Category: The Industry
Get Off That Treadmill, You Hamster, You! (another message for ordinary real estate brokers)
How often have you heard it? ‘Recruiting is the LIFEBLOOD of your real estate company!’ ‘Recruiting is the broker’s single most important job!’ ‘Recruit! Recruit! Recruit!’
Seems like we’re not even in the business of selling real estate anymore. We’re in the business of providing a place where real estate agents can work.
If your business is driven by agents . . . that’s a definite case of the tail wagging the dog!
It wasn’t always that way. Fifty years ago, real estate brokers were the business. They worked hard to market themselves and become fixtures in the local community. Sometimes, when they had more business than they could handle, they’d bring on an agent, to help.
But everything changed in the 70s when the franchises blossomed. They showed brokers that every time they added an agent they increased the office’s reach into the community and expanded the office’s sphere of influence. It was the birth of modern recruiting.
In the 80s, with success defined by the number of licenses held by the broker, recruiting warfare spread across the land. Once someone figured out how to pay agents 100% of the commission on a sale, commission split became the only thing that mattered. Splits rose higher and higher and company dollar fell lower and lower.
The contemporary residential real estate broker is little more than a beggar. He begs agents to come to work for him and then begs them not to leave. He sweetens the deal with the only tool he has: commission split. With the lion’s share of the Gross going to pay agents . . . well, they don’t call ’em BROKErs fer nothin’!
It doesn’t have to be this way. You can build your business on the power of your marketing rather than the number of bodies that occupy space under your roof. But you must take control.
- Get back to reality with an attitude adjustment. It’s your business! You took the risk, spent the money and you’re the one who squirms when it’s time to pay the bills. Sure you love your agents, but they are the help.
- Now that you’ve had an attitude adjustment, have a commission split adjustment. You are turning your office into a self-sustaining, lead generating machine. Anyone who works for you will benefit from that and thus should be paid something unheard of today: a reasonable commission split!
- Take back control of your marketing. As commission splits rose to astounding heights, brokers in large measure shifted responsibility for marketing to agents. Of course, very few agents actually invested in marketing and those who did marketed themselves, not your company. You have to control the marketing to control the message and the leads that are created. And you’re going to have to start spending serious money to market your company.
- Track and control your leads like the precious gems they are. A funny thing happens when real estate brokers take control of their marketing: they become extremely fussy about their leads! How many did we get? What caused them to contact us? What happened to them? It’s no wonder. Today, most brokers spend more than $100 to generate a single inquiry! With that reality, you have to demand excellence in how they are handled.
- Never hire anyone until your business is generating so much buyer and seller traffic that you cannot handle it with your current staff. This probably means you’re going to have to let some of your existing staff go. It’s ok. Your future staff is going to feed you so much better than the commission split crew you have now.
- Come up with a consumer offer that is so compelling that people have to call you to find out how it works. It should be unique and should benefit the consumer. Here is a hint: if your consumer offer is 6%, MLS, Zillow, Sign, Open House, etc. – that’s not good enough.
IF you can execute those six steps, recruiting will stop being your reason to exist and become an essential activity, undertaken when necessary. Armed with what every good agent wants, a steady flow of leads, you will be in a position to choose the agent you want to hire. There is a big difference between choosing and begging and, as we all know, beggars can’t be choosers!
By now you are probably wondering what planet this happens on! Understandably so. The ordinary real estate world has been flowing in the same direction for so many years that, for it to right itself now would be about as difficult as having the Titanic maneuver around that iceberg!
Thankfully, the infrastructure for this real estate revolution is already in place. It is a consumer focused, broker-centric business model called Help-U-Sell Real Estate. For forty years we have been on the cutting edge of keeping brokers in control, and of delighting consumers in the process. We build our businesses through careful marketing (and we market like nobody else), not by endless recruiting. We deliver a full service experience that saves consumers thousands of dollars every day.
We organize our offices very differently than our ordinary counterparts. A broker controlled environment operating on less revenue per transaction would have to. Many brokers, struggling to make ends meet in their 6% offices, can’t imagine how Help-U-Sell Real Estate is able to charge less and keep going. But here’s the truth: through proven systems and efficiencies, through careful control of leads and accountability, through staff specialization and division of tasks, our brokers usually return more dollars to the bottom line on a typical transaction than ordinary brokers do. That’s right: we charge less but make more.
If that sounds too good to be true, we’d love to talk with you and show you how it works! Or have you talk with some of our current members.
Let’s be honest. For forty years – probably less, depending on when you entered the business – you’ve watched us and thought we’d be gone like dust in the wind in a matter of months. But we’re still here. We’ve never gone anywhere. Obviously, we have something that works. Isn’t it time you found out what it was?
How to Generate Leads (a message for ordinary real estate brokers)
The lifeblood of our business is leads . . . but how do you get them?
It’s harder today to generate a lead than it ever has been. As the real estate business has grown up, the flow of easy leads into the office has dried up! And while the Internet has lowered the cost of marketing a listing, the cost of generating a lead has gone UP. Offices with active marketing programs easily spend $100 – $150 to generate a single lead. When you factor in typical conversion rates – something like 8 to 1 – the cost to generate a bona fide buyer or seller can approach $1,000.
Before delving deeper, let’s define terms. An Inquiry is a call for information. It may come on the phone, in an email or in response to an Internet ad. Inquiries do not become Leads until that person surrenders his or her contact information. So a Lead is a person we have the ability to contact.
Most potential Leads are lost right there: in the conversion from Inquiry to Lead. Real estate salespeople are so notoriously bad at this that at least half of all Inquiries simply evaporate without ever becoming leads. Smart brokers demand performance in the conversion process, insist on practice and role play, and track it over time. Smarter brokers hire specific personnel whose sole function is to respond to Inquiries and convert them to Leads.
There are several cultural factors that have caused that great river of real estate buyer and seller leads to go dry. They include:
An explosion of readily available information. With the Internet, Zillow, REALTOR.com and dozens of other portals, there’s very little a potential customer can’t find on his or her own. In short: they don’t call you anymore, because they don’t need to.
A steadily waning trust factor. We have become obsessed with privacy and anonymity. So often, the innocent sharing of an email address of phone number has led to endless scamming and unwanted solicitations. People today are far less willing to give up their contact information than they were even 10 years ago.
The genericization of the real estate industry. A couple of decades ago, there was a perceived difference in the consumer offering of some real estate companies. That perception is gone with the last millennium! Today, there is not one whit of difference in the consumer offering of almost any real estate brand. There is endless innovation in how real estate companies attract and retain agents, but for the consumer it’s basically 6% (or 5% or 7%), put you in the MLS, put you on Zillow, hold an open house and pray. When everyone is offering the same thing, something extraordinary has to come through in an inquiry response before contact information is exchanged.
So how do you become a lead generating machine in this environment? It’s actually pretty easy.
Step One: look at your consumer offering. What are you offering that is utterly different from what everyone else is offering? And, forget the industry buzz terms like ‘Excellent Customer Service,’ and ‘Professionalism.’ Those things are important, but to the consumer, they are an expectation, not a differentiator.
Remember that one of the first things any consumer shops is price. If your pricing model is the same as the 3,000 other Realtors in your Board . . . well, that’s hardly standing out in the crowd, now is it? And does your pricing model make sense? Does the person in the $250,000 house pay less to sell it than the person in the $300,000 house? If so, why? Spoiler alert: answers like, ‘That’s just the way we do it,’ don’t fly.
The pricing of any consumer good or service is a value-for-value exchange. In a value-for-value universe, your fee should have some relation to the cost of the goods or services you are providing. So, if the person in the $250,000 house pays, say, $15,000 to sell but the person in the $300,000 house pays $18,000, where are you spending the extra $3,000 in the home marketing process? You’re not? Well, then, both of those homeowners should be paying the same thing, don’t you think?
Assuming you do step one correctly – meaning you devise a superior pricing model for your company and a dynamite consumer offer – you move on to:
Step Two: which is to market the heck out of it.
Bear in mind that it is your company that makes the consumer offer; it’s not the agents. They may make the offer on the company’s behalf, but it is the company’s offer.
Over the past 40 years, residential real estate companies have shifted the cost of marketing (which is how we communicate the consumer offer) in large measure to agents who demanded increasingly lofty commission splits. The logic was solid: I can’t afford to pay you 80% unless you start paying for your own marketing. But we’ve learned that, generally speaking, agents won’t invest in marketing regardless of split. The end result of shifting marketing to agents is agents running around willy-nilly, making this promise here and that pledge there, with no coordination from the broker and no clear or consistent offer being made to consumers.
So, you have to take control of your marketing, which means you’re going to have to budget a significant portion of your gross for it. Then you go into your target market strategically and consistently with your marketing message . . . and soon, like the swallows returning to Capistrano, the inquiries start to flow in.
By this time, the next step should have already happened. It will happen while you are doing step two.
Step Three: Take control. As you take control of your consumer offer and of your marketing, you will take control of your company. As lead generation becomes your responsibility, as you begin to hold your staff accountable for the disposition of those leads, as your unique consumer offering is constantly and consistently conveyed, your company will shift from being a place where agents work to a thriving business machine with growing market share and value.
Sound like a lot of work? A lot of risk? It is. But if you want to control your business (rather than be controlled by it), it has to be done.
Thankfully, there is a shortcut.
For 40 years, Help-U-Sell Real Estate has been perfecting the kind of business model described above. Our consumer offer – Sell Fast for a Low Set Fee and Save Thousands – is unique and very attractive to consumers. Our marketing system is a system. Like the consumer offer, it is unique in the industry and produces stellar results. Nobody markets like we do and nobody generates a steady flow of leads into the office like we do.
Couple this with a robust technology platform that we built and own and free expert coaching and support; and Help-U-Sell Real Estate could be your path to local market domination.
If you’d like to know more or simply have questions, feel free to contact us. Much can be learned at our website, helpusellfranchise.com or at one of our regularly held informational seminars, but nothing is better than picking up the phone and having a conversation.
Caution: One of the biggest snags brokers encounter when trying to understand how Help-U-Sell Real Estate works happens when they try to imagine the pricing model fitting into their existing operation. It doesn’t work. If you did that, you’d fail. We are not a stripped down version of what any other real estate company does. We are a completely new and different approach to how to run a real estate company, one that allows us to charge less and make more.
Just as almost every seller who is aware of us feels they must find out what we do before choosing a listing company, you too should find out what’s different and special about Help-U-Sell Real Estate before you map out another year of your future. Get in touch today.
Flashback: The Ineffective Realtor (or what to do when your agent sucks)
This post from 2013 has been getting lots of hits lately. Must be a lot of unhappy home sellers out there!
You are a home seller and you’ve become entangled with an ineffective real estate agent or broker. The relationship started out well enough and you had high hopes that it would result in a successful transaction but now things are . . . off track. What should you do? Without giving legal advice (I’m not an attorney, and truth is: what you legally can do varies from State to State) I’d like to explore this for a few paragraphs.
First, let’s get clear on what constitutes poor performance on the part of a listing agent and office. The logical answer would be: no activity, no offers. It would be logical, but it wouldn’t necessarily be correct. You have to dig a little deeper. Why is there no activity? Why are there no offers? Here’s a great truth: agents and brokers don’t just pull showings and offers out of their hats. They have to have a marketable product and the product attracts potential buyers. Agents and brokers orchestrate exposure for their listings and those that are marketable are shown and eventually sell. So, the real question is: did your agent advise you about the marketability of your home?
What does that mean? Marketability? Here’s a short list:
- Is it located in an area into which people are interested in buying?
- Does it look inviting from the street?
- Does it show well on the inside?
- Is it properly priced?
- Is it fully and easily available to be shown on a continuous basis?
I can see you nodding ‘yes’ as you read each of those bullets, but stop for a moment. Think back to the Listing Consultation. Do you remember the price range your agent/broker recommended? Did you price within that range? Or did you insist on a few thousand more? If so, that’s probably the problem: price. If you overpriced against the recommendations of your agent, don’t blame the agent when the house isn’t shown. If you want to blame your agent for something, blame them for taking an overpriced listing!
And what about that availability thing? Do you have a lockbox on your property? And is the house available to be shown with or without an appointment? Those are the homes that are shown the most (assuming they are priced properly) because they are easy to show. I realize there are often very good reasons why some homes may not have a lockbox, may require an appointment 24 hours in advance, but those good reasons don’t negate the fact that each time you add a showing restriction . . . you restrict the number of showings you will get.
Usually, when listed sellers complain about their agents/brokers, a little digging reveals that the seller didn’t take the agent’s advice about pricing, marketing, staging or showing availability, and that’s why activity is slow. If there is an agent problem here, it is that the agent didn’t go back again and again to make the point that the price needed adjusting or the house needed to be staged or the showing restriction lifted.
But if you did follow the recommendations of your agent at time of listing and you are still not being shown, before you blow a gasket, find out how long it takes to sell a home like yours in your general vicinity today. Is it 60 days? or 160? Do listed homes in your area have anniversaries before they sell? Really: if your market is sloooowww and you need to sell fast, don’t blame your agent; reduce your price.
I know: I’m putting a lot of this back on the sellers’ shoulders. I’m making it sound as if the only problem with any listing is the seller, not the agent. And that’s not really true. Agents screw up too. How?
Not exposing the property. This is rare today. Any listing put into the MLS is almost always automatically syndicated out to dozens of Internet real estate portals and that’s the best possible exposure. But, in addition, is your agent making it easy to get information on the property? Is s/he keeping the flyer box filled? Is there a QR code on or near the sign? Is there a recorded information number? How about a virtual tour? Does somebody answer the phone when the number on the sign is called?
Not following up with regular market updates. Real estate markets shift. Sometimes rapidly. Two months ago, here in my San Diego market, homes were selling in days with multiple offers. Buyers were paying more than asking prices and waiving appraisal contingencies. Since then, two things have happened: interest rates have risen a full percent and potential sellers, intrigued by the feverish activity, have jumped to put their homes on the market. End result? Today things are a lot slower. Your agent should be talking to you once a month or so about changes in your marketplace and how they affect your listing.
Not communicating. As an agent (a long time ago), I hated to call my listed sellers when there was really nothing to report. If I’d done everything I could, If the property was properly priced and the marketing was working but we still had no activity – that’s when it was so hard to pick up the phone and make the call. But that’s the most important time for an agent to call. You, the seller, have to know that your agent is on the job and concerned about your home selling project. If you’re not being talked to at least once a week . . . well, that’s a problem.
Not knowing their business. There’s no substitute for experience and in real estate it is measured in numbers of closed transactions. Each one adds to an agent’s knowledge of how to make transactions work. If your agent does not have that depth of experience s/he may not be equipped to handle the inevitable problems that arise during a transaction. Interestingly, it’s not the new agent you need to be cautious about: they are usually closely supervised by a savvy broker. It’s the average agent who’s been in the business for several years and bumps along at 6 – 10 deals a year. That’s enough production that their brokers assume they know what they’re doing, but their knowledge base can’t compare with agents doing, say, 20 transactions a year.
Charging a stupid percentage based commission. And that’s exactly what they are: stupid. They make no sense at all. A broker charging 5% or 6% or 10% is operating in the real estate dark ages and charging you way more than you need to spend to sell your house. Find a broker who charges a reasonable flat fee and who allows for the possibility that you may find the buyer yourself (and charges less in that event). How do you find that modern broker? Go HERE.
That’s an incomplete list. I am sure there are other ways in which agents let sellers down. But what do you do if you are on the receiving end of this kind of poor service?
First: when you list, get an agreement in writing that enables you to cancel your listing if you are unhappy. Be fair. Allow your broker a reasonable time after notification of your dissatisfaction to remedy the situation: a few days. And don’t think this kind of agreement enables you to ax your broker and negotiate directly with a buyer or to whimsically flip to a different broker with a shinier business card.
Second: call your agent and set up a meeting to talk about the problem. Give them a reasonable time – again, a few days – to fix it.
Third: call your BROKER (the person for whom the agent works) and set up a meeting to discuss the problem. Your agent is representing the broker and if s/he is not performing in a way that will have you crowing about the great service you received, the broker is going to want to know about it.
Finally: seek legal advice. That means an attorney who specializes in real estate. When you list your home for sale with a real estate broker, you sign a listing agreement – which is a legally binding contract. Often they cannot be unilaterally cancelled. If you were to ‘fire’ your broker and then sell your house through another broker, you might be liable for two commissions! A good local real estate attorney can advise you and may be able to get you out of a bad situation.
But make that attorney option the last resort. Talk, talk, talk to your agent and broker first. The real estate business is built on the referrals of happy clients and an unhappy client can do big damage to a company’s reputation. Most brokers would rather do whatever it takes to make you happy than have you become a fountain of negative talk in the neighborhood.
A Must See For The New Year
Help-U-Sell Brokers, you know we talk about list to sale price ratio and days on market all the time. We use those metrics to show that our production is far superior to that of the average broker/agent in the MLS. And, honestly: I have never seen a Help-U-Sell office that did not beat the MLS on those two metrics!
Well . . . you need to see this 10 minute video. It documents how a Coldwell Banker mega-team in Miami manipulated that important data to skew the ‘truth’ in their own favor. What they did is truly devious and has big implications for decision makers in lots of industries.
So, grab a cup of coffee and settle back, maybe toggle to full-screen view, and close out the year learning how NOT to do it.