The real estate market has changed, the fundamentals of a successful business haven’t

By Dirk Zeller

There has been a lot of change that we all have experienced in the last few years. While change is a constant, the depth and breadth of the change has been historic. With all the change and challenge, foundational truths still apply in the real estate business.

Sales is an odds-based business

I realize that many agents don’t view themselves as a salesperson. If you want to replace service or professional representation service for the word sales, OK. There are odds in any business. The odds for some buyers has become extremely low in today’s market. Buyers who need closing costs from the seller, who have low money down or who have zero dollars they can allocate for appraisal gap coverage are having a tough time. You are investing your time, effort, energy and expertise in a buyer client whereby presently, the odds might be heavily stacked against them. I am not advocating to not work with them. I am advocating monitoring your buyer pool to make sure all your clients don’t occupy this category.

Wants and needs don’t change the odds

Just because your client wants it or needs it doesn’t change the odds of them securing it. There are untold buyers currently struggling to move to the new market realities. They want to buy their home at the pricing of 6 to 12 months ago. They think if they just wait, diligently look and are patient, they will find the “proverbial” needle-in-the-haystack home.

We need to select our clients with a heart of service, as well as a head for business. We are in a service-based business. The purpose of a service-based business is to provide outstanding service for compensation. The second part at times is omitted. The “for compensation” is important. The two are linked together and occur in proportionality to the odds of the marketplace and the buyer. With a buyer that has low odds due to marketplace conditions and their individual buyer conditions (low down, type of loan, no appraisal gap funds, etc.), your earning compensation is equal to or worse than their individual odds. The odds must be evaluated logically with our head while we serve them with our heart.

Client selection plays a more important role in achieving success in today’s marketplace. It does pain me to write that, because I wish for all that want to become homeowners to become so. Due to the nature of the present real estate marketplace, low inventory conditions, escalating prices and, now, interest rate increases, the field of successful homebuyers has narrowed. As we all know, our income is attached to their successful outcome. As a businessperson, I have to use my head and my heart at all times with prospects and clients.

Murphy’s law will always get a portion of your output

Murphy’s law — whatever can go wrong will go wrong — is alive and well in the world today. Plan for Murphy to take a portion of your business. Not to think of that as fact is to be naïve. The sales ratios in the real estate business have changed. Historically, if you wanted three buyer-pending transactions each month, you would need to be working with about six active, motivated, ready-to-buy clients. About 50% of your buyers would find what they wanted in 30 to 45 days in a normal inventory market.

In today’s market that timeframe for some is longer. That has caused the ratios of 2:1 to increase to 3:1, maybe even 4:1 or 5:1 in most markets. That requires us to alter our formulas. You might need nine buyers or even 12 active buyers to secure three pended deals a month. The sales ratios have changed, so we must adapt to the new ones if we are to achieve successful outcomes for our clients and ourselves.

The more challenging the market conditions, the more truth is revealed if we are observant

Market difficulties shrink the allowable margins to success, narrowing the lane of opportunity. Disruptions in the market don’t remove opportunity; they just narrow the variables and tighten the shoulders of the road. For example, if you are inconsistent or non-existent in lead generation activities in your business, today’s more challenging market conditions will reveal that a lot sooner. We must be observant and strategic to marketplace changes, conditions and prospects’ and clients’ odds of success. The market demands improvement of our business, skills and strategies and habits.

Dirk Zeller is the CEO of Real Estate Champions.

Supercharge relationship-building by mastering your CRM

By Marki Lemons-Ryhal

As real estate professionals who spend A LOT of time having conversations and building relationships, there’s no way we can remember all the details we accumulate without a little extra help. So, is there a simple way to keep track of everyone we connect with?

Yes, a customer relationship management system (CRM) allows us to do all this and more. Why is a good CRM so necessary? How can we use the information we have to make us unforgettable?

Build rapport by identifying the F.O.R.D. of your ideal client. F.O.R.D. is an acronym for family, occupation, recreation and dreams.

Every day people share their F.O.R.D. with the world via social media, email and text messaging.

The key to growing your real estate business is understanding your clients’ pain points and desires. Successful marketers don’t have to tell us what they’re doing. Instead, the results they get in business are evidence of a foundation of value, systems and intention.

Add each person’s F.O.R.D. to your customer relationship management system daily.

Idea: On Facebook and LinkedIn, spend one hour Monday through Friday identifying each person’s birthday, promotions, accomplishments and favorite activities. Implement an 8 x 8 campaign where you make eight people feel special by 8 a.m. daily via email, messaging or mailing them something special.

To earn $100,000 per year, you need to add 2,880 contacts to your customer relationship management system if your average price point is $250,000. These actions statistically will net you 20 closed real estate transactions. In real estate, it’s so easy to get bogged down by distractions, inefficiency and a lack of boundaries. When we’re not getting the results we want, our daily work routine is the first area we need to examine.

To accomplish your six-figure earning goals, you need to add eight new contacts to your CRM or connect in a meaningful way to the contacts that are already in your system daily. Separate the essentials from what’s not moving the business forward to become effective and unstoppable.

Every time you generate a new lead or communicate in a meaningful way one-on-one with a contact, add or update the contact in your CRM and place a check mark in the box below that corresponds with the week and day of the month.

Many real estate agents believe that they have to be open 24/7 to succeed in our profession. They’ve bought into the lie that building a competitive business requires agents to give up all their time. Fortunately, this doesn’t have to be true for us.

It’s possible to have a thriving business without 80-hour weeks and burnout by choosing to work by relationship and referral. Agents who grow by nurturing their database dictate their schedule, work manageable hours and are better equipped for market shifts.

  • Why your social circle isn’t doing business with you

If we want our friends and family to do business with us or refer people to us, we have to get them to see us in a real estate context.

  • How to choose the right CRM

You need a place for your information to live so you can take care of your people; it doesn’t need to be more complicated than that.

  • The limiting belief agents have to overcome

We don’t have to be available 24/7 to make our clients feel like we’re doing a good job. But if we prove ourselves to be valuable, people will respect the schedules we set.

Marki Lemons-Ryhal, the owner of ReMarkitable LLC, is a licensed managing broker, best-selling author and inducted into the REBAC Hall of Fame. She holds a Bachelor of Science in management from Chicago State University, a Master of Business Administration from Saint Xavier University and 64 real estate-related licenses, certifications and designations.