Many of you who’ve followed my blog or my training know how I feel about open houses. I think they are a bad idea. I should clarify that statement. I believe that there is one single instance in which you should consider an open house: continuously until it sells. I’ll explain.
The Secret to Success with Internet Leads
According to the 2008 National Association of REALTORS® Profile of Home Buyers and Sellers, as many as 87% of all our customers start online and a full 93% 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 not be online 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:
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’s been successful at working traditional real estate leads 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. And why do you think 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, making follow-up more difficult.
But the reason most 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 that 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, and the beginning of the escrow phase, which ends at closing.
This real estate buying cycle has been relatively unchanged for many years, but until recently, very few agents knew about how it affected their business. Make no mistake: The buying cycle has been with us for as long as people have used agents to buy real estate, but until recently it has remained largely unknown. So let’s look at this buying cycle and see how it affects the prospecting of real estate customers.
1. Phase One: Information-Gathering. The best research indicates that home shoppers begin the process of buying a house about 8 weeks before buying a house. 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 all 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.
It’s during this initial phase, that 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!). He makes up his mind what he wants in the way of features, and often he narrows down the part of the community he wants to live in.
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 before they transition into Phase 2 and want to work with an agent. 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 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 to the buyer.
Nearly all 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: the buyer now knows what he wants and is out to find it. And, somewhere in the early part of this search phase, he wants to begin working with an agent. He knows that we have the key to the lock box and is willing to work with us now that he has decided what it is that he wants. 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, lasts until the customer finally finds his dream home and gets an accepted contract. In other words, the first three fourths of the search process the buyer wants to do by himself, and then when he is finally ready to look at homes, the agent better be ready or he will miss the opportunity.
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 very emotional about it. Every little bump in the road becomes a drama, and this is another 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. The experienced agent will also avoid deal breakers by the way he negotiates the contract. 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.
Do you see the advantage? Has the light in your head clicked on? Have you had that big “Aha!” 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. That means, unfortunately, that our clients see all of us REALTORS® as essentially the same. We know that we aren’t all the same, but what’s important is what our clients think. Perception is reality.
Since they see us as a commodity and more or less interchangeable, any agent with a good online strategy has a huge strategic advantage, because he’ll be the first agent the client talks to. And if we’re first, the odds of our doing the deal are 3:1 in our favor. Period. The only way to keep from doing the business, is to mess it up! What a huge advantage! A smart agent with a good online strategy will simply identify the customer first and then devise ways to make sure he befriends the customer. Just be first, and don’t mess up the relationship, so to speak. The rest will take care of itself.
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, so when you go shopping, you go because you want to buy something.
Now think back to the last time you went shopping. 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 (Phase One) for a few minutes and that, later on, when you were searching (Phase Two), 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 that initial “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! And by being overbearing and using a hard-sell approach he simply alienates himself from the potential customer and removes any chance of ever gaining the business. But make no mistake: that customer will go on to buy or sell, only with another agent! What a tragedy.
Is there a solution to this fundamental problem? 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 a follow-up system in place. That follow-up system should 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.
Remember, you’re simply making friends. Let’s be honest, when you get a mindless drip campaign email you can tell, and so will your client. You 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 your 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 inspector wants to inspect, and 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 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.
OK, it’s time for another brief commercial message.
If you’d like to look into licensing our LCM web gateway technology, it’s easy to get. Put away your credit card. You can get the technology for free by joining my personal real estate team, by joining one of our FavoriteAgent.com Virtual Offices, or even by opening your own FavoriteAgent.com Virtual Office. But don’t worry — we even have ways you can license our technology and stay right where you’re at. So, check us out by clicking this link:
My Promise to You for Reading: If you invest your time in reading Becoming a Mega-Producer 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.
Matt Jones
Broker/President/CEO
FavoriteAgent.com
Tell Me What You Think!
I’m often asked what I think of open houses. Well, I think it’s as good a way to waste a Saturday afternoon as any. My advice is to just take a long nap and catch up on your sleep instead. It will advance your real estate practice a lot faster than an open house! Let me explain. Continue Reading…
Let’s face it — we all know that much of what we spend our marketing dollars on is a complete waste of money. And what’s worse is our advertising amounts to the single biggest expense we have as agents — as much as 20% of GCI or gross commission income! That means if you gross $100,000 a year in commissions, you are likely spending up to $20,000 a year in advertising. Continue Reading…
Make your own leads and stop depending on lead vendors, your broker, or your friends! A recent survey of nearly half a million veteran agents revealed that the number one concern facing agents today is having enough customers. This is further compounded by the recent decline in the national housing market. Meanwhile some agents are having their best days ever, making more in a month than most agents make in a year. So what is so different about these agents? Simple — they’ve quit depending on everyone else.
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Pipeline-i® Virtual Office is an innovative technology designed by agents, for agents that empowers you to generate more customers than you can possibly handle, all for less than a cup of Starbucks a day. The Pipeline-i® Virtual Office technology package includes integrated lead capture with our LCM® Web Gateway, our LCM® Phone Gateway technologies, our Agent SimpleSite®, and unlimited personal business coaching.
Check out what you get with Pipeline-i® Virtual Office…
We became a leader in the technology industry by making simple tools for real estate professionals. Our tools are unique because they’re designed by agents, for agents. That means they meet agents’ practical needs, but more importantly, they’re also simple - designed to learn in five minutes or less. Our core technology package Pipeline Virtual Office includes exactly what every agent needs to thrive in real estate.
So what are agents saying?
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Albuquerque, NM
“Favorite Agent is the reason that I am where I am today. Without hearing about FavoriteAgent.com, I would still be using the old traditional ways of doing business that aren’t very efficient. It has enlightened me on the importance of the internet and has drastically changed the way I have been doing business over the last two years for the better. Everything is internet based and has been very good for our business. Pipeline Virtual Office is an exceptionally cost effective way to make and manage leads. We have been very happy with our results. If you’re looking to increase your business, I would definitely recommend FavoriteAgent.com.”
Randy Roach
Phoenix, AZ
“As a new agent, I was broke and ready to quit real estate after 4 months due to the lack of business. Then I found the FavoriteAgent.com lead capture technology [Pipeline Virtual Office], and my business has never been the same. (I’ve used their systems for the past two years.) When I started with them, I was a rookie agent and had only sold one home. After my first full year with them, I was named the top producer in my company of 21 agents (for 2006 and again in 2007), and was ranked in the top 3% of all the agents in my MLS. All the other agents in our region are saying 2007 was the slowest year they’ve seen, but I’ve had more business than I could handle. So much that I recently hired a full time administrative assistant and started my own team. FavoriteAgent.com helped me solve the “no-business” problem! Thanks guys!”
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Radcliff, KY
“I actually came across Favorite Agent while doing floor duty reading Broker Agent News, and it had an article Matt Jones wrote for the magazine telling how he was able to do 100+ listings in his first calendar year. Whoa! That got my attention. I found out he used a lead capture gateway [now called Pipeline Virtual Office] and that he was continually studying and changing it to make it work better.
So I had to at least give it a try. I found out you didn’t just join a company you joined a family. At Favorite Agent, all the way from the President to Customer Service, they actually cared about my success. They really take the time to give an agent that’s stuck some coaching advice. This is so good because you get a chance to talk with someone who’s actually done it and is talking with many agents from around the world daily, so you get ideas that others are just not doing. With Favorite Agent I’ve been able to make it through the slowing real estate market because I have the one problem every agent wished they had: TOO MANY LEADS! (Help! I can’t keep up! ;-).
Joseph Ignat, P.A.
Tampa, FLP.S. If you want some stats, I personally give Favorite Agent credit for 22 transactions in the year and a half I’ve been with them.”
“Before I was introduced to the FavoriteAgent.com technology I was a struggling agent closing, on average, one deal a month. I was driving some pay per click traffic to a standard, template real estate website and closing a few deals as a result. At the time this was the best marketing system I had found because I could at least generate leads somewhat consistently. Little did I know that I was paying way too much per lead and per deal because I didn’t understand how important it was too have a lead capture system in place. As a result I was spending a lot to make a little.
When I heard about the FavoriteAgent.com lead capture technology and integrated database [Pipeline Virtual Office] I was skeptical. They told me if I replaced my current website technology with their LCM Gateway, that I would increase my capture rate from 1 customer out of 100 visitors to 25-30 out of 100! After several phone calls with the helpful staff, I took the leap of faith and purchased the system. Within two days of directing Internet traffic to my FavoriteAgent.com LCM Gateway, my lead count exploded. I was spending the same ad dollars but now I was generating 25-30 times more leads than before. After cutting my ad dollars way back so I could keep up with the leads, I decided to start building a team of agents to multiply myself.
With our team, we closed 126 transactions in 2006 and 130 in 2007, which was a “slow market” according to the so-called experts. And we did it at a fraction of the advertising dollars we would have spent using traditional marketing methods. In fact, 7 of the 10 top producers in our company of 150 agents used this system to build their successful businesses. When I started, I knew nothing about Internet marketing, lead generation, lead capture, pay per click, Google AdWords or anything before I began to research it myself. FavoriteAgent.com made it so simple with their systems, training and customer service that anyone can learn the concepts and get their Internet business up and running within a few days. Needless to say, I highly recommend this system to anyone serious about increasing their transaction volume while decreasing their current marketing budget.”
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Boise, Idaho
“Pipeline Virtual Office is the number one reason I have had success in real estate. I was able to jump feet first into a competitive market and not only write deals for customers immediately but shorten the real estate learning curve that cripples most agents. FavoriteAgent.com is for any agent who is serious about success!”
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Boise, Idaho
“That’s right I’m an agent, but I’m also the President and CEO of FavoriteAgent.com. We have agents all over the world using Pipeline Virtual Office to make their own leads for as little as $3 each. Our typical agent spends only about $250 in advertising and makes between 80-90 leads. Sign up today and I’ll pay your $1,000 activation fee for you. How cool is that? So go ahead and sign up today and start making your own leads tomorrow!”
Matt Jones
President/CEO
FavoriteAgent.com
How much does Pipeline Virtual Office cost? The complete Pipeline Virtual Office technology package costs only $550/month, with a 2-year contract. To learn more about our pricing, click here.
Why is Pipeline Virtual Office so cheap? Good question. For a slick website, a state-of-the-art lead capture, a contact manager, and personal business training, agents might expect to pay up to $1500/month.
Today an agent can get our full technology package for less than the price of your lunch each day! You’ll have to agree that any agent that’s truly serious about his or her career can make that size of an investment, especially considering you can save 50% by committing to a two-year contract.
Online marketing? What’s that?
It’s the wave of the future, but don’t worry, you don’t need to be an expert. The average online marketing campaign takes about 15 minutes to set up. It’s so easy your mom could do it. So why is it important? Because even armed with the best lead capture technology on the market, if nobody visits your website, you can’t capture them.
How much does advertising cost? The best part is online marketing is scalable to your budget. You can spend as much or as little as you want. And there are no lengthy contracts, so you can stop and start your campaign when you want. Our average agent spends only $250/month on advertising.
Many of you are a lot like me. Entrepreneurial. We’re constantly looking for opportunity, and when we see it, we often just naturally go for it. Some of us more than others, depending on our place in life, our risk tolerance, financial ability, and the other things on our plate, but all of us, to some degree, learn to spot opportunity and react. Such is the life of an entrepreneur. Continue Reading…
As someone who spends a large part of my life training agents to succeed in this new age of real estate, I’m often amazed at the general lack of understanding on the topic of advertising in our industry. I’m not talking about understanding the nuances of Madison Avenue or even being a student of David Ogilvy, Al Ries, or Jack Trout (some of the giants in the advertising industry). I’m simply talking about having a good working understanding of the fundamentals of advertising, since as working agents, advertising is our single largest expenditure. Continue Reading…
Today’s successful mega-producers are generating plenty of business, but unlike the customers of yesterday, today’s real estate customer is beginning online. According to the latest figures, in excess of 90% (94%) are beginning their search online. In my last installment, I explained how successful agents today are going way “upstream” to capture their business — before the customer has had the opportunity to be attracted by old-school marketing techniques. If you haven’t read it yet, you owe it to yourself to start there. Continue Reading…
In my last post I discussed the difference between yesterday’s pull marketing and today’s push marketing. I explained how pull marketing is reactive — “If you build it they will come.” Push marketing, on the other hand, is pro-active — “If you build it they won’t come so you have to go get them.” (Click to view previous blog post.) Many agents today have experienced that very phenomenon: doing lots of advertising and getting little if no results. Today’s successful agents are going upstream and capturing the lead early — generally during Phase One of the buying cycle. Continue Reading…
Before we launch into this segment, let’s recap the last installment. In it I was discussing how in the 1960s and 70s, our industry was in a Broker-centric Era. The brokers had all the power. Customers had very little access to listing inventory except through them. Agents had no business except through them. Modern real estate brokerage was in its infancy. By controlling the inventory, broker-owners were able to build real estate dynasties. It was common place to see multiple office operations with teams of agents, and it was during this climate that companies like Century 21, Coldwell Banker, ERA, and other similar broker-centric companies became huge empires. Continue Reading…
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