The Mirror Effect

Do you ever wonder how to deal with someone else’s opinion of you – especially if it’s negative?  Not how to handle a negative or even rude opinion; early on you should have learned that politeness is how we handle almost any situation.  No, I’m asking if you have a mechanism or coping skill for those times when you discover what someone else thinks about you and it’s painful in some way?  This is not an uncommon experience and might be especially common for real estate agents!  (I’ll leave you to find your own context on that one.)  Personally, I’ve heard a number of answers to this question and they are usually similar to the one found in The Four Agreements by Don Miguel Ruiz.  While not completely representative of everyone’s answer, it’s close enough. This solution seems to lie in finding ways to ignore, become indifferent to, or otherwise devalue the offending expression.  (Mr. Ruiz, for example, points out that when someone says something about us, we should remember they are limited by their own view of the world – their own prism – and realize what they say, says a lot more about them, than us.)  This is both obvious and oblivious.  May I suggest something a little different?

The Mirror Effect
Of course other people see things through their own prism; so what?  Their opinions can not – and do not – hurt me in the least. How could they?  They are only words and, depending on your philosophical bent, the person saying them may or may not even exist!  If I feel hurt or pain (or happiness for that matter), you can be sure I am the sole cause.  I hear the words, I interpret them (through my own prism Mr. Ruiz) and I create feelings in reaction to my interpretation.  I create…  That’s where the wonderful opportunity lies.  The negative or painful (or happy) feelings are created from within.  That’s not just a difference regarding who is in control (per Mr. Ruiz and the rest, I am to develop some ability that will counter the hurt caused by the words or expressions of others – thus giving them the control and me the dependent action).  It’s more than that.  It is how we evolve and become happier and more peaceful; how we become more succesful possibly, and more free definitely.

Suppose someone says to me: “Sean, you are not much of an athlete.”  I would not be stirred by this.  I know my athletic accomplishments.  I know my athletic abilities.  I am comfortable with who I am as an athlete.  I may believe this person to be mistaken or misinformed or ignorant, but I do not take their expression personally – I am not hurt by it. They could have also said: “You are not as good an athlete as Michael Jordan.”  Again, I would not be stirred by this.  Just as I know who I am as an athlete, I know who I am not and my self worth is not dimished by this comparison.  If, however, ten minutes later this exact same person said to me: “Sean, you are a bad father,” I may indeed walk away in pain.  I am divorced and a single dad; I have doubts about whether or not I am being everything my boys deserve.  So when I hear this I may feel angry or hurt; maybe I’ll want to argue and “convince” this person how wrong he is.  Why is that?  Why didn’t I want to convince him of how wrong he was ten minutes ago when he brought up my athleticism?   This is the same person after all, yet what he thought of me as an athlete had no affect and what he thought of me as a father did.  What changed?  Obviously, what changed was my interpretation; my reaction; my feelings on the subject at hand.  The problem does not lie with other people’s opinions, otherwise I would have been hurt both times.  No, the diffence in those two scenarios is… me.

When confronted by an opinion I knew to be false (or at least believed to be false), I was not bothered.  My vision of myself, athletically speaking, was in alignment with my day-to-day experience.  But that last opinion, the one about my being a bad father, that bothered me a great deal.  Why?  Because there is a truth to it – or at the very least I fear there is a truth to it – that I do not wish to face.  This is, in effect, a mirror held up to me – and I don’t like what I see.  That’s why we can’t cultivate an indifference; the indifference would be to ourselves.  That’s why Mr. Ruiz’s answer is so off track too: how do I devalue the prism when it is my own?  I cannot.  Even if I could… what an opportunity I would miss.  What a blessing upon myself I would be throwing away.

The Opportunity!
The next time someone lets you know what they think about you and it hurts, don’t argue with them or run away from the pain or try to devalue what was said.  What’s needed isn’t a coping method.  Instead, thank them!  Thank them and mean it.  (After all, they were merely the person holding the mirror and nothing more.   Besides, this has the added benefit of messing with their heads.)  Then walk away and realize you’ve just been blessed with an intimate look at yourself.  A look we don’t like, no question; we’re face to face with how badly our internal vision of ourselves does not match our external expression of ourselves.  But if we’re honest about it, that look is also a revelation – and a roadmap to greater happiness and success.

Live a Life that POPs

Filed under: BUYERS, INVESTORS, LENDERS, LIFE THAT POPs, REALTORS, SELLERS

The NAR Backs the FHA… Who’s Backing You?

Late last week the House of Representatives passed H.R. 5072, the so-called FHA Reform Bill.  One of the major components of that bill (you can read the text of the bill here), raises the monthly insurance premium for all FHA buyers.  What does that mean to your bottom line?

 

Currently, the FHA monthly premium is .55% and the new legislation Congress is looking at will raise the premium a wopping 272% to 1.5%.  What does this mean to your buyer?  If they are at the limit of their eligibility on a $300,000 purchase price now, they would have to lower their interest rate by over 1.25% to still qualify for that house.  In other words, if the current market rate is 5.00%, it would have to drop to 3.75%!  If you think you might have trouble locating a lender who will do 30 year fixed loans at 3.75%, don’t worry; you can also lower their purchase price to bring them back into eligibility.  Their new price would only have to drop 10%!  A buyer looking at $300,000 today will be looking at $265,000 to $270.000 as soon as this bill passes. Does that change your market opportunities for the better… or the worse?

 

I understand why the NAR supports this, it keeps FHA alive and well, doing sub-prime loans for people who can’t afford to buy a home, which in turn keeps dues paying agents busy and coughing up their fair share.  But why do agents support it?  It’s going to have a devestating affect on your clients, and therefore on you.  Do you support it?  Have you let anybody know?

Filed under: INVESTORS, LENDERS, POLITICAL & ECONOMIC FOLLY, REALTORS

A Scary Thought on the (Non-Existent?) Shadow Inventory

The shadow inventory has been a topic of interest with almost every agent I talk to lately.  Most believe it is large and few understand why it isn’t in the marketplace rather than held by the banks.  Russell Shaw recently wrote about the shadow inventory being gibberish.   It is an interesting article and one I recommend reading.

I rarely disagree with Mr. Shaw, and rather than do so now I’ll simply suggest that we are talking past one another.  As I read it, he is suggesting that this inventory doesn’t exist because it is, for the most part, out there already; just not listed as REO.  He makes it quite clear, however, that he is not talking about foreclosures still to come. (Apologies to Russell for over-simplifying.)  This is where we begin to part ways.  I submit that the shadow inventory must necessarily include not only actual REOs (or REOs not listed as REOs), but the entire picture.

More to the point, if we look at all the homes that have been foreclosed on, are in foreclosure and should be in foreclosure, we are left scratching our heads and find ourselves back to the same question: why aren’t the banks taking these homes in, putting them on the market, and selling them?   (I’m talking here especially about those homes where people have stopped making their payments and continue to live for 6, 12, even more months.)

MORTGAGES IN DEFAULT
Here’s a graph courtesy of the New York Times:

Sources: Federal Reserve Board and Mortgage Bankers Association, via Haver Analytics

That is an awful lot of mortgages in foreclosure; but add to that that lower line – of mortgages in default and not yet in foreclosure – and the numbers are staggering (again, think of people staying on a year after they’ve stopped making payments).  So no matter what we call it, the question remains: What are the banks doing? Why aren’t these mortgages foreclosed?  Why isn’t this inventory on the market?

I know all real estate is local and there are plenty of areas around this country where the last thing agents want to see is more inventory.  But here in San Diego this question of  Shadow Inventory is burning a hole in people’s brains.  We are down to less than two months inventory and the effective inventory (discounting homes that are not financeable due to cracked slabs, missing kitchens, etc.) is closer to one month.  The average buyer is writing over fifteen offers before buying a home or simply walking away in frustration.  We are clamoring for this inventory; why isn’t it out there?

A THEORY
Here’s a theory I’ve been sharing over the past two months with the agents I talk to: the banks have a financial incentive NOT to sell these homes for the same reason they have a financial incentive NOT to lend money.  Let me ask you: if you could borrow money right now from the Fed at roughly 0%, and through carry trades create a very low risk return of 3%, would you do it?  Of course you would; that would certainly be more prudent than putting the money out there in relatively risky mortgages?  More important to our discussion of Shadow Inventory:  you can borrow that money at 0% so long as your balance sheet and reserves are in order. When you have a non-performing asset (like a mortgage not being paid) you can carry that for quite a while.  But, if you sell that home in foreclosure you book the loss.  I don’t know about you, but if I were a bank I would happily carry a non-performing asset and continue to borrow money at 0%.

CONCLUSION
When the Fed begins to raise rates -expected to be late 2nd quarter or early 3rd – the banks will thank them for the ride and begin clearing their books of these non-performing assets in a hurry.  If we follow this theory to its inevitable conclusion, we are looking at a scenario wherein inventory is going up (and home prices are dropping) while at the same time rates are rising.  Falling home prices and rising interest rates. Not the summer I want… and I hope to hell I am as wrong as I have ever been.

Filed under: BUYERS, INVESTORS, LENDERS, REALTORS, SELLERS

When Can I Touch and Who Should I Contact?

Yesterday in a marketing Mastermind Group with a half dozen agents, a bit of confusion arose over two of the primary principles I use when developing their marketing campaigns. The question was new to me, which usually means there are more agents out there with the same question.

Earlier, we had discussed the parameters of an effective drip campaign on those we already know: friends, family, past clients, past prospects, and so on. I call this group your S.O.I.L (Source of Income List) because we want to grow a very robust referral business from it. Gary Keller, in his outstanding book Millionaire Real Estate Agent, refers to this group as METs and suggests you touch them or drip on them 33x per year. I have “adopted” this philosophy wholesale and – as with most of the concepts in that book – find it applicable to agents no matter where they work.

A little later, I mentioned that statistically speaking, 80% of all business happens after the fifth contact. This is not real estate specific. It’s more of a universal rule borrowed from the direct marketing world. (You may notice I do a lot of “borrowing” and “adopting”… most great marketing is based on ideas stolen from another industry or product. Take a look around outside the world of real estate. You’ll be amazed how many great ideas you find.) While discussing this idea, one of the agents asked why we need to touch our sphere 33x when most of the business is going to happen after the fifth contact. Great question because it illuminates one of the basic misunderstandings in marketing.

When you drip on your sphere – touch them regularly – you are practicing Epiphany Marketing. This is very similar to branding but, in my opinion, more effective. It’s designed to generate referrals and is on the very edge of what we can accurately call “marketing”. On the other hand a true, honest-to-God marketing campaign revolves around a specific concept (hopefully a USP) and is designed to carry people along a well-lit path until they inevitably reach the decision to BUY. It should go without saying if they reach this decision to buy the product or service but don’t use you, there’s some tweaking needed in your campaign… but that’s another post entirely.

The differences in the objective as well as the process between these two campaigns should now be obvious. Epiphany Marketing is designed to buy mind share by offering information that’s useful and interesting. An out and out marketing campaign, on the other hand, attempts to buy mind focus and decision by offering specific benefits amid repeated calls to action. The former is dominated by a 33 touch system of useful drips. To enjoy an 80% conversion on the latter, however, we need to contact the same target audience at least 5 times. The confusion brought up by the agent yesterday is cleared simply by remembering the difference between touches and contacts.

Filed under: LENDERS, MARKETING, REALTORS

Embarrassing Confessions & Marketing Muscle Memory

Two quick confessions:

I can’t throw a baseball.
I’m pretty sure I just scared a potential client away.

I used to be able to throw a baseball. I played little league and pony league with some success. There weren’t any pro scouts putting radar guns on me or anything, but I played right up until high school and I was regularly elected to the all-star team. (Although looking back, it probably helped that I was much bigger than all the other kids and threatened to show them my Bruce-Lee-super-fist-of-temporary-death if they didn’t vote for me… Nah, I’m sure it was my prowess inside the foul lines.)

Anyway, in high school I discovered my true calling: shot-put. After that, I didn’t have occasion to pick up another baseball until my boys started playing just a year or two ago. That’s when I discovered that I now had all the throwing grace and accuracy of a little girl. You see, by my estimate I probably threw the shot – over the course of my competitive career – 15-20,000 times. That pretty much wiped out any skill I ever had for throwing a baseball. On the other hand, it created a near perfect shot-put technique that I can still demonstrate even now… as I enter my peak “mid 40s” athletic years. (These are a lot like my peak “mid 20s” athletic years, only everything is now done while carrying around the extra weight of a small child. It’s actually quite impressive if you think about it…) Think about it or not, I can still summon dynamic and purposeful form because of a powerful adaptation called muscle memory.

Earlier this week, as I was parking my truck, I noticed a car stopped in the middle of the street. The driver was craning her neck to jot down information from an agent’s For Sale sign. She then pulled up two houses and stopped again to take down information from another agent’s For Sale sign. By this time I was walking down the sidewalk; I veered in toward the middle of the street and approached her on the drivers’ side. “Hi,” I said, trying like hell to flash my I’m a big, cuddly polar bear smile rather than my (way too similar) I’m a big, psychotic black bear smile. Pointing back toward the two signs she had just copied down I continued, “I work with both of those agents and they’re very good. My name is Sean and I’m the best damn lender in San Diego.” Then I stuck out my business card. I had to reach pretty far through her open window because at this point she had recoiled almost to the passenger’s seat. I’m guessing I frightened her.

Will she call me for a loan? Very doubtful, but then I never expected her to call me. That’s not why I did it in the first place. This was an opportunity to perform rep #7,487. Every chance we get – as agents, as lenders, as vendors… as salesmen and women – we must practice our marketing form. We must ingrain our Marketing Memory. You may lose the ability to throw a baseball, you might even scare away a prospective client. But eventually, you’ll end up with a near perfect marketing technique and be on your way to world class producer.

Filed under: LENDERS, MARKETING, REALTORS, MARKETING, Success

Join the DOER Revolution

The $8000 first time home buyer tax credit is a mistake.  Congress should have enacted the original idea: a $15,000 tax credit.  This goes for the repeat home buyer tax credit as well.  As a matter of fact, I would like to have seen both tax credits even higher.  If you’ll maintain an open mind for the next few minutes, I hope to show you how embracing these tax credits actually creates a “win-win” situation that benefits you and this great nation.

The inherent spirit of humankind is individualistic, creative and inclined toward action.  The heart of man is inexorably drawn toward freedom: freedom to live, freedom to express and freedom to choose.  No matter what short-term damage is effected by an oppressor or institutionalized by a government, men and women will devise ways to rebuild and overcome.  Even in countries where the idea of freedom has been systematically driven out by force, we witness people taking action toward freedom.  It is a natural state that can be delayed, but not denied.  We are DOERs.  This country, the United States of America, is the poster child for taking action toward freedom.  We are a nation made up of DOERs.

So what does this have to do with the tax credit?  It empowers us with a “win-win” opportunity.  The immoral bribes to home buyers, the unconstitutional mandate for health insurance, the socialistic bail-outs, even the very destruction wrought by stimulus packages:  embrace them all!  These are all opportunities to make that “win-win” choice.  Embrace the home buyer’s credit and ACT on it!  Be a DOER.  It’s the DOERs who create the success of our society.  A nation of DOERs – of independent, entrepreneurial, action-based DOERs – will always bring about the necessary changes to save this republic.  If you desire your own success, then you desire to become a DOER.

More specifically: every action you take to help another person receive the tax credit strengthens you as a DOER while at the same time weakening the architects – the very architecture – that imposes itself upon a free people with that tax credit.  Eventually, the system cannot bear its own weight; the center cannot hold.  In taking action to embrace the tax credit you not only strengthen your potential for long-term success  by being a DOER, but you effect the implosion of the progressive state.  In other words, you hasten the collapse of an economic enemy by using its own tools of destruction and in the action of using those tools, in being a DOER, you reinforce and strengthen the very reason such a system cannot stand in the first place.  It’s a “Win-Win” proposition.

One last thought: there are those who fear taking action because they don’t know what will happen after the crash.  That’s actually a  surprisingly insignificant concern.  We don’t control outcomes and so we cannot know them.  Rather, we take action based on our knowledge of who we are, what we believe and what we desire.  We are a nation of DOERs.  If you believe that, than you have no reason to fear your desires or the brave new world after the collapse.  A more legitimate fear might instead be: “what happens to me after the collapse if I am not a DOER in a society being restored by DOERs?”

Embrace the government hand-outs and credits and stimulus spending.  Encourage an immediacy so apocalyptic that no one has time to read the laws they enact.  Take action and be a DOER… Join the revolution.

Filed under: LENDERS, LIFE THAT POPs, POLITICAL & ECONOMIC FOLLY, REALTORS, Doer, Home Buyer Tax Credit

The #1 Obstacle to Success

What keeps us from our goals?  Whether it be work, personal, health, money; what is the number one obstacle to achieving our potential?  Assuming our goals are attractive to us and within our ability, shouldn’t we reasonable expect to achieve a majority of them?  Yet most of the people I talk to say they’re not living up to their potential… yet.  But they will, once they get around a few obstacles:  once the economy improves and rates come down; just as soon as the boss recognizes that butt kisser for the incompetent he really is; after all the Holiday parties with the pies and cookies and egg nog.  You get the idea.  But the truth is, none of that stuff “out there” is the real obstacle.  That’s because there’s nothing “out there” nearly so scary or powerful or destructive to our success as we are to ourselves.  Most of us carry around a few self-doubts, maybe even a few “I can’ts.”  If asked, I bet you could list five things you don’t like about yoursef without even really thinking about it.  It’s as if we’ve gone on a date with ourselves and halfway through dinner decided we’re not good enough for the other person… and the other person is us!

Knowledge is power and knowing that we are our own biggest obstacle is very powerful. Yes, you have to have goals.  Yes, you have to create a plan for achieving them.  But I guarantee that plan will be much more successful if its very first step, is to fall back in love… with yourself.  Sound a little corny?  Maybe easier said than done?  Fear not: I’m going to leave you with a small, powerful two-word phrase for that all-important first step.  Not long ago I was talking to my 7 year old son and I was congratulating him on figuring something out for himself.  He immediately threw his arms into the air and said “Yeah Me!”  No pretense.  No guilt.  Only genuine admiration.  Imagine that: “Yeah Me!”

Go ahead, try it yourself.  Stop reading for a moment, put your arms in the air and say “Yeah Me!”  Come on… say it with feeling – really mean it.  “Yeah Me!”  Does it feel a little funny?  Make you feel a bit awkward; a little self-conscious?  That’s not unexpected; remember, we’re the same people who decided we weren’t good enough while on a date with ourselves!  Try this: for the rest of the day say “Yeah Me!” every chance you get.  Say it at least 100 times and mean it every time you say it.    Hold a vision of yourself, goals firmly in hand, during that brief moment it takes to say “Yeah Me.”  Most importantly, don’t stop doing it all day long.  You see the moment it stops feeling funny, is the moment you discover how successful you can really become.

“Yeah Me!”

Filed under: LENDERS, LIFE THAT POPs, REALTORS, Success

Real Estate Marketing: Making the Numbers Add Up

In a recent Bloodhound post about Twitter (only Brian Brady could write the third post in just over a week on the same subject and generate so many comments!) there was a comment on marketing numbers that so intrigued me I felt compelled to respond in a post rather than a comment.  It’s been my experience that many of us do not accurately calculate the numbers when it comes to our marketing.  This should really come as no surprise – numbers and especially statistics can be beguiling and even misleading.  But if we’re not tracking and calculating our marketing efforts correctly, we’re just shooting into a dark room hoping we’ll hit the target.

The numbers quoted (or maybe it was just the idea) are credited to Larry Kendall, but they provide an interesting opportunity to work a real world example of marketing in general and Twitter specifically.  For this exercise I am pulling some examples from the actual comment, but just about every one of us has made this type of calculation before.  I follow each with a slightly different view.

I want 50 local people that I can really connect with (on Twitter).  If I have 50 people and they each know 50 people, I have a pool of 2,500 people.  Not quite.  It means you have the potential to reach 2500 people, but it’s unlikely.  For the purpose of calculating marketing numbers… you’re reaching 50.  This is akin to speaking at a seminar filled with 50 people from the neighborhood and assuming you’ve reached all 2500 people in the neighborhood – you haven’t.  If, on the other hand, you send a direct mail piece to all 2500 people in the neighborhood, then we say you’re working from a pool of 2500 potential clients.  Is it realistic to think all 2500 read that mailing?  Of course not.  But our expected conversion numbers take that into account.   The expected conversion numbers are simply based on a pool of 2500.  A pool of 50 will generate no usable statistical model from which to base a marketing campaign.

If the *normal* turnover rate in my local area is every 5 years, that means that 20% of the market is up for grabs. Each house has 2 possible transaction sides and that would mean that 40% of the marketplace has a commission attached to it.  Again, not quite.  Let’s assume for now that the average turnover is once every five years (which I believe has actually expanded to more like once every seven years), that still does not translate to 40% of the marketplace having a commission attached to it.  Twenty percent of the marketplace has a commission attached to it and that commission (for sake of argument) is 6%.  Whether that commission is split between two brokers or (unethically) double-ended by one broker doesn’t matter; for purposes of your marketing campaign twenty percent of the market is available at any one time.  Why is this important?  Again, if you don’t know the actual number of targets in the room, you might as well go back to shooting in the dark.

2500 people in my Twitter network = as many as 1,000 transactions.  Not to put too fine a point on this, but there are 500 transactions (20% of 2500).  If you are calculating your business – and more especially if you are creating your yearly business plan – you need to know the number of potential transactions as well as your expected capture or conversion relative to that number of transactions.

5% of the potential = 50 transactions.  As we now know, 5% would be 25 transactions (5% of 500 transactions).  More importantly though, we have arrived at the most integral question of all: What is my conversion rate? Owning 5% of the transactions in a marketplace, while a laudable and maybe even attainable goal, is quite an achievement.  The aforementioned 5% would most definitely NOT be my starting place.  There are plenty of very successful agents who have never achieved a 5% saturation in their marketplace.  The best way to calculate this would be to look back over at least the last five years and discern your actual conversion rate.  You can take into account whether or not that rate is growing, slowing or erratic when coming up with the final number you use for calculations going forward.  Absent a five year history, or in the case of entering a new marketplace, I would calculate my numbers this way:

From your Title Co. get an accurate count of transactions in your marketplace for the past twelve months.  Through the local board, Department of Real Estate or whatever source you can find, try and ascertain a relatively accurate count of the number of agents located within your marketplace.  (For now, we’ll discount agents from out of the neighborhood who are working a one-off deal in your farm.)  Divide number of deals by number of agents to get an average per agent, then divide that number by total number of transactions to get the average conversion rate per agent.  Now, the 80/20 rule is pretty universal (although my take on real estate is that it’s more like 90/10!).  If you want to be conservative go with 80/20.  Calculate 80% of the total number of transactions and divide that by 20% of the total number of agents.  Finally, take that new number (which is equal to total number of transactions per “top producing” agent) and divide by the total number of transactions in your marketplace.

EX:
500 total transactions
200 total agents
500/200 = 2.5 and 2.5/500 = .005 or .5% avg conversion per agent

400 transactions (80% of total transactions)
40 agents (20% of total agents)
400/40 = 10 and 10/500 = .02 or 2% avg conversion per top-producing agent
(incidentally, these numbers -  if scaled up – are not far off from San Diego’s actual numbers)

Now you know the conversion rate of an experienced, top-producing agent in your area.  Assume you are not one yet and set your conversion rate at somewhere between the average of all agents and that of the 20% who are producing.  From there, go forward with your marketing plan.

The point of this exercise is not to isolate the comment of any one person.  The point is this: if we want success in a commission based career, we must track our numbers and follow an intelligently thought out marketing plan.  Armed in this way, we can achieve our dreams.

Filed under: LENDERS, MARKETING, REALTORS, MARKETING

Twittering Twitts of Twittledom

I have always loved Through the Looking Glass by Lewis Carroll.  It is many things, not least of which is a truly amazing exposition on language.  I bring this up because I recently read Brian Brady’s piece entitled Is Social Media Marketing Worth the Effort and quickly imagined myself on a walk with The Walrus and the Carpenter.  Greg Swan commented on Brian’s piece by publishing a video of himself, talking to us about his lack of interest in Social Media Marketing.  I can only describe this as so eerily representative of what one might find on the other side of Mr. Carroll’s looking glass that it’s borderline derivative! For reasons that will be clear in a moment, I felt compelled to jump into the conversation.

‘Contrariwise,’ continued Tweedledee, ‘if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t.  That’s logic.’

That’s logic… You just have to love the confidence of that line.  What’s even more interesting is how well this quote appears to sum up a few of our SMM darlings.  I’m thinking of Twitter here and as a matter of full disclosure: I’ve never used it.  As a matter of fact, I don’t believe I’ve used any Social Media in a way that can be measured for Return on Investment or conversion of prospects into customers.  As a matter of fact, the very idea of measuring return on investment or counting conversions goes a long way in explaining why so few people succeed in our business: they confuse marketing with advertising.  I’m itching to write a piece exploring that malady and will get to it as soon as I can carve out a little extra time.  But meanwhile, we have Twitter.  I know people right here in the Hound who are so old-school when it comes to marketing that they’re actually successful in this business (I’m not directly referring to the Bawldguy here, but if you’re still unsure I will look in his direction and whistle) and yet even HE has a Twitter account!  Go figure…

In Twitter Policies Come to Workplace, the main focus is on the banal problems Twitter engenders for those who choose to trade hours for money (and those who employ them).  But here’s what I found really interesting:

TWITTER BY THE NUMBERS
2.9 million: Unique worldwide visitors to Twitter.com in June 2008.
44.5 million: Unique worldwide visitors to Twitter.com in June 2009.
40.5: Percentage of tweets that fall into the “pointless babble” category
37.5: Percentage of tweets that are conversational comments
21: Percentage of users who have never posted a tweet
5: Percentage of users who account for 75 percent of all tweeting activity

Now that’s eye-opening: 78% of all tweets are pointless babble and comments – which are often “stimulated” by pointless babble and must, by necessity, be babble themselves.  And almost all of that originated by just 5% of the users!  As a means for generating business, I would not call this a “target-rich environment.”  But hey, who am I to comment?  I don’t use the thing myself and maybe I just don’t see the logic behind it.  Maybe the Twitterati are on to something.  Maybe it all makes sense to someone… walking on some distant shore…

“The time has come,” the Walrus said,
To talk of many things:
Of shoes — and ships — and sealing wax –
Of cabbages — and kings –
And why the sea is boiling hot –
And whether pigs have wings.”

Filed under: LENDERS, REALTORS, Twitter

How to Run a Real Estate Business: Finding Wisdom in a Baseball Storm

“Last night I went to a boxing match and a hockey game broke out.”  (Ba-da-bum-ching.) That’s an oldie but a goodie.  I had a similar experience recently:  I went to a baseball game and a business class broke out.  About an hour north of me is the Padres Single A affiliate, The Storm.  If you’re a fan of baseball and haven’t made it to a minor league game, you really should; they are a blast.  But that’s a different story.  Because I attended the game with a friend from the Padres organization, I was lucky enough to meet the Storm’s President, Dave Oster and we got to talk a little business.

What’s that you say?  What does minor league baseball have to do with real estate?  By now you should know that business is business.  In the end, if you’re an agent, you’re running a business and I suggest we take every opportunity we get to learn from other successful business people.  As a matter of fact, I’m going to come right out and say you learn more from someone running a business different from yours than you’ll ever learn going to another 5000 seat auditorium and listening to some “real estate expert” who hasn’t sold anything but seats for years.  (Sorry… another tangent).

When Dave and I first got to talking, my goal was to ask him about his marketing philosophy.  I am always interested in learning what someone can share on marketing.  It’s been my experience that most people (and agents in particular) do a poor job of it.  Actually, that’s misleading.  The problem most people have is they don’t know the difference between advertising and marketing.  Genuine Chris Johnson wrote a post yesterday (and Jeff Brown is famous for them ) wherein they lay out that difference, but I wonder how many people are seeing it.  In any case, that’s another post for another day because Dave gave me a humdinger of an answer.  During the course of our conversation though, he said something you almost never hear, yet it may be the most important concept in running a business.  That’s today’s topic.

I was asking, in a very general way, about the group of people who work for him.  After a bit of hesitation Dave said (and I’m paraphrasing):  “It’s hard for me to answer questions about everyone who works here as a whole.  I see them as two very distinct groups: there’s those who create revenue and then there’s everyone else…  everyone else being a cost.”  That is probably the most important concept any one of us will ever learn about running a business.  Sound simple?  Play it through.  Let’s stick to baseball for a moment: the people taking tickets are certainly taking in revenue; so are they creating revenue or are they a cost?  That’s right, they’re on the debit side.  Same goes for the people behind the hot dog window and the ushers and even the guy who turns the lights on.  They may all be important (God knows the beer vendors are important) but they all count as costs.  Who creates revenue?  Anyone whose actions or ideas directly translate into more people coming through the gates.  This is so rarely understood that even the big guys get it wrong.  But if you start to view business, any business… your business, through this lens – profits go up.

Real estate, believe it or not, adapts to this way of thinking quite easily.  If you are a rainmaker, which is to say: if you are someone who goes out and brings in closed business, then you are a revenue creator.  Everyone surrounding you, however, represents a cost no matter how important they might be.  Your transaction coordinator? Cost.  Your trusted assistant?  Cost.  Your buyer’s agent, your receptionist, even your broker?  They are all a drain on your revenue.  Why is this important?  Because small business owners often lose track of the bottom line.  We lose track of who’s important – and that’s a sure way to lose your money too.  The first thing any business owner should do is take a look around and categorize every single person who gets paid… including themselves.  You will normally find there is one, maybe two people who are generating closed sales: revenue.  Everyone else who gets paid is getting paid out of those revenues.  That does not mean what they do is unimportant.  It might even be integral.  But it does allow you to assess your resources with a much more accurate eye.  It also aides in creating chains of command.  Far, far too many people in the work-a-day world believe they are important to a company when in fact their position might be important.  They themselves are simply a cost and their importance is tenuous at best.

There’s one other way to look at this and maybe it will help.  Those who generate revenue are integral to the firm.  Those who are a cost might fill a role that is integral, but they themselves are replaceable.  Get it?  Your assistant might be very important to your success, but he can be replaced.  How do you replace the person who generates actual revenue?  Never lose sight of the ledger in your business.

Filed under: INVESTORS, LENDERS, REALTORS, Rainmaker, Success