Advice to Consider Before Becoming an Agent
- Agents survive as listing agents, not buyer's agents
- A listing is a vehicle for an agent to get more business
- Most of the marketing an agent does isn't to sell the home, but to get more homes to list
- Price eventually sells everything.
- The role of the agent is to get it to the right price.
- The biggest role of an agent is being an unlicensed therapist/counselor
I saw the Activerain challenge for January and thought that I might be able to edit a chapter in my upcoming book to fulfill the requirements.
Keep in mind that my book isn't for the agent community. I'm writing to sellers to give them a look from the inside so they can make better decisions on how an agent can help them.
Maybe someone who is thinking about becoming an agent might find it useful.
Yes, it's long. It's part of a book. At the end, I answer the questions that the Activerain challenge asks for.
I don't write this to be derogatory of what is going on. I write it to bring light to the subject so that sellers can evaluate and decide on the best path to get their home sold and how to better decide on an agent to assist them.
Being in the business for almost 20 years, I know that most agents are hard working and really want to do the right thing. There are always a few bad apples in any profession, but from what I've seen, agents are a very ethical group.
But it's a tough business to survive in. 90% of new agents never get past the two-year mark.
One big reason for so much turnover in the industry is that many agents treat the business as a hobby. They just do enough to be able to retain their license by taking a few continuing education courses each year. They hand out some business cards to friends and family hoping that they'll use those connections to get a few deals here and there.
They most likely have another job or they rely on their spouse to provide the main family income. The National Association of Realtors says that the average gross income of a Realtor is only $42,500. That's gross, which means before expenses. So the average "net" income is probably around $25,000.
Another point to consider is that most failure in the business isn't because the agent is bad at doing the business of real estate. It's because the agent isn't good at getting new business to do.
You, Mr. Seller, are the one who is being sold
The successful agents really aren't that much better at marketing homes than any other agents. What successful agents excel at is marketing themselves.
Everything will make sense if you remember one thing. Traditional agents aren't trained to persuade buyers to buy. They are trained to convince you to sell.
You, Mr. Seller, are the target of most real estate marketing. You are the prospect that is being sold.
First, you get sold on listing with the agent. Then you get sold on lowering the price. Then when an offer comes in you get sold on accepting it as quickly as possible.
Much of the agent training that goes on is teaching agents how to get more listings. It's how to get leads and the scripts to convert those leads to listings. The training isn't about how to actually get a home sold for top dollar.
If you want a taste of an advanced training seminar, just Google something like "Money Magnet Video Real Estate Agent" and then select "videos." At first, when I saw these videos I assumed that they were jokes. Who would lie down on the floor and have others sprinkle money down on them while they chant out “I'm a money magnet, I'm a money magnet”?
But this is the actual training that agents at one of the top national brokerages get. They must be proud of it since they display it proudly on YouTube.
If you want to see the scripts that agents are trained to use, Google something like "Listing scripts real estate agents" and select "videos." This will make you aware of how agents try to get sellers to list with them.
My Broker Laid It All Out
About five years into my career as a real estate agent, my broker at that time gave the clearest and most concise analysis of what an agent needs to do to survive in this competitive market. This is a broker who had been in the business for over 20 years. At that time he was a partner of the biggest real estate franchise in the US. He knew his stuff. He knew the business inside out. He had worked in the trenches and had worked with helping other agents become successful.
At a small office meeting that I attended along with about 10 other agents, he gave a ten-minute talk that I'll never forget. I had never heard such truth and honesty from anyone in the industry before that.
I don't agree with everything he said because I don't think it puts the seller first. He was working for agents, not sellers. Who you put at the top determines what advice you give.
He explained exactly what an agent needed to do to be successful in the business. He also explained the reality of what actually gets a home sold.
He told us to just remember two simple rules for success.
Rule #1. You must list to survive. Listings are a platform from which new business is acquired.
Rule #2. Price eventually overcomes any and all reasons that might cause a home not to sell.
Your mission as an agent should be to get listings and then get them priced where they will actually sell. If it sells in one day, you priced it right. If it lingers on the market, do whatever you can do to get price reductions as soon as possible.
He then went into details of both rules. This explains so much about what you see and hear from agents.
List to Exist
As in any business, half of your time is doing the business, and the other half is trying to get new business to do. If you fail at the latter, you'll soon go out of business.
What's the cheapest and easiest way to market yourself?
Listings. Period. End of story.
Every new listing with your sign in the front yard is a billboard for yourself. Brand it with your face or some other memorable feature, and you get a ton of free advertising. (Some agents remove the “For Sale” from their signs to make sure they have enough room for their agent pictures and marketing slogan)
You'll starve if you specialize as a buyer's agent. As a buyer's agent, you are invisible to the public. You might have been the buyer's agent for every home that sold in the neighborhood but who's going to know that? The sellers of those homes might know, but they are leaving and aren't going be around to tell the remaining neighbors.
But if you are the listing agent with your signs out there, you become known as the neighborhood expert.
From the listing, comes many other marketing opportunities. Sure, we say that we are marketing the home, but most of the marketing is done with the agent in mind, or at least a major part of it is.
From the for sale sign and other marketing, you should be able to pick up home buyers who need your buyer agent services. So the listing is the crucial part of getting more buyers and sellers.
My broker asked, “What's the main reasons that sellers hire an agent?”
Simple, he said. It's to give their home maximum exposure to buyers.
What's the main method agents use to do that?
He said that without a doubt, it's the agent MLS, (multiple listing service). It's probably 95% of what gets buyers to know about the home for sale. You list it on the MLS, and from there hundreds of other sites are fed the information. Now that most agent websites have an IDX tool, your home will automatically be seen on thousands of sites. It's nothing difficult to do. It all happens automatically with the click of a mouse. In this digital age of the Internet, it's probably the only thing that really matters.
Yes, 95% of the exposure to the market happens by just getting it into the MLS. So does it really make sense to spend your time doing much more as far as advertising the home? There's something called the Law of Diminishing Returns.
Before the MLS, it mattered what company a seller used because it was the agents in that company that went out there and maybe talked up the home at sales meetings and such. It was important to have a company with a hefty advertising budget.
But now, the MLS feeds it to the internet sites automatically and for free, or almost free. So it's pretty much a waste of time and money to do much else, as far as advertising with the hopes of actually getting the home sold.
All the rest of the things that an agent does is for the benefit of the agent in promoting themselves or laying the groundwork for a price reduction from the seller.
Every agent knows that reducing the price is the last thing that a seller wants to do. They usually are very reluctant to reduce the price until they feel that every other angle has been tried.
The Three Things That Sell a Home
My broker made it simple. There are three things that will sell a home.
If the MLS is responsible for 95% of the exposure to buyers, it's pretty much a waste of time and money doing any other type of advertising.
The condition of the house is also key to getting the home sold. But agents all know that there's just so much that a seller is willing to do to get their home in showing shape. Even if they might be willing to do necessary repairs and clean-up, many times they just don't have the money. So eventually you have the condition of the home at a level that isn't going to change.
Homes That Are Total Dumps Will Sell at the Right Price
Which brings us to price. Price is the factor that overcomes everything else.
Everything sells at the right price. Homes that are total dumps will sell, with multiple offers, if they are priced right.
A $500,000 home priced at a 10% discount will sell with multiple offers no matter how it's marketed. Put it in the MLS with no pictures, and you'll get buyers lined up to see it if it is priced at a true discount.
The flip side to that is also correct. You can put lipstick on a pig, but it's still a pig. You can do some amazing marketing for an overpriced home, but it's still an overpriced home that won't sell.
Whatever the reason for a home not selling, eventually it is worked out by getting it to the right price to overcome whatever negatives there might be.
You might get the seller to eliminate all of the negatives that can actually be eliminated, but some things can't be corrected. The power lines in the backyard aren't going away.
Maybe the seller is just resistant to making the necessary changes. They don't trust the agent's suggestions. Sellers always think they know better. So as an agent, you try your best to get the seller to do what they can do to maximize the condition. But you can only get them to do so much.
Agents hear sellers say it all of the time “I'm not about to spend another penny fixing up this home. I've done enough. Not a penny more.”
Never Come Across as Being Negative About the House
All agents know that they have to walk a fine line. If they walk into a home and tell the seller exactly what needs to be done to get their home sold for the most money, most sellers won't believe it and will never list it with that agent, even if it is true.
Agents quickly learn that they have to say nice things about the home and the seller. Never criticize decorating decisions that the seller made. Never come across as being negative. Pet odors? Are you going to get anywhere telling your best friend that they have bad breath? It might be true. They eventually might figure it out and do something about it, but they will always look at you negatively for having told them the truth.
Many an agent who was honest and upfront about the problems that the house presented never got the listing. The seller didn't think the critical agent could sell the house because they didn't seem to like it that much. They think, how can an agent who is seeing so many negatives be able to be enthusiastic about selling our home?
So agents learn quickly to tiptoe around things even though they know it's going to hinder the sale and hinder getting the price the seller wants.
You Have to Get the Listing in Order to be in the Game
You first have to get the listing to be in the game. If you don't have the listing, you don't have a marketing platform to get more listings and more buyers. So you take the listing, warts and all, at the lowest price that the seller will agree to.
If it expires and you lose the listing, hopefully, you will have gained some other business from it.
The agent has to figure out the probability of actually getting the home sold during the usual three month listing period. If they don't think it's likely to sell and if it's unlikely they'll be able to get the seller to reduce it to a reasonable price, how much time, effort and money do you think the agent is going to invest in it?
Remember, they usually don't get a penny until it actually sells. So if it doesn't sell, all the effort and money is wasted. That's why many agents are very reluctant to spend more than $100 on a listing.
Why spend a couple of hundred dollars on professional photos and flyers if you don't think it's going to actually sell? Whatever marketing that is done, is done with the agent in mind. It's to try to get more business.
Remember, your home is a marketing platform for the agent's services. Why else would an agent have their picture on the for sale sign? Why else would the agent have their picture on the flyer? Does their picture help sell your home or does it help sell the agent?
Price Solves Everything
My broker said that being systematic about asking for price reductions was one of the biggest duties you owed the seller.
Yes, in the eyes of an agent, getting a price reduction is deemed to be a big benefit to the seller. It gets the seller one step closer to a sale.
It's like a mother giving her child some awful tasting medicine. The mother deals with the howls of resistance, but she knows that it's in the best interest of the child that she persists until the medicine is taken.
Unlike a mother, an agent can't force the seller to take the medicine. They have to persuade them by making them feel that all other aspects have been addressed.
Sellers never think that it's the price or the condition that is holding back the sale. After all, those are the two things that they actually have control over.
Stalling for Time by Looking Busy
If it isn't selling, it must be the marketing. The agent just isn't getting it the proper exposure to the right buyers. So the agent will hold open houses, send out postcards, knock on doors, send out emails to other agents. On occasion, this activity might actually result in something.
But agents don't do it thinking that it really is going to get any results. It's primarily to show the seller that they are actually doing something and are earning their commission. Rarely do open houses result in a sale but they are great opportunities to hook up with buyers or neighbors who might be looking for an agent to eventually sell their home. At the same time, they are showing the seller how hard they are working to get the home sold.
So the agent does things to bide time and waits for the seller to realize that maybe they really do need to lower the price.
It's Always a Good Time to Lower the Price
Some of the most successful agents are the ones who call the sellers every Monday and try for a price reduction.
No matter what it is, it's time for a price reduction. We haven't had any showings? That means the high price is keeping buyers away. You need to reduce the price.
We had ten showings this week but no offers? That means that the price is too high. For whatever reason, there are things that are keeping buyers from making an offer at this price. You need to reduce the price.
If the seller doesn't reduce the price, maybe the agent gets them to do something to improve the condition.
Maybe the agent can get other agents who have shown the home to give honest feedback that the listing agent was afraid to give upfront. Maybe it takes five agents to bring up the pet odor before the seller concedes that there is a problem and does something about it.
Sometimes it's just offering that glimmer of hope that gives you a little more time for the right buyer to come into the market and fall in love with the home.
Sooner or later, you get the price to a point where it will sell in whatever condition it happens to be.
If It Doesn't Close, No One Gets Paid
Along with getting the price to the correct level to invite an offer, my broker told us that our value as an agent is also to get the seller to accept the offer and then keeping the deal together through to closing.
If the seller doesn't accept an offer, there isn't going to be a closing, and no one is going to get paid. Of course, it's always rationalized in some way that getting the seller to accept is always in the seller's best interest. Something like, "Maybe they didn't get what they should have, but the seller can get on with a new chapter in their life." An agent always needs a good rationalization to smooth over a disappointed seller.
Agents Are Councelors and Therapists
In the beginning of your career as a real estate agent, you think it's about the nuts and bolts. But as you navigate through more and more transactions, you realize that your most valuable service is being an emotional counselor to your seller.
You end up being a shoulder to lean on when the uncertainties of the process begin to wear thin on the seller. You spend endless hours consoling your seller and keeping hope alive.
It's all about dealing with personalities and emotions. Sellers are stressed. They will always second guess themselves. No matter what price they get, they'll feel like it wasn't enough. Should of, could of, would of.
Many times the personalities of the buyer and seller just don't mix. Say one wrong word and you can taint the whole transaction. The wrong word can create a pissing contest. If one party feels slighted, they'll make the smallest item stand in the way of a million dollar deal. It won't be what's best in dollars and cents; it will become an issue of standing up for a principle of some kind.
Agents can easily spend an hour in the evening talking a seller down from doing something stupid. Something they know that the seller will regret and will most likely kill the deal.
So much time is spent getting the seller to just look at their bottom line and not the specific details on how they get there. Sellers easily get sidetracked by minute details instead of looking at the big picture. They might be getting $5000 more than they ever expected but if they feel that they caved on a few insignificant items, they will feel that they lost the game.
So one of the biggest value that an agent brings to the table is being an unlicensed therapist. Sometimes one has to dig deep to uncover the real reasons sellers make some decisions. Sometimes it goes back to something about their childhood and their parents.
I went to a seminar put on by a really good real estate coach. He said that an agent needs to try to get to what he called the “red zone” by asking the question behind the question.
You keep asking why something is important until you get to the real deep-seated reason. It's amazing. Once the real motivating reason is out in the open, they usually realize it for what it is and can move on and do what needs to be done.
But many agents never get to the red zone, and deals never get done because of it.
Can't Really Market the Truth
So that was just a little insight into what a real estate agent actually does and the value they bring to the transaction.
But things like that aren't going to get the phone to ring.
Imagine if agents said:
We'll badger you for price reductions until it sells.
We spend 30 minutes getting it into the MLS; most of the rest is for show.
We use your home as a marketing platform to get more homes to sell.
We give you a shoulder to cry on.
I don't write this to be negative, and I don't want this to be taken as a dig on real estate agents. As I've said previously, real estate agents that I've worked with are for the most part very hard working, ethical professionals.
This is just the reality of the industry and what agents feel that they are compelled to do in order to stay afloat in the business.
I bring this all up so that one can focus on doing the things that actually will get a home sold for the most amount of money and not get sidetracked doing irrelevant nonsense.
What's a Seller to Do?
The two main things that a seller can control is the price and the condition. Focus on that and you will have a successful sale.
Find an agent who is good at presenting your home to its best advantage. Find an agent who is comfortable telling you the things that they know you don't want to hear. Find an agent who you feel comfortable with because it really does become personal and emotional.
Use an agent as an adviser, protector and a conductor.
Orchestrating a sale of a home is a series of little things that individually might seem trivial but when put together in the correct sequence and presentation, can make a huge difference in the final profit a seller walks away with.
There might be 100 small decisions along the way. If you just make each one of those small decisions 1% better, you end up with a huge success. The flip side is also true. A 1% worse decision multiplied by 100 will result in failure.
As far as the Activerain contest,
What do you wish you had known the very first year you were in the business that cost you lost business or income?
I wish that I knew human nature better. People don't always say what they mean. Always trust actions more than words.
Was there ever a time you questioned whether you had made the right choice of being a real estate agent?
I've always questioned whether I made the right choice. I'm a natural introvert. I'm not supposed to be good at this stuff. But I found that I really don't have to sell like the stereotypical salesman. I just have to say the truth and somehow that is enough to get enough business to make a good living.
What events caused you to stick with it and succeed?
It pains me to see how sellers are not given the truth that they need to get their home sold.
It pains me to see the public believe in gimmicks such as the "Guaranteed Sale" Program.
It pains me to see sellers accept mediocrity and incompetence.
What are 3 things you have learned along the way that have positively affected you and helped improve your real estate business?
I have a long list but I'll share the ones I feel are most important.
Always tell the truth.
Always trust your initial gut feeling
Always look at it from the perspective of the buyer or seller.
You'll never know the real reasons for people's actions. Accept that and move on.
Be willing to say no and walk away
No one is perfect. Accept responsibility for any screw-up and do what is needed to make it right
Care for clients as if they were part of your family
Never split the difference
Never lose your temper
Quit talking and just do it
Doing one thing well is better than doing ten things half way
Address a negative situation head on. Hiding from it only makes it worse.
Don't wait for perfection before you try something new
The way presents itself only after you get started