Category: Management

Doing More in 2012

Reality:

  • There are fewer deals in the market than there were 6 years ago
  • Fallout rates have about doubled (today you sell 3 to close 2)
  • Prices – and therefore commissions – have fallen
  • Transactions, particularly Short Sale and REO Transactions, have become increasingly complex, requiring more time to process

The Bottom Line:

You are working much harder to close fewer transactions for less revenue

The only answer is to do MORE.  But HOW?  How are you going to do more?  You’re already maxed out . . . there are just 24 hours in a day . . . and, believe it or not, your energy level is a finite quantity!

We used to spend more on Marketing to do more.  Ordinary Realtors usually recruit more agents.  But we are in a New Reality, and if recent history is any indication, those methods are flawed at best.

This year, you’ll do more my creating more FACE TIME for yourself.

Face Time is the time you spend eyeball to eyeball with people.  It’s not time at the computer or with your nose in a file.  It’s your arena:  where your business germinates.

You’ll create MORE FACE TIME (and more deals) by exploiting efficiencies in your business.  Things like:

  • Limiting the distance you will drive to take a listing and drive times in general
  • Converting every repeatable event in your business into a step-by-step process
  • Honing your scripts and dialogues until they are crisp and effective
  • And so on

You’ll also create MORE FACE TIME by getting help.  It may come in the form of:

  • A Buyer Agent who enables you to focus on Listings, Marketing and Lead Generation (most likely the highest and best use of your time)
  • An Assistant who handles your paperwork, takes your calls and keeps your schedule
  • An Intern (quite possibly a FREE Intern) from a local college who optimizes your website and builds your online presence (I’ve used bold italics on purpose)

Recognize that your business grows by personal contact.  The more personal contact you have, the better your business grows.  It is through personal contact that people come to like and trust you and that remains the single most important prerequisite to doing business with you.  Want MORE in 2012?  Minimize desk-time by exploiting efficiencies and getting help,  and Maximize FACE TIME. Meet The People.

* * * * * *

The above is a summary of my opening comments at the Success Summit.  Here are a few minutes of video from that talk:

New Age Real Estate

Boy, things sure are different from the last time I wrote up a purchase agreement!  That was almost 30 years ago.  Lenders were killing us with staggering interest rates (rather than foreclosures) but the business itself was fairly straightforward.  A buyer wanted to buy and a seller wanted to sell and most negotiations took place between those two parties via their agents.

Fall-out rates were in the 15% range.  Can you imagine that?  85% of your ratified contracts making it to closing?  Sounds heavenly.

Today, a single complete transaction package is about the size of the old MLS book I used to carry around and there are often lenders, investors, asset managers and more who have a stake in the deal.  In a word, real estate transactions have become very COMPLEX.  And from what I hear, for every six contracts written, just 3 – 4 will close.

I am generally in awe at the job most (good) Realtors do today.  As Donna Summer might chortle, ‘They work hard for the money.’  There are hundreds of details that need handling, dozens of potholes and roadblocks along the way and a multitude of deal killing explosions to navigate.  Picture:  O. J. Simpson running through an airport as he did in those old Hertz commercials, except now the concourse is a mine field!

Add to this the fact that prices and, therefore, percentage based real estate commission have fallen by nearly 50% in most markets and it’s suddenly common to hear brokers and agents say, ‘Well, I think I made about $10 an hour on that deal.’    It’s mathematical:  Falling prices + increased complexity = more hours + less money.

What’s wrong with this picture is that the business has moved on to a new age, but the way we do it is stuck in the last decade.  Today,  you probably can’t afford to do real estate in the intimate, hand-holding way we did it in the 80’s and 90’s.  Doing it all by yourself will wear you out and greatly limit the number of deals you can put together.

The solution seems to be to get help:  an assistant, an admin or someone to take some of the numbing complexity off your shoulders.    But how do you do that when you’re working harder than you’ve ever worked for much less money?

I know brokers who have assistants working on a per-closed-transaction basis, where the assistant receives $X or X% of every closed deal.  In theory, it’s a great way to work because the expectation is that the assistant will free the broker to do MORE, and as the broker does MORE, the assistant makes MORE.

I know brokers who have pressed their high school and college aged children, nieces and nephews into service, helping them evaluate and then install time saving, efficiency producing technology.

I know one broker who hired a new Mom and semi-retired real estate agent who wants the flexibility of working from home – in a way that allows her to keep her new daughter with her – to do all of his BPOs.  The broker can focus on taking listings and doing deals.

The important thing is this:  so many have gone back to being Phase I brokers, working alone, doing it all.  That has been an excellent response to the tightening of the market the last few years.  However, there is a downside:  as activity picks up, your ability to do more transactions is greatly diminished.  If you are maxed out today – and just getting by – how will you do more if you don’t find a way to transition to Phase II (which means getting help)?

This year, in late November – Early December we will begin our annual business planning process, but this year it will be a little different.  It’s going to all about getting to the next level, all about going from Phase I to Phase II, from Phase II to Phase III. To get your brain started around this challenge, check out John Powell’s presentation from last year’s rally swing:

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Help-U-Sell and Performance Improvement

The International Society for Performance Improvement (ISPI) San Diego Chapter has asked me to speak to their members next month on how we’re using Coaching to drive the new Help-U-Sell University, Pro-Coach U.  It’s a very prestigious group full of big names from the fields of Instructional Design, Educational Technology, Performance Improvement and Organizational Development.  What we’re doing is a little cutting edge and there is lots of interest in how our point-of-view might make similar programs in other industries more effective.

What is that point-of-view, you ask?  Well, it’s simply this:  When we train adults in a business setting what we’re usually trying to accomplish is a change in behavior.  We want them to act differently then they normally have in the past.  It’s applicable to all kinds of training, but think for a moment about sales skills.  If you’re like most people, you came to real estate sales thinking you couldn’t sell anything  to anybody.  You went through a learning period where you discovered that you actually DID have sales skills and you worked to polish them.  You began to behave differently than you did before you jumped into the selling pool.  If you’ve ever trained to be a manager of salespeople, you studied and practiced until you became adept at asking the right questions at the right time (rather than impressing your team by telling them everything you know).  These are new behaviors that you learn by first recognizing their importance and effectiveness, then by seeing someone else do it correctly, then by practicing in a safe environment and getting feedback from a knowledgeable Coach.  That’s what we do in Pro-Coach U.

Most sales and management training occurs in a classroom in a compressed period of time with usually just a head nod toward role playing or any kind of meaningful practice.  Even worse are the purely online programs that merely dump the information out of the screen an onto your desk where it rarely gets put into action and is quickly forgotten. With Pro-Coach U, we use the Internet to deliver information.  That’s where the book learning takes place.  It comes in the form of brief video Lessons where the hard core information we are working with is presented in a compelling fashion.  The new Information is then explored in a series of real world Exercises and Activities, supervised by the Coach.  As the participant practices, the Coach provides feedback.  The Coach watches and listens and decides when the new Broker is ready for the next infusion of Information.

Here’s a little secret about training adults:  it’s a selling situation.  The job is to convince people that what you want them to do is going to make them happier, more productive, richer, better looking, healthier, and wiser than they currently are.  If you can accomplish that, the actual learning and behavior change is easy.   It’s awfully hard to do that kind of benefits selling over the phone or over the Internet or even in a classroom.  It usually takes the trusted guidance of someone who’s been there, done that and understands the benefits from a personal standpoint:  a Coach.  And that’s why Pro-Coach U is, from beginning to end, a Coaching driven experience.

Jeanne Strayer and I started working on Coaching back in 1987 when we developed a Coaching driven in-office training program for Century21, the Sales Performance System(SPS).  It was a magnificent program that came with almost three hours of video – used to role model the new behaviors – comprehensive Participant and Coaching Guides.  The Agent went away, did their work and exercises, then came back to see the Coach, who only had to turn to the appropriate page in the guide to know what to ask, what to inspect, and what came next.  The big surprise came to me in 2003 when, new to Help-U-Sell, I came across Science to Sales:  Don Taylor’s way of training high performing Buyers Agents.  It was created several years before SPS and followed the same basic coaching methodology.  I maintain to this day that Science to Sales is the best agent development training program I’ve ever seen – even better than SPS, which was left in the dust as Century 21 was sold and sold again.

Jeanne and I went on to weave Coaching into most every project we touched after Century 21 and even brought it to bear in the last iteration of Help-U-Sell (the pre-2006 version).  Now, in the new Millennium, technology has finally caught up with us and we’re creating Pro-Coach U as a blended learning solution, involving video, the internet, audio, print and Coaching to produce solid Help-U-Sell Citizens.  It makes perfect sense to us . . . but the rest of the world sees it as cutting edge.  That’s ok:  we Help-U-Sell folks always like being first anyway.

Help Wanted


Wanted:  Market Segment Specialist
We are expanding our business and are looking for
a few happy folks in specific ‘niche’ marketplaces
to help secure our position there.  Are you in a
unique or specialized neighborhood? Belong to a
large local organization?  Are you active in a local
club, religious or social group?  This might be the
perfect way to earn an extra income working part-
time from home!  A real estate license is necessary
but easily obtained with our help.  Contact . . . . .

 

Once again, today’s Broker Roundtable call was a hit.  The sharing has been so good lately, there is a move afoot to change the name from ‘Roundtable’ to ‘Mastermind.’  We started out talking about the difference between hiring an agent as a real estate salesperson (charged with the responsibility of expanding your business) or as an assistant (helping you manage the flow of business you have created and freeing you up to create more).  It was an interesting discussion.  But once again, near the end of the call, an exciting new idea bubbled up.

It started with Maurine Grisso describing a Seniors Only neighborhood in her marketplace.  She said she’d love to have someone there to be her advocate.  Ken Kopcho chimed in, saying, ‘a kind of Market Segment Specialist?’  So this idea of bringing someone on to help you gain access to a specific niche market began to take shape.  It might be Seniors in a specific neighborhood or active in a specific club, or Veterans at the VFW, or even well liked and visible teachers.

The MSS job would be to tell the Help-U-Sell story whenever an opportunity arose so that we get the call when it comes time to buy or sell.  Compensation would probably be a referral fee.  You’d probably NOT be offering these people a full bore real estate career – and good candidates probably wouldn’t want one — just a chance to earn some extra money doing something easy and enjoyable.

Jack Bailey talked about a very well liked teacher who is active in his school and with the families of his students.  He has five kids of his own and is always looking for a way to earn a few extra dollars.  This might be perfect for that man.

While the initial vision of this job seemed to be most like a ‘bird-dog’ simply alerting the Broker when activity is imminent, Maurine enhanced it a bit, saying she’d want her Senior Specialist to work any of the buyers who might be appropriate for that specialized neighborhood.

I just cranked out the sample ad above that might be helpful in identifying candidates for this interesting new recruiting target.  Perhaps it would go well in Craig’s List or the Penny Saver.

While I love this idea, it is a little bit of a twist on the Help-U-Sell way.  Ordinary (Traditional) real estate Brokers recruit bodies with almost no selectivity hoping to hire the few who may expand their business.  You see, the Ordinary Broker believes the only way to do more business is to hire more agents.  At Help-U-Sell, we never hire unless we have more business than we can handle.  When we hire, we’re hiring NOT to expand our business but to more efficiently and effectively handle the business we have already created.  When we want to expand our business we do it with Marketing and skill development.

But here, you are hiring a Market Segment Specialist who will enable you to break into markets that are at present unavailable to you.  You are hiring them to help you expand your business. It’s a new wrinkle for us . . . but I like it!

 

Did you feel that? It was a Paradigm Shift!

One thing that ordinary real estate brokers doubt about Help-U-Sell is our claim that we Charge Less but Make More. Their disbelief is understandable. Usually they are charging thousands more for the same service we offer and having a very difficult time turning the smallest profit. So they think, “If I’m not making it charging 5% or 6% or even 7%, how are they making it on a much lower Set Fee?”

The problem with that kind of thinking is the Paradigm surrounding it. The ordinary broker looks around and sees office after office doing essentially the same thing, broker after broker trapped in a recruiting treadmill that is supposed to pay off someday, agents coming and going and demanding ever increasing splits . . . and concludes that’s just the way things are in the real estate business . . . for everybody (us included).

Well, it’s not. Our reality is very different. Our Paradigm is built on almost 40 years of success in the field with a business model that is remarkably and proudly different than the status quo. It’s a model that strips a lot of the fluff and nonsense out of the real estate business and gets down to the brass tacks of: what does it take to market a property? And, what should that cost?

Let’s start with the Listing. Ordinary real estate would have you believe that the fine art of selling a home requires the careful handling of a near super-hero, a professional who routinely works miracles with the wave of his or her mysterious, magic real estate wand. That may have been partly true in the 50s and 60s when most Americans were pretty naive when it came to home buying and selling and we didn’t have the wonderful marketing tools that are readily available today. But today, it’s pretty simple. Here’s the formula:

  • Price the home competitively
  • Get it up on the Internet, syndicating out to as many aggregator sites as possible (especially Zillow and Trulia)
  • Put a sign in the yard with a QR code so SmartPhone enabled buyers can get the information
  • Do a Virtual Tour and include lots of pictures in all marketing
  • Price the home competitively
  • Put the listing in the MLS if and when you believe the extra local exposure is necessary*
  • Mail or hand deliver Just Listed information to as many neighbors as possible
  • Instruct the Sellers on how to effectively hold an Open House and provide them with enough directional signs to lead guests to the property.
  • Price the home competitively
  • Distribute information about the home to your Centers of Influence and anyone in your Buyer Pool for whom the property might work
  • And so on (yes, there is more you could do . . . but really: this will do the job for most properly priced homes in any marketplace.)

Getting this job done does not require a magician, a super-human agent, or anything of the kind. It requires a well-organized person who knows the local market and has a predictable and repeatable system for processing all listings the office takes.

At Help-U-Sell, you’re not paying to have a super-star agent’s name sitting on top of your for sale sign. You’re paying for a proven marketing system and a team of professionals to do a complicated job for you. We believe that all listings belong to the office, not to an individual agent and it is the office’s marketing system that will bring a buyer, not the personality of an agent.

So the seller pays a Low Set Fee that is sufficient to cover the cost of carrying and marketing the listing until sold plus a reasonable profit for the office. When the sale closes and the Fee comes into the office, we don’t lop off the lions share to give to the ‘Listing Agent.’ The ‘Listing Agent’ was the office and the full fee goes into the company coffers. It’s one of the reasons we are able to charge less but make more. Take a look at the numbers:

Assume a $250,000 house. The ordinary agent working in an ordinary office charges, say . . . 6%. The Help-U-Sell Broker has a Set Fee of, say . . . $3,950.

Ordinary Office:

  • Commission Earned on the Listing Side: $7,500
  • Less 70% Commission Split to the Agent: $5,250
  • What’s left to run the business and make a profit: $2,250

Help-U-Sell Office:

  • Set Fee Earned on the Listing: $3,950
  • Less Agent’s Commission: $0
  • What’s left to run the business and make a profit: $3,950

The Help-U-Sell office, in addition to having a delighted Seller, has $1,700 more to apply to expenses and the bottom line. It’s one of the reasons our brokers are able to out-market their ordinary competitors: they have more funds available!

Now let’s take that delighted Seller and multiply by, say 300. Can you imagine how quickly business would fly through your door if you had 300 former clients in the local marketplace singing your praises every time they had a chance? Add to that the fact that your offer to home Sellers is far superior to anything else anyone is doing and Listings get easier and easier to take. And you know what all those listings produce, don’t you? Yes: Buyers.

And this is where Agents enter into the equation in a Help-U-Sell office. We hire agents to handle the Buyers our listings generate.

Once again, we have to make a Paradigm shift when we start talking about hiring agents. The ordinary broker believes that the only way to expand the business is to add more and more agents. The ordinary broker has been taught that Recruiting (with a capital R) is his or her single most important function. The ordinary broker’s mantra is something like: Always Be Recruiting, Recruiting is the Lifeblood of the Office, Recruit the World! Recruit! Recruit! Recruit!

At Help-U-Sell, we don’t Recruit. We Hire agents when the flow of Buyer business is so strong that we cannot handle it with our current staff. We Hire agents to help handle the business the Office has created. It’s a great job, too, because we don’t ask our agents to list, to call FSBOS, to door knock, to do any of the things agents generally hate to do. We ask them to take the Buyer leads the office has created and do a decent job of converting them into sales. And because we have taken responsibility for expanding the business off their shoulders, we are able to pay them a reasonable commission split.

Did you hear that?

That was the sound of push-back as dozens of real estate agents read that last sentence. It’s that ‘reasonable commission split’ part that gets them. But hang on just a moment. Average per agent production today is in the 6 closed sides a year range. Yet average commission splits are in the 70% range. I think everyone would agree: if you’re doing just 6 sides a year, you’re failing. So what good is that 70% split? It’s not enough to boost your income above poverty level, is it?

How many more Buyer side transactions could you produce in a year if you never had to generate a lead, take a listing, fight for a price reduction, pay for marketing, wait for the phone to ring, and so on? And how many more could you do if every time you put one under contract, you were handed another? You see, the ordinary broker has little to offer an agent other than a lofty commission split. At Help-U-Sell we offer you leads. We also offer you training, coaching and accountability.

I was an ordinary broker years ago. I was a good one too. But at times I just felt like a beggar. I spent my days begging people to come to work for me and begging the ones I already had not to leave. My program was exactly like everyone else’s so all I could do was beg and wave around a big commission split. The agents I hired went out into the field and begged people to list with us. Again, our program was exactly like everyone else’s so all they could do was beg and hope their personality would win the day.

At Help-U-Sell we don’t beg. Our Seller offer is so good that sellers reach for it, without the begging. Our systematic marketing is so effective that we have a flow of buyers coming into the office. We hire agents to help take care of that business, without the begging. It’s a real business with no smoke, no mirrors and no magicians.

*MLS is a wonderful tool, but it is expensive.  Selling through MLS usually means having to pay not one company but two.  So when you elect to go into the MLS, you have to be prepared to pay that other company, that outside agent.  Sometimes market conditions are such that MLS is essential.  But sometimes it is not, especially if the home is priced competitively.  Where most ordinary brokers insist every listing must go into MLS (and every seller must pay enough commission to cover the added expense), at Help-U-Sell MLS is an Option.  You’ll discuss this with your Broker and make a decision.

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