Category: Management

Working with Buyers, Step-by-Step

Kendra, Alejandro and I were talking with Stephen Taber today.  He is setting goals for the new year and one of the items that jumped out was the lopsided mix of anticipated buyer and seller sides.  Stephen was planning on just 30% of his production being from buyer sides.

Of course, we all know why buyer sides are important.  Truth is, we market like crazy for sellers so that we can dominate the listing inventory . . . because doing so will create a strong and steady stream of buyer leads.  Yes, we make plenty of money selling our listings; but we generally make MORE working with buyers.  Even Don Taylor said it:  ‘People forget, but Help-U-Sell Real Estate was always about the buyer.’

By the way:  Stephen’s lopsided mix of buyer to seller sides is not unusual.  Almost every Help-U-Sell office is weighted toward seller sides.  Often the imbalance is slight, but it is usually there.  We strive for a 50/50 mix of buyer to seller sides, but usually fall a little shy of that goal because our marketing is so heavily weighted toward home sellers and it’s easy to spend all of your energy and effort there.

Stephen said, ‘I just like listing!  I enjoy it.  You never know with a buyer when they’re going to go somewhere else or drop out all together.’  What I heard was that listing is predictable;  working with buyers is not.  We know what to do when we are working on a listing.  Conscious or not, we know step 1, step 2, step 3.  We know our scripts and how to respond when the prospective seller voices a concern.  In other words:  when it comes to listing, we have a system.  When it comes to buyers, well . . . not so much.

Of course, there is a very notable exception to that generalization:  Jack Bailey’s Buyer Consultation system.  Nobody does it better than Jack and as proof of that, his buyer to seller sides mix is usually weighted to the buyer side.  He usually does more buyer sides in a year than he does seller sides!   For Jack, working buyers is as easy and predictable as step 1, step 2, step 3, and he’s helped many Help-U-Sell Brokers and Agents get to the same comfort zone.  But still there are a lot of folks out there essentially winging it when a buyer calls.  I think it’s time we had a simple, systematic approach to buyers.

Today’s buyers can and usually want to do a lot of the home search process on their own.  One of the ways we can establish our value to buyers is to help them do that.  Maybe step one is to ask the buyer how they are currently searching for homes.  They will probably say Zillow or Trulia . . . both of which we know are horribly flawed, with duplicate listings and dead listings and bad Zestimates of value.

Right now, you know of a superior home search tool focused on your local market.  It might be your own Help-U-Sell office website.  After all, it is updated from your local MLS every day and gives buyers the ability to search very much like an agent would.  It might be your MLS’s own public home-search portal.  Or it might be a 3rd party tool like Listingbook.  Whatever the best site for searching in the local market, you need to know how to use it backwards and forwards.

Then when the buyer calls and you ask how they are searching, you can give them a better alternative.  Stephen had the great idea of:

  1. Pointing out the limitations of their current search method (trust me:  if they’re searching on Zillow, they are painfully aware of the limitations)
  2. Asking if they are in front of a computer and if so, emailing them a link to a free online meeting site like join.me*
  3. Once online together, showing the buyer how to search on the broker website or MLS public site or Listingbook or whatever the best local tool is
  4. Exploiting the opportunity further by showing them how to set up a ‘First to Know’ profile and so on.

In less than 1o minutes you will have established a comfortable rapport based on your desire to HELP them.  What could be better.

I’m going to be looking into this whole issue of buyer step 1, step 2, step 3 and how we might have a simple system for working with these important customers going forward.  In the mean time, if you are so inclined, perhaps you could begin to think about how you might make the process a little more predictable.  I’d love to hear from you if you do!  And Thanks, Stephen for the great brainstorm.

*join.me is a free GoToMeeting type of online meeting/screen sharing platform.  What’s great about it is that you, the presenter, need to install a small piece of software, but the person you’re meeting need only go to a website – and you will be together.  There is nothing for  the attendee to install.  Once in the meeting, you can share you screen and show the person how to search effectively.  It is sooo coool.  

 

New (Shorter) Agent Video

A few weeks ago, we created a video for agents who express an interest in Help-U-Sell Real Estate and want to know more.  It’s a fine video and says all the right things.  The problem is that it is LONG – a little more than 6 minutes long.  It is fine for an agent who wants to know more, but not so good for prospecting.  There’s a rule about teaser or ‘for-more-information-call’ videos – video’s used to pique curiosity and elicit a response:  once they exceed 2 minutes in length, their effectiveness takes a nose dive.

So, we took the original long video and edited it down to . . . well, just over 2 minutes.  It’s now appropriate for prospecting.  Have a look:


If you are curious, you can view the original 6 minute video HERE.

If you need help adding either of these videos to your website, creating a landing page around them or using them in a prospecting campaign, drop an email to support@helpusell.com.  We’ll be happy to help.

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.

Lead Generation I: Analog and Digital Marketing

If you are a Help-U-Sell broker, you want to generate leads.  Mostly you want to generate seller leads, but buyer leads are ok too.  You read and you hear about online marketing and lead generation and it sounds wonderful!  You want onboard!  And you wonder how!

I’ve been working on this for awhile and I have seen some great successes.  I’ve also seen some failures.  I think we get into trouble with online marketing for two reasons:  lack of budget and not doing the groundwork first.  You see, that marketing that we did before the Internet matured into a viable marketing vehicle – the mailers and postcards and CIs and Arounds and signs signs signs – didn’t go away.  They are still vital.  Online marketing, though essential today, is in addition to those other things we all used to do before the downturn.  As people leap to online marketing, I see them abandoning that real, tangible, local marketing – what I call Analog marketing – and that’s a mistake.

Analog marketing has to do with being physically visible in the target market.  A well located office with great signage is essential Analog marketing.  A billboard is Analog marketing, An EDDM delivered to 5,000 households is Analog marketing. A car wrap is Analog marketing.  Regular and planned contact with your CIs is Analog marketing. Sending postcards to 100 neighbors around a new Coldwell Banker listing is Analog marketing. Having lots of For Sale and Directional signs out is Analog marketing.

And Analog marketing is the first step.  It should be in place before taking on an online, or Digital marketing program.

Listen:  I love my digital life.  I love the fact that I can hold a device in my hand that makes a Star Trek communicator look old fashioned, that beams a signal into space and beams it back so that I can be instantly connected with anyone on the planet.  I love that, without even pushing buttons, by simply speaking to Google, I can access the sum total of human knowledge, to learn new things, figure stuff out and get answers on the fly.  I love that we have an inexpensive electronic marketing mega-tool that enables us to be in front of consumers in our local marketplaces and across the country.

But unless you have done the Analog steps of becoming visible in the local market, your attempts at Digital marketing will be less effective.

So, part one of lead generation is . . . back to basics.

It is doing a comprehensive Market Analysis – really doing it – looking at today’s real turnover rates around the area and choosing your target market(s) from those neighborhoods with highest turnover.

It is setting up systems that happen automatically every day in the office:  the EDDM that goes out every month or six weeks, Brag Cards and Arounds, regular contact with CIs, budgeting for a car wrap and maybe a billboard.

It is creating a budget for all of this Analog marketing that is treated like your office rent:  you’ll plan to have the expense no matter what’s going on in your business (because marketing is what drives your business).

Once that blanket of Analog visibility is laid down and functioning in the marketplace, it will be time to add in the Digital.

By the way, here are some metrics to guide you in setting up the Analog portion of your marketing program:

  • You want a Target Market of between 12,000 and 20,000 households.  The size will be determined by turnover rates (lower = more households) and your budget.
  • You should look for neighborhoods where Turnover rates are 4% per year or higher.  Anything under 3% per year can be a problem.
  • Your total marketing budget (Analog and Digital) should be between 7% and 10% of your anticipated annual Gross Commission Income.  If you plan to Gross $250,000, you should be spending between $1,500 and $2,000 per month.
  • Roughly ⅔ of your marketing budget should be Analog, devoted to being physically visible in your target market(s).  ⅓ should be devoted to Digital marketing.  It costs less, so you spend less.

Next up:  What is Digital marketing? And how to go about making it work for you.

What To Pay Your Realtor And How

(Once again, THIS is the single most popular post on the Set Fee Blog. Every day, dozens of people find their way onto this site searching for guidance on what to pay their REALTOR. I’ve freshened this up a bit – added a little more detail – and want to post it again. I only hope this helps some people hang on to more of their hard earned equity.)

I check my stats and other metrics for The Set Fee Blog fairly regularly. It helps me to know what’s drawing visitors and what’s not. It’s also helpful to see what search strings people are using to find me on the web.

Today, I had the following as a search string:

“What Percentage Do Real Estate Agents Charge?”

Ok, so it’s not that unusual. In fact I’ve seen it in the results for this blog before. But today it just jarred me:

What a sad, stupid and unfortunate question!

Seventy plus years of REALTOR double-talk has trained the public to expect to pay a percentage of the sale price of their house to an agent when it sells . . . and that makes no sense whatsoever.

What does a percentage of you home’s value have to do with getting it sold? Nothing!

Think about it:

Here you are in your $350,000 house. Thankfully, you are not upside down. You have roughly $60,000 in equity. So you decide to sell, and list with ABC Realty**, who charges you (and every seller with whom they work) 6%*. When your house sells (for full price), that’s a commission of $21,000!

I’ll give you a moment to catch your breath . . . before I point out that that may be 6% of the sales price, but it’s 35% of your equity!

Meanwhile, your neighbor down the street also wants to sell, but his home is smaller. It’s only worth $250,000. He also lists with ABC and agrees to pay their 6% Commission. When the house sells for full price, the homeowner is going to pay $15,000 — still high, but not nearly as high as your $21,000 commission.

Now, here’s the question of the day: What did YOU get for the extra $6,000 you paid to sell your house through ABC?

More Advertising?

More Open Houses?

A better Sign?

Oh, maybe your agent worked $6,000 harder! Yeah, right.

What you got for the extra $6,000 you paid is this:

Absolutely Nothing

In almost every case it takes no more time, effort, energy, money or marketing to sell a properly priced $350,000 house than it does a properly priced $250,000 house. There are some situations in some areas where a market niche, say, luxury homes, might take a little more time and might require additional or specialized marketing. But these situations are rare . . . and $6,000 extra dollars to sell your $350,000 house? That’s absurd.

It makes no sense today, made no sense yesterday, and will never make any sense at all.

Please don’t take this to mean that your percentage based real estate friend is a bad person.  The percentage model is so deeply ingrained in the ordinary real estate world that today’s practitioners don’t even question it.  It is all they know.  And the truth is, if they were to abandon it in favor of something that makes sense (i.e. Set Fee Pricing), their business model would collapse.  They operate in a world where so many people get a cut of the big commission you pay that changing direction in favor of something better would be impossible.

Smart Brokers – by the way, ‘Smart’ is a synonym for ‘Help-U-Sell’– Smart Brokers charge a set fee. Everyone pretty much pays the same thing no matter what the sale price is. It’s logical. The Broker works very hard to determine his or her hard costs of carrying a listing, then adds a reasonable profit to it, and . . . that’s it: the Set Fee the office charges everyone.

Here’s a little bit of scripting I actually heard in a REALTOR seminar some years ago. It’s what an agent is supposed to say when a potential seller is shocked by the high percentage based commission.

“I know it seems like a lot, Mr. & Mrs. Seller, but think about it for a moment. We’re getting 6%, yes, that’s true; but YOU’RE getting 94%! I think you’ll agree our commission is actually a bargain!”

I hope next time you need to sell, you’ll do the right thing and call a Help-U-Sell set fee broker. You’ll save a bundle (the set fee is usually thousands of dollars less than whatever percentage based commission you’re being quoted). And you’ll have the satisfaction of knowing that, finally, for the first time in your real estate life, you haven’t been taken to the cleaners!

*Commissions, whether set fee or percentage based, are always negotiable. They are not set by law or REALTOR rule. They are set individually by office Brokers. Price fixing occurs when different Brokers get together and agree to charge the same thing. That’s highly illegal. Different Help-U-Sell offices charge different Set Fees, because the carrying costs of marketing a listing vary from market to market, as do the number of days it takes a properly priced listing to sell.

**The “ÄBC Realty” referred to in this blog is fictitious and is used only for illustrative purposes. Any resemblance between it and any other “ABC Realty”, is purely coincidental.

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