4% for 4 different mortgage amounts and the difference.  You can see that a $500,000 mortgage will cost $71.50 more per month after a 1/4% increase in rates.

Continuing with that $500,000 example:  what if the $2,315.58 payment at 3.75% was the most you could afford?  What if the increase in rate meant you needed to decrease the amount borrowed to keep that original payment?  That’s what’s on the next line down:  $485,447.  So if you were looking at houses based on a $500,000 mortgage (probably in the $650,000 – $700,000 price range), this little 1/4% bump in rates may have cost you $14,553 in purchasing power!

increase

I realize the type is a little small but if you’ll click on the chart, it will open in a larger view.

 

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