Susanne and I like to attend so we can congratulate our agents to their awards. It gives us a chance to celebrate their accomplishments and show appreciation for all they do for our brokerage.
Congratulations to Candy, Gary, and Jim! (pictured above)
Our agents are very successful. And, I am most proud of the fact that they do it without any “lead handouts” from our brokerage.
Do You Own A Real Business?
There are 2 ways to make money as a Realtor – you are either a Business Owner or an Operator. Here’s the difference …
The Business Owner is independent. If you own your business, you are in charge of your destiny.
Any business relies on customers who pay for your products and services. Without customers you will be out of business quickly.
Attracting new customers is a core skill you must master as a business owner. And that includes generating leads and converting them.
The Operator is dependent. An operator’s job is to service the client.
Many agents tell me they are in real estate because they love to help people buy or sell. Servicing clients is only part of the business.
If you are an operator you need someone else to supply you with paying customers.
The Changing Role of the Broker
There was a time when agents were working for the broker. The broker would run marketing and sales and the agents would service clients.
That has changed.
Today’s agents are independent business owners. Therefore, they are responsible for finding customers. The broker’s roles are to help agents stay compliant with real estate laws and to support them when they need help.
Should You Join a Team?
If you do not want to generate your own leads you should join a team. As a team agent you are working for the team leader, whose role it is to provide you with leads.
Many team leaders do exactly that by buying online leads for team members to convert and service.
Buying leads is expensive. The cost of online leads has skyrocketed to $20 or more. With only 1% converting, you need to shell out $2,000 for one transaction.
That’s why your team leader can’t pay more than 50% of the commissions – else they would go broke.
Learn How to Fish
You all heard this saying. Now apply it.
If you want to own a “REAL” real estate business, you need to learn “how to fish”. You need to generate your own prospects and clients. Mastering the skills of lead generation and conversion is critical to your success.
This is where we come in.
The main goal of our brokerage is to help agents build a thriving business. We accomplish this by teaching various lead generation strategies and coaching agents to implement them consistently.
Do you rely on leads from your broker?
If your income depends on “handouts” from your broker, you may be out of business soon.
Susanne and I just got back from a trip to Austria. We visited family and spent a week in the Alps.
Austria is a great place for mountain hiking. First class hotels and excellent restaurants are plentiful where ever you go.
Here’s a picture of me hiking through a gorge near the Dachstein mountain.
The “Hometown” Real Estate Broker
Susanne and I grew up in a town called Mistelbach, 30 miles north of Vienna. It’s a county seat in the center of a wine growing and farming area.
To find out how the real estate business works in Austria we stopped by the local RE/MAX office.
The broker’s name is Franz Hugl. He has owned RE/MAX Best for 12 years and employs 10 agents.
Franz was glad to sit down with us and share his story.
How Real Estate is Sold in Austria
Terms The German term for real estate is Immobilien. The broker is called Makler.
Agents are employees not independent contractors. Franz said the Austrian government is strictly enforcing employment laws (of which there are many) and don’t allow agents to work as independent contractors.
Obviously, this creates additional expenses for the brokerage. The employer has to withhold taxes, as well as mandatory health insurance, social-security-like retirement insurance and more.
Commission Splits Due to the high cost of employing agents’ commissions are split 50/50. The brokerage pays for all advertising.
Commissions The typical rate is 3% for each side. However, the government charges VAT (value add tax) which is 20% in Austria. This means the seller has to pay 3% of the purchase price plus 20% of the commission.
Agent Income Franz told us his top agents make more than 100,000 Euros.
Austrian Housing Market
Listings Most listings are not exclusive. Sellers hire multiple brokers to market their properties. There’s no MLS, so a listing agent has to actively market the property to find buyers.
Buyer Agency When a buyer is represented by a real estate agent, the buyer pays the agent’s fees (usually 2 – 3%). The seller will not pay for the buyer agent’s commissions.
Leasing Franz is representing both landlords and tenants. Leasing commissions are usually one month’s rent or more, depending on the length of the lease.
Competition Although Mistelbach has only 10,000 inhabitants there are 11 real estate offices. Some are affiliated with banks. RE/MAX is the only global network to speak of and has excellent brand recognition.
Leads As Austrians do not move every 7 to 10 years as Americans do, there’s less turn over. Franz told us his best lead sources are probate (if the owner dies the heirs usually sell the property) and new built condominiums.
What do you think?
Is it easier or harder to sell real estate in Austria?
Have you heard the term “influencer” before? An influencer is a person who has the power to affect the purchase decisions of others. Celebrities are often influencers, as are politicians, athletes, and business leaders. They can use their influence to endorse people, products, services, and event ideas.
In real estate, local influencers can be huge sources of referrals. Getting to know just a few of them has the potential to double or triple your referral business.
Types of Influencers
There are two types of influencers who can send you referrals. The first type is the individual with substantial social connections.
This person could be a social butterfly, have a high-profile job or position, or just be a natural networker. Because of the sheer volume of people a social influencer knows, he or she is often the first to hear when people are looking to buy or sell real estate.
The second type of influencer is the individual whose job or position involves regular contact with buyers and sellers. Obvious examples are mortgage brokers and bankers. Less obvious examples are divorce attorneys, estate attorneys, HOA & condo board members, and property managers.
The first place to look for influencers is your current database. Many agents have existing relationships with influencers but don’t realize it. Now that you know who to look for, scan your database and make note of any candidates.
A second place to find influencers is at networking, social, and charitable functions. Be sure to meet the hosts of those events, as influencers are often in that role.
Finally, influencers are found in local news stories, magazines, blogs, and other publications. Reach out, mention you saw them in the publication, and ask if they’d like to meet up.
Getting Referrals from Influencers
Most influencers have existing relationships with real estate agents. That doesn’t mean you can’t get referrals from them; it just means you need to build relationships with them as well.
The key to building relationships with influencers – or anyone for that matter – is to give before you take. Since influencers thrive on the strength of their personal and professional connections, the best way to build relationships with them is often to introduce them to people in your network.
For example, an influencer who owns a business would appreciate introductions to potential customers. An influencer who supports a charitable organization would appreciate introductions to potential donors. Focus on building relationships and the referrals will come as the natural by-product.
Last Tuesday we celebrated the accomplishments of our agents with the Annual RE/MAX 24/7 Office Awards. They had a fantastic year, and we truly appreciate their efforts. Our top producer made more than half a million in GCI (gross commission income) without a team. In average, each agent earned $267,774 in commissions and closed 33 transactions. Makes me very proud as their business coach!
Before the end of the meeting everyone set new goals for 2018. We wrote them on the whiteboard to track throughout the year.
Real estate is a lonely and tough business. That’s why many solo agents get stuck and don’t make it. The typical agent works from home and gets referrals from friends and family, but doesn’t have access to the support system needed to grow their business.
Quite a few agents hire a coach to get “unstuck”. They pay $500 to $1000 a month for accountability, ideas and access to a community with other coaching members.
There’s an alarming trend in our industry. Low cost, virtual brokerages are opening all over the country promising agents that technology and online leads will solve all of their problems. Truth is, agents get less access to mentors, to their broker and to a support community.
On the other hand you will find “body-shop” brokerages. They have large offices with hundreds of agents. In their mind agent count equates to success.
Their top producers have teams that compete against each other with little support for solo agents. If you are productive you are surrounded by inexperienced, new agents who ask you the basic questions their over-leveraged broker can’t answer.
Large offices may offer a community to socialize, but they won’t help you grow personally as a leader.
The Value of Community
How would a community of productive agents who support each other benefit your business?
You can mastermind with like-minded professionals.
The competition with other agents in the office is a lot less.
You don’t need to spend thousands on an outside coach.
Become the average of the other agents in your office.
Do you want to be the average of the agents in your brokerage? If not, we should talk! I am always here for the realtors at my brokerage and want everyone to have a better year than last!
While some of you are already busy, others may think about changing brokerages because their business is not growing. If you are contemplating joining a team vs. moving to a boutique brokerage as a solo agent, here’s my thoughts…
Solo Agent Vs. Team
If you are considering these 2 options you are probably a solo agent who’s stuck and looking to grow. Real estate is a lonely and tough business. If you don’t have access to a mentor or someone you can ask for honest advice, it’s really hard to improve and grow.
You may be thinking about joining a team because you are looking for consistent income. Or maybe a well established system for marketing and managing transactions. Teams promises leads, a consistent flow of business and proven systems. They also try to provide training and a supportive environment including ISA’s and closing coordinators. However, there’s a cost associated with joining teams. You will have to share 50 or 60% of your commissions with the team’s leader.
Are you outgoing, self-motivated, well organized and independent? You will do well as a solo agent. If you are looking for safety, for a leader to take care of you, for someone else generating leads for you, you shouldn’t be a solo agent.
Benefits of a Boutique Brokerage
A small brokerage with 25 agents or less, may give you the best of both worlds. They provide personal support, mentoring, and masterminding with other agents. As well as, the independence to run your own real estate business as you see fit. And you’ll keep all of your commissions.
There’s one big question you should ask whether you join a team or a boutique brokerage. Will they perform and will you get what you were promised? Talk to other agents or the team’s members, and investigate their track record. Your success will depend on it!
Last week I indicated that we’ll tackle this critical question before the Holidays. Let’s take a closer look at agent profitability and compare solo agents to team leaders. This should give you something to think about, if you’re planning to form a team or if your broker encourages you to form a team (a strategy some brokerages use to grow, while pushing more responsibility down to the team leaders).
The Solo Agent
Say you are a solo agent and you close 15 transaction sides worth $3.3 million. Your commission income should be around $100,000 (3%).
As a typical solo agent most of your business comes from referrals. Your marketing expenses are small, maybe $500 a month, and your operating expenses add another $1,000 a month.
Your total annual expenses are $18,000, resulting in a net profit of $82,000 (before broker splits and taxes). This means you keep 82% of your commissions – a very high profit margin.
The Team Leader
To grow your business and work fewer hours, you decide to add a buyer’s agent. He or she will close another 15 transactions worth $3.3 million, increasing your total revenues to $200,000.
What’s happening to your expenses?
Assuming that you still close your personal 15 sales from referrals, you need to generate 15 new transactions. So you invest in marketing to get more leads.
You will likely spend 20% of your income on marketing to generate enough leads for your buyers agent. In addition, you split commissions 50/50 with your buyers agent.
Your total cost to make the extra $100,000 amounts to $70,000 ($50K to pay your buyers agent and $20K for leads). You are left with a profit of $30,000 (30% profit margin).
How did your overall income improve?
Your total commission income as the team leader increased to $200,000. Your expenses also shot up $88,000: you still incur the original $18K for your personal business, plus $70K for your “team” business.
Your net profit is $112,000 which is a 56% profit margin.
Should You Form A Team?
I believe the key question you need to answer before you venture into forming a team is: “Can I generate enough business and obtain a good profitability for myself, while working less?”
Once you form a team, you are responsible for your team members. All too often I see team leaders shelling out large amounts of money to “feed” team members at the cost of their own profitability.
According to a survey by a national real estate coach, the profit margin of the typical team leader is only 10%! This means you have to earn $1 million in commissions to make a $100,000 profit.
I hope this insight will help you with your business planning for 2018.