Failing to Build Your Real Estate Practice as a Business
Most real estate agents launch their careers with only two objectives – To achieve a certain level of income and to enjoy the freedom of self-employment. Only a rare few start out with the idea of building a business that will grow for years and that can be sold to someone else in the future.
If you adopt a business owner’s mindset, you’ll derive far greater benefits from the time, effort, and money you invest in your real estate practice. The difference between how a single agent works and how a real estate sales business works boils down to this – To build a business, you need to design and perfect a set of business systems. In addition to the sales and customer service programs that every real estate agent needs to adopt in order to build a real estate business, you need to add systems that define how you hire effectively, train consistently, hold others accountable, and establish, track, and monitor the performance of the agents who are part of your business team.
It has been seen that a larger agency is more successful since
- Companies with large number of agents have a bigger network of clients
- Larger companies enjoy economies of scale, allowing them to provide a greater degree of service at a lower price per agent
- Due to their size, larger agencies can negotiate better rates for their advertisements from various newspapers and channels
- Due to their size, larger agencies can negotiate better rates from new apartment builders
Poor Financial Management
Too many agents enter the real estate arena with no business background, a lack of previous self-employment experience, and a play-now-pay-later mindset. Most of them end up in big trouble financially. They overspend on business expenses and then compound the error by overspending on personal expenses as well. They overplay even in the real estate market, by investing on leverage.
Follow these few simple steps to avoid the financial problems that plague many agents
- Establish a business current account: This separate account ensures that you don’t mix your personal and business funds and expenses.
- Deposit your commission checks into your business current account and then pay expenses — including payments to yourself — with business revenue.
- Create a business rainy-day fund: At the same time that you transfer 20 percent of your commission check to your tax savings account, transfer 10 percent to your business savings account. If you hit a slow month, you’ll have a reserve to draw from.
- Set up a retirement plan: Commit to financial success by planning for your long-term security. Each time you receive a commission check, direct 10 percent to some kind of savings scheme.
- Pay yourself: Set a personal salary amount that you draw monthly from your company. Pay yourself enough to set aside another 10 percent into your personal savings account.
- Take advantage of tax deductions: Being a self-employed business owner delivers many opportunities to create wealth. Meet with an accountant to figure out which expenses are deductible. Then keep careful track of expenses and deduct every one that you can when you complete your tax return.
Not Buying Enough of What You Sell
Significant wealth in the real estate arena comes not from the sale of real estate — though commissions from sales certainly help — but from your own acquisition and ownership of properties. Inquire and you’ll quickly discover that the wealthiest agents believed their own sales pitches and purchased properties regularly and consistently. As you build a successful real estate sales business, use your cash flow to purchase the real estate that will make you wealthy.
Poor Use of Time
Your time is your most precious finite asset. A finite asset is something that you cannot grow or expand dramatically in total volume. You have the option of better use, but you can’t increase the amount. We all have 24 hours in the day with no hope for acquiring a 25th. Discover ways to control your time and you’ll be able to control your life, your income, and your wealth.
Invest in Yourself
Too many agents spend a fortune on what they wear and what they drive and spend nothing on the improvement of their skills and mindset.
Look at successful companies and you’ll see that they invest a small fortune annually on what’s called research and development, or R&D. They spend this money knowing it will constantly improve the products and services they offer the public. As a real estate agent you should do the same. Luckily, though, your R & D takes the form of self-development programs that improve your skills and mindset, and those hardly cost a fortune.
Throughout the year, enroll in courses, buy books, get involved in coaching, and listen to audio programs to improve your skills and your business success.
Making Yourself Available to Prospects and Clients 24-7
The most respected professionals are not available to their clients round-the-clock. They set normal, professional work hours, conduct business in their offices (where clients come to meet them), and make after-hours appointments a rare exception.
Doctors, dentists, lawyers, accountants, and financial planners are service professionals, yet none make themselves available 24 hours a day, 7 days a week. In contrast, most real estate agents follow a work schedule that runs practically round-the-clock. What results from this workaholic approach is a loss of momentum and eventual burnout.
Give yourself a break. Set working hours, manage your days, schedule personal and family time each day and week, and commit to vacations that allow you to restore your energy and enthusiasm. Remember, real estate isn’t your life.
Failing to Communicate Frequently
The biggest complaint of real estate clients is the lack of agent communication. The solution is to establish a great communication system that you and your clients both buy into. As you launch the client-agent relationship, explain the frequency of communication you plan to have with your clients, and check to make sure that level of communication meets their needs.
As your clients’ deal becomes a pending transaction, reconfirm the level of frequency and method of communication they prefer. Some people only need e-mail updates. Others prefer the personal connection that a phone call offers.
Lastly, don’t quit communicating with your clients after your commission cheque is cashed. Ongoing communication wins you clients for life and provides the kind of endorsements that lead to new clients and sales.
Being Inconsistent
This is the old tortoise versus the rabbit lesson. In real estate, as in most other endeavors, consistency leads to larger-than-expected rewards. However, if you’re inconsistent, your results will be notably disappointing. Inconsistency derails success faster than any other factor.
To a real estate agent, the consistent activities of daily prospecting, daily lead follow-up, daily practice of sales skills, daily personal development, weekly planning, and scheduled evaluation time create exponential return compared to the effort invested. On the other hand, occasional bursts of activity create work with little payoff.
Ignoring the Fundamentals
The fundamentals of real estate sales success aren’t exciting or exhilarating, and for that reason it’s easy to get sidetracked by new ideas that seem more interesting and innovative.
Consistent prospecting, client communication, transaction management, and flawless property marketing are hardly flashy, and they never make headlines or draw crowds. In fact, on some days these activities are downright boring. Meanwhile, sales gimmicks generate enthusiasm, attention, and publicity even if for just a quick moment in time.
Agents seeking public recognition can count on being rewarded by flashy promotions, but they can’t count on making more money.
Talking Too Much, Listening Too Little, and Then Going Silent
When working with prospects, customers, and clients, follow this advice: Use your mouth primarily to ask questions. Contrary to popular belief, the person asking the questions — not the person talking or answering questions — is really the person in control. After you ask a question, accept and enjoy the pause and silence that precedes the response. Your power as a salesperson is intensified if you’re willing to withstand the temptation to barge into the silence that follows your question. There is an old sales adage, “Whoever talks first, loses.” It basically is saying that when you ask a question, be quiet. This is especially true if you ask a closing question or for the order. Be quiet and let them sign the contract.
