What Does it Mean to “Go Virtual”?
Let’s assume that you’ve acquired the essential technologies that I talked about in the previous installments in this series. Now let’s talk about the practical side of practicing real estate from a virtual office. By way of a short review of the previous four installments, Are You Ready for the One Minute Commute? discussed the idea of working remotely in a virtual office from a macro perspective and just how mainstream that idea is becoming. Today, twenty-three percent of our nation’s workforce currently work remotely, and another 62% would like to.
In Part 1 and Part 2, I talked about building a virtual real estate practice and the crucial technologies that allow agents to receive the benefits of an office (communication, instruction, supervision, and money) in a web environment as opposed to a brick-and-mortar location. At this point we were still very theoretical and macro in our discussion.
Part 3 and Part 4 got specific about which technologies are essential to the successful practice of real estate in today’s new real estate economy. I listed the eight crucial technologies you need and showed you how you could get them for well under your recommended advertising budget. If you missed any of those installments, you really need to go back and check them out.
Now I’d like to move away from the theoretical and begin to paint you a picture. I’m afraid that for many of you taking this training, what I’m preaching sounds like science fiction, and not reality. I realize that the average agent taking this training is a 52-year-old female who is very relational in her real estate practice and reluctant to rely on technology.
(Okay, for the 42% of you who are men, you too average 52 years old; you too are allergic to technology, although not quite as much; but you tend to be a little less relational in your practice than your female counterpart.) You have been in the business an average of 10.5 years, so changing your mindset will be difficult.
I know that for many of you, “going virtual” sounds either too complicated, too impersonal, too expensive, or just plain too different to even consider. But I’m telling you, as soberly as I can, that you really need to consider it. And consider it quickly or you may find yourself considering another career. I’m not trying to scare you, but I’m encouraging you to make the painless adaptation to this new age of real estate. It really is easier than you probably believe.
I’d like to expand your thinking a bit (as if I haven’t already!) by giving you a “virtual tour” of a virtual company. My company. I’d like to take you through it, one part at a time, and contrast it with your real estate brokerage so you can see the practical advantage over a traditional model company. Once you’ve seen it with your own eyes, you’ll be open to embrace this new way of doing real estate.
Let’s start with everyone’s favorite topic: money. The average traditional brokerage in America pays its agents 62% of gross commission income (GCI) and brings only 2% to the bottom line. In fact, some companies pay their agents even less and still see lower profit margins. Many broker-owners continue to list and sell real estate because they can’t afford to keep the doors open without being the top producer in their own office.
When I started in real estate, I worked for a very traditional independent company. A year and a half later, the owner decided to make it a traditional franchise company. At one point, we had as many as 35 agents. But for the entire two years I was with the company, we never had a single profitable month. Why did we stay open? The owner was also a large builder, and although he continually lost money in the real estate practice, the brokerage sold a lot of his new homes and he made good money on the construction. As soon as he closed his construction business and became a developer, he sold the franchise, because there was no way to make a reasonable profit in today’s climate.
Contrast that to my current real estate brokerage. We paid our agents an average of 85% of GCI and last year brought 13% to the bottom line — pure profit. Now I know what you’re thinking: How can you run a brokerage on the remaining 2% of GCI? Well read closely, because I’m going to tell you. We have a virtual office model. Before you dismiss it as not being real enough, let me remind you that we have the largest office (yes, brick and mortar office) in our local market. By virtual, I don’t mean without a physical location — I mean technology empowered.
Today’s new real estate model is about empowerment through technology. To give you some specifics, I spent nothing for my 8,000 square foot, state-of-the-art transaction center last year. My affiliated business arrangements (two in-house mortgage companies, an in-house law firm, and a title company), covered the entire physical overhead.
Our company doesn’t advertise — our agents do. And our agents spend the same amount of money on advertising as our competitors, and yet they receive about 30 times as many customers. Why? Again, the power of our technology. While our company is over twice the size of the brokerage I started in, we only have one full-time employee as opposed to the eight full-time employees they had. How? Again, technology.
We don’t have a receptionist. We don’t have an MLS clerk. We don’t have a file clerk. We don’t have an office manager. We don’t have a rental department and property managers. We don’t have a bookkeeper. We don’t have– We don’t have a lot of personnel overhead. We don’t have a lot of office politics (It’s hard to be political all by yourself.). We don’t have a lot of sick days. We don’t have a lot of office turnover. We don’t have a lot of bickering or griping. What we do have is efficiency.
When I was an agent in a traditional office, when I took a new listing, I filled out a form and turned it into an MLS clerk. Assuming the clerk was at work that day, or not behind from previously missing work, a day transpired before my listing was in the MLS. Invariably it was entered wrong, but the clerk didn’t bother to call me with questions. And how did I find out about the mistakes? From my client who managed to find out about the mistakes before I did.
Then the client would call me, angry and I would turn in the corrections. If all went smoothly, it would take a week for the listing to actually be entered correctly in the MLS, creating needless liability for the company (and me), and costing the company lots of money that could have been returned to the agents in commission dollars.
By contrast, our agents enter their own listings. No lack of communication. No time lag. No bureaucracy. No hassle. No cost to the office. The agents prefer it. The clients aren’t angry because they caught the mistakes some minimum wage clerk made and assumed the mistakes were made by their agents.
At the traditional office where I began, either duty agents or a paid receptionist fielded all lead calls. We had a strict policy in place that any call coming in requesting information about a specific property, was to be forwarded to the listing agent. Pretty simple. Now because all agents are honest, you know that policy was consistently obeyed, right? Yeah, right!
I continually averaged 50-60 active listings while I was an agent with the company and I was available every single day to answer my phone. Not once did a call come in from over 50 yard signs! Not once! The reason I know no leads came in is because I would have been given the lead. Right? Yeah, right!
Contrast that to our virtual company. Our agents are allowed to advertise (including their yard signs) their own phone numbers as well as their own LCM Phone Gateway numbers. And if a customer calls their LCM Phone Gateway, the call is electronically routed to the agent without anyone touching it, stealing it, or dropping the ball. Simultaneously, both an email and text message are sent to the agent.
The email and text messages contain the caller’s phone number, the property called about, and the advertising source (whether the call came from a yard sign, a homes magazine, their website, or wherever). Again, expensive and inefficient personnel has been replaced with inexpensive and very efficient technology.
In that traditional company any Internet leads that came in came to the broker. The broker’s lead coordinator eventually got around to sending them to a handful of “broker’s pet” agents, who generally did little or nothing with them. The company had a website, and it listed the agents on the company site. The website was always out of date, and did very little in terms of capturing business.
Each of our agents has his own website. They generate as much business as they want from them and nobody else ever sees or touches those leads. The company also refers leads to some of our agents, and those leads can be seen and managed completely by our managing broker through our Pipeline Client Management platform. We can see exactly what the progress is with any lead at any time.
If an agent is not doing his job in following up a company lead, the broker can pull that lead back from the original agent and reassign it to another agent with the click of a mouse. It’s easy and it’s seamless. The lead, complete with the entire history and notes, is removed from one agent’s contact manager and inserted, seamlessly, into the other’s. How cool is that?!
I know that I’m causing some of you to have a meltdown, but stick with me. Don’t feel like the lone ranger. About two and a half years ago, a very successful broker-owner attended one of our National Agent Summits, a quarterly training seminar we host, where we teach the new model of real estate.
I won’t reveal his name, but you should know that he is extremely successful, and his company owns eight large offices in Atlanta. His is one of the most innovative and most profitable operations in the country, and he actually brings almost 5% to the bottom line. He’s one of the top real estate franchisees in the world, and the office where he works had 165 agents.
He drove to our office in his new Jaguar, dressed impeccably in expensive clothing and jewelry. He was “the man”. He was powerful and impressive. When we all met around our large conference table, it was clear that this man was the “big dog” in the room. Everyone waited for his reactions before speaking. I’m sure you know what I’m talking about. In our first session he sat with his arms crossed over his chest and his head cocked back a little (as if to say, “Go ahead, tell me something I don’t know”). I have to admit, I was a little intimidated. He was and is an extremely sharp guy.
By the second session, he was sitting on the edge of his chair, and by end of the third session he was taking notes furiously. By the fourth session, he was begging for more information in wide-eyed disbelief. We messed him up. We completely blew his mind! On his drive home he called our office and said he had been speaking with his partners and wanted to know what he had to do to purchase the development rights to Georgia. He wanted to lock down our model in his state. He had to see it to actually believe it, but after two full days of sitting in our classroom in the middle of our office building, watching real estate the new way — the FavoriteAgent way — he experienced an awakening.
I can assure you, it was not the profound wisdom that rolled from my lips (as eloquent as I am!); it was actually experiencing something so radically different from the traditional real estate model of which he was universally considered to be a master. His real estate world will never be the same again. He caught a vision of something so powerful, and yet at the same time so simple, that it literally messed him up.
Why did he want to buy the rights to Georgia? Our company was much smaller than his. Here’s why: When his eyes were opened, he realized that when our model of real estate came to Atlanta, his model was finished. He paid his agents far less than we do, and yet he still netted less profit. His overhead was staggering, and ours was minimal. His agent services were good but ours were every bit as good. He saw that we had everything that his company had, only we did it virtually.
I realize that I’ve already given you a lot to absorb and process, so I’ll break here for this segment. In the next installment, I’d like to walk you through our office and give you a guided tour. A “virtual tour” of our “virtual company”, if you will. I will try to help you actually picture it.
Of course, you’re welcome to come actually visit anytime you’d like. We’d love to meet you in person.