By Scott Newman
So you’ve made it through the worst of the real estate bubble, you’ve developed a nice client base, and you’re taking over the entire industry – great! If that’s the case, then this blog isn’t for you.
Instead, this blog focuses on what we as veterans of the industry can share with the newbies to shorten the learning curve and help create another reputable professional who gives our industry a good name.
The following are my top three “I wish I knew that when I first started” tips to make your transition into a real estate career as painless as possible.
1. Simple Math
So many real estate agents come into this business thinking of the riches they’ll make selling homes for a living. Many even come up with lofty goals for themselves, “I’m going to make $200,000 my first year in the business.” Does that sound familiar?
Well, the problem is that most agents don’t stop and break down the math behind creating that kind of volume. They end up focusing on the big picture when it’s the attention to the little details that will create the success they desire.
For example, let’s say you’re new to the business and don’t know a lot of people, and that the average home price in your area is $200,000. Simple math tells us that you will make $3,500 per transaction at that price, assuming you have a 70/30 split. At $3,500 per deal, you’d need to complete 58 transactions a year to make your $200,000 – that’s more than one house a week, which is a large volume even for a veteran real estate pro.
Let’s break that down further: Let’s say you have to talk to 20 people to get one client and earn that $3,500. That means if you want to sell a house a week, you need to get in front of 140 new people a week in a meaningful way to meet that goal – or 6,720 people a year.
What does this example prove? It simply demonstrates that for a new agent who has no other way to get new business–without spending money–to expect to meet their goal of $200,000 would be unrealistic.
Instead of setting themselves up for failure, if the person in this example had taken the time to break down the math on what it would have taken to meet their goal, they most likely would have set a more realistic goal that would put them on the path to success.
2. The Power of the Word “No”
When I first got my license, I would have taken on any client who was willing to get in my car or take my phone call. I said yes to everyone and everything that came across my desk. Why? Because I valued my time at $0 and figured anything was better than nothing. Unfortunately, that couldn’t be further from the truth.
Every time you make the decision to do anything in this business–take on a client, attend a seminar or training, or take the day off to spend with your family–there is an opportunity cost associated with that decision.
That opportunity cost is the lost income, connection, etc., that you could have made by being somewhere else instead of where you choose to be. This is where the word “no” becomes so powerful.
Think long and hard before you take on a client. Make sure that person is pre-qualified, cooperative, and serious about buying a home and sticking to a plan to get there by a pre-set date. Every time you take on a client who ends up being a waste of your time, you literally threw money out the window because you passed up the opportunity to work with real buyers.
When I mentor the agents on my team, I constantly remind them of two things in respect to this tip: 1) It’s better to take the day off and relax or do something enjoyable than waste it; and 2) When you meet with a client for the first time, it should be just as much about you interviewing them as them interviewing you. Don’t take on bad clients and you’ll make more money in the same amount of hours worked with no additional effort or expense.
Please say this out loud to yourself in the mirror every morning before you head to the office: “Just because I don’t get paid by the hour doesn’t mean my time isn’t extremely valuable,” and don’t ever forget it!!
3. Cooperation is the Key
I have to admit, I have a long, long way to go in restoring the damage I did to my reputation from when I first got into the business. I, as many agents do, felt that the only way to overcome my own lack of experience and knowledge was to be combative, argumentative, and in many cases, less than pleasant to deal with. I honestly thought this is what my clients wanted and expected and that I was being the tough negotiator they wanted.
Unfortunately, I had to learn the hard way that this couldn’t be further from the truth. Of course your client expects you to bend over backwards to advocate for their best interests, but you can absolutely excel at doing so without creating enemies.
The best weapon you have in your tool belt when it comes to being a successful agent is your reputation. If other agents like you, they’ll look for your name on listings, push your offers to the top of the pile on their listings when you have the buyer, and, in general, go out of their way to do business with you and your clients. The more allies you have out there in this industry, the more successful you’ll be–that’s a non-debatable fact.
Go out of your way to make friends, do favors for people, and do everything you can to develop a reputation as a fair, honest, and kind person, and you’ll do wonders for your bottom line.
This is a very tough business and it’s only getting harder. We all need to stick together to succeed. If you’re new, follow these tips–as well as other tips you get from successful veteran agents–and skip the learning curve. This will help you hit the ground running and minimize the time you need to put in to get your business up and running.
Scott Newman is the broker-owner of Newman Realty in Chicago. Connect with Scott at www.newmanknowschicago.com or @newmanrealty.