In This Issue...
Words of a Champion
Dirk Zeller
CEO
We experience “gaps” in life, for example the gap between knowing and doing. For many people, we know what we need to do, but we fail to do it. We are not successful at putting into action what needs to be done. We usually don’t fail to do what must be done. The gap is doing what needs to be done.
One of the great skills in life is learning to close the gaps in life. A gap exists because of the void between the actual (where we are) and the ideal (where we think we should be). This void or gap causes the challenge, fear, and anxiety that we experience. This gap causes negative emotions and feelings. If left undirected and unharnessed, these emotions and feelings cause destruction. These emotions and feelings properly harnessed cause action.
The real purpose for the “ideal” in our life is three fold. The ideal is first created in your mind to:
1) Establish goals
2) Motivate ourselves
3) Endure hardships
The ideal is a concept, not a set of goals. The goals are a result of the ideal concept. You work to try to quantify the ideal. Once the goals are set we then motivate ourselves to the achievements we want within the time frame that we desire. If the passion is great enough we will endure hardships to achieve the result we are looking for. This ideal is the catalyst for goal setting, motivation, and perseverance.
Work to establish your three-step pattern to close the gap between the actual of today and the ideal of tomorrow.
To Your Achievement of GREATER success,
Dirk Zeller, CEO
RealEstateChampions.com
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Affirmations of Your Value
I am absolutely worth what I charge.
You have to believe it yourself before you can convince others. Do you believe this statement to your core?
My value is measurably greater than the competition’s.
The key word is “measurably”. Is there a scale or measurement that can prove through empirical evidence or data that you sell the home in less time or for more money? Can you prove factually, not subjectively, that you are better and provide more value?
The value of my services clearly exceeds my cost.
If you can show and define the value of each component of your service in dollars or percentage of sales price and then compare it to the actual cost, you can tip the scales in your favor.
I don’t give away my hard-earned and well-deserved fees.
To reach the Champion level in earnings, we have to stop giving away our fees. When we adjust our fees, we are merely adjusting our net profit. All of the commission fees we fail to collect are revenue that would have flowed straight to the bottom line. We are giving away our net profit . . . that’s all! There are some Agents who are embarrassed to charge what a good Agent charges. They feel it’s “too much” for what we do.
What consumers, and even Agents, fail to recognize is the risk to reward relationship in our business model. We, as an industry, could charge lower fees if some of the risks were shifted to the Seller or Buyer. Because we are assuming all of the risks, our fees need to reflect that risk we assume. We risk our time, energy, money, knowledge, and emotion with an expected return when the home sells or the Buyer buys. What if the home doesn’t sell or the Buyer doesn’t buy? We have to amortize the cost of our service over fewer transactions. This raises the costs of our service on a per transaction basis, thereby reducing our net profit.
Even if a full fee is acquired at closing, we have paid for all of our time, living expenses, marketing, and advertising dollars out of our own pocket. Additionally, in most cases we do not receive 100% of the total commission; we split the fee with another co-op Agent. Our broker receives some of the compensation in percentage of the commission or desk fee. We then need to account for our expenses in marketing, advertising, pro-rate share of car, insurance, gas, E & O, cell phone, Internet site, Assistant’s salary, and all other fixed costs for our business.
We also need to pay our taxes. Since we are, in effect, self-employed, we pay the employer and employee section of the payroll taxes, FICA, Medicare, etc. The tax rate is usually 15% total for self-employed people. We then must pay our federal and state withholding amounts, which can be up to 33% federal and often up to 10% for the state. Many of us pay in excess of 50% of our net income, after expenses, to taxes. When you calculate the “real” net dollars earned, it’s easy to see why you don’t want to give away your hard-earned and well-deserved fees.
I firmly believe that cut-rate fees accompany cut-rate service.
It is not possible to provide more service for less money. When the cost of service goes down, the service goes down, as well. Discounters have to cut something out. Southwest Airlines is often used as the model for discount fee success. Their cheaper tickets are accompanied by cheaper or cut-rate service. You get peanuts to eat. You can’t ever buy a snack on board. You don’t know where you are going to sit until you compete with others for the best seats. There is no option for an upgrade for the frequent flyer group. They fly smaller planes, only 737s. They have zero wide body or two aisle aircraft in their fleet. This lowers comfort for flyers on longer cross-country flights. There is no entertainment on board except the flight attendants. Cut-rate fees always accompany cut-rate service. Most consumers, when working with a Real Estate Agent who discounts, don’t think they will receive cut-rate service. They expect to receive high levels of service for low levels of fees. In the end, life and business don’t work that way.
In the end, you get what you pay for.
We don’t usually beat the system, although we all secretly wish we did. We get what we pay for. There is a reason that a Mercedes sells for far more than a Kia. The question is do you want a car to get from point A to point B? A Kia will do that. In real estate sales, your safety, future appreciation, current sales price, and net dollars at closing could be compromised by selecting the discount Agent.
To be a Champion caliber Agent, we have to believe in our service, value, and fee structure. We don’t have to lower our fees because a few, or even most, Agents in the marketplace can’t demonstrate and defend their value.
We need to say, read, rehearse, and internalize our affirmations daily. Put them on a few 3 x 5 cards. Put one on your mirror, so you can see it each day when you get ready in the morning. Put it on the visor of your car and computer screen - anywhere you will see it and be reminded to say it a few times a day. To sell your value, you have to believe it first.
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Business Plan
The business plan is a foreign tool to most REALTORS®. After studying, observing, interviewing, and coaching hundreds of Agents, I have concluded that very few have taken the time to create a quality business plan. Fewer still review their business plan on a regular basis. The few who have good business plans often make them so complicated that they possess little value. Those Agents create such a complex business plan that they will never carry it out. What kind of value does this complex business plan have to them? . . . Zero!
A well-written, concise business plan can provide an exceptional road map to guide your quarter, year, or next five years. Most well-run companies have well-developed business plans. You, as an Agent, are the President of your own real estate sales company. You have to view yourself as the head of a corporation that needs direction, vision, and a well-conceived road map to follow. The business plan can provide all these tools that lead to success.
To create a quality business plan, you have to know where you are today – right now – in your business. You have to ask some basic questions about your business.
- How much do I want to earn in gross commission?
- Where does my business come from?
- What is my average commission check?
- What is my average cost per transaction?
- How many days am I going to work this year?
- How many hours per day am I going to work?
- What things do I need to implement to take my business to the next level?
The best place to start is at the top. Ask yourself, “How much do I want to earn?” You can have total control of your income. You can make as much or as little as you desire. The only person or thing that determines your income is you. The market, other Agents, and other outside factors have very little control over your income. You alone have absolute and complete control.
Once you determine the amount you want to earn, break it down to quarterly, monthly, and weekly amounts. For example, if you decide to earn $500,000 next year, you need to earn $125,000 per quarter, $41,666 per month, or $9,615 per week. Secondly, you need to determine where your business comes from. Figure out the percentage of transactions that are done in every category. Let’s say you closed seventy-five deals last year. The break down was thirty from referrals, fifteen from open houses, eighteen from sign calls, and twelve from expireds.
Here is the breakdown in percentages:
- 40% Referrals
- 24% Sign calls
- 20% Open houses
- 16% Expireds
You should also know the ratio or percentage of listings sold versus buyer controlled sales.
The next exercise is to determine your average commission check. Take your gross commission and divide by the number of transactions. For the purpose of our example, we will use $5,500 as the average commission check. You want to earn $500,000 next year. In order to do that, you divide $500,000 by $5,500 which equals 91 transactions. You will need to close an additional 16 transactions next year to reach your goal.
Then figure out the number of transactions you need in each category.
- 40% of 91 = 37 transactions from referrals
- 24% of 91 = 22 transactions from sign calls
- 20% of 91 = 18 transactions from open houses
- 15% of 91 = 14 transactions from expireds
You can break these numbers down to a quarterly, monthly, and weekly number of transactions from each category. This break down will give you a clear path to achieve your income goal. If you do the number of transactions you need weekly, by year’s end, you will achieve your goal.
Then you need to break down each category of business: referrals, sign calls, open houses, and expireds. You need to figure out exactly what you need to do to create the results you desire. The further you can break your business down, the easier the overall goal is to achieve. It is easier to achieve your goals if you can break them down to daily activities. All you have to do is the daily activities to achieve the desired results.
Another important factor is profitability. You determine your profitability by subtracting your gross expenses from your gross commission dollar. The critical point is to not forget any of your expenses. Organize all of your expenses into categories such as automobile, staff, mailings, marketing, office supplies, etc. You are only fooling yourself if you are not accurate. Take your gross expenses and divide them by the number of transactions. For example, gross expenses of $95,000 / 75 = $1,267, which is what it costs you to close one transaction in our example. You can see how profitable you really are in your business if you follow this example.
To answer questions five and six, you need to address your work days and hours. You need to factor them in against the work that needs to be done. Then allocate the work that needs to be completed to the number of days worked. This process will give you a schedule of what needs to be accomplished daily.
The last section of a well-planned business plan is implementing new ideas or systems. Determine the weaknesses in your business and devise a plan to overcome them. Do not overdo in this area because, often, when Agents over implement, they slow their business down to a crawl. Since everyone is different and all staffs are different, a good rule of thumb is: Do not implement more than two major changes in a month. Determine what needs to be completed. Prioritize your list, and then devise a plan to implement changes at specific times.
A business plan can be the backbone of your successful business. The backbone will weaken if not checked on a regular basis. You must review your business plan daily for the first few months; then you will need to review it regularly after that. Do not make the mistake of writing a fantastic business plan and then never look at it again. That mistake would be almost as bad as if you had never written it in the first place.
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Creating Your Championship Performance
I will share with you a few short keys to help you move your way up to being a high producing rainmaker in your business. The pathway to excellence is not easy. It’s one of the key reasons most people never achieve it. They aren’t willing to apply themselves with enough focus, force, and consistency to overcome the challenges and hurdles that litter the small, narrow, rocky pathway to super success!
A number of years ago, I started to plan out what I wanted to teach my son, Wesley. What were the tools, skills, characteristics, knowledge, and attitudes I wanted to instill in him? He is, in effect, “on loan” to Joan and I for 18 years. I want the loan to be at full maturity when it comes due in 13 more years.
Once I had completed my plan, I asked myself a question. If I could only ensure he got one of these because my life was cut short, which one would I select? It took me a few minutes to decide which one. My decision was discipline. Now, you might have selected something else from the list for your child. The reason I selected discipline was because, if he got that, he could acquire any of the others in my plan when he needed it. If he really needed something later in life, his discipline would give him the basic building block to achieve it. I also recognized at that moment that, if he learned and acted in a disciplined way, his success was guaranteed. It doesn’t mean he won’t have hardships and challenges; it means he would have the primary skill necessary to work through them. A Champion Listing Agent is no different. To really be at that Champion level, they have to acquire discipline.
Discipline is the most fundamental building block for successful people in life. Nothing of significance can be accomplished in life without first developing and then mastering the skill of discipline in a key area. It enables you to capture your motion and wisdom and translate them into action. Discipline is the bridge between thought and accomplishment – between inspiration and achievement – between necessity and productivity. Most of us align the word discipline with negative emotions, such as fear and guilt.
Here is our challenge in life: You must do things you don’t want to do … so you can have the things in life you want to have. It is the process of purposeful delayed gratification. An immediate reward for lack of discipline is a Friday at the golf course. A future reward of discipline is owning the golf course. It’s not a matter of “if” but of “when.” If it is later, the price is greater. You will pay a greater price for your success if you put off doing disciplined action to achieve that success.
Discipline is action: an act of will and self-management aligned with your priorities. Real discipline is having total control over the yes’s and no’s of life
“Life is a series of problems. Discipline is a basic set of tools that are required to solve life’s problems.”
~M. Scott Peck
As a champion, I define discipline as:
“A personal system of skills and personal techniques, developed by an individual, that are used to correct questionable behaviors and promote positive growth, personal development, integrity, and a strong character.”
Success is not something you pursue; success is something you attract by the person you become. Our mandate is to develop disciplines of success first in ourselves and then help others on the team acquire those disciplines, as well.
Success finds you when you are:
- Disciplined
- Diligent
- Consistent
- Mentally strong
- Have impeccable skills in sales and time management
- Striving for greater knowledge
Most people create a large list of undisciplined habits that they posses. We all know the things that we do that lead to our demise. We resolve over and over again to wipe out those undisciplined habits from our lexicon in life. We resolve to quit smoking, quit eating certain foods or too much food. We try to attack and wipe out the negative in our lives.
For most of us, we can’t focus too much on what we aren’t doing in a disciplined manner. That can lead to disappointment, lack of motivation, and in extreme cases, hopelessness. Too much focus on the “have not’s” rather than the new “haves” is really the wrong approach to a disciplined life. The correct approach is to focus on something new, to establish a new habit or discipline. We need to feel the good feelings and good rewards of starting and keeping with something that is beneficial to us and something new. We need to gain an advantage over the bad habits by establishing new, good ones.
Focus on walking around the block, making a couple of calls daily to your past clients, practicing your scripts and dialogues daily. These will all enable you to establish more discipline and success in your life.
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