Business Management Life

The buying forward issue for us as sales people is real. The consumers have taken advantage of the record low interest rates to position themselves for the long haul, in their present home or a new home, at record numbers in the last 24-36 months.

This movement produces some challenges for us as Realtors now and in the future. We need to respond to the call of the challenge. The marketplace of the future is going to be more competitive than ever, since the number of leads will be reduced due to the buy it forward trend. We will need to venture out into more competitive areas to generate listings and sales. The truth is most Agents choose to have a limited amount of listing prospects. The choice is made due to unwillingness to compete in the marketplace for listings. Most Agents want the listings to come to them instead. We use only a small segment of the marketplace to generate business. The small segment is centered around working ONLY on a referral basis or past client basis for their business. When we evaluate the potential listing prospects available there are six key categories of potential prospects.

1. People who plan to list with you now

This is the category that most Agents deal with exclusively. We don’t venture outside of this group. The reason is we are not prepared for the more competitive marketplace. We feel that people who are not in this category are a waste of time. We have been taught to be so-called experts to only do business with this group of people. That anything else in the marketplace is worthless other than a referral based business. These experts tell us, use my system and your relationships will be so great you won’t have to compete. They further say use my system and you will never hear an objection as long as you’re working my referral system. That is total hogwash. If you follow that model exclusively you will find the business to be increasingly difficult. This category is shrinking fast no matter how much we work a referral-based business.

Now, I do not want to get labeled anti-referral business. I too believe that is the best and easiest business to build with lower personal rejection and higher return. I think that to be exclusive when the marketplace is changing and consumers are shopping Realtor services more than ever is poor planning. The marketplace will only get more competitive as the years go by.

We have to be driven and hungry to be great, we have to work to compete in the other categories that we should be in regularly. This category of people that plan on listing with us is pretty simple, don’t blow it and we got it. The problem is, there are not enough of these people. If we don’t stub our toe on the listing presentation, we get the listing. If you don’t stub your toe that does not mean that you have a great listing presentation. We must prepare to take on more of the market than just this category.

2. People who will probably list with you

These are people that are leaning our way, but they haven’t fully decided. We might be in a slight competition for this client and this commission, but we should get a high percentage if we show up and do a few things well. The key is clearly understanding their expectations in terms of service and being able to meet those expectations and the listing is ours. We have to know how they are going to make the decision and if they are ready to make it now. Some of successful selling is being there at the right time. Far too often we are so excited about just getting the appointment we lack the preparation and timing that sets us apart from the others.

This group is shrinking also. Most people know a few Realtors. Most consumers will select an Agent based on commission or price, all things being equal. Most Agents aren’t able to clearly distinguish themselves from the competition in a meaningful way besides being a nice guy. The consumers are catching on to this lack of competitive difference and merely selecting the lower fee or highest list price Agent. We as Agents have to prove to the consumers that it fundamentally matters who they select to represent them.

3. People who are planning on listing with someone, but undecided on who

This is where the competition begins. In terms of shear size it dwarfs all other categories. This is where most Agents drop out of the game. We spend all our time on the first two groups exclusively. I think those groups are great, but they are smaller in size as a percentage of the overall marketplace.

This segment of the marketplace is rapidly expanding. This segment is taking more market share away daily from the probably list with you and planning on listing with you. If we are not actively, and on purpose, in the market segment we are losing a large part of the marketplace at large.

People are shopping more than ever before because they have devalued the services of a Realtor. The media has been hammering us for the last few years in terms of our fees and service and the consumers are buying into it. People will always shop price if there is not discernable difference.

The consumers have a commodity mindset toward us as professionals. A commodity mindset basically acknowledges that I buy commodities based on one factor and that factor is cost, the cost of the goods or services. Most of us don’t care if the bananas are Dole or Chiquita. We only know one is 59 a pound and one is 79 a pound. We will buy the one at 59 a pound. Until we strategically change the mindset of the consumer through our benefits, competitive points of difference and our competitive advantages, we will be at the mercy of the commodity mindset. We must, as professional sales people, know we are the best and show we are the best. If we do, it’s ours. We need to show the specific benefits of doing business with us and link them to the three primary needs they have as consumers.

Let me share with you how to do this. We must ask the right questions in qualifying our prospect to know:

What are their major concerns in selecting an Agent?
What are the most important Agent services they are looking for from an Agent?
How will they gauge a successful relationship with us?
What is the timeframe on their decision?

What are the two most important factors for you when selecting a Realtor to work with? The standard response by a consumer is price and commission. These are areas that we don’t want to compete on directly. I don’t want to compete directly on those factors because there will always be someone who will do it for less money and bid the price up. I don’t want to raise their price and lower my commission.

When competing to show we’re the best, we need to level shift the price and commission discussion to show them that we increase the probability of them getting the highest price.

A. Active listings we have or the company has: More signs increases the calls. It also increases the cross marketing opportunities. We create more buyers in general which directly relates to our ability to bring them the best buyer. The best buyer increases their chance of a higher sale price and a cleaner sales agreement and cleaner sale. Thereby saving them time, money and emotional energy.

B. Market share we have or the company has: Market share equates to increased call traffic of buyers and sellers. Market share dominance leads to additional opportunities due to our positioning in the marketplace.

C. Average list price to sale price: The average list price to sale price shows our negotiating skills. That’s when we tell them we can get them a certain amount, they can rest easy that we can. They can make plans to net a certain amount of money and have no surprises later on when a final contract is negotiated. My belief is surprises are reserved for birthdays.

D. Days on the market: Our days on the market share the story of our overall success. How good we are as an Agent is contained by how quickly we accomplish the task.

I am assuming that we are not radically under pricing the home. I would hope that Agents are honest and ethical enough to their fiduciary responsibility to their client. Days on the market reveal our true pricing skills and how effective we are at achieving the desired result.

There are others that I could site as examples as well like, experience in units rather than years, or average of listings sold vs. listing taken. There are a number of key ways to create competitive advantages for you in the marketplace.

In commission discussions we have to focus on the net, not the gross. When we focus on the gross and the actual commission charged, we lose. There will always be someone who will do it for less. There are plenty of Agents willing to do a commissionectomy in every marketplace in the world. When you are faced with the commission discussion, use a level shift script.

A great script to use is:

“What I hear you saying is, the Realtor that provides you the best opportunity to net the highest dollars is the person you are probably going to do business with, is that what you are really saying?”

This segways the conversation into the net discussion and away from what you charge.

The reason we don’t go down farther than the B level category is we are not prepared to compete. We don’t want to put ourselves in a position where we have a high probability of getting rejected.

My friends, that’s human nature. No one wants to get rejected. That’s what is called normal. If we knew going in that we had a high probability of success, it wouldn’t bother us who the seller was and who we might be competing against. When I sold real estate, I did a lot of business in this competitive category. This is the largest most profitable category of all, but most Agents never venture into the pool. This is a great category because the people are motivated; they are going to do something soon. They just don’t know with whom.

I had the attitude, if the seller was motivated, I didn’t care who I was up against. I wanted to know who it was, so I was prepared to help them comparison shop. I wanted to be able to highlight my competitive advantages against those of the other Agents. Be the best; learn the skills and it’s yours.

4. People who are planning on listing with some other specific Agent

The odds start to get a little longer here. We have to be able to change their thinking and really show that it would be a big mistake not to select us.

Our key point in any market place is it really matters who you select to represent your interests. It matters in dollars in your pocket, stress level of the transaction and length of time you will invest or hassle factor.

Bottom line - we have to know their expectations clearly and exceed them and we can get the listing. We have to make them realize their first reaction to who they should do business with was made without all the facts. In light of the new information we are the only choice.

5. People who may consider listing with someone

We need to cultivate more leads; maybe even longer term leads and educate those leads on the benefits of our service, but also the benefits of now. Most Agents don’t have enough leads to support the goals they have set. We need more and need to be able to convince some that they need to move now rather than later.

These people are still deciding. We need to know the critical elements of their decision to sell, so we can evaluate the odds. We must sell our personal representation services and we may get the listing. We are not assured like in A, B & C if we do the right presentation. There are factors, even with the right presentation, that would cause this person to not move forward.

This person may take additional follow-up, but in a listing marketplace that is challenging, we have to spend some of our time on a few projects to increase the listing inventory if ours is low. I would define some time as not more than two hours a week total, between lead follow-up and appointments for these people.

6. People who will not list with you. Committed to another Agent, but want your opinion or free information

These people, we must avoid - They are clearly a waste of time and energy. They won’t list with us not now, not ever.

For the last few years, Agents have been working exclusively in the A & B categories. We have been in the comfortable realm. Not wanting to venture out into the competition of the open market.

We don’t have that luxury in a buying forward marketplace. We have to be willing to enter the most competitive situations. We have to be willing to take the risk of rejection to get better.
There is a story about a basketball player named Swen Nater that John Wooden recruited to UCLA. Mr. Wooden told Swen that he would play back up center most of his career at UCLA because he would have to play behind Bill Walton.

He also gave Swen the guarantee that if he wanted to be the best player he could he should come to UCLA because he would be playing against the best daily in practice in Bill Walton. The daily battle with Bill would be the best for him as a player in the long run. Coach Wooden also knew it would take a man of great character to agree to be a back up player when he could have played almost anywhere else in the country as a starter.

Swen came to UCLA, played backup for most of his career, just as Wooden told him he would. At the end of his college career, Swen became a first round draft choice in the NBA and made millions in the NBA. Swen credits the fierce competition he played against day in and day out at UCLA with his success. He is the first to say that because he went to UCLA he turned into an NBA player.
Be willing to compete. Don’t just take the easy ones that anyone can do. Make the commitment to accept the challenge to make you better. Don’t just go for the roll over listing appointments. As the market continues to increase in competition you will see the effects of that competition manifest itself in your listing inventory numbers. Get in the game and play to win!!

Dirk Zeller is an Agent, an Investor, and the President & CEO of Real Estate Champions. His company trains more than 250,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. He’s the widely published author of Your First Year in Real Estate, Success as a Real Estate Agent for Dummies, The Champion Real Estate Agent, The Champion Agent Team, Telephone Sales for Dummies, and over 300 articles in print.

Real Estate Champions is a premier coaching company. Training covers a wide spectrum from new agents, to seasoned, as well as those interested in real estate marketing or real estate investing.

You can get more information at Free Resources for Realtors, Real Estate Training, Real Estate Marketing

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This entry was posted on Friday, May 2nd, 2008 at 8:33 am and is filed under Leadership, Management, Hiring, Ideas, Tips, Blog Carnival. You can subscribe via RSS 2.0 feed to this post's comments. Responses are currently closed, but you can trackback from your own site.