There are 110,000 opportunities to get paid on a real estate deal in metro Denver annually
and you need a surprisingly small number of them to make a half-million dollars per year.
Here’s a game plan that can get any agent from $100K to $500K annually within the next 24 months.
From My Perspective
I’ve been in residential real estate full time since 1988. In those 30+ years (and as an engineer in my former work life), I’ve discovered that a simple plan executed consistently outperforms a complex plan done sporadically. The business development activities described below are things any agent can do, and keep doing, even when busy with lots of transactions. Always ask yourself the following about any business development activity you are considering: Will I actually do this and will I do it even when I’m busy? If something is massively outside your comfort zone or requires a huge time investment, it probably won’t happen consistently.
Let’s run some numbers.
The average sale price in metro Denver over the last 12 months was $469,000. Assume your average GCI per transaction is 2.50%.
With those numbers, you’ll make approximately $12,000 per transaction and you’ll need 43 of them to get a shade over $500,000 in GCI. That is 3.5 closings per month.
How many opportunities do you have to get paid? There have been 50,000+ MLS transactions per year in the Denver Metro area for the last few years. As you know, a real estate transaction takes two parties, and this means there are 100,000 clients that need help. Add another 10,000 buyers that need assistance with a new home purchase, and you’ll find that there are 110,000 sides per year.
You need 43.
That is just three hundredths of one percent … one out of every 2,600 sides. There are plenty of opportunities. You don’t need a massive amount of business to hit your goal.
Get There Incrementally
You have two years to get to this $500K goal.
Spend the next twelve months getting your current $100K income up to $200K by doubling your production in the next year. That’s doable and it will allow you to put some habits and systems in place that will let you make the leap to $500K the following year.
Keep It Simple
Every system and process you put in place must be simple. Don’t let “perfect” be the enemy of “good” or even “just okay”. A simple, slightly imperfect thing done consistently will beat out the complex perfect thing you take six months to develop and only do sporadically.
Clean Up Your Database
Pick any contact manager out there – it does not matter which one because you are only going to need some very basic functionality. It’s best to pick something new so you can have a database specifically focused on your business. Add everyone you know to this contact manager and make sure you have four items for everyone on your list: complete name, home address, phone number, and email address. Get this done in the next seven days.
Send Something of Value That Demonstrates Expertise Related to Real Estate, Every Other Month
Everyone likes information on their property value. Send some kind of market trends report out to your database, bi-monthly. You can do this by email to save both time and money.
At CHR, we have a very simple system that allows agents to easily prepare a one-page report of market stats that are specific to either single family or multi-family properties in a given zip code. The report is branded to the agent – with agent’s name and contact info. It takes less than a minute to pull one up and save it as a PDF. Find something like that to send. It needs to be simple and high level, not reams of data.
Attach the PDF report to an email and include three things in the text of the email:
- A Standard Paragraph: (This is the same for every single person.) Example: “Attached is a high-level overview of what is going on with homes in your zip code. It’s worth having this more focused look at the market because most areas in the metro area are either doing somewhat better or somewhat worse than the overall averages you hear about on the news. If for some reason you need an estimate of your home’s value, let me know.”
- A Customized One to Two Sentence Paragraph About the Market in Their Area: Make a comment or two on how the market is doing in their area. Example: “I noticed that the appreciation in your area is a bit below the metro Denver average but the days on market are really low. So, homes are moving nicely.”
- A Personalized Paragraph: Say something to let the recipient know that this is not just an automated email. Example: “How was the trip to Disneyland?” Or “Did Jake end up getting that scholarship?”
Hit “Send” and you’re done!
Every month has at least 20 weekdays in it. If you have 100 people in your database, you’d only need to send five emails per day, Monday through Friday to get this type of info out to all 100 people. That’s 25 per week. It can be done in under an hour per week … maybe two hours per week if you work more leisurely.
Anyone that responds to the email gets a phone call from you. That call is not to ask for business but just to check in. Example: “Hi, Dan. Glad you like those market stats. Just checking in. What’s going on with you and Julie? Have you been doing as much skiing as you normally do?”
Keep a Transaction Pipeline
A pipeline is a simple list of transactions that people may want to do. When anyone even hints about the possibility of doing a real estate deal, that person goes on the pipeline list.
The data you need on each possible transaction is as follows: Client Name, Buy or Sell, Property Address (if selling), Likely Sale Price, GCI You’d Make, Likely Close Date, Transaction Status.
For Transaction Status, you have three possibilities: Potential, Active or Under Contract. Potential is used for anyone that has not yet employed you. The status gets changed to “Active” once you sign a listing agreement or buyer agency agreement. They get changed to “Under Contract” when you successfully negotiate a buy/sell contract.
Put every transaction on this list no matter how improbable it might be. You might be at your friend Joe’s house for a party and overhear his friend Alex talking about selling his house. Alex goes on your pipeline to remind you to follow up with Joe to get some contact info on Alex so you can send him some helpful info about the market.
Here is how you use a pipeline: Review it once a week. For each potential client, ask yourself what real estate related thing of value you can send. For a buyer, it might be a cool house that has come on the market that is in the area where the client wants to live. You might find an article on why it’s a good time to downsize and send it to that person that has been thinking about moving to a smaller home. The possibilities are endless.
Make sure you are sending at least one item per month to any potential transaction on your pipeline list. Devote a couple hours per week to this activity. By interacting regularly with these warm prospects, you massively increase your odds of being the agent they use.
Send A Marketing Piece Regularly
Notepads are one of the most economical items you can send to your sphere. They are useful and they have shelf life and people love them. I resisted doing them for years because it seemed too stereotypical for a real estate agent. When I gave in and started sending them, I was amazed at how many people commented on them. I had years when I did not do any other proactive business development (not a recommended practice) and I’d still get 20 to 30 deals a year just from the notepad mailings. Contact Captain Notepad to get this rolling. I recommend sending them monthly but no less than once every other month. Get this done within the next month.
Host at Least Two Get-Togethers per Year
Host a summer “open house style” barbecue that makes it easy for people to come and go. Let people know you are going to a concert and invite others to attend also (dutch treat) and then get together for drinks before or dessert afterward. These things can be done inexpensively and keeps you connected with people you know. It also provides endless opportunities to follow up with more one-on-one social gatherings over the next few months.
Use the “Every Client Replaces Themselves” Dialog
When you sign a listing or buyer agency agreement with a new client, set the expectation that you work by referral and that they will replace themselves before their deal closes. Here is a playful way to do so: “I get most of my business “by referral” from satisfied clients. My goal is to do such a great job for you that you’ll want to refer all your friends and relatives to me in the future. In fact, my hope would be that the first referral you give me will happen even before we’ve finished your transaction.”
Do A Great Job
All of the activities described above will get you more business, but it is all for naught if you don’t handle the transaction professionally. So, pick one skill to improve every month. Learn how to do a better market analysis this month. Next month, focus on improving your negotiating skills. Commit to your own professional development.
Expand Your Database
The actions outlined above will easily double your business over the next twelve months. To set yourself up for even greater success in the following 12-month period, add people to your database.
The best way to do so is to join a group related to some of your personal interests and hobbies. You may be a mountain biker or an astronomy geek or a quilter. Join a club around such personally fulfilling activities. It gives you some recreation, and rubbing shoulders with a new group will have you expanding your database as you develop friendships around shared interests.
The activities defined above can be completed in less than 20 hours per month. Done consistently, they will lead to more business in the next year and a quantum leap forward in the following year.
If you’d like support in executing on this plan, let’s talk. CHR is committed to helping agents grow their business.
Interested in learning more about partnering with Colorado Home Realty? Click here to read up on how we are helping our agents reach the top 1%.