Success as a Real Estate Agent For Dummies®, 3rd Edition
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Library of Congress Control Number: 2017934018
ISBN 978-1-119-37183-0 (pbk); ISBN 978-1-119-37185-4 (ePub); ISBN 978-1-119-37188-5
Welcome to the third edition of Success as a Real Estate Agent For Dummies! You’re about to move into the big leagues, populated by the most successful real estate agents.
Real estate sales is the greatest business in the world. In my more than 30 years as a business owner and entrepreneur, I’ve yet to find a business equal to real estate sales when it comes to income potential versus capital investment. In any marketplace, a real estate agent has the opportunity to create hundreds of thousands of dollars in income. (I coach many agents and teams who earn more than $3 million per year.) An agent’s income is especially significant when viewed against the capital investment required by the business. Most agents need as little as $2,000 to start up their practices. Compare that to any other business and you’ll find that most involve sizeable investments and burdensome loans to buy equipment, lease space, create marketing pieces, develop business strategies, and hire employees — all to achieve what is usually a smaller net profit than what a real estate agent can achieve in the first few years. It’s almost too good to be true!
Because of technological advances, including the Internet and social media, a new agent can create the appearance of success, marketplace stature, and marketing experience far beyond the early stages of a real estate career. This gives new agents better odds at carving out a career for themselves. The timing of your decision to enter the field of real estate or advance your career could not be better. The industry has seen a steady and exciting improvement in sales and opportunity in the last few years. New agents are entering real estate sales in very high numbers. Real estate is in a strong growth phase in which home values have risen back to peak pre-recession market pricing.
Real estate sales paved the way for me to become a millionaire at a very young age. It has provided a solid income, many investment opportunities, an exciting lifestyle, and a platform from which I’ve been able to help many others achieve their own goals and dreams in life.
This book is about becoming a successful real estate agent, for sure. It’s also about acquiring sales skills, marketing skills, time-management skills, people skills, technology skills, and business skills. It’s about gaining more respect, achieving more recognition, making more money, and closing more sales. It’s a guide that helps you achieve the goals and dreams you have for yourself and your family.
I’m delighted to share with you the keys I’ve found for real estate success and to help you avoid the mistakes I’ve made along the way. (I’m a firm believer in the idea that we often benefit more from failures than from successes — but that doesn’t mean you have to repeat my failures.)
The techniques, skills, and strategies I present throughout this book are the same ones I’ve used and tested to perfection personally and with thousands of coaching clients and hundreds of thousands of training program participants. Although technology has had an expanding influence on the real estate market in the past decade, the foundational skills of sales, time management, marketing, and people skills have not changed as much. This is not a book of theory but of “real stuff” that works and is laid out in a hands-on, step-by-step format. You’ll also find time-tested scripts in most sales-oriented chapters. These scripts are designed to move prospects and clients to do more business with you. (If you’re a junior member of the grammar police, you may find that some don’t perfectly align with your expectation of the English language. The objective of sales scripts, though, is not perfect sentence structure but rather maximum persuasion of the prospect or client.)
If you apply the information contained in this book with the right attitude, and if you’re consistent in your practices and in your success expectations, your success in real estate sales is guaranteed.
Throughout this book I incorporate a number of style conventions, most aimed at keeping the book easy to read, with a few aimed at keeping it legally accurate:
As I compressed a career’s worth of real estate experience and coaching advice into these pages, I had to make the following assumptions about you, the reader:
This wouldn’t be a For Dummies book without the handy symbols that sit in the outer margin to alert you to valuable information and advice. Watch for these icons:
In addition to the material in the print or e-book you’re reading right now, this product also comes with some access-anywhere goodies on the web. Go to www.dummies.com
and search for “success as a real estate agent” to find these goodies. To view this book’s Cheat Sheet, simply go to www.dummies.com
and search for “Success as a Real Estate Agent For Dummies Cheat Sheet” in the Search box.
The beauty of this book is that you can start wherever makes the most sense for you.
If you’re a newcomer to the field of real estate sales, I suggest that you start with Part 1, in which I consolidate all the start-up information that you’re likely to be looking for.
If you’ve been in the trenches for a while and simply aren’t having as much success as you’d like, start with Chapter 3 or 4 and go from there.
If you’re pressed for time, facing a crucial issue, or grappling with a particular problem or question, turn to the table of contents or index to look up exactly the advice you’re seeking.
Wherever you start, get out a pad of yellow sticky notes, a highlighter pen, or your note-taking app and get ready to make this book — and all the information it contains — your own key to success. I send you off with my very best wishes!
Part 1
IN THIS PART …
Get an overview of the skills you need to swing the odds for success your way. Find out the basic fundamentals that place agents on the right path to reach their target.
Navigate the process of evaluating, choosing, and joining a real estate company.
Discover how to act and work like a top-producing agent to make your goals a reality.
Research and understand the marketplace in which you’re working.
Chapter 1
IN THIS CHAPTER
Defining financial success
Understanding the role and importance of a professional real estate agent
Knowing the importance of lead-generation and sales skills
Building your success as a listing agent
Choosing the right path to real estate success
Each agent defines success slightly differently. Some agents set their goals in dollars, some are attracted to the opportunity to be their own bosses and build their own businesses, and some want the personal control and freedom that a real estate career allows. Achieving success, however, requires the same basic fundamentals regardless of what motivates your move into real estate. Agents who build successful businesses share four common attributes:
You’re already on the road to real estate success, demonstrated by the fact that you picked up this book to discover what it takes to become a great agent. This first chapter sets you on your way to success by providing an overview of the key skills that successful real estate agents pursue and possess.
One of the first steps toward success is knowing what you want out of your real estate career. However, “financial independence” is not a specific enough answer.
I’ve been in real estate, either working in direct sales or teaching, speaking, training, writing, or coaching people, for nearly 30 years. I’ve spoken to sales audiences on five different continents. I’ve met hundreds of thousands of agents, and nearly every one started selling real estate with the same goal of financial independence. Countless times I’ve asked the question, “Tell me, how do you define financial independence?” What I usually hear in response is some variation of “So I don’t have to worry about money anymore.”
By having your financial goal in mind, you find clarity and can see past the hard work that lies ahead of you. When you have to endure the rejection, competition, disloyal customers, and challenges that are inevitable along the way, your knowledge about the wealth you’re working to achieve helps you weather the storms of the business.
I must share that this focusing on your financial independence number is more real to me today than ever. I realize these steps I just shared with you I did myself 30 years ago. I created a plan as I exactly have described for you. I have worked that plan for 30 years and it has compounded to the point where I don’t have to work. The financial piece of the puzzle has been accomplished. I choose to work because I enjoy what I do, not because I need the money it brings. That is true freedom and financial independence. I wish that for you as well.
Real estate agents join doctors, dentists, attorneys, accountants, and financial planners in the ranks of licensed professionals who provide guidance and counsel to clients. The big difference is that most real estate agents don’t view themselves as top-level, highly paid professionals. Many agents, along with a good portion of the public, perceive themselves as real estate tour guides, as home inventory access providers, or even as mere cogs in the wheel of the property sale transaction. The best agents, however, know and act differently.
The Internet and the open access to real estate information have accentuated the view that agents are simply home access providers. Consumers in the real estate market are able to find so much information online that they often view themselves as the experts and agents as simply the key masters. The increasing strength online of third-party sources of real estate information like Zillow, Trulia, and Realtor.com has created another gap between agents and consumers. I’m not advocating a return to the dark ages of MLS books the size of a local telephone book with property information printed biweekly. That is certainly a bygone era. But, to succeed in these technological times, we must expand our offerings and showcase that our services go well beyond basic real estate information and access into homes. We must clearly communicate with the online consumers what they don’t have access to, what information they are lacking, along with our benefits and value — even in their early researching period.
Real estate agents represent the interests of their clients. As an agent, you’re bound by honor, ethics, and duty to work on your client’s behalf to achieve the defined and desired results. This involves the following functions:
Delivering counsel: In the same way that attorneys counsel clients on the most effective way to proceed legally, it’s your job to offer similarly frank counsel so that your clients reach the real estate outcomes they seek. That counsel can vary based on the clients’ goals and objectives, as well as the state of the marketplace. You will counsel a client differently in a seller’s market than in a buyer’s market. Turn to Chapter 3 to understand how market conditions influence what to say and do.
An attorney may encourage a client to proceed with a lawsuit when the client has a high probability of winning, or she may recommend an out-of-court settlement when odds point toward a court loss that could leave the client with nothing but legal bills to pay. Likewise, you need to be able to steer your clients toward good decisions regarding the value of their homes, the pricing strategies they adopt, the marketing approaches they follow, and the way their contract is negotiated in order to maximize their financial advantage.
Diagnosing problems and offering solutions: A good agent, like a good doctor, spends a great deal of time examining situations, determining problems, and prescribing solutions. In an agent’s case, the focus is on the condition and health of the home a client is trying to buy or sell. The examination involves an analysis of the property’s condition, location, neighborhood, school district, curb appeal, landscaping, market competitiveness, market demand, availability for showing, and value versus price. The diagnosis involves an unvarnished analysis of what a home is worth and what changes or corrections are necessary.
Some say that agents should present all the options available to their clients and then recommend the course of action they feel is best. By doing this, agents allow their clients to make the final decision. Although many experts praise the virtues of this approach, I prefer the diagnostic and prescriptive approach because it positions you better as the expert. When clients make poor choices such as setting the wrong price on their home or making an initial offer that is too low, you may still receive some or all of the blame even though they chose the wrong option. No matter the style of your counsel to a client, whether more advisory or assertive, your success in guiding your clients to a successful outcome is based on your expert analysis and application of the variables to the marketplace.
Many agents get into trouble because they lack the conviction to tell clients the truths they don’t want to hear. If a home is overpriced or not ready for showing, or if an offer is too low for seller consideration, it’s the agent’s job to speak up with sound advice. In these situations, you could get blamed for a poor outcome. You may also run the risk of doing all this work and not getting compensated for the time you invested.
To prepare yourself for the task, flip to Chapter 12, which helps you determine and advise sellers regarding a home’s ideal price; Chapter 13, which helps you counsel clients regarding changes they need to make before showing their property; and Chapter 15, which helps you counsel clients through the final purchase or sale negotiation.
Troubleshooting: Unavoidably, many times you have to be the bearer of bad news. Market conditions may shift, and the price on a seller’s home may need to come down. A buyer may need to sweeten initial offers to gain seller attention. A loan request may be rejected, or you may need to confront sellers because the animal smells in their home may be turning buyers away. Or, a home that buyers really want may end up selling to someone else.
At times like these, your calm attitude, solution-oriented approach, and strong agent-client relationship will win the day. Chapter 16 is full of advice for achieving and maintaining the kind of relationship excellence that smoothes your transactions and leads to long-lasting and loyal clients.
When you help clients make real estate decisions, your advice has a long-lasting effect on your clients’ financial health and wealth. Their decisions based on your counsel will affect their short-term equity as well as their long-term financial independence. According to a study by the Society of Actuaries, the equity in one’s home on average represents 70 percent of one’s total assets. In most cases, home equity is the single largest asset that people own. Your ability to guide clients to properties that match their needs and desires, that fit within their budgets, and that give them long-term gain from minimal initial investment impacts their financial health and wealth for years to come.
Before the advances of the Internet, the consumer’s only avenue to information about homes for sale was through a real estate agent. Every other week, agents received phonebook-sized periodicals presenting information on properties for sale, with each new entry accompanied by a small, grainy, black-and-white picture. I know that seems hard to imagine in our information-rich technological world.
Today, consumers can go online instead of going to a real estate office to launch their real estate searches. With a few keystrokes and mouse clicks, they have access to a greatly expanded version of the kind of information that agents used to control. There are tens of thousands of sites that offer access to real estate information and access to properties for sale. However, when consumers discover a home they want to see, they must contact either the owner or an agent to gain inside access. This is where things get tricky.
Fifteen years ago, only 8 percent of buyers found the home they wanted to purchase on their own through the Internet. Last year, 44 percent of buyers found their home online themselves and then contacted a real estate agent. The consumer is clearly doing more online research and finding what they want.
Imagine that you’re on the game show Jeopardy!, and you’re given just seconds to provide the most important response of your career. Imagine that you’re asked to write down the question that prompts the answer: The function that makes or breaks a real estate agent’s success. (If this book contained music, you know what tune would be playing right now.) Okay, time’s up. How did you respond?
The moneymaking reply is: What is creating customers? How did you score?
Did you answer: What is customer service? If so, you gave the same answer that more than 95 percent of new agents give. In fact, more than 90 percent of experienced agents don’t win points with their answers, either. Only a rare few agents see customer creation as the golden approach that it is.
You have to be excellent at customer development and customer service. However, in terms of priority, you have to first be exemplary at lead generation. Following are a few reasons:
Most consumers have been provided with such poor service that their expectations are remarkably low. When service providers do what they say they’ll do in the agreed-upon timeframe, consumers are generally content with the service they receive. An Internet-based customer, which is a growing segment, wants ease of service, faster service, and lower-cost service. The truth is that competing on the first two is better than the lower-cost service model. The real estate industry is more personalized in the service it renders than many other Internet-based businesses. Responsiveness is one of the keys to success in the Internet realm. Certainly you want to develop the kind of expertise that delivers exemplary, outstanding service, but if you commit from the get-go to do what you said you’d do when you said you’d do it, your delivery will be better than most.
Because you’re holding this book, I’m willing to bet that you’ve either just come out of training to receive your real estate license or you’re in the early days of your career. In either case, decide right now to master the skills of selling in order to fuel your success.
In my view, sales skills in the real estate industry are at the lowest level I’ve seen in 30 years. So much effort and emphasis has been placed on technology and social-media training in real estate that companies and agents have lost their way through the sales skills and sales strategies that are foundational to success in a sales-based industry.
You might be a younger new real estate agent. That means you are more native to technology. It also means you naturally communicate through technology platforms, but may lack the face-to-face interpersonal skills that older real estate agents grew up with. Typically, selling in real estate is done, even in the technological world, face-to-face. According to NAR, 67 percent of buyers buy through the first agent they meet with.
It’s hard to believe that probably 95 percent of agents lack top-level sales skills. In my career in training and coaching, I’ve met hundreds of thousands of agents. Very few, even at the top echelon of earnings, have had any formalized sales training. Whenever I speak to agents, I always ask the audience how many have taken any formalized sales training, and I usually see only a few hands out of the hundreds in the room.
The other reason I know sales skills are lacking is that I coach some of the best and highest-earning agents in the world, and even they believe their sales skills can use improvement. Many agents record their prospecting sessions or listing presentations, but I have yet to meet one who feels that they’ve nailed their sales skills. The difference between these high-earning agents and other agents is that the high-earning agents realize that sales skills are vital to success, and they continuously seek excellence in this area.
According to the National Association of Realtors, more than 40 percent of agents didn’t close a single transaction last year, and another 20 percent closed only one transaction. This clearly demonstrates the lack of sales and lead-generation skills in the industry.
The way to build immunity to shifting market conditions is to arm yourself with skills in prospecting, lead follow-up, presentations, objection handling, and closing.
In real estate, there’s a saying that “you list to last.” In your early days, you’re likely to build your business by working primarily with buyers. But in time, you begin to develop your own listings, and after that you begin your climb to real estate’s pinnacle position, which is that of a listing agent.
To create long-term success, a high quality of life, and a strong real estate business, set as your goal to eventually join the elite group — comprised of fewer than 5 percent of all agents — who are listing agents. The advantages are many:
Creates quality of life: Being a strong listing agent creates quality of life as well. By my fourth year in real estate I was on pace to sell 150 homes. I also was in construction of a vacation home in Bend, Oregon. Joan, my wife, was a general contractor. She needed to be onsite on Fridays to meet with subcontractors. I shifted to working Mondays through Thursdays, and taking Fridays, Saturdays, and Sundays off. It was totally unheard of for an agent to take weekends off then, and even now.
I would have not have been able to accomplish the high level of sales and time off without being a strong listing agent. I didn’t work a buyer the rest of my real estate sales career. They typically want to see property on weekends. I was enjoying my lifestyle at my vacation home playing golf, snowshoeing, hiking, and biking.
Much of the information in this book focuses on developing listings, because to achieve top-level success, listings are the name of the game.