According to the 2008 National Association of REALTORS® Profile of Home Buyers and Sellers, a full 87% of all our customers (and an amazing 94% of buyers between the age of 25 and 44) are using the Internet for their home searches! And that number is growing every single year.
Even more important is that searching online was the home shopper’s first step more often than all other first steps combined! This includes first steps like calling an agent, driving by homes, talking to a friend or relative, visiting open houses, looking in newspapers or home magazines.
Today, not to have a strong Internet strategy is be out of business! The simple fact is that, if we don’t learn to tap the Internet, odds are we will be joining the third of the agents who leave this business every year.
So let’s take a look at these “Internet” homebuyers. Here are some things you may want to know about them:
- They’re better educated.
- They have more money.
- They’re buying more house.
- Their search time is shorter.
- They like to help in the process.
Sound like the perfect customers, don’t they? Well, they are. But, today’s real estate customer is also more demanding than his predecessors and wants information right now. Tomorrow’s not good enough! He goes to the Internet to get that information, and if you’re not there, you can be assured that several national lead aggregators will be there in your place.
Bottom line: It’s imperative that you have a strong web presence, that you learn how to capture business from the web, and, most importantly, that you know how to respond to today’s Internet customer.
In this segment, we’ll discuss Internet shoppers. How are they different from other leads, such as referrals or duty-desk leads? Should you handle them much as you would sign calls? Or should you treat them like open-house leads? How, exactly, should you approach them? Understanding the Internet buyer is the single most important skill you can learn as an agent in today’s real estate market.
The Real Estate Buying Cycle
An agent who has come up doing traditional real estate and who’s been very successful at it is quite often unsuccessful when he tries to transition to working Internet leads. Why? Because he tends to approach Internet leads the same way and using the same methods he’s always used to approach leads, and for the first time in his career he’ll find himself failing.
The first temptation for any confident and successful agent is to assume that Internet leads are just “bad leads”. That’s because many good agents with experience prospecting, simply can’t make a connection with these Internet leads. The problem is compounded by the fact that many Internet leads provide very little information — often just a name and an email address.
After years of coaching agents, I believe that the primary reason many agents fail in prospecting Internet leads is they have a fundamental misunderstanding of the real estate buying cycle. The Internet customer is an ordinary customer, with the same needs and motivations as any other real estate customer, except that the Internet customer is the cream of the crop, so to speak. So let’s talk about the real estate buying cycle and how we can use that new-found knowledge to change the way we approach and follow up with real estate customers on the Internet.
The real estate buying cycle, just like any other buying cycle consists of three phases: information-gathering, the search, and finally escrow. This buying cycle has been relatively unchanged for many years. But until recently, very few agents knew of the existence of Phase One. Make no mistake: Phase One has been has always been there, but until recently it’s remained largely unknown. So let’s talk about the different Phases and what they mean to us as real estate professionals.
Phase One: Information-Gathering
The latest research indicates that home shoppers begin the process of buying a house about 10 weeks before buying. But, they spend about 2-3 weeks, before they ever contact an agent. During this crucial time they are building their dream and they don’t want us around.
It’s during the early part of Phase One, that the buyer is thinking about budget, features and amenities, neighborhoods, and school districts. Let’s not forget that this is the American Dream! We’re taught from earliest childhood that home ownership is very much a mark and measure of success in our culture, so we want to be careful and thorough in our search process. In this initial phase, the customer is solidifying, in his own mind, what he wants to buy. He chooses his search criteria and his budget (often incorrectly, as any experienced agent can tell you!).
This is a very important part of the buying cycle, and it’s going to happen whether we like it or not. The best thing we can do is realize it, accept it, and plan for it. Most importantly, Phase One of the buying cycle is the only part of the process that every customer wants to do on his own. Our clients don’t want to have their dreams shaped by agents, parents, friends, or anybody else. They want the dream to be theirs. This phase is going to last 2-3 weeks. Anyone attempting to speed up the process does so at his own peril!
Phase Two: The Search
After the information-gathering phase has run its course, the buyer proceeds to a new phase and a mental shifting of gears. He’s decided what it is that he wants and is now on a legitimate quest to find it. This phase typically lasts about 7-8 weeks, and, according to the NAR, the search process has actually lengthened about two weeks since last year because of all the technology tools and information that is now so readily available.
Now more than ever, real estate shoppers understand that they need us to help them in the process of finding their dream homes. But what they don’t want (and I can never reiterate this enough) is for us to try to shape their dreams. That part of the process is very personal for most customers.
During the search phase or Phase Two of the buying cycle, the customer wants to look at houses. He’ll typically do lots of drive-by looking on his own and will begin skimming through home magazines. Remember: he thinks he knows what he wants and now he’s out to find it. And, somewhere in the middle of this search phase, he wants to begin working with an agent.
This is the crucial part of understanding the buying cycle: the agent who’s on the customer’s mind when he reaches Phase Two is the agent who’ll likely close the transaction and collect the commission!
So how do you become that agent? By being there! Just like always, you need to be there at the precise moment when the buyer calls a duty desk, the moment when he picks up a home magazine and calls an agent, the moment when he’s out riding around looking at neighborhoods and decides to make a sign call. This is how most agents have always picked up their new customers!
Well, this is the same when working Internet leads. The customer hasn’t changed with the Internet. What’s changed is when the customer comes into our lives; and this search phase, which is usually only a few weeks long, lasts until the customer finally finds his dream home and gets an accepted contract.
Phase Three: Escrow
The third and final phase of the real estate buying cycle, also known as the escrow phase, begins with the accepted contract and moves forward to closing. The buyer has found a home and is very emotional about it. Every little bump in the road becomes a drama, and this is one of the reasons our clients need us: we aren’t emotionally connected to their dreams. Certainly, we identify with them and we wish them the best, (and let’s not forget that we want to be paid for our work), but we don’t have the level of emotional attachment to the transaction that our client feels.
How well Phase Three goes is entirely dependent on how well the agent does in Phase Two. It’s during Phase Three, that almost all of the legal problems surface in any transaction. That’s why we need to excel at setting and managing our customer’s expectations.
This is one of the most important things you can take away from reading this segment. If you learn nothing else, you should at least be looking at Internet leads differently, and here’s why. Wait for it– Internet leads come during Phase One!
Do you see the advantage? Has the light come on? Did you have that “aha” moment? According to the National Association of REALTORS®, over two-thirds of our customers only talk to one agent. That’s both bad and good. Bad in that our clients see all of us as largely the same. Now we know that we’re not the same, but what’s important is what our clients think.
Our clients see us as a commodity and more or less interchangeable. So, if we still want to have a strategic advantage over our competitors, we need to be first. If we’re first, the odds of our doing the deal 2 out of 3. Period. The only way to change that ratio is to mess it up!
Now think about that a minute. That’s a huge advantage! A smart agent will simply identify the customer first and then devise strategies to make sure that he doesn’t run the customer off, so to speak. The rest will take care of itself.
Let me close with a simple and yet powerful illustration that will probably change the way you look at Internet leads. I want you to think back to the last time you shopped in your favorite department store. Now, if you’re like most agents, you don’t have a lot of time to waste; so when you go shopping, you go because you want to buy something. For this example, let’s imagine that you had to buy something special to wear at an important function.
As you walked into the clothing department, a sharp sales clerk came up to you and said, “Can I help you?” Now, I want you to be completely honest. What was your answer? You know what it was; it was the same as mine: “No, thanks. I’m just looking.” And I’m willing to bet that, within five minutes, you were looking around and finding that same clerk to help you locate something in your size.
Did you really mean that you weren’t interested, or did you really mean that you wanted to gather information for a few minutes and that after you were finished gathering information, and ready to search, you might actually need his assistance? The procedure is no different for a real estate customer except that the buying cycle is much longer, given the price point of the purchase. The Internet customer is still gathering information when most agents call to say, “Can I help you?”
There are generally only two reasons that an agent will fail in working Internet leads: either he’ll take the “No, thanks. I’m just looking” literally, as though the customer wants nothing to do with him, or (more often) he won’t take the hint and instead will insist on trying to set up an appointment to start showing houses immediately! This overbearing, hard-sell approach simply alienates the agent from the potential customer and removes any chance of earning the business. But make no mistake: that customer will go on to buy or sell, but with another agent! What a tragedy.
So how do we fix the problem? Easy: Embrace, Understand, and Act. Here’s what I mean.
First we need to embrace the reality that the Internet’s here to stay and that it’s is a legitimate source of business. At the current rate of growth, virtually all real estate customers will use the Internet for help in their property searches or sales within the next year or two. As real estate professionals, we can either accept that fact and learn to capitalize on it, or we can begin to “build our parachute” and look for another line of work.
Next we need to understand the real estate buying cycle and know that customers won’t want us around much during Phase One. Around, no — in touch, yes. But not in a pushy way. We need to learn the skill of staying visible but not pushy. Our job is to be helpful. What could be simpler? Learn to serve your customers, not asking anything in return. You’re simply there to make a friend. The statistics clearly show that a home buyer will work with an agent that he likes, so be that agent. Your job is simply to make him like you during this first crucial phase.
Finally, we need a follow-up system that will allow us to maintain contact with “future” customers over a longer period, even when we’re feeling overwhelmed with our “present” customers. The rule of thumb is to keep it short and to keep it personal. Mix it up. Use phone calls and emails.
But when it comes to email, remember this: 20-30 words in a short but personal email will do much more to move the relational ball down the field than any mindless drip campaign. Remember, we’re making friends here. Let’s be honest, when we all get a mindless drip campaign email we know it, and so will your client. We owe it to them to become personally involved.
When you’re tempted to dial up the pressure in your early Internet prospecting, remember this simple truth: two-thirds of our customers use the first agent they talk to (assuming they can remember who that is). So stay in touch and stay out of the way and the odds are 2 out of 3 that you’ll earn a commission. Now how cool is that?!
It’s really very simple when you think about it. The buyer wants to buy, the seller wants to sell, the lender wants to lend, the inspector want to inspect, and closing attorney wants to close. If we just stay out of the way and stay in touch, we get paid! What a fantastic business!