In the movie Ace Ventura: Pet Detective, Ace is walking down the street and yells, "Got a package people!" In the real estate business we can say, "Got an opportunity people."
We are all in the same boat. The market stinks and the economic news keeps getting worse. You can argue it's perception vs. reality all you want, but perception drives what people do. As the public perceives the economy as bad and getting worse, they cut back if not stop on discretionary spending – like houses. Sellers are caught in a virtually nonexistent market.
As real estate agents, companies, owners, this is our opportunity. It is time to change how we do business, and the best time for change is when it is absolutely required -- we're there.
It is time, and the timing is optimal, to change how we do business. First, a brief history.
- We have hired agents based on the "fog" test. If they can fog a mirror, we hire them;
- Training: "Here's your desk, here's a phone book. Go get 'em."
- Retention: "I like Joe; he doesn't do any business, but he's fun to have in the office."
- Fees: We do way too much for free, we've become prostitutes – guess that's really not fair because even hookers charge a fee.
- Our reputation generally ranks down there with Congress and car salesmen.
I've always admired, or rather I guess envied, attorneys. You can't even call one without them putting you "on the clock" when they answer the phone and charge you for the conversation! What a deal.
Henry Ford once said, "You can take my factories, burn my buildings, but give me my people and I will build the business right back again." Our people, your agents, are your lifeblood. Your first client is not the buying and selling public, it's your agents. They bring you the business, they bring you your reputation -- company name and image may help -- but people do business with people they know, like, and trust. In real estate they do not care what company an agent is with, they do business with that agent for the reasons in the preceding sentence. Your people bring economic value to your company.
Every organization's major asset is its people. If an organization focuses on quality, productivity will improve due to less waste and time spent on rework. As productivity improves, costs will decrease which can result in a pricing strategy that will increase market share. If share is increased, it will allow an organization to remain in business, and finally produce a return on investment. Therefore, focusing on quality is a growth strategy.
What we must do:
- Take a long, hard look at your agents – you already know which ones you shouldn't keep, so why are they still there? Pare your sales force down to the best producers;
- Stop working for free. My best friend has been a commercial Realtor for the past 25+ years and he made an interesting comment the other day, "I'm not working for free any more, if someone wants me to do something, I'm charging them for it."
He recently did some research for two different parties and he sent them invoices -- in the $200 to $500 range -- and they paid him! People expect to pay for good, professional service. Now, $200 to $500 may not sound like a lot, but it's $200 to $500 you didn't have yesterday. My point is – why are we doing all this work for nothing and sharing our hard-earned, and expensive, education and expertise for free? No other profession does it;
- Marketing. What's working and what isn't? Can you track return on investment for each of your marketing programs? Studies have shown, for example, that real estate newspaper classified advertising has about a 2% return on investment when advertising listings – a colossal waste of money. If you're going to advertise in the newspaper, advertise your agents with pictures – remember, your agents are the ones who bring in the business;
- Agent tools. Do you provide individual websites for your agents? Probably yes, but do you help them set up an effective site? Probably no. Sit your IT guy down with each agent individually and custom-design each agent's web site and teach them how to use it and how to track results, check for customers, etc.;
- Can we lower fees and still make money? Absolutely. In my area, years ago, 7% commission was the norm. Over time that has eroded until now it's closer to 5%, for several reasons:
- "Cut-rate" companies opened. Say what you will, the public used them;
- Competition became intense. The public knew it and used it as leverage to demand lower fees – and in way too many cases the agents "caved" because they thought they had to;
- Agents became, and are, desperate for business.
The Game Plan:
Pare your sales force to those who will produce, in any market, because they have the drive and stamina to succeed;
Re-evaluate your marketing program. What's working and what isn't; 3) Charge for your company's and agent's services -- regardless of what it is;
Give your agents only the tools that work;
Re-evaluate your fee structure.
If you don't know how to do the above, hire someone who does. Money well spent, an investment that will bring a return.
Published: November 5, 2008
Use of this article without permission is a violation of federal copyright laws.
 Mark McCloud is the owner of McCloud Seminars, a sales and management training/consulting company. He has over thirty-five years experience in real estate sales, marketing, management and providing educational services.
He holds the professional designations of ABR, BA, CREI, CRRS, GRI, MMDP and was awarded the Outstanding Professionalism Award. He is a published author and public speaker, recognized for his insight and common-sense approach.
He is available for training, consulting, and public speaking engagements.
He can be reached at: 360/281-2086, .
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