In This Issue...

• Growth of a Real Estate Champion
• Controlling the Risk Versus Reward of Hiring
• Accepting Over-Priced Listings
• Increasing Sales Production Through Number of Contacts

Growth of a Real Estate Champion

True growth in life happens when we are willing to risk and stretch our abilities; when we are willing to put it on the line for change.  It is easy to get comfortable being around the same crowd, doing the same thing we have always done.  We can often get attached to a system of activities that will only lead us to the same result we have always gotten.

We have to be willing to risk where we are today to get to where we truly want to be.  By venturing out, we develop skills of strength that will build us up and make us stronger.  Napoleon Hill said, “The strongest oak tree of the forest is not the one that is protected from the storm and hidden from the sun.  It’s the one that stands in the open where it is compelled to struggle for its existence against the winds and rain and scorching sun.”

The challenges you are facing right now will make you stronger.  Move forward and take them head on.  Step up to the challenges.  Step up to the opportunities that lie just beyond the challenges.  You may be in darkness, but the light is right around the bend.  When you overcome the obstacles facing you, you will then be able to drink in the sunlight of accomplishment to recharge your battery.

Focus on success today,

Dirk Zeller
CEO
Real Estate Champions, Inc

P.S. We've just launched our best Business Growth Program yet, if you haven't yet check it out now... click here

Controlling the Risk Versus Reward of Hiring

Too often, we examine the risk and make it too large.  We view the first hiring of an administrative assistant as a $30,000 per year expenditure.  This is especially true for your very first hire.  Your mind says, “Well, what if I don’t increase sales; what if I have an off year; what if the assistant doesn’t get it?”  These are natural thoughts, but in many cases, they are blown out of proportion.

While you might invest $30,000, or $40,000, or even $50,000 over the course of the year in pay, taxes, and benefits for an assistant, you aren’t taking that level of risk without some safety value.  If, six months after hiring your first or adding another administrative assistant, your production doesn’t increase or show signs of increasing, would you keep the employee?  For most business people, the answer would be NO.  A good business owner will not go much beyond a reasonable period of time to try a new technique, staff member, or lead generation system.  I believe that six months is ample time to know if something is working and producing a result.  With a staff member, it could be closer to ninety days. 

Your financial investment during that time period could be $7,500 to $15,000.  For most agents, the expense is around two commission checks to test the waters.  We invest two commission checks on hair-brained marketing gimmicks almost at will.  We are really trading their $10 to $20 per hour in pay for our potential to earn $300 to $1,000 per hour.  Can you invest greater time in success producing activities, even though you have to invest time in training?

With buyer’s agents, we have to evaluate difficulty.  The question is, if you don’t work with some of these buyer leads, can you invest your time to secure more seller leads?  Can you then convert those seller leads effectively enough to offset the buyer income reduction and turn a profit?  Do you have a choice because you might need to secure more listings to grow your business anyway?

I frequently coach agents to do the “old” Ben Franklin close when evaluating the risk and reward; to draw a line down the middle of the paper and put risk on one side and reward on the other.  Then just brainstorm each side.  I encourage them to write as much as they can as quickly as they can.  When you do this, don’t evaluate, score, or interpret what you put down . . . just write.  The time to evaluate is not at hand yet.  Once you have brainstormed it, then you will need to see the difference in the number of items on each side.  The shear volume is one factor to consider.  The quality of the items must also be evaluated.  Some of the risk items on your list will be small, but others will be more significant. 

I have had times when I personally did this exercise when the reward side presented a tremendous opportunity and upside.  There was a large volume difference of items on the reward side versus the risk side.  The problem is there was one item on the risk side that swayed my thinking.  It killed the option of moving forward.  Do this evaluation with the critical business decision you are facing.

I want to share with you a few benchmarks to evaluate in your business.  These are benchmarks that I have constructed through years of coaching agent to build teams.

The Rule of 30: Most agents reach the point of diminishing return at around thirty units in production.  They have difficulty increasing their production much more than that as a singular agent.  They might be able to squeeze another five or even ten units, but they are bumping up against the ceiling of production for a singular agent.  The mix of your business will also influence this Rule of 30.  If you generate more transactions through buyer representation, rather than listings taken, your maximum will be closer to thirty.

Most agents who surpass the Rule of 30 (as singular agents) by more than ten units pay a high price in terms of their time and quality of life.  They are merely willing to work more hours and often too many hours to grow their production.  This 24/7 model isn’t sustainable for the future, and leads to health problems, children challenges, and relationship issues.  It isn’t the way to live and run a business.

Another clue to pick up on would be survey scores.  I believe that every agent should establish some type of customer survey system.  We need to know how we are doing.  If you survey your clients, you will be able to learn what’s most important to them, what you did well, and what you didn’t do well.  You might find, through surveys, that your staffing levels are too low; that your communication, reporting, feedback, and overall service was less than the client wanted or expected.

In order to achieve a high level of efficiency and a high return on your investment of time, your buyer’s agents need to be doing in excess of thirty units of production a year.  That would be at the bottom of the good scale on an efficiency model.  If you had five buyer’s agents who did thirty units each and you did seventy-five units on the listing side in your personal production, your total units for the year would be 225.  You would have six people, including yourself, for those 225 units or thirty-seven units per person.  That would put you in a solid efficiency category for effort and return on investment.  The goal is to be north of the thirty units, based on the producing members on the team.  You also count in that group.

Using an efficiency model to see if change is needed is a wonderful way to check your progress.  After coaching hundreds of teams personally in almost ten years of coaching, it’s clear to me that we need to understand the average production that should be done per staff member.  By calculating per producing agent production per unit as overall staff member production per unit, we can apply a scale of performance to see if we are efficiently handling business and when to add more staff.

A Champion Lead Agent will produce between seventy-five and 100 units a year in sales.  These sales will result from listing activity almost exclusively.  There will be few transactions on the buyer side of the business.  This Champion Lead Agent will have limited involvement in administration, so their listing coordinator and transaction coordinator must be stellar to achieve these levels of individual performance.

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.

Accepting Over-Priced Listings

I don’t advocate taking over-priced listings. Sometimes, it is inevitable, but before you take a listing that is overpriced, see that the sellers meet the follow three criteria:

1. The sellers must have strong motive to sell.

   Your client’s motivation to sell is the key indicator of whether or not you will earn a fee for your service. You’ll be paid only when your client’s property sells and closes, so evaluate and re-evaluate the interest and determination of the seller to complete the transaction.

   If a client absolutely has to sell – because of a job transfer, divorce, financial difficulty, a home too small for the family, or a new home purchase for which sales proceeds are required – the odds of a successful closing swing strongly in your favor. The pressure of the pending circumstances will push the seller to complete the deal even if it involves a necessary price adjustment.

   A client who has already purchased another home will become increasingly motivated to sell as the pressure of making two house payments comes to bear. I’ve seen clients undergo complete attitude adjustments regarding the price of their property around the first of the month when they had to write two mortgage checks.  The pain of that second check becomes greater than the pain of the price reduction.

2. The sellers must have the financial capacity to sell at “true” market value.
   

   If sellers owe more on their mortgage than their home is currently worth, they’ll need to come up with the difference between the sale proceeds and the loan balance at the time of closing. If they don’t have the necessary resources, don’t take on the listing at any price.

   Over the past few years, many homeowners have pulled cash out of their homes and taken new mortgages based on appreciated home values, which have already stagnated or declined. When sellers in this situation get ready to sell, they owe more on their mortgage balance than they’ll reap from the equity they’ve accumulated – and the real estate agent’s fee becomes an out-of-pocket expense, rather than a deduction from sale proceeds. 

   Set this rule in stone: Take on listings only for owners with sufficient equity to sell at real market value or sufficient other assets to make up the shortfall.

3. Accept over-priced listings only for clients who make a long-term commitment to allow you to represent them.

   If you agree to list a property at a price that is over the home’s current market value, insist on a listing term of at least six months. This will give you enough time to market the property, reduce the price if necessary, or even put a second transaction together if the first one doesn’t close.

   Too often, sellers who want to stretch beyond top dollar value also want to give you a short timeframe in which to prove yourself. Follow this rule instead: Insist that the term of your listing needs to align with the price of the listing. Take a 30-day listing only if it’s backed by a 30-day price – with a 30-day price defined as a price that is 5% to 10% below fair market value. Most sellers want a 30-day listing at a price that is 10% to 15% above market value. No deal! Use the following script to align the listing period with the sale price:

   “Mr. Seller, based on the price you want for your home, I am going to need a 12-month listing agreement. You’re asking a 12- month price, so I will need 12 months to accomplish a sale. Now, if you want to set a 90-day price of x dollars, then I would be able to take a 90- day listing.  What is your desire? Which of these options do you prefer?”

   If a seller wants to list their homes at a price that exceeds current market value, be sure they meet the above criteria. Otherwise, you’re gambling with your time, effort, money, and energy, with the odds of a payoff approaching the chances of a Powerball win.

If you'd like a complete step-by-step Seller Conversion System check out "How to Create & Deliver a Dynamic Listing Presentation™!" go here.

Increasing Sales Production Through Number of Contacts

When you break a real estate agents business down, there are only four ways to increase production.  There are four proven avenues toward increased gross revenue.  The four ways to increase production are:

• Number of contacts
• Method of contacts
• Quality of the prospect
• Quality of the presentation

When you begin working on any one of these, you have taken the step to becoming a Champion Agent.  Once you have raised your level of the performance in each of these areas, you can call yourself a Champion!

Whether we like it or not, real estate sales is a full-contact sport.  Too many agents are trying to devise ways to avoid making personal contact with people.  We use massive mailing programs to raise our image and “build our brand”.  We develop elaborate websites and e-mail contact systems, so we can hide behind the computer every waking hour of the day.  Some of us do this because we don’t interact with people well.  Some of us do this because it is beneath us to “prospect” for business.  Others do it because someone told us this is what we need to do.

In the end, the number of contacts matters.  My definition of a contact is probably different from most people.  I define a contact as talking to someone over the age of twenty-one about real estate.  This person must have the capacity to buy or sell or be able to refer you to someone who can.  A contact can be face-to-face or over the phone.  A contact, for the purpose of my definition, is not an Internet e-mail address or a mailing piece you send.  It can only be face-to-face or phone-to-phone.  You can make a contact at an open house, during floor time, at the grocery store, or at your child’s soccer game, provided you really make it a contact by discussing real estate and discussing referrals.

Life is a series of numbers or, in essence, a numbers game.  It’s the number of t-ball games you make or miss or how many and how frequently you have a date night with your spouse or significant other.  You can have numbers in your life you don’t like.  A few years ago, I had a cholesterol count of about 200.  For those of you who don’t know, that’s not a good number.  I could ignore that number or work to change it.  I decided I needed to take action to change it.  I needed to change my diet and increase my exercise patterns.  Fortunately, I didn’t have to go on medication, but that is an option if it gets out of hand again.

Numbers matter in life and in business.  One of the ways to know the health of your business is to know your sales ratios.  By knowing your sales and conversion ratios, you can determine your income before the year, quarter, or even month begins.  One of the most powerful things we posses is our sales ratios, but only the Champion Agent knows what they really are.

Within the first year of my real estate practice, I understood my sales ratios of contacts to leads, leads to appointments, appointments to representation contracts, and contracts to closings.  Because I clearly knew my ratios, it allowed me to create a plan that I could follow to earn what I wanted to earn.

The reason that such a high percentage of our clients at Real Estate Champions earn what they want to earn is because we teach them that contacts matter and your sales ratios are king.  A word of caution – because you tracked them once doesn’t mean you stop tracking them.  You must embrace tracking your sales ratios for the rest of your career.  Your sales ratios will usually improve because your skills will improve:  your ability and skill to ask for referrals, to ask for appointments, to conduct Champion level buyer and seller interviews.  A Champion Agent should see regular improvement in their sales ratios if they are working on their sales and business skills.

There is one exception we are seeing now to that rule.  The sales ratios can change negatively or adversely if the market changes adversely.  You might see, as some of our clients have, the number of contacts to create a lead go up and the number of leads to generate an appointment go up, as well.  In some markets, the number of appointments rises because the sellers are unwilling to do what is necessary in terms of price to be competitive. 

You might have to walk away, as some of our clients have, from a few more listings.  When that happens, you have to have an attitude of acceptance and a commitment level to do what it takes.  Jack Welch, the famous retired CEO of General Electric, has six rules to business success.  One of the rules is “face reality as it is, not as you wish it to be.”  A Champion Agent has that attitude and commitment.  When the marketplace dictates sales ratios will change and things will get tougher, they deal with the reality of the marketplace influence on their business.  They realize and accept the influence and increase their number of contacts to reflect the new sales ratios that will enable them to reach their goals.

If you'd like more information on how you can dominate how you make contacts by phone, check out my new book (now in stock) "Telephone Sales for Dummies®"... here.

Help Your Friends

If you have friends and colleagues who would enjoy the Coaches Corner™ please forward it and invite them to subscribe. We appreciate your help since your recommendation is how we grow.

Real Estate Champions is committed to partner with you to create abundance in your business and life.

REALTOR^® is a Registered Trademark of National Association of Realtors, Inc.

Learn More Here

Teleseminars
• TBA

Get Dirk Zeller’s Award Winning Books and Download Real Estate Champions PDF Ebooks!

Telephone Sales For Dummies® Now In-Stock!
Here First!

by Dirk Zeller

The Champion Real Estate Team Now In-Stock!
Here First!

by Dirk Zeller

The Champion Real Estate Agen

by Dirk Zeller

Success As a Real Estate Agent For Dummies® Dummies Now In-Stock!
Here First!

by Dirk Zeller

Your 1st Year in Real Estate: Making the Transition from Total Novice to Successful Professional

by Dirk Zeller

• Prospecting?

• Lead Generation?

• Listing Presentations?

• Scripts & Dialogues?

• Objection Handling?

• Converting?