When CNN’s Pulse on America program featured us two years ago, they were investigating an interesting phenomenon in our industry. Click to view video. It seems that today there are two real estate worlds coexisting simultaneously. Like in the movie The Matrix, there was the “perceived” world and then there was the “real” world. In our industry there is much the same today. Those agents who are practicing real estate this new way, are doing quite well — many better than ever. But those who are hanging onto the old-school real estate model are finding themselves working harder and harder and making less and less money. In order to understand this “new way” of doing real estate, we must first look at the history of real estate practice and see how it has evolved.

The 1960s and 1970s: The Broker-centric Era
The 60s and 70s were quite literally the “golden age” of real estate (think Century 21’s gold blazers): a time when the real estate industry as we know it today was born. That original giant, Century 21, and other companies like Coldwell Banker, ERA, Prudential, Wychert, Long and Foster, etc., are responsible for pioneering many of the techniques that have become synonymous with real estate practice. The then novel ideas like geographic farming, sphere of influence marketing, floor duty, open houses, model homes, and so on, have now all become today’s mainstream methods of gathering customers.

I call this time in history the broker-centric era, because the broker was king. The broker owned the office, the listings, the signs, did the advertising, and generated the sales leads. He provided the agent with training, tools, and work space. It was also broker-centric in that broker kept most of the money. A 50/50 agent split was the norm, and that was after taking any franchise fees off the top. Real estate brokerage as we know it was in its infancy and many agents did quite well.

The 1980s and 1990s: The Agent-centric Era
Sometime in the early 1980s, top producing agents began to wake up to the fact that they were “doing all the work” and they were not getting what they felt to be their fair share of the money. Enter the agent-centric era. Companies like Realty Executives, Re/Max, Keller Williams, Exit Realty, and many others began to spring up, offering the top producing agent much more money. But like any other industry, there is no “free lunch”.

The additional agent compensation (today’s average agent split is now 62%) came with a price. Along with shifting brokerage commission dollars to the agents, brokers began shifting much of the associated overhead to them as well. Desk fees, office rent, telephone, fax, and copy fees, administrative fees, transaction coordination fees (to name only a few), became the norm in those agent-centric model companies. The agent was now king, but he had to finance his own kingdom. The agent did his own advertising and provided his own sales leads. The money for the agents became marginally better, but the overall customer experience (as measured by customer satisfaction levels) began to erode, as more and more agents were driven by independence and money.

2000 and beyond: The Customer-centric Era
Around the turn of the century, real estate began to change again, this time brought about by the Internet. Today’s information-empowered customer is now king. In both the broker-centric and the agent-centric models, the real estate professionals (either brokers or agents) were in control. Today, however, the customer is in control, and the customer demands excellent service. If he doesn’t find it with one agent, he will move on to another.

And now that the customer is king, the key to success in today’s fragmented real estate market is learning to gather customers, and then learning to serve them well. In an article I wrote for Broker Agent News, I describe at length the market dynamics of today’s customer. Essentially, today’s customer is different, and understanding and adapting to those differences, will make you wildly successful in our current market environment. Those agents who take the time to learn real estate this “new way” will dominate the real estate landscape over the next decade while those who don’t will be looking for new careers.

In my next post, I will begin to develop that foundation. How can an agent transition to the new age of real estate? How can you thrive while those around you are floundering? I believe you can! I believe you must! Stay tuned…

“Goosey Lucy said that Ducky Lucky said that Henny Penny said the sky is falling.” From reading and listening to the media you can’t help but think of Chicken Little. Okay, well I’ve finally heard enough! I’m so weary of hearing one person after another bemoan the sad state of real estate today that I’m about ready to scream!

Every time it’s told it gets worse! “The end of real estate is near.” “The mortgage industry is doomed.” “Give up and get out now while you still can.” “The lead aggregators have ruined our business.” “The banks are taking over our business.” On and on it goes. No doubt, you’ve heard it too. Well I say poppy-cock! The sky is not falling!

Certainly today is a tough time to be in real estate. If you are trying to do traditional real estate, you are no doubt struggling. But the funny thing is that for many agents — agents who have embraced the new model of real estate — this is one of the best times ever! It all depends on how you do real estate.

One of the agents that I supervise is named Kevin. Kevin has been in the business for less than two years. Before real estate he was a truck driver. Last month I paid him over $50,000 in commissions and he had his best month ever — well, that’s until this month. I have another agent named Dave who’s been licensed barely a year. Dave is part-time. He earned over $300,000 last year and he can’t even begin to keep up with his business. I could go on and on, listing agent after agent across the country that are having amazing times in this tough market. So what is this “new model” of real estate?

As opposed to the broker-centric model of the 1960s and 1970s, or the agent-centric model of the 1980s and 1990s, around the turn of the century this new model began to emerge. I call it the customer-centric model. In this new model, gathering customers is king. Those agents who’ve learned to do that — to gather customers well — are experiencing growth like never before in the history of the business. Gone are the days of “branding”, “image advertising”, and waiting on customers to come to us. Today we must go get the customers. Those who learn to do it well are making amazing money.

Over the next few weeks, I’ll write a series of commentaries on this new model and how you can participate in one of the best opportunities in the history of real estate. For now, I will settle for letting you ponder this question: Is real estate really that bad, or is it your approach?

As I’m sure you know, it is difficult to operate a business in today’s economic climate. It is more difficult to operate a start-up business, particularly a restaurant. That’s why I bought a going concern. During the course of my due diligence, I was given P&Ls for the previous six years of operation, all certified by a CPA. The most recent six months’ financials, however, were not available. I did, however, have numbers from the previous owner that showed consistent sales for those last two quarters, as well the owner’s certification of his full regulatory compliance at the time of the sale. Not being able to futher verify the information, I decided to purchase the restaurant anyway. I know what you’re thinking… and you’re right!

As it turned out, sales for the last six months were well below (less than half) the historical sales, and the latest information given me was fraudulent. Additionally, the restaurant (I later got detailed inspection reports from the county health department) was not in regulatory compliance, and was in danger of being closed. Clearly I could have done a better job in my due diligence. The good news is that we have courts to protect buyers from fraudulent representations of sellers, and there is now pending litigation that will hopefully compensate me for much of, if not all of my loss.

I also assumed a commercial lease that was 5 months in arrears when I bought the restaurant. I assumed that having a paying tenant would be enough to assure a great relationship with my landlord, who was responsible for all landscaping. When I took over, the restaurant was overgrown and looked like it was owned by the Adam’s Family. I requested several times that the landscaping be addressed in time for my grand re-opening to coincide with the face-lift we had given the building. When we got to the weekend of the opening and the landscaping wasn’t done, so I hired a landscape company to make the business look good, at my own expense, of course.

The new landscaping was a source of irritation to the landlord who eventually sued me wanting me to reimburse him for replacing 20 boxwood bushes which had been cut back a lot but were still healthy and growing fine, albeit much shorter and smaller. Our relationship deteriorated from there, and soon I was not afforded electricity to my road sign (on the shopping center’s circuit) even though I offered to pay for the power. We went for months during the summer when the sign didn’t illuminate until nearly 9PM (well after the dinner hour), and we had many guest stop in to see if we were open. The sign was on a timer and an electric eye system and wouldn’t illuminate until there was not a ray of light in the sky. The final straw was the landlord’s removal of our Muzak satellite dish from the roof (it had been there for 5 years) with no notice, and on Valentine’s Day (the biggest day of the year for a fine dining restaurant).

I made the decision that I would not continue to swim while carrying these lead weights. I felt I could certainly use the energy for my core businesses, and the ongoing financial drag on the corporate checkbook made the decision an easy one. I had been given the perfect opportunity to get out, by an unreasonable landlord who had breached our lease again and again. I took the opportunity, although I very much liked the business and was continuing to grow sales and manage expenses. I kept my general manager on the company payroll and now we’re using his skills at FavoriteAgent.com.

In making the tough decision to close, I had to detach myself from my emotional reasons for keeping the business and simply look at the numbers. It was a business. Was it the highest and best use of my time and resources, when I had been given the opportunity for a legal “do-over” by the actions of both the seller and the landlord? It took me about 15 seconds to realize that it was not. I didn’t like the prospect of facing friends and their feeling sorry for me. My pride was injured but I’m confident it will heal. Perhaps one day I will own another restaurant. It is nice to buy wine wholesale!

Ok. I closed the restaurant… well, it’s more like I am in the seemingly eternal process of closing the restaurant. I can tell you one lesson: It’s a lot easier to start something than it is to stop it. Buying a point of sale system takes a morning. Selling one takes weeks. Buying inventory is a quick and steady process involving a few minutes a day. Disposing of inventory takes forever. The same with everything, from leases, to advertising, to accounting, to tax returns. So what’s the lesson?

Take the time to plan your business. It is much easier than having to change directions after beginning in the wrong direction. The same is true in the real estate business. I’ve seen agents waste a year or two in a company they would never have chosen had they taken the time to look at different options and their own business plan. I’ve seen agents waste months and thousands on the latest advertising idea, simply because they saw an idea at a conference or seminar. Advertising (your single biggest expense in real estate) should be carefully thought out and planned. It is much easier to plan well going in than spending the remainder of a contract and a lot of hassle trying to extricate yourself from a bad marketing plan.

Planning is crucial to your success, regardless of the business you are in — whether restaurant or real estate. See my article on planning. And sometimes, even the best plans don’t work because circumstances change, as in my closing the restaurant. Don’t be discouraged if that happens. Hey, it’s only money, right?! If you know how to make money, you can always make more.

In the next installment, I’ll discuss the decision making process I went through in deciding to close The Vineyard. Maybe as we explore it together, we’ll take something away that we can use the next time we are in a similar situation. Please feel free to write and submit comments and questions. I’d love your input. Until next time…

In the last installment, I compared the restaurant manufacturing operation with real estate. In this installment, we’ll look at a restaurant as a sales organization. While the back of the house (the kitchen) is all about manufacturing, the front of the house (the dining room) is all about sales. Meeting customers, setting expectations and exceeding them, and attention to detail are crucial elements in any sales organization. A restaurant is no exception. Everything is important — from the elegant music, to the dress code of the staff, to the words in your script, to the carefully choreographed service. That’s why our company has carefully selected background music, decor, and office location to help create the right environment to facilitate transactions.

Harvey Mackay, best selling author of Swim With The Sharks Without Being Eaten Alive, once wrote that sales is really about creating the right setting so that the customer sells himself. In a restaurant, up-selling and suggestive selling, building the sale, and properly presenting options are important to your success. As real estate professionals, we have the opportunity to do all of that as well. Up-selling and suggestive selling is much like finding bargain properties for investors, 1031 exchanges for those who have recently sold and need to find a new place to invest their proceeds to save on taxes. Building the sale in a restaurant is much like our finding creative ways to help customers purchase more real estate, whether quantity (more properties), or quality (bigger and better single purchase). We build the sale by educating our customers, like properly explaining the leverage value of real estate investing, higher rates of returns on certain higher priced properties, finding our clients incredible opportunities, and so on.

At one time or another, we’ve all been to an empty or nearly empty restaurant. What did we think? Maybe other people know something we don’t. Maybe there’s a reason it’s empty. When the waiter spoke to us, he sounded desperate. So it is in real estate. One of the most pathetic sights is an agent without enough customers. He or she becomes desperate, and generally pushy. And somehow customers and clients can sense the desperation, and either leave or become more demanding. Before I discovered how to generate hundreds of new customers every month, I was a desperate agent too. Part of being a successful salesman is having enough customers that you can relax and focus on providing good service.

And of course, we all know how important it is to present our services in the best light. Whether that means properly staging a listing, cleaning up our offices, dressing properly, washing our cars, or a myriad of other seemingly small things we do to increase sales. The restaurant business is very similar. Appearance is critical — from the plating of the courses, to the presentation of the food at the table, to the proper method of opening a bottle of wine and presenting it to a guest, to the dress and hygiene of the staff, everything is important in making the sale.

In my next installment, I��ll discuss how it’s easier to start something that it is to stop it. More to come��

So I closed the restaurant after a year. We had grown sales about 20% over the year and were continuing to grow in sales and margin every month, while controlling costs and growing margin, but we were still another year from turning a profit. Because of the down turn in real estate, the pressures from my core business (real estate and real estate related technology) I felt I needed to really focus my attention on them. Continuing to subsidize a restaurant during the housing downturn would have brought our company’s cash reserves to dangerously low levels. So, I sucked it up, and made the tough decision to close. It was bittersweet. I enjoyed the restaurant. I enjoyed meeting the people. I enjoyed the staff. And I enjoyed the food and the wine. What did I learn? One thing I learned is that restaurants are really two businesses rolled into one. In other words, you can operate one part perfectly and still have a problem with the other. It’s a balancing act, but it’s a business. So what are these two parts or businesses?

First, a restaurant is a manufacturing business. In a restaurant, your product is first and foremost, your cuisine. To execute well, you must not only have good food, but you must be able to prepare it within budget. As a fine dining restaurant, the rule of thumb is for food cost to be between 27-35% of sales. By carefully choosing to offer a very limited menu, and by only offering entrees that would provide us with a good gross margin, we managed to keep our food cost under 22%. It is very similar in real estate business, however, instead of manufacturing a product, your “product” is your brokerage services.

Like a restaurant is careful to choose its menu, it is important that an agent choose his service offerings carefully, or he may do lots of transactions but not generate any revenue. I have agents in my company that do lots of transactions but at very low price point, resulting in lots of work and very little money. Or, there are those agents that somehow feel that spending a day doing a BPO (broker price opinion) for a bank for $50 to $75 is somehow a good idea. What niche you focus on is very critical, after all, your time is all you have to sell. Similarly, you may gross a lot of commission dollars, but if your operating costs are too high, you may flow a lot of money and yet not make any.

Many agents today find themselves with good commission cash flow and yet no real income because their marketing and advertising costs are so far out of line. Recently I was asked to speak at a local Association of REALTORS� in Roanoke, Virginia. I had an agent in one session that grossed well over six figures last year. But he spent nearly 30% on advertising, when he should have been able spend 10% and actually generate more business, had he done it properly. More importantly, he was very frustrated because while he was grossing a lot of money, he wasn’t bringing it to the bottom line.

In my next installment, I’ll show you how real estate, just like a restaurant, is also a marketing business. More to come…

Well, I finally did it. I decided to close my restaurant after a year of hard work, a lot of struggles, and even more soul searching. Over a hundred thousand dollars invested in trying to “turn around” a failed upscale eatery. And as I unwind the affairs of the restaurant, I must confess, it is a very bitter-sweet experience for me. I had to lay off nearly 20 good employees, walk away from a large capital investment, and more importantly, admit to myself that I am very capable of making bad decisions.

So as I finally finish the urgent details of closing, I’m finally able to sit and reflect on the last year of being a restaurateur. What did I do right? What did I do wrong? What was foreseeable (even if I missed it) and what was not? What should I have done differently? And most important — what did I learn from the experience? I know we’ve all heard the stories of people like Henry Ford that failed five times before his huge success, but somehow when you’re sitting in the ashes of recent failure, those stories don’t seem all that encouraging. Sure it’s nice to know that I’m in good company, but I need a little time. It’s pride, no doubt.

So, over the next few weeks I’m going to post a series of reflections on the experience. Hopefully readers will find the posts helpful, and perhaps the exercise will allow me to “work through it” all. Maybe we can all learn from this together. More to come…

Putting it All Together

WHAT’S IN THIS INSTALLMENT?

1. THE TECHNOLOGY ELEMENT
2. THE HUMAN ELEMENT

In the previous installments we’ve discussed all the various elements or components of what I believe to be the best buyer seminar you’ll find anywhere. I’ve determined not to give you just fluff, but rather to give you my entire system — from the underlying theory, to the preparation required to become a top buyer agent, to the actual nuts and bolts of how I became a mega-producer in a few short years.

In this installment I will help you assemble all the pieces. I admit that I’ve given you a lot to chew on already. Not a day goes by that we don’t get three to five emails from agents asking us to explain some of the mathematics or to discuss how the approach might work in their market. If you’re a bit overwhelmed, don’t feel like the Lone Ranger! I hear those questions a lot. But remember: nothing worth having is easy to get.

If this approach were really easy to learn, everyone would be doing it. However, the fact is that it’s not. While the concept itself is the very picture of simplicity, putting it all together takes a commitment from you the agent, probably unlike anything you’ve ever been taught. But again, I promise you that, if you’ll take the time to put it all together, you’ll become a mega-producer. You’ll be the top producing agent in your market — maybe even in the state or country.

My approach really comes down to two parts: the technology element (assembling the right tools) and the human element (having the knowledge and the philosophical base). If you have the technology element and yet lack the knowledge and underlying values, you won’t become a mega-producing agent. By the same token, if you have all the education in the world and yet fail to acquire the technology tools critical to compete in this new age of real estate, you can never become the dominant agent in your market, and you may find yourself struggling just to survive. Becoming a mega-producer requires balance.

THE TECHNOLOGY ELEMENT

In the first two installments of this seminar, we discussed how the Internet is rapidly becoming the predominant method for home searches today. From only a small percentage of searches a few years ago, as many as 92% of buyers and sellers today are turning to the Internet like never before. Now more than ever, it’s critical for any agent to develop a comprehensive web-marketing strategy. After all, if the Internet is where the customers are looking for real estate, then the web should be where you focus your marketing efforts.

To develop a comprehensive Internet marketing strategy, it’s not necessary to spend a lot of money. Instead, it’s important that you invest in assembling the proper pieces. Many agents adopt a marketing policy of “ready, fire, aim,” rather than “ready, aim, fire.” The result of such a policy is frustration. Frustration from spending a lot of money and receiving little, if any, return on your investment. Frustration from wasting a lot of time trying to do what all the “experts” advise, only to figure out too late that those so-called experts haven’t got a clue about online marketing. Frustration from making a good-faith investment of time and money, only to be let down again.

For less than the cost of running an ad in a homes magazine for a single month, you can put together the marketing solution that will return as many as 100 new inbound real estate customers! (For most agents, that same money spent on a magazine ad will return 8-10 leads.) What’s even better is that, by using technology to capture the leads, not only do you get more information, but also the information is inserted into your database, and follow-up is a snap.

Using our LCM Gateway, our typical agent partner spends only about $120 per month for his technology. That small amount buys him his lead capture gateway technology, and then we give him a website and an integrated customer database (the very same ones that my own real estate team uses), at no additional cost. After getting the technology in place, our average agent spends roughly $250 for advertising. That’s all! The result is an average of 92 leads, nationwide, for a marketing cost of only $2.71 per lead. And for that tiny investment, our agent partners not only spend less money on marketing than their competition does, but also they generate more business than they can personally handle, allowing them the freedom to grow their businesses like never before.

Imagine what it would be like for your own business to have twenty new leads every week — and each for less than the cost of a cup of Starbucks® coffee! Would that change your business? Would it take the pressure off? Would it allow you to be a little choosier about which customers you work with? Would it give you enough “breathing room” to begin to expand your business? Could you see how simply having a steady inbound stream of customers would allow you to run your practice more like a business?

If you answered “yes” to any of those questions, you truly owe it to yourself to look into getting the right technology. You don’t have to spend a lot of money to have state-of-the-art lead capture. And good lead capture will set you up for being the top producing agent in your market because you will have more opportunities than anyone else. And that’s what it really comes down to: more opportunities. Call us toll free at (800) 708-7705 extension 7500, and speak to one of our real estate coaches. Or feel free to visit our website, where you can learn more about our technology and our agent partnerships. We’re happy to discuss your specific scenario and your market. Maybe we can help you take your practice to a new level.

THE HUMAN ELEMENT

As I mentioned before, having the best technology in the world — having an endless supply of new inbound customers — won’t help you at all if you don’t have the basic skills needed to turn those opportunities into closed transactions. That’s where the human element comes in. I believe that there are several fundamental things that a REALTOR® must have if he’s to become a mega-producing agent. Just as the technology is crucial to success, so are these basic “human” factors.

First let’s talk about education. In this seminar I’ve given you some very specific things to learn that will make you the best agent for the job. Let’s be honest here: most of us haven’t done a lot of studying since we left school, and the temptation is to try to get by without having to do the work. I know that. But that’s all the more reason to make yourself do it. Average agents won’t. You want to be a top agent!

I’m going to make a confession here. I don’t really like to study either, but that’s what gives me an advantage. My peers never crack a book, while I read about two books a week. Do I do it because I like to read? NO! I do it because I need to continue to push myself to become all that I can become. If I am to be the top agent in my market — if I really want to be the best — then I have to make myself do those things that I don’t necessarily want to do. Remember how your mom used to make you eat spinach? Well, I say eat your spinach.

It’s a hassle to do the market research required to become a top agent, but this is your career. I promise you that there are agents calling me every day asking for help because they really want to go to the next level. Those who put in the work invariably succeed. Those who don’t, won’t. They won’t become top agents. It’s as simple as that. Winners make it happen, and losers make excuses. It’s all about you. Do you really want this? If you do, I’m absolutely convinced that you can achieve it.

The other key human factor is your governing values (or personal philosophy). It’s not my desire to be preachy here, but I believe that out of our inner self flow the issues of life. We influence our success or failure by how we bring ourselves to the process. And I believe that the value system we use to govern our businesses has a direct impact on the outcome of our lives. And I believe that there are a number of principles that we can follow to ensure our success.

1. The Principle of Vision. The most important principle, in my opinion, is vision. By this, I mean being able to see that which is not, as though it were. I believe that we’re made in the image of a creative God and as such are inherently creative by nature. And it’s that creativity that gives us the opportunity to build something truly phenomenal. Most of us don’t take the time to allow a clear vision to be formed in our hearts. But the more detailed our vision, the greater our chances of achieving it. The scriptures teach that, as a man thinks in his heart, so is he. Allow yourself to develop a vision for what could be and take the time to see it clearly in your mind’s eye.

2. The Principle of Confession. Taking our vision and beginning to articulate it is the key to bringing it to reality. Just as God’s instrument of action in creating the world was “speaking” (i.e. God said, “Let there be light”), the way that we transfer vision to reality is by speaking it. I never miss an opportunity to share my vision with people around me. Every time I get a chance, I articulate it to employees, agents, recruiting prospects, and peers. Why is confession so important? Because our subconscious mind believes what it hears. That’s another reason to be careful what you’re listening to. If there are negative people around you — people who tell you that you can’t do something — it’s important that you let them know you don’t want to hear their negativity. If you must, find someone else to spend time with! You alone control what your subconscious mind listens to, so make the message good.

3. The Principle of Reciprocity, or Sowing and Reaping. We’ve all heard the old adage that what goes around comes around. It’s true. Scripture teaches us that, “Whatsoever a man soweth, that shall he also reap.” In other words, give, and it will be given to you. This principle has two aspects:

a) Quantity. To the degree that you give, to the same degree you’ll receive. “He that soweth sparingly will reap sparingly.” The more you do to help others, the more your kindness and generosity will come back to you. Giving abundantly is the key to success. I know of lots of agents who never volunteer at their local Association, who never take the time to help a new agent, who never help those in need. What a shame.

b) Kind. You will reap in kind with your sowing. If you plant apples, don’t expect to grow bananas. If you want to reap success, you need to sow success for those around you. If you’d like to receive happiness, then make sure that you don’t sow seeds of “ugliness” for those around you. Whatever seeds you plant will ultimately come up. Make sure you’re planting the right seeds.

4. The Principle of Greatness. If we want to be great, we must be servants. The way up is down. This is contrary to traditional wisdom, which teaches us that, if we want to get ahead, we must put down our competition. I marvel at the crab-bucket mentality that so many agents have. Many would rather pull someone else down than actually see what they can learn from a competitor. How tragic! If you want to be great, serve those around you.

5. The Principle of Leverage. Two are better than one. You can create leverage through synergy. Team building is an example of this principle. By enlisting others, we can build something much bigger than ourselves. In fact, we can build a whole that’s greater than the sum of the parts. Don’t be afraid to work with other people: often that’s the key to going to the next level.

6. The Principle of Stewardship. If we’re faithful in the little things, we will be entrusted with bigger things. If we waste the resources that we’ve been given, we shouldn’t be surprised that we lack the resources that we need to grow when opportunities come our way. I know of many agents who have all the “toys,” own a huge house, drive the most prestigious car, and yet live from deal to deal. Again, what a tragedy.

7. The Principle of Responsibility. To whom much is given, much will be required. God holds us accountable for that which he has entrusted us. If you’ve been given success, you have the opportunity and the responsibility to use it wisely. This principle is related to the principle of stewardship, but different. One is the flip side of the other. Stewardship is the key to getting success. Responsibility is the burden of that success.

8. The Principle of Perseverance. We must endure trials and hardships in order to succeed. There is a refinement of character that comes from perseverance. Show me a successful person, and I’ll show you someone who has gone through many personal trials. And when those trials come your way, learn to see them as an opportunity to persevere. I know that, in my life, nearly every time I feel as if the situation is so bad that I can’t possibly endure it, I hold on anyway. Invariably the solution to my problem comes right after I’m the most tempted to give up.

9. The Principle of Thankfulness. Nothing is less attractive than a whiner and griper. Nobody wants to be around that kind of person. Well, there’s a principle that thankfulness is attractive. Of course, when everything is going well, it’s easy to be thankful. But if you find yourself in a tight spot, determine to be thankful anyway. Lack plus thankfulness equals sufficiency. I personally believe that this is the mechanism that demonstrates to God that we truly trust Him. If we’re thankful, regardless of our situation, we attract other people to come along and help us.

10. The Principle of Rest. The more talented you are, the more you’ll be tempted to “force” things. And while forcing something often provides a solution, it’s rarely the best solution. If you feel pressured to make a decision, don’t make one. Bite your tongue, and say, “No, thanks.” Often the best action is no action — rather simply to wait patiently for the right solution to emerge from the quietness.

So there you have my entire buyer seminar that’s made me one of the top producing agents in the country and earned my clients and me lots of money. Now you have the big picture, from the technology tools to the underlying philosophy that’s been responsible for my success. Hopefully, you can see that this is not simply a buyer seminar to memorize: it’s a way of doing business. I hope that you’ll try it if you’re looking to improve your business.

I know that, over the last few years, we’ve had hundreds of other agents who’ve decided that this approach could provide a missing ingredient in their practices. Many have gone on to grow as fast as or even faster than I did. We have quite a few agents who’ve grown so fast that they’ve had to recruit additional agents. Many have grown their personal production while taking more time for other activities. But one thing is certain: every single agent who has actually tried to do what we taught him has experienced some degree of success. The fact is that this approach works everywhere. Call us today at (800) 708-7705 extension 7700, and we can help you find the technology, or we’ll help you with any part of the seminar if you have questions. Our LCM gateway may be the right solution for you, and it may not be, but we’re happy to help you either way.

SO WHAT’S NEXT?

Well, now you have the secrets that allowed me to become a mega-producer. Now you know exactly how I’ve grown from a single agent practice to the owner of the largest brokerage in our market, all in three short years. It wasn’t magic. It wasn’t luck. I didn’t do anything that you can’t do if you decide you want to do it. The ball is in your court. Will you decide to go for it? I hope you will.

Feel free to print out the installments and to read them again and again at your convenience. If you take the time to study what I’ve shown you and then — more importantly — to apply it, your real estate business will never be the same again.

For more information about FavoriteAgent.com, call us toll free at (800) 708-7705 extension 7100 or visit our website at http://FavoriteAgent.com.

We’re happy to help you become a mega-producing agent. It’s my greatest honor to be able to play a small part in your success. Thanks again for reading.

Matt Jones
President/CEO
REALTOR®, BROKER
FavoriteAgent.com

Leveraging by Team Building

WHAT’S IN THIS INSTALLMENT?

1. THE DIFFERENT TEAM MODELS
2. THE LEVERAGE TEAM
3. MOVING TO MANAGEMENT

In the previous installments, I’ve discussed many aspects of building a growing and successful real estate business at a time when real estate professionals are failing at record rates. With 86% of new real estate professionals not making it to their first license renewal, our industry turns over an amazing one-third of all our agents every single year! However, even with these dismal statistics, there are a few agents who’ve adapted to this new age of real estate and are making more money than ever before.

Welcome to the “super-agent” or “mega-producer” era. Today, experts tell us that 93% of the total transaction volume is being done by only 7% of the agents! So if you’re not one of those 7%, you’re probably fighting to survive on the leftovers. In my earlier installments, I mentioned how, even though I became an agent less than four years ago, I’ve now grown a local team of more than a hundred agents — larger than any other company in our market. If you’ve missed any of those installments, I encourage you to read them. But if you’ve done much of what I’ve been “preaching,” you have a whole new problem now: you’ve got more business than you’re able to handle alone. Of course, that’s a good problem to have!

So how do you take it to the next level, once you’ve solved the basic problems facing most agents today? After creating a system where you never have to worry about finding customers, how do you actually close all that business? And after becoming the dominant agent in your market, how do you manage all the transactions and still work with the hundreds of buyers who come from your lead generation engine? How do you assimilate all the growth? How can you get the most and best results from your new-found technology advantage? How can you build your business so that it can be larger than you? Is it possible to work smarter without working harder? Well, all of these questions bring us to this installment — “How to Build Your Own Team: Becoming a Rainmaker.” Let’s just go ahead and jump right in by talking about the different team models in use today.

THE DIFFERENT TEAM MODELS

Having had the privilege of working with hundreds of agents across the US and Canada, I’ve seen many different types of business configurations. And, today, one of the major real estate buzzwords is “team-building.” In fact, it seems to be the talk of every brokerage. How do we deal with teams? What constitutes a team? What is the brokerage responsibility and liability with a real estate team? How can I encourage teams in my company without going broke? And there are hosts of other questions arising every single day. So let’s start by defining the three basic team models.

AGENT-ASSISTANT(S) TEAM

This is the model of “teamwork” that’s been around the longest, so we’ll cover it first. Somewhere in the progression of an agent’s business, he or she begins to hit a production ceiling. It’s hard to assign a dollar amount to this concept because every market is different, but the ceiling is generally somewhere around forty or fifty transactions per year (or almost one per week). Obviously, this ceiling may be closer to fifty transactions if the agent is extremely organized, or forty if he isn’t.

Another factor that affects the exact point of the ceiling is the agent’s tolerance for less-than-excellent customer service. In other words, if an agent doesn’t mind dropping the ball on his professional responsibilities sometimes (which, of course, he shouldn’t), he may have time to push the ceiling even further. Even so, there’s almost invariably a production ceiling in the range of one deal per week. For an agent to push beyond that ceiling, the top producer generally has to hire an assistant or assistants. Of course, the primary function of these assistants is to handle the administrative load associated with a high-volume practice, or put out fires after the fact, or both.

This team structure is the most common model, even though all it does is increase the rainmaker’s production by twenty or thirty percent. With this model, there’s an absolute ceiling in the sixty-to-seventy-deal range; and as more assistants are added, the costs and the chaos almost invariably increase. Also, there’s a high turnover with assistants, and they’re a fixed cost on the top producer’s business (i.e. an assistant’s salary will be on the weekly payroll whether or not any deals have closed). Assistants tend to be employees rather than contractors and are paid salaries. In the leverage model explained below, the additional personnel are a variable cost, meaning that, if there’s no volume, there’s no cost.

THE SUPPORT-GROUP TEAM

This odd phenomenon seems to be gaining popularity. In this model, two or more medium-producing agents from the same company will share duties and responsibilities so that both can have additional freedom. For example, one team member may pull floor duty or meet a client so that the other can spend the weekend out of town. Then on the next weekend the two agents may very well reverse the situation. This model is typically an alliance of equals and is done more for convenience and freedom than for leverage of production. In this model, each agent has his own relationship with the company, and each is treated as an individual with regard to agent splits, fees, and management. Most frequently, a support team consists of two agents, but occasionally it may grow to as many as four or five agents who are similar in approach and production.

THE LEVERAGE TEAM

This is the team model that I recommend for building your business. Here’s how it works: The leverage team consists of one super-producer or rainmaker who’s producing more business than he can handle, so he recruits another licensed agent to work some of the overflow. This second agent typically works on a split with the top producer, as spelled out in a written team agreement. He or she is managed, trained, and given business by the rainmaker as well. The top producer has a relationship with the broker-in-charge; and, even though all the agents hang their licenses under the brokerage and the broker-in-charge, they’re managed and paid by the top producer.

All correction and communication flow through the rainmaker, and usually the production and money are given to him. It’s then the team leader’s responsibility to make disbursals to subordinate agents according to the written team agreement. This model is essentially a company-within-a-company and is the type of team that I built when I began to generate more business than I could handle.

This model also allows an agent to move to significantly higher levels of production because he or she is multiplying time. Most top-producing agents begin by handing out buyer business to buyers’ agents while continuing to do listings (since the listing side is more closely linked to lead generation), but there’s no hard-and-fast rule regarding the division of clients.

MOVING TO MANAGEMENT

In this type of team structure, the team is able to grow to about four or five agents before management responsibilities begin to overwhelm the rainmaker or team leader. Depending on the agreed-upon team split, this first income ceiling is about twice what the rainmaker was able to earn before starting the team. Now, if the team leader doesn’t make the transition to management, he or she is destined to stall at this level. However, there’s a critical step that can be taken.

To go to the next level, the agent must quit being a producing agent on the team and become the team leader full-time. Since the leader’s income is typically reduced by as much as fifty percent during the interim period, most top producers don’t want to make the change. They don’t want to sacrifice any revenue, even short-term. However, if he’s willing to forego immediate gratification, the top producer will soon discover that the size of his team will be limited only by the amount of business that he’s able to generate.

At the current time, my team has grown to more than a hundred agents, and I haven’t done a real estate transaction in over three years! Instead, I’m slowly moving my agents toward becoming independent and growing their own businesses. This year I’ll make a seven-figure income while acting as a full-time broker-in-charge and managing and training my team. Moreover, I now have five teams within my master team, and all of them are growing and healthy and producing their own leads.

And yet, while growing my local real estate team, I’m also devoting much of my day-to-day work to growing our national technology company, which has now signed more than 12,000 agent partners worldwide. In addition to our real estate and technology divisions, I’ve just finished my third book, we’ve started a national real estate media company, and branched into the hospitality industry with the launch of our restaurant brand. Most importantly, I will not be personally involved in any of the hundreds of real estate transactions we’ll close this year! It’s the ultimate in duplication of time, or “leverage,” and following this model will allow any agent to build his team as large as his imagination will allow.

So what’s required to take a team to this level? Primarily, the only elements that are required are the vision to do it and the ability to generate an unending supply of inexpensive leads to feed your team. And in order to do that, you simply need to have the technology in place. The rest is just a matter of putting more ad dollars to work in generating traffic to the technology. Our team has generated more than 2000 leads per month for at least forty-eight consecutive months, all at a cost of $1.50 to $4.00 per lead. Using our technology, my business is entirely scalable, and we don’t have to spend money to generate additional leads until we’ve built the infrastructure to support that volume.

As a rule of thumb, I use 24:1 ratio to calculate how many leads we need to generate. By this I mean that, if my agents are able to handle, on average, two deals per month, per agent, then we need to produce 4800 leads. (24 leads x 2 deals per month x 100 agents = 4800 leads). And, from a management standpoint, I should hold each agent accountable for any leads that I refer to him. If his “deal rate” rises above 24:1, I need to find out why. I can easily identify problem areas in my team’s prospecting and customer follow-up by monitoring deal rates.

Something else that I look for is a “reach rate” of 50%. (Each of my agents should be able to engage at least half of his customers in meaningful dialogue.) I look for a 6:1 appointment rate, or one appointment for each six customers that he reaches and begins to work with. Finally, I look for two appointments per transaction, or a ratio of 2:1. I want to see one closed transaction for each two appointments with customers.

If the reach rate is too low, then I know I have problems in the areas of agent self-discipline and prospecting. If the reach rate is good but the appointment rate is low, some basic sales training may be in order. Sales skills are developed, not inherited, and part of my job as a team leader is to help my team members develop those skills. If an agent has a good appointment rate but a poor closing rate, that’s generally an indication that many appointments are being made with customers who aren’t adequately pre-qualified, and the only way to solve this problem is to train agents to do a better job of pre-qualifying clients.

As you can see, once you reach this level, your job will become one of diagnostician and trainer-mentor. And it’s fun! Nothing’s quite like the feeling you get from seeing dozens of transactions coming through from all the agents on your team, while you’re taking the weekends off! This is what teamwork is all about: the multiplying of time for you, the rainmaker. To sum it all up: building a mega-team comes down to only a few key things:

First, you need to be able to create an unending supply of leads for your team. This goal is best accomplished by having a very efficient lead capture technology such as an IVR system (call capture hotline) or an LCM gateway (Internet lead capture gateway like the one we’ve developed).

Second, it’s important to have a common database that your team members can use for following up leads quickly and efficiently. In addition, all follow-up and working notes must be viewable for each teammate to read. In that way, nothing will be interfering with any team member’s follow up.

Third, you need to have the ambition to grow your business as large as it can grow. Can you see yourself as the leader of the largest team or company in your local market? If not, why not? Why shouldn’t it be you? Someone has to be the dominant agent in your city. It may as well be you.

CLOSING THOUGHTS

Well, this should give you some things to think about. If you apply the truths and principles that I’ve shared with you, they could literally turn your business around! In the first installment I mentioned Kyle Wilson, one of our agent partners in Boise, Idaho. He’s been in real estate only four years, yet in the last two years he’s grown his team to 30 agents and is now the dominant agent in his market. Kyle is a perfect example of how you can actually become the dominant agent in your market in only a couple of years. He’s actually done it. Kyle has big dreams and big plans. His goal this year is getting to 500 transactions! He fuels that growth by making more than 3000 leads every month and by constantly recruiting new agents to join his team. And it could just as easily be you. Why shouldn’t it be you?

To reach that goal, you need some basic technology tools, and you need commitment to a vision. Don’t worry: the tools are very inexpensive and easy to use, and the commitment to the vision is free — but you’ll have to make a leap of faith. It’s tough to spend money, often money that you don’t yet have, to sow seeds of success for your business. And sometimes it’s tough to go against the flow in your office…the flow of mediocrity. Sometimes you need to muster the courage to do what you know in your heart is right, even if your broker or your friends have never heard of it or done it before. Sometimes the first step to being the leading agent in your market is actually taking a bold step and leading.

I hope that this installment will both inspire and challenge you to become the best REALTOR® you can be. Becoming a market dominator can be more than just a dream; it can be a reality. And it can be your reality if you want it badly enough and if you’re willing to commit your time and resources to it. I look forward to hearing about your success and maybe even helping you create it. Give us a call to see if we can help you accomplish your real estate dreams! We’d love to try.

So how well are you tapping the largest of all markets — the Internet? Do you have efficient lead capture on your website? If you don’t, the first step to becoming a dominant real estate agent is having too many customers. You really have to start there. Everything else is second to that. Today, the lead vendors are spending lots of money tapping the Internet; and if you’re going to compete with them, you’re going to have to have technology that puts you on the same level. Otherwise, you’ll find yourself depending on lead vendors or your broker for much of your business. Call us today at (800) 708-7705 extension 7600, and we can help you find the technology you need.

SO WHAT’S NEXT?

In the next installment, we’ll be discussing putting it all together. Success is more than just having the tools — although having the tools is very important. But more than the tools, the technology, and the knowledge, is having the winning attitude and mindset. How to add that final element and construct the ultimate real estate practice will be covered in the next installment, so you won’t want to miss it. In the meantime, work on getting your technology in place, if you haven’t already done it. There’s never going to be a better time to start than right now.

Finally, let me renew my commitment to you. If you invest your time in reading this seminar and then — more importantly — in applying what I show you, your business will never be the same again. This is my sincere promise. It’s my greatest honor to be able to play a small part in your success. Thanks again for reading.

For more information about FavoriteAgent.com, call us toll free at (800) 708-7705 extension 7100 or visit our website at http://FavoriteAgent.com.

Matt Jones
REALTOR®, BROKER
President/CEO
FavoriteAgent.com

Prospecting — Turning Leads into Closed Deals

WHAT’S IN THIS INSTALLMENT?

1. THE ANATOMY OF AN INTERNET LEAD
2. PROSPECTING AND THE REAL ESTATE BUYING CYCLE
3. PROSPECTING: WHAT TO DO AND WHEN TO DO IT
4. COMMON MISTAKES AGENTS MAKE

In the previous installments, I’ve discussed how it all has to start with leads or customers. Without customers you are out of business, no matter how good you are. With lots of customers, you can actually be a lousy agent (I’m not recommending that) and still make lots of money. Why? Because even the worst salesmen have some close rate. Let me illustrate my point like this. Imagine, instead of two real estate agents, we’re talking about two baseball players.

Player one has a batting average of .250 (or in other words he gets a hit 25% of his “at-bats”) and player two has a batting average of .400 (he gets a hit 40% of the time). Which player is the better hitter? It’s not a trick question… player two is the better hitter. Right! Now let’s imagine that player one gets to hit 20 times, while player two gets to hit only 10 times. Who’s the better hitter? Right. Player two. Who got the most hits? Player one did! (Player two got 40% of 10 at-bats or 4 hits, while player one got 25% of 20 at-bats or 5 hits.) In real estate, hits are dollars in the bank. As you can see, even a far superior agent can earn less money by not having as many leads.

Now imagine what you could do as both a good agent and with lots of leads. Imagine player number two with 20 at-bats! He would have 8 hits, or in real estate terms, make twice as much money. That’s why I’ve been harping about having lots of leads. Low cost leads. And that brings me to Internet leads — the best leads of all.

THE ANATOMY OF AN INTERNET LEAD

I know what you’re probably thinking. And if you are, you’re wrong. Internet leads are NOT bad leads. Internet leads are the best leads of all, in virtually every measurable way. But, they’re also difficult to convert into closed transactions for the average agent. That’s why most agents think the leads are bad. Any agent who’s been doing traditional real estate and who’s been successful at it is frequently unsuccessful when he tries to transition to Internet leads. Why? I believe it is because he tends to approach Internet leads the same way he’s always approached leads. And by doing that, often for the first time in his career he’ll find himself failing. But let’s face it — we don’t like to admit our failures. I sure don’t. So what do we do?

The first temptation for a confident and successful agent is to assume that Internet leads are of poor quality. Why might we come to that conclusion? For some reason, even though we clearly know how to handle traditional real estate customers, we’re often just not able to make a connection with Internet leads. This problem is compounded by the fact that many of the Internet lead vendors (House Values, etc.) provide very little information — often just a name and an email address. That makes it very difficult for an agent to build a bridge or find common ground, or in many cases even reach the customer to have a conversation.

Let’s think about the nature of Internet leads. How are they different from other leads, such as referrals or duty-desk leads? As we previously discussed, they come at a different time in the customer’s buying cycle. And because of that fundamental difference, you shouldn’t handle them in the same way you would sign calls or treat them like open-house leads. Traditional leads (duty desk leads, sign calls, home magazine ad calls, newspaper ad calls, referrals from our sphere of influence, and so forth) all approach us during Phase Two of the buying cycle, after they’re finished building their dream and are ready for the help of a professional agent.

Customers realize that real estate agents control the bulk of the inventory — that we have the key to the lock box, so to speak. To see the vast majority of homes for sale, they realize they will need to have our help. But they don’t want our help until they’ve built their dream. Once the dream is built and they have decided what they want (or think they want), they almost always want our help in finding it, particularly since it doesn’t cost them any money. While they’re building their dream, they don’t want anyone trying to shape that dream by offering what feels like direction or pressure. So how should you approach Internet leads then? What can you do to ensure a good connection with the customer so you can ultimately do business with him?

PROSPECTING AND THE REAL ESTATE BUYING CYCLE

First things first. The critical thing you need to determine — before you do anything else — is where is the customer in his buying cycle? If the Internet lead is Phase One, and he will be in Phase One about 90% of the time, you must have a very hands-off and non-threatening approach. If the customer gets even the slightest inkling that you are trying to shape his dream, push, manipulate, or sell him, he’ll be gone so fast it will make your head spin! Trust me, I know from experience. How will he disappear? Normally he’ll leave you in a very non-confrontational way. He’ll tell you he’s changed his mind and isn’t going to buy. He’ll not answer your phone calls, because he recognizes your phone number. He’ll not return your messages. He’ll report your email as “spam” so your future correspondence goes to his junk folder and he never even sees you again. Let’s face it: none of us like confrontation so we simply avoid it
whenever possible.

If you are like some persistent agents, then you’ll try different strategies, like calling from a different phone number or using a different email account. What does this communicate to the customer? That you are desperate, or worse, that you’re pushy (which is why he’s been ducking you in the first place). It is important that you realize where every lead is in its buying cycle. If it is in Phase One, you have to approach the customer with kid gloves. Phase One leads are very skittish. They’re easily spooked. And you only get to fail once, because the reason they’re on the Internet is because they want to be “out of touch” until they’re ready and move to Phase Two.

Here’s what I’ve learned about successful prospecting during Phase One: Take it very, very easy. As someone who sold for a living for well for over twenty years before coming into the real estate business, this went against everything I had every known about selling. Salespeople are all taught, from the beginning, the ABC’s… Always Be Closing. We’ve heard things like, “A sale is made on every call — either you close them, or they close you on some lame reason they can’t buy now.” “You must control the sales process.” “Know what you call salesmen that can’t close? What? Skinny.” On and on it goes. I will promise you one thing — if you use these traditional sales approaches on Phase One leads, you will be very frustrated, and you will probably think that Internet leads are bad leads.

Phase One leads need to be approached gingerly. I’ve personally found the most success when approaching them as a customer service call. My objective is not an appointment. It is not to sell them a house. My purpose is to simply make them like me. My definition of a successful prospecting call to a Phase One buyer is that the lead is warming up to me and that he’ll take my next call. That’s it. Simple, isn’t it? And it goes against everything I’ve ever been taught about selling. But think about it this way: three-fourths of today’s real estate customers will work with the first agent they meet. All you need to do is be first and get them to like you. If you do, the odds are three to one in your favor that you’ll be their agent. What could be simpler? We make it so difficult.

“But Matt,” you’re probably asking yourself, “why do I have to throw all my sales skills out the window to work with Internet customers? After all, I’ve spent a long time learning to sell.” To that I would answer that you don’t. Sales skills are very important to a successful agent. But, the objective of the sales call is different depending on which phase of the buying cycle the customer is in when you make your sales call. Phase Two customers want to work with an agent. When you encounter one, you should be very direct and pull out all the stops in your selling. If you don’t, you’ll lose your customer to some more aggressive and more skilled agent. Remember, Phase One customers want to build their dream. So let them. Be their friend. Help them without being pushy or manipulative. And if you do, you will be their agent and get paid for your effort.

So how do you know which phase your customer is in? I’ve found that it’s best to assume the lead is in Phase One and use the customer service approach. If the customer is wanting to go faster, he’ll let you know. If you have good lead capture technology, like the LCM Gateway we’ve developed, your customer to tell you what phase of the cycle he is in. If he says he wants to find an agent, you’ll know that he’s in Phase Two. That happens about 10% of the time. On the other hand, if he tells you he wants to look at houses without an agent, he’s telling you he’s in Phase One. So clearly, having our technology gives you a tremendous advantage. (Notice the little commercial there?) But you can be very successful by simply assuming that your customer is in Phase One until he tells you otherwise.

There is little risk in assuming a Phase Two customer is in Phase One. The worst that can happen is that the customer might surprise you and want to meet sooner than you’d expected. But there’s a huge risk in assuming a Phase One customer is in Phase Two and wants to work with an agent. You risk alienating your lead and never having the opportunity to work with him at all. Then three months later he’ll buy from another agent in your firm or an agent down the street, and you’ll realize that there are very few bad leads — just bad agents. And when that happens, and it has happened to me more than I care to admit, it hurts. But the pain gives you the opportunity to learn. That’s exactly how I learned the right way to work Internet leads, and hopefully, I can help save you some of the pain of learning it the hard way. When I was figuring it out, the Internet was brand new and there were no agents teaching the proper way — I
would have loved to read this information!

PROSPECTING: WHAT TO DO AND WHEN TO DO IT

Now that we’ve identified where your customer is in his buying cycle, let’s discuss some basic theory of what to do and when to do it. Notice, I’m deliberately NOT giving you word-for-word scripts for sales calls. I want you to learn the theory and not some rote presentation. If it sounds canned, it is by very nature, not personal. Friendship is personal. I want you to befriend your customers. Having spent years training sales people, I know that a) most people will never learn a canned approach well enough for it to sound natural, and so it will come across to the customer as disingenuous and phony; and b) as simple as this approach is, it is much better to teach you the theory and allow you to make up your own “scripts” as you go. That will allow you to focus on being a friend and not on selling. Let’s start by answering the when to do it first, and then we can cover what to do.

This is simple after you understand the Buying Cycle: you should touch Phase One customers twice a week and Phase Two customers every day. How you touch them is not as important as the frequency. If you attempt to touch a Phase One customer more often that twice a week, you will probably come across as needy and desperate, and more importantly, as pushy. This will have the worst of all consequences — the customer will vanish from your life until after they have closed their transaction. Don’t be pushy.

I am often asked whether I recommend using drip campaigns and email marketing. As someone who does a tremendous amount of email marketing, let me give you my very strong opinion of drip campaigns. I hate them. Our Pipeline technology has very advanced functionality, but yet no drip campaigns. Why? Because I am fundamentally against the drip mentality. Let’s face it, all of us would like to create an automatic money machine. Why do you think people are drawn to pyramid schemes and other get-rich-quick ideas? We would all like to receive maximum input (money) from minimum output (work). The simple fact is that there is no “free lunch” or “easy money”. Mega-producing agents all share one characteristic — they all work very hard. Don’t think for an instant you can put a lead into an email drip campaign and walk away with a commission check. It doesn’t work that way.

What, you may be wondering, is an email drip campaign? A drip campaign is a pre-written series of email messages set on a time-release calendar that you can design ahead of time. Then when you turn on the campaign, each customer gets the same series of “authentic sounding” personal emails that are not personal at all. I’m sure that if you think about it, you notice getting those drip campaigns every day in your email inbox. So let me ask you a question: How long does it take for you to identify an email as being a drip campaign email? About two lines? Yeah, that’s what I thought. Me too. We’ve all seen so many of those campaigns that we can spot them a mile away. Now let me ask you another question: How do you feel the moment you realize that the “personal” email you just got was a canned drip email, and part of somebody’s marketing campaign? Did it make you more or less inclined to like the sender? I thought so. Me too.

Remember, our objective in prospecting is to make the customer like us. If the approach we use has the exact opposite effect, we shouldn’t use it, even if it’s easier. We’d be better off doing nothing than using an approach that moves the relational ball the wrong way down the field. Resist the urge to use the free money machine — it doesn’t work anyway. How do I know? Because, like many of you reading this, I’ve tried using drip campaigns. I’ve spent years in quest of the perfect series of letters. Then one day I woke up and realized that it was a bad idea, even if taught by some of the best companies and coaches. There two simple rules I use in my email marketing: short and personal.

I have a friend who writes thousand-word letters to her clients, believing that by being verbose she will win them over. There is an abundance of research on the subject, and according to all those who have researched it, less is definitely more. You should try to keep your email correspondence to 50 words or so, until and unless it is in response to a specific request from a client or customer. Then make it as long as it needs to be to cover the topic. You have an interested audience and they will more than likely read it if it is not a waste of their time. But if it is unsolicited (not in response to a customer’s correspondence to you), keep it short and to the point.

Personal is always better than impersonal. I try to recount some personal reference or anecdote to make my reader know that it is not a canned email. Some experts in the field use lack of capitalization, lack of proper punctuation, or intentionally misspelled words to keep their message looking personal and not automated. Three or four good personal, well-thought-out sentences will do more for advancing your relationship with your customer than thousands of words of cold, impersonal, drip campaign letters will ever do. If you can’t be bothered to take the time to write a personal note, you really need to rethink your profession. This is a very relational business.

Email is a great way of maintaining a relationship, but it is not very good at initiating one. The reason should be self-evident. Email is less personal than talking. For that reason I believe that more important than our email campaign is our personal conversations with our customers. Voice carries with it emotions and subtle signals that are nearly always absent in writing. Emails are often colder and come across much differently than the message we were attempting to communicate. My own rule of thumb is to always make my initial contact with a new lead by telephone. Until I speak to them, I won’t write them an email that might be considered spam. Once I have spoken to them, I have a “history” that I can refer back to in a very innocent way to communicate that the email is not a drip mail.

Normally, I call, the email, then call, then email. I want to speak to my customer at least once per week during Phase One and every other day in Phase Two of the buying cycle. My first email will be a short, “thank-you-for-speaking-to-me” email that has my contact information and an invitation to call me or email me whenever I can help them in the future. I never try to sell them on anything other than liking me during Phase One. It takes the pressure off my customer and it is the easiest thing in the world to do. When I make my first call, it generally goes something like this:

“Hi, this Matt from FavoriteAgent.com customer service. I noticed you were on our website looking for a house. I’m doing a customer service follow-up to make sure you were able to find your way around our website ok?” The lead, a bit uncomfortable because she half-way thinks I’m trying to sell her somethings generally says something fairly cool like, “Yeah, I was able to find my way around pretty well.” Depending on how convincing I was as to customer service, she may add something like, “I was just online messing around…” At this point I generally DON”T get defensive (since I know that her cool response is not personal but really just means “No thanks, I’m just looking.”) but just act as though I didn’t even hear her. I’ll say something like, “Well, I have quite a few people I need to call, but I thought I would leave you a couple of quick trips to make the searching easier.” Then I offer about 15-20 seconds worth of advice
about using our IDX website.

Before I wear out my welcome, I say, “Thanks for visiting our website. If you have any questions or problems doing searches don’t hesitate to call…” (At this point there is no way the lead is going to call you back, but we are simply being friendly and personal.) Then, as if it’s an afterthought I say, “Oh! I almost forgot to tell you… (pause for effect briefly) my company just started doing this really cool service for our customers… we have this new technology that allows us to put a client’s search criteria into our computer and then the second any new listings come on the market that meet the customer’s specifics, it emails them information on the property. It is SO cool because it gives our clients the jump on most of the other agents who are looking at all the new listings for their clients. Anyway, it’s free if you’d like for me to put your criteria in our computer. Then every day or two when a new listing comes on
the market you’ll immediately have the inside track. Can I set this up for you? It’s free and will only take a second.” Almost without fail the customer says yes.

At this point you walk them through their search criteria, and look for opportunities to relax the client and build on your relationship. DO NOT TRY TO SELL THEM OR SET AN APPOINTMENT! If you shift into salesman mode, you will do so at your own peril. Of the hundred and fifty or so agents I’ve had the privilege of having on my team, the most effective of all told me his secret for his first phone call. He said if I can keep them on the phone for thirty minutes, I will close a transaction with them. He fully understood that people want to do business with someone they know and like. Become their friend and you will get their business.

I’ll leave you with a final note on the subject of prospecting phone calls. Always leave the seed for your follow-up call. On my first phone call I will generally tell them as we put their search criteria into the computer, that I will do my best to call them in a week or two to check on the emails and to see if we need to refine the search criteria. I let them know it is pretty normal to have to tweak the search a few times until we get it just right. That lets them know I’ll be following up and it gives them an expectation that I can then exceed. I leave them doubting whether I’ll ever be able to call them and if I do it will be in a week or two. Then I set an activity in my Pipeline contact manager and call them in one week. Exactly. The first thing I say is, “I know you didn’t think I’d call, but I promised you I would so I did.” Then we discuss the search criteria and we are like old friends. I want to talk as long as it
is comfortable but not to overstay my welcome. The late jazz singer, Sammy Davis Jr. said it like this: “Always leave them wanting more.”

We as Realtors often try to make it too difficult. Let’s face it — the buyer wants to buy (it’s the American dream), the seller wants to sell, the lender wants to lend, the closing attorney wants to close, the inspector wants to inspect — it doesn’t get much easier. If we simply focus on making friends, exceeding expectations, and serving our clients, we will be rewarded greatly. It couldn’t get any better! What a great business we are in!

COMMON MISTAKES AGENTS MAKE

In my experience, there are really only two mistakes that agents seem to make again and again. They will either come on too strong in the beginning and chase of a perfectly good Phase One customer by treating them like a traditional or Phase Two lead, or else they will lack the follow through to stay with a Phase One customer until they become a Phase Two customer and want to work with an agent. To successfully manage a pipeline of what is often over a hundred different customers, all in different places in their own buying cycles, it is imperative that an agent be organized. I believe that having a contact management system is critical to doing that and doing it well. That’s why we built Pipeline — we wanted a powerful organizational tool for our agents to use so they could turn their leads into closings. We knew that to become a mega-producer an agent had to close a lot of business. And to close a lot of business, an agent had
to be mega-organized. And just like lead capture, when we couldn’t find a good tool for the job at hand, we built our own.

That’s why we built Pipeline to have a five-minute learning curve. That’s why we made it both simple and powerful. That’s why we integrated our follow-up email templates and allowed our users to customize them and make them personal, as opposed to sending out mindless drip campaign emails. That’s why we have a full time coaching staff to help our agent partners learn this new way of doing real estate. Having the best tools in the world is only good if you know how to use them to grow your bottom line. Actually, there is one final mistake I see again and again… a mistake I’ve seen countless agents make in spite of being warned ahead of time not to do it… Most agents fail to move to that mega-producer level because they refuse to learn new skills and methods. They adopt an “I know it already” attitude and become unteachable. What a pity.

So please take the time to learn this new way of doing real estate. Let’s fact it: You can practically train a monkey to do most parts of this business. You can find people who will gladly escort customers to properties. You can hire a minimum wage employee to meet a inspectors at clients’ houses. What you can’t find very easily is someone who has the ability and skill to interact with new people and make magic happen. Most agents have the basic gifts and skills to be that person, but they lack the discipline and follow through to master this new skill. Prospecting on a large scale requires both administrative and relational skills. Most agents will naturally have one but not the other. Either they’ll have the administrative ability and no people skills or worse, they’ll be the life of the party and yet can’t manage to focus for the six to eight weeks of systematic follow-up required to become a mega-producer. They end up
racing from deal to deal until they burn out or give up. And that is truly sad. So take the time to master the skill set required and become a truly great agent. I believe you can do it if you put your mind to it.

Well, now you know what to do to turn Internet leads into closed deals… but do you have your own unending supply of Internet leads? You should be able to make your own leads for less than a cup of Starbuck’s Coffee per lead. Do you have efficient lead capture on your website? If you don’t, the first step to becoming a dominant real estate agent is having too many customers. You really have to start there. Everything else is second to that. Today, the lead vendors are spending lots of money tapping the Internet; and if you’re going to compete with them, you’re going to have to have technology that puts you on the same level. Otherwise, you’ll find yourself depending on lead vendors for much of your business. Call us today at (800) 708-7705 extension 7500, and we can help you find the technology you need.

SO WHAT’S NEXT?

In the next installment, we’ll be discussing leveraging your business by building a team. Even the best agents in the world can only do about 60-70 transactions a year as the sole producer. At that point, the weight of all the administration and other duties become too great to move much further. How you can take your practice beyond that barrier and become a mega-producer is what we will cover in the next installment, so you won’t want to miss it. In the meantime, you really need to get your technology in place, if you haven’t already done it. There’s never going to be a better time to start than right now.

Finally, let me renew my commitment to you. If you invest your time in reading this seminar and then — more importantly — in applying what I show you, your business will never be the same again. This is my sincere promise. It’s my greatest honor to be able to play a small part in your success. Thanks again for reading.

For more information about FavoriteAgent.com, call us toll free at (800) 708-7705 extension 7100 or visit our website at http://FavoriteAgent.com.

Matt Jones
REALTOR®, BROKER
President/CEO
FavoriteAgent.com