Real Estate 101 – Improving on "the basics"

[photopress:h.jpg,thumb,alignright]For the last few weeks I’ve set aside Friday mornings to get together with a small group of agents to talk about their Real Estate Business. Not everyone will succeed by the same means, and there are as many different ways to approach this business, as there are people in it. This is the time of year to take a step back and re-evaluate what you have been doing, and take the necessary steps to fix what is broken. This applies not only to each and every individual real estate agent, but companies as well. The times have changed…time to change with them without “throwing away the baby with the bathwater”. I’m going to go back and attempt to improve on the basics. For those who never learned “the basics”, you may find this helpful. For those who know the basics, let’s try to move a step forward together.

Basics: Year one = 12 “things”. I am going to change some traditional principles here, with regard to “things” to expand them from 3 to 4, and to eliminate the word “listing” from our vocabulary. I would like to elevate “having a listing” to “having a seller client” if and when possible, to remind us that we represent people who sell property. We are going to evenly weight representing a seller client and representing a buyer client, breaking from tradition here. An idea whose “time has come”, don’t ya think?

Most offices in the past had a big chalk or white board with three columns titled “Listing”, Listing Sold” and “Buyer Controlled Sale” or similar language. Given the changes in our industry since 1989, every company should change that system, to the one I recommend here. Every office should create a “Virtual Board” on an agent only, password-access website. The “board” should have four columns marked, Property for Sale, Property Needed, Property Sold and Property Found.

Column 1) A seller hires you to represent him in the sale of his property. You put “123 Peachykeen St.” on the board in the “Property For Sale” column. That is a “thing”.

Column 2) You meet a buyer at 123 Peachykeen St, but they don’t like it. You decide to help them find a property to buy, and they agree to hire you. You put “Mr. and Mrs. notPeachykeenSt” on the board in the “Property Needed” column. That is a “thing”.

Column 3) Joe Agent from another company faxes you an offer on 123 Peachykeen St and your seller client accepts that offer”. You put “123 Peachkeen St” on the board in the “Property Sold” column. That is a “thing”.

Column 4) Mr. and Mrs. “not PeachkeenSt” submit an offer on a property and that offer is accepted by the seller. You put “Mr. and Mrs. notPeachykeenSt – 123 SomewhereElse St” on the board under “Property Found”. That is “a thing”.

It is very important for agents to track “things” and not just sales. Columns 3 and 4 are sales. Columns 1 and 2 are the actions that create the sales. In a balanced or buyer’s market, every item in column 1 should produce 1 sale in column 3 and 2 sales in column 4. Given most of the Country is coming out of a hot seller’s market, it is a good time to review the basics, and go back to when property was on market long enough to produce 3 sales from every property for sale.

A new agent should have 12 “things” by year end. A second year agent should double their sales from the first year, and reduce the number of “things” in Column 1 and Column 2, that did not result in a sale. When an agent reaches 36 “sides”, by doubling their sales each year, they reach a crossroads, but that’s another article.

For now, the goal of every agent is to get to 24 to 36 sides per year. A side is representing the buyer OR the seller in a real estate transaction. The goal is to have 12 properties to sell each year, and sell them. From those 12 properties, you should be able to assist 24 buyers in finding a home to purchase. 36 “sides” equals 12 Properties Sold and 24 Properties Found. The number of sides between 12 and 36 is somewhat affected by the price range you are selling. If your average sale price is $200,000, then you will need more sides than someone whose average sale price is $600,000.

Now everyone get out your “boards” from last year. Examine Columns 1 and 2 very closely and be very honest in answering where you may have failed in assisting your buyer and seller clients in achieving their objective last year. Not what “they” did, but what “you” did not do for them.

Look at Colums 3 and 4 and examine what you did right in those scenarios. Contrary to popular belief this is NOT a “numbers game”. Every property you do not sell equals a failure for you seller client. Every person whom you did not find a property for, is a failure for your buyer client.

It’s is now time to do your 2007 Business Plan. Some of you will need to hone up on your skills, to get more of Column 1 down to Column 3, by converting more of your Properties for Sale to Properties Sold. Some of you will need to hone up on getting more of Column 2 down to Column 4, by honing up on your skills of finding the right properties for the right people. Others may need to make better choices with regard to columns 1 and 2, or reduce the costs of attaining them.

Focus on the clients and not just the numbers. Why couldn’t you sell 123 PeachykeenSt? What did YOU do wrong, not what did the seller do wrong. Why couldn’t you find a property for Mr. and Mrs. notPeachkeenSt? What did YOU do wrong, not what did they do TO you. If you think your clients failed…you will not be able to implement an effective business plan for 2007. Once you accept the responsibility for all of your business and non-business in the prior year, you will improve on your business and business plans in every year out into the future.

If you DID achieve the goal of 36 sides, but don’t feel you made enough money, then your problem is in either in the cost area and not the client area, OR you need to elevate your price range.

Questions? Feel free to ask away.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

18 thoughts on “Real Estate 101 – Improving on "the basics"

  1. Good stuff Ardell. The real estate schools and brokers should teach this stuff. I met half a dozen people in my class that needed to sell a house the week out of school to make a car payment, insurance payment, rent, etc.

    You want to be a real estate professional? You need to think like an entrepreneur. You need a business plan. You need marketing plan. You need a budget. You need to have working capital set aside to cover all your personal and business expenses for many months to jump start your business until revenue consistently rolls in. Being self employed has additional costs. Self employment tax. Additional liability insurance for your vehicle. Errors and Omissions insurance. Marketing costs. Hardware and software. Business property insurance. business license. B&O tax. etc.

    Michael P. Lindekugel MBA
    Financial Analyst
    RE/MAX Commercial
    Team Reba – RE/MAX Metro Realty, Inc

  2. There are some other ways to approach the business. It never dawned on me to not be “serious” about my career, since I was switching careers from a well paid salaried career.

    I started in real estate as a second career at age 36 in Cherry Hill, NJ on June 1, 1990. I had my first client in escrow by the end of June and closed in July. I pulled an agent in and did a 50/50 with the first one, to ensure the client was well covered. The client was also very savvy. It was a strong buyer’s market. The second one I did by myself and then I took a step back. I became a licensed assistant to the top agent in South Jersey for six months and we became a listing and selling macine. Then, when I felt I was really ready, I sold my house. I had three children and an employed spouse. I bought a cheaper house over the bridge in Bucks County. By the end of my first year in Bucks County I was able to sell the “cheaper” house and buy a home comparable to the one I owned when I switched careers. By the end of year two, I was the top agent in my office.

    Life circumstances caused me to totally start over again from scratch on 4/01/04 in Seattle at age 49. So to some extent I am a “newbie” going back to the basics. So far so good. Started out the same way. Sold my first property in WA within two weeks of getting my license here, took a step back and partnered with a Seattle agent for six months. I moved to the Eastside. After one year I bought my home, comparable to what I had before the switch to WA, and I’m the top agent in “my company” 😉

    “Life emulates life.” Just had to go back and “remember”…the rest was a piece of cake considering the first time I had a 4 year old a 2 year old and a 6 month old. Now they are 18, 20 and 22, so it’s been much easier this time around.

    Integrating being”a company” with being “a successful” agent has been a challenge, for sure. But a great experience so far. For those who have asked…that photo was taken the day I decided to move to Seattle…3 yars ago.

  3. Pingback: Ardell DellaLoggia didn’t write this! | BloodhoundBlog | The weblog of in Phoenix, Arizona

  4. I love the message, Ardell, and couldn’t agree more with putting “listing” in the bad word bucket, as Steve calls it. Along those lines, the phrase I would like to banish is “my people”. I hear so many agents say things like “I will talk to my people”. They are not our people, they are clients or buyers or sellers.

  5. Kris,

    I like “my people”. At least it shows that the Buyer Agent understands who they are working for, and it’s not themselves or the seller. I think that’s a step in the right direction.

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