Real Estate Is Not a Numbers Game

By
Education & Training with Sell with Soul

Real Estate Is Not a Numbers Game!
(at least, it doesn't have to be)

You've heard the cold caller's philosophy...for every 100 phone calls you make, you'll get five appointments; for every five appointments you go on, you'll get one listing. Therefore, if you make 500 phone calls, you can count on five listings as a result. If your average listing commission is $5,000, then every phone call is worth $50 since it takes 100 phone calls to get a listing. Supposedly you will actually start to enjoy each rejection, because you realize that every 99 "no's" equals a "yes" which leads to a paycheck, since every "no" means you are one step closer to a "yes." Sound fun?

Not to me. In fact, it sounds like an awful way to make a living. Pestering people for three hours a day asking the poor sap who answers the phone if he "knows anyone who's thinking of buying or selling real estate?" Being rejected 99 times out of a hundred, voluntarily? Ick. Phooey. Blech.

So tell us how you really feel, Jennifer!

Okay, thanks for asking, I will.

The State of Colorado's Division of Real Estate did not grant me a real estate license so that I could be a professional prospector. I have to assume that good old DORA intended for me to spend a significant amount of my time serving the clients I am honored to have today instead of tracking down the ones I hope to have tomorrow. Taking good care of my listings and my buyers. As my first priority. Not as an afterthought when I can squeeze them in around my prospecting and networking efforts.

But, but, but....!

Yeah, I know. As self-employed types, we have to ensure ourselves a steady stream of business to keep the home fires burning in the style to which we intend to become accustomed. Hey, believe me, I never took a vow of poverty and I don't sell real estate out of the goodness of my heart. I've had $50,000 months before, more than once, and I could happily get used to that!

But you know what? I have never cold called, I have never knocked on a stranger's door... in fact, I've never even asked a stranger for business. Ever. No, not even FSBO's or expireds.

For ten years I have depended on my SOI for 100% of my business. And they have generously delivered. Sure, I've picked up the odd client here and there from floor time or open houses; maybe two or three a year, which is nothing to sneeze at. But the vast majority of my business comes directly or indirectly from the people I know or meet.

And every client is special to me. Even precious. Okay, admittedly some are a pain in the ass, but I still appreciate their business and the juicy commission checks I get as a reward for putting up with them. But most of my clients are pleasant people with a real estate need who simply want to be treated as if their business is valuable to me. Not like a number.

When you depend on your SOI for business, you bow out of the numbers game. And it's wonderful. No more dragging yourself to the phone for your daily cold calling session. No more searching the real estate ads for your next FSBO target. No more beating yourself up because you'd rather take a nap than finish up your 10 HouseValues CMAs that are due today.

When your pipeline is running low, you have a little Super Bowl party. Or send out some friendly personal emails. Or ratchet up your "take-a-friend-to-lunch" campaign. You don't need 20 more clients today; just two or three good ones will restore your mood. And pad your bank account.

SOI business is good business. It's loyal business. It's fun business. The success ratios are more like 50%-75%, compared to 5-10% from traditional lead generation (and that's being optimistic!). So if you get 100 leads from your SOI, that will result in 50-75 closings from you.

So how does it work exactly? Glad you asked.

SOI business comes in one lead at a time. But the leads are good leads, leads that will likely result in a closing. And, depending on your market and your broker split, each lead-that-will-probably-result-in-a-closing is worth thousands of dollars to you.

So let's say you have 20 close friends. If you have implemented a respectful, consistent SOI campaign, you, obviously, are the agent of choice for most of them if any happen to need a real estate agent this year. Maybe that will only get you one or two sales; or maybe your friends are a restless bunch and you'll get five or six.

You should also get the family business of your 20 nearest & dearest. Katie's grandma moves to town to be closer to her grandchildren. Fred's brother-in-law needs a referral to a Las Vegas agent. Maria's sister gets engaged and needs to sell her condo. Her fiancé wants to sell his too. There's a good chance you'll get first dibs on this sort of business. So let's say you pick up three family members.

Let's not forget everyone else your 20 friends know. If just half of your friends refer you to just one person, that's 10 more clients for you. What if all of your friends refer you to one other person? Or if three of your friends each refer you to five of their friends? What if you have 30 friends? 50?

Oh, and what about everyone else in your SOI? The other 150 people you know and stay in touch with? Your husband's assistant? Your dog trainer? Your massage therapist? Depending on the strength of your SOI campaign, you might see 5-15 sales a year from these folks.

And we haven't even talked about the NEW friends you're going to make over the next 12 months! If you're out there in the world, with your antenna up, you will run into people who happen to be in need of real estate services. If you approach them right, that business is yours. Maybe that's another five sales for you.

So add it all up and you're selling some real estate! All without treating anyone like a number.

Unless you're striving to be a mega-producer with 10 buyer agents scurrying around underfoot, you really don't need to go after every buyer and seller in town. This is what I mean when I say that Real Estate is Not a Numbers Game. The business that you can generate from your SOI and from your own social encounters really ought to be enough.

And the best part? If you spend a few years building a strong cheering section (i.e. your SOI), you can coast through the rest of your real estate career. NO prospecting, NO marketing budget, NO sleepless nights worrying about where your next closing is coming from. Now, that's a lifestyle I could get used to (and I have).

Sell with Soulhttp://www.sellwithsoul.com/

 

copyright Jennifer Allan 2007

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The More Fun You Have Selling Real Estate, the More Real Estate You Will Sell! 
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Rainer
51,553
John Hruska
Homes Charlotte, LLC - Charlotte, NC
Interesting insight.  I'm not a BIG cold caller myself.  It was nice to have a different approach confirmed.
Jan 25, 2007 04:13 AM #6
Rainmaker
468,753
Alexander Harb
Knights Investing - Mesquite, TX
Dallas, Texas Real Estate Investing

It sounds like you love your SOI like you love your husband...with passion and fervency.....

I am sure you live life like that also....... =-D

Not everyone is so blessed to market to their SOI and see that kind of response. That is why one way of marketing works for one agent and another agent does something else.... we all have to find what works for us.

I am glad your marketing technique works for YOU..... everyone has to find their own way in this business.

YOU GO GIRL!! =-D

Jan 25, 2007 04:21 AM #7
Rainer
12,617
Steven Holcomb
Keller Williams Realty - Plano, TX
Esq. - BBA, JD, GRI

Jennifer,

I am in complete agreement with you on cold-calling, and I am still convinced that it is not an effective way to prospect.  I make a point when sending out expired letters to tell every potential client that I will not visit them or call them following the one letter.  One prospective client told me that he saved my letter for months for that very reason, because to him it indicated I was a professional and a successful expert in real estate.  And it appears that he is going to list his $1 million property with me.

Steve

Jan 25, 2007 04:28 AM #8
Rainmaker
441,311
Debbie Cook
Long & Foster Real Estate, Inc - Silver Spring, MD
Silver Spring and Takoma Park Maryland Real Estate
You are sooo right about this! Although, try as I might to get business from expireds, fsbos, internet.  Every year the numbers say that 90-99% of my business came from my SOI and previous customers!!!
Jan 25, 2007 04:52 AM #9
Rainmaker
223,941
Tricia Jumonville
Bradfield Properties - Georgetown, TX
Texas REALTOR , Agent With Horse Sense

Most of my business has come from socializing - but a lot of it with people I've never met in person until they need an agent.  I've spent a lot of time online for years and have developed relationships that way and when I got into real estate, they, of course, knew about it.  Since they "know" me from our online relationships, I'm the obvious expert when they want to know something about real estate.  SO much nicer than calling complete strangers and interrupting them at whatever they're doing when I happen to call!

 

Jan 25, 2007 07:15 AM #10
Rainer
61,556
Netta Blackwood
La Rosa Realty - Kissimmee, FL
REO/BPO Expert
Jennifer, thanks for letting us know what works for you.  We appreciate reading your thoughts on the matter.  Congratulations on your success.  It is also a source of motivation too that whatever it is that we are currently doing, we need to be dedicated to it.  Again, this is some useful information and reminders for all of us.
Jan 25, 2007 07:21 AM #11
Rainer
340,092
Ken Smith
Suburban House Hunters - Arlington Heights, IL

But being a large team allows me to provide a above average income for others that wouldn't be able to do so on their own. This is very rewarding to me. Sure the money is nice, but helping others is why I got into real estate to start with.

Jan 25, 2007 09:26 AM #12
Rainmaker
307,523
Ryan Hukill - Edmond
ShowMeOKC Real Estate Pros of KW Elite - Edmond, OK
Realtor, Team Lead
Jennifer, another great post! I too have never done ANY cold-calling. I do plenty of open houses, which I enjoy and still the majority of my business comes from SOI. I expect that will always be the case for me but I also use other marketing plans to bring in other business that I usually refer to one of my partners. It allows me to keep working the way I like to work while helping those on my team build their income to the levels they dream of. Thanks for another great post!
Jan 25, 2007 12:50 PM #13
Rainer
60,875
Daniel Lowery
1st Choice Real Estate - Jefferson City, MO
e-PRO, Broker - Owner
Very good post, I really enjoyed reading it, I also do not cold call, but I do open houses, sometimes they are a waste of time
Jan 25, 2007 02:01 PM #14
Rainmaker
1,766,770
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate
I love your perspective on SOI. I think what often happens with new agents is that during the first 6-9 months of their careers there is not enough activity from their sphere to sustain them, so they fall back to 'traditional' prospecting methods and end up neglecting their sphere. And in some markets you can't throw a baseball without hitting an agent or somebody related to one. Still, a consistent and sincere program of keeping in touch and developing a sphere will definitely yield solid long-term results.
Jan 25, 2007 02:52 PM #15
Rainer
122,217
Christy Powers
Keller Williams Coastal Area Partners - Pooler, GA
Pooler, Savannah Real Estate Agent
I hate cold calling. I haven't done it since Pennsylvania in 2003.......
Jan 25, 2007 03:06 PM #16
Rainer
32,233
Stephen Hodge
Chestnut Park Real Estate Limited, Brokerage - Cobourg, ON
As a newer agent who had to make cold calls in his previous life as a PR consultant, I am pleased to say that I will never, ever let that irritating aspect of business enter into my life! The only "numbers game" that I play is for viewers on teh internet - which helps me as clients contact me directly out of the blue, and my listings as that's what many of these "out of the blue" contacts are getting in touch with me about. So no cold calling, but lots of exposure - for me and my clients. That way everyone's taken care of!
Jan 26, 2007 02:12 AM #17
Rainer
5,071
St S
Mou - Pleasant Grove, UT
I like the way that you have created a 100% referral business based on your SOI.  Do you have some advice for new agents that don't have such a committed referral base?  How about new agents that are from out of state and are trying to get into the business without knowing anyone?  Can this type of success work for them too, or should they resort to meeting FSBO's?  Can they make it in the industry without having a strong SOI?  How long can they last?
Jul 29, 2007 12:16 PM #18
Rainmaker
89,016
Frank Harris
Keller Williams Realty Centre - Columbia, MD

Awesome blog, you should write a book and if you did I would definitely purchase one. LOL

Really I am going to buy your book, I think it will be an excellent addition to my library.

Great post.

 

Jul 29, 2007 01:21 PM #19
Rainmaker
1,027,000
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

As always, I could not agree more.  And, if I may add one thing...I think sometimes newer agents don't quite grasp the concept of using a SOI to generate business because of how it is traditionally defined.

To me, it is not just about getting business directly from your SOI (although many people do), but rather, it is about getting out there, building or expanding an SOI and using that base as a way of getting business.  I've never cold called, never made phone calls, never talked to a FSBO, never called a expired, never asked for a referral...and I've done well since day one, even though we were new to the area and I did not know a soul. 

I consider my sphere everyone that comes into my world, regardless of the reason. For example, if it's a handyman who does a great job for me, I refer him to clients...I call him first and ask if he has time to take on a job (of course, I want to be sure he knows who is doing all this referring!)  And so and so forth...although I don't ask for referrals in return (because that is just not my style), they come in spades.  It's all about putting yourself out there, staying in touch and having fun with it.

Jul 29, 2007 03:07 PM #20
Rainmaker
484,282
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Stephen - First thing, - read Susan's comment, above! She's dead-on... SOI isn't just people you know today, it's everyone who crosses your path, every day. No, that doesn't mean you have license to pester them, but they are excellent sources of business and referrals IF you know your stuff and IF you love your job. When I refer to my own 100% SOI business I don't mean that my friends shoveled referrals my all the time - a great many of my clients were people that I met while I was a real estate agent. In fact, my first 25 deals with all with people I would consider SOI, but not anyone I knew on the day I got my license. But most of them went on to bring me lots more business in the years to come.

For a limited time, there's a teleseminar on the topic on my website (www.sellwithsoul.com) under Checklists & Moore... Maybe that will give you some ideas!

Frank - great idea!!!!

Susan... as always... couldn't have said it better. It's a paradigm shift for most, but once you GET IT, it seems so obvious, doesn't it???

Jul 29, 2007 10:49 PM #21
Rainmaker
1,027,000
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

LOL...yes, it does seem simple!

I call it "Six Degrees of ME!"  ;-) 

 

Jul 30, 2007 04:02 AM #22
Rainmaker
186,433
Debra Kukulski, Broker Associate
RE/MAX Suburban - Cary, IL
SRES;SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

Great post, Jennifer and agreed!

Jul 15, 2008 03:24 AM #23
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Jennifer Allan-Hagedorn

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