Making Money in Real Estate

7 minutes
Business man perplexed at his desk. Or a desk. We don't know it's his, but we can assume.

The Path Toward Real Estate Success: Avoid These Top Three Mistakes

Joshua Smith Oct 23rd, 2020
Joshua Smith
Making Money in Real Estate
Mastery

The average realtor makes less money than if he/she were working full time at McDonalds.

This fact is largely due to the fact that the average realtor also makes a TON of mistakes. We could spend days talking about all the mistakes, so I figured I would break it down to the top three.

Top 3 Mistakes Realtors Make That Hinder Their Success

1: They do not run their business as a business.

2: They do not take enough intentional planned action.

3: They do not constantly work on mastering new skills.

Let’s break them down:

1: They do not run their business as a business. Most realtors see themselves only as a realtor. Now, take real estate out of the equation. 80% of all businesses fail between 1-5 years of being in business, and then, 80% of those which made it through the first 5 years end up failing and closing their business in years 6-10. So, when I talk about the failure rate of realtors, that holds true for all entrepreneurs not just realtors. 

As stated in the amazing business book by Michael E. Gerber “The E-Myth Revisited,” which I highly recommend, most businesses owners fail because they never operate from a space of being an entrepreneur. For example, the baker who bakes world class muffins but does not know how to run a business. Or the personal trainer who knows the human body and everything about nutrition, but, again, does not know how to run a business, And the realtor who knows the real estate contract inside and out, knows how to negotiate contracts, always looks out for his/her clients’ best needs, but does not, and is not, running his/her business as a business.

As a realtor, you must know how to be a great realtor! You should know the contracts, how to negotiate for your clients, put client needs before your commission check, and deliver world class services to your clients, etc. All those things are essential, and by no means do I want to downplay the importance of those essential key roles. HOWEVER, those alone are not enough! A lot of amazing realtors are broke. Just as there are a lot of world class bakers, and world class personal trainers who struggle, and eventually go out of business.

My personal opinion is that being a great realtor is the “anti” to being in the industry. That is to say it’s the given, the minimum requirement to succeed. If a realtor is not committed to being a great realtor, then he/she should not get into the industry. BUT, again, that is not enough to succeed, only one part of it.

To succeed, you MUST also become a great entrepreneur, aka business owner. You MUST treat your business as a business and run it as a business! 

So, what is the difference? Think of each role as a hat you are going to wear and at different times you are wearing different hats. You wear your “realtor hat” when you are on a listing or buyer presentation, when you are writing up a purchase contract, when negotiating terms, when doing a final walk through, when prospecting, and  when following up with your leads. Think of this as the hat for anything that you are doing “in your business.”

When you put on your “entrepreneur hat,” you’re working “on your business.” When wearing this hat, you are working on activities like: goal setting/business planning, tracking and breaking down your numbers, creating systems which allow you to work “in your business” more effectively and efficiently, planning, reflecting, etc. Put it on when you are taking a view from the 30,000 ft. level on your overall business. 

Most get so busy working “in the business” that they never take the time to work “on the business” to build a systematic, predictable, duplicatable and eventually scaleable business. Don’t be most people. Working “in your business” is every bit, if not more important, than working “on your business.”

2: They do not take enough intentional planned action. Now that you are working “on your business” as well as working “in your business,” you are able to take the correct action on the correct items. You will be tracking all of your numbers and will know the exact amount of leads, action, monetary investment, etc. which you MUST take yearly, monthly, weekly and daily to ensure your goals become a reality. You are taking the time daily to reflect and plan, as well as constantly working on new systems to operate more effectively and efficiently inside your business.

Here’s a common conversation I have with many realtors: “My goal is to make $300,000 in gross commissions this year.” I reply with, “Great, I love big goals! What is your exact game plan to make that happen? What must you be doing daily to make that a reality?” The typical response is, “I am not sure. All I know is I am going to be more focused and work much harder.”

I am all about being more focused and working harder, but the reality is that hard work alone is a plan for failure. Even if a realtor should succeed with just hard work, if he/she is not tracking and working “on the business” as discussed above, then the success will be very difficult to duplicate.

You MUST take intentional planned action to create true and sustainable success. Have a specific plan in place, and then take massive action executing the plan.

3: They do not constantly work on mastering new skills. In life we are either growing or we are decaying. The average high school and college graduate only reads one book after graduation. On the other hand, the average Fortune 500 CEO reads sixty books per year. Successful people are lifelong students and put their self-development as a top priority. You must always be improving your skills to succeed.

If a realtor is currently making $50,000 per year and has an eventual goal of making $500,000 per year, well, he/she won’t get there by doing the same things which made $50,000. If you want more, you MUST become more.

The world we live in today makes growing and changing easier than ever. With all the great podcasts that exist, all the great books, audio books, YouTube videos, inexpensive online training sites like Udemy, where you can learn how to “Code Write Your Own Apps” for $38, you have no excuse to not improve. Only 5% of realtors ever invest in a coach or any type of coaching program. There is a reason every top realtor has a coach and takes his/her self-development very seriously.

If you start working hard, right now, on making sure you never make these “Top 3 Mistakes,” you will absolutely succeed. I am not saying it will be easy; you will still have to put in a lot of hours and a ton of action. But, eventually, it will all pay off and you will create the life you know you want and deserve!

Thanks for reading!

  Joshua Smith, Realtor/Mentor/Entrepreneur

-Voted 30th Top Realtor in America by The Wall Street Journal

-Over 5,000 Homes Sold & Currently Selling More Than 1 Home Daily

5 minutes
Real estate agent showing a property to a couple.

The Path Toward Real Estate Success: Become The Information Portal

Joshua Smith Oct 16th, 2020
Appointments
CRM
Follow-up

We are living in the “Information Age,” and to stand out from our competition, you must learn to win the game of delivering great information to the marketplace.

For realtors, the name of the game is: Get people to know you, like you, trust you, and become aware of what you do for a living. Then, as long as you stay in touch frequently, your business will grow.

The internet and technology continue to change how this mission is accomplished, so you must always be adapting to the changes to continue to thrive.

Today’s consumer can search homes, get information, see photos, and much more without our help. No longer is the realtor essential in the home search process; well, at least that perception can be the consumer’s sentiment. So we must ask about which things can be really difficult to find information. What are things important to the consumer that can’t be found on Zillow or other major online search sites? Spend some time on those sites, and you will quickly find out.

If you can deliver the hard-to-find information consumers are looking for, you become valuable. And if consumers continue reading/watching your content, they will get to know you, like you, trust you, and become aware of what you do for a living. And when they are ready to buy or sell real estate, the chances of their choosing you greatly increase.

The cool part is that this strategy is essentially free. Let’s break down a few things to give you some ideas.

What and How To Create Content To Become The Information Portal In Your Market:

First, let’s break down the “How.”

#1: Get a camera that shoots good video (an iPhone or any new cell phone will work). I am sure you already have a cell phone, so this should not cost you any additional money.

#2: Have a website with a blog feature, and which is connected to a CRM/database. I am sure you already have one, as it is essential to have in the time that we are in, so again, should not cost you any additional money.

#3: Set up a YouTube channel. YouTube is 100% FREE.

#4: Have a Facebook account. Facebook is 100% FREE.

Now let’s break down the “What.”

#1: Create a weekly video in which you interview a local business owner. Make the interview about the business owner and not your business. Discuss what the business does, how long they have been open, do a tour of the facility, etc. Keep it under five minutes.

#2: Create videos of local parks, amenities, schools. Anything nice about your area and would attract people to want to live there.

#3: Create videos of local subdivisions/communities.

#4: Create videos of all new build developments.

#5: Create videos of all your listings and any nice homes that you see/preview.

#6: Create a monthly video market update about your local real estate market.

Now that you have all this great content, what do you do with it?

#1: Upload the videos to YouTube and make them public. Make your channel in your name, with your photo, and make sure to put in a great description. 

#2: Embed the YouTube video into your website blog, so now you have a video blog, AKA “Vlog”, then do a written blog about the video you created.

#3: Mass email your blog link to your database as soon as you release your blog (weekly is a good timeframe).

#4: Share your blog on your Facebook page, as well as any other pages or social media accounts you have.

#5: Create a local area Facebook group: Example “Living In XYZ City, State”... Make it a group, not a page, and allow anyone to join. Post each blog in there (again weekly is good).

Yes, this is a lot of work, but work which is well worth it. Think about it this way: As a realtor, you are applying for a job to work for buyers and sellers. When you apply for a job today, what is the first thing the potential employer does after reading your resume? They search for you online and on social media. YouTube is the number two search engine on the planet. And YouTube is owned by Google, which happens to be the number one search site on the planet. Google will drive consumers to your YouTube channel to watch your content, and embedding a YouTube video on your blog is one of the quickest ways to build up SEO (Search Engine Optimization = getting your website to pull up organically on searches without having to buy ads on Google).

In addition to the points in the above paragraph, at minimum you are delivering great content to your database (valuable on its own merit), which then drives your leads back to your website. With Facebook, you are building a local community of people who live in your area and are building connections and allowing potential clients to get to know you, like you, trust you, and become aware of what you do for a living.

As with anything new you take on, this shift in action does come with a bit of a learning curve, but eventually you can can accomplish all of the above in about five hours out of your week. You will meet all the local business owners, builders, school principals, etc. Not bad people to have good relationships with, and you will become “The Information Portal In Your Market”.

Thanks for reading!

  Joshua Smith, Realtor/Mentor/Entrepreneur

-Voted 30th Top Realtor in America by The Wall Street Journal

-Over 5,000 Homes Sold & Currently Selling More Than 1 Home Daily

3 minutes
Leading a meeting through glass

The Path Toward Real Estate Success: Breaking Down Lead Generation

Joshua Smith May 22nd, 2020
Joshua Smith
Lead Generation
Making Money in Real Estate

It all starts with lead generation.

You can deliver amazing service to your clients, you can know the contract inside and out, you can know how to look out for your clients’ best interests, BUT if you can’t generate a constant stream of leads, you won’t have the chance to excel at the preceding tasks.

So, how do you generate a steady stream of new leads?

You have to start by acknowledging the importance of generating new leads. Every single day, you must make new people aware of you who were not aware of you yesterday, offer those people something of value in exchange for their contact information, and then follow up with them frequently. The essence of lead generation and lead follow-up.

Most realtors make two BIG mistakes make with lead generation: #1: They do not make lead generation a daily priority, and #2: They pursue too many lead sources.

A different approach:

#1: You must make lead generation a daily priority. You have to wake up each day with a plan in place to generate leads. Block off that time on your calendar. You must become intentional each day with your lead generation.

#2: Success is not found in doing 1000 things but in doing a few things brilliantly, thousands of times. Don’t try to focus on having twelve lead sources, but instead, focus on three or four. Do those three or four things constantly to become world class.

What is the best lead generation source? It doesn’t matter. The only thing that matters is your consistency and willingness to generate leads day after day. The best source is the source you enjoy, and the one you will continue to use over and over and over. 

Identify your personal strengths, and then identify the lead generation methods that align with your strengths. For example, if you love talking with and networking with people, then try joining local networking groups and working those groups for new leads. If you are more introverted, and don’t like networking, try Facebook lead generation.

If you study all the top producers on the planet, they have different lead sources, of course, but the one factor that runs through the most successful realtors in the industry is a willingness to be radically consistent.

A magic lead source has yet to be invented. You must plan to win with consistency.

Your lead generation task list:

#1. Break down your personal strengths.

#2. Identify three to four lead generation methods which align with your strengths.

#3. Block off daily time on your calendar to intentionally work those lead generation methods.

#4. Go build a constant stream of new leads to fuel your success in the real estate industry.

Thanks for reading!

  Joshua Smith, Realtor/Mentor/Entrepreneur

-Voted 30th Top Realtor in America by The Wall Street Journal

-Over 5,000 Homes Sold & Currently Selling More Than 1 Home Daily

4 minutes
Delegation via notes.

The Path Toward Real Estate Success: Delegation

Joshua Smith Jul 10th, 2020
Joshua Smith
Making Money in Real Estate
Delegation

You can only do so much. And there are only so many hours in a day. So, as a realtor, you must delegate.

A quick reminder from the Making Money blog post, realtors earn money by: #1: lead gen/lead follow-up, #2: appointment conductions, and #3: negotiating contracts.

To begin delegating, make a list of everything you do regularly that is not part of these three money making activities. This list will give you the activities you need to delegate.

ABSOLUTELY CRITICAL NOTE: As you are growing your real estate business, you will need to do everything for some time, as you will not likely have the funds to pay for additional help. Also, you want to do everything initially so you can learn how things are done and how you like them done, so, when you do delegate out these tasks, you can train your staff properly.

Before you start spending money, make sure everything you are doing is necessary. If you are doing a lot of tasks that are not getting results, you may, of course, just want to eliminate those tasks. Also, see if you can delegate regular tasks to your vendor partners. For example, you may see if your lender has someone on staff who can do your flyer design for you. I only like to spend money when it is necessary, so see what you can eliminate and delegate out for free. 

IMPORTANT FINANCIAL TIP: Before hiring a person to help with tasks, you should have at least four consecutive months of consistent closings/commission income, which can pay your business expenses, your personal income, and have enough left over to comfortably pay for some help. I like to see at least four months, because you know it is a trend that can be duplicated and not just a fluky good month or two.

Who do you hire first? Everyone has a different philosophy on this topic, so there is no perfect answer. However, I will give you my opinion based on my own personal experience. 

First: I recommend hiring someone to do your house/personal tasks. For example: landscaper, house cleaner, etc. These tasks can take up a lot of time you could otherwise use for business needs and can be far cheaper than hiring a full-time employee for your business.

Second: Check to see if you can find a licensed realtor who you can pay a per transaction fee to input your listings for you into the MLS, turn in paperwork to your broker, order your listing photos, signpost, lockbox, etc. and also can do all contract to close tasks like ordering inspections, following up with the lender, etc. Fees always differ, but you may find someone who will do the listing input for $150, and the contract to close for $350, give or take.

Third: Eventually, hiring a full-time in-office assistant will make sense. For most realtors, this time comes once most realtor get to four to five closings monthly (again, make sure this progress is consistent). Once you have hired this assistant, take the list we discussed above of all the non-moneymaking activities you do in your business, and assign those to your new assistant.

IMPORTANT SIDE NOTE: When hiring an employee, make sure you know your true costs, which can be more than just salary. For example: payroll fees, taxes, benefits, etc. By having all of this information, you will be fully prepared and can budget accordingly.

Once you have your assistant trained and dialed in, your business will continue to grow, and you can eventually add more assistants and even agents to work your overflow of leads, etc., but the above is a great place to start!

One last import piece of wisdom: “Your Trust Will Always Equal Your Capacity!” Or to continue growing your business, you eventually will need to delegate tasks and trust others to take these tasks on. If you don’t, you will find your business will hit a level where it can’t grow any further.

Delegation can be a scary process, but if you have your processes documented and your systems in place, success will be unavoidable.

Thanks for reading!  

Joshua Smith, Realtor/Mentor/Entrepreneur

-Voted 30th Top Realtor in America by The Wall Street Journal

-Over 5,000 Homes Sold & Currently Selling More Than 1 Home Daily

5 minutes
Aerial shot of a neighborhood. A few of the houses have solar panels. Our photovoltaic neighbors, they are probably called. But with a hint of condescension. It appears altruism is merely an intention and not a public certainty. L'enfer, c'est les autres.

The Path Toward Real Estate Success: Does Geographical Farming Really Work?

Joshua Smith Oct 30th, 2020
Joshua Smith
Funnel
Making Money in Real Estate

Many realtors think geographical farming is sending direct mail to homeowners, which is geographical farming, of course, but only one variation.

Geographical farming is fully practiced when a realtor focuses on and creates market share in one specific area. Which is what real estate is all about.

Some of the many was this concept can be practiced are direct mail, door hangers, circle prospecting, door knocking, open houses, Facebook ads, expireds, FSBO’s, etc. The most power strategy, of course, is when a combination of these strategies is employed. For example:

Example #1:

#1: Call expireds and FSBO’s inside your geographical farm area to get a listing.

#2: Once you have a listing, send out a “Just Listed” post card to the closest 500 neighbors.

#3: Three days after the postcard hits the mailboxes, circle prospect, aka call those same 500 neighbors.

#4: Hold open houses at your listing.

#5: Repeat #2 and #3 once your listing is sold but as a “Just Sold.”

Example #2:

#1: Hold open houses in your geographical farm area. If you do not have a listing inside your area, ask other realtors to hold theirs open, for example.

#2: Four days before the open house, deliver 500 neighborhood open house flyers to the closest 500 neighbors.

#3: Three Days leading up to the open house, run a paid targeted Facebook ad to your geographical farm area.

So, as you can see, direct mail is one way to farm, but it’s not the only way!

But why is focusing on a geographical farm area so important? Think of it this way: you are identifying an area which you want to work and gain market share in. Let’s say you are doing open houses. I will outline two options to show the power of geographical farming. 

Option 1: Identify an area (a geographical farm) which is within a one square mile and contains 15,000 homes. Every weekend that you are doing open houses, everyone in that area is seeing your signs, your name, your face, and your website. They are also getting the invite flyers you put out before the open house, and also your weekly Facebook ads are showing up in their newsfeed. On top of that, they are seeing your for sale signs in the front yards of homes in that area. You very quickly build brand recognition. The more frequently people see your name, the more confidence they have in your services.

Option 2: You do open houses all over your county. Anywhere you can get an open house will do. Different areas of the county see your signs, flyers, ads, etc. You are not building the hyperlocal branding that you are building in Option 1.

Also, think of your time investment. You might be able to work with four Clients in a day in a focused area, but if you are having to drive from one side of the city to the other, you might only be able to work with two. Not only is geographical faming effective, it also can be extremely efficient.

Now, let’s discuss the critical element of how to pick a geographical farm area. I have a few requirements I follow, which have proven to be very successful.

Recommended Requirements/Research To Perform In Picking a Geographical Farm Area

#1: Identify your ideal client. Who do you like working with? Who do you connect with the most? Of all your past clients, who sends you the most referrals, and what are the commonalities? As an example, maybe you find out that your ideal client is 30-45 years old, second and third time move up buyers, who are married, and with a young family.

#2: Identify to where your ideal client is moving. What cities in your county? What zip codes? What subdivisions?

#3: Once you identify where, then determine the house turnover rate in that area. Most successful geographical farmers like to see 8-10%+ yearly. To identify the turnover rate, take the total number of homes in the area and divide by the total amount of sold homes in the past twelve months. Example: 1,000 total homes, divided by 100 home sales equals a 10% yearly turnover rate.

#4: Research how many dominant realtors are in the area. I define dominant as a realtor who has sold more than 20% of the listings in that given area. A good rule of thumb is to pick an area with no more than one dominant realtor. I don’t want to plant a limiting belief in your mind that you can’t succeed in an area with more than one, but gaining market share is much easier and quicker in an area with one, or ideally zero, dominant realtors.

Once you have identified your geographical farm area, go to work and start implementing your marketing and prospecting strategy! 

Thanks for reading!  

Joshua Smith, Realtor/Mentor/Entrepreneur

-Voted 30th Top Realtor in America by The Wall Street Journal

-Over 5,000 Homes Sold & Currently Selling More Than 1 Home Daily

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