How To Do It: Step 2 – A Better Deal

(This is an elaboration of  ‘How to Rule the (Real Estate) World in 10 Easy Steps‘)

Before we get on to Step 2, I want to clarify something about Step 1, which had to do with building listing market share.  If you get 20 listings this month, spread out over a 50 mile radius of your office, that’s nowhere near as powerful as 20 listings within a 3 -5 mile radius.  We’re not talking about taking any listing anywhere — that’s not what this is about.  This is about quickly creating a market presence that feeds you and perpetuates itself.  You do that in a compact target market.

I believe there are 3 areas where you might take listings:

  • 1 is your target market, where you spend time, money and effort to get listings.  It’s probably a 10 minute drive around your office, maybe smaller.
  • 2 is the area directly contiguous to your target.  It’s probably no more than 20 minutes from your office.  You’re not going to actively market there (until you’re ready to expand) but you’ll naturally get some inquiries and you won’t turn them down.
  • 3 is a much broader area where friends, family and former clients who refuse to work with anyone else have property.  Every once in awhile you’ll probably have to take one of those, but any listing that takes more than 30 minutes to get to from your office is probably a distraction from what you’re doing and should be avoided. Think about it:  showing a property like that or meeting with a seller to review price will take 30 minutes there and back – that’s an hour – plus however much time you’re spending at the property.  You easily could shoot an entire morning or afternoon taking care of one simple task, a morning or afternoon that could be spent getting another listing in your target market.  And though we all like getting paid when that distant listing sells, we’re probably not going to take advantage of the marketing opportunities the sale affords because, frankly, we’re not building anything there right now.

The word is FOCUS.  Clear?  Great:  on to Step 2 – the Better Deal

You can’t run into the market shouting ‘I do everything the other guys do and get paid just like they do, and that’s why you should list with me!’  There is no differentiator there, nothing to sell.  If that’s the consumer offer, my neighbor, 2 doors down is probably a better deal.  At least I’ll have peace in the neighborhood.  Now you might fluff that up with some fancy or hi-tech language, but consumers have become pretty savvy and are not nearly as susceptible to hyperbole as they were 20 years ago.

Neither can you run into the market shouting, ‘I do everything the other guys do and charge a lower commission than they do, and that’s why you should list with me!”  All you’re saying is that you’re the same old thing, just discounted.  If your competitor is charging 6% and you’re charging 1.75%, the consumer does the math and decides you’re a cut rate alternative, like the dollar store.  The question they will have in the back of their heads is:  what are you NOT going to do for me?   What am I giving up?

When you go into the market shouting, ‘I do everything the other guys do but have a completely different business model and charge in a completely different manner and that’s why you should list with me!’ you’ve said a mouthful!  In the back of the consumer’s mind is:  How does that work?  What do you do?  And you know, with Help-U-Sell, if any seller ever asks, ‘What do you do?’  you’re 80% assured of getting the listing.   The offer is so appealing that you’re almost always successful.   You’d probably have to make a mistake or not want the listing to fail.

So what is this better deal you’re offering sellers? It’s the BIG THREE:

Set Fee Pricing.  It says ‘I set my fees logically.  Just like any other business, my goal is to cover my expenses and make a reasonable profit, not a killing‘ (Who died?  The consumer!)  Really:  if you convert your set fee into a percentage, you take all the differentiating power and logic out of it.  You just become another discounter and the consumer question is:  What am I NOT going to get?  None of this means you should have only one set fee.  If logic dictates that you have 2 or even 3 (logic being things like marketing time and expense), you should have them.  But if your ‘set fee’ is graduating every $50,000 in price, it’s not a set fee at all.  It’s a percentage commission in a very bad disquise.  As we used to say Down South:  that bird won’t fly; that dog don’t hunt; that cat won’t flush.  (Sorry, cat lovers — couldn’t resist!)

Menu Pricing. This comes into play twice.  First, when the seller chooses the services he or she wants — open  houses?  MLS?  showing fee?  Second, when the house sells and the seller pays for ONLY the services that produced the sale.  This is a big differentiator (and if you haven’t noticed, anything that differentiates you from the stale traditional model is GOOD).  With your competitors, one size fits all.  No matter how the house sells — whether in the MLS through another broker or not, whether the seller happens to find his or her own buyer or not — the percentage based commission is not going to change.  Think about that for a minute . . . is that stupid or what?  If that made sense, every time you took your car in for a tune up, you’d be charged for an overhaul (just in case);  every time you ordered an entre in a restaurant, you’d be charged for an appetizer and desert (cause you might just get one).  The Seller Savings Comparison (it’s in the Download Library) is something you should be able to work in your sleep because it is the tool you use to present this wonderful consumer benefit.

Seller Involvement. Yes, this is a big consumer benefit.  Over an over, the research indicates that sellers are quite happy to take on some of the less challenging aspects of selling their home, especially if there is a potential financial reward for doing so.  If we first present Menu Pricing and then demonstrate how a seller increases his or her odds of saving the greatest amount of money by participating, they almost always say, ‘Heck yeah!  Save $6,000?  I’ll hold a few open houses and keep my flyer box stocked!’

There are lots of other components of the consumer offer, but these are the three that will cause sellers to pursue you.  If you’re working with a seller who is so intrigued by the Big Three that he or she wants more and more detail, you might also talk about:

Targeted Marketing.  It fuels our program.

Broker Control.  It brings sanity back into office operation so that we can offer our incredibly good pricing deal and still make more money than our competitors.

Focused Job Descriptions for Office Staff (including Buyer Agents).  Like Broker Control, this is something that makes it all work.

It’s going to be a rare seller who’s going to want to know all about the second set of three . . . and if you run across one, call me because they’re probably a good candidate for buying a franchise!  And if you’re getting into that level of detail in a listing consultation you’re probably spending too much time.  Help-U-Sell makes perfect sense and so it doesn’t take long to explain.  This is significant.  I remember working at brand X and training agents to make elaborate and long listing presentations.  The presentations were long because it takes a long time to justify a commission that makes no sense, or to wear a seller down, whichever comes first!  If you’re presenting Help-U-Sell effectively, you should be done with that part of the presentation in 10 – 15 minutes.  Pricing should take another 15 – 25 depending on how realistic your seller is, and coaching the seller on how to prepare and participate will take longer: 20 – 30 minutes.  You should be in an out in about an hour.  I’m not kidding.

Tomorrow, unless I get hit by a bus, we’re ‘How to Rule the (Real Estate) World in 10 Easy Steps:  building consumer awareness and interest.

How To Do It: Step 1 – Listing Market Share

(This is an elaboration of here ‘)

You’re starting out from scratch (or starting over from scratch . . . or barely scratching by and wanting to start over) and you want to take that first step:  build listing market share.  What do you do?  You don’t have much money and you may not see much on the horizon among your slim and tenuous pendings. Here’s the formula:

Learning:  The Elevator Speech and the Listing Consultation.  In today’s market you also want to check your knowledge of how to help a homeowner who is upside down or in distress.  Don’t worry about fancy schmancy objections and all the shiny things you can hang on these basic bits of information right now. There will time for that later.  You want to work the Elevator Speech until it flows off your tongue without any hesitation whenever anybody asks ‘What do you do?’  There are thoughts here and Step 2!as well as in the Operations Manual, posted in the Download Library.  You’ll also find the Listing Consultation in the DL Library along with video of John Powell working with a seller.  The whole consultation is important BUT there are two key pieces on which to focus:  The Service Comparison Chart and the Seller Savings Comparison.  They are the heart of the whole conversation.

Prospecting:  Start with people who are begging for your help:  FSBOs and Expireds.  Become obsessed with them and obsessive about contacting and maintaining contact with them.  Select powerful handouts to leave with them that differentiate you from the pack.  The old Help-U-Sell DVD, though a little dated, still works very well and, last time I checked was a bargain at about 40 cents apiece via NBS Printing, but a simple flyer that says who you are, and how you’re different is fine, too.

At the same time, mix in the folks who already know who you are and appreciate what you do:  past customers and clients.  Every day, call a few.  You’re catching up, giving them some market information (an item of value) and keeping your business in the top of their minds.

Marketing:  Choose your handouts for use with FSBOs, Expireds and anyone else you’ll be contacting.  You should have several so that you can go back to people with something new.  Also, doorhangers are important at this stage:  since you’re economizing you’ll want things you can leave on a door knob rather than mailing.  Doorhangers can be good for arounds and have the added benefit of giving you an opportunity to actually meet a neighbor face-to-face (if you deliver them yourself).  Speaking of arounds and brags — this is where to spend your marketing dollars in this first phase.  Your efforts are all about getting listings, so when you get one, pull out all the stops in exploiting the opportunities to market around it.

If you’re starting from scratch (or starting over from scratch), becoming visible is very important.  Make sure you present the benefits of seller involvement in the Listing Consultation.  Seller involvement frees you to do more high payoff activities and, if coached properly, means more directional and open house signs in the neighborhood that you don’t have to manage.  Supplement this growing number of signs with inexpensive Blitz Signs.  Even if you have to put them out on Friday and Pick them up Sunday evening, these little gems instantly make the statement that you are here and can save sellers thousands.  Consider investing in a car wrap.  You’ll spend $1,200 – $2,000 (I’m sure you could spend more) but you’ll have a mobile billboard you can park anywhere you want to make a statement.  If your budget is too tight at the moment, opt for magnetic car signs with the Help-U-Sell logo and use them! (drive nice).

Staffing:  If you’re starting from scratch you probably can’t afford help yet.  However, if you have the ability (rather, when you have the ability, which should be soon if you do what’s outlined here), the first person to hire is a good solid administrator who can take over most of the office activities and free you to be out meeting people.  Yes, a real estate license is a big plus and in today’s economy they are plentiful and available.

Time Management:  If the sun is up, the highest and best use of your time is meeting potential customers and at this point that usually means sellers.  Save learning (which is very important) for after 8 in the evening and before 8 in the morning.  When the sun is up become a people meeting machine.  Create opportunities to tell your story.  If you need some down time, schedule it for 2pm Eastern time on Tuesday and Wednesday.  Use that hour to attend the Help-U-Sell webinars to get fresh ideas and connect with other Help-U-Sell members.  Unless you have very thick skin, one of the things that will wear you down is the feeling of being all alone out there.  You’re not, and the Tuesday and Wednesday calls are an opportunity to tap in and re-energize.

Here is a Great Truth:  there’s no reason you can’t get 20 or more listings this month all by yourself.  Really.  A listing is something you can DO as Floyd Wickman used to say.  You can get out of bed this morning and say, ‘Today I’m going to get at least one new listing,’ and there are things you can DO to make that happen.  You can’t DO a sale — there are too many variables, too many other people involved.  But you really can go out and get a listing today and most every day if you make that your purpose.  I’m not much for fear motivation but really:  if someone held a gun to your head and commanded you to go out and get a listing, you could do it, right? So, if you are on the ‘Build Listing Market Share’ step, why not just decide you’re going to get one every day this month?   There will be days that something will block you, of course, but I bet if you are single-minded in the pursuit you can get 20 in 30 days.

OK?  On to Step 2!

How to Rule the (Real Estate) World in 10 Easy Steps

In chronological order:

  1. Go after Listing market share (Get more than your share of listings,  have more signs out than your competitors)
  2. Get Lisitng market share by offering a better deal than everyone else (it’s the low set fee, remember?)
  3. Use your growing Listing market share to build consumer awareness and interest.  (In other words maximize signage through seller involvement, exploit marketing opportunities for things like ‘arounds.’)
  4. Become expert on capturing buyer inquiries and faithfully track and follow-up with in-bound calls (there is no such thing as a ‘throw-away’ lead).
  5. Hire staff to help you take care of the large number of buyer leads your growing Listing market share is creating.
  6. Hold your staff (and yourself) accountable.  Not everyone is up to performing at the standard you set.  Your job is not to save them but to move them out and find someone who can do it.
  7. Start counting closed sides and comparing your results with the MLS:  your TRUE market share, the one based on closed sides, should be growing.
  8. Become the easiest company in town to work with.  That means know your stuff and play nice.  Just don’t stop being who you are.
  9. Study your bottom line (by the way:  it’s probably irrelevant until you get to this point).  What could you do to create more revenue and minimize expenses?  Where can you be more efficient?
  10. Look for ways to give back to your community.  It has enriched you, now find ways to make it better.

NOW:  Let’s take a closer look at Step 1!

Old Scripts/New Scripts

I love ‘scripts.’  I hate ‘scripts‘.  It’s a love/hate relationship.  Scripts are so phoney.  Yet, scripts can be the key that unlocks a great real estate career.  I know:  they unlocked mine.

Way back when dinosaurs roamed the earth (oh no, here he goes again), I was failing as a new real estate salesperson.  I was 25 and most of my buyers and sellers were 40 or better, so let’s just say I had a lot to overcome.  Completely frustrated after six months, I went to my local Board of REALTORS and checked out a set of Tom Hopkins’ cassette tapes.  Do we still listed to Tom Hopkins?  I don’t know. . . Anyway, Tom was very big on LEARNING THE SCRIPT WORD FOR WORD AND NEVER DEVIATING FROM THE SCRIPT!  As if the words had some magical power to make people say, ‘Yes!’

I’d drive around in my car, previewing property, listening to Tom Hopkins, saying to myself, ‘There’s no way I’m ever going to say any of this stuff, it’s not me,’ or ‘it sounds so fake.’  Still, I kept listening; and then the damndest thing happened.  I called on a FSBO (I had such a great attitude walking up to that door:  I knew I wasn’t going to get anywhere with this person because I’d never gotten anywhere with a FSBO before!).  She opened the door and stood there, arms folded across her chest and . . . suddenly Tom Hopkins’ words started coming out of my mouth.  I got the appointment and I got the listing.  Then I sold the listing in a couple of weeks sold the seller a house and listed two family members’ property.  It was the beginning of my success.

I became a devotee of scripts, a script junky.  I studied them all and I started to notice something:  while the early scripts were pretty much sales technique and tricks of tongue to get the other person to do what you wanted (‘I could stop by at 5, or would 7 be better?’ there is no bad answer to that question), the more sophisticated ones were just simple truths. I started noticing that when I learned a new script I was actually clarifying some basic piece of knowledge I already had and learning how to package it powerfully.  Let me give you an example:  my favorite script from 1987:

‘You know, Mr. FSBO, there really are only four kinds of buyers out there.’  (Intrigued, the FSBO raises an eyebrow or otherwise indicates he wants to know more).

‘There’s the first time buyer.  I love  them;  they are so rewarding to work with.  But you know what?  They’re usually scared to death.  I often have to sell them three or four times on completing the purchase they’ve already made.  Plus, they rarely buy directly from an owner.  They need help and they know it.  It’s probably not a buyer you’re going to find as a FSBO.’  (Is that true?  Yes!)

‘Then there’s the move-up buyer.  This is the local person who’s wanting to go to a newer, better, or bigger house.  They’re great buyers too and you know what?  You CAN find them.  They do shop FSBOs because the number one thing on their list of wants is:  it has to be a bargain and they think that’s what FSBO means.  Plus, when they decide they want to buy your house, you know what they have to do before they close?  Right:  sell their house.  Hardly your best buyer.’  (True?  Pretty much).

Third is the Investor or Speculator.  It’s really two buyers but I lump them together.  The Investor wants to steal the property so he can have a positive cash flow when he rents it.  The Speculator wants to steal the property so he can do some cosmetics and then flip it for a profit.  The operative phrase, of course, is ‘Steal the property.’  You can find them all day long, but you probably don’t want to deal with them.’  (True?  I think so — all that ‘steal the property‘ stuff is just packaging the truth that they’re going to want a good deal.)

‘Finally there’s the quality buyer from out-of-town, the transferee.  Now, think about it.  Suppose you were moving to, say, St. Louis, and you’d never been there in your life and really didn’t know anyone there.  Your company is giving you a long weekend to come into town and find a place to live.  Are you going to trust yourself to find the right house at the right price in the right neighborhood?  I sure wouldn’t.  And transferees rarely do. They seek the professional help of a REALTOR who can keep them from making a big mistake.  The transferee is a buyer who rarely looks at FSBOs because they don’t have time and they don’t know enough on their own.  It’s a buyer that’s largely unavailable to you.  And it’s the buyer I can bring.’  (True?  Mostly.)

All of that was stuff I already knew back in 1987 on some level.  The ‘script’ was just a way of clarifying it and packaging it.

Today I think scripting is mostly about first knowing your business, then about finding ways to present what you know powerfully.  I think it’s fine to learn a Mike Ferry or Brian Buffini or David Knox script, but while you learn it, tie it to your base of knowledge.  Make it your own.

Today’s scripts are different.  In the old world it was all about ‘how can I get this person to buy or sell.’  Today it’s all about solving problems.  Seems everybody’s got some kind of real estate problem and our scripting needs to be focused on this.  For example, I got a glimpse of one that went something like, ‘You’re like so many other homeowners today who find themselves upside down and possibly  unable to keep up mortgage payments.   What you need to know is that you have options.  In fact, I have nine strategies that can help.  When can we get together to review them?’  I don’t know what the nine strategies are but I’ll bet one of you does.  How about sharing it here in a comment (or via email to me if you’re worried about your competitors stealing your silver bullets).  What are your favorite scripts today?  What seems to carry the most weight when you speak to a buyer or seller?  I’d really like to know.

Smack A Young Person Today! (It’s All Their Fault)

Here’s a little statistical analysis for you, courtesy of NAR.  First is a chart comparing rates of homeownership by age group in 2004 with the second quarter of 2010:

The blue line is the 2004 rate, the green is 2010 and the yellow is the % difference in the two.  What’s important is that homeownership has declined for every age group since 2004 with the biggest decline occurring in the under 35 group.  The good news:  there’s a whole lotta folks out there who NEED to buy a home!

Here’s another graph, this time from the Census Bureau.  It’s showing the ‘Mover Rate’ — which tells us who’s moving around out there.  Again, it’s the under 35 set that’s moving the most.  They are running around like chickens with their head cut off when what they should be doing is so simple:  buy a home!

Finally, here’s a non-comparative graph showing rates of homeownership, again by age:

Again, it’s that under 35 set that has the greatest need.

So, it’s younger people who are moving around the most, who have the greatest NEED to buy, but who are pulling back from homeownership at a faster rate than anyone else!  And all of this is happening at a time when interest rates are very low and housing is more affordable than it’s been in decades.

I sniff a sales challenge here.  What are we saying to the under 35 set to get them interested in buying real estate?  What should we be saying?  Does the old rent vs. buy analysis still work?  Or is it old hat?  What’s it going to take to get these folks off the fence and back into the market?

I also believe it’s time for young people to step up and take responsibility for this mess!  Clean it up!  Young people:  it is your DUTY to get out and buy a home this week.  You don’t just owe it to yourself, you owe it to your ECONOMY!  Personally, I think each of us should go out and find someone under 35 and just smack them!  It’s all their fault!

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