Effective real estate brokerage is simply doing the most profitable activities before you do the less profitable activities. One of the greatest mistakes is believing that all net profit producing activities should be done. The great agents – those who retire wealthy – learn quickly that most activities taught today in real estate will end in net profit but only very few maximize net profit.
Since maximizing net profit is a special part of real estate to me (a part that I enjoyed and pursued), I’m going to lay out the 25 ways that I believe maximum profit can be obtained from your real estate business.
1. Look to do more fully disclosed dual-agency transactions. Get your listing off to your database as soon as you get it. Get the sign up before it hits the MLS. Hold that open house the first Sunday.
2. Determine some great ways to fill your pipeline with more listing presentations and time-block those activities. Many of these lead generation activities have been taught for years, but recently, we’ve made them fun. Do the things that other agents don’t do like working with the expireds and having the largest inventory of for sale by owner relationships. Talk to the assisted living center sales people and know who owns real estate in your town but gets their tax bills sent out of state. These are just four of the 64 methods that my coaching clients use to aggressively pursue more listing leads each week.
3. Quit spending money on stupid stuff. Vendors promise methods to make more money with less work. This business requires work, at least 40 hours a week. Those 40+hours will require that you talk with people and ask them to buy and sell. Trying to trade that work in for a blog, a website, or social media does not work.
4. Work with fewer buyers. When you do work with buyers, make sure they’ve happily answered questions over the phone. Make sure they get pre-approved in writing before you meet with them. Make sure they meet with you so you can show them how you will produce property for them that isn’t in the MLS. Make sure they sign a buyer-brokerage agreement. You’ll be showing them for sale by owners, expireds, and clients out of your past client database.
In addition, you’ll send postcards to the area that they want to buy in and advertise their needs through your site(s) and social media outlets along with any print advertising. This method creates multiple returns from one exertion of energy. While you’re showing property to buyers, you’ll be showing them off-market property that could create a listing lead and increase your chances for a double-ended transaction.
5. Stop trying to educate your clients. You know what’s best. Make the recommendations. Don’t spend a 2-hour listing presentation that contains the college course on marketing real estate. You don’t get paid until closing, therefore you work for free until the closing. Make sure that your work is efficient. Efficiency makes that you’re talking with a client who has a real motivation that actually makes sense! With that motivation, you can design a marketing plan to actually achieve your client’s goals. Teaching them how is a waste of time.
6. Know when to cut a client loose. Sometimes, there are sellers who say they want to sell, but their motivation never really made any sense to you. Then you find that they won’t reduce their price, and they negotiate like they don’t want to sell. Could it be that they don’t want to sell? How about those buyers who are shown perfectly good properties with the lowest interest rates known to mankind and they still won’t pull the trigger? Maybe by the 15th showing, you might become more aggressive in asking them why an offer isn’t forthcoming. The old 80/20 rule does apply here – 20% of your clients take up 80% of your time. Trading in these clients for better ones is a skill that the top agents know how to do without hurt feelings.
7. Know when to refer clients. Buyers and sellers who won’t cooperate with questions designed to help them should be referred. You need to give them valuable reasons as to why they should answer these questions. If they still decline to answer the questions, they have probably already answered your question as to whether or not they’re worth your time.
8. Get multiple bids on everything. The days of me trusting one vendor are over. Whether it’s printing, insurance, or IT assistance, I get more than one opinion. It takes longer, but I meet more potential clients. Also, I usually learn so much more about how my money is being spent.
9. Get an assistant. Our lead generation activities are so good that our clients want to do more of them then they find that they soon run out of time. With many of my clients, we have been teaching their transaction assistants on how to spend a few hours of their day generating more leads. The assistants appreciate that they have a way to make some more money, and we’re doubling the amount of listing presentations for our rainmakers. The top people soon find out they can’t do it all themselves. Get over the fact that you’re afraid of adding a little overhead when you have access to some of the best systems in the world to generate listing leads.
10. Get a coach. There are a few real estate speakers and trainers who have retired wealthy from their real estate earnings. If they can teach you how to do the same or give you manuals on how to do it, take advantage of it. Reinventing the wheel is just stupid.
11. Produce your own leads. Buying leads is expensive, and usually doesn’t meet the same profit potential as producing your own leads.
12. Watch your spending. Real estate agents have a knack for consistently spending more than they earn, no matter how much they earn. You don’t need a new car when a 3-year old one will do just as well. You don’t need that many pairs of shoes, and you can certainly go on a 10-day vacation versus a two-week vacation. Look for ways to cut back and save money.
13. Buy real estate. You only have enough time in your life to learn one investment medium really well; for most of you, that’s real estate. Get the down payment together as soon as possible. Put some money down on a small rental that has positive cash flow after a 35% expense factor, and let the tenants pay off the mortgage. Don’t believe the “flippers.” Most of them cannot make it through a sideways market, much less a horrible market.
14. Make the most of office meetings. If your office has an office meeting, make sure that everyone presents a motivated buyer and seller. You should be able to put together a few transactions at every meeting.
15. Write contracts so they close sooner. This means less “stuff” that can happen.
16. Counter-offer every offer. Make them iron clad. If it’s going to fall out, make it fall out in the first few days not three months later.
17. Show fewer short sales and foreclosures to your buyers. You don’t have control over them. They take longer and they’re much more frustrating than a real transaction with equity.
18. Get your buyer to seller ratio to about 20/80. Fewer buyers and more sellers is one of the major steps to getting you rich.
19. Generate enough leads allowing you to feel comfortable in raising your commission. Also, negotiate your commissions harder. Too many of you are walking out with reduced commissions. Often, if you take a closer look, many are taking up to a 50% hit in what you take home.
20. Don’t move offices thinking you’ll be able to do more business. If you weren’t doing well at one office, chances are that you won’t be doing well at another office. The only reason to ever change offices is to increase your net proceeds after the commission split.
21. Get some time to think. You need to turn off your phone at some time in the evening and at some time on the weekends. When I say turn off your phone, I mean turn off everything. If you don’t have the business systems to provide excellent value to your clients during business hours, you aren’t going to please them that much after business hours. Quit using all of your creative energy for services rendered outside the typical business day.
22. Be happy. Quit taking clients who beat you up for no reason and who can never be pleased. If you still want to take them, at least learn how to ignore them. There are some people who just don’t appreciate what you do, which means you should still do your best but don’t let them affect you.
23. Stay current with your taxes. Put some money in a tax-advantaged savings account. Don’t get behind with the IRS. Run your business to maximize your net profits after taxes. Get a 529 plan for your kids.
24. Build a community of trusted advisors. You need to have the best real estate coach, the best attorney, the best CPA, the best handyman, and the best mentor available in your sphere of influence.
25. Prepare a simple plan and break it down to daily activities. Try to develop some balance around family, fun, faith, fitness, friends, and personal finances.
I know that some of these items are extremely difficult to implement, which is why there are few wealthy real estate agents. Continually working on these items and shying away from the other “noise” in the real estate industry will help you pay attention to the activities that really make money. Good luck on your endeavors to get more signs up, work with fewer buyers, have more double-ended transactions, and buy some real estate for yourself!
Walter Sanford has been designing and implementing real estate systems for 30 years. One of the most successful REALTORS® and now wealthy from his systems, Sanford teaches his systems and strategies through his products, seminars, and personal coaching producing the best results in the industry. Do what works, do what is proven. Hire Walter Sanford. Call our office at 800.792.5837, email walter@waltersanford.com, or chat with us online at www.waltersanford.com.
