Category: The Industry

NAR Convention 2009 – The Exhibit Hall

The National Association of REALTORS held its convention this weekend in San Diego (my home), so I took today to go down and walk through the exhibit hall.  I’ve done this many times before and find it a good way to get the pulse of the business and spot new or at least interesting things.  Here’s what I noticed this year:

  • Only a handful of the large national real estate firms were present.  Of course, Realogy was there with CB, C21, ERA and BH&G in their booth.  Prudential was down the aisle a bit.  And Keller-Williams was there . . . so was Exit.  Oh, and Re/Max.  But that was about it.  And truth is:  most of the booths were pretty empty. 
  • There were tons of exhibitors focused on Short Sales and REOs.  Some were networks you could join, others offered training and there were a few vendors with software for managing the process.  It seemed pretty clear, though, if there is a focus, REOs and Short Sales are it.
  • Actually, there were very few people in the exhibit hall.  Now, it was the last day, and many were probably in meetings, but I remember years past there being crowds pushing through the aisles.  Not so today. 

I saw only a few things that really excited me:

  • Listingbook.  I’ve already written about it here.  But after wandering the Exhibit Hall and looking at everything that hopes to be similar, I discovered that nothing else comes close.  Listingbook is absolutely the best way to share market data and listing information with your clients and potential clients.  It keeps you in control and delights them.  I had a meeting with their VP of Sales and we will be doing some things with them very soon.  Stay tuned.   www.listingbook.com
  • David Knox.  Sometimes what’s tried and true can be fresh and new.  David’s message has always been spot on and now, with some upgraded technology, I think he’s in an excellent place to reach even more people.  He’s spoken at Help-U-Sell conventions in the past and something tells me we’ll be seeing more of him in the future.  www.davidknox.com
  • RepTech.  They have software that will let you doctor interior and exterior property photos to look as they would if the house was fixed up!  Particularly valuable in distressed property situations where it’s important for the customer to see what might be possible, the software shows how the place would look with fresh paint, new landscaping, a pool and more.  The lady who did the demo for me ripped the carpet out of this living room, put down hardwood floors and an oriental rug and changed the drapes and it was easy.  www.reptechcenter.com
  • WindowVision.  Remember how we used to post photos and descriptions of our listings in our storefront windows?  Well, some of us still do, but these guys have put that idea on steroids.  Photos of individual listings are displayed in a lightbox (so they are illuminated and beautiful) and each has a 3 digit number.  A customer wanting more information about a listing, walks a couple of steps to the right where there is an actual touch screen device in the window that allows them to access and view more photos and information about the listing on a flat panel display.  You can even wire up a speaker and they can hear a description while viewing.  This all happens outside your office — at any time of the day or night.  Now,  here’s what I saw:  You could work with these folks to build a small self-contained mall kiosk that could really make a statement and pick up some leads.  They’ve actually done this and have examples to show.  WindoVision demo
  • Finally, I found a memorable chatchkie.  Moments to Remember USAis doing a calendar that might actually be kept and used by your customers.  It comes on an 8.5 x 11 inch laminated background with a photo of their house and your photo and contact information.  The calendar itself is two full years in length (from the day of closing) and each page is big enough for a few notes to be added each day.  It’s attractive, it features their house and you and actually has some shelf life.  All for $21.90.  www.momentsusa.com

Heroes

Since coming back to Help-U-Sell in June, I’ve talked with a lot of brokers.  What I’ve found is a bunch of heroes.  I mean:  here in the most difficult real estate market in history, we have people working harder than they ever have, managing to survive and even thrive, all the while maintaining an infectious, positive attitude.  There are so many I’d just like to give a medal to.  What they’re doing is no small feat, either.  They are, against great odds, preserving the dream of home ownership for all of us.  I’m always proud to be an American.  Today I’m proud to be a REALTOR.  And I’m even prouder to be part of Help-U-Sell, where courage, commitment and passion for a job well done reign. 

In this challenging real estate universe where only the strong survive, I’ve noticed a few common themes in the attitudes and conversations of  the Help-U-Sell brokers who are making it happen.  First is optimism.  They acknowledge that the market is complex and demanding, but they are up to the challenge and know — really, know — they’re going to make it no matter what.  They seem hungry and open to new ideas and soak up new information as if it were a rare commodity.   Then I see them installing the best ideas into their own businesses.  That says a lot about  flexibility and adaptability. 

I see remarkable confidence and self-reliance.  These are the folks who regard everything at their disposal — even their Help-U-Sell franchise — as a tool for increasing their productivity in the field.  More than a few have said something like:  ‘I love Help-U-Sell.  I can’t imagine working without the brand, the set fee, and the system.  I appreciate corporate and I’m excited about what’s happening but, frankly, I’m going to make this thing work no matter what anybody else does.’  You can see in that statement the heart of the American Entrepreneur.  It’s that dogged determination to take a business on your own shoulders and make it work.

These are the ones who are not looking for a handout, not looking to be rescued or protected.  They’re not looking for some magical new idea to somehow save them.  They don’t have time for that.  They’re too busy finding ways to save themselves, and having a darn good time doing it. 

It takes a lot of heart to dig down deep in the midst of chaos and collapse, and find the optimism, enthusiasm and energy to pull yourself up and out.  And I assure you:  this team of Help-U-Sell brokers we have out in the field today — they have that kind of heart in spades.   Thank you all for being here and for doing what you do.  You are heroes to me.

How Ordinary Brokers Mistake Cash Flow For Profit

It’s darn hard for a broker to make a profit in the ordinary (traditional) real estate business.  I know this because I spent years working for one of the large national franchisors specifically to help their franchisees find ways to become profitable.  I worked with hundreds of brokers and learned to dissect their financial statements and make recommendations that might help increase the bottom line.  It was a futile effort.  Once brokers started averaging less than 30% in Company Dollar, there was little hope there would be much left after expenses.

Many of the offices I saw made no money at all.  Most bumped along at between 1% and 3% profit.  And a few — just a few– approached 5%.  They’d usually protest when I gave them the bad news.  ‘What do you mean, I’m not profitable?  I got money in the bank!  I pay my bills!’  What they had was cash flow — not profit — and there’s a big difference.  Cash flow is just the money a business kicks out from a variety of sources.  Profit is a measure of a business’s success.  Successful businesses are profitable.  Failing businesses are not.  And the problem with traditional brokers was their business model:  it was broken.

Time and again, I’d ask for financials and receive these fairy tale statements that had seemingly  been created in never-never land.  Filled with magical thinking, they usually showed piles of cash at the bottom line . . . until I started straightening them out.  As a refresher, here is how a real estate office looks at profit:

  • Gross Commission Income
  • Less Cost of Sale (which includes Agent Commission Expense and Franchise Fees)
  • Equals Company Dollar (Net Operating Income)
  • Less Expenses (Rent, Marketing, Utilities, etc)
  • Equals Profit/Loss

And here are a handful of the most common things traditional brokers do to their P&Ls to hide the fact that they make no money:

Basing profit on Company Dollar, not Gross Commission Income.  Doing so can make a 1% profit look 5-10 percentage points higher.  Just a reminder:  Profit(%) = the bottom line divided by Gross Revenue, not by Net Operating Income. 

Not paying themselves for performing the management function.  Most brokers run around all day long, cleaning up their agents’ messes, solving their problems, deal doctoring, training and recruiting, recruiting, recruiting.  Few ever budget compensation for that massive task.  I insisted they build in a salary for themselves equal to what they’d have to pay someone else to do this job– even if they never write the check.

Not paying themselves as an investor.  Most brokers sink thousands into their businesses getting them open and to the break even point.  That’s money they could have invested anywhere else . . . and gotten a return.  I insisted they build at least 8% Return on Investment into their income statements.  When they’d protest I’d challenge them to go out and find someone else who would loan them an equal amount for that kind of return. 

Not paying themselves for personal production.  Over and over they’d say, ‘Oh, I just leave my own commissions in the company.’  Wrong.  You pay yourself on the same basis you pay your top agent.  If, after doing so, there is not enough money left to pay the electric bill, you invest more money into the business. 

Attributing ancillary sources of income to the real estate business.  Title, escrow, mortgage, insurance, termite and on and on.  I actually had a group of California brokers tell me they never intended to make any money in their real estate operations.  They just used the real estate office to generate business for their ancillary services!  Anybody who would intentionally take on the risk and liability of a real estate company with no intention of making a profit is . . . well:  there’s a new definition of insanity for you. 

Not too many years ago I was doing a project for another one of the large nationals.  I was in a meeting with some of the execs when someone came into the room, fresh from a meeting with a group of their top brokers. 

“How’d it go?’ she was asked. 

‘Not too good,’ she replied, ‘They’re all struggling with profitability.’ 

‘Well, did you show them how to charge a transaction fee?’ 

I had to bite my tongue.  If your business model is so messed up that you have to charge your customers a fee for handling their transaction in addition to the commission you charge them to handle their transaction . . .  

These are just a few of the many reasons I fell in love with Help-U-Sell.  Here I found brokers who were making a reasonable profit and delighting customers at the same time.  They were controlling the biggest drain on income most real estate offices face, Cost of Sale (which includes agent commission expense).  Company Dollar was greater and so more cash fell to the bottom line.  In Help-U-Sell, brokers had a way to charge less  .  .  . and make more.

Chicken Little

We all know the story of Chicken Little:  how a seed fell from a tree and landed on his tail and he therefore assumed the clsky was falling! the sky was falling! 

He ran and told Henny Penny, ‘The Sky is falling, the Sky is falling!’

And Henny Penny cried, ‘We must run!  We must run and tell the king!’ 

They ran into Turkey Lurkey and when he asked how they knew the Sky was falling, Chicken Little said, ‘I saw it with my eyes, I heard it with my ears, some of it fell on my tail!’ 

To which Turkey Lurkey gobbled, ‘We must run!  We must run and tell the king!’ 

Of course you know the story, they ran into Ducky Lucky and Goosey Loosey and soon the entire barnyard was in a panic. 

And that’s where our memory of the story usually ends.  We get the lesson:  don’t panic, and that’s great, but the story gooseyactually goes on from there. 

Eventually this hoard of feathered fowl encounters Foxy Loxy.  They tell him their story and when he asks how they know the Sky is falling, they all chime in, ‘Chicken Little saw it with his eyes!  He heard it with his ears!  Some of it FELL ON HIS TAIL!!” 

To which Foxy Loxy said, ‘We will run!  We will run into my den and I will tell the king!’ 

And they all ran into Foxy Loxy’s den . . . and never came out again.  The End.

I’m rehashing this wonderfully instructional tale for obvious reasons:  it has great implications for our recent and foxycurrent real estate markets.  Of course, you can’t listen to the ney sayers that surround you.  You have to tune them out.  But understand that in times like these, when there is a cacophony of negativity and fear, there is also opportunity.  These are the times when smart companies grow and gain.  These are the times that bring out the Fox in those of us who still have one lurking beneath the surface.  My hope is that the Help-U-Sell team gets foxy and we come through this winter with enough fried chicken to last decades!

No More Begging!

It dawned on me 20 years ago when I was working as a Business Consultant for one of the other large national real estate franchises:  In the ordinary real estate world, we were all beggars.

Agents made listing presentations where they begged sellers to work with them.  Then they begged them to reduce the price and relist.  They begged their buyers to be loyal.

Brokers begged agents to come work in their offices.  They begged them not to leave, too.

The Franchises begged (really:  begged) people to join them.  Then they begged them to use the tools, begged them to do the thngs that would help them succeed and begged them to renew at the end of their term.

It was all very degrading, all this begging.

In a universe where everyone is on their own and everyone has the same set of tools, where all the players are just alike — making a convincing argument for your service becomes sophisticated begging.  It’s no longer a matter of educating the customer about the benefits your particular way of doing business can bring to bear on their situation.  It’s about having enough flair to make the ordinary seem special, enough personality to be convincing when you say, ‘Trust me.’

HUS_logo-PNGsm

When I came to Help-U-Sell, I noticed something different.  I saw agents and brokers who had more then their personalities to distinguish them from the pack.  They had systems that worked.  They had a specific way of marketing a listing that got it sold.  They had a unique way of starting a new agent in the business that made them productive.  They had a carefully structured method of working with buyers that not only resulted in loyalty, but also produced such customer satisfaction that testimonials were a cinch.   Everyone — brokers, agents, even the franchisor — was coming from a position of strength because they were backed by a unique business model that worked.

The Help-U-Sell Listing Consultation is not about trying to convince the seller that you’re the best.  It’s about showing the seller enough of your program that they want it, and then deciding if this is a listing you want to take, a seller you can work with.

We don’t chase buyers.  We capture them with a carefully constructed intake system (the Buyer Data Sheet), and then do a consultation that ends in a loyalty commitment.

When we recruit (and we only do this when our program has created more business than we can handle with current staff), we don’t try to convince every agent who walks through the door to join us.  We look for the few who recognize the value of being able to focus on a single, managable aspect of the business.  Then we put them through Science 2 Sales training and hold them to a reasonable production standard.

It’s all about having systems that produce results.  That’s what puts you in a position of strength so that you don’t have to beg for business.

Accessibility Toolbar