Is your real estate business suffering from too many expenses and a lack of closed sales? If so, today’s column gives you four ways to put your business back on track no matter what the market does.
1. Invest in training and education
The number one mistake that both agents and companies make in a slowing market is to cut back on their training and education budgets. When money is tight, it’s easy to justify diverting funds to other areas. The agents and companies who are currently investing in training are picking up market share now and will be well positioned to dominate players as the market improves. In terms of your personal training, focus on lead generation, lead conversion, negotiation, and mastering key market fundamentals such as absorption rates.
2. Become a foreclosure solution specialist
A great way to enhance your business is to become a foreclosure workout specialist. To do this, use your marketing materials to invite people to visit your Web site where they can obtain a report called "Four Legal Ways to Delay or Stop Foreclosure." The four strategies include:
- Working with Hope Now to obtain a loan workout
- Working with a loss mitigation company (be sure to provide local contacts)
- Hiring a consumer attorney from NACA.net who can help the homeowner determine if there is an issue with the lender’s loan documents that would prohibit them from foreclosing.
- BEST strategy: Ask the lender for the original mortgage paperwork. The University of Iowa found that lenders are often negligent in maintaining the required paperwork. Their study found that in 40 percent of the cases, the lenders were unable to produce the note. While most lenders have electronic copies of the paperwork, this request can sometimes stop the sale. Even if it doesn’t, it may delay the sale long enough for the homeowner to sell the property or workout a short sale.
3. Traditional prospecting strategies
The basics still work. "Right now" business is still the quickest way to generate leads. This means calling on expired listings, for-sale-by-owners, holding open houses, or engaging in any other activity that puts you face to face with buyers or sellers. To convert these leads into signed business, offer them a service, rather than mailing them a marketing postcard with your picture on it. For FSBOs or expired listings, your offer could be the use of your 800 Call Capture system. For open houses, invite neighbors and people from move-up areas to attend the open house. Be sure to serve refreshments. When people attend, have a list of properties that are good buys, foreclosures, or properties priced about 30 to 40 percent less than the house where you are sitting. Remember to select properties that are not open. Give your visitors a list and offer to show them any properties that they would like to see. …CONTINUED
4. Track results
Very few agents track where their leads originate, as well as how much it costs to generate the lead and turn it into a closed transaction. Consequently, it’s impossible for them to distinguish between which activities are dollar productive and which ones are not. To track your results more accurately, you can obtain a rough estimate by reviewing your most recent tax return. First, determine how much you took in total deductions on your Schedule C or corporate tax return. Divide this number by the total of clients you worked with during the last year. This gives you an estimate of the average expense per client.
For example, if your expenses were $40,000 and you worked with 20 clients, your average expense per client was $2,000. If you closed 10 transactions, you spent approximately $20,000 on dollar-productive activities and another $20,000 on transactions that did not close. Again, this is only an estimate. To have a truly accurate picture, you must track each activity individually.
To put your business back on the road to profitability, track each activity that you engage in, how many closed transactions it generates, as well as how much money you spent on Web marketing, print, signs, transportation and any other activity required to generate the sale. It’s also smart to track this number by individual address and by specific client. To illustrate this point, consider these two examples:
1. An agent spends $3,000 in Web marketing with three closed transactions. Average cost per closed transaction is $1,000.
2. The agent also sends out 12 print marketing pieces to 500 people in her geographical farm at a cost of $1 per piece for a total cost of $6,000. This generates two closed transactions. The average cost per closed transaction was $3,000.
In this particular example, this agent was spending $2,000 more for every transaction closed from the agent’s farm as compared to her Web marketing efforts. If the agent had put the entire $6,000 into Web marketing, it would have resulted in an additional four closed transactions. There’s no way to know this information, however, unless you track it.
You can prosper in any market provided you (1) have the right training, (2) stay focused on the basics that work in any market, (3) provide a solution to the challenges your clients face, and (4) track results.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com.
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