Agents rarely "feel the love" when someone new and interesting joins the party…

The contributors at Rain City Guide (RCG) have been falling over themselves talking about the folks at Redfin. Don’t know who they are? Not a shock. They’re a real estate firm based in the Seattle area with offices in the Bay area of San Fran which has a discount model for services. Earlier this week there was a conference in NYC that Glenn Kelman of Redfin attended and he was slammed by a REALTOR(R) representative. To me, having come from the tech industry, it was the old school getting pissed at the new school and not necessarily playing nice.

Before you think I’m a big fan of Redfin – stop! I don’t really like anyone that is my competitor. Granted, I can actually “like” the people involved but of course I’m also competitive and I’m focused on becoming a top player as well so any competition is considered friendly competition – and competition doesn’t play in my sandbox, so to speak.

I actually had a woman from my office pull me aside Tuesday and ask me to share my business plan with her. My competitive nature kicked in and my first thought was, “why would I share a plan that I carefully crafted and have been tweaking and developing for almost 4 years and which I have a 5 year plan staked out for the future, with you?” Did you mention that there’d be some form of payment for my consultation services? Did you say that perhaps there was some other motivation other than you wanting to succeed after stealing my concepts (which she’s already doing) such as a large donation to my non-profit? Of course not.

The way I know I’m making progress and getting market share, and therefore being noticed, in my field is to watch others copying me. It’s supposed to be the most sincere form of flattery and to a VERY small degree I do like it. However, for the most part we know we’ve hit a new segment when others start chasing us with the same ads, asking our vendors to stop advertising with us, steal our exclusive speakers, and more. But if you want to really get me going then show me your cards by saying something like this gal did to me. I won’t share the full details but I think you get the drift. Redfin, I feel your pain – I just don’t need to give away a chunk of my commission to feel it.

The “Ideal” Business Plan

[photopress:meeting.jpg,thumb,alignright] In answer to Russ’ comment on my post of this morning, How to Choose a Client, let’s break down how an agent can do a super-duper job at representing their clients’ well, choose their clients wisely, and also make a good living AND price their services fairly….all at the same time!

John Q. Agent wants to make a six figure income of $100,000 a year after gross expenses. He decides to work with no more than 2-5 active clients at one time, so that he can do “Whatever it takes” to help his clients fulfill their objectives. By focusing on 2-5 good-hearted, honest and serious clients, he is able to sell 2 houses a month and loses only 1 in every 15 clients he accepts to “take on”. By focusing on only 2-5 clients at once, he does such a super job, that he doesn’t have to pay for leads or spend the bulk of his time looking for leads, because his very happy, good-hearted clients send him business. By recognizing that he represents people for a living, and doesn’t sell houses for a living, he leaves a long trail of happy closed transactions in his wake. All of this “good will” brings him a steady stream of new clients, so he can spend all of his time representing his clients and very little of his time dredging the bottom of the barrel for “new leads”. His “good-hearted” and happy past clients, know other “good-hearted” people because, “birds of a feather flock together”.

Average home price is $400,000 in the Seattle/Eastside Market. That’s a little under the actual median price, but let’s assume that the best clients don’t necessarily have the most money 🙂 Let’s assume that John Q. Agent charges slightly less than 3% for clients buying and selling at $400,000 or less and 2% for clients buying at $750,000 or more and 1% for clients buying at $1.5 million dollars or so and also has varied programs in between, depending on the timeframe and actions needed to fulfill the client’s objectives.

So John Q. averages $13,500 per client, but gives $4,500 of that back, even after the reduced rate, on average, because he only needs to make $9,000 apiece X 24 sales (two a month) to make $216,000 of which he pays his broker a cap of $20,000 annually leaving him $196,000 before “expenses”. Keeping Russ’ figure at 20% for “expenses”, John Q. Agent exceeds his goal of $100,000 by making $156,8000 after expenses working with only 2-5 good-hearted, honest clients per month and selling 2 homes a month and “being the glue” that holds them together so ALL of them close, and it is NOT a numbers game…in fact, it’s not a game at all.

John Q spends 20 hours a week on his “in escrow” transactions and 20 hours a week on helping his “next to come out” listings get their homes ready and 10 hours a week doing all that other stuff that agents do. He spends so much time focusing on these few clients that none of them “leave him in the dust” or “screw him”. Though a few do decide not to buy or sell…and he wishes them well.

And they all lived happily ever after…