6 Great Steps to Build Your Real Estate Business

There really isn't "one" way to succeed in real estate - not for everyone in every area. There's no one miracle strategy or widget that'll do it all. For those of you who don’t know me, I am a sponge for new ideas, trends and always learning. I have bought those expensive coaching or programs that BS me in by doing this one thing I will make a gazillion dollars and be Number 1 this or Number 1 that. (The only person who made any money was those who sold me their shtick!).

But from nearly every top agent I've ever met, I've found that ultimately they generate most of their clients through some type of credible relationship - whether the client already knew them (or knew of them) or was referred to them from a trusted friend or source.

Established agents generate as much as 70% of their business this way.

But what about the rest of agents who don't have massive list of past clients and huge market awareness? Is there help for the new or hungry agent wanting to get to the next level?

Yes, there is. The process of building a real estate business is no different than any other business. It's ultimately about building market share. There are 2 ways to establish market share: 1) work your way into the market, or 2) buy your way into the market. If you have no money, you're forced into manual labor to get clients.

There are really 4 basic areas to think about when building your business. They include:

1. A unique and beneficial product or service for which there is a definable, proven market…
2. A sales generation system to market and sell that product and retain your clients for as long as humanly possible to generate a) more sales, and b) referrals, word of mouth and repeat business...
3. A unique product or service delivery system (remember I said "unique")...
4. Measurement systems (to know how you're doing).

For most agents, the biggest stumbling block is generating enough client flow to make real estate a lasting business - it's all about marketing and sales generation. So here are 7 important tips to consider in creating a stellar marketing and sales generation system…

#1. Nothing Worthwhile Was Ever Achieved without a PLAN.If you don't know where you're going, any road will get you there. Smart agents think through their marketing strategies, examine where their current business comes from, and plan the future strategically.

You can do the same thing too. Just number out 3 or 4 major marketing efforts, set a goal for them, and focuses like a laser beam. Here's an example of a super-simple 30-transaction annual plan:

1. Goal: 12 transactions. Build my "house list” to 500 names in the first year and create monthly contact.
2. Goal: 6 Listings. Select the highest probable farm areas (# of listings, short market times, high turnover, fewer agents, etc.) where I'll send special marketing pieces and walk the area weekly to become a neighborhood specialist.
3. Goal: 6 Listings. Generate 1 buyer from every listing I take by employing buyer magnet strategies with my listings (sign tags, info tube flyers, free reports, etc.).
4. Goal: 6 Buyers. Create a buyer generation system (I have 47 different systems you can use).

#2. Prioritize Your Marketing Time, Money and Effort According To the QUALITY of the Prospect or Market."Quality" is defined as how well the prospect already knows you and is most predisposed to use or refer you over any other agent.

You've only got a limited amount of time and money to spend, so you need to spend it on the highest potential prospects. Don't go chasing cold prospects at the expense of higher potential prospects.

Without a doubt, your highest priority market is going to be past clients or friends who have already sent you a referral. The second highest priority will be the rest of your "house list" (friends, family, etc.) who already know you and have the ability to do business with you or send you referrals.

The third highest priority would be inbound transactional leads. These are people who have called you from signs, ads, and other "pull" marketing - most agents fail to follow-up properly and convert these people to clients.

And the lowest priority would be the general population who neither know you, nor care to know you - yet remember (before the "no call" lists) how many "gurus" told agents to open the phone book and start calling? There's a reason why they outlawed that method!

#3. When Starting Out (or starting over), Spend 80% of Your Time on Prospecting and Client Acquisition Strategies.Whether it's cold prospecting or establishing marketing systems, ads, sales letters, press releases, walking neighborhoods, etc., focus your resources on getting business. Don't allow distractions (self imposed or otherwise) to interfere with this task.

Too many agents are busy doing the wrong things. They spend their time previewing, running documents or anything except nose-to-the-grindstone prospecting. If it ain't going to bring in more business, it can wait.

At the same time, don't neglect establishing marketing "pull" systems so you can quickly stop manual outbound prospecting. You only make money when you work with clients and close deals, so anything you can do to automate your ability to generate leads and clients is going to naturally increase your income.

#4. Create a "House List" and Market To Them as Your Primary Marketing.You already know that 74% of all real estate transactions occur from a relationship - they know the agent or are referred.

Here's something you don't know: If you built a "house list" (database of personal contacts) with 300 people (homeowners) on it, and the average home ownership period is, for example 7 years (nationally it's 5.5 years), then 42 of those people will buy or sell every year - not including the referrals they could send you.

600 people and its 84 transactions every year, etc. You won't get all 42 deals, but who do you think would be the odds-on favorite: the stranger who cold-calls them over dinner or sends a recipe card, or the person who's been in their life each month, brought welcomed and valuable assistance, demonstrated their professionalism and follow-up each month, and also confirmed they're committed to the relationship for the long haul?

That's what I call "market share". Get your house list going, and start bringing them welcomed, value-oriented contact. If you need ideas, we should meet

#5: Use Direct Response in ALL Your Marketing.There are many elements to direct response, but remember this: No one will reply to any of your marketing without a specific, self-serving REASON to respond.

95% of the agent community is hopelessly ignorant of this fact and they keep using "image" advertising with the same lousy results. I'm talking about making an OFFER to prompt response from prospects: a special report, an area analysis, a "Free Home Package" of a listed home, etc.

All of your marketing should include an irresistible offer and call to action to prompt response. Want to learn more about how direct response can revolutionize your business?

#6. Market off Your Listings to Generate Buyers and Other Listings.I have helped agents use this system and they have increased their business immensely.

In closing, you need to think of your marketing as building "systems". Systems act like spokes on a wheel, with each spoke being one system. The more spokes you have working for you, the stronger, more powerful the wheel. Most agents have only 1 or 2 systems working for them, so if they lose a system, the whole wheel collapses.

Plan your business around these 6 simple strategies, and you'll see an immediate and lasting improvement in your production and your life.

Running faster on the treadmill, chasing people, trading time for money, rejections, running faster, babysitting clients, tire kickers, over priced listings is not the best way to run your real estate business.

Watch for or request my exclusive 9 Foundational Principles of Client Attraction and how you can build a steady month in , month out real estate business that frees up time, money and allows you to truly enjoy this great business of helping people buy and sell real estate by being a trusted advisor.

The Average Agent Cannot Retire

Here is a short financial planning survey recently done with real estate sales representatives and the results of this survey were alarming. The average age for agents completing this survey was 48 years old.

Here are the survey questions and responses:

Are you currently saving for retirement on a consistent basis?

33%   Yes, I set aside money each month for retirement
52%   No, I’m not able to save for retirement
15%   Other

How much do you currently have saved for retirement?

47%   Less than $25,000
7%    $25,000 to $50,000
10%   $50,000 – $100,000
35%   Over $100,000

Do you have an emergency fund?

33%   I don’t have an emergency fund
10%   Emergency fund to cover 1 month of living expenses
20%   Emergency fund to cover 3 months of living expenses
37%   Emergency fund to cover 6 months of living expenses

Do you have a part-time or full-time job in addition to selling real estate?

78%   No, I’m a full-time real estate agent
10%   Yes, I have a part-time job
11%   Yes, I have a full-time job

Was your income higher in 2011 when compared to 2010?

39%   My income in 2011 is higher than 2010
21%   My income in 2011 is the same as 2010
40%   My income in 2011 is less than 2010

Do you feel as if you’re on track to reach your savings goal for retirement?

30%   Yes, I’m on track based on my age, current savings & future savings
57%   No, I don’t believe I have enough saved to meet future financial needs
13%   I don’t plan on retiring. I’ll be selling homes until I kick the bucket

These results are alarming.  We should be concerned about the future financial well being of those in the real estate industry. This survey reveals that many agents are headed for poverty.

Most work 10-15 hours a day, 7 days a week and most won’t have enough money to retire.

Of those surveyed, 87% plan to retire at some point in the future. However, 52% are not currently saving for retirement.  13% indicated that they would continue selling homes and didn’t plan to retire. This is fine; however, what happens if you are unable to work because of your health and don’t have any savings?

54% of those surveyed have less than $50,000 saved for retirement. The average age of those responding to the survey is 48 years old. Based on traditional retirement savings calculators, a 48 year old should have between $100,000 and $120,000 saved. This doesn’t seem to be the case for those in our industry. Most agents are way behind in their retirement savings. And even worse, 35% of those surveyed don’t have a retirement savings account in place.

One unusual finding was that 60% of those responding indicated their income was the same or better in 2011 when compared to 2010, but most agents still aren’t saving consistently. After reading the results of the first question, which revealed that 52% of agents aren’t saving on a consistent basis, I automatically assumed this was because our income levels in 2011 were lower than 2010. This is not the case for 60% of those surveyed.

These results are shocking, in and of themselves, but the scariest finding from the survey is that 43% of those surveyed are just ONE month away from financial disaster.

This can be seen in the responses to the question, “Do you have an emergency fund?” An emergency fund is a savings account that you can dip into, if you have a financial emergency, or don’t sell any homes and need some money to live on. Most financial planners recommend saving enough money in your emergency fund to cover 3 months of your total living expenses. This way you could live for 90 days without any income.

This recommendation is usually for folks who have full-time jobs. As real estate professionals who are paid commissions, we should have larger emergency funds because our income is more sporadic. To be safe, real estate agents should set aside at least 6 months of living expenses to protect themselves and their families.

One of the systems that I have set up as the owner and Broker of Record is financial training and budgeting for agents. Real estate is a business and should be treated as such. Knowing how to budget, when to spend money, understanding return on investment (your marketing and prospecting) is extremely important.

Let’s talk; I can help you plan your future.

    A business plan is like a blue print.  Without one, the structure of your real estate business becomes unsound, without focus and a haphazard project.  Every sales professional, no matter what the basis of his or her business is, must build a business plan for success, and think like the CEO of their company.

   It’s easy to brush aside the concept of a business plan. It is not enough to have an “idea” of how to do business rustling around inside your head.  Instead, it is necessary to actually put it down on paper, something concrete that can be revisited, revised and rethought at regular intervals.

   “PROS” is actually an acronym for a proven business planning system used by Envelope Real Estate professionals.  Although this basic system will work equally well for any sales professional, it has been especially beneficial for real estate professionals. 

   P stands for Perpetual.  The definition of perpetual is lasting forever, constant, and without interruption.  Creating a business that is continual regardless of the market conditions is the perpetual you are looking for.

   R refers to Referrals. Every sales professional wants a steady stream of referrals to sustain their business.

   O stands for your operation.  Every business plans strives to improve systems and operations to the greatest extent possible.

   S Saleable:  The goal of any CEO is this—to create a business that runs so well that it perpetually produces referral-generated business to the point that someone would be willing to buy your business.      

                       I ask agents all the time, what is your business worth? 

  The way 99% of agents are working today, their income depends on them working in their business, not on it. If they do not generate any transactions, no income. I have talked to many retired agents and asked what they did with all their past clients and relationships they had built over the years? I get the deer in the headlights look.

      Building a business plan on these four principles will ensure that you have a steady business flow, leads and referrals, and become a leader in your industry. There are two components to building a business plan.  The long term vision includes what your business and life will look like in two, three, five and ten years.  Outline, on paper, what your expectations of your business will encompass in those time frames.  Include what you want your hourly rate to be, yearly income, number of hours worked per week, number of transactions broken down into weeks, months and year. 

    Take a look at your home or family life.  How much time needs to be devoted to extracurricular activities, personal health, family activities, charitable activities and personal rejuvenation? 

    Schedule time for reading pleasure and business books and magazines  It may seem like mindless scheduling but ALL areas of your life need to be considered in order to build a viable business plan.

  The short term vision of your business plan incorporates the major issues of sales and business building.  Handling prospects, increasing leads, referrals and repeat clients, and scouting the opportunities to create business are the important building blocks of the plan.

  Handling Prospects

  For real estate professionals there are many categories of prospects and I have broken them down to  five levels of attention.  For , divide the prospects into A, B, C, D and E clients or 5 Star, 4 Star, 3 Star, 2 Star and 1 Star. All are just as important and valuable to you, your goal is to help them go up the ladder until they are ready and able to work with you.

 “A” clients (5 Star) are those buyers or sellers who are going to do a transaction within the next 30 days. They are qualified financially,  and have buyer & seller  DNA

• Desire
• Need
• Ability
   

  “B” clients (4 Star) are still in the looking stage and probably won’t buy for another 30 to 90 days.  They will require the phone calls, emails and personal contact but less often than a Five Star.  When these clients are ready to buy or sell, they will already know and trust you and are willing to do business with you.

  C” clients  (3 Star) are more suspects than prospects.  They are 3-6 months away and may be  sitting on the fence, haven’t made a commitment of any sort and may or may not ever really buy or list.  They deserve your attention, but not a time commitment.  Offer them information, phone calls, email updates but on a 45 day basis.  As soon as they indicate they are serious, move them into the “B” category. 

   "D" clients (2 Star)  are 6-9 months away. They may have to work on their home to get it ready to sell or as a buyer, in the thinking stage. The majority of your prospects and internet leads fall into this category.

    "E" clients (1 Star) are 9 months to a year and a half away or longer. Your goal here is to patient, keep in touch with a non-judgmental and no pressure communication system so that they will move up the ladder of your prospect system.

    The Star rating  process creates a net over your prospects.  To close that net and create loyal clients it is necessary to be creative, helpful, interesting and to build confidence that you will be the best fit for them when they are ready to buy or sell.

  Creating that net involves three important components:  follow-up, follow-up, and follow-up.  The best laid business plans and sales techniques will fall awry without the consistent and continual follow-up.  I have implemented and tested many follow up systems and over the years I have developed an exclusive, easy to manage, effective contact system that really works and which you can tailor to your personal style.

   Create an exit review with your clients, about five days after the closing, to ensure everything went well, their expectations were met and give the client the opportunity to offer you suggestions for creating a better experience.  At this time, you have the privilege of asking for future business, referrals from their family and friends and insight into their sphere of influence.

  Part of business planning is creating a perpetual stream of leads.  Create a list of 300 possible contacts, (that is one a day for one year!).  Anyone who has planned a wedding knows how easily the guest list grows.  How many of these people could be possible referral sources?  Not only think of people who may need your services but consider professional referral sources such as accountants, lawyers, mortgage lenders, Financial Planners and Builders.  Any of these professionals could become invaluable resources for leads. Reciprocation is important, so they should be professionals you would be willing to give referrals to as well.

  Finally, the last piece to a business plan is making it a viable practice that someone would want to willingly take over or pay to acquire.  Work on operations within your command by incorporating other people to cover various aspects of the business.  Keep your name out of the team name.  To create and run a smooth running team you have to be able to delegate, giving your associates freedom within specific guideline.  If you don’t have an assistant you are an assistant!  Build consistent habits of prospecting, follow-up, paperwork processing and appointments.  Block out time for important activities by updating your time schedule on your voice mail.  Outline specific times during the day when you return calls or emails.  Be in control of your schedule rather than reactive to every call, email and personnel issue during the day.

  You are in command of your business plan.  Only you know the vision you have for the future.  It is up to you to make your plan come to fruition.  Build a team that will support you, insist on customer service that makes you shine as the leader.  Write down your plan and revisit it often.  The “PROS” keep focused, are diligent, invest time and money into a business that will be the building blocks of success for a very long time.

  I have developed 7 separate templates for Envelope Associates to help guide you through the many stages of real estate earnings and growth.