UNcommon Wisdom

The most common wisdom is that going door-to-door, telling people that you are the local real estate specialist, is a good use of your time. There are people in every office in the country who will tell you to do it. If you don't get any business from it, they will tell you it is because you aren't doing it enough.

The common wisdom is that you need to "get your name out there." You can drop off a neighborhood newsletter or market analysis with the homeowners. They will remember you when it's time for them to buy or sell. This practice even has an official name: FARMING.

What a great idea! Right? WRONG!

Try doing the math on this very bad idea. Any group of geographically related properties has a fairly low turn-over rate. Generally it is from 3-7%. That means that for every 100 homeowners you will speak with, three to seven will actually sell that home during the next twelve months. That means the average odds are 20 to 1 against you. You are better off in Las Vegas where it is close to even or 6 to 1 at worst.

Even the 3 to 7 sellers will not identify themselves, so you will never know. Many don't yet know themselves and the others have no reason to share that information with you. Why would they? You are a total stranger with a business card.

More math...

Let's say you want to take 10 listings per year. Then if the turnover is 5%, you need to greet a minimum of 200 people on a long term basis. Over and over again. You won't ever get much more than 20% of the listings in the area, no matter how many times you call on every person. That means you need to talk with 1000 homeowners in the same area every month. If you don't get 20%, say 10%, then you need to talk with 2000.

It is just not going to happen.

That is 66 people EVERY day, including Saturdays and Sundays. Or 100 every weekday. At 10 people per hour, that is 10 hours per day, Monday through Friday. If you annualize this work, it is 2400 hours per listing taken. Not counting the time it takes to service the listing.

Now let's hope all ten of those sell and close escrow, you've earned it.

Here's the math:
2000 homes X 5% turnover = 100 deals X 10% capture rate = 10 listings.
2000 homes X 12 months = 24,000 talks ÷ 10 per hour = 2400 hours per listing.

Should I Start NOW?

The economy is in a shambles, credit is tough, gas is really expensive, unemployment is up...

So why would you want to go into real estate now?

Interestingly enough, people who begin a career in the tough times are often those who maintain a successful career over the years, regardless of the economy.

There is always a reason not to start. But the real reason to start is because it is something you want to do. I offer you a quote from Goethe:

Whatever you can do, or dream you can, begin it.
Boldness has genius, power, and magic in it.

When times are easy, you learn to do the business the easy way. So when things change, as they have recently, you are helpless. As a result many people who started in the up-market years are presently stagnant. They are still doing all they did before, but it isn't working anymore.

When you start in the tough times, you will be forced to master the systems that work, you will not be able to cut corners and still "do all right." Once you learn and master techniques, business principles and systems that drive business in this market, you will be poised to have significant business when the market turns to a bull market.

So the short answer is YES! Now is a great time to start.

Which buyers are real?

Always at the top of every Realtor's mind is, "Is this a real buyer? Are they ready to buy now? Am I wasting my time?"

It is not an easy question to answer. The old saying, "if it walks and talks like a duck, it's a duck!" doesn't work in this case. Lots of people want to buy a house. Lots of them can pay for one. Lots of people are both. All of them will go looking at houses with you, in your car at $4 per gallon. Then they don't buy. You have wasted precious hours (and hours!) of time with them for nothing.

What's a rookie to do? Is there a real way to tell who is going to buy from those that just want to look?

There is a way to limit your losses, if not cut them completely. It is not complicated, but it is also difficult to do. It requires you to take a stand for how you want to work in this business and say NO. The basic steps are:

1. First have an in-depth conversation with all the buyers about their needs. Go well beyond the price, number of bedrooms and baths. Get them to talk at length about their emotional needs. What things mean to them at the heart level.
   


2. Get them to your trusted lender to get qualified by someone you trust. They may get their loan from anyone, but before you move forward with them, be sure they are qualified.
   


3. Find out, by asking pointedly, what would stop them from buying right now. What obstacles are in the way that need to be dealt with? Attorney or parental approval, down payment issues, credit issues, physical or job-related issues. Find them out first.
   


4. Talk through everything before you go out to pick a house. Stop using "showing" and start using "picking" a home. Make it clear that when you go out to pick a home, they are in the decision making stage, not information gathering and education stage. Get agreement that is your purpose in going out.
   


5. Go out with them to pick amongst no more than 5 properties. If they don't pick on of those, talk it over. Take responsibility if they don't pick one. You missed something. You choose the best of the available properties.

It is not complicated. However, it will take fortitude on your part. It is a lot easier to just take everyone out, driving them from home to home with no criteria for determining how you spend your time. You can HOPE one will finally buy.

Don't wait till it's too late

I recently read an article about the Ike hurricane disaster:

It seems the local authorities instigated a mandatory evacuation to protect citizens from the storm. Everyone was to get out of town. It also seems there were a few hold-outs who defied the order to leave. While Ike is blowing down buildings and flipping cars, one of those hold-outs called 911 with a request for rescue. The operator, who was probably in another city, calmly told the man that the evacuation was for a reason. There were no emergency services available. "What am I to do?" the man wailed. The operator told him to get a permanent marker and write his name, address and social security number on his arm. So his remains could be identified later.

In our Quantum S.E.L.L.™ training we present a principle called the Window of Opportunity. It describes how the opportunity to make changes in your life decreases as you get closer to the event itself. You may remember writing papers in high school. The longer you waited, the less chance you had to research, write and revise the end product. I suppose the man in the Ike story missed his window of opportunity as well.

Knowing which things to do
Systematically doing the important things
Getting skill in the important things

There is a window of opportunity in your real estate career. There are only so many days available to you become productive. At the end of those days either you will be broke, on the street flipping hamburgers, or you will be making a living in real estate. Every day that you resist or put off the things you need to do to build your client base is a window closing forever.

Starting Right Now...Make sure:

• You have a real COACH who knows how the game works and who is willing to push you to your limits. A person who coddles you is not your friend in this stage of your career. You need a tough love kind of person who is truly invested in your success. If you need to be loved, get a dog. A real coach is probably the most important thing you will have in your journey to success in real estate.Without a real coach holding you accountable, you will find yourself putting off the difficult and resisting the uncomfortable

• You get business development training. You need to develop business contacts who will buy or sell with you in the near future. Make sure you know where to meet a LOT of people who are probably going to buy or sell. This is not "farming," where the probability is very low (less than 3% right now.) It is holding open houses and making a positive impression and an appointment to get acquainted.

• You have the necessary communication skills to gain control of the buying and selling process. Your client must trust that you will provide powerful leadership in the process. That means you must demonstrate your concern for their interests above your own. You must be able to really hear what they want to do. You need skill in gentle interrogation. You must ask for an exclusive right to represent them in the future.

When you consider that 13 out of every 14 people who enter the real estate business have failed before they finish the second year, you need to be sure you have stacked the deck in your favor.

Why is new agent training so hard?

When we look at companies, large and small, all over the country we are appalled at how ineffective training is. The statistics don't vary much from city to city or state to state. Such a small percentage of people enter real estate and become productive enough to earn a living at it, I sometimes wonder why anyone would think of going into real estate in the first place.

What makes a person effective and productive in real estate is building a clientele. You need to create a pipeline of future business or you will just be another statistic. Nothing else matters much at all. Not contracts, not listing presentations, not understanding title issues. Business development is the ONLY thing that matters in the early stages.

Real estate companies don't want to spend resources on training new agents because the return on those resources is so small. Of course that becomes a death spiral dooming them to continuing the dismal results.

The problem is that successful agents themselves are the product of a training environment that is haphazard at best and non-existent at worst. There is nothing in their own background that prepares them to train the new agents. There is nothing in the background of managers and company directors that prepares them either.

So we end up with amateurs as trainers.

Realtors are expert Realtors, not expert business development trainers. While they would never attempt to work on their own automobile, they are willing to “train” other agents.

But they are a product of the “throw it against the wall and see if it sticks” school of real estate training. They have a specific system that works for them, which is peculiar to their own style and have no information or insight into anything else. If their system doesn’t work for you, you are toast. Often their success is based on simple longevity, having a long list of people they worked with in the past and who pass on referrals. That is clearly not going to work for a new agent.

It is as if they survived open heart surgery then go on to train others in the process!

Being at a big company is not the answer.
Being at a small company is not the answer.
Getting really good instruction in the contract is not the answer.

The moment you enter this business, you are in critical condition.

Finding professional business development training is the answer.

You need a specialist. You need a business-building expert.

What is the effect of the Market on a career in real estate

Bull vs. Bear
Buyer vs. Seller
What is the “Market?”

In the thirty years we have been consulting and working in the real estate industry, we have seen the “market” change…a LOT…and a lot of times.

In the late seventies, it was the interest rates. It soared again when rates came down. Then it dumped when speculators left for the dot com extravaganza. In the mid-nineties it soared again when speculators left the dot com in droves. Now it has declined yet again.

So whose market is it now?
What exactly is the “market?”
Should I start a real estate a real estate career now?

Well, it is always a buyers market. Just like with the stock market, it is the buyers who buy and in buying determine the market value of what is for sale. It is really the mood of the buyers that determines what kind of market it is. The terms buyer or seller market refers to who gets the greater advantage, not whose market it is.

When they are eager to buy and will pay almost anything to do so, the prices go up dramatically. Thus we call it a BULL Market. (Like bulls, these buyers are both aggressive and often mindless in their pursuit.)

On the other hand, when buyers are pessimistic about the future, afraid of what it will bring, they are more like bears; they hide out and hibernate, creating the BEAR market.

In a bull market, when buyers are eager to buy, they will do about anything to buy, even deal with marginally prepared agents. In a bull market sloppy practices will suffice to create a bit of income. In a bear market, you need to be talented, prepared and willing to do the hard work. Of course those qualities serve very well in a bull market as well.

Anyone who comes into the industry in a bear market must learn to work productively. Since you must be fully productive, manage your time, your clients and yourself, to the highest levels to succeed in a bear market you will be incredibly prepared to succeed when the bull market gets a turn.

If you are a real estate agent, what is your market? It really doesn’t matter what the broader market is doing. The market for the individual Realtor is not the 1 or 10 million people who live in your city. Your market is the people who know you. Maybe it’s a thousand. Maybe it’s only fifty.

If it is fifty, your immediate concern is getting more people to know you. You need a way to get in front of real buyers and sellers in a big hurry. We train our Journey to Mastery people in a technology called the Quantum Home Tour™ to facilitate meeting lots of buyers and sellers quickly.

If your market is a thousand people, then you have a large circle of influence. You need to maintain some kind of contact with them on a regular basis. You need to determine which are the 200 or so most likely to buy, sell or give you a referral within the next twelve months. Then your marketing efforts can be directed to that group: making regular personal, relationship-building contact with them.

Real Support Getting Started

SUPPORT

The dictionary defines it as

1. To bear the weight of, especially from below.
2. To hold in position so as to keep from falling, sinking, or slipping.
3. To be capable of bearing; withstand.
4. To keep from weakening or failing; strengthen.
5. To provide for or maintain, by supplying with necessities.

In your real estate career, you had better find out what support means to you…and quickly! In most real estate companies, support is only a notion, not a commitment.


Here is a quote from one of our program graduates, Terry R. in Orange County, CA

“I spent a year working at another real estate office and I had no support. I would ask the agents for help on how do to an Open House, and I would get the answer “Everyone does it their own way”. I would ask the seasoned agents if I could sit in with them at their open houses and was told no. So I would hold an open house, and pass out flyers, and not set appointments with people coming through. I wouldn’t even ask for their name or phone numbers!”

When your ability to succeed is completely dependent upon the support you get from your company, you might want to make support a top priority in selecting a company.

Most companies don’t want to support you because it costs a LOT. Since they know that only a small percentage really makes it, they aren’t will to pay for real support. Then, because they don’t provide the support you need, you fail. Sounds like Catch-22 doesn’t it? It is a vicious cycle and as a result 13 out of every 14 people who get into real estate fail…before they complete their second year!

Real support in your real estate career looks like in-depth training, field training, skill training showing you how to get in front of real buyers and sellers quickly and make appointments with them. Then the skill to communicate with people in a way that helps them understand their own needs.

Real support looks like having a leader who is dedicated and personally involved with making sure you are doing the right things…things that will get you paid and making a living.

Real support is a scientific system that is proven to direct your activities and drive your business for the rest of your career. A system that gets more productive the longer you use it.

When you choose one of our partner companies, you are guaranteed to get the support you really need.

Proven results (Think 60% success vs. 7% success!)

Professional managers and trainers.

Personal Marketing system

Coaching and Accountability

Classroom training

Field training

Costly Cutting Corners

Many years ago Doug, the founder of Quantum Management, inspired a team of us to climb Mount McKinley with him. It was an experience to remember forever. We were among the least prepared to make the climb of all the people who did that year. We were in average to above average fitness and had way less than average skill levels compared to the other climbers...so off we went anyway.

Eleven people died climbing McKinley that year. I'm not sure what percentage that is, but it is a lot higher than going for a hike in the woods. For eleven people, cutting corners was literally fatal. I don't know about all of them, but I do remember a Korean team and an Austrian team were among them. Both of these teams were well equipped to succeed, yet they failed in the worst way possible.

The Koreans made a summit attempt in very bad weather and did not make it. The Austrians brought their stove into the tent during a blizzard and the air vent closed up, asphyxiating them.

Other events were near misses, only terrifying, but not fatal. One of our team became fatigued and disoriented on the summit climb. Our lead guide told him to sit beside the trail and he would be picked up on the way back down. My cramp-on (teeth on the bottom of your boots to grip the hard snow) came off because of a faulty strap and I began a slide down the thousand foot slope.

Every one of these events were the result of shaving a corner, taking an "easier" path. And in each case there was a really good reason to do it. The Korean team was running out of time, fuel and food; the Austrians couldn't keep their stove lit in the blizzard; our lead guide wanted all of his guides to reach the summit; my outfitter took one look at me (older, red fingernails, red lipstick and a new snow suit) and knew I was never going to make it to the headwall. I and my team member were fortunate, our cut corners were not fatal.

WHAT DOES THIS HAVE TO DO WITH A REAL ESTATE CAREER!

Truth is you will not die from cutting corners in your real estate career. However, your CAREER might die. When you make decisions to do the easy thing instead of the really productive thing, you are making a decision to fail at real estate. Problem is, the easy thing makes your career that much harder. Every time.

The easy thing makes it take longer to get productive. Time is not on your side. Every day takes you closer to running out of time, money and the support of your family.

The really productive things often seem harder:

• Calling on by-owner sellers
• Calling on expired listings
• Asking for an appointment every time you meet a new prospect
• Calling your leads on a regular basis
• Staying in relationship with the people you have met on a very regular basis
• Demanding that your buyer prospects get qualified with your lender

...the list is long...

It has been said...Real estate is the lowest paid easy work...and the highest paid hard work.

-Sherry Pitcock
Senior Consultant, QMS

Patricia becomes a star

Because of our work around the country and a relationship with Real Data Strategies in Orange County, we keep pretty close tabs on what is going on in the real estate market and particularly what kinds of results real estate agents are having.

In the San Francisco bay area, there are over 25,000 agents in the MLS. More than half of them, some 54%, did NO transactions in 2007. NONE!

And only 11% did five or more.

What does that mean for new agents?

Actually, those statistics are not very far off the norm. It is not the market.

Let me tell you a story about Patricia.

She joined our Journey to Mastery™ at Ventura Barnett Properties in San Jose about a year ago. She did everything we asked her to do. If you asked her, she would tell you, "It is a LOT of work!" Patricia did the work, week after week. She got sick...and got right back to work. She has children that are demanding...and she got to work.

She spent one year with training and guidance, including holding Quantum Home Tours™ week in and week out. Not just any weekend, but including New Years eve, Superbowl Sunday, Easter and Mother's Day.

She kept in contact with her leads in the prescribed way...Learned and practiced her skills at communication, marketing, business development planning...and at the end has done six transactions with more on the way.

That means that after one year, she is now in the top 11% of the Realtor population in the SF bay.

She also says she gained by "being confident in knowing what to do in so many situations. Being able to walk away from a deal because its not MY STANDARD and mostly enjoying the business so much more and finishing something I committed to do."

Quite an accomplishment.

Success is not Accidental. Contact one of our Journey to Mastery™ companies.

Sherry Pitcock
Quantum Management Systems.

REAL facts about floor time.

For those of you who don't know me, I have been a consultant, trainer and owner/operator and in the real estate industry for some 30 years. I have demonstrated to thousands of brokers and owners over that period the proof * of what I am going to tell you.

Floor time is the real estate industry's way of not spending money on answering the phone or spending money on call centers and receptionists. In studies I have conducted over and over and easily demonstrate, the consumer is asked for an appointment about 2% of the time. That means out of 100 consumers calling in response to ads and signs, about 2 are ever even asked for an appointment. When they see the property it is primarily because THEY (the consumer) asks the agent for an appointment.

No one in this business really trains agents to manage the phone and ask for the appointment. 82%...yes EIGHTY TWO PERCENT! of the consumers calling in on the phone are going to do something real estate related in 6-9 months. Approximately 20% to 30% are going to buy or sell now.

In the last market study I was involved in, (Chicago) it was actually 18.8%. The rest (about 80%) are seeking information as part of the early buying/selling cycle.

The inbound call frequency, does not usually justify the return on time invested (ROTI) when tested against other types of prospecting activities. Many others have far greater return. The ultimate test of ROTI is exclusively a function of inbound frequency, which is a function of the local market . So, traditionally, good producing agents don't take or want floor time and they are right. That leaves marginal producing agents answering the phone and generally doing a very poor job.

A close examination of agents who claim their production is from the floor generally shows that is not the case (unless they are marginal and that is the only business they have.)

We had one agent that was given over 75 leads from our call center and did only 13 transactions...another agent was given 27 leads and did 23 transactions. So it is clearly a matter of skill and training.

Production results from capture and competence. Floor time is extraordinarily rich source of leads, but very sporadic and sparse over time. That means every contact is worth meeting if you can. If you stay in touch for 6-9 months they have a very high ROTI. But that is not the time you spent on the floor! It is the time you spend in touch with them over time.

Bottom line...Floor time is good for capture, but bad for the agent to spend time trying!

Open houses are a very close second in density of leads. But having 3-5 people showing up and making no appointments makes them a waste of time too. At some point, inbound call centers may be the future of this business. It serves the agents interest, and serves the clients needs.

If you are intending to develop real business, both short term and long term, the real issue for you will be your own capture rate. If you are not capable of making appointments with 60% or more of the people at your open house or floor time, you will struggle to develop business.

Capture rate is everything when it comes to building your business!

*Any one who would like to challenge these facts may contact me and I will be happy to provide you with empirical documentation and you can prove this yourself.

Who is (and isn't ) making money in this real estate market?

People ask us, "What am I doing wrong?
I made money and did lots of transactions last year, but this year I am really struggling."

Because of our Journey to Mastery™ and other consulting, we have some insight into what is working and what is not.

What is NOT working is business as usual.
Almost 80% of the working Realtors started less than 10 years ago. That means they have only experienced the constantly rising, seller's market of the late 90's through 2007. They developed skills and habits based on the realties of that kind of market.

• They "farmed," meaning they sent postcards to a geographic area on regular basis, usually once each month or every other month.
• They sent out "Just Listed" and "Just Sold" postcards.
• They decided they were Listing Agents and ignored buyers who did not want to buy their listings.
  
• They advertised in the local newspapers and Homes magazines.
  They worked to "Get my name out there."
  
• They waited for their past clients to call them with referrals.
  

In other words, they used a passive and accidental approach to business development.

Who is making money today?

People who are proactive. People who are DOING the things that drive business to them.

• They are holding open houses and asking for appointments with every person who comes in.
  
• They are staying in touch with every person who makes any indication that real estate buying is in their future.
  
• They call every past client they have on a very regular basis to ask about referrals.
  
• They refuse to take listings except with people with a real commitment to sell.
  
• They work with buyers who are ready and able to buy right now.
  
• They keep in contact and nurture the needs of buyer (and sellers) who are going to be ready in the future.
  
• They work ONLY with people who are committed to work exclusively with them.
  

Visit our websites:

JourneyToMastery.com

NewLicenseTraining.com

Recruit2Coaching.com