Category: Management

A Reminder for Help-U-Sell Brokers

Back to Basics:

Help-U-Sell is a marketing driven company.  Everything begins with marketing.  Marketing is how we gain market share, how we grow, how we increase profitability.  Contrast that with what the Ordinary Broker does;  he attempts to accomplish those things through recruiting.

We market to SELLERS.  Because our seller offer is so far superior to what Ordinary Brokers have, our biggest marketing challenge is to simply inform home owners that we are here and can save them money.

We love buyers – really, LOVE buyers – but we find them through our listings, not through our marketing.  Every new listing creates a dozen opportunities for buyers to connect with us and the more listings we have the more buyers we connect with.  (I know, ending a sentence with a preposition . . . but we are communicating here, not teaching grammar).

Which is not to say we don’t market our listings to buyers; of course we do.  But this is mostly a process of plugging our listings into established channels like the Internet, the MLS, our ongoing marketing and so on.  Our strategic marketing, our aggressive, proactive marketing is to SELLERS.

There are four messages we want to communicate to potential sellers in all of our marketing:

We are HERE

People use us

It works

They save money

We use three tools to communicate those four messages:

The Easy Way

(or the Smarter Way – though as a Help-U-Sell purist, I prefer the Easy Way)

Sold & Saveds

Testimonials

If you have marketing pieces out there (i.e. websites, Facebook pages, EDDMs, brag cards, newspaper ads (what’s a newspaper?), etc.) that do not use those three tools to communicate those four specific seller messages, you’re doing it wrong and missing the boat.

Help-U-Sell is a wonderful business model that produces outstanding results IF you do it right and do it with consistency.  It is so simple that it’s easy to second guess it and start making changes.  Most of the changes I see make the model look more like what Ordinary Brokers do . . . and that’s certainly madness.  I mean:  who in their right mind would want that? 

Get back to basics!  Start marketing . . . to SELLERS.

 

Your Future in Real Estate

It’s time to get serious about your career in real estate.  The market is rebounding, homes are selling and it looks like we are in for another multi-year cycle of appreciation and normalcy in the marketplace.

Now is the time when great careers and great real estate businesses are made.  It is your moment, your time to shine, your best shot at major success . . . IF you are positioned to take advantage of the opportunity.  What does that mean?

If you are an agent working for an ordinary real estate company, be it franchised or independent, you are competing against thousands of other agents just like yourself, with the same tools, same information, same offering, and same pricing.  The only edge you could possibly have in that fishbowl – the only things that might set you apart from the pack – are your personality and your work ethic.  So, let’s assume you really apply yourself next year.  You work harder and smarter and you polish up that smile . . .  and you go from doing 18 deals to doing 25.  That’s very nice, but it’s hardly the stuff of real estate greatness.

This is not the time to increase your production by 30%.  It is the time to increase it by 300%.  And you won’t do it by doing the same things you did last year and the year before, only doing them harder.  It’s time to look for a better way to do the real estate business.

If you are a broker, get ready.  You have been able to rein back outrageous commission splits a little in the past few down years.  But with the market heating up, even your most mediocre agents will be looking for more, and you know if you don’t give it to them, the office down the street will.  You can expect your turnover to move higher in the months to come which means, if you are going to maintain current levels of production, you’re going to have to kick up your recruiting game.

I gotta tell ya:  I don’t envy you at all.  The success of your business is dependent on your ability to get people to come to work for you and then, to get them to stick around; and your only real tool for accomplishing either of those objectives is split.  And what the heck does any of that have to do with helping buyers buy and sellers sell real estate?

Clearly, it is time for a new game, a new model, a new way to do this business.  A way that results in incredibly satisfied clients, busy agents with healthy bank accounts and brokers who are functioning as successful entrepreneurs, not mere support for their sales staffs.

And you know what the way is:  It is Help-U-Sell.  Here’s why:

As a Help-U-Sell broker you will go into the marketplace with a consumer offer that is not only fundamentally different than that of your competitors, but also superior to theirs from a consumer point of view.  You’ll accomplish the same results the pack of ordinary agents and brokers will but you will save people thousands over what they’d pay anyone else!  It is an offer that is so compelling that, once word is out in the marketplace, potential sellers usually want to at least talk with you before making a listing decision.  And we find we get that listing about 90% of the time.

It is a focus on marketing and marketplace intelligence that more closely resembles what Home Depot does than what ABC Realty does. And because Help-U-Sell marketing is systematic and focused, it produces a steady stream of buyer and seller leads into the office.  These are leads the office has created, leads the office owns, leads the office will assign and track.

It is agents who want to come to work for you because you have the one thing nobody else can give them:  leads.  It’s agents who have had a close brush with burn out from the gigantic job description they tried to manage at an ordinary real estate company.  They will see the streamlined, focused job you have for them as an opportunity to do more, make more and have more fun doing it.

It is a smaller, tightly knit office team that is outperforming companies with 10 or 12 times the agents.  It is an team with one goal – yours, with one direction – yours, one purpose – profitability.  It is very different from an ordinary office where the broker begs people to come to work, begs people to stay, begs people to attend sales meeting, begs people to do the prospecting they promised to do and so on.  Aren’t you getting tired of all that begging?

And finally, it is a bottom line that is beyond healthy, that is growing and expanding every month.  This is the great truth ordinary real estate brokers and agents have the most difficulty understanding about Help-U-Sell:

Even though we charge consumers thousands less, we deliver more dollars to the bottom line per transaction than our ordinary competitors who charge much more!

I know you don’t believe me, but go ahead:  call a Help-U-Sell broker – any Help-U-Sell broker – and ask them to explain it to you.  I’m sure you will be surprised at what you hear.

The Help-U-Sell ship is sailing, and it’s going to do more than it did between 1998 and 2006 (the rough dates of the last up cycle in real estate).  And if you are serious about your success, it is time to fly a new flag on your own ship, to find a new and better way to do the real estate business.  For goodness sake!  Do it in a way that is different from what everyone else is doing and that is better for consumers and for you bottom line.  Do it with Help-U-Sell!

*Unlike other franchises who will give you a list of their 12 happiest franchisees to call, I have no problem telling you to talk with any Help-U-Sell franchisee.  We are a multi-year winner of the Franchise Business Review’s franchisee satisfaction survey.  Year after year, our brokers affirm their delight with the business model and the power of the team.  So go ahead:  pick a Help-U-Sell broker – any Help-U-Sell broker – and let them tell you why joining this team is a very smart move.

 

Planning for 2014 and Planning in General

We’re just a couple of weeks away from Thanksgiving, which means it’s time to start thinking about what you want to accomplish next year.  It’s a great time to be making a plan because, by all indicators, 2014 should be a good year, a year to grow, to expand.  A few things you might consider in your 2014 plan are:

Adding support staff.  But remember the Golden Rule of Help-U-Sell:  you never add staff until you are so busy you are missing opportunities.  Support staff should enable you to either do more business or take more time for other things.  If, four months after the new hire, you aren’t  doing either or both of those things, the hire was probably in error.

Expanding your geography.  Help-U-Sell is a geographically targeted business, remember?  Your vision is to own the real estate business in your target market and to take ownership one neighborhood at a time.  ASSUMING you have been following a targeted marketing strategy and have begun to  dominate in a neighborhood or two, maybe this is the year you move on to broaden the target, add a few more neighborhoods.

Taking a step up and back.  Perhaps 2014 is the year you not only add a buyers agent or two, but you also add a listing assistant:  someone who can meet with a potential seller, do a listing consultation and take a listing on your behalf.  Before you recoil in horror (nobody can do it as well as me!), let me remind you that Help-U-Sell is built on systems that work, not personality.  Your listing consultation is . . . well, just the facts, and a competent, well trained assistant can do the job as effectively as you, the Broker.  Taking a step back from the listing side of the business should enable you to take a step up to working ON your business, to planning your next expansion, to becoming bigger.

Supercharging your marketing.  How many tentacles do you have reaching out into the lead generation ocean that is the Internet?  Is this the year you step up to premiere status at Trulia and/or Zillow? You should, you know.  Is this the year you start doing Facebook and Google pay-per-click to drive traffic to your optimized website? Of course, if that is your goal, you will need effective lead capture landing pages, too.  Is this the year you electrify your web presence by creating a powerful, search engine friendly blog for your business? I know:  I’m biased, but I think this may be one of the best strategies you could employ to do more in 2014.

There are four ideas that may spur your thinking.  Before we leave the topic of planning for 2014, though, I want you to also rethink the planning process.  For generations we have heard, studied and practiced the 1-3-5 year planning ritual.  The detailed long term plan has always been held up as the be-all and end-all of planning . . . and I think that is a mistake.

Our real estate market shifts regularly and rapidly.  Opportunities fly in (and out), sometimes out of nowhere,  You have to be ready to grab hold of the next big thing while it is fresh and too often, a rigid plan and a stay-the-course attitude can make this difficult.  Here’s my prescription for planning, for 2014 an in general:

1.  Get clear on your BIG objective.  Why do you own this business? What are you trying to accomplish? How will you know when you are there? And what is your exit strategy?  These are big picture things, hardly detailed.

2.  What are the likely milestones you will encounter on this journey?  Typically Help-U-Sell brokers start out all alone, doing everything themselves.  The first milestone is the hiring of an assistant.  Then comes hiring of buyers agents.  Down the road, an expanded target market or a second office may make the list.  What are the 6 – 8 major milestones between you and your BIG ojective, in anticipated chronological order.

3. Now, focus on the first milestone.  What do you need to do today, this week, this month to move you closer to it?

That’s it.  

You now have a plan.  And it is a plan that doesn’t tie you up, that allows for new unanticipated opportunities, for side-trips and even small failures, without taking you off course.

I remember the camping/car trip I took from my home in Atlanta to Washington State’s Olympic National Park in 1973.  My friend and I knew our first big stop would be Estes Park, Colorado and the Rockies.  Each night we planned the next day’s segment.  It might be 250 miles or 1,000, might include side trips, stops and so on.  And we were free to change course during the day, too, so long as we ended up a little closer to Estes Park.  After Estes Park, the next milestone was Jackson Hole, Wyoming, and we proceeded in the same manner, each day taking us closer to the next milestone, each milestone taking us closer to our BIG objective:  Olympic National Park.

I believe that kind of thinking, that kind of planning, is the way to build a lean, rapidly moving, dynamic real estate company.

Exotic Dancers, Real Estate Agents and Minimum Wage

Earlier this month, Bloomberg reported that a U.S. District Judge ruled that exotic dancers at Rick’s Club in New York are entitled to minimum wage.  The decision came on the heels of a class action lawsuit filed on behalf of 1,900 dancers whose only compensation had been the tips they received from customers.

The Plaintiffs’ lawyer said the ruling “makes clear that employers cannot pass their statutory duties to pay wages on to their customers and gain an unfair advantage in the marketplace while their employees go without guaranteed or long-term benefits such as Social Security.”

As usually happens when I read a story about exotic dancers (or almost anything else), I thought about the real estate business (!).

You know real estate, don’t you?  It’s that business that thousands of people enter every year when what they really wanted to do doesn’t pan out. They become ‘Independent Contractors’ (which is what Rick’s Club considered its dancers to be) and only get paid when they bring in a commission.  The business model is a little like Avon or Amway or Herbalife where the number of people you recruit is more important to success than the amount of product you sell.  In real estate almost anyone who has a license can go to ‘work’ for almost any broker whether they ever produce or not because, hey, they’re not costing the broker anything, are they?

The end result of this idiotic business model is awful productivity.  The average real estate agent sold fewer than 8 homes in 2012 and made about $34,900 gross (before business expenses).

Can you imagine how quickly the whole industry would turn around if brokers were forced to pay their agents minimum wage?  Massive staff cuts would occur across the board.  Century 21’s sales force would shrink by 70% and all of those people would get letters from the Unemployment Office informing them that as Independent Contractors they are not eligible for benefits.  Keller Williams would have a big company-wide picnic to say goodbye to half of its agents (a picnic because they have such a family-like culture).  Re/Max would shrink to a dozen offices nationwide because there would be no independent contractor agents left to rent desks.

Nothing much would change at Help-U-Sell, though.  Our business model (which, HELLO, is completely different than the rest of the industry), makes it impossible for us to maintain non-productive agents already.  An agent doing industry average production in a Help-U-Sell office is costing the broker a king’s ransom in blown leads and lost business.  So we’re already lean and mean.

Funny thing:  that bit about an agent doing average agent production in a Help-U-Sell office costing the broker a ton of cash?  That’s true in the other guys’ offices too.  It’s just that they don’t pay attention to that kind of stuff.  Like the Herbalife people, they believe their success is dependent on one thing:  how many agents they can stuff into their offices.  Productivity doesn’t matter.  What counts is bodies.

Prior to the downturn, Help-U-Sell had a very carefully conceived salary model in place.  It worked beautifully . . . when the market was somewhat normal.  When the business went off the cliff, however, much of what worked so well stopped functioning.  Almost everyone went into survival mode, abandoned the salary model and cut back on staff.  One notable exception was Patrick Wood, owner/broker of Help-U-Sell Prestige Properties in Chino Hills, CA.  He continues to run his office on a modified salary model and, coincidentally, has ranked in the top 5 of all Help-U-Sell brokers for years.

I have been pretty tongue-in-cheek in this post . . . except for the parts about Help-U-Sell: that was quite serious.  But let’s remember that the IRS has been after the real estate industry for years.  They’d like to see the Independent Contractor status of agents get tossed and it’s only been the flexed muscle of the National Association of REALTORS that’s kept it from happening.  If that kind of change did occur, many real estate brokers would simply shut down.  They couldn’t make their business model work with that additional constraint.  The survivors?  They’d do something the industry has historically NOT done very well:  they’d adapt.  And after a little shake out time, the industry would be better, the consumer would be better served and real estate would start to be an occupation people choose, not just fall back on.

Flashback Friday: Marketshare

Today I”m thinking about Marketshare and found this post from Spring of 2010 that addresses it from a Help-U-Sell perspective.  This metric was so important to us 10 years ago.  We doggedly pursued it, pushing and pushing to increase it.  We watched it like no other metric in the book because it was the most meaningful measure of success.  

I’m afraid, in the downturn, all that flew out the window.  We took our transactions where we could and the idea of dominating a defined geography went away.  I strongly believe we have to get back to a geographically focused marketing program and, therefore, an obsession with marketshare as a measure of success.

Now, if you are roaming all over God’s earth taking listings wherever you can within a 100 mile radius of your office, I wish you luck with that.  It was a good strategy five years ago, but today, it’s a recipe for both burnout . . .  and lousy customer service.  However, if you want to get serious about establishing Help-U-Sell as the dominant force in your TARGET market, you must get back to the basics of:

  • defining your target market
  • collecting data about your target market
  • tracking your share of the target market

One last thought:  Help-U-Sell is a company built on a superior offer to home sellers.  In the post that follows we talk about tracking your marketshare based on closed sides. This method (which is best) takes buyer sides into consideration as well as seller sides.  But since our marketing is oriented to the seller’s side, here’s a quick and easy alternative.  Count the number of active listings in your target market and compare that with the number you have (in the same target market, of course – those outside don’t count).  Your listing marketshare ought to be very similar to your closed sides share.

I’m working through the old Operations Manual and just read through the section on marketshare.  We used to tell everyone they should get 25% marketshare.  That was the goal.  For everyone.  Did we have members who did that?  Yes, quite a few, actually.

We calculated marketshare by taking a carefully defined geography — the area(s) in which the member intended to do business, into which he or she directed marketing — and discovering what portion of the total number of closed sides done in that area were the member’s.  Further dissection of the marketplace into smaller units, like carrier routes or individual neighborhoods, might reveal that the member had 24% marketshare in this neighborhood and 14% marketshare in that neighborhood and so  on, each adding up to a total share of the target market.  We wanted to see target markets in the 10,000 – 15,000 household range with overall turnover rates in the 4% – 5% range.

The problem with this prescriptive approach is that it does not take in to consideration the vast differences that exist between markets.  Factors like:  the sheer number of competitors working the same area, the density of households, the impact of REOs on one market versus another, urban vs. suburban vs small town vs. rural areas . . . these were not considered.

Suppose your target market is a densely populated urban neighborhood.  You have 15,000 households and could probably walk your entire area in a few hours. Mostly it’s condos in the $200,000 range.  You set your fee at $3,950 and you figure with a 50/50 mix of buyer sides and seller sides, your average fee per closed side will be about $4,500.  You build a first year budget with expenses at about $12,000 a month.  Non-REO Turnover is at 4.2% — that’s 630 sales a year or 1,260 available closed sides.  Break even would be at about 32 closed sides:  a 2.5% marketshare.  This becomes our first milestone:  the point at which you start to look for ways to expand the number of transactions you can do by adding staff or improving systems.  You’d expect to hit that milestone within the first year and to be at 3% -5% marketshare  (36 – 63 closed sides), in your second year — and making a good profit.  Getting into your third year,  you’d want to be hitting  5% – 10% (63 – 126) closed sides.  This is usually where the ‘snowball’ effect takes over and as long as you’re willing to invest in more staff and better systems, an increase in marketshare and profit becomes very attainable, even up to say, 20% or 25%.

Now think about a smaller town, say 13,000 households.  Turnover is much lower:  3% in town and 2.8% in the surrounding county.  Although expenses might be lower and competition less fierce, average sale price and average fee are lower, too:  $3,200 per closed side.  A 10% share here (that’s 42 closed sides) — which was the tipping point in the above example — is just getting by.  It’s a nice job, but to be making money and building a business (not just a nice job), you’d need to be at 20% or more, and your snowball might not start until you were at 30%.

The first office needed 5% – 10% marketshare to be ‘thriving.’  The second needed more than 20%.

You have to think about more than just numbers of closings, too.  You have to consider the cost of doing business in each marketplace, the number of closed sides required to break even and how many it will take to get to a reasonable profit.

To further muddy the waters, you have to consider how you’re calculating marketshare.  We use closed sides.  Period.  That’s our yardstick and it makes sense from a dollars and cents perspective.  However, I met a Re/Max consultant once who told me they calculated marketshare on numbers of agents.  Production didn’t matter at all.  Just bodies.  When you think about it, it makes sense for their model. Re/Max operators make money by renting space and services to agents, so numbers of agents is a good measure for them (I’m not sure it’s the best measure for the consumer).

But even beyond that, marketshare is both static and dynamic.  Your static marketshare is a shapshot of a period of time.  It’s what we used in the examples here:  a one year shapshot  —  of all the closed sides done in your marketplace in the past year, how many did you have?  But your marketshare this month or this quarter is probably very different from your market share 8 months ago or two quarters ago.

Use the static, annual marketshare as your report card, the measure of the success of your business, the metric you use to set your goals.  But continually monitor the dynamic marketshare to make sure you are always progressing toward the next milestone and as an early diagnostic tool for problems in your operation or your marketplace.

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