We have some interesting dilemma taking place in the Real Estate industry, and it’s not one that can easily be cleared up or solved. However, it’s one that each of us has to address individually so we can clarify the direction we’re going to take with our business in 2015.
I had the good fortune of meeting with a Real Estate agent from Pennsylvania several months ago. He does about 75 transactions a year himself and then has 2 buyer’s agents who do about 50 transactions a year. 90% of his personal business comes from his past clients and center of influence … his database … which he works extremely well and the majority of the business from his database are listings that he takes, which eventually sell.
When we talked about where his buyer’s agents get their leads, his head kind of bowed forward and he got a little embarrassed, which I didn’t quite understand. Come to find out, he’s spending approximately $10,000 a month buying leads from one of the lead generation services on the internet. Yes, I said $10,000 a month. So, one of the dilemmas we face is whether or not we should be buying leads, which is questionable because they’re providing an agent with buyers and the biggest challenge we have in the Real Estate business today, including our Las Vegas market, is a shortage of inventory.
The second dilemma that I see is the agents who are deeply involved in all aspects of social media and technology, believing they are the answer to all problems that Realtors could possibly face. What I find most interesting about the technology and social media people is that they are taking the approach that they are 100% right and everybody else is wrong. I guess when you’re involved in technology and social media, you don’t see that there is white, black and gray on the color chart. I think most Real Estate people are now aware that social media, like Facebook, is not all that it was presented to be as a business-getter or as a method of expanding a business. (Just don’t say that to a technology or social media person!)
The next dilemma we face is trying to decide whether we’re going to spend money on marketing and advertising and personal promotion and if we’re going to, how much we’re going to spend. I talk to agents all the time, from all over North America, who are earning $500,000 or $600,000 a year and spending $150,000 to $200,000 a year on their advertising and promotional campaigns. When you look at this logically, it doesn’t make any sense because, as you know, if you make $500,000 gross and you spend $150,000 on advertising, and another $75,000 on normal business expenses, you now have approximately $250,000 in income. Then, you subtract 30% in taxes and all of a sudden, your $500,000 (which looks really good in your mind) is $145,000- $150,000 in spendable income. Yes, that’s a lot of money, but at the same time, there are a lot of people who earn $500,000 who are keeping $350,000. Which agent would you like to be? The unfortunate part of this category of agents is the fact that they want to “brand” themselves and make themselves into a household name in the community. This is an expensive endeavor that requires a lot of money.
The next dilemma is to look at the good old fashioned way of doing Real Estate, which is going out and earning it every day, by going out and finding people who want to buy and sell Real Estate. If you look at the people who are consistently doing a high volume of business, whether it is 40/75/100 transactions a year, they are people who are working their database continuously, spending the time talking to By Owners and Expireds, doing Just Listed/Just Sold doors and phone calls; and they’ve become real good at lead follow up, which brings them to continuous listing presentations.
The dilemma here, of course, is learning the scripts, dialogues and skills required to make this happen. When you take that approach, your confidence goes up and your income goes with it.
So as we look at 2015, which is right around the corner, I’m going to again suggest you source every listing and sale that you had in 2014. Where did they come from? How did you get it and can you duplicate it? We know that this last portion of the article, where you’re out looking for business every day, is predictable and can be duplicated and therefore, the most productive and profitable. Make some good decisions as you look at 2015.