The Virtual Office Partnership opportunity discussed in this series is not currently available, however the technology and coaching required to open your own independent virtual office is available. Feel free to contact us for details.
Your Very Own Virtual Office
Okay, so if we find the right person, what does a Virtual Office partnership look like? Since most of us are not in the real estate business for our health, or for our love of houses, or our love of people, let’s talk about the money first. After that we can discuss the mechanics of actually getting a Virtual Office open. Fair enough?
Let’s use an average home sales price of $200,000. That’s very close to the average home sale in the nation today. Let’s assume a commission side percentage of 2.5%, or slightly lower than the national average. That gives us an average gross commission income or GCI of $5,000. The first 10% goes to FavoriteAgent.com corporate.
I know what you’re thinking… Century 21, or whoever, only charges me 8%! That’s true, and we charge 10%. But there is a huge difference: Those national companies don’t provide anything other than their name for that franchise fee. You don’t even get a gold blazer! On the other hand, we provide $1,100 per month in technology for each agent in the company. If you have 30 agents, that’s nearly $35,000 a month.
Plus, we also provide the entire agent accounting function for the Virtual Office. We provide personal coaching for each agent. We provide tech support and training. Most importantly, we provide a Virtual Office environment that is unequaled in our industry. Nothing else is even close. So after taking the 10% off the top, the remaining money is what we call gross brokerage income or GBI.
Just like every other company, the next thing we do is pay our agents. Our agent commission plan is very simple and has only two tiers. All agents receive 80% after their first transaction, which pays 50%. Then they can make an additional 10% by being a top producer (completing 4 transactions in the previous 30 days) or by being a top recruiter (bringing 5 other agents to join the company). Having used this same pay plan for 5 years, we know that year in and year out the agents will on average keep 83% of GBI.
If agent dollar is 83%, then company dollar is 17% of GBI. The difference between our model and every other model is that the remaining 17% is pure profit. There are no more bills because we are a Virtual Office model company. Contrast that with the very best case scenario for the traditional model companies who make 2% of GBI after paying their agents only 62% on average.
Now, if you recall, this is a partnership, so we share the profits. On day one, before recruiting a single agent to join the company, our Team Leader partner keeps 50% of the profits. Incidentally, the Outback model pays their operating partner only 25%. But we reward our Team Leader partners for building their team.
When a Team Leader has recruited 10 agents he keeps 55% and we keep 45%. At 20 agents the Team Leader goes to 60% and we go to 40%. At 30 agents, it’s 65% and 35%, and finally, once the team reaches 50 agents, the Team Leader reaches his maximum share of 70% while we keep only 30% of company profit.
So let’s imagine an office of 50 agents. The average agent production is 7 transactions per year, so that means that a 50 agent office produces just over 29 transactions per month. If GBI is $4,500 and the company dollar averages 17%, the average profit per transaction is $765. If the company has 50 agents, the Team Leader share is 70% or $535.50 of that average profit. Multiply that by 29 transactions and you have a Team Leader profit of over $15,500 per month in addition to any personal production.
But how much time is really required to manage 29 transactions a month? If it took you an hour per transaction (the actual time reviewing the file and answering an occasional question on the phone is really more like 10 minutes), that would be less than an hour a day managing your agents. And for that hour a day, you’d make $186,354 plus your personal production.
And how much cash do you have invested? Let me see… that would be NONE! But hold on. It’s not that easy. Remember, I told you I was looking for people who would work their buns off! I wasn’t kidding. But I know from personal experience that recruiting 5% of the agent population in any market is very realistic. In fact, roughly 40% of the agents in your market will change firms this year alone. The first resistance level in building a brokerage comes after that 5% market share.
And our Team Leaders are expected to achieve their recruiting milestones before they are vested with our company. But trust me, recruiting in our model is simple. Not only will you offer your agents more money than every other national company, but you can solve the number one problem agents have today: not enough customers. And you will be giving each of your agents $1,100 per month in state-of-the-art technology as well as personal coaching, technical support, and training. Recruiting is simple.
For that matter, opening an office is simple. You could open your own Virtual Office brokerage with us and never miss a transaction. I want you to imagine being the person in the plan I’m about to lay out for you. It could very well be you, and the entire transition could take place in a few days. You’ll see. Here is your plan:
Day 1. Getting everything in place. A building, a managing broker, and your Virtual Office technology platform. First, your building. Some states require you to have a physical brick-and-mortar location for your company (at least for another few years). Legally, that can be your house, but I’m not suggesting for an instant that you use your house to meet clients.
Here’s how I do it in my own Virtual Office brokerage: I’ve negotiated the use of several conference rooms around town, with a large lender and a settlement company. Between them it gives me 5 conference rooms scattered around our community, but, the truth is that most customers prefer meeting agents in a neutral location, like a McDonald’s or a Starbucks. Why?
Generally, home buyers feel the agent has a “home court” advantage when meeting in their own office, so at their first meeting they tend to prefer a neutral location like a coffee shop or restaurant. After that, it’s all about convenience. All you need is an Internet connection, either by Wi-fi or cell phone wireless service.
I’m assuming you are a working agent, so you have been using both a lender and a closing attorney. Start there. Go and ask either of them — no, better yet, ask both of them — if they’ll allow you and your agents to use a conference room to meet clients, if you continue to send them your business. If they won’t, then find another who will.
This will be the simplest negotiation of your life. Believe me, both your lender and your attorney are looking for ways to “lock in” steady business. I’ve never heard of an agent being turned down when they asked for the ongoing use of a conference room. Remember, they want your business, and what better way to get it than to let you and your agents use a conference room that sits empty most of the day.
You should also check out your local coffee shops and fast food restaurants. Many have wireless Internet for free these days. The key is making it easy to have a handy spot to meet with clients no matter where in your community you or your agent happens to be.
Okay, now for your Broker. If you are not legally qualified to manage yourself or other agents, don’t panic. The beauty of this industry is that we have lots of agents who are qualified and yet leaving the business. Many of them are spending several hours and a quarter tank of gas doing Broke Price Opinions for $50-75 each.
Find a qualifying broker and offer him or her $50 per file to provide the “legal oversight”, and to review and maintain the transaction files. It shouldn’t take more than a CraigsList ad and a few phone calls to set that up. Remember, this arrangement can always be changed as you expand your business or when you get your broker’s license.
Finally, get your Virtual Office technology in place. That one’s simple. FavoriteAgent.com handles the setup and orientation. In a typical office of 30 agents, we cover the the cost of roughly $35,000 per month for the agent’s technology. How easy was that?! No big checks. No first and last month’s rent. No deposits. No staff to hire. If you qualify to open an office, we’ll provide the technology, the training, and the accounting.
Now it’s been a pretty busy morning, so go ahead and treat yourself to a nice relaxing lunch. While you’re having lunch, let’s think about your company name. Have you decided on a name yet? Our graphic design and our communications departments will need your new name in order to design your custom artwork, logos, and publicity campaign.
With our Virtual Office partnership, you’ll use the FavoriteAgent.com nationally recognized trade name, and immediately associate with nearly 20,000 other real estate professionals across the globe. We have agents in all 50 states, in every province of Canada, as well as Mexico, the United Kingdom, Australia, and New Zealand. Let’s see: “FavoriteAgent.com Premier Properties” has a nice ring to it. Perfect!
OK. Lunch is over. It’s time to think about a few logistics. You need to order some business cards and yard signs. No big deal. Within a few days our corporate office will have all the art work ready to send to the printer and sign company. Oh, and don’t forget to make sure your voice mail has your new company name on the recording. Now log into your MLS and download the email addresses for all the area agents and start focusing on a list of possible recruits. Don’t worry, recruiting will be easy.
Here’s what I mean: Recruiting always comes down to your value proposition to the agent. And what you have to offer them is so much better than everything else out there, hiring agents will be a snap. Here is your value proposition in a nutshell. You give them customers, freedom, more money, better tools, and training. What more could they possibly want?
Every agent will have his own lead capture technology solving the number one problem facing agents today: not enough customers. Freedom because your agents don’t have to waste half their productive time pulling floor duty, sitting in sales meetings, driving to caravan houses, or any of the other traditional agent busy-work. With FavoriteAgent.com they have none of that. Freedom is huge to a productive agent.
Like any of the national franchises, your agents will each pay 10% of gross commission to FavoriteAgent.com corporate. But unlike those other national companies, with FavoriteAgent.com they actually get something tangible for their money. Instead of paying a franchise royalty to use a national name, they get a national name and everything they need to succeed in real estate. Here’s what I mean.
Each agent gets his very own LCM web gateway, his own LCM phone gateway (both are state-of-the-art lead capture technologies), his own personal website, his own integrated client management software, his own virtual assistant and mobile applications.
They also get the most powerful Virtual Office real estate platform available today, complete with hundreds of training articles, videos, calculators, business planning modules and much, much more. Our technology bundle would cost each agent over $1,100 per month if they were to license it independently.
Now remember, as the Team Leader, running a typical 30-agent office, FavoriteAgent.com will be providing your company with nearly $35,000 per month in Virtual Office technology. And don’t forget that all of your agent accounting is included in that licensing fee, so you won’t have to spend your money to hire a bookkeeper to run your brokerage, or shut down the entire office for the month of January to get all the agent 1099’s sent out.
But besides all the freedom and all the tools, you’re going to attract your agents the old fashioned way — you’re going to pay them well! The FavoriteAgent.com Agent Compensation Plan is probably the simplest and most generous you’ve ever seen. Here it is: Every single agent pays a 50% split on their first transaction with the company. That’s to offset all the administrative costs in adding a new agent to the company.
After that first transaction, all agents keep a minimum of 80%. But, there are two ways any agent can make 90%. First, by being a top producer. If an agent completes four or more transactions in the previous thirty-day period, he is paid 90%. Or they can make 90% by being a top recruiter. If an agent recruits five other agents to join your company, his commission is increased to 90%.
And that’s 90% commission with with no office rent, no transaction fees, no administrative fees, no nickel and dime fees, period. Add to that the personal coaching, technical support, and hundreds of hours of online training, and you have a value proposition that is hard to compete with.
How easy do you think it is to attract agents when you give them training, freedom, provide them with a state-of-the-art technology platform and the ability to forever solve their lead problems, and you can pay them 90%?
Believe me, it doesn’t get any easier. OK, enough about recruiting. It’s been a tough day but well worth the time invested. Go ahead and take the evening off and get some sleep. You’re going to need it. Tomorrow’s going to be really busy!
Day 2. Today you have your initial coaching session with FavoriteAgent.com. It will take about an hour, and during that hour you’re going to learn how to set up and manage your online advertising. By the end of the day, you’ll have a steady supply of new leads coming into your own Virtual Office client manager. Don’t worry, if you forget something, the coaching staff is always there to answer any questions you may have. Now it’s time to do your homework.
The coaching staff is probably going to suggest that you take an hour to make sure that everything is set up just like you want it, and to learn your way around the Virtual Office software. Don’t worry, it’s simple! They’ll also help you import all your contacts into your Virtual Office software.
While you’re at it, why don’t you go ahead and email the customer service department your list of local real estate agents, complete with the phone numbers, fax numbers, and email addresses. You know, the ones that you downloaded yesterday. Within an hour or so, they’ll have them all in your client manager and ready to use. Was that easy or what?!
Day 3. Now it’s time to actually start recruiting agents. Better check your Pipeline. Oh my! You have seven new leads waiting to be called. Sure, you continue to practice real estate while you build your team, but now you get to keep 90% of your commissions instead of giving over a third to your old broker.
Finally you can spend less time drumming up business too, because it is coming to you faster than you can handle it. You can actually think about building your business by recruiting. Maybe you already are a managing broker and have agents working for you, or maybe you are just starting from scratch. Either way, using techniques we’ll show you, you should be able to recruit 50 agents in less than 180 days.
Let’s look at a realistic scenario comparing this model to the traditional model. Let’s say you recruit 50 agents over the next six months, and those agents average seven transactions per year (the national average). Here is how your income looks:
Traditional Model. With 50 agents and 29 transactions per month, using a typical traditional model broker split of 38% (or in other words, your agents make an average of 62%), and using an average GCI or gross commission income of $5,000 per transaction, you would have a franchise fee of $11,600. That plus any note payments you might have, and any mandatory signs and supplies you had to purchase.Now, if you run your brokerage like the typical traditional brokerage, then you will bring about 2% to the bottom line or about $2,900! Don’t forget, you might not have that much business coming in, and your expenses will still march on, but for purposes of this illustration let’s say your agents come through and business is good.
Virtual Model. With the same 50 agents and 29 transactions, paying 10% of GCI to corporate, and using the national average company dollar of 17%, the same 50 agents and 29 transactions per month, you’ll make $15,530. That’s your share of the company profits.In other words, your Virtual Office partnership makes six times as much money and has virtually no risk. No rent. No utility bills. No accounting. No company advertising bills. No additional staff. The very picture of simplicity. And you have lots of time available to actually do some production, if you decide you want to.
Remember, in the traditional model, your cash outlay is approximately $250,000 and your risk is very high. At that level, your return on investment is minimal and you have basically bought a job. Unless you can live on a $34,800 income, you are going to have no choice but to sell houses every day and compete with your agents.
In the virtual model, you’d make $186,360 on the revenue produced by one Virtual Office of 50 agents. Let’s say you continued to grow that office, adding 50 agents a year for the next five years. You’d be making $1.1 million a year, and it would all be profit! Your company will be a virtual real estate money-making machine and you’ll have very little, if any, stress.
More importantly, your agents will make more money, and your customers will be better served. You’ll have the benefit of a national brand and state-of-the-art technology, and you’ll own a business valued at roughly seven times EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization, or nearly $8 million.
Contrast that to the traditional model alternative where you would likely still be leveraged to the hilt in your one brokerage of 50 agents, taking on a huge risk of capital, and working with diminishing margins as agents continue to demand more and more money and brokerage commissions continue to erode.
Suppose you wanted to expand. You’d have to reinvest more capital to locate and equip a larger facility. And you’d have to add staff. Your risk would continue to escalate with every expansion, and unless you’re a rare agent, you’d still be selling houses and you’d own a business nobody would want to buy.
“One of the things that I am the proudest of is our unique calculators. We’ve developed calculators for our students and agents that are unequaled in the industry. From Absorption Rate, to Advertising, to Appreciation Rate, to Business Planning, to a CMA and Proceeds Estimator, to Days on Market, to a Sale Probability Calculator, and of course, a Team Leader Compensation Calculator. Click here to check them out.”
Day 4. Now comes the fun part… all you do from your fourth day on is make money. Now how cool is that!
I hope that helps you understand exactly how our Virtual Office opportunity works. It’s really very simple, and our company even pays all the Virtual Office expenses when we find the right Team Leader. More importantly, if you are the right candidate, we’ll hold your hand every step of the way and help you become successful. Why? Because our success is dependent on yours. We can’t get the top rung on our new ladder without the help of lots of sharp and aggressive Team Leaders.
But is our getting that top rung really possible? I say it is, but you be the judge. I’d like to leave you with an example of another company, in another industry, that already did it — that successfully got their ladder up, and grabbed the top rung. And they did it in a field crowded with competitors much bigger than they were. When I’m finished, you will either think I’m the most incredibly arrogant person you’ve ever heard of, or you will want to jump on the field, grab the ladder and help me capture the top rung. Now the story.
Back before the turn of this century, before Allan Greenspan burst the Internet bubble, there were hundreds of Internet companies burning through millions of dollars of venture capital, all vying to become the “doorway to the Internet”. The media dubbed it the “Portal Wars” since most were portals or search engines.
The biggest names were companies like AOL, Netscape, Ask Jeeves, Infoseek, Lycos, Excite, Dogpile, Go.com, MSN, and Yahoo! And while they all looked different on the outside, behind the page, they were all doing search exactly the same way: by analyzing key words and meta tags. It was the same way online search had always been done.
About that same time, a couple of computer science grad students at Stanford University, Larry Page and Sergey Brin, had an idea. What if you used a mathematical algorithm to do search? What if you assigned values to key words and meta tags, but you also valued inbound links, outbound links, content, traffic, words in links, and many other criteria? By using a mathematical calculation based on that algorithm, they believed you could return better organic search results.
They took their idea to their adviser and asked if they could test their hypothesis as a class project. They were assigned space on the college servers and they built their new search engine, incorporating their new way of doing Internet search. The name of the project, and the new search engine, was Backrub.
They put the word out on campus that Backrub was doing a better job at Internet search than any of the other search engines. Pretty soon students all over the US started using it, and it wasn’t long before word got out to the public. Soon the traffic on their “project” website was getting so high that Stanford told them it was time to take it down. It was using too much of the university’s computer resources.
Having worked hard on the project, they decided to see if they could sell their idea. They met with some managers at Yahoo! and told them they had invented a brand new way of doing search. That meeting will probably go down in history as one of the all-time-worst business decisions ever made. Remember, in those pre-crash days, money was flowing at most large Internet companies, and Yahoo! was one of the biggest.
Yahoo! probably could have bought the idea for $10,000, but instead, they laughed at Larry and Sergy and told them to “come back when you’re big”. Famous bad decisions. So Larry and Sergy went back to campus with their tails between their legs. They bought some new computer equipment on their charge cards, and a friend, Susan Wojcicki, let them set up the website in her garage.
They decided that if they were going to get serious about doing Internet search, they needed a new name. They finally decided on Google, a play on the word “googol,” a mathematical term for the number represented by the numeral 1 followed by 100 zeros. Well, four years ago Google had the largest initial public offering in the history of the stock market! Larry and Sergy sold off 10% of their company, and overnight both became billionaires!
But let’s think about it. What did they do? They invented a new way of doing an old thing — Internet search. A better way. They put up a brand new ladder. Then they managed to grab the top rung before anyone else could get there. Last year, 65% of all online searches, world-wide, went through Google. Two weeks ago the numbers came out for this year. This year it’s 70.3%! Google is pulling away!
But think about this: The realm of Internet search is only a tiny sliver of our nation’s economy. On the other hand, real estate is the sixth largest segment of our economy. And just like Google, FavoriteAgent.com invented a brand new way of doing an age old thing. The opportunity is beyond comprehension. What would it look like if you somehow participated in 70.3% of all the real estate transactions in your local market?
I know, it’s hard to even think in those terms. But I’m telling you, just as soberly as I can possibly tell you, the opportunity before us is beyond big. It’s absolutely huge. But I can’t do it without the help of some Team Leaders that will help me grab that ladder, sprint across the field, slam the ladder against the wall, and climb up and grab the top rung before anyone else gets there.
And after we get that top rung, we can take a vacation and sit on our yachts somewhere in the Caribbean, and talk about the old days of being small and hungry. So where do we go from here?
Are you my Team Leader? Do you have the three characteristics I’m looking for? Do you have the energy to work your buns off for the next few years while we get this ladder up? If you do, then fill out the form below and let’s talk. I’m ready to get started right now!
Maybe you’d rather use our technology where you are now. We have several payment options, including an “as-earned” option where you only pay when you have a closing. Call me. It doesn’t cost anything to talk… not talking could cost you a fortune!