Tag: real estate recruiting

Why NOW Is The Time To Become A Help-U-Sell Broker

Welcome to 2013, the year the real estate industry stopped staggering and returned to swaggering.  We all knew it would take a recovery in the housing market to initiate a recovery in the overall economy and this is the year the home-buying public decided it was time to make a move.

But what about you?  What’s your next move?

If you are a real estate broker – a savvy one –  you have to be on the lookout for the next trend, the next twist, the next thing that will give you a competitive advantage over others. Up until the late 70s, about the most innovative thing the industry did was create the MLS. But with the advent of the franchises, the real estate business began moving at locomotive speed, with giant competitors looking for new and better ways to grow.  Unfortunately, it has been a one-track itinerary for that locomotive:  recruiting.  The industry so overwhelmingly decided that the way to grow is to add more and more people that today we hardly question why recruiting should be a Broker’s single most important activity, why recruiting is the ‘Lifeblood’ of the real estate business.

Here is a tip about change:  it will the innovators who question what everyone else holds to be true who will ride the next big wave in the real estate industry.

Let’s go back to basics.  Our business is built on the idea that people who want to buy real estate and those who want to sell it need qualified, knowledgeable help.  That’s what the real estate industry is about, our reason to BE.  But notice: nowhere in that statement is there one word about recruiting.  Yet recruiting has become the only acceptable ‘HOW,’ the only strategy for accomplishing the goal of helping consumers.

The message on the Brokers’ internal billboard glows with self-congratulatory phrases about ‘providing an environment where talented people can thrive,’ and ‘serving the community with the most knowledgeable and professional agents in the business.’  But here is the more honest, though somewhat cynical paradigm that underlies that business model:

As a Broker I know that almost anybody with a license can sell a few houses.  Everyone has friends and family who would be willing to give them a shot.  While I am actively seeking super agents, I know that half the people who enter the business will do 4 – 6 deals from their personal network, and quit.  That’s ok:  I’ll take those 4 – 6 deals.  Those agents aren’t costing me much and I can almost cover my overhead on their production.  I also know that 35%-40% of those coming in will stay in the business but will muck along at 6 – 8 deals a year, each personally making $25,000 – $35,000 a year but making $20,000 to $30,000 for me.  20 of those agents and I’m doing ok.  40 and I’m great!  Because I know most people won’t make it, and that many who do will eventually move on to what they perceive as greener pastures, I accept the fact that I must constantly recruit to replace those who leave. My job as a real estate broker is to provide comfortable space and acceptable systems for my agents.

Is that the kind of real estate universe in which you want to live?  Because that’s what’s out there whether it calls itself Keller-Williams, Re/Max, Century 21, or Local Independent Realty.

If, on the other hand, you are ready to shake things up a bit, to return to the business of actively seeking customers – not agents, then you owe it to yourself to take a look at Help-U-Sell.

Step one is to set your prejudices aside.  You have been marketed a picture of Help-U-Sell that keeps you at a distance.   Here are the underpinnings of that false picture:

How can they make any money?  I can barely make it charging full fare and here they come charging half what I do.  What a stupid idea!

They don’t do anything for their sellers, that’s why they charge so little.  You get what you pay for.

Its a pure come-on.  They give away the listing side to get the buyer side and then sell OUR listings for full buyer-side commission.  I think we should automatically cut their buyer side commission when they sell our listings!

Help-U-Sell?  They’re still around?  I thought they went bankrupt.

That’s all just REALTOR-speak.  Don’t let your competitors make up your mind for you.  Do your own investigation.  You’ll discover:

  • Help-U-Sell is not just some discount real estate ‘service.’ It is a completely different way of approaching the real estate business, a different business model.
  • Help-U-Sell fess are lower because the business model is more efficient.
  • Help-U-Sell brokers deliver more dollars to the bottom line charging less than their ordinary competitors who charge much more . . . really!
  • The Help-U-Sell bulls-eye is the consumer.  That’s what we are all about.  We love agents, but they are part of our business model, not the target of it.
  • Help-U-Sell takes the broker out of the role of administrative support for agents and puts him or her back in a role of entrepreneurial leadership.
  • Help-U-Sell is not a do-it-yourself FSBO company but rather offers full-service to consumers that looks very much like the full-service ordinary brokers offer.

If you are attenting the California Association of REALTORS EXPO this week or at the National Association of REALTORS Conference next month, stop by the Help-U-Sell booth.  Talk to our people and discover why this 40 year old twist on the real estate business might be your ‘next big thing.’

 

 

 

 

 

Exotic Dancers, Real Estate Agents and Minimum Wage

Earlier this month, Bloomberg reported that a U.S. District Judge ruled that exotic dancers at Rick’s Club in New York are entitled to minimum wage.  The decision came on the heels of a class action lawsuit filed on behalf of 1,900 dancers whose only compensation had been the tips they received from customers.

The Plaintiffs’ lawyer said the ruling “makes clear that employers cannot pass their statutory duties to pay wages on to their customers and gain an unfair advantage in the marketplace while their employees go without guaranteed or long-term benefits such as Social Security.”

As usually happens when I read a story about exotic dancers (or almost anything else), I thought about the real estate business (!).

You know real estate, don’t you?  It’s that business that thousands of people enter every year when what they really wanted to do doesn’t pan out. They become ‘Independent Contractors’ (which is what Rick’s Club considered its dancers to be) and only get paid when they bring in a commission.  The business model is a little like Avon or Amway or Herbalife where the number of people you recruit is more important to success than the amount of product you sell.  In real estate almost anyone who has a license can go to ‘work’ for almost any broker whether they ever produce or not because, hey, they’re not costing the broker anything, are they?

The end result of this idiotic business model is awful productivity.  The average real estate agent sold fewer than 8 homes in 2012 and made about $34,900 gross (before business expenses).

Can you imagine how quickly the whole industry would turn around if brokers were forced to pay their agents minimum wage?  Massive staff cuts would occur across the board.  Century 21’s sales force would shrink by 70% and all of those people would get letters from the Unemployment Office informing them that as Independent Contractors they are not eligible for benefits.  Keller Williams would have a big company-wide picnic to say goodbye to half of its agents (a picnic because they have such a family-like culture).  Re/Max would shrink to a dozen offices nationwide because there would be no independent contractor agents left to rent desks.

Nothing much would change at Help-U-Sell, though.  Our business model (which, HELLO, is completely different than the rest of the industry), makes it impossible for us to maintain non-productive agents already.  An agent doing industry average production in a Help-U-Sell office is costing the broker a king’s ransom in blown leads and lost business.  So we’re already lean and mean.

Funny thing:  that bit about an agent doing average agent production in a Help-U-Sell office costing the broker a ton of cash?  That’s true in the other guys’ offices too.  It’s just that they don’t pay attention to that kind of stuff.  Like the Herbalife people, they believe their success is dependent on one thing:  how many agents they can stuff into their offices.  Productivity doesn’t matter.  What counts is bodies.

Prior to the downturn, Help-U-Sell had a very carefully conceived salary model in place.  It worked beautifully . . . when the market was somewhat normal.  When the business went off the cliff, however, much of what worked so well stopped functioning.  Almost everyone went into survival mode, abandoned the salary model and cut back on staff.  One notable exception was Patrick Wood, owner/broker of Help-U-Sell Prestige Properties in Chino Hills, CA.  He continues to run his office on a modified salary model and, coincidentally, has ranked in the top 5 of all Help-U-Sell brokers for years.

I have been pretty tongue-in-cheek in this post . . . except for the parts about Help-U-Sell: that was quite serious.  But let’s remember that the IRS has been after the real estate industry for years.  They’d like to see the Independent Contractor status of agents get tossed and it’s only been the flexed muscle of the National Association of REALTORS that’s kept it from happening.  If that kind of change did occur, many real estate brokers would simply shut down.  They couldn’t make their business model work with that additional constraint.  The survivors?  They’d do something the industry has historically NOT done very well:  they’d adapt.  And after a little shake out time, the industry would be better, the consumer would be better served and real estate would start to be an occupation people choose, not just fall back on.

Flashback Friday: No More Begging!

(Here’s a post from November, 2009 that’s still very relevant.  The point is:  since there is not one iota of difference in the consumer experiences at  Coldwell Banker, Century 21, Keller-Willams, Re/Max, and every other ordinary real estate company, since they are all selling exactly the same thing, their ‘pitch’ ends up being smoke, mirrors and begging.  You have to have something different that works before your ‘pitch’ can be educational, meaningful and powerful. )

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.’

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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.

The Reason Why Everybody Doesn’t Do This

As Help-U-Sell Brokers we have the pleasure of delighting sellers when they learn about us. So often, when we lay our program out before them, they get almost as excited as we are. Often, they say:

‘Wow! This is amazing! Why doesn’t everyone do it this way?’

The answer is too complex to share with a seller on the verge of signing a listing agreement, so we take the question to be rhetorical, and reply, ‘I don’t know . . .’ or ‘Beats me!’

But there is a reason. It’s a stupid reason, but it is the reason:

Our industry is organized around the notion that the average agent should make a decent living.

Thirty years ago or so, Brokers (not Agents, Brokers) made a shift in their business models. They put the accent NOT on serving buyers and sellers but on recruiting, retaining and serving agents. In a sense, the Agent became the Broker’s client.

Today, Brokers go to school not to learn how to better serve buyers and sellers, but to learn how to recruit. Keller-Williams, Exit and a host of other companies have invented new wrinkles in their operating systems to reward agents who bring other agents into the company. Basically, they’ve found a way to get their agents to do the recruiting for them.

In ordinary residential real estate today, it’s all about the agent: how to find more, get more, keep more agents. The Broker believes his income stream is dependent on agents, not on buyers and sellers, and that belief colors the entire operation.

So who are these average agents (the ones everyone is working so hard to recruit)? Nationally they do six or fewer deals a year. Really. Think about that. What kind of service do you think an agent doing only six deals a year brings to the table for a buyer or seller? Compared, say, to one doing 25 deals? Who’s going to be sharper, more up-to-date, better able to negotiate and solve problems as they arrise?

But, because the ordinary Broker’s business is dependent on his getting and keeping as many six-deal-a-year agents as possible, he has to find a way to make doing six deals a year appealing. He has to find a way for the average agent to make a reasonable living.

There’s a two-step formula for this.

First, charge outrageous sums of money for your services and do it with a percentage based commission so that your fee is tied to the sale price of the house. That way, when your agents sell more expensive property, they bring in more cash. Never mind that in most cases, it takes no more time, effort or money to sell a more expensive house. Just be glad you get paid more when you do.

Second, give the lion’s share of that bloated commission to the agent. You’re going to have to pay them really well so that they can appear successful even though they’re only doing six deals a year. If they appear successful, you’ll be better able to attract more six-deal-a-year agents who also want to appear successful.

Ok. I’m overstating the case. But I think you see the lunacy in this system. And it is lunacy, madness. The ordinary real estate business is so off track, it may never be able to right itself. It is so lost that the moment Google or Microsoft decides to jump into the business with both feet, automate it like Schwab did the brokerage business 25 years ago . . . well, your friendly local real estate agent could become extinct. . . like the dinosaur.

Thankfully, there is an alternative.

  • It is a system where the Broker is IN the real estate business, where his or her client IS the buyer or seller, where the agent is part of the Broker’s operational system to provide excellent service to clients.
  • It is a system where the Broker’s income stream is dependent on how many buyers and sellers he or she serves, where growth is driven by careful marketing, not by recruiting.
  • It is a system orchestrated by the Broker to drive ever increasing numbers of leads into the office, leads that are handed to the agents who are charged with the important task of turning them into happy clients.
  • It is a system that nurtures truly successful agents, who outperform their ordinary competitors in spades because they don’t have to worry about cold calls, door knocking, FSBOs, angry sellers, and open houses. All they have to worry about is the client they picked up at the office today.
  • It is a system that charges a reasonable Set Fee for the service it provides, a fee that stays the same regardless of the sale price of the property.
  • It is a system that offers sellers a menu approach to services and pricing, where one size does not fit all, and where the fee paid has a direct relation to the tools it took to affect the sale.
  • It is a system that delights customers because: it works, and they save money.

It is Help-U-Sell.

*By the way, in case you missed it, in 2012, the median gross income for an agent was $34,900, according to NAR. That’s gross, before expenses.

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