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In Part 1, we began the planning process by writing out our business goals as a real estate professional. We then created a set of strategies for reaching these goals. These strategies included composing a mission statement to propel us toward the realization of our goals. Next, we identified our target audience, performed a SWOT Analysis, and determined our financial needs.
In Part 2, we continue the planning process by identifying the specific activities we need to engage in to actually generate commission income. These activities are referred to as DPAs or Dollar Productive Activities. You may have heard that you need to “treat your real estate business like a business”. This is great advice... But what does it mean exactly?
Creating a comprehensive business plan and well-defined ways to execute it, is a fool-proof way to build a solid foundation for your business. All top-producing real estate agents know the value of a business plan. In fact, it is the most important tool for creating a high level of sustained commission income. Agents who do not create a business plan are like a leaf that blows in the wind; making money becomes a hit and (mostly) miss proposition.
Agent “Juliet” of ABC Realty, a productive real estate company where all agents create and follow their business plans, has just met and fallen in love with Agent “Romeo” of XYZ Realty. Romeo and his struggling co-workers are barely making ends meet. They lack discipline, structure, and business plans. Romeo’s idea of marketing consists of: (1) Sitting by a phone and hoping it will ring; (2) Sending endless emails that will likely never be opened; and (3) Posting information on social meda that may never be seen.
Agent Juliet wonders why agent Romeo chooses to struggle like this. She asks, “Why not join the ranks of the prosperous who understand the value of a business plan and actually put one into play?” Romeo, like you, will now uncover the secrets of a simple, yet highly effective business plan. But first, we must remind ourselves why we chose to get into real estate as a profession.
Running your real estate business like a business begins with the decision to make money. After all, isn’t that ultimately why you got licensed in the first place? I know–some of you say you got into real estate because you love homes, you love working with people, and you want to be of service to others. As truly wonderful as those reasons are, no matter what you do for a living, you expect to be paid fairly for your services. It’s no different with real estate.
All Fortune 500 companies build their success on a platform that includes business planning. They do not reach this level of success haphazardly or by “winging it” on a daily basis. For some reason, however, many real estate agents hope to create a sustainable stream of commission income level without planning for this success. The good news is that all agents, even new ones, can assure themselves of the best chance of succeeding by creating a plan.
Simply stated, a business is a funding mechanism for life. Now, before you dismiss business planning as “too money-focused,” keep in mind that it is not the money we are after, but the experiences that the money affords us. Money is the “barter chip” that we use to exchange for life’s experiences. You make more money–you get to have more experiences. Life is defined by the experiences we create for ourselves and for others. Make no mistake about it–prosperity is an experience that is chosen!
There are many different activities that a real estate agent can choose to do each day. But, at their core, these choices are either dollar productive or non-dollar productive. And, make no mistake, both options are a choice. Agents who avoid business planning are, in essence, making the choice to be nonproductive.
On the other hand, agents who create and follow a business plan are choosing to be dollar productive and financially secure. A Dollar Productive Activity, or DPA for short, is any activity that adds value to the time invested. The beauty of real estate as a career is that the DPAs are blissfully limited. By this I mean, they are easy to identify and surprisingly simple to apply.
Being “dollar productive” means planning and engaging in the 5 DPAs described in this section. As you read the following, notice how each DPA logically leads to the next. A well-designed business plan shepherds you through the progressive realization of your goals through the execution of DPAs. As part of the planning process, you should tract how much time you spend each week in each of the DPAs. Here are the DPAs in order:
The word prospect is one of the most maligned words in real estate. As a business coach, I have always found it curious that the most productive thing a sales associate can do is often the most feared. Would you stay on an airplane if the pilot said, “I love my job, but I get nauseous taking off and landing airplanes?” Would you recommend a surgeon to a friend if the surgeon proclaims, “I love my job, but I get noodle legs whenever I see blood and gooey stuff?” Point made!
Prospecting is any direct activity the purpose of which is to locate a buyer or a seller lead. Productive agents understand that prospecting means making prospecting calls and knocking on doors versus sitting at a desk and waiting for the phone to ring. A prospect is a decision-making adult who is may buy or sell real property in the future. Productive agents also use proven scripts and dialogs for every aspect of prospecting. Ultimately, the goal of “prospecting” is to locate a lead.
This Dollar Productive Activity involves maintaining regular contact with the leads you located through your prospecting efforts. A lead is a decision-making adult who intends to buy or sell real estate within a defined period of time. The time within which the buying or selling decision will be made determines the value of the lead. The goal of “lead follow-up” is to set an appointment to list a seller's property or sell a property to a buyer.
As a Dollar Productive Activity, listing is the process of making a presentation to your seller-leads with the intent that they will list their home with you. We exercise this DPA each time we make a listing presentation to a potential seller. As you make a listing presentation, your prospective seller is also interviewing you to be their agent. Use a scripted approach for efficiency and consistency of presentation. The goal of “list” is to walk out of the home with a signed listing agreement.
As a Dollar Productive Activity, selling is the process where you make a presentation to your buyer-leads with the intent that they will purchase a home with you as their buyer’s agent. We exercise this DPA each time we ask a buyer to enter into a buyer’s agency contract. Again, use a scripted approach for efficiency and consistency of presentation. The goal of “selling” is to get a signed buyers agency contract. If the buyer is not prepared to sign an agency contract at the time you make your presentation, at least help them understand the value of working with you on an exclusive basis.
This Dollar Productive Activity is where we put it all together. To negotiate is to secure a signed purchase agreement between a ready, willing, and able seller and an equally ready, willing, and able buyer. The goal of negotiating purchase agreements is to get the parties to the closing table with the best deal possible, in the shortest period of time, and with the fewest possible problems. To accomplish this, you must be well-versed and rehearsed in the art of handling stalls and objections. The goal of “negotiating” is to secure a signed purchase agreement.
The first part of a business plan includes separate, written, personal and business goals for the year. These goals establish your level of commitment to your business plan. Without goals, sales professionals lack commitment. Written goals actually propel sales professionals forward. No goal is ever reached without it first being written down.
If you are new to real estate or new to business planning, it will take some time to determine how much time you need to spend in each DPA. You can dramatically shorten this time by consciously and consistently tracking your daily activities. Write down how much time you spend engaged in each DPA every day. Start with the following standards which have worked for thousands of high-producing sales associates over the years. Productive agents typically spend 70-75% of their time engaged in DPAs. Assuming an average of 8 hours in a business day, this means 5 hours spent focusing on your planned DPAs. If you are new to the real estate business, most of your time will be focused on prospecting for new business leads.
Based on the prior paragraph, I’m not suggesting that new sales associates have to spend 5 hours each day prospecting. Instead, a minimum of two 50-minutes cycles of prospecting each business day is a great way to start. Interestingly, agents who consistently prospect two times each day throughout the year tend to be consistent 6-figure income earners.
You should also schedule time each day for practicing your scripts. All businesses that generate consistent income year in and year out know the value of scripts, dialogs, and checklists. Most brokers offer some form of new agent training for newly-licensed agents. This training likely includes scripts. If not, there are a number of sources on the Internet that provide scripts such as MikeFerry.com.
It is important for agents to track their daily, weekly, monthly, and yearly numbers. For example, the agent will track:
• The total number of contact attempts made (whether via telephone or door knocking);
• The number of leads that are located through prospecting efforts;
• The number of appointments that are set to make presentations to sellers or buyers;
• The number of listing agreements or buyer agency agreements that are signed at the conclusion of the presentation; and,
• The number of closings that result from acting as a seller’s agent or a buyer’s agent.
Regular tracking of these numbers tells the agent how efficient they are or where they may need to hone their listing and selling skills.
While there are many approaches to business planning, they all start with the intention to produce at a higher and more consistent level. A good business plan identifies the exact behaviors and activities that are necessary to bring about that production. If you make the decision to build your business plan around the DPAs we just discussed, you will be amazed at how well it works. Always remember that success begins with the decision to create a plan. As Walt Disney said, “If you can dream it, you can do it.”
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However, fulfilling the promise of a successful real estate future requires the right choices at the right times. The most important decision to make right now? Where you’ll begin — or continue — your real estate training. NCI Associates, Ltd. remains your intelligent choice for Michigan Real Estate Classes.
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