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RULES for REAL ESTATE SUCCESSReal Estate Sales and Marketing Guide
By C. Perez
iUniverse, Inc.Copyright © 2011 C. Perez
All right reserved.
Chapter OneReal Estate Success
Understand the following:
What will be required to achieve the level of success you want
The decisions you will make for a successful real estate career
What to expect as a real estate agent
How to prepare for a the real estate career
How to overcome common pitfalls in real estate
Can you be Successful in Real Estate Sales?
Real estate is not for everyone, but if real estate is for you, there is a systematic process that can lead you to success. However, before you decide to invest in this career, you have the right to know what is required to achieve the level of success you want, and what is the realistic income you can make. To help you with making a real estate career choice, this chapter will introduce four crucial areas that you will face.
Four Crucial Areas (D.E.P.P.) You Will Face as a Real Estate Agent
3. Being Prepared, and
4. Pitfalls you will encounter.
In this business, you will have to make several difficult decisions. For example, you will need to decide if you want to be a full time or part-time agent, the type of training you will obtain, and the type of Brokerage Company in which you will be comfortable. Will you generalize or specialize? Will you work with buyers or sellers, or both? Will you obtain a mortgage license? What type of marketing will you use, and in what areas of real estate are you willing to invest in? The most important decision you will make is whether you can make a commitment to yourself. Once you have decided, you can start implementing your plans and goals. Later, you can always adjust your goals, but for now, you need some direction. Schedule a meeting with your broker, manager, or a career coach. Below is an introduction to serious decisions you will have to consider which are covered in greater detail in Chapters 7-10.
Full-time vs. part-time self-employment
Job vs. career choice
Generalization or specialization agency
Single vs. multiple license
Buyer vs. seller agency or both
Virtual vs. physical marketing
Salary vs. commission income
Small vs. national franchise brokerage
Type of commission agreement
An action plan
Deciding on Your Marketing Approach
The following chapters hold many suggestions about how to find business and how to drive it to you. This is the concept of marketing and sales. Tom Hopkins says, "Selling is a two part component: one is to find people to sell, and two is to sell to people you find." While the following chapters offer hundreds of ideas, you cannot use them all. Instead, try to find a few marketing ideas that works best for you. Try to develop a working model. You can adjust the model later to suit your own needs and style. Your selection should be based on a good return on your money, whether you enjoy it, and how comfortable you are using it. The more comfortable you are using a marketing idea, the more likely you will devote enough time to it for success. We are all different and prefer one marketing or sales technique over another. Whatever you decide, make sure you give it enough time to work and enjoy what you have selected. Good ideas may take several months and an investment of money, but nearly all proven ideas will work, provided a sufficient amount of time and money is invested. A mistake many new agents make is trying new marketing ideas without giving the previous ideas enough time to work.
Deciding Whether to Work Full-Time or Part-Time
You will have to decide if you are going to be a full-time or part-time real estate agent. To help you decide, answer the following questions: "If I were selling my home, the biggest investment of my life, which agent would I use?" Who would most likely be there when you needed them? Who would most likely be committed to his/her work and be able to service your property 100% of the time? You would want the best, someone who would give you 100% of his/her effort, and has made a commitment to his/her career rather than treating the work as just a job.
It is understood you are entering this business to increase your earnings. However, success in real estate is rare for the part-time agent. This is not to say it cannot happen, but it takes a remarkable person with time management and an understanding of the information presented in this text. For this reason, most brokers are reluctant to hire part-timers unless they are either paying a monthly desk fee or have plans to become full- time. Not everyone is able to start working as a full-time agent, if this is your case; the material in this book is designed to help you quickly reach your goal so you too can enjoy a successful and rewarding career.
Decide to Generalize or Specialize
Another decision you need to make is whether you will be a generalist or a specialist. You will most likely have to generalize during the early part of your career; nearly all agents do. At some point, you will need to decide whether you want to continue being a generalist (i.e., a "jack of all trades" selling real estate, insurance, mortgages, and property relocation, or helping both buyers, and sellers) or if you want to become a specialist, the expert in a certain market. An agent who is a specialist may work with only buyers or only sellers, within certain income brackets, or in a particular location. Most top producers are specialists. For instance, top athletes who specialize in one position generally get paid more because they are considered the best in their field of work.
If you decide to specialize in working with only sellers, focus your attention on taking care of your sellers. If you are a buyer's agent, focus your attention on how to best serve your buyers. Focusing on anything else is a distraction. Another reason top producers specialize is due to the amount of work, time, and money it takes to be an expert in a particular area. How to become a specialist is discussed in later chapters. After all, the top 10 percent of successful agents are specialists, while the bottom 90 percent are generalists. The common belief is that agents should do it all, be a one-stop shop. On the surface, this seems like a good way to make extra income; however, this is not true. Imagine you are having a medical procedure. Do you want a general practitioner or a specialist? If you are having a complex procedure, you probably want a specialist, and are even willing to pay extra. Since housing is the biggest investment for most buyers, they will also want a specialist, the expert, especially for the same price.
One-Stop Center Decision
Many real estate offices provide several options for buyers and sellers. A one-stop real estate office or a real estate broker may offer residential real estate, commercial real estate, leasing, mortgage lending, insurance, investments, and title work services. Attorneys, surveyors, appraisers, interior designers, engineers, investors, hard money lenders, and real estate schools may be housed in the same office. This concept was developed to make home purchasing easier, less expensive, and more attractive to consumers. Real estate buyers and sellers shop or go to one office instead of going to different people and locations. The real estate broker could offer discount fees, since he/she would receive fees from two or more sources. Since the broker can control more resources, it is easier to legally resolve any problems and be able to close on time. If the broker acts as the real estate agent and loan officer, many transactions can be saved because he or she has both licenses. Many agencies consider this practice unethical; however, there are federal and state forms for this type of arrangement. Sometimes this helps push a sale through when the closing would not have funded with only one license.
Choosing Sellers Over Buyers and Vice Versa
Before deciding on working with buyers or working with sellers, decide which group will prove more profitable. Which group costs more and takes more time to work with, buyers or sellers? Usually, the answer is buyers. Searching for buyers is an expensive exercise, which can be frustrating. Many agents start working with both to get a better understanding of the selling cycle. Later, they will decide if they prefer to concentrate on one group over the other. As you will discover, many agents simply enjoy working with buyers. If you would rather work with buyers instead of sellers, that's understandable, but be aware of the cost and frustrations associated with working with buyers. Chapter 10, Prospecting for Buyers, provides several tips to help reduce the cost and frustrations of working with buyers.
For every house sold, there is an equal number of buyers and sellers (or the 50/50 rule). Today, over 73% of buyers search the Internet for their housing needs before searching for an agent. This is an important statistic which you will need for planning your marketing approach. Planning your marketing is discussed in Chapter 6. Buyers will usually call the agent who holds the housing inventory, thus leading to a possible increase in the agent's income. Chapter 7 discusses how to increase the number of buyers who call on your listings. The more inventory you hold, the greater the percentage of calls you will receive. More signs mean greater exposure. The bottom line is agents who focus on sellers have over 80% more business than agents who work with buyers. Skillful agents who understand agency rules will sell at least 50% of their listings if they adopt the marketing and sales strategies mentioned in the chapters with statistical sources to follow.
Virtual vs. Physical Marketing Decisions
You will have to decide whether to use old methods of marketing or try new technology. Before computer technology, agents prospected by farming/harvesting, cold calling, door-to-door sales, and using regular mail. This has changed. The future of real estate marketing is clearly the Internet by using social networking, software, cloud computing, and online services. While the Internet may have virtually endless boundaries, let us look at previous marketing techniques. Farming, cold calling, and door-to-door sales may be old-fashioned, but they still work, therefore, many agents are comfortable prospecting this way. Old-fashioned prospecting is discussed in Chapter 7, Prospecting for Sellers, to help you understand how each marketing method works. Having many options and using them all is almost impossible. Considering time and your monetary resources, are you comfortable using old reliable methods, or are you willing to understand and invest in the future of technology? Try to find new ways of using technology with old fashion prospecting.
Deciding on Commission or Salary Decision
You will need to make the decision to work for commission only income or salary income. Deciding how you would like to be paid for your services is a serious decision to make. Most brokerage companies are commissioned only. If you do not sell, you are not going to get paid. Coming into the office and working from 8:00 a.m. to 8:00 p.m., seven days a week will not earn you a paycheck. You must close a deal. A transaction may take several months to close, or worse, it may take several months to put a seller and buyer together, and then take several more months to close the deal.
Nearly every broker has his/her own commission structure, which can range from 100% of the commission to being paid 50% of the commission. You must decide what is best for you. A 100% commission broker may have a pricey monthly desk fee and/or not offer the tools you need, while a 50/50 commission plan may not have such a fee and it provides substantial training. The 50/50 commission broker is paid for availability to you. Keeping half of a commission is a significant incentive for the broker to want to help you and train you to become a better salesperson. Be aware that some 100% or even 50% commission brokers may have little incentive or are unable to help you become a super star. As you prepare to obtain your real estate license, you may want to visit several brokerage offices for information on training, support, fees, and commission structures. Study the different commission structures to find out what works best for you. If you choose a broker with a nice commission structure, but it ends up not working out for you because of the many additional fees, or they do not have the training to take you to a higher level, you can always transfer to another broker.
Deciding on an Action Plan
Are you in the habit of making excuses, such as why you did not finish your assignments? Was it due to a lack of time, or were you watching your favorite television show? If sales are slow, it may be due to the economy or it could also be your mindset. If you think sales are slow because of the economy, you are just blaming the economy. Instead of blaming the economy for slow sales, make the decision to readjust your plans; look into additional marketing techniques or mail-outs. Try something different, such as: door-to-door sales, start a farming plan, open houses, or turn your attention to short sales and investment properties. If you need more leads, start a listing campaign. Hundreds of ways are available to promote your real estate services. We all have comfort zones (the least amount of stress for the greatest reward), but continued drops in sales is an opportune time to rethink goals and plans. As you leave your comfort zone, do not be afraid to make mistakes. Business mistakes become learning opportunities.
What to Expect from a Real Estate Career
What to Expect
While thousands of individuals choose real estate as their new career, the public frequently hears about the lucrative investments and the money some agents make. The public is unaware, however, the degree of effort those agents made in order to obtain their income. Therefore, before starting your career success, giving some employment insight into this business to you is only fair. Let us examine what you should expect from this business.
Expect to Be a One-Man Show
Being self-employed in real estate is much the same as being the CEO of a company except you will be doing it alone, without the help of specialists. Keep in mind that corporations hire accounting specialists to do the paperwork, financial managers to prepare budgets and taxation, upper managers to design plans, CEOs to establish goals and make decisions, lawyers to make legal decisions, marketing departments to create ideas to attract customers, salespeople to sell the products, and human resources to keep everyone happy. As a real estate agent, you are essentially a CEO without any of these people to support you, unless you are willing to pay for their services. No one is going to set goals or develop a well-executed business plan for you. No one is going to tell you how you are going to sell houses. Being a self-employed agent means you are an army of one – you must be all of these specialists yourself. In preparing for this type of career, you must be willing to treat your new career as a real business.
You will need to learn (or at least be aware of) taxes, budgeting, accounting, legal issues, marketing, sales, as well as setting goals, and devolving a business plan. More specifically, you must transform yourself, which will require you to do things you have never done before. You will have to learn new things and learn how to do them differently. Think about your new real estate career this way, "You cannot succeed in business unless you understand business." Secondly, "The greater you understand business, the greater the opportunity for business success." Community colleges are an excellent resource for business courses. Invest in your career; do not just take the minimum number of courses to obtain a license, but sign up for business courses that will advance your career. The advantage is that you have the opportunity to earn more income than any other type of employment. What other types of work makes it possible for an average person to earn millions?
Being self-employed as a real estate agent essentially means "No Work, No Money." Business is not going to come to you. The fish is not going to deliberately jump into your boat. You are not going to sit in an office while customers line up waiting to see you. Most likely, it will be you looking for business, not business looking for you.
Excerpted from RULES for REAL ESTATE SUCCESS by C. Perez Copyright © 2011 by C. Perez. Excerpted by permission of iUniverse, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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