You’ll sometimes hear me confess, “I can over-simplify with the best of them.” But a better confession is that I make a bit of a hobby out of challenging over-simplification. So it won’t come as a surprise to those who know me that a statement made by a nationally recognized real estate “guru” got my brain working:
Where agents get in trouble is working low probability prospects for long periods of time.
On the surface, it’s a hard statement to disagree with–that’s true of most generalities. But one of the stories I relate in class is about a client I worked with for three years before a deal was completed. When we first started talking, she would have been easily labeled “low probability.” Fortunately, I wasn’t being coached by this particular guru. In fairness, he also says that we shouldn’t waste time with prospective clients unless there’s at least a 51% chance they will commit to working with us exclusively. So while I wasn’t sure how long it would take, I was quite certain I would be the agent she would work with exclusively–unless of course, I gave her a reason to go elsewhere. One reason to go elsewhere would have been to send her packing with the instruction, “Call me when you’re ready to do something.”
A key to success in this business is to balance short-term and long-term perspectives. Agents who are not committed to the business long-term must have a short-term vision. The previously mentioned guru suggests 80% of the clients we sign on should be expected to buy or sell within 30 days. Considering it often takes 30 days to go from under-contract to closing, that seems perhaps a bit optimistic.
One of my favorite questions of a prospective client is “And how long would you like it to be before you have bought (or sold) your property?” The answer to that question will not only tell a lot about the client’s motivation and expectation, it will help determine a strategy. Personally, I always tried to keep things moving just a little faster than the client expected or wanted.
During my years as a consultant to companies, one of the oft-discussed factors discussed was “client-readiness.” There’s really no difference in the practice of real estate–every transaction is made up of a series of decisions–some are tougher than others. Very often the decisions we think are easy are difficult for the client. And sometimes the ones we think are easy can be difficult. Client-readiness is about the client being intellectually and emotionally ready to make the required decision. Whether it’s consulting or real estate an important part of our task is to help those clients become ready. We need a plan, but we also need to understand that we can’t force that readiness.
That’s why it’s important to have a good mix of clients who are in various states of readiness. We can put some structure on it. Buy or make one of those grid-type calendars. List all your clients (and near clients) down one side and then project when they will buy or sell. I’ll use a monthly example.
(Hopefully you have more than six clients and prospects–this is just an example!) What you’re actually doing here is comparable to project planning. You can beef it up by using letters or codes to indicate key steps in the transaction, starting with your first contact through closing.
The process will help you keep some balance in your business. I can assure you that I did not book three days of showing appointments when I first met my three-year client. She would have enjoyed it, but she wasn’t ready for it. (We did look at a couple of houses, but our goal was for her to get a sense of what she might be prepared to buy… one of the early issues was the responsibilities of home ownership truly petrified her. As a result, she was focused on buying a “cheap” house and the minimizing the financial commitment believing that was a low-risk strategy. There was truly a long learning curve for her.)
By the way, if it’s not apparent this chart gets made in pencil because you’ll be changing it regularly as your client’s change. All the chart does is help you decide how and where to invest your time. “Invest” is an important word, because you want to make the decision based on the anticipated return. Showing a buyer who isn’t ready to make a decision 18 properties will not make him any more ready–it may have quite the opposite effect. Conversely, brushing off a buyer who seems reticent may result in a missed opportunity.
While it might seem tempting to go only for clients with high probably and fast closes, what that means is you are constantly on the run trying to grab every “hot” opportunity. An interesting question that too often goes unasked is “What is the ideal number of clients to have?” It can be hard to answer, but thinking about it is important. What you need is a balance of clients at various stages of the process. It’s called “keeping the pipeline full.” We can make it a numbers game, but there’s some art involved. It can be simple, but not always easy.
One of my very good friends likes to say, “I’m always working; I just don’t always know when I’m going to get paid.” He’s also someone who works smart–he knows that it’s important to pay attention to everything and everyone. I experienced that first hand when I received a call from a prospective real estate client. He explained that he called me because “You’ve been a substitute teacher at the school and my daughter really likes you so I think I will too.” Who would think that a sixth grader would qualify as a potential real client, albeit indirectly?
I once had a licensee brag that she had 60 listings. I wanted to ask how she managed them. Being a numbers kind of guy, I immediately did this math in my head: If she’s spending 20 minutes per week on each of those listings (staying in touch with the seller, advertising, making sure information stays current…) that’s twenty hours per week. Did I mention she also works with buyers? That’s not a pipeline–it’s a raging flood. I suppose dumping as much as you can is a valid business strategy, but if we’re going to work smarter instead of harder (and longer) we really need to manage our business.