Real Estate Pros: It Is Time For “Business As Unusual”
I love talking real estate! I usually get the opportunity to meet and talk to new and even experienced investors once or twice a month at different events around the country. These are always educational style events for investment groups and the room is usually full of questions about my families businesses. By far, the biggest question we get is about how we have continued to grow when it seems like so many are having trouble even getting started. That is a tough question and one that is not easy to answer.
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Doing “Business As Unusual”
We have never been able to tell people that it is simply a matter of hard work. That answer is way too simple and almost sounds like the person asking is simply not working hard enough. Truth is, I have no idea if they are working hard or not. More often than not the real answer to why some have success and others do not, lies in a mix of working hard and working smart. Lately, I have started to answer the question a little differently and choose to walk an investor through a series of questions myself to guide them to their own answers. Here are some of those questions that I ask:
1. What are you doing daily to grow your business?
A very common occurrence among many real estate professionals is to complain about the poor real estate atmosphere, the lack of opportunities, the tight credit markets, so on and so forth. Every excuse for not doing business seems to conveniently pop up during slow periods. A funny thing happens when the conversation turns from complaining about business to contemplating what they are doing to improve. I am constantly surprised by those that say they want to invest in real estate and they are fully prepared to get started. Many times they have their farm area ready to go and are fired up about sending out a mailing campaign to interested owners who might want to sell. At the same time they have pulled all of the REO listings in their farm area and yet…nothing happens. Nearly 100% of the time, that investor who is so ready to go is actually so scared of actually doing anything that nothing is happening. When they are asked how many post cards they sent out to their farm area they answer 25 “because they want to test first”. When we ask how many offers they made on their REO list, they answer two “because those were the only ones that fit their model”.
The fact remains that the real estate environment has changed drastically in many markets and many long-time real estate professionals are having to adjust with the changes. Many professionals understand that with changing times come changing methods and tactics and if you want to stay ahead of the game (and sometimes even stay in), you have to change to. Investors who are accustomed to making 10 offers a week to get the 1 or 2 houses they want are making 20-25 offers now to get those same houses. For those that may not understand the math, they are doing twice as much right now to get the same volume…but that is what professionals do!
2. What are the threats to your survival in the real estate industry?
There are threats to our survival as real estate professionals everyday. Do you know what is threatening your business? Are you even aware that there are very real threats? Every week there are legislators in state government and federal government that contemplate new taxes or removing tax credits and those actions will have an adverse affect on real estate investors. Many states are enacting or continue discussing plans to slow down investment in their cities. Banks, as well as lending institutions, are placing restrictions on the resale of properties that they are selling from their REO portfolios. Still, other institutions are placing profit limits on their properties limiting an investors profit from the resale of a property. Banks are burdening real estate agents with the costs of upkeep on properties they list from their REO portfolios and in some instances limiting the fee agents can collect when listing properties from their portfolios.
For investors, the simple rumor that a “private fund” has entered their market is enough to cause major panic. That panic is nothing compared to the havoc that ensues when a fund or multiple funds enter a market. Just ask most real estate professionals in Phoenix what that feels like! Still, there are several investment companies and individual investors that I know who continue to have great success in the Phoenix market even with all the craziness that unlimited spending brings. They built their businesses on fundamental values and recognized outside threats long ago. When the funds arrived and the chickens all lost their heads (it’s a southern thing), they stayed the course and saw their businesses continue to thrive.
Here is the bottom line when it comes to threats to your business. It is not the threat that can sink you, it is your lack of preparation and lack of response that sinks you. Every threat I listed above has affected my business in one way or another and not one has slowed us down. In fact, we are on pace to grow 142% from 2010. In two years time, we will grow almost 142%! All of that growth is credited to preparation and recognition that all of the so called threats are nothing more than opportunities. According to Henry Hatman success is that funny thing that happens when preparation meets opportunity.
3. How do you stand out from others in your industry?
Seems like a simple enough question right. The problems occur when the answers start coming in.
So many of us are all-consumed with the “wow” factor. How can I make myself stand-out? What can I do that will make people go “wow”? I think these are great questions, but the answers often stink. I promise you that sending a 4×5 desk calendar with your logo on it is not a “wow” factor. If you are thinking that your wow factor is the fact that you use 4 color post cards or you use a printed bandit sign while everyone else uses handwritten bandit signs, you may need to re-think what it means to stand out in your industry. I kid you not, I had a real estate investor tell me once that his business card was made out of that “really shiny material” and had a QR code on it…it was his secret weapon that made him stand out in his market. I had to tell him the following story.
I have a realtor friend who wants to make sure her clients remember her during these tough times. She has spent hours knocking on doors of properties that matched the profile of her clients…but were not for sale! She sets up a signing and notary service to go to her clients homes when it is time to sign closing documents, whether purchasing or selling a home. This cost comes out of her commission of course. She does not want her clients to have the inconvenience of fitting the closing into the schedule of a title company or attorney. She wants her clients to close according to their schedules and pays for that service. She also hand delivers documents, hand delivers keys and sends extraordinarily detailed thank you letters when business concludes. She even pays such close attention to her clients during conversations that her “welcome baskets” for clients that purchase homes include personal touches that are meant for that specific clients. She leaves an incredible impression on all of her clients and that impression is her “wow” factor.
4. What are you doing differently today & tomorrow & next week?
Regardless of your industry or the role you play in your company, we are all capable of becoming complacent. Unfortunately, the percentage of people who are so inner-driven that they never have to worry about complacency is very, very small. For the rest of us, every day presents a new opportunity to grow our business and prepare for future challenges. That preparation often means reviewing what we do each day, each week and each month and our entire approach to our clients…then throw it out the window and start re-assembling what we are going to do differently. In a conversation with one wholesaler, he told me a story about changing his reaction to interested callers. His answering service and script were so good that he could send an email and do research on a caller and their house before ever placing his first call to them. He could call someone interested in selling their home four or five days after they first called him and get the deal. This gave him plenty of time to prepare his offer. When he noticed he was starting to lose more and more deals as other wholesalers got to the leads first, he didn’t fret. He changed his approach. He told me that today he calls ever lead within two hours of them calling his answering service. Regardless of time of day or location of the property, he calls EVERY lead back in two hours. He has seen his success rate go through the roof and in turn he went from a very, very comfortable business to a BOOMING business. He realized that being first was much more important in today’s environment than being the most prepared.
Every single Tuesday, my entire staff gathers for a company wide meeting. We even patch in our employees who work in other cities and bring everyone up to date on what is going on with the company. One thing that comes from these weekly meetings are ideas. We love ideas and it does not matter who has them or which department they are directed toward. Every one is trying to get better and push the company forward. What has become apparent, and this was not by accident, is that the whole company is constantly thinking about how to improve. From the way we answer telephone calls to the way we route questions, to the materials we include in mail-outs and even the color of the flowers outside the front door. If there is something we can do differently that will have a positive effect on our clients, we discuss it!
Now, I will tell you that we have never change the color of the flowers because we thought it would improve our company. But we have taken many off-the-cuff remarks and ideas and turned them into service gold. One quick example. We send out cookies to our clients. At different times or for different occasions, we will send out home-made cookies. Not store bought, shipped from some other state cookies. These are fresh cookies made right down the road by a stay-at-home mom. An employee in our renovation department asked if the cookies could be iced with our logos on them. He reasoned that we send half a dozen to a dozen cookies and most people probably shared them, why not have our logo on them. He thought it would be a great conversation piece. It cost us a dime a cookie! We have actually had three referral clients who have purchased multiple properties and that was the best ten cent decision we had ever made.
I’m not about to tell you that sending out cookies with your logo on them is the magic bullet. In fact, we all know there are no magic beans or silver bullets or pillars of success. For real estate professionals around the country, the past few years and even the next few we see on the horizon present awesome opportunities for those of us that are willing to figure out how to do “business as unusual”. It is that very willingness to ask ourselves the above questions that will lead some of us to huge success while others wonder what went wrong.
Photo: Roger Davies