Becoming a Mega-Producer (Part 6)
How to Build Your Own Team: Becoming a Rainmaker
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 talked about setting your practice up so you have new incoming customers every day. We discussed today’s Internet customer and we discussed prospecting techniques and today’s real estate buying cycle.
If you’ve missed any of those installments, I encourage you to go back and 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.
Today’s Three Team Models
Having had the privilege of working with thousands 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.
The Assistant Team. This is the team model 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 Freedom Team. This odd phenomenon seems to be gaining in 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 return the favor.
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 freedom 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 instruction, coaching, 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 disbursal 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.
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 forgo 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 local team has grown to more than seventy agents, and I haven’t done a real estate transaction in over five years! This year I’ll make a seven-figure income while acting as a full-time broker and managing and training my team. Moreover, I also have agents on my national real estate team, and they are growing and healthy and producing their own leads.
And while growing my real estate teams, I’m also devoting much of my day-to-day work to growing our national technology company, which has now signed more than 20,000 agents worldwide. In addition to our real estate and technology divisions, I’ve just finished my fourth book, and we’ve started a national real estate news and best practices media company. 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 thousands of leads each month for at least sixty 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 like our LCM web and phone gateways that are the lead capture part of our Pipeline-i Virtual Office technology.
Second, it’s important to have a common database like our Pipeline-i Virtual Office client management technology 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.
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 agents 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 free if you join one of our virtual real estate offices, or if you help us open a virtual office. Even if you want to stay right where you are and simply license the technology, it’s probably less expensive that you think, and should pay for itself many times over. 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 the dominant agent in your market 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.
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.
OK, it’s time for one more 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
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