11 Steps to Success as a Real Estate Professional
Step 1: Decide on a Goal
Goal setting is the first step to success in any venture. The power to pick a goal, and decide to act is an important step. Understanding that you will have to do something is very powerful. The process of deciding that you will be a success, have a great marriage, strong relationship with your children, or certain type of business or wealth is an important step in moving forward towards your goal. At some point, if you want to move forward toward your goals, you have to decide what those goals are. Once you make the decision, write it down. Written goals are much more effective.
Most people never decide what they truly want in life therefore they get nothing. Your conscious decision will cause your mind to diligently search and create the reality that you have chosen. For example, you might decide to work a Monday through Thursday workweek. This would likely be a major life decision. Make the decision and create a specific plan for to achieve the goal of a four-day workweek. By making the decision, you will be able to block out things that are taking you farther away from your goal. This will allow you to successfully achieve your goal with lasting results for life.
Step 2: Create a Plan
A written plan is very important to success. You need a plan for every day. This plan should include your daily schedule, and should encompass your whole life. Your business and personal life need to be factored in to create balance. Far too many agents sacrifice their family to achieve a sales or commission goal. When they finally reach their goal, they have no one to share it with or they realize what little importance that goal was in relation to their family. I have a friend who tragically lost a child and now is reflecting on the years of decisions made for the sake of a few plaques and personal production goals. Even though she was very successful, those plaques or even the money earned are little comfort to her at a time of great sorrow.
The schedule should encompass the "time block" system. Block out or schedule specific time for each daily activity in real estate. Schedule time to prospect, qualify buyers and sellers, negotiate contracts, return phone calls, listing presentations, and show property. The better you "time block" the more effective you will be. The more that you adhere to the schedule the more success you will have in sales. (and in life in general) Also, it is important to remember to allow for a little "play time" or "flex time." You will need some time to relax and decompress. This time for relaxing will enable you to stay focused and sharp during the "up time." Plus, not all activities can be scheduled down to the minute. Give yourself 15 minute "flex time" every two to three hours. This should be sufficient to break the tension or catch up so that you are able to stay focused and "time blocked."
Step 3: Calculate the value of your time
Hourly workers understand this concept easily, because their pay is based on a dollar per hour system. However, salespeople rarely think in these terms. But they should. The secret is to maximize your dollar per hour income by decreasing your time worked and increasing your production. You must know and understand the value of your time so that you can choose which activities to spend it on. Anyone can make more money if he or she trades more time for it. Even the ditch digger can do that. He merely needs to work overtime. The secret is to trade less time for more income.
People who understand the value of time trade less and less time for more and more income. You must first know the value of your time today. What are you worth per hour? Do you know? If you do not, it is a simple equation. Determine your gross commission for last year and divide it by the total hours you worked. The total would be your hourly rate.
If you want a more accurate figure of what you are worth per hour, you need to look at a net figure, which considers business expenses also. To get this number, subtract your business expenses for last year from your gross commission for last year. Divide that figure by the total hours you worked. This is your true value per hour. Most people don't have the courage to really look at this number.
One agent had a gross commission each year of $300,000.00 per year; which without expenses was $144 per hour. However, he spent $133,000 each year in expenses and marketing, so he actually only earned $166,000 (still a good income, but not nearly what he thought)nbsp; This translated to about $80.00 per hour. With his high level of skill in the real estate business, his hourly rate was about a third of what he should have been making. He either needed to cut his expenses, or work smarter.
People who know the value of time in their life create masterful lives. People who do not know have a miserable existence, because they do not understand the importance of time, and they end up wasting it on unproductive activities.
Time is like a bank account. Let me give you an example:
If you had a bank that credited your account each morning with $86,000 — that carried over no balance from day to day — that allowed you to keep no cash in your account... and every evening cancelled whatever part of the amount you had failed to use during the day — what would you do? Draw out every cent, of course! Well, you do have such a bank—its name is 'time.' Every morning it credits you with 86,000 seconds... every night it rules off as lost whatever of this you have failed to invest to good purposes. It carries no balance... It allows no overdrafts. Each day it opens a new account for you. If you fail to use the day's deposit, the loss is yours. There is no going back. There is no drawing against tomorrow. You must live in the present on today's deposit.
If you and I make the most of our time, it will be because we understand the value of each and every second. We will learn how to spend our time wisely.
Step 4: Focus on High Payoff Activities
Define what the high-payoff activities are for you. Typical high-payoff activities for real estate agents are: prospecting, lead follow-up, going on listing appointments, negotiating contracts, coaching and training you staff, and planning your business. They may be different for you.
Once you have defined the activities, you need the discipline to do them daily. If you want to raise your hourly rate of pay, focus on these activities only.nbsp; It is important to understand that these activities will change as your hourly value increases.
For a new agent, who will likely not have a staff, most of the high-payoff activities should be centered around prospecting and sales activities. For a top agent, who makes $300.00 plus per hour, high payoff activities will likely be focused on closing listings, closing sales, and training staff to do the prospecting.nbsp;
Do not spend your time in low payoff activities, such as filing, cleaning your office, or showing houses to unqualified prospects. You must focus, like an attorney does, in billing out hours daily. The more hours you bill, the more income you make. Only instead of billing your clients, you are essentially billing yourself. The greater percentage of the day you spend on high-payoff activities the more income you will earn.
Step 5: Develop an Ideal Client Profile
In order to maximize your success, you need to understand what your “Ideal Client” looks like. You need to develop a philosophy, and then stick to it. A philosophy is guidelines for doing business both personally and professionally. If you understand your value per hour and your average commission check, you can determine the type of people you are willing to work with, i.e. personality types, price range, and the type of clients to look for. This is an “ideal client profile”nbsp; You may not be able to work in a certain price range or with certain types of people. You may want to focus on expensive homes. You may want to focus on lower priced homes.nbsp; It is up to you. But whatever your criteria, once you figure it out, stick to it. When a buyer does not provide you the answers you need, you can refer him to another agent or drop him because he does not meet your philosophy.
You need to understand you were not put on this earth to help everyone. There are people you cannot help. This fact does not make them or us bad people or you a bad person. It just makes you a business person who expects a reasonable profit for the amount of time invested. Get clear on your philosophy of what a client is and your expectations for a client, and only work with people who conform to your philosophy. You must define clearly your ideal client. This definition will enable you to better select the people to work with. We have all selected the wrong people. We have spent large amounts of time and money working with people we should not have and felt awful afterwards. In some instances, we were never paid or appreciated for our efforts.
You will feel much better turning them down before you invest your time, energy, and money in a losing cause. By understanding your "core" philosophy, you will be able to seek out the clients who meet your criteria rather than finding those that do not. By sticking to people who fit your ideal client profile only, you will generally find the clients you are looking for. You will also be able to quickly dispense of those clients who do not meet your standards.
Step 6: Understand your Business
Know what activities generate the most business for you. What are the top three income producing activities that you do? Where do you spend your time daily? Now look at your hourly income that you calculated earlier. Are you spending your time doing the highest paying jobs?nbsp; Only perform tasks that earn you the highest return for the majority of your day. And high payoff activities are not putting up signs and lock boxes. These are only high payoff activities if you want to make less than $10.00 per hour. Tasks such as finding potential homes to list are much more profitable.
Remember that you are a business owner of a company that sells millions of dollars in product per year. Your product is real estate. You need to know and understand your business. You must know where your sales come from to enable you to sell more. Most agents earn success by hard work. They outwork the competition, and as a result, they work long hours.nbsp; Your job is to outthink your competition, and be smart. This focus will get your hourly value to a higher level. Then, if you really want to set some records, outwork your competition - if you desire.
Step 7: Prospecting
There are as many ways of prospecting, as there are people. The key is you must prospect daily to bring in the business. You can prospect via the phone or in person. You can prospect expireds, FSBO's, cold calls, appointments for buyers, investment properties, your sphere, and out of area owners. The list is endless.
If you are not spending a minimum of one hour everyday prospecting for new business, you will have difficulty during stretches of your career. Even calling your past clients and asking for referrals is an excellent way to prospect.
When you begin to get busy, do not fall into the common trap of letting prospecting slide. Just because you are busy, do not think you do not need to prospect anymore, this is the time to focus on prospecting and bring in more clients. You have momentum, so keep going. The analogy I like to use is that if a plane is on the runway it takes a tremendous amount of energy to climb to 20,000 feet. Once the plane is at 20,000 feet, it can throttle back a little and easily maintain its cruising altitude. If the plane throttles back completely, it will soon be back down on the runway. Do not throttle back in your prospecting or you will find yourself on the runway quickly. By continuing to prospect, you can then climb higher or do the same production in less time. Consistency in your prospecting leads to consistency in your paydays.
Step 8: Qualify the Potential Client
This step is crucial to success. More real estate agents make mistakes in this area than in any other. They are afraid to qualify people, and walk away when a potential client does not fit the right criteria. Do not make this mistake. The whole goal in qualifying is the exclusion of the people who do not fit the set criteria that you have established. This may mean they are not motivated to sell or buy, their home is too low or too high priced for your target, or any other reason that would cause you to walk away. If you do not become skilled at excluding those who do not fit your criteria, they will waste your time and they will eventually drive you out of the business, both emotionally and financially.
The most valuable commodity you have is your time. We all have a finite amount of time each day. If we choose to work with unqualified, unmotivated, unloanable, unable to sell people too often, we are out of business.
By properly qualifying all leads, early in the process, you are saving yourself from driving them around or going to their house to find out they are not a lead at all. It is foolish to spend hours showing property only to find that the “prospect” is already working with another agent, unable to buy because of bad credit, have no money, or are unrealistic of the value of homes today. Do not allow these people to control your business. The majority of the agents in our industry really need to strengthen this discipline dramatically. Let the lesser skilled agents have the unqualified clients, and you focus on those who meet your ideal client criteria.
To many of us, leads are like security. If we have a bunch of leads, we feel secure and we do not have to find new ones. But a lead by itself has no value. Why not make them worth something to you and your family by qualifying them well, and then setting an appointment or throwing them out if they are of no value?
Step 9: Create Strong Systems
Systems enable agents to leverage themselves while still servicing their clients and prospects. You need to develop systems that create the desired result without your involvement. A major reason why McDonalds is so popular is not the good food, but instead consistency. Whether you go into a McDonalds in New York, California or China, the food will taste the same. They have developed their systems and procedures that allow them to sell billions of hamburgers and fries with the same effort and outcome every time.
Although it would be impossible to setup your real estate business like a McDonalds, you can set up systems to handle the common tasks that come up day to day.nbsp; You need systems for listings, escrows, buyers, sellers, leads, other agents, presenting offers, negotiating, follow-up with leads and clients, etc. You need a step-by-step process for each of these so you can delegate certain tasks to other staff members. In addition, you need systems for your own activities as well.nbsp; The more consistent you are with your systems, the more successful you will be.
Step 10: Learn to Delegate
If your personal hourly rate is $200 per hour, and you can hire an assistant who will work for $12 per hour, doesn’t it make sense to hire that person and delegate every task that does not fall into your “high hourly rate” category? Learn to delegate the low payoff tasks, and be sure that you spend the time you save in high payoff tasks. Be sure to train your staff well so that the tasks you assign get done properly and professionally. They need to learn to replace you in certain functions. Monitor their progress with praise, and get out of the way and let them do it.
Delegation is often the most difficult step for agents and business owners in general.“I can do it better myself” is a common problem. It results in the hiring of assistants, and then never turning ownership of the tasks over to the assistant. You need to be able to relinquish control. Let your assistant fall down and bump their knee. Let them ruin some deals and make some clients angry.nbsp; Let them make mistakes, and help them to learn from their mistakes, so the next time, they will get it right.nbsp; The more independent your staff is, the better for you, but it will take time to get them to that point.
Step 11 – Make the Most of Your “Pay Time”
“Pay Time” is the time of the day or week where you need to be doing the most profitable activities. This is the time you are in front of clients. You need to make the most of it, as this time is precious. Depending on your schedule, your “pay time” will be different than the next agent. Agents who focus on listing may have different prime hours than those who focus on showing homes. If you focus on commercial real estate, your time will probably be during the day vs. evening if you focus on residential. Whatever it is, know it and make the most of it. NEVER do your paperwork or low-paying activities during pay time. Save those activities for the slower “no-pay” time. This also relates to your hourly value. Always be aware of it and make the most of it!
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