Here is a link for a webinar I did about a week ago for Number 1 Expert.  You do have to fill out a short form to listen and give them them information to get to the actual recording.  It is about an hour long and you will see slides on the screen that are in sync with my answers.  They titled the talk, "How to Stay Positive in Uncertain Market Conditions".

Some good stuff.

This was passed along to me by Benn:

We are a small real estate company in Md.  We are trying to expand our clientele do you have any advice on how we can grow our business.  We are looking to attract more listings without paying a lot of advertising expense.  We tried the expired listings but most of the time the homeowner phone number is not listed.

Thanks,

(name deleted)

I’ve deleted your name, so in case you feel insulted by what I am about to tell you - you can feel a little less insulted because no one but you will know who wrote the note above.  Including me.  I couldn’t find you, no matter what I tried.  The very first thing I attempted to do was to find out a little bit about you - what you are doing now.  There are so many different companies who seem to have a similar name - that there was no way for me to land on your web site.  If you even have one.  You didn’t give your name or any contact information when you wrote this and I am going to assume this is somewhat standard operating procedure.

The first problem I see you being up against isn’t the size of your company, because that is irrelevant.  What sort of leaps off the page is you are very out of communication with the world around you.  Do most of the people who live or work within a hundred yards of where you office even know your name or what you do?  If they saw you on the street would many of them even know you sell real estate?  I believe this is your primary barrier to confront and handle: come out of non-existence with the people in your immediate vicinity.  Start there.  Then widen that circle.  Get out and talk to people.  Get rid of (as in completely rid of) the idea that you need permission to approach someone - like you need someone to issue you a license of some sort before you open your mouth.  You didn’t find any phone numbers in the print-out of the expired listings.  So what?  Just give up on expireds?  Maryland is a pretty small state.  You could probably drive across the whole state in a few hours.  You could absolutely drive completely across the town where you live in 90 minutes.  Show up at their door.  Ask them if they still want to sell their home.

You don’t want to pay a lot for advertising for two reasons: you don’t have the money to pay and you wouldn’t know what to put in the ad anyway.  Okay so skip advertising for now.  Prospect.  Learn what people consider valuable just by trial and error.  See enough people and ask enough people what they might be interested in and in very short order (a few hundred people from now) you will know what to say and what not to say when you are talking to a prospective customer.

There are exactly two methods of getting business in our business: marketing or prospecting.  Learn to effectively do one or both of those or leave real estate sales.  Fortunately, or unfortunately, those are the only three choices.  The skill of getting customers is the "important skill" in our business.  For a really bright future make this important thing your important thing.

For Immediate Release: Arizona MLS Takes Stand on “Scraping” and “Indexing”

RECENT NAR INTERPRETATION CREATES COMPETITVE DISADVANTAGE FOR REALTORS®

PHOENIX, AZ – JUNE 10, 2009 – The Arizona Regional Multiple Listing Service  (ARMLS) is taking a stand on a recent National Association of REALTORS® (NAR) ruling on the technical interchangeability of “scraping” and “indexing” as it pertains to display of the IDX Database on the Internet. A recent controversial interpretation issued through the Center for Real Estate Technology (CRT), NAR’s technology arm, advised members that “scraping” and “indexing” are in effect the same practice and represent misappropriation of the IDX Database. ARMLS believes that this ruling places NAR members at a distinct and serious competitive disadvantage. ARMLS maintains that the CRT opinion does not factor in the end use of the “scraped” and “indexed” listing data. It fails to distinguish between benign and malicious “scraping” and “indexing.” These practices are termed benign if they provide intended benefits to the consumer and the buyers and sellers whom the REALTOR® serves, and are not in conflict with the ARMLS IDX Policy. They are deemed malicious if they utilize the listing data in a manner foreign to the original intent of the REALTOR® and the property owner, and are incompatible with the ARMLS IDX Policy. The practice of “scraping” or “indexing” by search engines for the purpose of displaying or indexing the data for consumer property search, and which ultimately directs the consumer back to its source, is benign, and is in sync with the REALTOR’S® intention when displaying listings on the Internet. When a third party, e.g. a search engine, through “scraping” or “indexing” misappropriates and uses the listing data for purposes not intended by the property owner or REALTOR® , these practices become malicious and should be prohibited. Any interpretation by NAR prohibiting REALTORS® from allowing search engines, such as Google, from benign “scraping” and “indexing” listing data puts the REALTOR® at a distinct competitive disadvantage. The ARMLS IDX Policy contains the statement that “IDX Brokers must protect the IDX Database from misappropriation by employing reasonable efforts to monitor and prevent “scraping” or other unauthorized accessing, reproduction or use of the IDX Database.” The interpretation of this policy was not intended to discourage dissemination of listing information through search engine indexing or to discourage brokers or their permitted licensees who offer listings from optimizing their listings to achieve higher search engine placement. ARMLS supports and encourages a change in NAR’s interpretation of “scraping” and “indexing” that factors in the results of such activities and removes any competitive disadvantage that NAR’s current opinion creates.

A few short years ago when I was doing my original research for shaftingrealtors.com (when I first became enraged with Realtor.com) I found something very interesting.  There was a site (a rather stupid looking site with an even more stupid, long and impossible to remember URL) hosted on AOL that was beyond critical of Realtor.com.  That site is no longer up (and I have since removed shaftingrealtors, when NAR politely asked me to).  What was interesting was that it was impossible for me to find the person who had put up that site on AOL.  Their name showed up nowhere on the site - or anywhere else.  They were afraid of reprisals from NAR.

As recently as fall of 2006 I  had numerous people writing to me, telling me I was "very brave" to openly speak out against NAR’s handling of Realtor.com.

My my, how the playing field has changed.  No one writes stuff like that to me, anymore.  Seems the only thing stopping anyone from saying anything these days is they are busy trying to make a living (that thing NAR is supposed to actually help us with).  Thanks to Jim Duncan for unearthing these gems from Realtor.org.

For nearly a decade, REALTOR.com has helped REALTORS® thrive in the Internet age.

REALTOR.com was created to be an Internet site that would always be owned and controlled by REALTORS®

Protected members against business models intended to disintermediate them or force unfriendly tariff models upon the industry

No “For Sale by Owner” properties may ever appear on REALTOR.com

It would be wonderful if the four quotes above were actually true.  Unfortunately, they are not correct statements.  But it doesn’t have to stay that way.  I believe NAR is populated by nice people who will wind up doing the right thing.  Even if it takes a while.  I also believe I have a lot of company now.  So there is light at the end of the tunnel.

Here are some factual statements:

Most people who enter the real estate business are gone in just a few years.  Most real estate agents, who stay in the business, are not very successful.  To be in the top 1% of all agents in the U.S. would require about 50 - 60 sales a year.  Most agents, who are successful, (50 - 60 sales per year) do not really know why they are successful.  They think they know but they are usually wrong.

Only about 25% - 30% of the top 1% of all agents actually know why they are successful and most of those don’t know it very well.  So success can seem mysterious or elusive.  It needn’t be.  If one were to apply the same exactness to the subject of real estate sales that any well trained engineer would apply to his discipline it wouldn’t seem mysterious at all.

But applying that exactness would mean - really - looking, not listening.  Look at what people do.  Look at how they do it.  Exactly.  Look at what results they get from doing it.  It makes little to no difference what they think is causing their stats to rise.  What is causing their stats to rise?  Anyone who says he (or she) knows why they are successful would be able to teach it - and teach it in such a simple manner that the other person could apply what was being taught and get a similar result.  There would be no special cases, no exceptions.  Not if a scientific approach was being used.  Anyone who knew why they were successful would be able to increase their level of success.  If they could not do that one thing then what they are thinking is the "reason" isn’t the real reason for the success they have had.  That last one is so obvious it is usually missed.  Is there really any "highly successful" person who left real estate sales so they could teach it?  Even one?

There are few subjects on earth (possible exceptions are mathematics, physics, chemistry, etc. - and the other so-called "exact sciences" - that don’t just reek with false data.  The subjects of sales and marketing (those are two different subjects, by the way) have so much asinine, stupid and unworkable gibberish being pawned off as "the way to do things" that it is a minor miracle anyone who actually studies either of those subjects ever succeeds at all.  Just as an example, about 20 years ago it was validated that, in some fields, women who were trained by male sales managers did not do nearly as well as women salespeople who had no sales training of any kind.  Amazing.  The "sales training" had an actual negative value.  This is just one example.  So the thing to do is: LOOK, DON’T LISTEN.  I don’t care what someone says they are doing to bring about sales results (and highly successful real estate sales people will sometimes actually invent things to tell others because it "sounds better" than what they are actually doing).

There was a scale developed many years ago (originator is uncertain) that has been altered (for the worse, in my opinion) from what I learned in 1971.

From the bottom up, the original scale went:

1.  Unconsciously incompetent.  Doesn’t know and doesn’t know he doesn’t know.

2.  Consciously incompetent.  Knows he doesn’t know.  (note that NOT knowing is a step UP!)

3.  Unconsciously competent.  Knows how to do it, but doesn’t really know why it works.

4.  Consciously Competent.  Knows how to do it and knows why it works, so can increase it and validly teach it.

The secret to becoming a top listing agent?  First become a really crappy listing agent.  Become a really crappy one, then a bit less crappy, and so on.  That is the actual path.  There is no substitute for "stage time".  None.  Fail.  Fail more and go right on doing it.  Having the right attitude is probably more important than any other factor.  A complete willingness to do whatever is necessary and to have the viewpoint that you are going to persist until you have arrived.  Sort of like it mattered.

Here is a professional quality video of Mike Orr of The Cromford Report giving a talk at a Mastermind meeting I attend every month.  It is about an hour long and the specific stats won’t apply if you are not in the Phoenix area.  His interesting and unique methods for tracking and predicting short-term price movement will apply.  If there is something better available I’ve not seen it.  Click here for the link to the video.

Just as a gentle reminder to all of what the actual purpose of the National Association of Realtors is supposed to be:

"The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful."  You can see that here.

Prior to reading this post - which most internet-savvy Realtors have now read - I didn’t know what "indexing" was and didn’t care.  That was something I only learned in the comments section of that post.  So I now ask, Is it possible that Paula was wrong to allow search engines to find all of those listings on her site and for Google to index them?  Is it possible?  Really, isn’t it possible?  Well it must be possible, some people at NAR already thought it was wrong and Paula’s local association leaders also seemed to think it was wrong.  Do I personally think that a "no indexing rule" would be such a horrible bad thing?  If no one, no company could index listings?

It would be alright with me if Realtor.com wasn’t allowed to do it.  But Realtor.com is allowed to do it.  And they are also allowed to use terms like "MLS" in their meta words.  All of the listings on Realtor.com can be found by Google and indexed.  Because some people at NAR (who couldn’t see around corners, even a little bit) originally gave away the name, "Realtor.com" to a for-profit company instead of making it a member benefit we now have LOADS of other places that have our listings out there to be indexed.  Trulia, Zillow (and a growing list of other sites with MLS feeds) are all allowed to have the listings available for indexing.  These are all companies that would not even exist if it weren’t  for NAR’s original mishandling of Realtor.com.  Is NAR going to stop them?  Could NAR stop them?  Is NAR going to stop Realtor.com from allowing listings to be indexed?

This past week in Washington D.C. it looked for a brief moment like sanity would prevail.  In the end it didn’t.  Can anyone (elected or paid staff) at NAR, on any committee or in any position explain how this makes even a little bit of sense?  Or are you going to try to ignore this issue by justifying it with, "It will be taken up by the committee in November"?

Why would it be okay with you for public - for profit companies - to have the right to freely do something that Realtors are then prevented from doing?  What twisted, tortured logic is used to justify that? 

Anyone?

A great question from Mike Price in response to this post:

Russell,
What percentage of brokers would you guess use any sort of formalized tracking system for analyzing lead sources? At an agent level?
When you finally created and implemented a business system, did you put into place your own tracking system or did you use something off the shelf?

Excellent questions, Mike.  I’m glad you used the word, "guess", because that is what I will have to do to respond.  At the broker level, I am thinking any brokerage firm with 20 or more agents - that is still in business and has the resources to stay in business - uses some sort of stat analysis.  I don’t know about the tracking part.  Keep in mind that a "lead" to a brokerage firm is seldom a buyer or seller - it is an agent.  One they can hire.  A lead for a brokerage firm is a possible hire.  Most successful brokers are not in the real estate business - they are in the get and keep agents business.

At the agent level, it is an easier question to respond to - as all successful agents keep some kind of stats.  Sometimes referred to as, "they know their numbers".  They seldom know them all and there are some stats that most agents will go out of their way to "not-know" (like actual number of listing appointments).  But top agents will typically have a pretty good idea of how many listings they take a month, how many closings they have a month, how many leads they get a month, how much income they get per year and per month.  The better ones will have their lead sources specifically named, as well.  How many deals did I get last year from referrals?  From internet leads, from my geographic farm, etc. 

Any agent not keeping those stats (which I am estimating at 93% of all Realtors) will not be able to do much business.  My answer to your lead question is 7%.  Nationally, and in most specific locations, 7% of the agents do over 80% of all of the business.  It isn’t 80- 20.  It is 93 - 7.  7% of the agents do almost all of the business and 93% of the agents do the remaining 20% of the business.  There is a bright line of demarcation between the two groups.  That line is keeping track of important stats.

The answer to your 2nd question is easy.  I used the "count them once a month" method and then transferred the "IIII", then crossing through with a line = 5, into a spreadsheet.  I’ve included three of those stat sheets here.  As you can see I have not yet bothered to enter January or February’s stats to the Excel spreadsheets.  Very sophisticated, I know.

And from Dru Bloomfield to this one:

Russell,
You should know that this post has generated side bar conversations.  The face-to-face kind.  One of the points that came up in a couple of these conversation was that any Gen X/Y Realtor needs to seriously consider online social network as part of their marketing mix.  They are there anyway - it’s where they grew up. It’s where their future client base is and will be.
Some of us who are older may be less comfortable with this kind of relationship building, but in fact, that is what is happening.  I watched Amy Cherow and Phil Sexton greet other like old friends yesterday.  They had never met in person before, but they immediately jumped into a prior Twitter
conversation about skiing that went on and on.
I think that we can talk about marketing and SEO and producing, but ultimately what these on-line tools are doing is building relationships. In this fast-paced world, we are all looking for instant gratification or proof that our efforts are working. 
That being said, social networking isn’t for everyone, just like TV or direct mail don’t fit for others. 
My humble opinion is that agents must market in a way that’s enjoyable and productive individually, since these actions must be repeated over and over to achieve their personal goals.

I realize this brands me as someone suffering from something other than terminal hipness but I don’t really understand someone getting a tattoo.  I understand the desire to "be unique".  I understand how the process of getting the ink under the skin is considered art by some.  I have many friends who have "gotten inked".  But the bottom line is, I really don’t get it.  Why, in the name of God would someone want to f–k up their body permanently for something that is guaranteed to look just awful later?

I feel exactly the same way about "social networking".  I don’t get it.  What the hell does it have to do with business?  Or me?

Big businesses are usually based on marketing (getting the customer to reach toward you first) as opposed to prospecting (you reaching to the customer first).  Speed of getting a potential customer’s questions and concerns responded to accurately and quickly is of paramount importance.  But I don’t even take my cell phone with me when I am out of my car (unless I want to play solitaire while I eat).  I get about 150 emails a day.  As it is now, I already have all the off-beat requests, odd issues, and "important news" coming my way that I can handle.  Already, I "delegate graciousness".  I am not trying to network.  That said, there is nothing that Drew wrote I disagree with - nothing.  Like getting a tattoo, it isn’t for me.  Doesn’t mean it can’t be art.  Or fun.

What is a "top producer"?  How is it defined?  Why would anyone care?

Some would say if you are in the top 10% you qualify.  I set the bar higher because the bottom 90% is doing so poorly.  To be in the top 1% - of all agents in the United States - you would need to sell about 40- 50 houses a year.  The first year I qualified I sold 38 houses.  At 40 - 50 sales in a year you would probably always be in the top 1% in your area and in the country.

Why does it matter?  Why have you seen me mention so many times, "what top agents do"?  It certainly isn’t to suggest that someone doing less or something different is in any way "wrong".  There are many many ways to approach this business and anything that is working can be defined as "good".  To me it has to do with systems (successful methods).  There are some top agents that have very poor systems and handle their business by taking each particular situation, each escrow and just "glowing it right".  Through sheer intention and desire, making it close.  Forcing the deal together.  These agents do not have a stable business but have a temporary perch they will soon fall from.  When I think of "top agents", for me, it is really shorthand for "has workable systems".  Most importantly, top agents who are stable top agents spend very little energy "glowing things right" with regard to procuring new business.  Without exception, they have exact and specific methods they apply again and again and again - and get the same predictable results each time.  They have a system for getting business.  They do not depend on: lucky breaks, caught a good one, happened to meet a guy who is ready to buy, didn’t expect it to happen but it did sell and close.  As I personally spent the first twelve years of my real estate career depending exclusively on lucky breaks, happening to catch a good one, etc. - I am very familiar with how that works, as well.

During my first twelve years in real estate all of my deals - each and every one - came about as sort of a fluke.  If I had arrived just 15 minutes later, I might have missed it.  If I hadn’t driven down that street I wouldn’t have seen the guy in his front yard by a FSBO sign and wouldn’t have stopped to talk to him.  I discovered that I could get business from almost any activity.  Just about anything could produce a deal or two.  But while striking up a conversation with the guy behind me - while playing goofy golf, or chatting with someone in line at the drugstore or a movie theater could produce business, it wasn’t a very predictable method.  It is this point alone - a predictable method of producing new customers - that separates the top agents from the pack.  This is what makes the difference between having a business and having a job.  It was in 1990 I started to really make that transition from hoping for a deal to the continuous creation of deals (developing workable systems).

So when I hear someone say, "I got a deal from twittering", "I met the client at a Kiwanis meeting", "I knew them from church", "We golf together", "The neighbor really liked my custom yard sign", etc., to me that sale is in the category of a fluke.  I mean no disrespect.  That is not to say it didn’t happen or will never happen again but that it is not a controllable event.  I can’t go to enough Kiwanis meetings to get all of the business I want.  I can’t happen by enough golfers to support myself.  During those lean years I did have "miracle escrows" that truly seemed like a gift from heaven at the time.  And I was grateful too.  But I was also determined to eventually get to the miracles as usual level.  That required workable systems.

I believe that the success of a rain dance has more to do with timing than the quality of the dancing.  A few short years ago the discount real estate companies were being heralded as the wave of the future.  "Traditional brokerage" was all but finished.  Game over.  Now the internet based, lower fee, more modern, forward-thinking companies would dominate the industry.

Virtually all of the real estate companies that proclaimed this the loudest are either already completely out of business or have dwindled down to the point that few think of them as much of a threat to anything (except their own stockholders).  Oh sure, a few companies are still attempting more "innovative things" but eventually the venture capital folks will pull the plug on the money hemmoraging and that will be the end of this particular round of remarkable real estate sales innovation.

What happened?

Discount companies in real estate brokerage tend to fall into one of two categories: national or regional companies funded by investors (who believe there is a scalable model) or a small, local, one-man show.  Can the one-man show survive?  Sure.  Pretty much anytime anybody puts enough of themselves into anything they can make it "work".  But those people don’t have a business - they have a job.  Usually, they can’t even afford much in the way of help, let alone have a business model that is scalable.  It seems that the proponents of "let’s charge less" to drive in lots of business often overlook the obvious fact that less means less for them and less to pay for promotion.  If you take in less you have to (without increasing your overhead by very much) take in that "less" far more often and in far more volume in order to have "enough".

So how come these companies that were charging less and thereby so successful a few short years ago are now going out of business?  Yes, it is true that all companies are having a rough go of it just now but the discount companies have been hit even harder than the traditional brokers.   Glenn Cohen, the guy who started the company that later became Foxtons, here in the U.S. had this to say, about a month ago, at Inman Real Estate Connect:

"…because in a down market people are desperate to sell, and in their mind believe — whether it’s true or not, and in some cases it very well is — that the local agent of the big brand name can do a better job for them and they’re less likely to trust the sale of their home with a discounter.

I don’t say it can’t work, and there always will be a small place, I think, for flat-fee MLS and for discount. And if you develop some best practices around it you can do really well, but frankly you can’t make a whole lot of money as a flat-fee discounter, at least the way I view the business model. So it’s not all that enticing for an entrepreneur."

Why would the consumer’s perception of what is a good real estate company or a good real estate agent change?  What causes that change?  Why can’t a discount company continue to attract the consumer when the market is "bad"?  After all, they charge so much less, don’t sellers still want to save all that money?  The correct answer?  Yes, if they believe they can.  In a long-lasting seller’s market they believe they can.  When the market turns and favors buyers then sellers stop believing that "just anybody can do it".

This last seller’s market was the longest one in history.  We’ve never had a seller’s market that lasted that long before.  Historically, about two-thirds of the time it is a buyer’s market and about one-third of the time it is a seller’s market.  The "natural" seller’s market was winding down just about the time the dot.com bust happened in the stock market.  Then all of that stock market money started chasing real estate and what should have been a buyer’s market turned into a red-hot seller’s market.  This was further fueled by Wall Street criminals (like the kind at Bear Stearns) who created and caused the sub-prime mess (and cheated French, Chinese and German bankers out of hundreds of billions of dollars).  A direct result of this was that more discount real estate companies came into existence and survived than at any time in history. 

To someone who just recently arrived it did look like the game had changed and the "traditional broker" was going the way of the buffalo.  If only that seller’s market would last forever.  But it didn’t.  They never do.  Which is the "problem" that discount real estate companies have.  They thrive in a seller’s market and can’t survive well (or at all)  in a buyer’s market.  When it is easy to sell any house the value of a Realtor’s knowledge - in the eyes of the public - goes down.  Way down.  It doesn’t take much to "become a Realtor".  When anyone can "become one" and anyone can sell a house there is extreme downward pressure on commissions and most agents are seen as a "commodity" by the public.  Which agent can we hire for the least amount of money (as they are all the same, producing the same result) becomes a common viewpoint from which agents are viewed by sellers.

When the market shifts and there are more sellers than buyers (and this will always eventually occur) it is no longer true that "anyone can do it".  Few of the agents who came for the gold rush stay and even many of the old-timers head for greener pastures (as in another line of work) all agents are no longer seen as a commodity.  In fact, some are now perceived again as a fiduciary.  It is almost impossible for a company that based their entire marketing campaign on "we do it for less" to later be perceived this way.  To the exact degree that they were successful with their "we do it for less" message - they will continue to be  be stuck with that tag and perceived as "we do it for less" when what the seller now believes is "I need more".  Oddly, most individual agents (if they have their eyes open) can turn on a dime and change with the times, it is companies that are stuck.  It is companies that ran national PR and advertising campaigns.  When it comes to marketing, most agents seldom rise much above mailing postcards to a geographic farm.

The Wall Street types, the investment bankers, the marketing geniuses, the brilliant entrepreneurs who (every time there is a prolonged seller’s market) come out of the woodwork and start their "takeover of the real estate industry" uniformly achieve all of their success only during a seller’s market.  Their dance worked.  They were brilliant.  Then.

This will all happen again.  It might look just a little different next time but it will still be the same thing.  If you’re young enough you will get to see it again a couple of times. 

Remember this post or bookmark it.