From the Department of Homeland Stupidity comes the newly formed Department of Bailouts. Is there now a sufficient level of converting the United States into a socialist economy for the New Regime President (aka, Treasury Secretary Paulson) to feel that his work is done?
But the above isn’t my special area of expertise. Showing fellow agents how to have a truly successful business is what I am known for. And I find it funny (odd?) when I read something that directly contradicts what I know to be true on that particular subject. It certainly isn’t the first time I’ve seen, “getting listings is no longer the best way to go” – just the first time I’ve seen it from someone I respect as much as I respect Brian Brady. He wrote:
Thirty years ago, the mantra “listers last” was all important advice to a new real estate agent. Today, inventory has been democratized through the IDX search on a website. Open houses then, are a good time to work on your SEO. A REALTOR who controls the SERPS rather than the inventory should profit best from this buyer-centric market.
Okay, fine. But can anyone name even four or five TOP AGENTS who have buyer based businesses? I personally know a couple of them. But I don’t know of any top agent who has had a buyer based (as opposed to a listings based) business who did it for 3 – 4 consecutive years. Can an agent attract buyers via the internet? Absolutely. Can it be done at a level so great that the lead agent (rainmaker) hires many many many buyer agents to handle the load? Again, the answer is a confirmed yes. However, the web traffic – at that level – isn’t normally achieved through SEO but pay per click. All of the huge buyer based operations I know of in the U.S. use PPC to attract the traffic. Not saying SEO doesn’t enter into it but the bulk of it is PPC.
How many of them have done it or will be able to maintain their performance level for even three years? I can’t say, as it (at least to my knowledge) hasn’t ever been done for that long. Which is my main point. Almost all top agents have a listings based business. I am not saying this because I have a listings based business, I am saying it because that is what I found when I went looking at the profiles and the patterns of top agents. What I observed is what caused me to decide to take the path I took – become a lister. I have never seen any confirmed data (vs opinions)that contradicts that.
There is nothing I am writing here that suggests that selling homes to buyers (as we need at least one for every listing!) is bad or should not be done. Oddly, by accident, I am one of the leading buyer side agents (based on number of sales) in the Phoenix market. I discovered that odd fact a little over a year ago. I had been working for years to find out what the “top buyer agents” were doing so I could start doing it too. Once I realized that I wasn’t way behind everyone else but ahead of most everyone I stopped trying to “discover” what I must already know. Our buyer sides came about as a result of marketing our listings. Period. Just doing the things that should be done to properly market a listing produced buyer deals. Lots of them.
An interesting post I came across about a month ago was over at the always-worth-reading, Notorious R.O.B. There was a discussion regarding possible violation of a listing agent’s fiduciary duty to have their listings on Zillow, Trulia, etc. Seems several different lawyers were of the opinion that it could possibly violate a listing agent’s duty to his seller. I disagree. Completely. From my comments to that post on Rob Hahn’s site:
There will always be plaintiffs and lawyers litigating for various reasons. I can not say any lawsuit over which websites a listing was posted on should not occur. I can say that any lawsuit brought for those reasons is without merit. It would have be based on the (erroneous) premise that inquiries from those various sites actually directly helped or caused a home to sell.
The top national site for traffic is Realtor.com. I currently pay about $4,000 a year to “enhance” my listings. There was a time that every 20 leads from Realtor.com equaled a closed escrow on *a* home. Seldom the one they inquired about. Now, the *only* reason I am on Realtor.com is to be able to say to our sellers that “we feature your home on Realtor.com”. That is the ONLY reason. In the past four years, I have never sold a listing because it was on Realtor.com, Trulia, Zillow or any of the other sites. I have sold homes to buyers because we received an email lead because we have a lot of listings on those sites. Big difference.
If you are wanting buyer leads those sites may or may not be good. If you want to “impress” your sellers, they can be very good. If you want to actually sell that house I don’t see that they make *any* difference.
All of my listings are on all of the important sites. We do receive some inquiries from nearly all of them and some of those inquiries can become actual leads where we make a sale. I’m not convinced that today’s “internet lead” is much different than the “ad call” of twenty-five years ago. The best data I had at the time was it took about 400 calls (on the average) regarding a particular home to physically sell that home to that buyer. If you only have a few listings and sometimes sell one it can seem like it does not take that many. Get a few thousand and keep track of them and you see a different picture. If this were not true I suspect that most of us would be out of a job – as most sellers could just run an ad (or today, get “internet leads”) and sell their own home.
My main points in this post are:
1. Listings were, are and will continue to be the very best method of having a stable real estate practice.
2. There are huge amounts of fantastic nonsense available from lots of different places regarding what is necessary to sell homes.
3. People who can’t see clearly will continue to disagree with point # 1 and therefore continue to attempt to sell the nonsense mentioned in point # 2 as essential.
Nonsense.
Bill Lublin
September 23, 2008 at 3:09 am
Russell;
I never understood the whole distinction about being a buyer or listing agent – my license allows me to do both. As a business person I know that working with buyers is more time consuming, so having a listing inventory is an efficient way to generate a larger pool of potential commissions. However I also know that the marketing efforts should generate buyer inquiries, and I woudl be foolish not to sell them something once I am in contact with them.
Why not do both (as you do) and make more money?
I like dessert better than most entrees, but that doesn’t mean I don;t consider both parts of a good meal.
Once again, you make sense out of chaos!
😉
Mack
September 23, 2008 at 7:00 am
I also heard the adage “List to Last” and agree with it. Listings generate buyer leads pure and simple. While a buyer may not elect to purchase the listing they inquire about that doesn’t mean that I can’t sell them a different one. As far as the internet goes, fortunately my site generates both buyer’s and sellers. I think everyone will agree that a website typically generates more buyers but there is no reason it can’t do both.
Elaine Reese
September 23, 2008 at 7:22 am
I’ve not understood why an agent would choose to only work with buyers. When it comes time for that former buyer to sell, they must find a new agent to handle the listing. Therefore, a buyer’s agent must constantly be seeking out new clients. That would seem to be a tough business to be in.
Regarding Mack’s comment that web sites … or blogs … generate more buyers, I’ve found that my blog is more likely to gain sellers since they investigate how an agent markets their listings. I’ve had sellers tell me they Googled various agents to see who does the best job. They also look to see whether the focus is on promoting the agent OR the home.
I like listings!
Jim Gatos
September 23, 2008 at 10:24 am
My blog is simply there as an experiment and because I have a feeling the world will be going in that direction; until then, I still prospect every day the ‘ole fashioned way!
Benn Rosales
September 23, 2008 at 10:43 am
Interesting concept, but I do not think Brian is wrong, rather, I believe he stops short of the mountain top in that a listing broker with 400 listings in a single city on say, Trulia, now owns the dominant market share of that single city on Trulia and on the ground. Imagine 400 results of a sellers agent to 0 of a buyers agent in a single city- who’s really winning here with a mesurable asset portfolio? The sellers agent has increased his odds of selling a unit by x’s 400 and beyond.
Now one could argue the cost to market and advertist on Zillow or Trulia is more cost effective as a farm, but I’m not sure how you can measure (as a portfolio) buyers in a market divided by the number of active agents.
Broker Bryant
September 23, 2008 at 6:10 pm
Russell, I’m with you 100%. It may very well be a buyers market BUT buyers buy….. listings!! When buyers are searching on the Internet, which 87% of them do, they are looking for….listings! A listing broker conrols the inventory and the commission. How can that possibly be a bad thing?
Brian Brady
September 24, 2008 at 9:12 am
I did a sloppy job by making that statement without explanation. I think Benn captured where I was going with this, Russell. I’ll expand upon it and link back here.
Gary McNinch
September 30, 2008 at 9:24 pm
Russell, I think you prove your point (which we’ve known for a long time), by the fact that as a huge listing agent you are also a huge buyers agent. One brings the other. Must have the inventory and methods to capture the folks who are looking at it when they raise their hand electronically. Thanks, Gary
BawldGuy
September 30, 2008 at 11:52 pm
I offer the following comment with a kind spirit, and good intent. I understand however, some will choose to take it otherwise. I’ll begin by telling a story on myself.
I’ve always been a listing agent. But there’s nothing whatsoever superior about a listing agent as compared to a buyers’ agent — except for income.
We all do things in life because what we weren’t good enough at something else. I ran long distance, because I got my butt handed to me in college by real sprinters who actually ran fast on the track, not just in their minds. I became an umpire in the NCAA because I didn’t have the skills to play amateur adult ball at the elite level. I became an investment specialist in real estate because, in the end, though a solid producer on the house side, the subjectivity got the best of me. I didn’t have what it took to deal with it.
So I did turned to what I was good at — objective analysis, numbers, research, etc. The following comment brings much of my own experience to the table.
Proffering the idea, (axiom?) listing to last, is to me, akin to positing water is wet — but I digress.
No offense intended to buyers agents everywhere, as some of my best friends are BA’s. 🙂 I’ve found, since the term was created, they’ve been somewhat sensitive to some truisms.
1. The vast majority of them choose the buyer side because they failed at the listing side. That’s not good or bad in and of itself, it’s merely fact, at least in my experience. It’s also what almost all of them told me themselves.
Let’s let down our virtual hair a minute, OK? If they tried listing, they didn’t leave it ‘cuz they were makin’ so much darned money. If they didn’t try it, why not? Why’d they quit listing properties?
Don’t we know the answers to those questions? Do we have to spell it out?
2. I’m sorry for how this sounds, but if I wanted to make six figures in San Diego without having to prospect in any way, I’d become a BA. I know a part timer here with three kids who works every year ’till she crosses the $100K mark, then takes the rest of the year off. You guessed it, she’s a BA.
In her words, (paraphrased of course) — “I show up in the morning. They give me relatively vetted leads. I call them, setting up appointments. I separate the wheat from the chaff, and usually by Halloween, I have my hundred grand.
She works an average of 10-25 hours weekly — not every week though.
True, if she was in Dayton or Grand Rapids her income would be more like $40K. But then her cost of living wouldn’t be in the same arena as San Diego’s.
3. In the end, they show up, wait for the head agent to pass out the candy, grab their share, become skilled at finding the ones with the commission filled centers, eat them until sated.
Have I missed anything?
Oh yes, it seems I have.
4. The aforementioned commission filled candy. It was handed out, not always, but surely the 80/20 rule applies, by, (you know what’s coming), a listing agent.
Michael Hampton
October 1, 2008 at 12:22 am
Thanks for the link.
As bad as the economy gets, there are always going to be people who are looking to sell their homes, or buy a home. The only thing that’s going to be different for the next few years is that buyers will have to prove they can afford the mortgage payments.
The banks should have been requiring this all along. and with respect to the present bailout, that’s where things went terribly wrong. After all, without a GSE or a Congress to bail them out, no such mortgage would ever have been offered in the first place. That’s right, the lenders knew these buyers would default and were counting on being bailed out.
This is obviously a recipe for financial disaster.
Though I admit to being wrong to compare the present crisis to a hurricane. It’s more like an earthquake, and we’ll all be feeling the aftershocks for some time to come. Of course, everyone knew this earthquake was coming, and not only failed to prepare for it, but also pretended that it would never happen.
For people who make money in real estate, I can say this: This wasn’t the big one. The big one is yet to come. And at the rate we’re going, it will be soon. I have a stack of stories of Realtors who are now homeless and living out of their cars, and I expect it will only get worse as the Alt-A mortgages begin to default in large numbers in the next few months.
The sad truth is that we’ve passed recession and are headed for a depression, if we aren’t already there. Whether the depression is short, with recovery within a year or so, or it’s prolonged for a decade or more, depends largely on what Congress does. If the bailout stays dead, then it’ll likely be short, and by this time next year we’ll be more or less stabilized (and the homeless Realtors will be back in business). If they pass a bailout, then it will only prolong the agony, and things will get even worse than you can yet imagine.
Missy Caulk
October 1, 2008 at 4:12 am
Russell, you said,
” Can an agent attract buyers via the internet? Absolutely. Can it be done at a level so great that the lead agent (rainmaker) hires many many many buyer agents to handle the load? Again, the answer is a confirmed yes. However, the web traffic – at that level – isn’t normally achieved through SEO but pay per click. All of the huge buyer based operations I know of in the U.S. use PPC to attract the traffic. Not saying SEO doesn’t enter into it but the bulk of it is PPC.”
Yes, that would be me, I went from a team of 3 to 6 buyer agents. Yesterday, I went to a Saline Chamber meeting, my past client from google spoke, I did a 5 minute interview with him afterwards on my flip. (posted on AR)
Bottom line 70% of all clicks are organic, but PPC has the highest conversion rate at 30%. Interesting to put some stat’s behind it, but I knew that in my gut and results.
Russell Shaw
October 1, 2008 at 4:33 am
Missy, when I get ready for buyer leads PPC you will be the one I want to learn from. Jeff, as usual, we agree on this subject 100%. Brian, I can’t stress the respect part enough. 🙂