Category: Management

Mastering the Buyer Inquiry

Yesterday, on the regular Wednesday Help-U-Sell training webinar, we worked on the  Buyer Inquiry.  I think this is one of the more critical moments in the client life-cycle, if not the most critical.  It’s the place were all of the power and energy of the marketing program falls right into the hands of the person answering the phone.  This is the Arena for your real estate career, where it all happens.  It’s the Moment of Truth you will either leave with the beginnings of a client relationship or leave with nothing.  It is clearly where the rubber of all your preparation and hard work meets the road.  I am absolutely convinced that this is the single most important skill to polish if you want to increase your production and your own bottom line . . . and I’m not kidding or puffing the goods.

Think about it:  if 1 in 10 buyer inquiries make it to the closing table, how much better would your income be if 1 in 5 buyer inquiries made it to closing?  Right:  Twice as good.  So, without even listing more or improving your closing ratios, you could double your income right now by mastering this little five to ten minute phone conversation!

You are in business to help people sell and purchase real estate.  Your measure of success is closed transactions.  You spend thousands of dollars each month to attract the buyers and sellers who will fuel that process.  The Buyer Inquiry phone call is the bridge that connects all of  your marketing dollars with the big payoff of a closing.

Think about your car for a moment.  You have an engine under the hood.  It’s powerful, but all by itself it’s not going to take you anywhere.  To GO, you have to have something else:  spinning wheels. Of course, without the engine, the wheels don’t spin and you still don’t go anywhere.  In your car, there is a contraption that sits between the engine and the wheels that translates the power of the engine into the spinning of the wheels and it’s the Transmission.

In your office, Marketing is the engine.  It powers everything.  The end result, the spinning wheels, are closings – that’s what we want.  But without a strong transmission – the well executed Buyer Inquiry call — we don’t go anywhere.  Let’s put some numbers to that.

Let’s assume it costs $85 to make the phone ring one time in your office with a potential buyer on the line.  Now, I didn’t just pluck that $85 from thin air.  I’ve been working with brokers on operational issues like this for 30 years and I can tell you those who did the math were usually surprised to discover that every buyer inquiry cost between $80 and $100 dollars to generate.  If you were to add up everything you spend to market your company and then divide that by the total number of buyer inquiries you receive over a period of time, you’d know your own cost . . .

So, everytime you pick up the phone and it’s a potential buyer on the other end, just picture that you’re holding about $85 in your hand.  You can either toss it in the trash can . . . or you can INVEST it in your business by capturing that buyer lead.  The payoff for capturing the lead can be very large:  like about $6,000 – that’s what the average buyer side commission is in Help-U-Sell today.

Of course, you know and I know you’re not going to get every single buyer inquiry to the closing table.  In fact, you probably won’t get most of them.  But let’s just assume it takes 50 buyer inquiries to create one closing – then your cost to create the closing (not counting your time showing, negotiating and handling details) is $4,250 (50 inquiries X $85 per inquiry), and that leaves a pretty small return at the end of the day . . . one for which it’s probably not worth staying in business!

So, let’s see what happens when we start doing a better job on the phones.  Let’s assume for every 10 buyer inquiries we receive, we are able to get one to closing.  Then our investment (at $85 per inquiry) is $850 and that’s starting to look like a pretty good return:  invest $850 to receive $6,000?  Pretty good.

But, I think you can do better than that. I believe if you work on the Buyer Inquiry diligently and continuously, you can get that down to 1 in 5.  And now your investment is $425 (5 x $85) and your $6,000 return is more than $10 for every $1 invested in marketing.  Now that’s a business worth having.

At Help-U-Sell, we have a tool for capturing that buyer inquiry and turning it into a prospect.  It’s the Buyer Data sheet and it is utterly simple and brilliant at the same time. You owe it to your income, your career, your office, your family . . . but mostly to yourself, to practice handling incoming calls every week (if not every day). If you are a broker/owner, make role play of the Buyer Inquiry part of your company culture.  Do it every week, several times a week.  Do it so often that the natural discomfort that comes from exposing your skill level before your peers goes away.  Do it until it just becomes what you do in your company.  If you are an agent, make a pact with a partner.  Commit to regular focused practice on this one key skill.  Role play, critique, try different scenarios.  If you do, I promise:  you’ll see a corresponding increase not only in your numbers of buyers, transactions and closings . . . but also in your income.

This Generation and That One

I was talking to Ken Kopcho, a great Help-U-Sell broker, today about an email I’d sent him.  He hadn’t seen it yet.  ‘You know, I’m a mano a mano kinda guy,’ he said,  ‘I respond well to face to face meetings and conversation.’   I think he was ribbing me about sending an email rather than calling.  And he’s right:  I do resort to electronic communication probably more than I should.  Truth is, I can get 3 or 4 quick business-like text or email messages out in the time I can have one phone conversation.

‘There are people in this world,’ he continued,’who could be sitting at the desk directly across from me who would send me a text if they needed to tell me something!’  This ribbing was turning into a smack-down!

‘Come on, Ken,’ I finally answered, ‘It’s just different kinds of communication for different kinds of people and we should to be able to work with everyone.’

That’s when Ken got excited and started telling me about the sale he just made.  His buyers are a military family:  he’s  in Korea and she’s at home in Texas.  He’ll be stationed at Vandenberg Air Force Base near Ken’s Santa Maria marketplace, so they have been looking at houses online.  They first found Ken on his office website after Googling ‘homes for sale’ in Santa Maria.  Then they found his listings again on Zillow and it was through Zillow that they made contact with him.  He was right back to them and they said (almost on cue), ‘Why, you’re the only broker who’s gotten back to us!’

Though they have been in touch over various listings, Ken has never met this family . . . and here’s the kicker: they are now under contract on a house they have never actually seen (except online).

There are lots of little lessons in this brief saga.  First, if we’re going to be successful, we’re going to have to be sensitive to the communication styles of the people with whom we work.  The shortest distance between your message and the person you want to get it is through their preferred mode of communication (not yours).  Though Ken is a more traditional guy, he was able to communicate so well  with this family electronically that he made a sale.

The story also puts me in mind of the great real estate generation gap.  The average REALTOR is 52 years old.  The average home buyer is 32 years old.  Those twenty years are measured mostly in terms of technology.  Our buyers are often more tech savvy than we are.  They are also impatient with anyone who isn’t up to speed with the new way of doing business.  Here’s where we (more mature) real estate professionals have to really hunker down and learn the new way.  I mean:  you may be the best horse and buggy salesperson in the world, but if most of the world wants a Model T Ford, and you don’t understand those new fangled things at all . . . you better get busy learning.

I talked with another broker a few weeks back who I think illustrates this dilemma.  Like me, he’s . . . um . . . mature.  He’s been in the business for 30 years.  His strength has always been the personal touch.  He gets to know his customers and does the searching for them, showing them only the homes that closely match their criteria.  His marketplace has become trendy and the upwardly mobile early 30s crowd is moving in.  His buyer lead conversion rate has been in decline for awhile and is now frustratingly low.  Truth is:  his style is probably turning off many of the buyers in his marketplace.  He needs a quick masters degree in working with the tech savvy buyer:  how to use Zillow, Trulia, Facebook, Listingbook, Sikku, and websiteSSS to empower consumers in the home search process.

I know that’s harder for some brokers than others, not because they are stupid, but because it’s not enjoyable for them.  They’d rather be meeting the people, showing property and solving problems mano a mano.  This is a perfect situation for a sharp young buyers agent to come in and handle that segment of the market.

Take it from one . . . . um . . . . mature real estate broker:  if electronic communication and marketing is not your thing, it’s probably a problem in your business.  One way or another, you’re going to have to deal with it, either by going back to school or hiring someone who already knows it.

Charging Less – Making More

Traditional real estate brokers don’t get us.  They don’t understand how in the world Help-U-Sell brokers can afford to be in business.  After all, they charge a seller about 3 times what we charge and even at that it’s near impossible to turn a profit.  Obviously we must be cutting corners, cutting service, skimping on, well . . . everything.

The reason they don’t get it is that they look at the Help-U- Sell consumer offering through their traditional broker eyes.  They see our low set fee and then immediately picture what would be left after splitting with an agent:  next to nothing! Of course that would make no sense at all; therefore, Help-U-Sell must make no sense at all, right?  Wrong.

The error here is in assuming we have the same business model they have, that we conduct business the same way they do.  Nothing could be further from the truth.

The first thing we do in a Help-U-Sell office is put the broker firmly in charge.  He or she takes responsibility for creating an effective marketing plan and for generating all leads into the office.  He or she also takes all listings for the company– even if, sometimes a licensed assistant takes them.

So there is no splitting of the listing fee, no sharing of it on a 70/30 basis with an agent.  The Listing Fee flows intact, directly to the paying of expenses and ultimately to the bottom line.

‘How can you do that!’ wails the traditional broker.  ‘My agents work very hard on their listings!  They run ads and hold open houses and follow-up after showings!  If nobody’s responsible for that, it won’t get done . . . and service will suck!’

Truth is:  we do everything they do in servicing/marketing that listing, and we do it better.  First, our marketing is a pre-meditated, carefully tracked system.  When we take a listing we don’t suddenly create a whole customized marketing plan for that property.  We have a powerful marketing program for all of our listings already running.  We just plug the new listing in.  (By the way – that customized marketing plan created just for that one listing is mostly smoke and mirrors designed to pacify the seller and create the illusion of activity until the yard sign or the MLS produce a sale).

Then, instead of asking our agents to do some of the less skilled activities associated with selling a home – things like holding open houses, showing people through and keeping the flyer box full – we ask our sellers to take that on.  Most agree and, with a little coaching, do an excellent job.  The reason they do it is that seller participation creates the greatest opportunity for maximum savings.   ‘You mean, if I find my own buyer through an open house or some other method, all I pay is $3,950?’ they say, ‘But if I don’t do that and you bring the buyer I’ll pay $7,900?  Sure!  I’ll hold a few open houses!’

So, Help-U-Sell offices are offices without agents, right?  Wrong.

We love agents and good ones love us.  In a Help-U-Sell office, the agent has a focused and manageable job description:  they take the buyer leads the broker creates through his marketing and listing activity and converts them into transactions.  Period.  They don’t prospect, don’t call FSBOs, don’t knock doors, don’t chase around after listings.  They simply show up for work, take the buyers created by our marketing and catalogued in the Buyer Pool book, and pick one or more to work.

Sometimes they sell office listings and sometimes they sell homes on the MLS.  Either way, they are paid very well for the job that is done, are as busy as they want to be; and without the burden of all those other jobs the traditional agent must do, are in a great position to provide excellent customer service.

So far, this discussion has touched on all five of the Pillars of Help-U-Sell:

  • Low Set Fee
  • Menu of Services
  • Seller Participation
  • Targetd Marketing
  • Broker Control

Now, let’s take a look at the numbers.

Let’s consider a $200,000 house in a $200,000 market.  (Of course, all commissions, whether set fee or percentage are negotiable.)   Let’s assume the traditional broker is charging, say, 6%.  The Help-U-Sell broker charges $3,950 and has a showing fee of $3,950 (both are set fees; what a concept!)

First, the Seller’s perspective:

Traditional Broker cost:  $12,000 no matter where the buyer comes from.

Help-U-Sell:

  • Find your own buyer:  $3,950, a savings of $8,050!
  • HUS brings the buyer:  $7,900, a savings of $4,100
  • An MLS broker brings the buyer:  $3,950 + 3% to the selling broker, a total of $9,950 and a savings of $2,050

Help-U-Sell wins every time.

Now from the broker’s perspective:

The traditional broker will receive $6,000 on the listing side of the commission.  He will split that with an agent, probably on a 70% split (that’s NAR’s most recent average) leaving $1,800 to pay the bills and create a profit.  Good luck.

The Help-U-Sell Broker receives $3,950 on the listing side no matter how the house sells.  There is no agent to pay, so he has $3,950 to pay the bills and make a profit:  $2,150 MORE than the traditional broker.

And finally from the Agent’s perspective:

The agent on a 70% split will make $4,200 on the sale of the traditional listing.  If a Help-U-Sell buyer agent sells the same listing, he’ll receive about a thousand dollars less because the commission splits are lower.  The difference is, the Help-U-Sell agent’s buyer was handed to him.  He is not pushed to go out and create business.  All he does is take the lead and convert it to a sale, and then go back and get another.  The Help-U-Sell agent will probably close twice the number of sides he or she would close in a traditional office and his or her income will be considerably greater.

The traditional agent will make the same $4,200 when he or she sells the Help-U-Sell listing because we allot 3% to the outside selling company (in this example).

If the Help-U-Sell agent sells one of the office listings, he or she is going to receive $3,950 – because in these situations the full Help-U-Sell showing fee is given to the agent.  The broker makes the same thing he’d have made no matter how the property was sold:  $3,950.  The Help-U-Sell agent makes more on the Help-U-Sell listing than on a similarly priced property listed with a competitor, so there is an incentive to sell in-house.

To summarize, with Help-U-Sell:

  • The seller almost always saves, and can save significantly
  • The broker has a solid flow of listings into the office because of the set fee offer and more revenue flows to expenses and the bottom line than his traditional counterparts.
  • The broker also has a strong flow of buyer leads produced by the large number of listings.
  • The agent has a streamlined job description and a steady flow of leads and so is able to do many more transactions than at a traditional shop.  More transactions mean a much better income.

In a traditional shop:

  • Sellers pay more and they resent it
  • Brokers find it almost impossible to make a profit (they don’t call them BROKErs for nothing!)
  • Agents burn out in a few years because they are expected to do it all.

Let’s face it:  Help-U-Sell is just a better way to do business.

Blueprint for Growth

We’ve just concluded the first set of summer 2010 Rallies with a meeting yesterday in Baltimore.  Like the three Rallies that preceded it, the Baltimore event was great fun.  Everyone was focused, intent and engaged.  There was a real sense of excitement and mission as we worked through the material together.

John has been talking at these meetings about growing your business.  The premise is that, in the downturn, we’ve cut our expectations.  Where 10 closed sides a month used to be just getting by, now we shoot for 4.  Many of us have thus taken our mature offices and rolled them back to Phase I offices: minimal or no staff with the Broker doing most everything that needs to be done.

What John presents in ‘Blueprint’ is a logical and reasonable plan for growth.

Phase I is all about doing deals and establishing systems and procedures.  The Broker’s goal is to get to 4-5 closings a month.  His or her role is to create systems for everything from handling inquiries to processing sales so that when staff is added they will have procedures and standards to uphold.

The transition to Phase II comes when a consistent 4 – 5 closings a month is achieved.  It is at this point that the Broker begins to be ‘maxed out,’ and opportunities start falling through the cracks.  Phase II begins when the Broker starts hiring staff:  a part-time admin and a single Buyer’s agent to start.  The broker’s role shifts from doing deals personally to generating leads.  The business has begun to grow, and he must sustain that growth by producing a steady flow of leads into the office.  Leads are largely the result of Listings and Marketing so this is where the Broker  (now freed of tedious office tasks by the Admin and of time consuming buyer work by the Buyer’s Agent) focuses his or her efforts.

Marketing today looks a little different than it did 5 years ago, but accomplishes the same thing:  Consumers in our area understand that we are here and represent savings, other people use us, and it works. Rather than sending 10,000 pieces of mail each month to establish that message, the broker may be developing consistant programs for contacting FSBOs, Expireds, and PIDs (Properties in Distress).  He or she may be devoting significant time and some financial resources to establishing an Internet presence that enable consumers in the local market to find the company.

This is the point where the Broker’s obsession with leads comes to the forefront.  Every inquiry into the office, whether from the Web or the phone, is logged, contact and source information is collected and office staff is held accountable in the conversion process.  It’s funny, but the tried and true Help-U-Sell Buyer and Seller data sheets and the corresponding Buyer Pool Book they create become the real backbone of the company.  After all, Help-U-Sell offices are all about LEADS generated and successfully converted to sales.  An effective tracking mechanism and a constant focus on conversion rate improvement is essential.

As Phase 2 continues, more Buyer Agents are added and support is increased.  The Broker continues to focus on Listings and Marketing.  Phase 3 probably begins about the time the Broker hires help on the Listing side of the business:  a licensed assistant who handles all of the routine tasks associated with having listings and who can stand in for the Broker on Listing appointments in his or her absence. Now the office is doing 120 – 150 deals a year and can increase that number easily by adding more buyer agents and support staff.

This vision is very clarifying.  I’ve said it before: for the Powells (John and Maria), the business isn’t easy . . . but it is simple.  Growth is logical, next steps are triggered by specific events that have been anticipated and the company grows quickly.  For John and Maria, Phase 1 took their first six months — mid-2008  to early 2009.  They are still in Phase 2, with several Buyers Agents and an expanding support staff.  Phase 3 is within reach and will probably be achieved by year’s end.  All of this has happened in the worst real estate market in history, in one of the hardest hit markets in the country:  Tucson, AZ.

What’s fun in John’s presentation are the profitability projections.  In Phase 2 he demonstrates how a Broker can pay himself a salary and still turn a profit in the high teens.  In Phase 3, the salary is increased and profitability goes to near 30%.  It’s great to see that on paper, but what’s even better is to see it as it’s actually happening:  in Tucson, Az.

A Funny Thing Happened On The Way To The Rally

I didn’t get there.  I’m talking about the Help-U-Sell Rally in Oakland which starts in . . . five minutes.  I was so sick for the meeting in Orange County (head cold), I couldn’t make myself get on the plane to N. CA and decided to let John Powell and Ron McCoy handle the program there.  I’m sure they will be fine.

The meeting in Orange County, like the one in Phoenix, was excellent.  I was struck by how interactive it was:  lots of sharing.  It was much more a conversation than a presentation.

We worked through John’s Blueprint for growth, which got everyone thinking; got back to basics with the Five Pillars of Help-U-Sell and then got excited with new programs:  The Help-U-Sell Homebuyer Stimulus Program, The new Short Sale prospecting program, and the Help-U-Sell website.  But, like last week’s Wednesday Broker Roundtable call, what seemed to resonate the loudest was this:

The importance of Buyer and Seller Data Sheets and the Leads Management program that accompanies it.

John’s Blueprint includes triggers for when it’s time to hire and they are based on closed sides and leads flow.  There’s no way you could do it without knowing how many inquiries you’re getting, what’s generating them and how they are being handled.

Growth involves recruiting and the Buyer Pool book — which is made up of the same Buyer Data Sheets — is the agent Value Proposition.  If you don’t have it, you have nothing to offer.

High productivity is dependent on Broker control and accountability.  If you’re not tracking every lead that comes in the door, you can bet your conversion rates are suffering.

We are a marketing company.  Whether we’re doing low cost/no cost marketing, optimizing our websites or sending thousands of pieces of direct mail, we are marketing and cultivating leads.  To spend the energy and money it takes to create inquiries and then not record and track them is crazy.  I bet, when you take your overhead and divide it by the total number of leads coming into your office, you’ll discover that each inquiry costs between $75 and $100 to generate.  Not tracking, and not insisting everyone track is throwing your marketing money out the window.

The ideal situation is to grow your business to the point that you have a licensed assistant answering all inquiries and gathering contact data before passing them on to agents.  The assistant’s log becomes the basis for the Broker to followup with the agents, asking:  ‘What happened with this one?  Where are you with that one?’  But even if you have not grown your office to that point, the discipline of leads management can be installed.

I talked with Ken Kopcho this morning about this.  He has run a contest in this office from time to time:  each completed data sheet is good for $1 at the last sales meeting of the month.  It’s not a huge amount of money, but it does create a competition around improving performance in this key area.  He’s also toyed with the idea of giving lottery tickets instead of dollars and I think that’s a good idea.  Leads Management and the collection of leads data becomes everyone’s job and while the contest is good for those who do well, can you imagine how naked the poor performers feel when they have to stand up and say they got . . . one or . . . two or . . . none.

There are great electronic tools for leads management.  Our current system is built in Excel and it will become part of the Help-U-Sell OMS at some point in the future.  However, the basic Buyer and Seller Data sheets are paper and should stay that way.  You can’t have an impressive Buyer Pool Book without paper Data Sheets.  Plus, if there is a stack of each at each phone in the office and in every briefcase, there’s no excuse for not completing them!

You’ll find the Data Sheets (there are several versions) and a complete leads tracking system in the Download Library under Operational Tools/Leads Management Forms.  You’ll also find the University Module on Leads Management there.

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