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I Mean Business

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I Mean Business

What is a "top producer"?  How is it defined?  Why would anyone care?

Some would say if you are in the top 10% you qualify.  I set the bar higher because the bottom 90% is doing so poorly.  To be in the top 1% – of all agents in the United States – you would need to sell about 40- 50 houses a year.  The first year I qualified I sold 38 houses.  At 40 – 50 sales in a year you would probably always be in the top 1% in your area and in the country.

Why does it matter?  Why have you seen me mention so many times, "what top agents do"?  It certainly isn’t to suggest that someone doing less or something different is in any way "wrong".  There are many many ways to approach this business and anything that is working can be defined as "good".  To me it has to do with systems (successful methods).  There are some top agents that have very poor systems and handle their business by taking each particular situation, each escrow and just "glowing it right".  Through sheer intention and desire, making it close.  Forcing the deal together.  These agents do not have a stable business but have a temporary perch they will soon fall from.  When I think of "top agents", for me, it is really shorthand for "has workable systems".  Most importantly, top agents who are stable top agents spend very little energy "glowing things right" with regard to procuring new business.  Without exception, they have exact and specific methods they apply again and again and again – and get the same predictable results each time.  They have a system for getting business.  They do not depend on: lucky breaks, caught a good one, happened to meet a guy who is ready to buy, didn’t expect it to happen but it did sell and close.  As I personally spent the first twelve years of my real estate career depending exclusively on lucky breaks, happening to catch a good one, etc. – I am very familiar with how that works, as well.

During my first twelve years in real estate all of my deals – each and every one – came about as sort of a fluke.  If I had arrived just 15 minutes later, I might have missed it.  If I hadn’t driven down that street I wouldn’t have seen the guy in his front yard by a FSBO sign and wouldn’t have stopped to talk to him.  I discovered that I could get business from almost any activity.  Just about anything could produce a deal or two.  But while striking up a conversation with the guy behind me – while playing goofy golf, or chatting with someone in line at the drugstore or a movie theater could produce business, it wasn’t a very predictable method.  It is this point alone – a predictable method of producing new customers – that separates the top agents from the pack.  This is what makes the difference between having a business and having a job.  It was in 1990 I started to really make that transition from hoping for a deal to the continuous creation of deals (developing workable systems).

So when I hear someone say, "I got a deal from twittering", "I met the client at a Kiwanis meeting", "I knew them from church", "We golf together", "The neighbor really liked my custom yard sign", etc., to me that sale is in the category of a fluke.  I mean no disrespect.  That is not to say it didn’t happen or will never happen again but that it is not a controllable event.  I can’t go to enough Kiwanis meetings to get all of the business I want.  I can’t happen by enough golfers to support myself.  During those lean years I did have "miracle escrows" that truly seemed like a gift from heaven at the time.  And I was grateful too.  But I was also determined to eventually get to the miracles as usual level.  That required workable systems.

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at nohasslelisting.com and number1homeagent.com.

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13 Comments

13 Comments

  1. Mike Price

    March 13, 2009 at 2:08 am

    Russell,
    What percentage of brokers would you guess use any sort of formalized tracking system for analyzing lead sources? At an agent level?

    When you finally created and implemented a business system, did you put into place your own tracking system or did you use something off the shelf?

  2. Jim Gatos

    March 13, 2009 at 8:23 am

    For tracking systems, you can get them from Mike Ferry, Floyd Wickman, David Knox, and others, I’m sure.

    Keller Williams has tracking systems built into their intranet. Very very good if it’s (ahem) used…

    That’s the key. I’m glad Russell wrote this post.

    At a “turning point” seminar, Brian Buffini said something I’ll never forget. He said something to the effect that in real estate, average is pretty much “slow death”. You can’t make it in real estate being just “average”… Now, you don’t have to be a mega producer, but you shouldn’t strive to be “average”. Being “average” in real estate is having 3-7 sales a year. Look over the “average” statistics from NAR for ANY given year. Is that REALLY want YOU want.

    You don’t have to be number 1. As my personal favorite, Floyd Wickman says, “It’s the SECOND mouse that gets the cheese!”…

    Another funny thing Floyd said once was something to the effect was to envision a cemetary with your tombstone.. Would you want it to say “Here lies Joe Mama.. He “just got by..”

    LOL..

    I think honestly, Predictable systems should be adopted SUPPLEMENTED by “hit and miss” strategies…

    Hell, what do I know?

    Jim

  3. Leo Orzhel

    March 13, 2009 at 8:49 am

    Russ,
    I really enjoy reading your blogs and the way you cut through the chase. Chasing deals is a far cry from having a business and it will ultimately distroy you. Thank you for your words of wisdom.

  4. Matthew Hardy

    March 13, 2009 at 1:08 pm

    Russell is one of the few real estate practitioners who really treat their business like a business. He is able to provide consistent high-level service to his clients because nothing is left to a whim. And, whereas I mute most commercials, I don’t with Russell’s. His genuine care and appreciation for the client comes through clearly – because it’s real.

    The boom times taught many that transactions could be picked off a tree. The current climate is helping some to realize the value of Russell’s point of view. He’ll always be a tough man to catch, but you’ll be better for trying.

    As for systems, here’s a good question to ask yourself: are your data and methods honed to the point where you could sell your business if you wanted to? I’ve seen this happen, and to the seller and buyer both, it’s a thing of beauty.

  5. Brian Brady

    March 13, 2009 at 6:43 pm

    “I can’t go to enough Kiwanis meetings to get all of the business I want.”

    I might suggest that you can find all the profit you want from Kiwanis clubs. Work with me on the metrics here, Russell.

    MREA says 1 out 12 “mets” result in a transaction annually. If you’re meeting and marketing to 500 people a month, wouldn’t that yield in 40 or so transactions?

  6. Missy Caulk

    March 14, 2009 at 8:10 am

    I track all my sales on an excel sheet, so I know my numbers pretty much all the time.

    I track sales, year to year and compare the quarters.

    Everything we do is marketing and face to face, being involved with our communities is a biggy.

    My past clients and or friends, co-workers of past clients and sphere use to account for 85% of my business.

    Since most folks quit moving up to bigger and better in Mi due to the economy, I had to go find those moving here due to jobs transfers.

    Now it is 58% internet of all closings.

  7. Erion Shehaj

    March 15, 2009 at 5:15 pm

    Wait a minute! Top 1% is 40-50 houses a year?!
    Does that have to be houses you listed, or 40-50 sides a year (buyers or sellers)?

    I might have been in the Top 1% this whole time and I didn’t even know it 🙂

  8. Russell Shaw

    March 15, 2009 at 7:51 pm

    40 to 50 houses a year in CLOSED sales would put you in the top 1%.

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Coaching

Disputing a property’s value in a short sale: turn a no into a go

During a short sale, there may be various obstacles, with misaligned property values ranking near the top, but it doesn’t have to be a dealbreaker!

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magic eight ball

It’s about getting your way

Were you on the debate team in high school? Were you really effective at convincing your parent or guardian to let you do things that you shouldn’t have been doing? How are your objection-handling skills? Can you flip a no into a go?

When working on short sales, there is one aspect of the process that may require those excellent negotiation or debate skills: disputing the property value. In a short sale, the short sale lender sends an appraiser or broker to the property and this individual conducts a Broker Price Opinion or an appraisal, using special forms provided by the short sale lender.

After this individual completes the Broker Price Opinion or the appraisal, he or she will return it to the short sale lender. Shortly thereafter, the short sale lender will be ready to talk about the purchase price. Will the lender accept the offer on the table or is the lender looking for more? If the lender is seeking an offer for a lot more than the one on the table, mentally prepare for the fact that you will need to conduct a value dispute.

Value Dispute Process

While each of the different short sale lenders (including Fannie Mae) has their own policies and procedures for value dispute, all these procedures have some things in common. Follow the steps below in order to conduct an effective value dispute.

  1. Inquire about forms. Ask your short sale lender if there are specific forms that you need to complete in order to conduct a value dispute. Obtain those forms if necessary.
  2. Gather information. Your goal is to convince the lender to accept the buyer’s offer, so you need to demonstrate that your offer is in line with the value of the property. Collect data that proves this point, such as reports from the MLS, Trulia, Zillow, or your local title company.
  3. Take photos. If there are parts of the property that are substandard and possibly were not revealed to the lender by the individual conducting the BPO, take photos of those items. Perhaps the kitchen has no flooring, or there is a 40-year old roof. Take photos to demonstrate these defects.
  4. Obtain bids. For any defects on the property, obtain a minimum of two bids from licensed contractors. For example, obtain two bids from roofers or structural engineers if necessary
  5. Write a report. Think back to high school English class if necessary. Write a short essay that references your information, photos, and bids, and explains how these items support your buyer’s value. This is not something that you whip up in five minutes. Spend time preparing a compelling appeal.

It is entirely possible that some lenders will not be particularly open-minded when it comes to valuation dispute. However, more times than not, an effective value dispute leads to short sale approval.

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Coaching

Short sale standoffs: how to avoid getting hit

The short sale process can feel a lot like a wild west standoff, but there are ways to come out victorious, so let’s talk about those methods:

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short sales standoff

What is a short sale standoff?

If you are a short sale listing agent, a short sale processor, or a short sale negotiator then you probably already know about the short sale standoff. That’s when you are processing a short sale with more than one lien holder and neither will agree to the terms offered by the other. Or… better yet, each one will not move any further in the short sale process until they see the short sale approval letter from the other lien holder.

Scenario #1 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they will proceed with the short sale, and they will offer Bank 2 a certain amount to release their lien. You call Bank 2 and tell them the good news. Unfortunately, the folks at Bank 2 want more money. If Bank 1 and Bank 2 do not agree, then you are in a standoff.

Scenario #2 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they cannot generate your approval letter until you present them with the approval letter from Bank 2. Bank 2 employees tell you the exact same thing. Clearly, in this situation, you are in a standoff.

How to Avoid the Standoff

If you are in the middle of a standoff, then you are likely very frustrated. You’ve gotten pretty far in the short sale process and you are likely receiving lots of pressure from all of the parties to the transaction. And, the lenders are not helping much by creating the standoff.

Here are some ideas for how to get out of the situation:

  • Go back to the first lien holder and ask them if they are willing to give the second lien holder more money.
  • Go to the second lien holder and tell them that the first lien holder has insisted on a maximum amount and see if they will budge.
  • If no one will budge, find out why. Is this a Fannie Mae or Freddie Mac loan? If so, they have a maximum that they allow the second. And, if you alert the second of that information, they may become more compliant.
  • Worst case: someone will have to pay the difference. Depending on the laws in your state, it could be the buyer, the seller, or the agents (yuck). No matter what, make sure that this contribution is disclosed to all parties and appears on the short sale settlement statement at closing.
  • In Scenario #2, someone’s got to give in. Try explaining to both sides where you are and see if one will agree to generate their approval letter. If not, follow the tips provided in this Agent Genius article and take your complaint to the streets.

One thing about short sales is that the problems that arise can be difficult to resolve merely because of the number of parties involved—and all from remote locations. Imagine how much easier this would be if all parties sat at the same table and broke bread? If we all sat at the same table, then we wouldn’t need armor in order to avoid the flying bullets from the short sale standoff.

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Coaching

Short sale approval letters don’t arrive in the blink of an eye

Short sale approval letters may look like they’ve been obtained simply by experts, but it takes time and doesn’t just happen with luck.

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Short sale approval: getting prepared, making it happen

People always ask me how it is that I obtain short sale approval letters with such ease. The truth is, that while I have more short sale processing and negotiating experience than most agents and brokers, I don’t just blink my eyes like Jeannie and make those short sale approval letters appear. I often sweat it, just like everyone else.

Despite the fact that I do not have magical powers, I do have something else on my side—education. One of the most important things than can lead to short sale success for any and all agents is education.

Experience dictates that agents that learn about the short sale process
have increased short sale closings.

Short sale education opportunities abound

There are many ways to become educated about the short sale process and make getting short sale approval letters look easy to obtain. These include:

  • Classes at your local board of Realtors®
  • Free short sale webinars and workshops
  • The short sale or foreclosure specialist designations

As the distressed property arena grows and changes, it is important to always stay abreast of policy changes that may impact how you do your job and how you process any short sale that lands on your plate.

The most important thing to do is to read, read, read. Follow short sale specialists and those who blog about short sales on AGBeat, Google+, facebook, and twitter. Set up a Google Alert for the term ‘short sale’ and you will receive Google’s top short sale picks daily in your email inbox. Visit mortgagor websites to read up on their specific policies and procedures.

Don’t take on too much

And, when you get a call from a prospective short sale seller, make sure that you don’t bit off more than you can chew. Agents in most of America right now are clamoring for listings since we are in the midst of a listing shortage. But, if you are going to take on a short sale, be sure that it is a deal that you can close. And, if you have your doubts, why not partner up with a local agent that can mentor your and assist you in getting the job done? After all, half a commission check is better than none!

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