I received a phone call last week from one of my readers who was calling to ask me for advice. He was surprised when I answered my own phone and even more surprised at the advice I gave him. But I’m getting ahead of myself.
My caller had a dilemma: Which company should he go with? One company had the federal HUD listing, and although the broker would only pay him a 50% commission split, he would get a lot of leads from the company. The other company would pay him 90% but didn’t supply him with any customers.
I politely listened to the details of each option, and I asked a few questions. It was clear that this agent had been agonizing over his decision for some time. I think my answer shocked him. I said, “I think you have your cart before your horse.” See, I believe he was asking the wrong question.
And he’s not alone. Today many of the agents I talk to are trying to change outcomes without changing the causes for those outcomes. They are practicing “ready-fire-aim” instead of “ready-aim-fire.” Here is what I mean.
The real problem was much more fundamental than deciding what broker he should work for. It was a matter of running his own business. Of being the driver as opposed to being a passenger. But in order for him to be the driver, he needed to know where he was going. I believe that either of his two broker choices could work to accomplish his goal.
What follows will be the advice I gave him. When you read it think about your own situation and the decisions you are faced with. If there are any parallels, make the application and maybe it can help you as well. Oh, and after you’ve finished, please leave me a comment below.
My first advice was that he needed to back up and complete a business plan. Not an elaborate one, but one that would help him filter out the important from the other noise. (Don’t we all get plenty of “noise” and other great distractions coming at us on a daily basis!?) I pointed him to my blog and the link for the free calculators in the right column. I told him to click on that link, to go to the Calculators page.
Of course, he was mobile when he called me so I went to the calculator and in less than three minutes walked him through the process. I asked him how much he wanted to earn in the next twelve months. He said $100,000. I said great… not a problem, and it wasn’t assuming he built a plan and executed it. It was very doable.
Next I asked him, “What is the average sale price in your market?” He stopped, clueless. Like a deer in the headlights. You could almost audibly hear the wheels turning, like “What does that have to do with anything?” I said it was absolutely critical to answer his question. He guessed that his average was about $150,000. I assigned him homework: to find out exactly and re-do our plan.
I plugged in the $100,000 and the $150,000 average sale price then asked him what the average commission percentage was in his market. He said 2.7% and I thought that it sounded fairly normal. I then assumed the 90% commission split with his broker and calculated that scenario first.
I said let’s plan on you working only fifty weeks this next year and taking a couple of weeks off. He liked that idea. I then asked him if he had considered if he had all the ingredients on hand to work with. I explained that executing a plan was like baking a cake. You had to have all the pieces in place for it to come out. I asked him, “Do you have a car?” Yes. “A computer?” Yes. “A phone?” Yes. “A broker to work under?” Yes. “Available to work however many hours are necessary?” Oh absolutely.
I said, “Well, it sounds like you have all the raw material you need except for one thing — customers.” I went on, “It looks like you will need 912 leads over the year to accomplish your goal. In other words you need a little over 18 leads every week. So how many leads are you generating through all your various marketing activities?” He said not many.
I said the fist thing he needed to do was figure out a way to generate that many prospects. Open houses, floor duty, circle of influence, referrals, home magazine ads — add them all up. I told him that whatever amount he was short by, he needed to figure out a way to generate them. Not to worry, that lead generation should be on auto-pilot. Some are going to come in because you are an agent and you know people, but the shortfall needs to be planned for.
Next I told him that any agent should be able to generate 2-3 leads a day for next to nothing using very simple technology like the LCM gateway. It could be done simply and without taking any of his time, and that was important. He asked me why. I said because based on my calculations, he was going to be doing other things for 44 hours every week.
He would be spending roughly 26 hours on the phone each week staying in touch with and incubating leads he had coming in. He would average 8 hours a week doing buyer activities like showing houses, writing offers, showing more houses, and so forth. He’d be spending another 3 hours a week doing escrow activities preparing for the 30 closed transactions he’d be doing. Finally, he’d need to plan on an hour a day doing various administrative functions, like managing his database, paying his bills, posting ads, filling out papers for his broker and so on.
It was like the entire world opened before his eyes. No longer was there a nebulous sense of “if I just stay busy everything will work out” as if he were a passenger in his own business. He got a glimpse of what it might be like to actually control his own business. He was astounded and ecstatic.
He couldn’t thank me enough, and yet I really hadn’t done anything. I never answered his question. I told him that he could make his income goal either way and that he needed to spend the time running various scenarios for himself. I encouraged him to take control of his own practice and not to be dependent on anyone — even his broker.