Coaches Corner Newsletter - Issue #965
 
January 17th, 2020
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Words of a Champion...

The most important day you can spend this year is the day you spend reviewing the year.  Too often we forget to review our past experiences.  To be truly successful, we have to invest what we have learned into our future.  By making this wise investment we increase the speed that we travel to achieve greater success.

My late friend, Jim Rohn, says you are either going to lead a life that is an example or a life that says, “warning”.  The difference between those two diametrically opposed lives is the time you reflect on your actions, results and outcomes of your efforts.

It is impossible to lead a mistake free, error free life.  Successful people don’t make fewer mistakes, they merely learn more from the mistakes they make and learn quicker.  They take the error and transform it into a new action.

It’s impossible to create new actions and new activities without reviewing what has been done and your progress.  With the New Year beginning to take full swing, don’t take another step without looking back and retracing your steps that you have taken to get where you are standing right now!  The truth is, if ignorance paid huge dividends, most people would be enormously wealthy because they never took the time to review and evaluate.  I encourage you to review the area of your finances first.

One key area of your finances that must be reviewed at this time is analyzing your expenses.  I was on too many panels as an agent for years and now meet too many people that have a large gross income and very little net income.  The worst part is they don’t even know it.  Most agents have little idea what they spend to fund their business and fund their life.  Take time to review and analyze what your expenses are in your business and life.

Let me give you a process to increase your net profit:

  1. Analyze your expenses for the last year.

    Take a look at each category on your profit and loss statement.  Take a look at the average you spend monthly in each category.  If you really want control, establish a monthly budget for each of the categories.  This will allow you to see where you might be prone to overspend in the future.  Establish the habit of reviewing budget verses actual expenses at least quarterly.

  2. Establish a goal of what you want to save annually.

    Saving money is an acquired, or learned, skill. Anyone can learn the skill if they establish a system to work within.  One system would be to take your annual savings number and break it down to a monthly figure.  For most salespeople, I recommend taking this process one step further.  Calculate out what the monthly amount would be per commission check based on your average commission amount per month.  This will give you an amount per commission check that needs to be saved.  The real secret to financial wealth is to pay yourself first.  I heard that for a few years and never really knew what it meant.  What it really means is, pay your savings first before you pay all other bills.  If you have to forgo all your other bills and only pay your savings debt – do it.  Make your payment to savings the most important one monthly that you pay.

Reviewing your finances, expenses and activities can be the most important time you spend all year.  Take the time to invest your past for a grander future.

To Your Success,

Dirk Zeller

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Know the Purpose of Your Presentation
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A quality listing presentation involves considerable advance planning, careful research and analysis, and highly developed presentation and sales skills.  This allows you to derive maximum impact from the minimal time you have to present yourself and your recommendations, close the deal, and obtain signatures on a listing agreement.

Your advance planning takes two forms.  First you need to qualify your prospects – determining not only their desires and expectations but also their ability to make the buying or selling decision and complete the purchase transaction.

The other essential ingredient in a listing presentation is a competitive market analysis (CMA) along with a presentation that displays the full complement of your sales skills and abilities and helps you win your prospect’s confidence and secure their listing.

Knowing the purpose of your presentation

Be crystal-clear on this point.  The objective of a listing presentation is to secure a signed listing agreement before the meeting ends. It’s not to pave the way for a “be-back” listing, where you plan to return at a later date to handle paperwork and secure final prospect approval. Your purpose is to make your case, close the deal, and get ink on the paper right then and there while you’re face-to-face with your prospects. If you don’t, I guarantee the odds of securing the listing start to swing away from you.

If you let even a few days or a week slip by, your prospects will have a hard time separating your presentation from other agents who they met in the meantime. And the moment they lose sight of your distinguishing attributes, they’ll revert to a commodity mindset by focusing on price and selecting an agent based on who offered the lowest commission or the highest list price.

I’ve personally made over a thousand listing presentations, and I’ve coached and listened to the presentations of hundreds of other agents. I am totally convinced that a quality listing presentation can and must result in a signed contract at the presentation.

These are two reasons you need to get the listing signed during the presentation: 

  1. The moment you leave the appointment, anything can happen. A buyer could appear out of nowhere, knocking on your prospect’s door with a direct offer. An agent who interviewed your prospect a few days ago could be desperate enough to call with an offer to cut their fee by another percent. At Rotary or church or a chamber of commerce meeting, your prospect could meet another agent. Or, after-the-fact, they could begin to confuse you for a different agent whose presentation they didn’t like at all. The list of “coulds” goes on and on. The only thing you know for sure is that if you don’t get the signed listing at the appointment, you leave it up for grabs and vulnerable. 

  2. You need to feel the win. The win in the listing game is when the contract is signed. Don’t underestimate the power of that personal victory. Selling involves the risk of rejection. If it didn’t, it would be called order taking, and you wouldn’t be paid so well because it would be so easy. A listing presentation gives you the chance to go for the win, perfect your close, and attain the victory. Give yourself the satisfaction and adrenaline rush of walking out of the home with a signed contract. Your drive home will be the shortest ever known. If you don’t get it signed, it will be the longest few minutes you’ve ever known.

I have an incredible coaching client who sells homes on Long Island. She is a listing machine in her market area. She takes over 125 listings a year. Yet a while back, when we tracked the numbers she was closing on the night of the appointment, we found her close rate was less than 40%.

This finding got her focused on the uncompensated time she was spending on second meetings with listing prospects. It also made her think about how many listings were lost following the first meeting. A month later, her closing figures had changed dramatically. With a new resolve to get the contract closed on the night of the appointment, she skyrocketed her closing rate to over 70%.

Again, be crystal-clear.  Know your objective of your listing presentation.  It is to secure a signed listing agreement before you walk out that door.  Don’t leave your business to chance – take control and watch your closing rate skyrocket!

 
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Real Estate Sales is An Odds Based Business
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As salespeople, we operate in a game of odds and probabilities.  Being deliberate in knowing the odds and improving them is what a Champion does.  We must be able to balance the odds of the marketplace, the odds of the prospect, the odds of creating a delighted client, the odds of expending our resources, the odds of a higher return, and the odds of our time.  All of these odds have to be evaluated and factored into our decisions.

Casinos earn large returns for the owners.  The reason is they play the odds in their favor . . . always.  They don’t do it sometimes; they do it always.  There is not a game in any casino in the world where the odds are against the house . . . not one game!  Some games, like blackjack, are more favorable with a higher probability of winning than roulette.  The odds are still less than 50/50 for the player, though.  The casinos know that, if you sit there long enough and frequently enough, even if you win in the short run, you won’t win in the long run.  It is certainly better when you are the house.  How do we become the house in the business of real estate?  The first step is to understand the aforementioned odds by tracking and analyzing the odds of the marketplace, the odds of your skills, and the odds of the prospect.

Champion Rule:  Wants and needs don’t change the odds.

Too often, we believe that if we want or need something, that fact will swing the odds in our favor.  I would have loved to play professional basketball.  I really wanted to be a power forward, like Maurice Lucas, Karl Malone, or Buck Williams.  At 5’11” when I graduated high school, the odds were heavily against me.  Even after I grew another four inches before I started college, the odds were extremely long.  How many 6’3” power forwards have there been in the last thirty years in the NBA? NONE!

If a seller says to you, “You don’t understand my problem.  I really need to net $100,000 from the sale of my home, so we need to list the home for $350,000 to net that amount”, and you know that the house needs to be at $299,000 to get a buyer for the property, does the seller’s need to net $100,000 change the value and sales price of the home?  What are the odds of finding a buyer who is willing to pay this seller a $50,000 premium for their home because they are nice, and the seller really needs it? ZERO!

We, as salespeople and entrepreneurial business owners, must play the odds.  The better application of odds leads to better income, results, and time off with our families.  When we are, in effect, playing the odds, we can still make a lot of money, but it will cost us more time than is necessary.  When I see agents working six or seven days a week, it tells me they are ineffective at evaluating and playing the odds.  It tells me that there is a lot of wasted time and emotion in their business model.  This correlates to lower than necessary hourly rates for what they do based on their skill, lead volume, market presence, and experience.

One of my key objectives, when I work with anyone in a coaching and consulting capacity, is to double their hourly rate in the first few months of working with them.  Your hourly rate directly connects to how well you are doing and will be doing in a sales business.  It also demonstrates the odds of your business and how well you play those odds.  Your value per hour is a critical computation and number of success.  I describe it as one of the six key numbers in a real estate agent’s practice.  The hourly rate is like when your doctor takes your pulse.  It is the pulse rate of your business.

To calculate your hourly rate, take your gross commission income for the last twelve months and write it in the blank provided below.  Your gross commission income is what you make before expenses or company split.  You created the gross revenue, so use that number.  Your split is really a cost of sale, not a cost of your time value.  Then take the number of hours you work in a day, on average, and write that in the space provided.  Then estimate the days you work per week and weeks you work per year.  Multiply all of those work hours, days, and weeks together to get the total hours worked.  Then divide your total hours worked by the gross commission income.

The goal is to double the number you just wrote down in the next six months.  If you double your hourly rate, you have dramatically more options in life.

You can work the same number of hours and make twice as much money as you normally would, or you can cut your hours in half and make the same as you were making before.  Most agents choose neither of these options.  They usually choose a combination of more income and better quality of life.  The best news is, you can choose now, where before you had no choice.  Champion Agents continually raise their hourly rate through improvement of their skills, knowledge, attitude, activities, and the odds of the business.

Champion Rule:  Consistent commitment of effort and consistent commitment of resources will change the odds.

A true Champion Agent is an agent of consistency.  They consistently do the activities that generate high profit margin revenue for their company.  They consistently prospect, do lead follow-up, and book appointments.  They operate in a world of consistency.  They consistently engage in self-improvement, listening to CDs, attending seminars to learn, or coaching.  They consistently evaluate the financial performance of their company and their personal assets.  They consistently engage in health-related activities like working out and monitoring their eating habits.  One of the characteristics of Champion Performers is consistency.  Most people are too inconsistent to be of Champion caliber.

Let me illustrate the power of consistency.  You decide to lose ten pounds, and in order to lose those ten pounds, you need to move your body sixty miles.  You are now faced with a choice of odds.  You could decide to go all out for three days and get it all over with by going twenty grueling miles each day to reach your goal.  You could also run one mile a day for sixty days.  Which of these approaches would increase the odds of your success in losing the weight?  The answer is obvious to us all.  The binge approach with little consistency would leave us far short of the ten-pound weight loss.  If we eat reasonably and exercise over the sixty days, we could achieve our goal.

The same is true in our sales business.  To go out and make fifty contacts today, to binge and get it over with, rarely works.  A Champion has developed the skill and discipline to invest in success producing activities like prospecting and lead follow-up daily.  A Champion Agent doesn’t binge in this area . . . ever!  They have learned to control their environment, schedule, access points, and emotion to engage in success producing activities every day of their working life.  The consistency of activity is the key.  That is true of everything in life.

 
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Why Prospects Object to Your Commission Rate
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There are two reasons for objections to your commission rate, and it isn't the fact that other agents are doing it.  The two reasons are:  we haven't established value for our service, and the seller or buyer has a fear that we haven't addressed properly to remove it.

These fears are real and must be conquered before you can secure a representation contract from a buyer or seller.

  1. Fear of making the wrong decision

    You must probe to understand the root of this fear.  It could be a previous bad experience with a real estate agent.  It could also be that they feel the need to talk with parents or friends.  They may feel the need to seek more counsel before they give you their final answer.

    A commission reduction, even if they ask for it, will not alleviate this fear.  They still won't sign unless you deal with the "wrong decision" fear.  Having an understanding of that fear and giving them reassurances that you will protect them to make sure their fear will never be realized handles it for most people.

  2. Fear of making any decision

    Some people are paralyzed by decisions.  They brood, steam, and toss and turn all night about decisions.  The perceived risk is significant.  You have to lower the risk in their mind.  An easy exit listing agreement where they can void the listing quickly will provide more relief than fee reduction, even if they asked for it.

    These people want to think about it.  We need to find out what they need to think about.  In order to secure them as clients, you have to isolate the fear and walk them through the situations and challenges that come to mind, overcoming each one.

  3. Fear of change

    A commission reduction really won't help with these people, either.  We often try to motivate them based on the monetary deal.  We have to sell the benefits of change.  Identify the worst case situation to prove to them that there is a limited down side.  A personal assurance of the next steps and the protection and security you are offering will work well. 

    You might even build a sense of urgency based on the marketplace, interest rates, or through the fear of loss.  Convince them that the window of opportunity is open now and might not be as favorable a few months down the road.

  4. Fear of being cheated

    For some people, this one can take aim at your fees for service.  We must build value for our service to show that, because of our skills and strategy, they will end up with a high sales price, more potential buyers through their home, a higher probability of a sale, better negotiations, and a smoother transaction with less risk.  Because they are receiving all of those items, the value is enhanced, so the fees don't need to be less.

    We have to demonstrate clearly that, even though they are paying more, they are getting more value. 

  5. Fear of looking bad to others

    Most people want social acceptance by others.  Other friends and neighbors will talk about how they grinded on an agent to reduce their fee.  It's like a badge of honor in the community.  There are some people who use it as the real litmus test to make decisions because the social recognition is so important.  The way to combat this is, again, with value.

    I see that behavior exhibited in agents, as well.  Agents who crave recognition and status often make poor business decisions just so they can receive a plaque or walk across the stage at the company awards banquet.

  6. Fear of acting without sufficient knowledge or reflection

    Too often, agents attack this problem with fee reductions, trying to create a decision now.  The best defense for this fear is a good offense.  Know how they typically make decisions of this magnitude.  What is their decision process?  Know the timing of when they want to buy or sell.  Some of selling is being in front of the prospect at the right time.  There is no substitute for correct timing of your presentation.

All of these fears are born out of a heightened feeling of risk.  They are really not commission based concerns.  We have not dealt effectively with the risk they feel toward working with you or any agent.  Focus on assuming the risk yourself or removing it.  Then, give them strong reassurances that they are making the right decision, and they should make it now.  Don't concentrate on your cost of service; focus on reassurance and work to pinpoint the client's fears and remove them.

 
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