The Most Important Question

There is a question you answered a long time ago, just as you were deciding to get into the real estate business.  Maybe you actually asked yourself the question, maybe you even wrote down the answer.  Chances are, however, that you just intuitively knew the answer and never questioned it, never verbalized it.

It is the most important question of your business life.  The question is:

Why?

Why did you open this business?  What were you hoping to accomplish?  What do you expect the business to do for you?  How will you exit the business when you are ready for something new?

Too often we let business gurus answer the question for us.  We allow these self-professed masters to dictate that our desire is to get bigger and bigger and do more and more deals and dominate the market and so on.  But that’s a lie.  I’ve been in this business more than 40 years and I promise you, after you scrape away all the scripts that were learned in some guru’s class, most people are in it to be their own boss and have control over their time.

That’s a very different mind-set from wanting to build an empire.  And it is perfectly all right.

There is no right or wrong answer to the question, ‘Why.’  Different people will have different answers and each answer will be laced with its own nuances.  What’s important is that you very consciously answer the question and then let the answer drive your behavior.  A broker wanting to grow to 500 closed sides a year should behave differently than a broker wanting to get to 60, even if they are both starting at the same place.

When you parrot someone else’s vision or regurgitate the picture you think some expert wants to hear, you set yourself up for failure.  You babble away about more market share, more listings, more closed sides, more staff and  . . . nothing happens.  That’s because deep down inside you don’t really want that.  You don’t want to manage all of those people, to deal with issues and answers 15 hours every day, don’t want to devote yourself to that mission.

So get real.

Why are you doing this?  What are you hoping to accomplish?  How do you see your role changing as you move toward that goal?

If you do discover that you want to be an absolute beast in the marketplace, the dominant player, great.  We’ll help you get there.  But you have to want it.  If you realize that all you want is a good job where you’re the boss and you control your time, that’s great too.  But you have to admit it and plan your business accordingly.

Understand that our goal as Help-U-Sell Real Estate is to become the dominant player in all of our markets.  We have the perfect vehicle to get there: a better offer for consumers.  We are delighted that you are making that offer to consumers and moving us closer to our goal.

If you are a 30 to 60 closed sides a year person, we will work with you to become more efficient and effective and happier in your business.  If you are a 200 to 600 closed sides a year person we will pull out all the stops to help you get there.  Regardless how you answer the big question, we appreciate who you are and what you’re doing.  You are helping us achieve our ultimate goal and you are heroes in our eyes.

Planning for 2012

Gather the following information about your 2011 production:

  • Number of new listings taken
  • Number of seller sides closed
  • Number of buyer sides closed
  • Average gross commission per closed side (all closed sides)
  • Average gross commission per closed seller side
  • Average gross commission per closed buyer side
  • Average listing price
  • Average sale price
  • Average sale price as a % of average listing price
  • Average days on market
  • % of sales occurring ‘in-house’

Inquiries generated by category:

  • Web
  • Signs
  • Print
  • Mailing
  • Referral
  • etc.

Set big numeric goals for 2012:

  • Increase production by 25% (or whatever % you choose).  Take new listings and closed sides and multiply each by 125%; if you took 100 listings in 2011, your goal for 2012 is 125 new listings, etc.
  • Look at the mix of closed seller sides to closed buyer sides in 2011.  Your goal should most likely be a 50/50 mix.  If you see it way off from that – say a 70/30 mix of buyer sides to seller sides, you’ll need to set specific short range goals to tackle the problem.
  • Look at your average gross commission per closed side.  How might you increase that?  Go after more expensive property?  Sell more buyer side transactions?  Increase your set fee?

Now, get real.

Truth is, the annual goal is just mile marker set way on down the road.  What’s important is what you’re going to do today, tomorrow and next week.  Think of your annual plan as a road trip across country.  You probably know where you want to end up and may even know some of the places you want to visit on the way, but by and large, you’ll invent your route as you go, responding to current conditions and opportunities in the moment.  As long as you’re moving toward your final destination, you’re on track.  So, for this exercise, consider the first quarter of 2012, January – March.  What are you going to do in the coming 90 days to move you closer to that distant mile marker?

  • If you took 24 listings in this period in 2011 and are planning for a 25% increase, what are you going to do to ensure you get 30 by the end of the quarter?
  • If you closed 28 sides between January and March of 2011, what are you going to do NOW to ensure you will close 35 by March 31?
  • If you are getting, on average, 95% of list price as a sale price, what are you going to do to ensure that you’ll increase that to , say, 97%?
  • If your average days on market is 110, what are you going to do to reduce that to,say, 100?
    • (By the way, the previous two items usually have most to do with how you price property at the time of listing)
  • Look at your percentage of in-house closed sides.  What can you do to increase that?  Is it time to polish up your seller participation dialogues?  Are you ready to rethink the notion that every listing must go into the MLS?

Compare what you did in 2010 against the MLS

  • If your average sale price as a percentage of list price is 95%, what is it for the MLS?  You’ll most likely discover that their number is worse than yours – say, 93% compared to your 95%.  If this is so, how might you use this information in marketing and in seller consultations?
  • If your average days on market is 110, but the MLS is 123, do you have something worth crowing about?

And then consider the number of inquiries you generated by category:

  • How many ended up as contactable entries in the Buyer Pool Book?
  • How many converted to listings or sales?
  • What can you do (over and above taking more listings) to increase the number of inquiries?
  • What can you do to improve your conversion rates of inquiries to clients?

By the way, the Inquiry category is very important AND many will be unable to examine results and set goals for inquiries because they don’t keep track of them, or do so inadequately.  If this is YOU, make one of your first goals for 2012 to become obsessive about leads tracking, inquiry capture and conversion.  Next year, when you do this exercise, you want to have the numbers at your fingertips.

Please, o please:  do not create a ten page carefully crafted Business Plan for the year unless you want to go to the bank to borrow money.  Other than in that specific instance, those plans usually end up as dead documents in a drawer that are never  seen again.  Instead, put your annual and quarterly goals in a bulleted format – preferably on one page – that you can get to quickly.  Your goals and action plans for the immediate future should function almost as a set of affirmations that you look at every day.  Reminding yourself constantly that you need to have 30 new listings by the end of March is a giant step toward making it happen.