In This Issue...
Words of a Champion
Dirk Zeller
CEO
Even Champion Performers get brain cramps at one time or another. Even Champion Performers occasionally rush ahead without assessing the situation and assessing the odds. Unfortunately, they often end up with the same disastrous results as everyday people.
As salespeople trying to achieve the Champion level in life, we must understand and apply the odds of our business, the marketplace, prospect conversion, time invested, energy required, emotional level, and future income potential. There are a number of key evaluations to make. The big question is what are the odds?
Here are the questions you must evaluate about your odds as a real estate agent right now.
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What are the odds of each of my listings selling in the next 30 days? If you are not at least at 70%, corrective action needs to be taken. The most effective corrective action is a price reduction.
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What are the odds of each buyer you are working buying in the next 30 days? At least an 80% is required to continue to invest your time in showing property to them.
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What are the odds of that prospect committing to work with you exclusively? At a minimum, that prospect needs to be 51% or greater . . . a probability rather than a possibility. The only exception would be a prospect you know has to list or buy in the next 30 days. The timeframe in that instance is so tight it allows you to expand the odds downward. Where agents get in trouble is working low probability prospects for long periods of time. Even if you get the transaction, by the time you do, you have worked so hard convincing them to work with you and providing them service there isn’t any net profit left in the transaction.
We are in an odds-based business. Those odds need constant evaluation in terms of our prospects, customers, clients, listing inventory, and the changing marketplace. The marketplace will move the odds of success in a volatile market monthly and, in most markets, quarterly. If you don’t track the marketplace, you won’t know the odds.
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Dirk Zeller, CEO
RealEstateChampions.com
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Entering the For-Sale-By-Owner World
Converting FSBO listings involves a process that, in a number of ways, is similar to working with expired listings. However, there are two key differences between the two areas.
The biggest difference has to do with timing. Most expired listings are re-listed and back on the market within a matter of days, while FSBOs convert at a much slower pace. If you contact the owners of a FSBO, usually you can expect them to take at least a few additional weeks to try to sell on their own before they commit the listing to you.
The second big difference has to do with the sales approach. When working to convert an expired listing, you need to take control in order to prevail over a bunch of other unknown agents who are vying for the listing. The owners of the expired listing rarely have an agent preference at this point. Their “first-choice” agent was the one whose sign just came down; from that point, they’re pretty much up for grabs. This isn’t always the case with FSBO owners, who sometimes have an agent “in the wings” who they are considering signing with if they have no success on their own. For this reason, you need to take a lower-key approach and work to build a relationship in order to win over the FSBO listing.
When the marketplace is active and everything in sight seems to be selling, as was the case years ago, FSBO listings abound, and FSBO owners achieve a reasonable sales success rate even without the services of an agent. So you may be wondering why an agent would even spend time trying to convert FSBOs to agent-represented listings. Here are just a few good reasons:
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FSBOs are simply too tempting and attractive not to work with. Real estate agents market homes for sale, and FSBOs most certainly fit that category. It doesn’t make sense to ignore this great market segment, though most agents do.
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Owners of FSBOs are qualified, motivated sellers. Clearly, they want to sell, but likely, they don’t realize the long odds of the game they’re playing.
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Owners of FSBOs are viable client targets. Unlike other prospective clients, you don’t have to wonder whether they own their home, whether they’re serious about selling it, and whether or not they have the authority and ability to conduct the deal.
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Owners of FSBOs are easy to find and reach. One of the most difficult steps in the sales process, no matter what you’re selling, is locating prospects in need of your product or service. With FSBOs, like expireds, you know who your prospects are, and you know how to get in touch with them. Reaching FSBOs is easier than reaching expireds because they want to be found.
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The vast majority of FSBOs fail to sell on their own. Even in a robust market, fewer than 30% of FSBOs sell themselves. This means more than 70% of the owners, if they want to sell, will eventually enlist the services of a real estate agent.
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FSBO sellers often net lower prices than those achieved by agent-represented sellers. Among the 30% of FSBO homes that result in a sale, most are priced right at or below fair market value. In fact, to FSBO sellers, price is the primary marketing ammunition. There is no reason for a buyer to take the additional risk of working with a FSBO except that they are trying to acquire a home for less money than they’d spend on a traditional transaction. The problem is that low price is exactly the opposite of what the homeowner is trying to achieve.
More than nine out of ten serious FSBOs end up as agent listings within a reasonable period of time – usually four to five weeks. Originally, owners set out to sell their own homes for one reason: They want to “save” the agent commission. They view the $10,000 or $15,000 that an agent will earn as too much pay for such an easy job and as money that they could put toward an additional down payment or a get-out-of-debt plan. They ask themselves, “How hard can it be?” as they pound the FSBO sign into their front yard. In the back of their minds many think, “Let’s give it a go. We’ll probably meet a few agents along the way, so we can always change our minds.” And most do.
After a month of the hassle, time, energy, emotion, and stress of trying to sell their own home – after running ads, fielding phone calls, holding open houses, and showing parades of people through their home – 90% of homeowners rethink their answer. Fortunately for agents, selling a home isn’t all that easy.
Before you pursue FSBO listings, it’s worth it to know the situation you’re entering.
When a FSBO goes on the market, most often only one of the owners is leading the charge. One half of the couple is fixated on saving the commission and the other relents for a specific period of time. As part of their compromise, they agree to give the FSBO approach a try for 30 to 45 days, after which time they agree to list it with an agent.
More often than not, the consenting partner gets frustrated with the whole process long before the FSBO test period elapses – tired of all the calls from agents and of the buyers who make appointments that end up as no-shows. If they do secure an offer, the owners grow weary when the buyer can’t secure financing. They get tired of people who need “help” to buy a home and who ask the seller to take less, carry a second mortgage, engage in creative financing, or even entertain some form of fraud. And then there are the jokers fresh out of some “no money down” seminar…
This is the life of a FSBO, and it’s why the odds of FSBO-conversions are heavily in your favor. Over 80% will end up as agent listings if they are serious about selling.
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Mastering the Primary Tool of Every Real Estate Agent
When sales skills go up, income goes up. There is a direct correlation between sales skills and ability and income. I know there is a large group of skeptics reading this. Let me illustrate my point. To be successful at any profession, no matter what profession you select, you have to achieve mastery of the primary tool of the profession. There are other secondary tools that help, but the primary tool is the cornerstone or capstone to success. Without mastery of it, you will always be brushing up against a ceiling of production; you will never explode through.
My father was a dentist for over thirty years. As a successful dentist, he had one primary tool that he worked for years to master, and a lot of secondary tools. As secondary tools, he had explorers, drills, polishers, Novocain, a dental chair, lights, scrapers, probes, amalgam fillings, sealants, gold crowns, different types of adhesives, x-ray machines . . . you get the idea. All of these were secondary tools.
What is the primary tool of a dentist? What is the one tool that must be controlled to let all these other tools work their magic? For a dentist, it’s his hands. A dentist without skillful hands as his primary tool isn’t a good dentist.
As a real estate salesperson, you have laptops, blackberries, Internet sites, lock boxes, lock box keys, marketing pieces, mailings, flyers, customer relation management (CRM) software, computers, tracking forms, your car, your clothes, MLS, and countless other secondary tools. What is the primary tool of a real estate salesperson? For a real estate salesperson, it’s the words that you say and how you deliver them. The message you present and convey either causes the prospect to work with you or repels them away. All the other secondary tools will not make up for a lack of skill in the primary area – the words that you say and how you deliver them.
Most agents invest far more in their wardrobe than they do in themselves and their skills. I have listened to hundreds of very good agents’ prospecting, lead follow-up, buyer consultation, and listing presentation tapes. I have never gotten one initially that I thought was awesome. The tapes I have listened to have come from some of the best agents in the world. That’s why I can say confidently that the vast majority of you reading this article, even if you are doing a lot of production, have a message or presentation that is not very good, either. I am not trying to cause you to get mad at me, by making such a bold comment. I am merely trying to get everyone to face the facts of how important our message is and what we need to do to change it to improve our business.
I had a client I worked with for a number of years who was an excellent agent in Cleveland, Ohio named Sheri Nasca. Sheri was one of the best salespeople I have ever worked with in terms of sales skills. She was forced to move and restart her business all over again in the Chicago area. She did sixty closed sales her first year in Chicago without knowing a soul. She was able to do it because of her superior sales skills. I think sixty units your first year in production without market presence, a sphere of influence, or past clients is outstanding. Sheri did it because she is the consummate professional in her sales skills.
A professional football team will practice for forty to fifty hours a week in preparation for a sixty-minute game. How much time do you invest weekly to practice your craft of selling? Most agents will spend at least $500 on a good suit, $75 on a quality shirt, $75 on a nice tie, $12 on socks, and $200 on a quality pair of shoes. All tolled, we will invest nearly $850 to walk out the door dressed for success. Yet, we won’t spend a dime on what matters most – our mind and our sales skills to create, convert, and service our customers well. The message you present and its quality are imperative.
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Seven Steps To Successful Selling
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Customers will judge your service performance with every transaction: In today’s world of sales no one gets a free pass. You always have to be prepared to perform at the highest level. We are not given a second chance in today’s world without a significant reason. The only opportunity we will have to “play it again” will be based on a substantial benefit to the customer the second time around. This usually equates into a substantially lower fee for goods and services or an unbelievable benefit to the client. Loyalty is not as much of a factor in today’s marketplace. One mistake can erase years of loyalty.
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You must have a real compelling reason for the customer to choose you over your competition: There are more choices and competition in today’s new economy than ever before. We must aggressively pursue sales situations where we have a clear and compelling advantage over the competition.
We then need to be prepared with a strong presentation and the facts of why we should be selected over our competition.
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Your competition should not be able to duplicate your compelling reason: Your compelling reason should be a factor, or combination of factors, that your competition fails to produce. This could be your success matrix numbers, or savings your client will receive from using your product or service. Any compelling reason that is truly a benefit to your prospect or client.
The benefit or compelling reason must be important to that individual you are working with. To ensure it has importance to the individual customer, you have to ask that customer enough questions to understand what they need. We have to properly diagnosis the problem before we can move into prescription.
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Target your prospects well: Success in sales is contained in selecting the right customers that are the right “fit” for your product and/or service. We are not able to service all consumer and customer requests. We must be selective when evaluating the highest probability of success in making the sale, but also in servicing the client long-term. We need to evaluate the needs of the customer to know whether to pass on this opportunity or go for it with intensity, focus, and the expectation of winning.
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Turn down the prospects that don’t fit: Most salespeople are not prepared to turn anyone down. They spend their time trying to make lemonade out of lemon clients. These types of prospects create trouble for you in the end. Since in many cases they don’t view the service you provide as any different than anyone else. They have limited loyalty and even more limited tolerance for error by you.
One of the best feelings in sales, even greater than getting the sale, is turning the sale down. Being able to say, “I am sorry I can’t help you.” Or, “I am sorry that doesn’t work for me” is powerful. If you are really working the right group of people you will get to do that often and do more business when you do.
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Embrace the 80/20 rule: To be a high-powered salesperson we need to apply the 80/20 rule daily. Most sales people readily evaluate the value of a particular client. They are just working hard to make the sale.
Some prospects and customers are just worth more money. They have the capacity to generate more revenue in less time. For salespeople 80% of your revenue will come from 20% of your prospects. Your objective is to spend the most time investing in those 20% rather than the 80%. We need to clearly focus on working that 20% first and the remainder of the time investing in the 80%.
We have to increase the number of easy sales that we can do and reduce the number of difficult sales we do. Sales is a margin game not a volume game. It’s the margin between the revenue that you make and the investment you put into it.
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We need to shift the ratio of supply and demand for our products and service: Our objective should be to raise the demand of our product and services to a level where demand outweighs the supply. Where we have more prospects knocking at our door than we can handle effectively or want to handle.
The most successful way to shift this is to increase our prospecting for new opportunities. Most salespeople prospect like their supply exceeds the demand. Because of limited prospecting there is no pent up demand, only over abundance of supply. There is restriction of growth in that model.
Our goal should be to have twice as many leads as you can take to a sale. This is the reward for prospecting. You then qualify the leads based on motivation, your time investment and your revenue generated. Selecting only the best and referring the rest.
We need to apply these seven principles to insure growth and long-term success in our sales business. Each one is significant on its own, but coupled together, you become unbeatable.
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