In This Issue...
Words of a Champion
Dirk Zeller
CEO
It’s time to take a look at the report card for 2009. We are right at the midway point. How are we doing? Have we taken the number of listings we needed to take? Do we have enough in escrow? Are we doing the daily disciplines that lead to success? This is the perfect time to stop and analyze how we are doing.
Take half a day in the next week to invest in replaying the first half of the year. Come up with your year-to-date numbers in the following categories:
Listing appointments
Listings taken
Buyer appointments
Buyer commitments
Closed listings
Closed buyers
Under contract listings
Under contract buyers
For some, you are right on track. This exercise will encourage you that you are doing the right things. For the people who are behind, you will now see reality. You need to create a Plan B to either catch up or adjust your finish line. Sometimes in life it’s not how we work Plan A. It’s how we implement and focus on Plan B that often makes the real difference.
Make sure to invest the time, know where you are, and how you got there. The more I coach, the more I realize that knowing your business and how it functions is a critical step to mastering your business.
Have a blessed and happy 4th of July!!!!
To Your Achievement of GREATER success,
Dirk Zeller, CEO
RealEstateChampions.com
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Be Effective In Sales By Understanding People
To be an effective salesperson, you have to understand people. You have to understand that people buy and sell for a set of reasons. They also make decisions on whom they do that with based on their reasons, not ours. Being able to read people and ask the right questions is essential to success. Let me share the rules of reading people.
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People are egocentric: This means they are self-focused. They are clearly fixated on what’s in it for them. If we don’t know what they want and link that with the benefits of doing business with us, we will stumble in sales. We all look at the world based on how a given situation or opportunity relates to us personally. When we fail to connect the dots personally with our customers, we are rendered less effective.
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People make decisions emotionally: Most of us decide quickly. Some of us gather our facts and information previous to making a decision. Once we gather the necessary data, we move to the decision. Even the most analytical person will make decisions based on a feeling, need, or emotion. These people’s sales cycles are longer than others. Your job is to identify the longer sales cycles and be there at the appropriate time. We must also send all the data beforehand to be digested by the customer before they meet with us.
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People will justify their decisions with reasons: As salespeople, we have to give the prospect sufficient reason to do business with us. This frees them to move forward in the purchase based on the emotional impulse they feel. They want to move forward but are looking for a little security to justify their decision. We must provide a compelling reason for their movement forward now!
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People delay making decisions: The longer the customer postpones making the decision, the lower probability the decision will ever be made. As salespeople, our objective is to provide the customer with enough reasons to get them to attach benefit to our service. Our other objective is to encourage them and direct them to act on it now once they have the information. The sooner we can provoke a decision by the customer, the higher the probability that it will be in our favor. The longer the time between when you make your presentation and when the customer decides, the lower the probability of success. We must focus to shorten our sales cycles.
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People fear losing something: The fear of loss is one of the most powerful motivators for action. People will move more quickly to a decision if they stand to lose something than if they are positioned to gain something. As salespeople, we need to put our compelling reasons for action now in terms of potential losses to our clients. There are two types of fear of loss.
- Losing something you have
- Losing the chance to have something you want
Both of these are forefront in your customer’s thoughts.
To be effective in sales, we really need to master understanding people and what makes them tick. We have to use a full complement of techniques to help our prospects and clients make the right decisions for their success.
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Calculating and Analyzing Real Estate - Part 1
Three key statistics reflect real estate sales success better than any other indicators. These statistics are: Average list price compared to average sales price, Average number of days on the market, and Average number of listings sold versus listings taken. In this article, we will take a look at Average list price to sales price.
Average list price to sales price
This ratio quantifies your skill and success in achieving the result you and your client expected when you first placed a home on the market. By presenting a strong list price to sales price ratio, you clearly illustrate your effectiveness for your sellers.
To calculate your average list price to sales price, follow these steps:
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Make a list of all your listed homes that sold and closed over a specific period of time, but not less than three months (one quarter).
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Add up the list prices of all the homes.
Let’s say that you listed three homes that sold in the last quarter. If those listings were priced at $259,000, $349,000, and $429,000, then you had a total listed inventory of $1,037,000.
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Add the sales prices of all the homes.
If your listed homes that sold last quarter closed at $245,000, $337,000, and $405,000, then your total sold inventory was $987,000.
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Calculate your average list price to sale price by dividing your total sold inventory by your total listed inventory.
Using the above example, divide $987,000 by $1,037,000. The calculation results in a list-to-sold ratio of 95%. Based on your recent performance, a seller who lists with you can expect an average of 95% of the sales price.
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Ratio: Total sold inventory ÷ Total listed inventory = List-to-sold ratio
Your list-to-sold ratio proclaims from the mountaintops your level of success. It is one of the first calculations I ask a coaching client to figure. It establishes a clear benchmark of how an agent is doing at pricing and negotiating, and it provides a clear indicator of an agent’s skills, abilities, knowledge, and systems.
Using your ratio
Regardless of the nature of your marketplace, the list-to-sold ratio for all good agents varies only by a few percentage points.
My view is that 95% is the bottom of the good range. An agent with a list-to-sold ratio of 95% loses $5,000 for every $100,000 in sales price. If you are selling a $600,000 home and settle for 95% of list price, the resulting reduction is $30,000! Aim for a ratio of 98% or above.
Beyond achieving a list-to-sold ratio of 95% or higher, aim for a ratio that places your performance in the top tier of all agents in your marketplace. When you can prove to prospective sellers that you consistently achieve a higher-than-average percentage of list price for your clients, their decision to entrust their home sale to your expertise becomes vastly easier.
To determine how your list-to-sold ratio compares in your marketplace, follow these steps:
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Learn the average list-to-sold ratio for all agents in your marketplace. Most MLS services provide this statistic for each geographic area they serve. Call your local MLS office, your local board of REALTORS®, or ask your broker to acquire the information.
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Compare your ratio with the market average. For example, over my career, my average list price to sales price was between 98% and 99%. My board’s average was between 91% and 95%.
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Use your outstanding performance to prove numerically that clients will net more money working with you than with other agents. If your average is 98% and your market average is 91%, then sellers working with you are likely to put 7% more in their pockets by listing with you.
If you’re a new agent with few listed properties, rely on your company’s list-to-sold stats while developing your individual performance. Whether you’re presenting your own or your company’s stats, however, you’ll want to present numbers that are higher than market averages; otherwise, they indicate serious problems with your business.
Improving your ratio
Your list-to-sold price discloses your skill in pricing a home properly. Obviously, if you take vastly overpriced listings and deal with the consequences later, your list-to-sold ratio will suffer accordingly.
The list-to-sold ratio is also a strong reflection of your skill in negotiating on behalf of a seller. In a neutral market, most initial offers come in at less than 95% of the list price. For instance, a home listed at $259,000 might generate an initial offer in the low $230,000s. Whether it sells at that price or higher depends on the listing agent’s ability to demonstrate to the buyer and buyer’s agent the value of the property, with the aim of bringing the offer up to $250,000 or even $255,000, at which point the list-to-sold ratio climbs back to 98%.
Finally, the list-to-sold ratio is affected by your marketing, staging, and exposure of the property.
(See Part 2 of 3 in our next issue)
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The Four Characteristics of a Champion Agents Presentation
Numerous studies have shown that your tonality and body language account for over 90% of your presentation’s effectiveness. The words you select account for less than 10% of your effectiveness. If you’re focusing on finding the right words, as most salespeople are, you are not focusing on the areas of your presentation that are most important. If you don’t know what to say, all you can do is focus on the words to say. If you know what to say, you can now begin to focus on the tonality and body language.
There are four parts to a great presentation:
Conviction
Webster defines conviction as a fixed or firm belief. I’d add that there is nothing more compelling than conviction.
Your unshakable belief that you are the right person for the job and can accomplish the task will set you apart from the competition. Your conviction in the value of their home will earn their trust, even if your price is lower than other Agents’. Your bedrock belief about where the marketplace is headed, backed by statistics that prove your belief and conviction, sells you and shows them why they should do business with you. People are attracted to people who have conviction. They trust, admire, and respect people with conviction, even when they don’t agree with them.
Before you go on a listing presentation, decide the core truths that you are going to express to them with absolute conviction. You don’t want to have ten things or core truths. You need half a dozen or less. If your core truths are in line with the Seller’s thinking, all the better. If their views are opposite yours, you know that your persuasion and resolve need to increase to move them to your point of view. Our goal is to have strong enough conviction to get them to sign the contract.
Enthusiasm
There is an old saying . . . enthusiasm sells. Sellers want to work with Agents who are enthusiastic about their home. If you don’t like (or express enthusiasm about) their property, you reduce your ability to secure the listing. If the market is changing or tough, you have to be honest; you can’t just hide market realities. Too many Agents are only enthusiastic about getting the listing. They aren’t enthusiastic enough to get the home priced right in order to get it sold. Any Agent can show enthusiasm and demonstrate that they are excited about the opportunity to list the home and represent the Seller’s interests. Your listing presentation will be more interesting if you are enthusiastic about the Sellers, the home, your career, and the real estate business.
Confidence
I know that my edge as a new Agent was my confidence. I am not completely sure where that confidence came from, besides athletics. I was new to the game of real estate, but I was confident I was the best Agent for the Seller. I really believe that my background as a professional athlete made me immune to the lack of confidence syndrome most new Agents posses.
I believe we all need to tap into victories we have had in the past. Those are so valuable. As you increase your confidence in preparation, it allows you to prepare with more passion because of your expectation of winning.
If you lack confidence, determine what you need to do to upgrade your belief in yourself. What do you need to upgrade in you ability to achieve long-term success in real estate sales? What knowledge should you acquire that will raise your confidence? What activities would help increase your confidence? What skills do you need to master to dramatically increase your confidence? What one thing, if you did it with excellence, would change your self-confidence?
The great success motivator Napoleon Hill says, “What the mind can conceive and believe, it can achieve.” What Napoleon was saying was that anything the mind can grab hold of and accept as truth will come to be. This is true of both positive and negative thoughts.
Assertiveness
One of the single biggest mistakes of non-Champion performers is not wanting to be seen as too pushy or aggressive in how they sell. Most of us wimp out before the close. We are not willing to assertively ask for the business. One way to overcome that is to tell the client up front that you are going to ask for their business. That way, they expect you to do it. They are not surprised when you ask them to sign the contract. It also sets you up, in advance, for when you get to the end of your presentation. You’d better ask for the order because you said you would.
The definition of a great salesperson is “a person who convinces someone to do something that is beneficial to them or convinces them to do it faster.
Going for the close or asking for the order is not pushy. If you don’t have enough confidence in your service and skill and value, you should get out of the business. Your confidence will sell. As a Real Estate Agent, your job is to persuade prospects that you have the best service and the best value. The best value is not price, but by factoring in all the benefits of your service, your present the best value. Our job is to link our benefits with their service expectations. Then, ask them to act now, so you can help them.
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