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

The Secret to Success with Internet Leads

WHAT’S IN THIS INSTALLMENT?

1. THE TRUTH ABOUT INTERNET LEADS
2. UNDERSTANDING THE REAL ESTATE BUYING CYCLE
3. A SIMPLE AND POWERFUL ILLUSTRATION
4. MEETING THE INTERNET CHALLENGE

THE TRUTH ABOUT INTERNET LEADS

According to the 2006 National Association of REALTORS® Profile of Home Buyers and Sellers, as many as 93% of all our customers are using the Internet for at least some part of their home searches! And that number is growing. In the last four years it’s increased by over 40%! These days, to be out of the Net is to be out of business! The simple fact is that, if we don’t learn to tap the Internet, odds are we will be doing something besides real estate in a few short years.

So let’s take a look at these “Internet” home-buyers. Here are some things the National Association of REALTORS® pointed out about online shoppers that you may want to know:

1. They’re better educated.
2. They have more money.
3. They’re buying more house.
4. Their search time is shorter.
5. They like to help in the process.

In fact, they’re about 15% better in nearly every measurable category! Sound like the perfect customers, don’t they? However, today’s real estate customer is more demanding than his predecessors and wants information right now. Tomorrow’s not good enough! He goes to the Internet to get that information, and if you’re not there, be assured that several national lead aggregators will be there to grab him. It’s imperative that you have a strong web presence, that you learn how to capture business from the web, and, most importantly, that you know how to respond to today’s Internet customer.

UNDERSTANDING THE REAL ESTATE BUYING CYCLE

Let’s talk about the nature of Internet leads. How are they different from other leads, such as referrals or duty-desk leads? Should you handle them much as you would sign calls? Or should you treat them like open-house leads? How can you know how to approach them? Are they all the same? An agent who has come up doing traditional real estate and who’s been successful at it is frequently unsuccessful when he tries to transition to Internet leads. Why? Because he tends to approach Internet leads the same way he’s always approached leads, and for the first time in his career he’ll find himself failing.

The first temptation for a confident and successful agent is to assume that Internet leads are of poor quality. Why might he come to that conclusion? For some reason, even though he clearly knows how to prospect, he’s just not able to make a connection with Internet leads. This problem is compounded by the fact that many of the Internet lead vendors provide very little information — often just a name and an email address.

But the reason many agents fail in prospecting Internet leads is not the lead quality, but rather a fundamental misunderstanding of the real estate buying cycle. The Internet customer is an ordinary customer, with the same needs and motivations as any other real estate customer, except that (as research shows us) the Internet customer is the cream of the crop, so to speak. So let’s talk about the real estate buying cycle and how we can use our knowledge to change the way we approach and follow up with real estate customers on the Internet.

The real estate buying cycle consists of three phases: information-gathering, the search, and finally escrow. It starts when the home buyer begins to look for information (generally online). Then at some point, the customer becomes willing to work with an agent to actually search for a home. The successful writing and acceptance of an offer to purchase mark the end of the search phase. Of course, there’s still the escrow phase, which ends at closing. This buying cycle has been relatively unchanged for many years. Until recently, though, few agents knew of the existence of Phase One. Make no mistake: Phase One has been with us for as long as people have used agents to buy real estate, but until recently it has remained largely unknown.

1. Phase One: Information-Gathering. The best research indicates that home shoppers begin the process of buying a house about 4-6 weeks before the beginning of Phase Two, or 6-8 weeks before the beginning of Phase Three. At first they’re just thinking and dreaming, but that dreaming leads to visualization as they become obsessed with the idea of getting a new home. In fact, in their minds they’ve already bought one!

During the early part of Phase One, the buyer is thinking about budget, features and amenities, neighborhoods, and school districts. Let’s not forget that this is the American Dream! We’re taught from earliest childhood that home ownership is very much a mark and measure of success in our culture, so we want to be careful and thorough in our search process. In this initial phase, the customer is solidifying, in his own mind, what he wants to buy. He chooses his search criteria and his budget (often incorrectly, as any experienced agent can tell you!).

This is an important part of the buying cycle, and it’s going to happen whether we like it or not. The best thing we can do is realize it, accept it, and plan for it. Most importantly, Phase One of the buying cycle is the only part of the process that every customer wants to do on his own. Our clients don’t want to have their dreams shaped by agents, parents, friends, or anybody else. They want the dream to be theirs. This phase is going to last 4-6 weeks. Anyone attempting to speed up the process does so at his own peril!

2. Phase Two: The Search. After the information-gathering phase has run its course, the buyer proceeds to a new phase and a mental shifting of gears. He’s decided what it is that he wants and is now on a legitimate quest to find it. This phase typically lasts about two weeks, and, according to the NAR, the search process has actually been shortened by about a week during the last several years because of all the technology tools that are now available everywhere.

Real estate shoppers understand that they need us to help them in the process of finding their dream homes. But what they DON’T want (and I can never reiterate this enough) is for us to try to shape their dreams. That part of the process is personal for most customers. During the search phase (Phase Two) of the buying cycle, the customer wants to look at actual houses. He’ll typically do lots of drive-by looking on his own and will begin skimming through home magazines. Remember: he now knows what he wants and is out to find it. And, somewhere in the middle of this search phase, he wants to begin working with an agent. This is the crucial part of understanding the buying cycle: the agent who’s on the customer’s mind when he reaches Phase Two is the agent who’ll close the transaction and collect the commission!

So how do you become that agent? (This is the secret to working Internet leads, by the way.) By being there! You need to be there at the precise moment when the prospective buyer calls a duty desk, the moment when he picks up a home magazine and calls an agent, the moment when he’s out riding around looking at neighborhoods and decides to make a sign call. This is how most agents have traditionally picked up their new customers! Well, the customer hasn’t changed with the advent of the Internet. What has changed is when the customer comes into our lives; and this search phase, which is usually only two weeks long now, lasts until the customer finally finds his dream home and gets an accepted contract.

3. Phase Three: Escrow. Beginning with the acceptance of the contract and moving forward to closing, there’s the third and final phase of the buying cycle, also known as the escrow phase. At this point, the buyer has found a home and is emotional about it. Every little bump in the road becomes a drama, and this is one of the reasons that home buyers and sellers need us: we aren’t emotionally connected to their dreams. Certainly, we identify with the client and wish the best for him (and let’s not forget that we want to be paid for our work), but we don’t have the level of emotional attachment to the transaction that our client feels.

A skilled agent will minimize potential bumps in the road by making sure (in Phase Two) that the client has actually been pre-approved, not just pre-qualified. By the way he negotiates the contract, he’ll show the client how to eliminate deal-breakers. Maybe he won’t allow a home inspection to create needless drama but instead will use it only to protect the client from unseen structural damage in the house, rather than using it as a second negotiation round, as many beginning agents do.

How well Phase Three goes is entirely dependent on how well the agent does in Phase Two. It should be noted that almost all of the legal problems arising in real estate transactions will surface during Phase Three, which is why all of us need to excel at the setting and managing of customer expectations.

 

 

 

 

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KEY CONCEPT!
Understanding the real estate buying cycle is one of the most important things you can take away from reading this seminar. If you learn nothing else, you should at least be looking at Internet leads differently, and here’s why. (Drum roll!)
Internet leads come during Phase One!
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Do you see the advantage? Has the light clicked on? Have you had the big “Aha!” pop into your head yet? According to the National Association of REALTORS®, 74% of all buyers and 76% of all sellers will work with the first agent they talk to. What that statistic means, unfortunately, is that our clients see all of us as largely the same. We know that we aren’t all the same, but what’s important is what our clients think. If they see us as a commodity and more or less interchangeable, and if we still want to have some kind of strategic advantage, we need to be first. If we’re first, the odds of our doing the deal are 3:1 in our favor. Period. The only way to change that ratio is to mess it up! What a huge advantage! A smart agent will simply identify the customer first and then devise strategies to make sure that he doesn’t mess up the process, so to speak. The rest will take care of itself.

A SIMPLE AND POWERFUL ILLUSTRATION

Let me close this installment with a simple yet powerful illustration that will change the way you look at Internet leads. I want you to think back to the last time you shopped in your favorite department store. Now, if you’re like me, you don’t have a lot of time to waste; when you go shopping, you go because you want to buy something. But remember how, as you walked into the clothing department, a sharp sales clerk came up to you and said, “Can I help you?” Now, I want you to be completely honest. What was your answer? You know what it was; it was the same as mine: “No, thanks. I’m just looking.” And I’m willing to bet that, within five minutes, you were looking around and finding that same clerk to help you locate something in your size.

Did you really mean that you weren’t interested, or were you implying that you wanted to gather information for a few minutes and that, later on, when you were searching, you might actually need his assistance? The procedure is no different for a real estate customer except that the buying cycle is much longer, given the price point of the purchase. The Internet customer is still gathering information when most agents call to say, “Can I help you?”

So there are generally only two reasons that an agent will fail in working Internet leads: either he’ll take the “No, thanks. I’m just looking” literally, as though the customer wants nothing to do with him, or (more often) he won’t take the hint and instead will insist on trying to set up an appointment to start showing houses immediately! This overbearing, hard-sell approach simply alienates the agent from the potential customer and removes any chance of his gaining the business. But make no mistake: that customer will go on to buy or sell, but with another agent! What a tragedy.

MEETING THE INTERNET CHALLENGE

Is there a solution to this fundamental problem, that working Internet leads has a learning curve? Of course. Let’s face it, nothing worth having is gained without some effort. The first step is to embrace the reality that the Internet is a legitimate source of business and is here to stay. At the current rate of growth, virtually all real estate customers will use the Internet for help in their property searches or sales within the next year or two. As real estate professionals, we can either accept that fact and learn to capitalize on it, or we can begin to “build our parachute” and look for an exit.

The next step is to understand the real estate buying cycle and know that customers won’t want us around much during Phase One. Around, no - in touch, yes. But not in a pushy way. We need to learn the skill of staying visible but not pushy. Our job is to be helpful. What could be simpler? Learn to serve your customers, not asking anything in return. You are simply there to make a friend. Research shows that a home buyer will work with the agent that he likes, so be that agent. Your job is simply to make him like you during this crucial first phase.

Finally, the third step is to have in place a follow-up system that will allow you to maintain contact with “future” customers over a longer period, even when you’re feeling overwhelmed with “present” customers. The rule of thumb is to keep it short and keep it personal. Mix it up. Use phone calls and emails, but remember, twenty to thirty words in a short but personal email will do much more than any mindless drip campaign. We are making friends here. Let’s be honest, when we all get a mindless drip campaign email we know it, and so will your client. We owe it to them to become personally involved. Increase frequency of contact as your client gets closer to entering Phase Two.

When you’re tempted to dial up the pressure in your early Internet prospecting, remember this simple truth: three-fourths of our customers will use the first agent they talk to (assuming they can remember who that is). So stay in touch and stay out of the way and the odds are 3:1 that you will earn a commission. It’s really very simple when you think about it. The buyer wants to buy, the seller wants to sell, the lender wants to lend, the closing attorney wants to close. If we just stay out of the way and stay in touch, we get paid! What a fantastic business!

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 for much of your business. Call us today at (800) 708-7705 extension 7400, and we can help you find the technology you need.

SO WHAT’S NEXT?

In the next installment, we’ll be discussing taking those Internet leads you’ve been making for next to nothing, and actually turning them into money! Closed transactions. Commission dollars. All the leads in the world aren’t worth a dime if you can’t turn them into closed transactions. And that’s what we’ll be covering 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

How to Get the Most Bang for Your Advertising Buck

WHAT’S IN THIS INSTALLMENT?

1. WHY YOU MUST SOLVE THE LEAD CAPTURE PROBLEM FIRST
2. HOW YOU CAN KNOW EXACTLY HOW MUCH EVERY LEAD COSTS
3. HOW YOU CAN KNOW WHICH ADS ARE WORKING AND WHICH AREN’T
4. THE BEST KEPT SECRET ABOUT FINDING NEW BUYER LEADS
5. HOW YOU CAN BE CERTAIN YOU’LL NEVER VIOLATE THE “DO NOT CALL” REGULATIONS

Imagine what it would be like to be the top buyer agent in your market. What if you got to the office and did nothing but talk to the three to five new buyers that came in overnight? What if you continued to follow up with those buyers and actually sold two or three homes every week, without fail? I know it sounds like a lot of buyers, but think of the freedom you’d have! And if only eighty percent of those buyers were to close, that would be over 100 transactions this year!

When I finally realized how nice it was to be a mega-producing agent, I was on vacation with my family to the Outer Banks of North Carolina. While on vacation, I did absolutely no work, but I did take a handful of calls from my office during the week. And while I was playing, I had several of my team members put contracts into escrow. How cool is that?! There’s nothing like the feeling of your business running itself, making you money, while you’re lying on the beach in the sun, listening to the waves crash in and catching up on your reading.

Well, if you do what I did, it’s not that hard. Most agents I know could do it — if they would do, step-by-step, exactly what I did. There’s nothing I did that can’t be duplicated by any intelligent agent with the motivation to learn something new and the willingness to work hard. Nothing. So let’s pick up where we left off in the last installment.

WHY YOU MUST SOLVE THE LEAD CAPTURE PROBLEM FIRST

Allow me to tell you a story. Once upon a time there was a huge river, stocked full of home-buyer and home-seller fish. All along the banks of that river were REALTORS® with their fishing poles. Everyone was catching all he wanted, and life was good.

Then one day, way upstream, a big commercial fishing company set up operations, with its computerized fish finders, its power nets, and the latest in fishing technology. The company began to pull many of the home-buyer and home-seller fish out of the water before they could make it downstream to the unsuspecting agents.

And it wasn’t long before the fishing began to get tough — so tough, in fact, that many REALTORS® just threw in the towel and quit the business. Others worked longer hours and did what they could to survive, while a third group simply gave up on the whole thing and bought fish from the big commercial fishing operations.

But what if an agent were able to get their hands on the same technology that the large commercial fishing operations were using? What if he were to go way, way upstream and begin to catch large quantities of home-buyer and home-seller fish? Not only would life be good again: it would be GREAT! What a huge advantage that agent would have!

Well, believe it or not, this story is actually true. The big commercial fishing operations are the lead vendors, like HouseValues, HomeGain, and ServiceMagic, and every day the “fishing” gets tougher because new lead vendors open their doors. If you don’t believe me, just check your email inbox. Not a day goes by that I don’t receive some new version of the same old thing — somebody using our listings to advertise on the Internet, catch our customers, and then attempt to sell them back to us.

But there’s another part of the story that’s also true. It IS possible for an agent to use the same kind of technology that the lead vendors use to capture leads — commercial lead capture technology only designed for single-agent use. And for those agents who have it, the technology produces amazing results.

SOME REAL LIFE EXAMPLES OF USING LEAD CAPTURE

In Greensboro, North Carolina, we have an agent partner named Kay Hunkins. She’s a veteran agent who was one of the first in her market to begin to try to tap the Internet. Well, she was getting literally thousands of hits to her websites every month and had her sites listed in lots of online relocation directories. And she was getting between 10 and 15 leads from the Internet every month, much more than the average agent produces from his website.

Then she installed our lead capture gateway on her existing website — nothing else — and she was immediately so busy that she found herself ignoring most of her prospects and cherry picking only the best buyers. The turn-around in her business was so fast she put a deal in escrow the same week she started with us. Without upping her advertising a dime, she began to capture over 20 leads every day (over thirty times her previous capture rate!). All of her leads were people who had been coming to use her site anyway, but now she was able to identify them!

And there’s John Miller, an agent in Austin, Texas. When he began using lead capture technology on his website, John was struggling with only a handful of leads every month. Now, using the lead capture gateway technology, he is able to capture between 300 and 400 leads every month. His business will never be the same! Now he’s so busy that he’s having to recruit agents and build his own real estate team!

So did these agents suddenly get smarter? Did they begin working harder? Did they work longer hours? Did they just get lucky? No. No. No. No. They just got better fishing equipment. Now, instead of having to be dependent on “commercial fishing operations” to sell them leads, they make more leads than they can possibly use, and all for next to nothing.

And I could go on and on with story after amazing story. There are many talented agents out there, just waiting for the tools to succeed and someone to point them in the right direction. They are the reason for their own success — we just happened to be fortunate enough to help them assemble the right tools and then point them in the right direction.

The simple fact is that you have to solve the lead problem before you can attack the other challenges in this business. Having more business than you can handle allows you to work without pressure. It allows you to turn away those “problem” customers. It gives you the ability to multiply yourself by building a team, if you so choose. And most importantly, it gives you freedom. No longer are you at the mercy of lead vendors, RELO companies, or even your broker. You have the freedom, finally, to take some time off and enjoy life again. A good lead count will solve virtually every other problem you can have.

KNOWING HOW MUCH EACH LEAD COSTS AND WHERE IT CAME FROM

Lee Iacocca, when he was head of Chrysler Corporation, made an amazing statement. When asked about advertising, he said he was convinced that half of the millions of dollars that Chrysler spent each year on advertising was wasted. Half! But then he added that, if he could only figure out which half was being wasted, he could save the company a lot of money.

As REALTORS®, we should typically spend 20% of our GCI, or gross commission income, on advertising. Magazines, newspapers, business cards, fliers, direct mail, websites, radio and television spots, billboards, and every promotional gimmick that comes down the pike: we sink money into all of these in a frantic attempt to generate enough customers to keep our businesses rolling. And the sad thing is that we know deep down in our hearts that much of what we spend our hard-earned commission dollars on is utterly wasted. Just like Lee Iacocca, if we could only figure out which half was wasted, we could save a lot of money.

Well, I have good news. By using lead capture gateway technology, it’s possible to know which ads are producing and which are not. It’s possible to know exactly where each customer came from and how much each lead cost. Let me give you an example from my own real estate practice. Currently I split my Internet advertising between two sources: Google and Yahoo. My cost with Google is slightly lower per visitor, but my CR (capture rate) is slightly lower as well. With Yahoo, my per-visitor cost is higher, but the actual CR is also slightly higher.

I’m able to monitor each of those advertising expenses in real time. No more waiting until the end of the month to see how the magazine did. No more wondering if an ad is working. I have the answers in real time. And here’s how I know. I assign each ad its own unique URL (web address), and the server log tracks how many visitors and leads have come in for each URL. I then take this information and make a quick calculation to determine exactly how effective each campaign was. No guesswork! This is a business.

Let’s say that, in a week, you had 110 visitors who came from your ad in Google. Of those, you had 32 leads. Your Google ad cost was $124. During the same week, you had 98 visitors from your ad in Yahoo, resulting in 30 leads. Your Yahoo bill was $125. Then let’s say that your yard signs sent you another 20 visitors, and, of those, 10 registered. Total cost for sign leads: ZERO! Here’s how it all breaks out:

Google: CR of 29.09%, with a lead cost of $3.88 ($124/32)
Yahoo: CR of 30.61%, with a lead cost of $4.17 ($125/30)
Yard Signs: CR of 50.00%, with a lead cost of ZERO! ($0/10)
Totals: CR 31.50%, with an overall lead cost of $3.46 ($249/72)

This is a “typical” example (actual marketing costs vary by market). What would 72 leads every week do for your business? They would probably force you to start recruiting. Or maybe you would just log in and put your ad campaigns on hold for a while. Either way, your business would be forever changed.

But then what if a particular source of advertising was costing you $125 per lead? (When I quit doing direct mail, that’s what it was costing me.) What if sitting an open house cost you half a day (on the weekend) plus $100 in promotional stuff, and you picked up 5 leads? If your time is worth $100 per hour (and it should be), your ad cost was $500. You captured 5 leads. Your cost per lead is $100. Or what about spending a day passing out fliers? Do the math. Or spending hours a day cold- calling? (Forget the risk of violating the Do-Not-Call laws and the potential $11,000 fine!) What do those leads cost you?

What if you could generate hundreds of your own leads for only a few dollars each, and then stop when you had enough business? This is how mega-agent teams have begun to spring up around the country. One agent figures out how to produce more leads than he can handle, and, before long, he has a dominant team taking a huge slice of the local business. Well, that mega-agent could easily be you, if you want it to be. First you get the leads, then you get the transactions. Before you know it, you’re “forced” to build your own agent team, and in a year you have a dozen agents working for you.

THE BEST-KEPT SECRET ABOUT FINDING NEW LISTING LEADS TOO

Even though you registered for this seminar to learn how to become a mega-producing buyer agent, I’m going to give you a tip that will help you with your listing business as well. Nearly every agent knows what to do when a customer fills out a CMA request on his website (or calls to ask for one). The problem is that those CMA requests are few and far between. And most sellers who ask you for a home valuation also ask several other agents at the same time. Some other frequently mentioned sources of seller leads are FSBO (for sale by owner) sellers and expired listings.

Just like the CMA requests, the problem with both FSBOs and expireds is the fact that you’ll be competing for those listings with the hungriest and most aggressive agents in your market. And while both are good sources for listings, those properties tend to be tougher to sell, either because the seller is unrealistic or because the property has been stigmatized by having been on the market since before you began.

I like getting my seller leads from a place where nobody else is looking: from buyer leads! What?! You read it right — from buyer leads! Let me explain. According to the National Association of REALTORS®, first-time home-buyers account for 40% of all real estate purchases. This number has held constant for years and shows no indication of changing. One thing is for certain: none of these first-time home-buyers are listing leads.

Another 23% of home-buyers are looking for investments, while 13% are purchasing vacation homes. Of the investment properties, some are bought to “flip,” while others are bought to hold. The same is true of vacation home sales: many are bought to hold, while many others are step-up purchases, resulting in potential listings as well. The best numbers from the NAR reflect the fact that 52% of all buyers are also selling — some in the same markets as their new purchases and some in other markets — so more than half of the buyer leads that you get will also be sellers. Here’s the little-known secret that will give you the first, and hopefully only, shot at those sellers:

Buyer leads almost always find a replacement home before thinking of selling.

As professionals we understand that this is not the way it should be, but the human psyche is hard-wired with a security need. We don’t quit our job until we line up another. We don’t sell our car until we find the new one. The same is true with real estate. The key to generating an unending supply of fresh listing leads is to generate lots of buyer leads and then find the half who are selling too. In most of those cases, you have the opportunity to list a home without anyone else’s knowing it’s going to be on the market. What a huge advantage!

So over half of the buyers will either have a home for you to list or — better yet — have a listing lead you can refer back to their original market, giving you a referral with no work whatsoever! No picked-over expireds. No FSBOs that know it all. Just an endless supply of new seller leads with no competition. And whether you choose to list or just work with buyers and take a referral for your listing leads, having an unending supply of leads — both sellers and buyers — is crucial to becoming a mega-producing agent in your market.

HOW YOU CAN BE CERTAIN YOU WILL NEVER VIOLATE THE “DO NOT CALL” REGULATIONS?

In March of 2005, the FCC imposed a $770,000 fine on a Phoenix, Arizona, mortgage company for violating the Federal Do-Not-Call Law. The FCC alleged that Dynasty Mortgage made 70 calls to 50 homes in Arizona and California between March 2, 2004, and January 20, 2005. A fine of $11,000 per incident was imposed on 70 separate counts, and the company was given only 30 days to pay the fine.

Curtis White, Dynasty’s president, said that his company had extensive systems in place to try to ensure that any do-not-call numbers were not called. However, some calls may have been made mistakenly because of a “flaw in the system,” and the company is now working to fix the problem.

If this case doesn’t make you think twice about cold calling, nothing will! I can remember many the day of cold calling when I would make more than 70 calls! It would be easy to violate the DNC laws accidentally by calling homes that “showed” to be “okay” on the latest list, but the list may have been out of date at the time of your calls. And $11,000 is a huge “slap on the hand”.

So how can you be certain that this kind of disaster never happens to you? By only making prospecting calls to INBOUND leads. With lead capture gateway technology, every lead is permission-based. By this, I mean that the lead has first contacted you and given you his phone number and, with it, implied consent to market to him. The law is very clear on the fact that, in such instances, there’s a three-month window of exemption from the date of inquiry. And your innocence is easy to prove if you have a time-and-date-stamped inquiry on file for each lead. Inbound Internet leads are the safest of all leads to call — period.

So how safe is your marketing? 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 places you on the same level with them. Otherwise, you’ll find yourself depending on lead vendors for much of your business. Call us today at (800) 708-7705 extension 7300, and we can help you find the technology you need.

SO WHAT’S NEXT?

In the next installment, we’ll be discussing the truth about Internet leads. What is the real estate buying cycle and how does it effect your prospecting of Internet leads? How can you compete with large companies with huge budgets on the Internet? These questions will be answered in the next installment, so you won’t want to miss it. In the meantime, work on getting your technology and your advertising in place. 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 teach you, your real estate life 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 registering and, more importantly, 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

First You Need a Plan

WHAT’S IN THIS INSTALLMENT?

1. WHAT DO ALL MEGA-PRODUCERS HAVE IN COMMON?
2. STEP ONE: IT ALL STARTS WITH VISION
4. STEP TWO: REVERSE ENGINEER YOUR SUCCESS

WHAT DO ALL MEGA-PRODUCERS HAVE IN COMMON?

Okay, so you want to become a mega-producer. That is the most important step — just making up your mind! But how are you going to do it? You have to have a plan. In fact, I don’t know of a single mega-producer who doesn’t have a well thought out business plan. Without a plan, you will never achieve greatness. It’s time to start thinking about the future. How are you going to do this next year? How much money are you going to make? How many transactions will you do? Will you take some time off? Purchase any large assets? Build a team? Start your own company?

Let’s face it: now is the time when we need to begin thinking about those things. But for many of us, thinking is all we’ll ever do. Most agents feel as if they’re at the mercy of whatever business happens along their way. Their “planning” is more like dreaming. And because they lack a sense of control over their circumstances, they don’t spend a lot of time building a business plan.

But what if you really could plan your business? What if you could map out a specific plan? And what if you could then hold yourself accountable to that blueprint and, at the end of the year, look back and see that you accomplished most of what you had planned? What if you could decide that you would build your business a certain way and then actually be able to do it just as you intended?

Sound too good to be true? Well, it’s not! That’s exactly how I do it, and it should be exactly how you build your business as well. Let me explain. I don’t rely on good fortune to build my business. I’m not a passenger, so to speak. Instead, I’m the driver, and as such, I decide where I’m going, how fast I’m going to drive, how soon I’ll arrive there, who’ll be going with me, and where I’ll stop along the way. And although you may not be able to foresee such a possibility for yourself, if you’ll follow along with me, you’ll learn that you can be the driver of your own business. You will no longer depend upon luck, or the market, or the broker, or your circle of influence, or any other external factors. You can actually take control of your business and make your own success.

But I know that talk is cheap, so allow me to give you some specifics. About the same time every year, I sit down and create my plan for the next year. A couple of years ago, I planned to become the largest company in our market. I planned to build our team to 46 REALTORS®. I planned to have the largest market share in our market. I planned to start a training center for agents.

So how did we do by the end of that year? Pretty well, I think. First the good news: we did become the largest company in town, we built our team to 60 agents, and we opened a training center for agents. The bad news is that we weren’t able to become the largest in market share. Oh, well. But during this first full year in business, we rose from number 386 to the top 20. And for the last quarter, we were in the top 10 and gaining ground rapidly.

Last year I sat down to do my planning and set some new objectives. I planned to expand our agent base to 100. We did it. I planned to continue to grow and become number one in market share. Still didn’t happen, but this year we are the only company that has maintained our production volume, while nearly every other company in the market has experienced a pullback, as much as 50% for some. Maybe next year we’ll become number one in market share.

I planned to write another book. I wrote two. We planned to release our contact management software (Pipeline) and get 20,000 agents to try it. Currently we have just over 12,000 agents using Pipeline and it looks like we won’t quite hit 13,000 agents by the end of the year. We planned to open several offices, and guess what? We did it. You get the idea. First the plan, then the accomplishment (or sometimes the falling short).

My purpose here is not to brag about our accomplishments. We’ve done well, but then we’ve been blessed with some really great people. No, the fact is that, when I entered the real estate industry five years ago, I immediately began using the same type of planning to build from a single-agent practice to where I am now. And the planning is what I’ll share with you in this installment. Before we dive in, though, I want to make sure you understand that this success story can easily be yours. You really can control your real estate destiny. You can take your business as far as you want! All you need is a good plan and a willingness to stick to it in the face of numerous distractions.

STEP ONE: IT ALL STARTS WITH VISION

Before you can begin any journey, it’s important to know where you’re going. Simple as that. Someone once said that, if you don’t know where you’re going, any direction will do. Well, I prefer to choose my destination. And having chosen where I’m going, I can then set out to build a systematic, step-by-step plan of how to get there. Without a destination, how will you know when you arrive? You won’t. If you don’t have a plan, any result will do. If you don’t have an objective, any outcome will do. You must have a destination — a finish line — a finite, measurable, clearly defined objective. Why? Because, without one, you’re only cheating yourself. Don’t be afraid of failing! This past year I failed to reach some of my objectives. But did I really fail? You be the judge.

I believe in the principle of vision. In order to achieve something, you have to see it first — in the sense, not of seeing a physical reality, but of seeing the end result in your mind’s eye. And I’m not talking about some mind-over-matter scheme of somehow psyching yourself into super-achievement. What I’m referring to is the simple principle that anything you create (in this case, your business) will be given life once you can see it clearly in your mind. The more clearly you see it, the likelier you are to achieve it. Steven Covey, author of Seven Habits of Highly Effective People, discusses the vision principle when he says, “Begin with the end in mind.” Napoleon Hill, in his famous book Think and Grow Rich, notes that, around the turn of the last century, dozens of industrialists used this same principle to become some of the richest and most powerful men of their day. To begin with vision is crucial if you expect to have
any real success.

In Psycho-Cybernetics, a classic from the 1960s, Dr. Maxwell Maltz explains the vision principle from a psychological perspective. First, he says, there’s the importance of seeing a thing. Whereas the rational mind has filters of logic and reason, the subconscious mind accepts the messages it receives without question. So learn to speak directly to your subconscious mind. It’ll believe you! Have you ever known a pathological liar? Have you noticed how he or she could say something once or twice and then, having said it, actually believe it to be the absolute truth? This is the vision principle at work, albeit a misguided application. Since the subconscious mind believes whatever you tell it, it’s important to develop a clear picture of your “success vision” and then to speak that vision to those around you. Your subconscious mind is listening and wants to help you build your business.

While we’re on the subject, I’d like to mention one more thing: it’s important to have as much detail as possible in your vision. Take the time to imagine the perfect real estate practice — your real estate practice. Picture the individuals working with you. Picture the perfect office. Picture the details. See the transactions being closed. Watch your staff execute flawlessly. You’re writing and starring in your own movie. Now watch it clearly, again and again, until you’ve memorized it. The more clearly you can picture your vision, the more help you’ll get from your subconscious mind. But let me give you some practical examples of vision-driven performance. When I began in real estate, I set several objectives for my first year. I decided that I would list a property a week, and I told the agents in my office what I intended to do. Initially I was struggling, but soon I was ahead of my plan, so I adjusted it to list 100
properties during my first twelve months. You know what? I failed at that new goal. I listed only 74. But in my first calendar year I listed 114 properties. Could I have done it without “seeing” it first? I don’t know. I doubt it. Vision drives us to succeed.

Here’s another example. I was determined to become the top listing agent in our market during my first year. I first saw this vision clearly in my mind, and I used it to drive me until I accomplished my objective in less than six months. Could I have become the top listing agent in our market without having that vision? Maybe. I doubt it. But I know one thing for sure: I did accomplish my objective after I’d first seen it in my mind’s eye.

I could go on and on, but what’s important is that, if you can see it, you can achieve it. And if you can “see” it before anyone else does, that’s even better. For years, Roger Bannister held in his mind a vision of himself running a four-minute mile. Not surprisingly, everyone in his day considered such a goal to be unreachable — everyone except Roger! He continued to train and to pursue that vision — and then one day he broke the four-minute barrier. So you know what happened next? That same year, several other people broke the same barrier. Roger had broken it first because he “saw” it first. But as soon as other runners could see it, they could then achieve it.

And there’s no reason that you can’t do the same thing. Any of us can accomplish greatness if we address the challenge properly. Take some time alone to get a clear picture of the “perfect” real estate practice. Your perfect real estate practice. In the next part I’ll give you the practical steps toward accomplishing your vision, but before I can do that, you’ll have to have a clear picture of what’s ahead for you. Just print out this installment, and then set it aside. Go take a few hours to get a realistic concept of where you’d like to see your business in a year. Dream big! Imagine that your goal is already a reality. And take the time to see the details. When you see everything clearly, write it down so that you can refer to it and use it to refresh your mind. I promise you that, if you do this, you’re on your way to becoming a mega-producer.

STEP TWO: REVERSE ENGINEER YOUR SUCCESS

All right, by now I trust that you’ve done your homework and taken the time to get a clear picture of your dream practice. I’m also confident that you have all the details clearly in your mind’s eye and have written them all down to refer to later. Good. Now we’re going to get into the practical steps toward making it all happen. You’ll need a pencil and a piece of paper for this part. And go ahead and get a calculator while you’re at it — we’ll be crunching some numbers. Don’t worry, though! I promise that the math will be easy. But first let’s discuss reverse engineering.

Reverse engineering is the process by which a company disassembles a finished product in a laboratory, carefully documenting all the details so that it can determine how to build a similar product. Maybe you’ve seen the movie Paycheck. (It was about reverse engineering.) Well, the reason I want to start here is that this is the single best way to build a business plan for your real estate practice. We’ll begin with the end in mind.

Now, because this process will be highly personal, you’ll have to supply your own finished model (i.e. your perfect real estate practice). In order for us to work on this together, however, I’ll show you the steps in an example. Remember — this isn’t meant to be a substitute for your own vision. It’s just an example so that you’ll be able to follow along and know what to do when you do build your own business plan.

Okay, for the purpose of this sample business plan, we’ll map out our assumptions.

• Assumptions for Sample Plan:
• Desired net income: $100,000
• Your brokerage split: 70% (the amount of each commission you get to keep)
• Average sale in your market: $200,000 (your market may vary)
• Average transaction side: 2.75% (your market may vary)
• Average GCI (gross commission income) per side: $5500

This is where we want to start. In order to begin our own business plan, we need to disassemble the sample plan. Here’s what I mean. We need to see what these goals mean in terms of specific details. Let’s start with the financial goal. To make $100,000, you must first determine what you need to produce in order to get there. To do that, take $100,000 and divide it by your agency split of 70%, and you have $142,857. But that’s not your target yet. Don’t forget that you should be investing 20% of GCI in customer acquisition or advertising, so what that means is that you need to take $142,857 and divide it by 80% (the amount left of GCI after you invest in your advertising). That number gives you a gross revenue target of $178,571 — the total amount of gross commission income that you must actually generate in order to make your desired net income.

But this is just a nebulous income amount unless we reverse-engineer it. Let’s talk about specifics here. Next you need to calculate how many transactions you need to close. Divide the gross commission income by the average commission, and you have 33 transactions ($178,571 divided by $5500). That’s how many average transactions you need to close. Now let’s take it a little further. What exactly goes into closing those 33 transactions? Let’s now look at the raw ingredients needed to produce all this business. First and most importantly, you need leads. Lots of leads. In fact, on average you need 24 leads per transaction. Thirty-three transactions times 24 leads equals 792, the total number of leads you need to generate for the year. Divide that number by 12, and you can see that you need to produce 66 leads per month (or roughly 3 new leads every business day).

Assuming that you’ve put a lead capture system in place so as to generate all those inbound leads, the next thing you have to do is convert those leads into deals. The best data says that you should count on ultimately making substantial contact with only about half the leads (after a maximum of six attempts). What that information suggests is that many leads will already be working with other agents, have friends in the business, be referred to someone else, or (for one reason or another) not want to talk with you. The good news is that the other half do want to talk with you!

And here are some more sixes. Of those six leads you contact, you’ll ultimately set up an appointment with one. And you’ll contact that one lead an average of six times as you build that relationship. Ultimately you’ll set up appointments with about one-sixth of all your leads. And half of your appointments should ultimately progress to closings. So let’s do the math together.

Leads per month: 66

Calls to those you never engage: 198 (33 leads times 6 attempts)
Average time spent on a call: 2 minutes
Total calling time: 396 minutes

Calls to those you engage: 198 (33 leads times 6 calls on average)
Average time spent on a call: 20 minutes
Total calling time: 3960 minutes

Total calling time (all calls): 4356 minutes (396 minutes plus 3960 minutes)

Now, if you do the math (4356 minutes divided by 60 is 73 hours per month; divide that by 4.33 weeks in a month), you can see that you’ll be on the phone about 17 hours a week. That’s a lot of phone work. But that’s 17 hours in a perfect world. In my world, I get interrupted, my computer quits, my call is dropped, etc. If you divide that 17 hours per week by .75 (allowing for a 75% efficiency) you need to plan on 23 hours every week for making your prospecting calls alone. In other words, it should now be obvious to you that high-volume real estate is extremely telephone-intensive. And then you have to factor in your time actually practicing real estate (listing, selling, and closing), add to your administrative time, and now you have a pretty full schedule. This is what business planning is all about. First you must plan your work, then you must work your plan.

When I was a brand new agent, I built this same kind of business plan. Because of the focus it gave me, I was able to spend a lot of time in my office with my door closed, talking on the phone. Well, many of my fellow agents spoke disparagingly about how I couldn’t (and shouldn’t) do real estate in my office. I told them that I couldn’t do real estate away from my office. I told them that, if I weren’t with a client, showing or listing a home, I would be in the office and on the phone. There’s too much to do! Real estate has changed. The age of going out all over town to hustle up business is over. Lead generation should be on auto-pilot, allowing you to spend your time actually working those leads you produce.

Now let me ask you a question: wasn’t that easy? Building your own business plan should be easy! First you need to take the time to build your dream — your vision. Then you need to begin to share that vision with those around you. Realize that many of your fellow agents will pooh-pooh your plan, but that’s because it’s easier to find fault with your plan than it is to build plans of their own. So don’t let those around you tell you what to do. Follow your own business plan. And then get a comfortable chair and phone headset. You’re going to need them! High-volume real estate is done on the phone. Finally, consider building a team. To the degree that you can duplicate yourself by adding team members, do it. Having your own team will allow you more freedom and give you the ability to take your business beyond your personal production capacity.

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