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Law of Averages
Successful Realtors play to the law of averages. Agents that understand their value and in turn can articulate their value find a way to consistently get in front of as many contacts as possible. They start understanding their sales funnel very well. They know that for every measureable input (number of phone calls, each paid search dollar, door hangers placed etc.) that they are going to get a predictable output. They set their income goals and start maximizing their inputs.
All good sales people understand this. Smart sales people understand for their business to be enduring they have to be able to magnify each sale into a lifetime of relationships that lead to both referrals and further deals with the client as their real estate needs progress.
Understanding the Home Ownership Life Cycle
If you pay attention to the needs of your clients throughout the course of each home ownership lifecycle you will find many more ways of interacting and creating value for those clients. A customer’s 2nd home ownership cycle might look something like the diagram to the right. There are unique opportunities at each of these stages to solidify a customer for life. The obvious ones are on the right of this diagram. Some of the long term difference makers are on the left. Where you might not be an expert at helping in these areas, your sphere of influence certainly should be. Partnering and creating synergistic value at these stages can create an enormous amount of value for you and for your partners. Mortgage, Decorating, Moving, Construction partnerships, to name a few, if worked right can lead to an incredibly profitable career in Real Estate. Gone are the days that a calendar, a Christmas card and a refrigerator magnet will be enough to win you your client’s next transaction.
Lifetime Value of a Client
Though I’ve seen a number of conflicting reports let’s assume that the average home consumer will move 5 times during their lifetime. Agents that are looking at Real Estate as a long term career should be looking at the value each client can add to their business. Let’s do some quick math. I’ll be conservative. Assume an average purchase price of $250k each time; a 20% fall out rate each cycle and two referrals per cycle. Let’s also assume a 2.5% list side commission and a 3% buy side commission. Let’s also assume that you will double end a deal 40% of the time and will sell your seller a new home 50% of the time. If these numbers hold true, each new customer you create should be worth $75k in commissions.
This doesn’t count subsequent referrals given by referrals from this client. If you start doing that math it adds up quickly. Additionally your mortgage partner would make $66k in origination fees and your decorator/furniture partner would garner 105k in revenue. There are real incentives there for you to work from in creating these relationships. Similar numbers hold for Movers, Utility Connections, Painting, Cabinet, Drapery and Flooring contractors. That unified interaction with the client is going to be part of the next wave of value creation.
Presented in an entirely different way
So let me see if I can illustrate this a little further. $100 to the first person that can put this to a rap beat and send me the recording Glade@obeo.com .
Ode to the refrigerator Magnet
You’ve seen her—that top notch Realtor®
Who worked with a heart of gold.
She battled for every listing
And would promptly get it sold.
Seven Percent is what she charged
Her and her team were worth it.
Who could turn down her big bright smile
Or the work that came with it?
One by one she got each listing.
One by one they would sell.
At closing all seemed so happy,
A result of treating them well.
With so many buyers and sellers
Leaving the closing content,
How could they ever doubt that she
Was worth that seven percent?
Buyers and Sellers became her friend
How could they not like her smile?
Next time real estate was their goal
She’d win their hearts by a mile.
To keep them happy, lifelong friends
A refrigerator magnet would do.
Not only that, to keep the love
She’d send a Birthday Card too.
The ownership cycle starts at the listing
selling and purchasing next.
Moving, décor and living follow,
But a payday there is complex.
A Realtor’s® job is to get that transaction
The commission is paid from the split.
The dreaming, decorating and living stuff?
Her strategy—the fridge magnet.
Along came the far sighted Broker,
Who saw clients’ needs where changing.
If agents helped at each point of the cycle
They’d control more transactions–Amazing!
Armed with the tools to start buyers dreaming
They made their listings compelling
Buyers could see themselves living there
All of their listings were selling
Those tools that garnished each listing
Turned more potent after the sale.
Owners could dream with virtual tools
The Brokerage referrals took sail.
The tired Agent with a waning smile
Couldn’t believe the market inaction
That happy long list of customers
Went elsewhere for their next transaction
The moral of this Realtor poem is
Homeownership starts at the sale.
If you fail to add value after the fact
When the next cycle turns you will fail
Glade Jones is the CEO of Obeo. He has worked closely with consumers from many different angles as both a Realtor®, a homebuilder, an entrepreneur and visionary. Obeo was founded by Mr Jones as a way to help consumers see a home both for what it is and for what it could be. Obeo’s tag line “See You There” is meant to encapsulate Obeo’s mission of being the bridge between dreaming and dwelling. Obeo is that company that inspires “moving” experiences. He can be reached via email at Glade@obeo.com
By Glade Jones | | |