I’ve been busy. My thoughts about real estate have been building up.
That’s a good thing, being busy. But when you’re in sales, when I’m in sales, I always think “how long will it last?” I’m not one to rest on my laurels. I’ve got to keep the funnel full, I’ve got to keep on striving and learning and growing. If I don’t do that, one of my competitors will take my business, eat my lunch and kick my ass.
I’m all about mixing metaphors. It’s the way I write. Free writing, free association. Getting it all down.
This morning I was up early reading the news and the blogs. Rob Reid blogged about his lifetime in journalism. Maple blogged about her year as working as a part-time barista. Both posts were reflective in nature.
I’m not really one to reflect, not in a nostalgic kind of way anyway. I will look back at the past and try to find the path, the decisions that lead me to where I am. The path meanders, but all paths do when you put one foot in front of the other. Have you ever noticed a path across a snowy field? It is hardly a straight line.
This blog post isn’t going to be nostalgic. It probably won’t even be useful. It is a kind of mind dump, a look at the map as I enter the clearing and get my bearings again.
If I were to start my real estate career over again, I would join a team. There is lots to learn in the real estate business and the only way to do that is to put in the hours (and hopefully get some mentoring). You have to learn by doing, at least I do. Malcolm Gladwell’s book Outliers pointed out that the great sports stars of our day like Tiger Woods and Wayne Gretzky practiced 10,000 hours before they got great.
How do you get to Carnegie Hall?
Practice, practice, practice.
I have an assistant now, Judy. She is already invaluable to me. It doesn’t mean that I am working less. It means that I am using my time doing the hard stuff (and hopefully more blogging, which is how I got to my current level of success). I’m still practicing.
The fear of loss
I went to free home evaluation the other day. The potential home seller was thinking about selling his house but didn’t want to lose money doing it. He had bought the home 16 months ago and then two months after that, took a job in Toronto.
Commuting was killing him.
But he loved the house. And, he did not want to lose money. He didn’t want to lose money. I know I said that three times.
I asked him how much he wanted to list it for.
He said $400,000.
But you bought it for $363,500.
How do you know that?
It’s public information.
Oh $#!%. Everybody know that?
I know it and you know it.
So I tried to help him. What have you done to improve the place since you bought it.
I bought a new washing machine. The old one broke.
I think he is going to rent it out for a few years so that he can sell it for enough to cover the costs of selling it without losing money. Not losing money is his main motivator. That is the fear of loss.
There is a sales rule about motivation. It goes like this:
There are two major motivators. The fear of loss and the opportunity for gain. Of the two, the fear of loss is the much stronger motivator. My potential client in the blurb above forgot that the commuting was killing him. That was the opportunity for gain.
Life is full of decisions. Not doing something is actually a decision. I used to say that buying a house is a process of elimination followed by a final compromise.
I still say that.
Whereas home sellers are afraid of selling for too little, home buyers are afraid of making a mistake. They get paralyzed by fear.
Even if you have a house built for you, you’re going to want to change things. You’re not going to get it 100% right.
I work on an 80% rule now. (I think I learned that from Tim Ferris). If the home, school and neighbourhood meets over 80% of your requirements and you’ve seen enough homes, over enough time to know this, then you are going to have to cross the threshold, you are going to have to bite the bullet, pull the trigger, shit or get off the pot.
3 nos rule
Last summer I was working with a client that had a three nos rule. If he didn’t like three things about the house, then he would cross it off the list and bar it from any further consideration.
That’s a good rule. I like rules. That’s one for my 365 More Rules about Real Estate.
Leave a card. Turn the lights off. Don’t let the cat out. Allow 24 irrevocable time for offers. Include Schedule B interest clause.
Maybe these should be preprinted in the realtor notes, on all listings.
What sort of message are you sending to potential home buyers and their agents with this sign?
There is no such thing as a half bath. It is either a bathroom or it isn’t. I can’t say powder room with a straight face. It’s two-piece.
Sliders are little hamburgers popularized in Northern Ontario, not glass doors leading to a deck or patio.
Immaculate. Yeah. The Virgin Mary was actually God’s second choice.
Stunning. Is there a condo unit anywhere without a view that is stunning?
Newish = old.
Listings are a realtor’s product
Real estate brokers say that an agent’s goal should be to have and maintain five listings. If an agent works the listings well, they would generate more listings. Listings also generate buyers who call on the listing or visit the listing either through making an appointment or by visiting open houses. Listings lead to other neighbourhood sellers. Potential home sellers see the signs, or visit the open house and subsequently list their home with that agent or brokerage too.
Listings are part of the big real estate machine. If you can maintain a few listings, you can get a discount when you commit to advertise a half page every month in a glossy real estate magazine.
Having listings is seen as proof that you can sell houses. Many websites give the advice to ask the question when interviewing agents, “How many listings do you have?”
Listing are countable. Listings are future sales. That’s why brokerages like listings. The majority of listings sell. A listing is worth 1.2 sales.
Some agents like to hold onto listings because it gives them something to work. They can do open houses. They can advertise. It gives them something to talk about. They can brag around the office about all their listings.
I don’t agree with most of that. Our job as Realtors is to sell listings, not to have listings. Listings are not the Realtor’s product. Knowledge and knowhow are the Realtor’s product.
I’ve succeeded in my career and in life by doing the opposite of what I “should” do. I didn’t get a job after finishing university – I went backpacking around Europe. Then a few years later, I gave up an entry level job and moved to Taiwan to study Mandarin. My grandmother was so angry with me for giving up my “meal ticket”. She was very conservative.
Opposite George is not conservative. He goes against conventional wisdom. My last broker thought real estate blogging was a complete waste of time. He was wrong about that.
If others are doing it, do something else. That’s the way I like to operate. Real estate is all about carving out a niche for yourself after all.
Buyers are better
The real estate industry is geared to go after listings, but working with buyers is better. Here’s why:
1) There are a lot more buyers than sellers. They are easier to find. They often find me.
2) I develop better and deeper relationships with buyers than sellers. I often spend a lot more time with buyers, showing houses, making offers…they are moving toward something whereas sellers are moving away.
3) Buyers soon or eventually become sellers.
4) Buyers give referrals. With sellers, it is more of a business relationship. They resent having to pay commission. It is a transactional relationship not a consultative one.
5) Opposite George. If the brokers and the industry mantra is “list to last”, then buyers are an open road to good business.
6) Buying is easy.
7) Selling is hard.
FSBOs are amateur hour
One of my clients last week wanted to put in an offer for a house that was for sale privately. We toured it together. The owner was quite nice. The house was overpriced, as FSBOs often are. The MLS information indicated that the units in the condo complex took a long time to sell (probably because of the high condo fees). But I work with FSBOs. It’s more work for me but my client wanted to offer aware of the information just noted above.
It didn’t go well.
The problem with FSBOs* are many
1) They think because they have sold their old Xbox console on Kijiji they can sell a house. They can’t. Maybe they can but it won’t be that easy.
2) They have paid for a so-called real estate service. They have bought into the dream of saving the commission. They won’t. They have paid their money and now they are doing all the work. They have taken the first step down a slippery slope.
3) They don’t trust agents. Maybe they have a good reason for that. Maybe they are just not that trusting. Maybe they should trust a little more. Truth is, buyers don’t trust FSBOs. Buyers wonder what you’re hiding. Buyer’s wonder why you’re not working with professionals.
4) They don’t have a code of ethics. FSBOs probably misrepresent themselves all the time without even knowing that they are doing it. It is not a little white lie or a fib. It is a misrepresentation, and if its a big one you are going to get sued.
5) They think all realtors are rich and overpaid. The average take home for a realtor is lower than the overall average wage. It’s around $42,000/year.
6) They don’t understand the power of the MLS. It’s where 75% of all real estate transactions get started (some say 90%).
7) They are anti-agent, but they don’t know what they don’t know. They don’t have a license or years of experience, dozens or hundreds of transactions under their belt. They are making it up as they go along.
8) There is no transparency. Real estate is data driven, but FSBOs operate outside of this transparency. We don’t know how many days they’ve been on the market or how many price reductions they’ve had. We don’t know if their home is a former grow-op.
9) They spam me. Every week I get an email from a FSBO inviting me to bring my clients to their listing. When FSBOs or other agents send me unsolicited and unwanted sales emails, I call that spam. We have ways of getting the information about your listing out. It’s called the MLS.
10) They don’t make it easy. I call up a FSBO my clients want to see tomorrow night between 6:00-7:00.
Can you come to the open house on the weekend?
Why can’t we come tonight? We are out looking at other houses tonight.
I’m out of town.
Is there someone else who can let us in?
I suppose, but I don’t want to inconvenience them.
Selling a home is inconvenient.
11) Agents don’t hate FSBOs. You are a pain in the ass, but don’t buy into what the FSBO companies tell you about us. Even before the FSBO companies found a way to make money from you, FSBOs existed in the market. There has always been and will always be a small percentage of people who think they don’t need an agent to help them sell their home.
12) Here are 15 reasons why you should use a Realtor and a note to FSBO sellers.
And that is all I have to say today.
*FSBO = For Sale by Owner