Building a successful real estate business for the long term requires self-knowledge, social skills, thinking beyond the immediate sale and understanding the dynamics of your market.
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In the summer of 1980, I was sent to Vista, California, to attempt to rescue a failing real estate office. Failure has a look about it that says, “I don’t care.”
Drab and dingy, grim and grimy, a hodge-podge of mismatched furniture and plastic plants that reminded me of a rummage sale.
The company turned down my request for a refresh, so I bought a couple of cans of paint and went to work in the evenings repainting. The office was quite typical for the time, a 1,200-square-foot space in a strip mall between a donut shop and a supermarket. There were 20 desks crammed against the walls that had to be pulled away to paint.
In almost every instance, when I pulled back the desk, pieces of paper that had been stuck between the desk and the wall would flutter out. There were phone messages, sticky notes and memo papers. They all had hastily scribbled yet similar cryptic codes: 3br/2ba, lg. yd., $90-120, a name and phone number.
It took me a minute, but as I collected them, I realized that these were leads. These were the notes of someone who had expressed an interest in real estate and then literally slipped between the cracks. Some had been there for years.
The irony of these tiny pieces of evidence of missed opportunities and their association with a failing office and was not wasted on me. I learned something important about real estate agents from that experience: they are encouraged to be deal chasers, not business people. They held potential future business in their hands, and they did not follow-up.
Out of sight, out of mind and off to find a “ripe one.” Giving them leads was throwing them away. Because they didn’t create them, they didn’t value them.
The other problem with the scribbled notes is lead quality. Leads written without more extensive notes on the inquirers is a stranger, a name and a number, a cold and lifeless ghost with whom we share no humanity. A good lead is as rare as a millionaire real estate agent.
1. See it as a business, not a sales job
The primary reason that real estate agents fail is that they see what they do as selling rather than business building. They lack focus and tend to ride off in all directions at once. They think primarily about buyers. They prospect, they sell, and they close … if they can.
Surviving and ultimately thriving in a highly competitive arena requires thought and planning. The business is out there, but so is a lot of competition, many times more than the volume of closings can support. Fortunately, most of them won’t be thinking and planning, they will be waiting for the good leads and chasing “ripe ones.”
A businessperson has a singular focus, which is customer creation. In the world of business, the mention of a single name draws immediate respect – Peter Drucker. For over 60 years, he influenced generations of business people as a teacher, a writer and a business leader.
Drucker said: “There is only one valid definition of business purpose: to create a customer.” He noted that profit is the byproduct of doing that well.
Drucker stressed this point: “Markets are not created by God, nature, or economic forces, but by businessmen. The want they satisfy may have been felt by the customer before he was offered a means of satisfying it. There may have been no want at all until business action created it.”
A businessperson wouldn’t be dependent on leads because the goal is customer creation. A lead is not a referral. A referral is the friend of a friend or acquaintance. A referral comes to you predisposed to utilize your services.
2. Know your objective
There are many distractions in real estate but the one thing that will make the biggest difference in your earnings and longevity is to build and maintain, through referrals, a portfolio of at least five marketable listings.
Listings are a contract that assures you will be paid. Many agents focus on first-time buyers, not realizing how long the process will take. According to National Association of Realtors (NAR) they made up only 33 percent of all buyers and obviously they represent zero percent of sellers.
There is no shortcut to earning a living in real estate, but there is a clear and sustainable path. Meet people, make friends, give 100 percent, and ask for listing referrals.
3. Create your own community
How many people do you know? 100? How many of them will be doing business with you? Maybe seven, maybe five, probably none. But they know people too, and your target is their community; the friends, relatives, neighbors and co-workers of the people you already know.
Most people know at least 100 people. Every time you create a new community member, you gain potential access to everyone they know. You know 100 people, they know 100 people. Now you have a community of 10 thousand; your own small town — “Youville.”
Increase the size of your community, and your business will grow. If you double the number of people you know, your volume will increase exponentially. Be selective. It’s your community. Who do you want to have as a member? What would your ideal customer look like?
4. Do what you love to do
The most effective way to increase both the quantity and the quality of your referrals is through the pursuit of activities that you enjoy. If you didn’t need to work, how would you spend your time? And just as important, what are all of the lesser things that bring you simple joy?
Make a list. You cannot have too many. Which of those activities involve other people? There you go, that’s work. That is your new job. Pick something to do together, and put it on the calendar.
You are building a referral business, and the best way to do that is by participating with like-minded others who share similar interests and values.
Understand where listings come from. While there is definitely a shortage of “ripe ones,” there is plenty of trouble and woe: divorce, death, illness, accident, financial problems and relocation. These are the predictable life events that cause real estate to come to market in the first place.
It is worth noting that when asked what the greatest negative impact on business was, NAR members most often selected lack of inventory. Concentrate on building a business that generates listing referrals, and you’ll be able to buy your own coffee.
George W. Mantor is an author, writer, speaker, real estate professional and founder of the Associates Financial Group. Connect with him on LinkedIn.