Build Your Real Estate Business Fast by Making Contacts

Written by Posted On Tuesday, 17 May 2005 17:00

Whenever I'm talking to new agents, one of the first things they ask me is "What's the easiest and most profitable way to get my business up and running fast?"

With all the options available to them -- direct mail, cold calling and networking -- which is the best way to build their business?

Great question.

Let's take a look at some of the economics behind each option and see what turns up.

With direct mail we're talking about anything you physically mail out to someone, and the United States Post Office charges you $.37 in postage for that privilege.

If you have a really good piece -- something that stands out from all the other mailbox clutter prospects face daily -- then you can expect a response rate of about one to two percent.

So let's say you've mailed out 100 pieces to your local farm area. You've got $37 for postage (100 x $.37), another $7 for copies of the letter (100 x $.07) and an additional two to three hours of your time stuffing envelopes. All of this in hopes that one or two people show an interest in your new real estate career.

If you try cold calling, the results may be a little bit better. As an example, let's say you're calling on expired listings. Here's what one can expect.

You make 15 calls an hour. After voicemail and no answers, you'll get into contact with about half of them. The only problem is that with the people you do actually to talk to, most are "not interested" or they may hang up. How do you usually respond to an unsolicited sales call? I though so.

After that, let's say you're really good, and manage to book a couple of appointments with the people you actually talk to. Those individuals have now become "leads," which means you go to the appointment, handle it appropriately, and hopefully get some business. And let's not forget the cost of the "list" itself, in this case the expired listings, which will run anywhere from $50 to $100 a month depending on what service you use, and how many counties you want.

And then last, but certainly not least, you've got networking. With networking we're talking about physically meeting new people on a face-to-face basis, at events like the Chamber of Commerce meetings, Rotary Club and places like that.

In terms of cost, it's really quite simple. You have the $20 or so for lunch or breakfast (which these meetings are usually centered around), plus the two hours of your time to get there, network and get back to the office.

So let's do a quick recap:

Direct Mail: $44 (per 100 pieces) plus 3 hours to stuff envelopes
Cold Calling: $75/month, plus 3 hours to book a few appointments
Networking: $20 plus 2 hours to meet a bunch of new potential clients

I don't know about you, but networking seems to be the clear winner. Not only do you spend less time and money meeting new prospects, but it's an easier skill to learn than say writing "show stopping" direct mail copy or handling rejection after rejection while making cold calls.

So what's the catch?

Just one. Networking isn't something that's going to provide an immediate benefit, the minute you step foot into the event. In other words, you'll rarely run into a prospect who's ready to buy or sell their home right now.

Which is why most Realtors don't attend.

But notice the language: You'll rarely run into someone who's ready to buy or sell their house right now. That doesn't mean they won't be ready to do so in the future.

According the latest numbers from NAR, the average American moves every five to six years. Meaning it's not a matter of if that person is going to move, but when. Which means the more new people you meet, and stay in touch with, the more business you'll get over a relatively short period of time.

Bottom line: Networking really is the easiest and most cost effective way to get new business, since it leverages skills just about every new agent has... talking and meeting with people.

So why not use that skill in your new career and build your business into a runaway success?

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