Real Estate — Chance Brown's Real Estate Blog

Creating a Real Estate “401k”

July 14, 2016 By Chance Leave a Comment

Something has been weighing on my mind recently and I wanted to try to offer a solution. The more agents I talk to, the fewer, it seems, have an exit strategy for when they are ready to “retire” from real estate. I’m not talking about the traditional exit strategy discussed in many blogs that involve creating an asset that can be sold or passed down with ongoing income streams. I’m talking about a retirement investment strategy.

If you look at the statistics, the average agent is 57 years old. While there are many contributing factors to that, one of the concerns I have is that people aren’t leaving the industry because they don’t have a choice. They are literally working until they die. So, my question is, quite simply, why? Here you have men and women with a world of investment data literally at their fingertips and nothing to show for it. In fact, how many times have you posted something on social media about now being a great time to start investing in real estate? But, have you taken your own advice?

Why don’t more Realtors walk the talk when it comes to securing their financial future?

Now, before we get into the details, let me preface this with a few disclaimers. Although at one point I did have a couple of securities licenses, I am currently not a licensed financial advisor. Also, I realize there are a multitude of financing options, market variations, etc. And, yes, this is not exactly Dave Ramsey friendly. This is overly simplified, I know. So, before all of the comments, I am aware of all of these things. This is just a simple illustration.

Why a “401k” example?

I am using the idea of the 401k in its simplest form. The meaning is that this model is designed to create results at retirement or some point in the future. This is not your traditional real estate investment plan where you are taking passive income today. This is an investment plan that is designed to create assets and income in the future by using the income today to build equity. If you choose to do otherwise, you can, but I am putting this out there for the folks who are disciplined enough to follow a plan and then reap the rewards 10-20 years from now.

Additionally, the “accumulation phase” of this plan is designed to hold the real estate. That doesn’t mean, at some point, you couldn’t “sell your stocks” or “trade” for a new or better (hopefully) asset, but remember this is a plan where you can hold an asset and receive a dividend for well into the future. We’ll discuss “trading” your “stock” in the Wealth Building Phase portion of this.

Finally, much like a real 401k, this is designed to own assets. When I say own, I mean own. I don’t mean finance and be leveraged. This is where, I believe, the plan spits in the face of many traditional real estate investment plans. It doesn’t happen overnight, but it happens and you will find yourself with an incredible asset and a whole lot of money coming in monthly. So, let’s get to it.

The Accumulation Phase

So, the first step, like in everything, is always the hardest. For the purposes of this illustration, we are going to create some constants. First, every house we are going to buy is going to be priced at $150,000. Second, every house we buy is going to rent for $1500. Third, the houses we are buying need no repairs to make them “ready for move in”. Finally, we are not going to take any price/value appreciation into effect until way later. We are, for the sake of painting the picture, and for ease of math, going to assume that ten years from now the houses are still worth $150,000. Trust me, just go with it. We’ll do some appreciation illustrations later.

Ok, so let’s buy our first house. To give us a jump-start on this, we are going to put down 20% (also to make financing easier and cheaper). So, we need to save $30,000. I’m not going to lecture you on how to do this. If you want to save $30,000 you will save it. Let’s shoot for no more than one year to save that amount and we are going to save that amount every year for the foreseeable future.

One year has passed and you now have $30,000. So, you drop your 20% on the first house, hereafter referred to as House 1. At a loan value of $120,000, your note is roughly going to be (assuming 3% taxes, $1500 insurance, and a 4.5% rate) $1150. That leaves you with $350 each month in profit. Instead of, like many investors, taking that profit, we are going to put every penny into the mortgage. Based on that overpayment, we would pay off House 1 in 14 years and 9 months. Not very sexy, but stay with me because it gets better.

In the meantime, we are saving another $30,000 in a year. So, year two begins and we buy House 2. Same numbers as before. Instead, however, of paying the additional $350 to House 2, we are going to pay it on House 1. Now, our payoff of House 1, with a $700 overpayment each month, goes down to just over nine years. Still not showing up on MTV Cribs (yes, I’m old), but the light at the end of the tunnel is more realistic.

Third year, same story. Our payoff on House 1, overpaying by $1050 each month, is less than four years away. And so the story goes. $30,000 a year. One new home a year. Every year.

Here’s where it gets better and why you have to see the long-term payoff on this. Let’s say that year 6 we pay off house #1. Now, we transfer all of our overpayment, and now an additional $1000 ($1500 less taxes and insurance) to house two. So, for the record, that’s $1000 plus (5×350) $1750 for a grand total of a $2750 monthly overpayment. House 2 gets paid off in less than 3 years. House 3 comes next, nearly 9 years from buying house 1. You now have 2 homes that you own and 7 financed, but not for long. So, 2,000 (from House 1 and House 2) plus (7×350)$2450 for a total of a $4450 payment each month. House 3 is paid off in a matter of months, not years. And so the dominoes fall. You can continue to purchase and payoff very quickly from this point forward.

The Wealth Building Phase

So, let’s say it is year 10 from our start. We now own 3 homes outright and another 7 with notes remaining. The great news is that we can literally pay off the remaining 7 within a couple of years, if not sooner. So, let’s stop saving our $30,000 a year in year 12. At this point, we will own (or be very close to it) 12 homes outright for a total value of $1,800,000 ($150,000×12). As a bonus, that asset is paying us (after property taxes and insurance) $12,000 a month. Do I have your attention now?

So, you can make some choices: either continue to buy, trade up on some of your “stock”, or sit back and enjoy the rewards of your hard work and discipline. The awesome part is that you can do whatever the hell you want because you have the asset and the security. For me, my choice would be to continue building wealth. Even in “retirement” I would still do it. Now we are getting into the legacy department, and that is for another day.

Picture this, though, at $12,000 a month, not saving an additional dime of your income outside of the 401k, you could buy a home a quarter and have them paid off in next to no time. So, instead of having 15 homes in year 15, you could have 20. In year 20, instead of having 20 homes, you could have 44. Looking at that, using the same numbers, you would go from a $1.8 million asset in year 12 to a $6.6 million asset and cashflow monthly of $44,000 instead of $12,000.

Oh, and by the way, since we stopped saving our $30k a year in year 12, we just bought and paid for 32 houses without investing a single penny of money into the 401k. That’s $32,000 a month and $4.8 million for free in an 8 year period.

Appreciation Models

So, using our illustration above, we have invested a grand total of $360,000 (12x$30,000) and have a $1.8 million return with a $144,000 a year dividend. Not too shabby, right? So, let’s look at what this might look like with some realistic appreciation models in place.

I live in Houston, TX, where we generally have conservative appreciation. Since my other assumptions are using our market as a model, we’ll stay here. We run a roughly 4% appreciation rate historically. So let’s assume that our value and our rental rate appreciates 4% annually. This will obviously affect our payoff in a positive way, but might also affect our taxes negatively. Let’s focus on the end result though, because, after all, we are in a 401k mentality. In year 15, House 1 is worth $270,000 and your rent is $2700. I’ll let you take the math from there, but you get the picture.

So, there it is. Yes, I know it isn’t perfect, but it makes the point. Should you also invest in other things like stocks? Yes, you probably should. Like Warren Buffett says, though, “Never invest in a business you can’t understand.” You understand real estate. Go get rich in it.

Here’s my challenge to you. Tomorrow, I am going to go to my bank and open up a separate account. I am going to start saving my first $30k tomorrow with the goal of buying my first rental property next year. Will you join me?

The Communication Game

March 16, 2016 By Chance Leave a Comment

Not to get all deep and philosophical about things right out of the gate, but I have a serious fear for my children and my children’s generation. It’s a lack of communication skills. Between messaging and Snapchat and emojis and texting in slang or abbreviations, I have a serious fear that the communication skills necessary for success are quickly going by the wayside. I try, the best I can, to limit screen time, make my kids tell me stories or even just about their days, and teach them to look others in the eye when they are talking to them. I want them in speech in debate as they get older. Why?

I truly believe that your ability to communicate your point, regardless of what you are doing, is pivotal to your ability to be successful.

You may be asking yourself at this point just what the hell this has to do with real estate. It’s this simple: if you really get down to the nuts and bolts of what we do, we communicate. We aren’t the parties to a transaction. We aren’t attorneys or title experts. We aren’t lenders or mortgage experts. We communicate. From discovery to service to follow-up, we communicate. We discover needs and wants, we set expectations, we relay information and documentation, we problem solve, and we close. All of that, again, at the base level, is communication.

Selling Yourself

What is brand building? What is advertising? If you can’t guess by now, it’s communication, it’s story-telling. How you communicate your value to your audience is the essential part of creating brand recognition. Creating a solid call-to-action is an essential part of lead generation and capture. Taking those leads from interest to client is a direct result of your ability to tell your story and show interest in their story.

How can you become the first thing people think of when they think of real estate? Continuous brand building and consistent messaging are key to brand awareness with your potential clients. Whether you choose to be topical, clever, or resourceful in your communication to prospective clients, your delivery of the message over time is the key to your success. Being able to do it without being annoying is also pretty important.

Servicing the Client

From the time the prospective customer becomes a client to the time you close the transaction, your communication revolves around the service you provide. Beginning with the discovery phase, you have to be able to communicate with your clients to be able to best serve their needs and wants. Once you’ve done that, and found them either the home they want to buy or an offer suitable for acceptance, your communication expertise in negotiation becomes key. After that, you become a conduit for communication between all of the involved vendors, agents, title people, lenders, and, of course, parties to the transaction. Since we have beaten the expectation setting part of this like a dead horse on this blog, I will forgo it for now, but it is vital. Holding your client’s hands through the process with clear communication is key to creating a smooth transaction. Creating a smooth transaction is key to creating a happy client. Creating happy clients is key to building your referral base.

Building Your Referral Base

Do you have a plan to create a referral engine? When you’re with a prospective client, and then a client, and then a past client, how do you approach the topic of getting referrals? When do you start? If you don’t have that plan in place, I would submit to you that your business is not working for you. That doesn’t mean that your business isn’t working. It just isn’t working for you.

A plan to build a consistent stream of revenue from your current and past clients is pivotal. It should start the first time you meet a prospective client. It should continue throughout the sale/purchase. And, here’s the important part, it should never stop. Ever. The great thing about this plan is that a great deal of it can be achieved automatically through a CRM. You have to have the plan though.

Protecting Yourself and Your Clients

It pains me to say this, but we live in a world where everyone wants to sue everyone when they don’t get their way. In case you were wondering, you are one of the everyone. In this world we live in, we communicate in an ever-increasing number of ways. While I am a huge fan of face-to-face and telephone communication, it should be noted, for your protection and the protection of your clients, that everything should be followed-up in writing. Keep texts and emails. Store whatever other medium you might use to communicate, but make sure that verbal conversations are then put into writing to ensure that everyone is on the same page.

I’ll give you an example. In our new agent training classes we have an exercise we do. The new agents pair up and sit back to back. One agent is given a simple drawing like a house or a bird or a fish. Without telling his/her partner what the drawing is, they have to describe how to draw it. The results are often comical in a classroom setting, but are a perfect example of how easily verbal miscommunication can occur. Follow it up in writing to make sure that your house or bird or fish matches their house or bird or fish.

Going back to the original point, understanding that your primary role as an agent, as a business owner, is communication will help drive your processes and systems. Being an expert communicator will make the difference in your level of success. Even if it is not your strongest natural strength, it is one that can be rather easily developed. Whether you choose to join an organization like Toastmasters or just develop and practice scripts, working on your communication plan is something that should be done daily.

Bumps in the Road

March 2, 2016 By Chance Leave a Comment

In the course of a “normal” real estate transaction there are more ways for something to go wrong than the general public can imagine. It’s one of the many reasons why the general public doesn’t find value in the work a good Realtor does on their behalf. It’s also not the stuff they show on HGTV. The potential bumps in the road are numerous. The good news, however, is that, if handled correctly, these bumps in the road can be handled. Most aren’t fatal to the transaction. So, where’s the “but”? The “but” is whether or not you handle them like a butt or like a professional.

Through properly setting expectations with a client, proper presentation of the problem to the client, and cooperation with your fellow professionals, most bumps in the road in a transaction can be overcome.

Now, that’s not to say that there aren’t problems that can’t be overcome. There are, and if you haven’t experienced it yet, you will. That is, unfortunately, a part of the business and something that has to be dealt with from time to time.

Setting Expectations

In a previous post, we talked about setting expectations at length. So, I am not going to rewrite that post for the sake of this one. The bottom line is this: people don’t like surprises, especially in what can already be a stressful situation. So, don’t let it be a surprise. Setting expectations from the beginning and reiterating those expectations throughout the process will keep your client both prepared for these situations and aware that you know about them and are working on their behalf. Building value in yourself is the bonus.

Proper Presentation

The hidden beauty of setting expectations is that it allows you to present a problem as it arises in a way that doesn’t come as a surprise to the client. How you present a problem to your client, either buyer or seller, is key. If you freak out, they’ll freak out. If you come in laying blame, they will too, and most likely on you. If you come in bad-mouthing the other agent or other party to the transaction, they will feel like you are not in control.

The correct way to present a problem is to, first, go back to the expectation you already set. For example, “Remember, Mr. and Mrs. Seller when we talked about (fill in the blank)? Well, here is what’s going on.” Second, you review what you have already done or are doing to resolve the problem. This, again, builds value in you and what you do. Finally, you leave them with the plan and what could or could not happen in the end. Set a time to follow-up and be very communicative throughout the process. How you present the problem to the client will directly influence not only the way they react to the problem, but how they deal with the problem as you work through it.

Cooperation

Yes, I know, it is hard to be as good as you are. I know that there are very few agents capable of the level of awesomeness you bring to the table daily. I completely understand. However, from time to time you are going to have to entertain these other agents in an effort to serve your clients and make the money you’ve earned. We’ve also talked about cooperating agents in other posts before so I won’t get too deep into it.

Being able to creatively solve problems with the other agent, lender, and/or title company is how you will successfully navigate the treacherous path that pops up when there are difficulties in a transaction. The ability to bring all parties and vendors together to create win-win situations is how you show your true professionalism in times of need. That’s what makes you awesome, not only to your client, but to your fellow professionals as well.

Anyone can navigate their way through a simple real estate transaction. Anyone can also screw up a somewhat difficult transaction. Don’t be anyone. Be better than that. Show your value to your clients. Be the agent that other agents want to be like when they grow up. Having processes and systems in place in your business to deal with difficult situations, unforeseen problems, and less than stellar vendors, agents, and parties on the other side of the transaction is paramount to your success. That’s how you differentiate yourself and become an all-star.

Presidential Campaigns and Real Estate

February 23, 2016 By Chance Leave a Comment

The 2016 Presidential campaigns are well under way with three primaries and two caucuses down. Now, whether you like it or not, if you’re involved in real estate in any form or fashion, politics play a large role in your business and you ought to be paying attention. How involved in that you’d like to be is up to you, but if you aren’t aware of the ramifications to your business that the policies laid out by the candidates can have, you may end up regretting your lack of attention. That, however, is a topic for another day.

Today, I’d like to take a look (again) at the lessons we can take from a political campaign and apply (or not) to our business. If you think about it, at its base level, a political campaign is nothing more than a very long (too long usually) marketing and sales campaign. Now, it’s a candidate’s dream to run unopposed, but that’s not always the case. If you approach your business as a candidate running unopposed, when you do have an opponent you will be unprepared to deal with it and will likely lose the election. So, here are just a few of the many things you could take away from a political campaign that could very easily translate to your real estate business.

Note: While I am going to use actual examples from actual candidates, none of the info contained herein should be considered a critique of a candidate or an endorsement. Please keep your political comments to yourself. This is a real estate coaching blog read by no fewer than 21 people on a regular basis, not Fox News or the Huffington Post.

Messaging

If you ask most political consultants, they will tell you that one of the most important things in a campaign is messaging, consistent messaging. Despite the scope of a Presidential campaign and sometimes the mud-slinging that happens, a campaign should be about policies and issues and the candidate who can clearly, concisely, consistently and, more importantly, convincingly communicate those points to the voter (buyer) usually wins. We’ve all seen the “flip-flop” ads accusing one campaign of changing positions based on voter attitude. Your value proposition should not change based on trends.

On the flip side of that, there is such a thing as too much messaging. Seriously though, how many of you have that friend who posts nothing on Facebook but things about their Advocare, Nerium, Plexus, Tupperware, Mary Kay, Seaweed Wrap, or Real Estate business? Being able to clearly communicate your value proposition is critical to your success. Wearing people out with it is, on the other hand, the fastest way to run someone off from being your brand advocate.

Distribution Channels

From a marketing standpoint, campaigns are generally excellent at using every available resource to distribute their message to the market. From traditional media to P.R., social media to word of mouth, commercials, print ads, video, radio, TV, newspapers, signage, and the list goes on, campaigns will literally use every single medium out there to communicate the messaging of the candidate and build brand awareness. What can you do to maximize your exposure to the public using the resources available to you? What are best modes of communicating your message to your intended audience? On that note…

Knowing Your Audience

So far, on the Republican side of this particular campaign, we’ve seen contests in Iowa, New Hampshire, and South Carolina. The winner of the Iowa Caucus on the GOP side was Ted Cruz. Cruz did an excellent job of communicating a message to Iowans that fit what they wanted to hear, despite having one particular position that directly opposed the views of many voters. In New Hampshire, on the other hand, a far more liberal state, Donald Trump held firm to more centrist ideals and won overwhelmingly. In both cases, the candidates knew their audience well and communicated the message using every format they could and came away with the win.

Ground Game

Another big difference between the Trump and Cruz campaigns is how they have put together their ground game. Ground game in a campaign refers to the number of people going door-to-door or making phone calls for a candidate. Ted Cruz has been very good about setting up a solid ground game in nearly every state. On the other hand, Donald Trump has eschewed the traditional ground game strategies and relied more on large-scale events and making headlines. Traditional wisdom would tell you that the person with more people working the public will win. In this case, nothing about this election has been traditional. That being said, let’s go with tradition and try to build an army of advocates out there building your brand for you. It is, after all, the cheapest and most profitable way to build your business.

Differentiation

So, here’s where the rubber meets the road in a campaign. A campaign is a zero sum game. In order for one candidate to gain votes, they have to take votes from someone else. The only way to do that is to differentiate themselves from the other candidates in the field. Sometimes that is easy because of significant differences in opinions. Sometimes, however, many of the candidates look and sound a whole lot alike. Being able to effectively differentiate themselves from the others in the field, even if there are few actual differences, is what allows a candidate to take votes from other candidates in order to win. What is the value proposition you need to communicate to differentiate yourself from the other candidates to help a client buy or sell a property? Does your service differentiate you? Your use of technology? Your expertise in a certain niche?

Measurement and Adjustment

Analytics are extremely important in a campaign. Everything is measured. From opinions about immigration and economics to who is most handsome or pretty to, in the case of Bill Clinton, boxers or briefs, everything is analyzed and measured. Anomalies are tracked. Trends are forecasted to account for every possible outcome. Polls are taken regularly and analyzed. Adjustments, based on all of this data and its analysis, are made to ensure that the candidate’s message, appearance, marketing materials, or anything else that isn’t seen as favorable changes. Remember, the goal of the candidate is to earn votes. The goal of the real estate business owner is to earn business. What are you doing in your business to measure and analyze the results of your messaging, marketing and dollars spent doing both? How would you adjust that strategy if it wasn’t working?

Admittedly, the title and timing of this post is not coincidental, but that doesn’t change the lesson. Marketing campaigns are called marketing campaigns for a reason. From the standpoint of a business owner, your ability to look at the campaign in its entirety will allow you to come up with a more comprehensive plan for creating your value proposition and the marketing tied to it. Hey, you never know, you might just get elected in the process.

The Top 5 Mistakes Rookie Agents Make

February 11, 2016 By Chance Leave a Comment

To start off, this is just another in a long list of posts that are related to “Your First Year in Real Estate”. It certainly won’t be the last, and probably won’t be the last on this site. Also, if you can keep the number of “rookie mistakes” you make to five, congratulations. You win Rookie of the Year. Hopefully this will help you avoid some mistakes that others out there have experienced and that I see on a pretty regular basis.

To preface the meat of this post, I have to say a few things about this list. First, none of these mistakes are fatal. You can make them and still turn out as a pretty good agent. Avoiding them will just help speed things along on the road to success for you. Second, this is not a 100% complete list. It’s just a list I made based on personal experience and coaching real estate sales people for a decade now, and some input from a friend who coaches agents and is pretty darn good at it. There are other mistakes you can, and most likely will, make. Remember, and not to sound cliché, it’s a journey. Learn from the mistakes and move on. Finally, if you read this list and realize that you’ve made one of these mistakes, that’s ok. Don’t worry. It can be fixed. Nothing in this crazy real estate world is that permanent, especially in your first year or two. Now, let’s get going…

1. Not Branding Yourself

I know, I know. You just took your exam and got sponsored and you think that your Broker/Brokerage/Parent Company/Coach/Kool-Aid Deliverer is the greatest thing since sliced bread. It’s an exciting time. It really is. I’m not just being a smart-ass to make a point. I’ve been there.

There is a little secret that I would like to tell you, though. You’ll probably change brokerages at some point in your career (This is not true of any of my agents that happen to be reading this. Y’all just skip this part). It may seem unthinkable, but the number of agents that have stayed at the same brokerage for an entire career is extremely small. So, brand yourself before you brand your Broker. Get your own domain name and your own email address associated with that domain: yourfirstname@yourname.com. Remember, according to NAR stats, only 3% of people care who you work for. This is a people business. They are buying you, not your Broker. Build your brand, not your Broker’s.

2. You Don’t Focus on Learning

Listen, your education didn’t end when you took that exam. In fact, I can tell you without hesitation that your education didn’t really begin until you took that exam. Most state regulated courses leading up to the exam are a joke and have no practical application in the real world. If you aren’t enrolled in classes (hopefully with your Broker), a mentorship, coaching or something like that a) you chose the wrong Broker, and b) you need to figure that out quickly. Also, start reading, listening to and watching podcasts, surf the web for coaching videos, etc. Follow smart people online, sign-up for webinars, shadow experienced agents. In other words, make learning a top priority in your business. When you aren’t doing something to make you money, you should be learning something that will.

3. Not Putting Systems and Processes in Place

It may not seem like it right now, but, at some point, time becomes your greatest asset and your biggest limitation. There will come a time when you will be so busy that the idea of stopping for a day or two to add systems and processes into your business will seem crazy. The problem is that you will have to do just that or risk stagnation. So, a real simple solution is to put them in place from day one. They don’t have to be perfect, but they do need to be there. You can adjust as you need to. Marketing, customer service, follow-up, transaction management, and database management are just a few areas to focus on. Without scalable systems and processes in place early in your career, your business will suffer later down the road.

NOTE: Don’t spend all of your time doing this. An hour a day or so will be just fine. This isn’t busy work so you can avoid doing real work. You don’t want six months to pass and all you’ve done is organize your contacts.

4. Not Using a CRM Software

We’ve talked about this before, but I just can’t emphasize the importance. Organizing your database, creating perpetual follow-up protocol, and automating as much of it as you can is pivotal to your success, especially at a time when you are initially building your brand awareness. That’s it. There’s nothing else to say. Find one and use it. Remember, the right CRM is the one you actually use. Play with a bunch and find the one that works best for you. Use a CRM or be SOL.

5. Focusing on the Outcome, Not the Input

If nobody told you in your interviews with a broker, let me be the first to break this news to you: success in real estate is not easy. This isn’t HGTV. You don’t just get a license and then the producers show up outside your house and start filming. Real estate is a grind. It’s a game for hustlers. The ones that are willing to do the work, and do it consistently, every f’ing day, are the ones that are making the money here. If that isn’t for you, take your ass back to what you were doing last week. If you’re willing to do the work, focus on the work. Keep your nose to the grindstone and the results will come. They will. I promise. Don’t get discouraged. Don’t get mad (unless that kind of thing motivates you) when a friend uses another agent. Suck it up, put on your big boy/girl panties and move on to the next task. Focus on what you can control. The results will follow with hard work, consistency, and patience.

There you have it. Now, take your ass back to work.

Your Competition Doesn’t Matter

January 28, 2016 By Chance Leave a Comment

It’s been a while. I took a little bit of an extended holiday break on the blog, but am back and have some big plans for this site for the new year. Look for some big changes in the next few months.

In the meantime, let’s talk about competition. Something I hear on a pretty regular basis as I help our agents put their marketing and business plans in place each year is concern or questions about what the competition is doing. It usually looks like, “(Insert agent name here) had a kick-ass year last year. What are they doing that I’m not?” Or maybe, “What if I did what (insert agent name here) is doing? Would that work for me?” Maybe. Maybe not. The real question is:

Why does what your competition is doing matter so much to you?

The simple answer is that you want their success. The truth behind that is that your competition didn’t just become successful because of this or that particular marketing tactic. The truth is that the success they are experiencing is more than likely a result of years of hard work and marketing. Top producers in a market in a market are top producers for a reason. They have put processes and systems in place, work tirelessly, market, prospect, service their clients, review, audit, rinse and repeat. It’s not any one thing that they did that automatically made them a success. It’s a combination of hard work, tenacity, and patience.

So, back to what the competition is doing. Should you replicate it? Maybe. If you’ve read this blog before, you know I’m a fan of stealing and making your own. But, that’s the key. You have to make it your own. If you’re just a carbon copy of someone else, how are you going to make that sale to someone? In the last post, we talked about being yourself and you need to be yourself in everything. Let your personality show in your marketing efforts too. That’s a big part of building your personal brand, in my opinion. It’s a bigger part of running the kind of business you want to run. A business that you control and that makes you happy.

On the other hand, if it’s something that puts you so far out of your comfort zone that you aren’t likely to be successful or follow it through to the end, why waste your time, money and effort? Wouldn’t you be better off doing something with a far greater chance of success? I think so. So, if you are copying the competition just because you either feel like you have to or because you think that they’ve raised the bar for everyone, think again. A well-planned, personal, creative marketing effort of your own can easily counter anything your competition does.

In the end, to make the decision on whether or not to use something a competitor is doing in your business, you have to look at how well it fits into your overall business plan. Instead of thinking of it as replicating the competition, imagine for a minute that what you’re going to do is a new piece of software or a new service you are adding to your business. Would you still do it? Is it a fit for what you’re trying to accomplish? Will it help you reach your goals? If the answer is no, the answer is no. If it is maybe or yes, then pull the thread on it the same way you would with a new software or service. Is there a realistic ROI? Is it worth the time and effort?

More importantly, don’t spend too much time worrying about the top producers and what they’re doing. Rest assured, they aren’t doing the same in return. They’re out there working their plan and growing their business their way. You should do the same. What I’ve found over the years is that your biggest competition is most likely looking back at you in the mirror. Go to bed every night knowing that you did your best and you won’t need to worry about the competition. They’ll start worrying about you soon.

Playing to Your Strengths

December 3, 2015 By Chance Leave a Comment

So, there are a million dumb clichés about getting outside some stupid metaphorical box and how growth only exists when you’re out of your comfort zone and blah, blah, blah. Clichés are clichés because they are generally true, right? But, with all of these business related clichés there has to be some underlying truths before you can do any of this. You can’t just decide one day that you’re going to be a race car driver and go nail down a few million dollar sponsors, slap some stickers on your Altima, and roll into Daytona.

For the record, I would like to invent a time machine, go back, find the a-hole that came up with “outside the box”, cram him/her into a box, and ship them to Siberia, during winter, covered in whatever polar bears like to eat.

Now, I have no problem with stepping outside of your comfort zone. I do have a problem with the idea that you aren’t “growing” or “developing” unless you’re outside your comfort zone. I take issue with the thought that you have to be outside some damn box to become better. The problem is that so much of real estate training that is out there tries to stick a round peg (you) into whatever hole makes the trainer or broker money the fastest. What happens after that is anyone’s guess.

I can tell you this, without question, without reservation: if I had gone through most real estate training programs when I first started, I would almost certainly not be in real estate today. I don’t for one second think that I am alone in that. Here’s a little confession. I suck on the phone. I’m terrible. If I had gone through one of the myriad new agent bootcamps that preach make a 100 calls a week or call expireds and FSBOs until your ear falls off, I would have failed.

Setting yourself up for failure by doing something new or that you suck at isn’t what I consider growth.

I’m a believer that success breeds success and that, especially when you are brand new or you are trying something brand new, you need a few small wins before you jump into it full force. So, two things real quick on this.

Being Self-Aware is Key

First of all, to know what is inside the box and what is outside the box you have to know what you’re good at and what you aren’t good at. For a lot of people, really doing a thorough self-examination is harder than it sounds. It can be really tough to look inside and say, man, I am really terrible at (fill in the blank). Unfortunately for those people, to really be able to take what you’re good at and make it the catalyst for your awesomeness you have to be very self-aware. You have to know your strengths and be able to play to them. Likewise, you have to know your weaknesses so you can marginalize them and focus your efforts on using your strengths to get those first few wins.

Play to Your Strengths

Once you’ve done that, you’ve taken that inventory of your strengths and weaknesses, then you can really look at how you’re going to use those strengths to build your business. The reason that playing to your strengths is so important is that you will see what is working because you know what to look for, you’ll keep at it because you like doing what you’re doing, and you’re going to see those little wins happening. As you see those little wins happening, they’re going to drive you towards that next little win. Before you know it, those wins will snowball into something much larger.

Again, I’m not saying that you should never step out of your comfort zone. At some point you will have to. When you do, being self-aware about your strengths and weaknesses can help you formulate a plan that will lead to success. That’s when real, actual progress happens. You are not a round peg. There is no silver bullet to success. You have to formulate plans based on your strengths that work for you and then go execute. Then, once that foundation is built, go outside the stupid box.

Just Be Yourself

November 12, 2015 By Chance Leave a Comment

I apologize in advance for this rant, but it is overdue and today pushed me over the edge a bit.

Dr. Seuss once said, “Today you are you, that is truer than true. There is no one alive that is youer than you.” Of course, the meaning behind the quote is that you are perfect just being you. You don’t need to try to be someone else because you’re just terrific, aren’t you?

Except that you’re not perfect and you’re never going to be. Truly accept that and it will change your life. Embrace the challenge of that and don’t use it to hold yourself down and you’ll never be happier.

The problem is, for 95%+ of the people I meet out there, they don’t like themselves the way they are or they perceive that they are less (fill in the blank) in one way or another than the people who they work/hang out/live with every single day. They’re too fat or too stupid or, most likely, just too damn afraid to do whatever they want or become who they want to be. Why? Because you want to be accepted? You want to fit in? You’re worried about what those people will think of you if you became the badass you were intended to be?

Instead, we will make excuses. We lay blame. We take on the personality of our supervisor or mentor or whoever we aspire to be like or are envious of this week. We get our hair cut like the latest celebrity, wear the latest fashions, or chase some other trend that we don’t really give a shit about just to be part of the crowd. So, the burning question is: Why? Would this crowd not be there if you were yourself? Why? Are those the kind of people you want to be associated with? Why? I just don’t understand it.

Don’t get me wrong, there is a difference between not being satisfied with yourself and not being happy about yourself. Not being satisfied is a catalyst for growth and development. Not being happy about yourself is a downward spiral. At best you stay where you are as the world passes you by. At worst, you are miserable. So again, I ask you why. Why?

If we’re going to be real about a good portion of the world, Dr. Seuss should have said something more along the lines of, “Today you are they, that is truer than true. There is no one alive that is theyer than you.”

So, instead of just sitting here and bitching about it, how do we fix it?

First, we stop caring so much about what people think about us that we change to suit some ideal vision of who they want us to be. Who gives a crap what they think of you? At the end of the day, you have to be able to look yourself in the eye and know that you did the best for yourself and the people that depend on you.

Second, stop being so damn concerned about things you can’t control. There is only a small fraction of our world that we can control. We have to let the rest go. Focus on the things you can impact and let the rest fall by the wayside. Don’t let the weight of the world bring you down. Let the opportunity in your world move you forward.

Finally, never be satisfied. Keep getting better. Wake up every day bound and determined to make it as awesome as you can. Impact what you can in the best way possible. Leave your mark and then go to bed planning to leave a bigger, better mark tomorrow. Because, by God, you are you and there’s only one you. Don’t deprive the world of that. Just be yourself.

Creativity, Motivation and Stress Relief

October 22, 2015 By Chance Leave a Comment

Why I write and don’t draw.

I made a conscious decision early not to inject too many personal stories or my own ego (which I contend does not exist) into this blog. I had the good fortune of having an early mentor that taught me to use third-person stories even when they are first-person stories. It irks the crap out of me when people who are clearly thought leaders put themselves up on a pedestal. It completely ruins their message for me (I’m looking at you John Maxwell). So, I do my best not to sound “preachy” or like I’m the best at this stuff so you should do what I do. I’ll dispel that myth for you now. I’m not the best at this and almost certainly never will be.

I am stressed and need to use this post as an outlet for my stress. In the past three months I’ve hired 20 agents, completely revamped our new agent mentorship program, am in the process of changing our recruiting program, and have taken on a 12 month project that is both incredibly exciting and at the same time completely scares the shit out of me. When those are finished, there’s a list of stuff on both of my Do, Doing, Done boards waiting to happen. All of that is the 8-5 part of my life. I also have a busy family when I get home from work. I’m not complaining, mind you. Life is good. I’m doing what I love and loving what I do. I’m also very fortunate to have an awesome wife supporting me and helping carry some of this load despite the fact that she also works a full-time job in a supervisory capacity and has stresses of her own. Nonetheless, I am stressed. Stressed almost to the point of hitting the wall, which we’ve talked about here before.

So, I am going to take an hour or two and just write.

Over the years, whether I was stressed or just needed a boost of energy or had to be in a game time mindset, I’ve found that doing something creative helped me get there. To be honest, when I first started blogging, it was because I needed an outlet. Just like today, I would wait for the kids to go to bed, plop down on the couch and go to it. It was my massage or pedicure or round of golf or whatever people do to unwind. Doing creative work just helped clear my mind and get over whatever hump was in my way. Looking back at a lot of those posts, I probably should have just kept a diary.

When I sold new home construction, Saturday and Sunday were the big days. That’s when people came in to model homes looking to buy and I needed to have my game face on. So, I planned my weeks to where the only thing I would do on the weekends outside of selling was creating marketing pieces. I’d sit there in my model and copy and paste things into Microsoft Word from Netscape Navigator. There was some serious WordArt happening in those days. Graphic design didn’t know what hit it when I started using Power Point to make flyers. Sometimes I miss 2003. It was fun and got my creative juices flowing. When I got up to meet clients who came into the model, my brain was already working. The difference being, for those who haven’t sat in a model home, that it is easy to get bored to death during downtime, of which there is plenty.

The other thing I find myself doing when I’m stressed like this is listening/watching/reading inspirational material. I don’t know if it’s the kick in the ass I need or just the break from whatever is stressing me out, but I’ll stop and watch something like the Holstee Manifesto or some Gary Vaynerchuk or listen to Napoleon Hill or read Success Magazine. Something that gets the juices flowing and makes me feel like I’m ready to take on the world. OK, I’m not going to lie to you. Sometimes I close my door, turn on Eminem and in less than 5 minutes I’m good to go. I know it’s silly, but you can listen to whichever white rapper from Detroit you want to. Don’t judge me.

Anyway, that’s my two cents for the night. Thanks for listening. I appreciate you allowing me this outlet and I hope that you find value here. I love reading your input and comments. It keeps me going, makes me look forward to next week, and seriously adds some level of validation that not all of my ideas are completely crazy. I hope that you know what it is that takes your mind off the things that stress you out and help you push past the obstacles. If not, start writing and see where it leads you. If that doesn’t work, try painting or running or yoga or whatever you have to do to find it, but find it.

Takeaways from NAR’s 2015 Member Profile

October 15, 2015 By Chance Leave a Comment

Admittedly, there isn’t very much fun about sifting through 70+ pages of statistics and graphs. Those that know me well know that I would rather watch soccer than sit and read stats for a couple of hours. Ok, that’s an exaggeration. I really hate studying stats, but I’d never watch soccer. That’s ridiculous.

That being said, outside of political advocacy, one of the few things that the National Association of Realtors does very well is compile some pretty good stats. If you’re an agent and you don’t read their Profile of Buyers and Sellers, you are missing out on some pretty good info that could help shape your strategic plans. But why would you want to know about the “average” Realtor?

Knowing your competition might allow you to exploit areas of weakness, opportunity, and/or underserved markets.

So, on your behalf, I sat down with the 2015 Member Profile and here are, in no sensible order whatsoever, some of the things that caught my attention:

Social Media

This may sound crazy, but one of my biggest surprises of this survey was that only 65% of Realtors use social media. I may be showing my age, but how can that possibly be true? I seriously can’t even imagine a world where an agent wouldn’t use social media in some fashion.
This stat shows me that if I was over 50 years of age, I’d get really social savvy. For agents under 50, this stat goes up to 80 percent. If you could market to the over 50 crowd that is in the social sphere, I think there could be real opportunity there.

Business/Production

In 2014, the typical agent did 11 transactions for around $1.7 million in production and made $45k. All three of those are down year over year from 2103. I’m going to go out on a limb and suppose that has something to do with strong member increases and not market conditions. Either way, I never really pay that much attention to these kinds of stats because, like in everything else in your life, the 80/20 rule applies and you aren’t the 80 are you?
The typical agent received 20 percent of their business from repeat clients and 20 percent from referrals from past clients. If that’s the case, I think that there are a lot of agents doing things wrong. It would also explain the drastic drop in the statistics around repeat business from the Profile of Buyers and Sellers. I would love to see this (combined) number closer to 75 percent.
Only 5 percent of Realtors reported that real estate was their first career. Nothing really of significance here other than it makes me sad. I’d love to see more universities with residential real estate concentrations.
Only 18 percent of Realtors have assistants. If that doesn’t prove the 80/20 principle, I don’t know what will. Just a thought: there might be a larger crowd in the 20 percent if more agents had assistants doing the things that keep the agents from their business development. More on assistants here.
In 2014, 26 percent of agents did more than 20 transactions. Again, the 80/20 rule lives.
I’ve always thought there was something of a “war of attrition” in real estate and that if you could just hold out long enough you would likely be successful. The stats seem to somewhat back that up, even though the numbers are just kind of disappointing overall.
More agents reported that finding the right property was a bigger obstacle to closing deals than was financing. I find this both encouraging and concerning. It’s encouraging because it would seem to imply that financing is becoming more widely available to all buyers. It’s concerning because short supply has long-term economic impacts that can be harmful if the shortage remains in place for an extended period of time. I have enormous concerns for Texas in this regard. The fortunate thing about this particular category in the profile is that 20 percent of agents reported no factors getting in the way of them closing business. That’s really encouraging.
69 percent of agents still belong to a commission-split model of brokerage. However, if you look at the higher-earning and more experienced agents, they tend to be associated at a higher rate with fee-based or 100% commission model brokerages. Maybe (and I might be biased given that I own a 100% commission brokerage) the younger agents should pay attention to their wise elders.

Marketing/Communication

Members allegedly brought in three inquiries and two percent of their business from their website. I know that those are small numbers, but I highly doubt the accuracy of these numbers. That’s not on the NAR for the inaccuracy, but rather the agents answering the survey not really reporting correctly. In today’s world, these agents might be getting some business from some websites, but only the truly tech savvy have websites that generate real business. My cynical side is guessing that the agents that reported this as they got business from a website and not necessarily their website. Could’ve been Zillow, their broker, or anywhere else on the ole’ interwebs. Mind you, this question was being answered by a member population with an only 2/3 adoption rate of social media.
In the frequency of use of communications and tech products, there really weren’t a lot of surprises. But, this is where I think you can find some real opportunities if you look at what isn’t being used. In this case, blogs and podcasts were at the bottom of the list. So, how can you use a blog and/or podcast to grow your market share?
Similarly, the most underutilized tool in the business software category is the greatest opportunity for any agent. The amazing thing (to me, anyway) is that every marketing/tech/web guru out there has been preaching this tool for a decade. VIDEO!!! If you aren’t using video, start right now. Record a video of how you liked/hated/fell asleep to this post and send it to me. Just do it. We’ve talked about video on here before.
In the preferred method of communication with clients category, again, the losers show you where the greatest opportunity lies. The bottom three? Blog, podcast, and video chats! Facetime your clients. Record videos from your phone and send them instead of a lame email. Use blog posts in your CRM to communicate with past clients. Same thing can be done with recorded podcasts.
In the information on Realtor websites category, the two low scoring features that jumped out at me were live chat and appointment scheduler. Those are easy things to put on a website and wouldn’t you want a hot prospect to be able to instantly communicate with you or schedule a time to get together?
Shockingly (or maybe not), is that more agents reported, by over 10 percent, that they put their listings on third-party aggregators like Zillow, Trulia, etc. over their own local MLS. If that’s not a wake-up call to every single MLS/Association Executive in the country, I don’t know what is. Wake up, dummies!!! Put together a good, consumer website where buyers and sellers can connect with your members. Your failure to do so is the biggest threat to the industry.
Newspapers suck. Less than 20 percent of agents put their listings on their local paper’s site. Even online, newspapers are useless.

Demographics and Misc.

If you’re under 40 and thinking about a career in real estate, go for it. Only 11 percent of agents fit that description.
85% of Realtors are white. That is nuts! If you aren’t white and thinking about a career in real estate (especially if you are not white and under 40), you should jump all over that.
Similarly, 85% of Realtors only speak English. So, if you’re white, learning another language might behoove you. Spanish seems to be the language of choice and since only 8 percent of Realtors are hispanic, it would make sense to habla.
As I mentioned, Realtors tend to be involved in their communities, particularly politically. 96% of agents are registered to vote and 91% actually did in the past election.
They are also involved charitably. 70% of agents said that they volunteer in their community.
Realtors tend to put their money where their mouth is. 85 percent own their own home and more than half either own a vacation/second home or investment real estate.

I’d love to see the NAR do a Member Profile of Agents Who Really Produce. I think that would not only be far more telling, but it would give a lot more insight into how producing agents do their business. It could potentially shape how local, state, and national associations set up member benefits and tools. If nothing else, it would be a great tool for new, ambitious agents.

I know, this is a long post, but I promise, despite the boredom you’re encountering now, that it really is the meat and potatoes of the report. Now, go take a nap and when you wake up you’ll be ready to take on the world.

« Previous Page