By Craig Proctor
RISMEDIA, March 26, 2008–History repeats itself.
Two decades ago, right across the country, the housing market tanked. Up until this point, housing prices had seen an average and steady increase. Around the turn of the millennium, the market really cranked up and held that way for 5-6 years. Because the market was so good, new agents came in droves.
Just 12 years ago in 1996, there were only 408,000 real estate agents, brokers and appraisers employed full and part time nationwide. Four years later that figure had increased by more than five times to 2.1 million agents and within a year, by 2001, there was a further 10% increase in agents to 2.3 million. In California alone there are nearly half a million agents (that’s a mind-boggling, 1-out-of-every-52 adults in the state!). Until recently this wasn’t an issue because the market was so hot and there was enough business for everyone. We competed for listings, but didn’t hold onto them for long because buyers were in abundance.
As we are all very aware, the up-curve has swung dramatically down. With more agents competing for a shrinking pie, median income, and the very survival of many, is being affected. A study by the National Association of Realtors said the median income for its members fell to $49,300 in 2004, down 5.6 percent from 2002, blaming the influx of new agents for the decline.
In April 2007, NAR predicted that U.S. home prices will likely drop nationwide by 0.7% from 2006 levels. This is an unprecedented call from this group, which has frequently publicized the fact that median home prices haven’t declined since the Great Depression. Couple this with the current extreme caution being exercised by lenders that has resulted in a decline in eligible buyers and an increase in foreclosures, both of which are adding to the inventory of houses in an already over-stocked market.
For most agents, then, listings are easy to get, but they’re not selling. As a result, the average agent is finding his or her personal listing inventory swelling. This is not a good thing. It means spending more money to sell each listing, which means, in turn, that agent’s net income could drop still further.
In average times, 20% of new agents fail within their first year in business, and 80% don’t make it to their fifth anniversary. These are below average times, so these statistics will only get worse. The harsh reality is that there is no longer enough business to support all the agents operating. Tactics are shifting and many are turning to discounting their commission to find an advantage over the dozens of other agents competing for the same clients. There is a much better way.
If life were a TV show, this would be “Real Estate Survivor.” Whether you get voted off the island or not will depend on how quickly you adopt the following five key “Survival Strategies” you will need to survive this buyer’s market:
1. Learning how to attract droves of loyal buyers who will not only sign a contract with you and do business on your terms (doing 90% of the work themselves), but will also happily pay you more than they would any other agent in town
2. Using guerrilla warfare tactics that will get your listings to sell faster and for more money than any of your competitors
3. Using inexpensive automated real estate marketing systems that attract, screen, qualify and pre-sell buyer and seller prospects for you who won’t argue with you about commission but instead happily pay you what you’re worth
4. Getting sellers to price their homes right the first time
5. Spending less on advertising yet attract more clients than agents with greater visibility
Agents who use these five strategies are not afraid of the current market. Instead they actually make more money in slow markets such as the one we’re experiencing because they know exactly how to market to real customer needs and pick up the pieces from the massive agent fallout.
You Become What You Think About
The first step to meaningful change and long term survival is mindset. If you position yourself as desperate, you will be desperate. The fact of the matter is, however, there is an exclusive subset of agents in marketplaces across the country who are not giving their time, money and pride away, and are also charging and getting more from both buyers and sellers. Only in the absence of value does price becomes an issue. If you’re not showing value, you will continue to discount your fee.
The Wrong Way to Work with Buyers
Most agents jump the moment a buyer calls on an ad or sign, putting them in their car and driving them around and around to look at houses. By doing this, you’ve demonstrated to buyers that you are willing to give away your time for free. No wonder buyers take advantage of most agents. By demonstrating your willingness to be used, you’ve set up the basis of your relationship going forward and you’ll be hard-pressed to gain back any control. Many agents will argue this point with me at first, claiming that their responsiveness sets up “good will” with the prospect, making them more inclined to include them in the transaction when they find a home they like. How many of you have heaped your good will upon a buyer only to find out they’ve bought through another agent who was lucky enough to be the one to show them the right home?
Who said you should be picking out the homes for the buyer in the first place anyway? If you’re honest, you’ll admit that most buyers find the home they ultimately buy themselves, despite how many homes you show them.
The ads you should be running to attract buyers don’t necessarily have to correspond with your specific listing inventory. Of course you should market your listings, but you know that when a buyer calls you on one of your listings, the chances that he/she will actually buy this specific home are very slim. More likely, after viewing this home, they’ll discard it as either being too big or too small, in the wrong neighborhood, etc. etc. You know this is true, and you also know that when you run an ad to promote one of your listings, it is highly unlikely the buyer for this home will come from call-ins about the property.
Despite the fact that all agents know this, many continue to knock themselves out describing the physical features of home A and home B in the hopes that someone out there might be yearning for a brick, 3-story, 4-bedroom home with a new dishwasher.
Here’s a tip: Buyers could care less about the features most agents drone on about in their ads. What they do care about is an emotional connection with the home they will buy. It’s your job to hit these emotional hot buttons in your ads to get prospective buyers to raise their hand – not to “buy” or to “make an offer,” but simply to raise their hand. Once you get a buyer to identify themselves, you can now take the next step of turning them into a loyal client you are guaranteed to get paid by.
Some of the most effective ads to attract buyers don’t advertise a home at all. But all of your buyer ads should compellingly call out to buyers with an offer they crave to take advantage of. Once they contact you to get what you’re offering, regardless of which ad they called in on, you should take the following steps to turn them into loyal clients:
You should compel prospects to come to your office for a face-to-face meeting (and 7 out of 10 should readily agree to do this) so you can provide them with daily updates of homes that match their criteria, including bank foreclosures, company-owned properties, vacant homes and other distress sales. You should explain that this is a free service and does not obligate them to buy a home.
If they object to this meeting and ask to do the whole thing over the phone, I recommend telling them the following: “Well, rather than e-mailing you hundreds of homes that may or may not match your criteria, or risk missing out on the perfect home, if we can get together for about 20 minutes, I have a form I fill out and I can take down exactly what you’re looking for.”
Most are satisfied with this answer and, frankly, if they still balk, they’re probably not someone you’d want to work with anyway. With effective marketing, you will generate so many buyer leads that you can afford to pick and choose who you want to work with – you have the luxury of saying no.
When you meet with buyers in your office, your buyer presentation should be so compelling, with so many over-and-above benefits, that nine out of 10 buyers you meet with will not only happily sign a contract with you but also pay you a non-refundable transaction fee. You should only spend time with (show homes to) someone who signs a contract with you.
Now you should e-mail these clients regularly with descriptions of home that meet their criteria. They are urged to review these homes, drive by the ones that interest them, and call you when they want to look inside one of them. In essence, then, they’re doing most of the work themselves but are much happier with this arrangement because not only is your time not wasted, their time isn’t wasted either.
Using this system, you should be able to easily make a very lucrative living in this industry, regardless of market conditions, while working far less hours. Even if you work on your own without a team, you should be able to easily handle a buyer client base of 300+ buyers by yourself. This system has been the difference between success and failure for many agents like Rick Brash of Calgary, Alberta:
“I started in real estate in 1990 and really struggled and toiled to make a living in this business. I did everything they told me to and spent many, many years and a lot of evenings at home or in the office making cold calls. I was a relentless cold-call cowboy, but real estate still put me in the poor house, and I ended up declaring bankruptcy. I started using Craig’s system in 1999 and what I learned completely turned around my experience in this business. I learned how to get buyers calling me.
“We have an inexpensive system in place now that generates leads for us on a steady and consistent basis. We make it really easy for buyers to buy a home, but only if they meet our criteria which I learned how to set. My buyer agents are not allowed to put a buyer in the car, which is another approach I learned. I now only work about 20 hours a week in the business but I make 10 times the money I ever made before and sell well over 200 homes a year. Life is great.”
A buyer’s market like the one we are currently experiencing is a great time to get out there and make your fortune. To find out more about the buyer system I’ve described, you can visit http://www.hypertracker.com/go/cp/a05a080326/ where you can learn about my 3-day SuperConference where I train agents on how to make working with buyers their easiest and most profitable source of business.
Billion Dollar AgentTM Craig Proctor has been in the top 10 for RE/MAX Worldwide for 15 years and is the only real estate trainer who actually does what he teaches. Craig consistently sells over 500 homes per year to earn almost $4 million in commission. Over 25,000 agents nationwide use Craig’s system to make more money in less time.
To receive free training from Craig with no obligation, visit: http://www.hypertracker.com/go/cp/a05b080326/. This Free Training includes free weekly teleconference training calls with Craig and some of his most successful agents where they discuss the cutting edge strategies they’re using right now, in this market, and explain how they work. You’ll also receive a free weekly email newsletter that reveals the tested and proven marketing strategies that continue to make Craig one of North America’s top agents. By taking advantage of this free training, you’ll also get advanced notice of Craig’s free half day seminars that will provide you with the tools you’ll need to start implementing these ideas immediately. These seminars are held year round in cities across the country.