In This Issue...

• Words from the President
• Comparing Different Types of Agencies - Which Is Best For You?
• Profits . . . More Elusive Than . . . - Than You Think!
• The Lead Agent’s Primary Job - For A Successful Team!

Words from the President

Thanks for joining me today on your journey toward success as a Real Estate Agent.

The three areas that we'll focus our time on today are Comparing Different Types of Agencies, Profits, and The Lead Agent’s Primary Job. Any of these articles could help you change your life in 2007 if you'll read, absorb, and use the information.

Before you get started, I'd like to take a moment and highlight one small change to Coaches Corner™ that we've made. This will likely carry on through out this year. We're increasing our article content by 33% by adding another article to the newsletter.

Why the change?...you might ask.

Well, there's been a lot of buzz in the industry over the last several weeks about Real Estate Teams. One thing you may not be aware of is that we here at Real Estate Champions, Inc have been coaching clients to build Real Estate Teams since 1998.

We've coached them on how to build them (sometimes from scratch), grow them, sell them, and how to use them as a path to retirement. So, we've got more than enough experience in this area to be called an authority on real estate teams.

Also, I've recently contracted with McGraw-Hill to publish a new book, "The Champion Real Estate Team" (due out Fall 2007). I'm actually wrapping it up right now and will be submitting it to the editor shortly.

In an effort to help meet the need for information regarding building a Real Estate Team, I've instructed my team to 1) assemble a pre-release version of a chapter out of my new book as the "The Champion Real Estate Team Guide" and 2) begin releasing article excerpts from the book here in Coaches Corner™. You can get an instant download of the guide here.

I hope that you'll invest a few minutes of your life with me today and that the information you gain from Coaches Corner™ proves to be a blessing to you and your career.

To your achievement of success in life,

"Swanepoel Real Estate
Trends Report"

During the past year, the real estate industry has experienced unprecedented change and significant innovation. You’ve no doubt experienced it first hand.

The key to being successful in real estate, or any other career for that matter, is staying apprised of the trends in your industry. If you can see where things are heading, you can utilize new opportunities before your competition.

• Beating your competition to the next wave of opportunities
• Avoiding fads that could set your business back years
• Gaining valuable insights about revealing strategies you can use right now

Learn More Here

Comparing Different Types of Agencies - Which Is Best For You?

Most agents, whether new or experienced, don’t invest enough time evaluating and analyzing companies, owners, and key managers before they commit to a real estate firm.

Real estate firms come in five basic varieties. The following sections look at the differences between large firms with more than 200 active real estate agents, small firms with 20 to 200 agents, and boutique firms, which range anywhere in size from a single broker to a staff of about 20 agents. Within the variously sized firms, you can opt to work for an independent company based in your regional or local market area or for a franchised operation, which is the choice of most U.S. agents.

Signing on with a large firm comes with a list of built-in advantages and a few challenges to watch for:

• Large firms usually dominate their markets. Because they employ the greatest number of agents, they generally win the greatest share of the market’s business. It’s hard for smaller firms to beat the name recognition and market position that results from the sheer mass of agents working for the largest firms.

• Joining a large firm usually means joining a company with a long history and good reputation in your market area. It takes years of successful operation and steady growth to become the company with the most agents.

• The challenge with a large firm is that you can get lost in the crowd.  You might receive excellent training for the first weeks while you’re getting up and running, but with hundreds of agents vying for your manager’s attention, you might get lost in the shuffle later when you need help the most.

This company category spans the gamut from a few dozen to a few hundred agents, with few one-size-fits-all truths applying across the board. To select the right small firm for you, consider the following points:

• Learn the company’s long-term vision. When you join a large firm, the vision is obvious: It’s to recruit and retain more agents to protect the existing market position. When it comes to small firms, though, some aspire to become large firms and some are happy where they are and want to stay there. Before joining, learn where the owners and executives want to take the company and be sure that’s where you want to go.

• Learn the niche the small firm fills. Most successful small firms exist in small- to medium-sized marketplaces where they present a unique offering. They might specialize in a certain type of property or a certain geographic area, for instance. Some small firms are comprised predominantly of experienced agents who work on a higher commission structure in return for a lower level of company service. Obviously, this model is not effective for a new agent.

With fewer than 20 agents, boutique firms are very exclusive. They usually revolve around a single veteran broker and are even more specialized and niche-oriented than small firms. Often, they cater to the higher segments of the price range in a marketplace.

Unless you are invited to work under the principle broker or the firm has an outstanding training program, they are rarely a good fit for a newer agent.

Independently owned real estate firms that are headquartered in and focused upon their local markets are becoming rare. Thirty-some years ago, they dominated the real estate arena – started by entrepreneurs who want to create their own businesses from the ground up. Today, nationally known, brand-name companies outnumber independent firms. Most that continue to exist are boutique companies serving specialty or niche markets.

Most of the brand names you recognize in real estate – Century 21, Coldwell Banker, RE/MAX, ERA, Prudential, Keller Williams, and GMAC – are firms that franchise their systems, marketing, training, and operational procedures in return for an initial fee and ongoing payments. A local office, owned and operated by an individual or a small group, is granted permission to operate under the brand name in return for a fee. The fee, which usually equals around 6% of the gross sales commission on every transaction, provides the franchising firm’s major stream of revenue.

Expect vast differences in business practices between franchise offices that carry the same national brand name, even within the same local market area. Each one is owned and operated differently. Before signing on with a franchise office, do your homework and weigh your agency options.

If you'd like more help with choosing the right agency for you, see chapter 3 in my book "Success as a Real Estate Agent for Dummies^®"... check it out here.

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Profits . . . More Elusive Than . . . - Than You Think!

While I have been coaching, teaching, and observing many Agents over the years, I have noticed that few Agents tell success stories about how profitable their business is.  They often have success stories to tell about sales volume, units sold, plaques, awards, and recognition but not profitability.  They become caught up in the company recognition system and for years lose all sight of the true function of a business.  The true function is to turn a profit, but the thought of selling one more house to pay for this new service or that new marketing idea seems to be the pervasive way of thinking.  This mental philosophy leads Agents down the slippery slope of financial destruction.  This philosophical flaw does not happen overnight, or even in a few months, or sometimes not in a few years.  Never the less it will surely reach them eventually, just as eating high fat foods and not exercising regularly leads to arteriosclerosis.  For some, they may not have a heart attack overnight, but they are heading that way on the fast track.

In order to keep your business directed toward turning a profit, you must examine return on investment.  You want to evaluate all expenditures based on the return you will receive from the dollars you have spent.  Most companies are not looking for a one-for-one type of exchange.  In other words, they do not want to spend a dollar to make a dollar.  You must not be satisfied with this type of exchange either.  In a one-for-one exchange you lose money.  Let me repeat, in a one-for-one exchange you lose money.  It does not matter what the “it” is; you will lose.  The reason is you have not factored in all the costs. 

Agents have a tendency to see that ad they ran on Sunday as the cost of the ad, $75 or $100.  They do not view the true cost of that ad.  By true cost I mean all the components of the cost.  They have the cost of the ad; let’s say $100.  They have the time and energy to produce the ad.  Their assistant does it or they do it, but they still have to review the ad.  No matter how big or small the task, they need to block a minimum of five minutes.  

I will give you an example from my own experience.  Suppose it took 15 minutes for my assistant to write the ad.  She was paid $15 per hour, which is $3.75.  I had to review it and make corrections, which took five minutes.  Since I made approximately $350 per hour when I was selling real estate, which is $30.  Then she had to correct the ad, reprint, and send the ad to the newspaper, which took another 15 minutes, or $3.75 more.  I could also factor in office equipment, computers, paper, and list goes on and on.  Those costs, in some cases, can be significant.  In this example I will not factor those into the overall costs.  Through this example, I had already invested $137.50 into this ad. 

When Sunday rolled around, I received ten calls on this ad.  Each one took me away from what I was doing when I answered the call: my family, open house, or buyers.  You get the idea.  The Sunday calls took 50 minutes of my time or $290.  I had invested $427.50 so far for this ad.

If I set one appointment to show the property that is another hour invested.  I had to drive to and from the appointment and show the home.  In addition I had to spend extra time on the phone to qualify and confirm the appointment before I met the prospects.  I also called my lender or theirs to make sure they could qualify for a loan before I invested my time.  I had invested at least another hour into this client, so there is another $350.  I have now paid $777.50 for the cost of one ad and one showing. 

I realize that I would receive a good return on my investment if I got the home sold to these people.  But if I have to go through ten ads and ten showings and then finally have to accept a co-op sale, unless I am getting a very high commission dollar there is no profit.  I have earned wages, but no profit.

Here is the painful part, as if the first few paragraphs were not bad enough.  In most states in this nation, in order to pay the state income tax plus the federal tax, you need to make close to $1.50 to make a dollar.  When you spend a dollar, you have to bring in $1.50 in revenue to actually get that dollar back.  In the case of the ad, even if we do not factor my time at all, I have spent $100 to the newspaper and $7.50 in staff expenses.  I also had payroll taxes, FICA and workmen’s comp.  I will not deal with these items specifically but purpose of our discussion you must understand they are an additional expense.  I had $107.50 hard costs into the ad.  I need $161.25 in actual dollars of revenue to cover the ad and the taxes I would pay for parting with my money.

Large successful companies think this way; they focus on return of time and dollars invested.  Maintaining this focus is how they got to be large and successful.  They did not get there by accident.  They thought their way to that place of prominence.  If you wish to be equally successfully, you must do the same.

The other thing they do effectively is to track their dollars well.  They have extensive Profit and Loss statements.  You must run Profit and Loss statements monthly.  You need to be able to track your expenditures and your revenues at all times.  Casinos in Las Vegas do Profit and Loss statements hourly.  Because millions of dollars are changing hands they need to know exactly where they are and how they are doing that frequently.  You do not need that kind of detail, but you do need to know where you are at any given time, income versus expenses. 

The only way to adjust your expenses down is to know what they are.  If you do not know them and track them how can you adjust them?  You can adjust them via the slash, or crisis system, but you will have yo-yo income and yo-yo staff.  You have to reduce expenses methodically according to a plan.

I have looked at many Agents’ Profit and Loss statements and found that most Agents could trim at least 15% off their expenses without affecting revenue.  How would you like a 15% raise without putting forth any more effort?  Start tracking your expenses.  Make a goal to cut 5% to 10% in every category.  Look at every expenditure carefully. Do you really need it?  Remember it is your money; do not be so free with it.

The last area is return on investment in training and education.  This is your best area of expenditure.  There is a direct correlation in the dollars you spend here and your increase in income.  You need to allocate dollars for yourself and your staff in training and education.  The most successful people and companies have spent large quantities of money in this area.  Many companies have huge training and Research and Development departments.  Research and Development is a fancy name for education.  Probably you do not have the resources of IBM to gather new knowledge.  You do have the ability to spend 5% to 10% of your income on books, tapes, seminars, workshops, and coaches.  You are not really spending the money; you are investing the money in yourself.  There is no better place to invest that money for tremendous long-term growth.  You will not get a better return even in a “Bull” market on the stock market.

I am still receiving a return on investment from the $6.95 I paid for the book, Think and Grow Rich by Napoleon Hill.  That small investment of $6.95 has made me several million dollars of income.  It has lead me to other books, tapes, and seminars.  I would not have found this other wealth of information without that small $6.95 initial investment.

If you'd like more help building your career & personal success you may want to explore "Real Estate Coaching"... check it out here.

The Lead Agent’s Primary Job - For A Successful Team

I often ask agents, “If you had to segment your business into two sections, what would they be?”  Most of them initially want to negotiate for more segments.  They don’t want to look at their business in such black and white terms.  Here is how I feel the business breaks up into two sections.  It would be sectioned off into creating customers and servicing customers.  Those are the two major categories in a sales business.  I then ask, “If you only had the option of being exceptional at one, which one would you choose?”  For many agents, again, they really don’t want to look at the option of excellence in only one.  One of the marks of excellence as a Champion Agent or Champion Team is excellence in both.  I would contend that few agents and few teams achieve this.

When confronted with this tough decision, most agents would rather achieve excellence in customer service.  They feel that is the pathway to a growing, sustainable business.

In my many years in real estate sales and real estate training and coaching, I have encountered few agents who reach the upper echelon of real estate sales with the exclusive view of customer service.  Before you jump to conclusions of my viewpoint, it is essential to excel at both disciplines of customer creation and customer service in order to become a Champion Agent or Champion Team.  While trying to climb the mountain of success, one of these sections will be secondary to the other.  Your investment of time and energy will be larger with one than with the other.  Your staff will pick up on your signals of which is more important to you and will adopt that prioritization, as well.  The decisions you make in this one area will determine how quickly you execute your success plan.

In terms of earnings and income, I have met many agents who earn large sums of money who are world class in client creation and down right poor in customer service.  While these agents don’t generate the referrals they should because of their customer service, they have developed viable business because of their top-notch skills in client creation.  Again, I want to emphasize this is not the ideal platform for success.  It is better than a limited focus exclusively on customer service.  In the end, you must achieve a balance between these two areas.  While climbing the ladder of success, your focus must be tilted to customer creation, however.

I have wrapped up the real word for customer creation in a fancy wrapper to make it more palatable.  It’s like the exterior coating they put on aspirin, so it doesn’t upset our stomachs as much.  Let me peel off the coating of customer creation and call it what it really is . . . prospecting.

As the leader on the team, your primary job is to be a Champion’s example; to be the model that all your other administrative and sales staff will follow.  You need to set the example of prospecting on a daily basis.  Let’s have a real truth moment in our relationship.  The truth is you are in sales . . . right?  Sales is a profession where we have to find prospects to sell our services to.

Champion Team Rule – Prospecting is the first step in the sales process.  You are in sales; you need to prospect.

If you don’t prospect, you won’t find prospects.  If you don’t find prospects, you won’t be able to make presentations to prospects to create customers.  If you don’t have customers, there won’t be anyone for you to serve.  You won’t be able to deliver exceptional service, so you won’t be able to create clients.  These clients you don’t have won’t be able to send you referrals, so you can acquire new prospects easier.

We really have an unlimited supply of what we can prospect.  Webster defines prospecting as “seeking a potential customer; seeking with a vision of success.”  In the definition, it doesn’t say waiting for the phone to ring, sending out post cards, hoping someone calls me.  It clearly says that prospecting is a seeking activity.  Let me share a guarantee from ancient scripture.  “Seek, and you shall find.”  The guarantee is if you seek, you will find.  I hear all the time from people, “Well, what if it doesn’t work?”  You are assured it will work because seekers become finders.

The second segment of this definition is that we need to “seek with a vision of success.”  Webster must have worked in a real estate office before.  He knows how other agents can try to pull you down or away from prospecting.  You could even have brokers who try to belittle you because of your prospecting.  Webster was saying, get your mind to positive, expect good results, focus on that, and you will succeed.  Don’t let others negatively influence your vision of success.

If you'd like more information on how you can build your own real estate team, get your free copy of "The Champion Real Estate Team™ Guide"... here.

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