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Words of a Champion

From years of coaching, I realize one of the biggest challenges for people is clearly seeing the promise they have in life.  If we can see the promise of our future and the surety of our success, the price we have to pay to achieve it becomes easier.

The people who have the most clarity in their vision of the future – the clearest picture of what their business and life will be like in the future – achieve the greatest measure of success.  These people may have less talent and skill than others around them, but because of their clarity of purpose they rise to higher levels of achievement.  The reason for this achievement is that the price they need to pay comes into clear focus. 

When we are unsure of our destination, the price to reach it is sketchy.  When we know the destination, the price becomes quantifiable and thereby manageable.

We must concentrate on the promise so we can bring the actionable items of daily success into focus.  If we all knew what the promise was of our future, the price we need to pay today would be easy.

 

To Your Achievement of GREATER success,

Dirk Zeller, CEO
RealEstateChampions.com

 

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Compiling a Marketplace Analysis

Before investing the couple of hours a month building your own marketplace analysis, check to see if your local board of Realtors or MLS compiles market trend reports.  I have found that most do something on this order but are not as comprehensive in price ranges.  They do mainly geography-based reports for all price points.  You need price segmentation. 

If the essential data isn’t available, set a couple of hours aside and construct the analysis on your own.  We need to use the following formula to gain accuracy of the trends in the marketplace. 

1. Segment your marketplace geographically.

   Our objective is to view the macro and micro of your marketplace.  The macro would be the marketplace or whole and even broken down geographically.  The micro is the price segmentation we need to do as well.  You could also break your areas out via school boundaries.  Many Buyers make their decisions on areas they will live based on school district or high school.  The broader view works well to gain a flavor for the marketplace.  The close-in view on specific market areas will be used heavily in showing properties to clients.

   The easiest way to create segmented market areas is through using the existing MLS geographic regions.  Most real estate statistics and data is already segmented in that format.  Another option is using the areas as featured in your newspaper’s real estate classified ads, as long as it works with what is considered standard marketplace knowledge.

2. Segment your marketplace into five price segments.

   While most people, Real Estate Agents, and the media view the marketplace as one entity (or even a couple, based on geography), that is too narrow of an approach.  Price plays a significant factor as well.  Once we decide on a geographical area or segment, we need to segment via price point.  We need to segment our marketplace into five key price segments: entry, low middle, middle, upper middle, and upper.  Each one of these segments can be vastly different from the other.

   Our Sellers and Buyers want to know the overall wealth of the marketplace.  What they really want to know about is what’s happening in the specific marketplace they are trying to buy or sell in; the only way to convey that to them is through price point comparison.

3. Know your available inventory levels.

   All markets are influenced by inventory levels.  The inventory levels in turn affect the percentage of homes that sell every month.  The higher the inventory, the lower the percentage of homes that sell monthly.  Another term used for the percentage of homes sold is listings sold versus listings taken ratio.  In a normal or neutral market, the listings sold versus listings taken percentage will run 65% to 70%.  In an inventory short, robust, high level Seller’s market, the number will be well above 90%.  We need to know the level of competition Sellers and Buyers will face based on the marketplace inventory levels.

4. Determine the number of sales in the last thirty days.

   Now, realize I didn’t say sold or closed properties.  I said sales or pending sales.  We want an accurate analysis for the previous thirty days.  If we count closed transactions, we are really reflecting the marketplace inventory from thirty to sixty days ago, not one to thirty days ago.  A property that closes, for example, on June 30 was really a pending sale in May or April, depending on the typical time in your market to complete the paperwork, inspections, appraisals, repairs, document writing, and all the other behind-the-scenes work for closing.  We always want to reflect the activity from one to thirty days ago.

5. Calculate the absorption rate or the number of months of inventory.

   This last calculation is the lynchpin of the whole analysis.  It is where most people fall short in terms of marketplace knowledge.  You need to take current inventory levels in each price point and divide that by the pending sales for the month.  This will give you the number of months of inventory left if sales remain constant.  We are also making an assumption with this calculation, which is that no new available homes will come on the market before the entire present inventory is sold.  We all know that assumption is false.  We do see the best-case situation of the market.

   As an example, you have 100 homes for sale in the entry level price point.  There are twenty that sell, on average, every month.  You clearly have five months worth of inventory left.  A Seller will need to be competitively price to be one that will sell next month.  What you are doing with this calculation is providing a clear picture of the current supply and demand mix in the marketplace.

   Let me share another example. If there are 300 homes for sale in a given geographic area with thirty of them pending this last month, divide 300 by thirty and end up with ten months.

   In contrast, one of my clients in southern California sent her market stats from over year ago.  They showed ninety-eight properties available with 176 pending on a monthly basis. That’s quite a bit different and more robust marketplace than one with 300 actives and thirty pendings.  One has ten months worth of inventory, and one has about two to three weeks.  The strategy, tactics, and counseling of the clients would be very different for these two marketplaces.  One is a “list at all costs” type of marketplace; the other is “you’d better secure the listing at the right price”.  The Seller has to be informed, or you are wasting your time.

   • Which market allows the Seller greater control?
   • Which market do you think is appreciating faster?
   • Which marketplace inspires the greatest Seller greed?
   • In which market will homes spend fewer days for sale?
   • In which market do Buyers have the least control and the greatest need to meet Seller demands in order to make the purchase?
   • In which marketplace do the Sellers put more pressure on Agents to cut their commission rate?

   The marketplace with only two to three weeks of inventory is the correct answer to all these questions.  The other marketplace is behind on all counts.

The trends of the marketplace are predetermined by the inventory of listings, pending sales, and number of months of inventory.  Your marketplace will not magically go against the grain of the law of supply and demand.  The key is knowing what the law is saying about it. Don’t leave your office without your monthly analysis!

When you have a strong market trends report, you will be able to do a number of strategic things that add value to your prospects and clients.  You will be able to send something that is truly an item of value to your past clients, sphere, and anyone else on your mailing list.  This report should include at least the current numbers and should be sent out quarterly.  You are giving your clients an update as to how their investment is doing.  You’re giving them a clear picture in case they want to sell or buy another home or make an investment purchase.

When you send this market trends report, underneath the numbers, write a couple paragraphs of analysis on what is happening in the marketplace.  Then write a paragraph of call to action at the bottom of the page.  The call to action could point out the opportunities in the marketplace.  You might highlight a new property you just listed and ask if they know of a Buyer for it.  There are unlimited calls to action.

You can also use the newfound knowledge to secure prospects over the phone and in person.  With this knowledge, you can position yourself as the expert in the marketplace.  Use your knowledge to inject urgency, reveal motivation, and convey your market knowledge.  For example:

• Were you aware that we have only about 3 weeks of inventory in the price range you want to buy in?

• Did you know that we had 22% appreciation in the marketplace last year?  This same home would have been almost $50,000 less a year ago.  You could have bought it for $225,000 last year instead of the $275,000 now.  I wouldn’t want you to waste another $50,000 by waiting until next year!  Would Wednesday or Thursday this week be better for us to meet?

• Have you been told that a well-priced, great condition, solid location house is only lasting three days on the market right now?

We are trying to use our knowledge to secure our appointment through building our credibility.  We need to open the door through our knowledge and close for the appointment quickly. 

Using key marketplace knowledge and statistics is really an easy way to build credibility and trust.  It sets you apart from the other Agents.  It increases the desire a prospect has of wanting to meet with you.  Your clients will listen to your counsel more attentively, and more importantly, they will actually do what you counsel them to do.

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Sale Scripts and Dialogues

The quality of sales skills can dramatically influence income.  At one time we all had tremendous sales skills, and we did not even know it.  We intuitively learned, and perfected, our presentation to the highest level.  We persistently pushed forward and never took, “No!” for an answer without a fight, then we usually wore our opponent down and got the sale.  We had it all going for us, we had it all figured out, and then we stopped.  Most of us stopped being great sales people around ten or eleven years old.  Up until that point we were highly skilled sales people.  Have you ever watched children under ten at the store?  Most are very good sales people.  The highest skilled are the three to six-years-old age group.  They know what they want, and they do not take, “No!” for an answer.  They usually manage to sell their parents on their idea or thought.

They are highly skilled because they know their scripts and dialogues.  They know what to say to get their parents to do what they want.  Agents must also have scripts and dialogues down, to elicit the desired response from the client.  Successful Agents need to have scripts for sellers, and scripts for buyers.  Brokers need scripts for other Agents, and for staff.  The better people define what they are going to say, the more successful in saying it they will be.

Many think having a script is manipulating the sale.  I think creating a script is part of being completely prepared.  Clients who hesitate in a selling situation can be saying that they need a few more facts to make them feel comfortable.  The Agent’s job is to give them the data to help them make the decisions that are best for them.  I view scripting as being able to help the client at the highest level, by accurately communicating in a convincing fashion, the benefits of a particular decision.  To be well scripted is to be prepared to help the client evaluate the situation carefully, by weighing all sides less emotionally.  The telephone solicitors, who sound as if they are reading from a cue card, are not well scripted.  An Agent who is well scripted can give an automatic response to a given situation he has been in before.  He has practiced and prepared for the question, before he gets the opportunity to answer it.  Do people want to have a heart surgeon who is well scripted?  Sure, they do.

Many professionals in other fields are well scripted.  Many professional football teams have the first 25 to 30 plays of the game planned.  Ask the coaches of either the San Francisco 49ers, or the Denver Broncos.  They know exactly which plays they will run.  They will evaluate how the plays work, then continue to use the best ones.  Other well-scripted professionals are the defense attorneys who use the same argument that worked to get their client acquitted last week, the surgeons who look at the x-rays and books to perform the appendectomy for the 500th time, the pilots preparing to land or take off in a 747.  They have all scripted out what they are going to say and do.  You, or I, would not want to be on that plane, in a courtroom, or in an operating room, if those experts were not well scripted.  Real estate Agents need to be at that level of professionalism and knowledge with their scripts.

Agents need scripts for all occasions:

• Prospecting:  Past clients, expireds, FSBO’s, cold calls, door knocking, apartment renters, and referral clients.

• Buyers:  Ad calls, sign calls, when it is the right house, qualifying the buyer, commitment to work with you, open houses, and for all objections.

• Sellers:  Listing presentation, qualifying, price reduction, weekly communication, and for all objections.

• Other Agents:  Getting them to do their job, create urgency, show your properties, and negotiating.

• Affiliates:  Send more referrals and take over more functions.

This is a short list of the scripts Agents need to use, to be skilled at the delivery of the information that they need to provide to buyers, sellers, Agents, and affiliates.  To join those successful Agents, you must learn to develop, and deliver, scripts with effectiveness.  If you do, there will be no cap to your income.  The different scripts will not change, nor will the basic questions, problems, objections, and solutions.  Once you learn to effectively cover these areas, you will be unstoppable.  There are not many new objections created by buyers and sellers annually.  If you have learned all the objections, and can deliver your response to the objections well, you will be rewarded.  You may need to make modifications and practice them regularly, but you will not have to go through the process of learning 40 to 50 new scripts and dialogues.  The difference between the amateur and the professional, in all things in life, is the skill and delivery.  Everybody can throw a football, but he cannot throw it like John Elway without dedication and practice.  Elway has perfected his skill with long hard practice.

Professional sales people have perfected their delivery of words.  They have practiced how to overcome all the objections.  They have practiced how they will list a home.  Many of us make new presentations every time we go out.  That would be like Elway drawing the game plan in the dirt in the huddle every time.  How effective would that be?

Do not become sidetracked by the poor salespeople who have poor delivery.  Scripts and dialogues are often knocked because of poor delivery.  Tremendously skilled salespeople are well scripted; you just cannot tell they are speaking from a script.  Constant practice makes the difference.

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Seven Secrets of Prospecting

For many salespeople, prospecting is the most difficult activity they do.  They dread the thought of picking up the phone to make a living.  Long-term success in sales is built through solid prospecting.  In order to be successful and profitable, sales people need to apply these seven secrets of prospecting daily.

1. It gets easier after the first call.  The first call is always the most difficult.  I prospected solidly for over eight years in real estate.  I never got over the difficulty of making the first call.  Getting yourself to make the first call is the highest hurdle.  The only solution is to just do it.  After you make the first call, you realize it was not as difficult as you had imagined.  The person on the other end of the line was not as difficult as your mind had created them to be.  In many cases, calling begins to get fun after a few calls.  The problem is most people just never break through the initial barrier.

2. Establish a routine.  To be successful, you should have a scheduled time for prospecting daily when that is the only activity that is being done.  Treat prospecting as an appointment.  Do not allow anything to interfere with it.  We often allow distractions to creep into our prospecting time.  The salesperson who has a set daily routine of making prospecting calls at a specific time and adheres to his schedule without distraction is guaranteed to succeed.  This person will not only succeed, but he will be a Champion Agent . . . the best of the best.

3. Big “Mo”.  At first, prospecting will be very difficult.  Your skills will not be developed to the level of an expert.  Once you start the process, do not stop.  Momentum is critical to prospecting.  Once you get the process going, your skills will improve to generate more leads and to set more appointments.  Do not break your momentum.

   Another Agent in the real estate office where I worked once issued me a challenge.  He wanted to see who could list more homes in a month.  I knew that I would win, since I had momentum, and he did not.  He had not been consistently prospecting, so he had no momentum.  I must say that he did have the best month he had ever had.  But that was because he was consistently prospecting and had been following-up on the leads he was generating.  At the end of the month, my team had taken eighteen listings, and he took six.  Do not bet against Big “Mo”.

4. Exploding the best time to prospect myth.  The best time to make prospecting calls is when you have the most energy and when you actually will call.  There have been tremendous arguments over this point by Agents and trainers.  Set a time to prospect, and call at that time.  Do not worry about things you cannot control, such as someone being home or not.  Focus on your skill level, avoiding distractions, and prospecting.  These factors you can control.  I always prospected early in the morning because that was when I had the most energy.  It also got my day off to a great start, which would carry me through the rest of the day.  I always thought that if I had a good, disciplined day of prospecting I had a good day regardless of the number of leads, number of appointments set, or anything else that happened that day.

5. Focus on the goal or objective.  Set a specific goal of what you want to happen on each call.  Know what you want that prospect to do.  It is hard to achieve success in prospecting without a clearly defined objective.

   The true objective is to set a qualified appointment with the prospect.  If you are unable to accomplish that objective, the next best objective is to get an agreed upon action by the prospect within a specific time frame.  For example, the prospect is going to be interviewing Agents next week.  You and the prospect agree to speak on Thursday about getting the appointment scheduled for next week.  The last objective is to generate a lead that will buy or sell in the future.  This objective depends on your definition of what a lead is for a buyer or seller.

6. The power of scripts.  Highly successful sales people use scripts.  For effective prospecting, it is crucial to know what to say before you start to prospect.  Scripts provide a guide and logical sequence of questions to follow.  They allow you to focus on the response of the prospect, rather than fumbling around to find the words.

   The only way to move to the highest form of communication is to know what you are going to say to the prospect.  The words you say only account for 7% of the communication.  If you know the words, you can begin to focus on your tonality and body language.  Tonality accounts for 38% of all communication, and body language accounts for 55% of all communication.  If you are focusing and stumbling through 7% of the words, you will be ineffective in prospecting.  We have all heard an unskilled telemarketer stumble through their scripts and dialogues.  Develop, learn, and practice your scripts, so you can effectively communicate and reach your prospect through your tonality and body language.

7. It is a numbers game.  Prospecting is truly a numbers game – for two valid reasons.  The first is the more prospecting you do, the less rejection bothers you.  The best way to deal with rejection is to get as much as you can as soon as you can to reduce its effect on you.  Most people you call are very nice and pleasant.  They may not need your services at this time, which is fine.  Rejection is rarely as bad as you imagine.  The only way to understand this fact is to make more calls.

   The second reason is you can replicate your business via numbers.  Prospecting will allow you to plan your income and results.  If you track your prospecting efforts, you will find you have ratios in your business.  I would make 25 expired listing contacts and get a listing signed.  If I wanted to list a property a day, I needed to make 25 expired contacts daily, which would then create the desired income for my family.  Contacts are defined as a prospecting call that results in talking to one of the decision makers in the household. 

   What is your desired income?  How many prospecting contacts do you need to make to achieve it?  As you get more skilled, the number of contacts needed will decrease.  When I first began prospecting, I needed to contact over 100 people to get a listing.  Start tracking your numbers, so you can play the game.  To play the game well is to know and understand the game.

Michael Jordan was the best player of all time because of his abilities, and because cerebrally, he knows the game better than any other player.  His physical skills were not at his highest levels late in his career, but his mental skills were beyond compare.  Develop your verbal and mental skills. 

Prospecting is truly an integral part of success in any sales profession.  Do not be fooled by the prospecting-free system to success.  Develop and apply the seven secrets of prospecting success.  Develop the habit of daily prospecting, and you will become one of the Champion Agents in the world.

 

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