Article Courtesy of: Inman News
By: Marian McPherson
Four real estate dynamos share eight things real estate agents must do to effectively advocate for their clients, improve their skills, safeguard their finances and build a business that stands the test of time:
The real estate market has been on an incredible run for the past two years with real estate agents handily breaking their previous sales records. However, the market has begun to shift as rising mortgage rates, unhinged home price growth, rock bottom inventory and worries about an impending economic downturn cut at homebuyer sentiment and threatens market activity.
Despite these potential downshifts on the horizon, RE/MAX Victory + Affiliates Vice President Donna Deaton, The My Southern View Team broker-owner Alyssa Hellman, Keller Williams Lucido Agency CEO and President Bob Lucido, and Chicago Properties Firm broker-owner Sam Shaffer said it’s possible to continue fueling success — but only if you’re willing to tune up your sales skills and tactics, business planning and development, finances and personal life to expertly navigate the twists and turns of the market.
First gear: Have an intimate understanding of trends in your market
As the market continues its extraordinary hot streak, top-producing agents said the first step to success is to make sure you have an intimate understanding of your market with multiple sources and data points to provide a full picture of what is — or isn’t — happening.
For example, Shaffer said real-time data is crucial in helping his buyers understand Chicago’s unique market that ebbs and flows contrary to most narratives about seasonality.
“One trend that’s happened year after year is that a lot of people don’t recognize things really slow down in the summer,” Shaffer said. “People have already established their living situations, they’ve renewed leases, and they’re into their new homes for the school year.”
“Summer in Chicago is just a magical time where the weather’s nice, people are going away to lake homes, friends are getting married, we have holidays, so all of a sudden, all these weekends are starting to get filled up and people aren’t spending as much time focusing on their home search,” he said.
“So if someone asked me when the best time to buy, I wouldn’t have the typical response. Someone that’s looking to be opportunistic, summer — not the fall or winter — could be the time for them.”
Although Shaffer uses data to help buyers identify opportunities, Deaton said she uses her data stockpile to help her sellers understand the slight shift in the market sentiment that’s pushed buyers to back away from making exorbitant bids. As sellers continue to rachet up their listing prices, she said it’s increasingly important to explain not only price trends, but other terms that made deals happen.
“Who can blame a seller for not wanting to get as much as they can our house? No one can,” she said. “I went on a listing appointment last week and the seller’s expectations were, ‘Well, that house around the corner brought in $100,000 more than what you’re telling me I should list at.”
“I said, ‘Yeah, it did. But here are the terms of that house, someone brought cash and an appraisal wasn’t an issue,'” she added. “You have to really give them all the information — you can’t just go in and say, ‘Well, your neighbor’s house sold for this much more than what yours seems to be valued at.'”
Hellman said detailed market research can make or break a deal, so that’s why she goes the extra mile to check in with fellow agents to get additional details on what’s happening in specific pockets of her market, learn what offer terms have been winning over sellers, and suss out other factors that can’t be packaged neatly into a report or spreadsheet.
“I connect with a lot of agents in terms of, ‘So what have you been seeing? Just to make sure that it’s still what I’m seeing as well?'” she said. “I think especially in our market, there’s kind of these little pockets that might be slightly more competitive or slightly less competitive than the market as a whole. So I’m kind of one always looking to identify where are those pockets.”
“One of the things that that we don’t oftentimes see — unless we’re receiving the offer — is where did everybody come in on due diligence, earnest money, or things like that,” she said. “Agents can’t really share that, but they can say, ‘Hey, I submitted an offer a few weeks ago with $10,000 in due diligence and I wasn’t even near the top.’ Those little kinds of insights that you can get can help you ballpark where you and your clients need to be in the market.”
Second Gear: Strengthen your relationships with agents and clients
After establishing baseline trust through showcasing your market expertise, Shaffer, Deaton, and Hellman said agents must put the pedal down on the basics of relationship building with clients and fellow agents. All three brokers said the volatility of the current market alongside worries of an impending housing bubble means there needs to be more hand-holding than they’re probably used to.
“It’s tough,” Deaton said. “We have to be a cheerleader and they can’t see that we’re stressing because we have to be there for them, we have to show them empathy and we have to communicate every single day — no excuses.”
Deaton said communication can include text messages, social media check-ins with past clients and other sorts of correspondence, such as emailed newsletters or handwritten cards. But in this market, she said nothing beats a phone call. “There are so many agents who have given up picking up the phone and calling someone — they either want a text or email,” she said. “But you’ve really got to make that personal connection.”
In addition to building strong ties with clients, Deaton said it’s equally important to build robust relationships with agents inside and outside of your brokerage. Strong agent relationships, she said, are invaluable in an uber-competitive and oversaturated market where agents are scrapping for the same clients.
“I tell agents all the time, ‘You may not like the way this deal is going, but we also have to remember that listing agent is overwhelmed as well and they’re just as stressed as we are, you know, on their side,'” she said. “So you do have to build that relationship and if [the transaction] doesn’t go well, then you send them like Starbucks card at the end of the thing and say, ‘Hey, I’m sorry, it didn’t work out. Have a cup of coffee on me,’ or something like that.”
“It’s a small gesture, but it goes a long way,” she added. “You don’t want to be known as an agent that’s difficult to work with.”
Hellman and Shaffer said tending to client and agent relationships helps build one of the most crucial business streams in today’s market: referrals.
“I would say probably about 85 to 90 percent of [me and my wife’s] business is referral base, and we’ve always spent a lot of time pouring into our past clients and pouring into our network of people that we know around town,” she said. “We’ve doubled down on [pouring into our network] because our goal is always if somebody’s thinking about real estate, we want to be right on the tip of their tongue.”
As they’re building relationships and their referral pipeline, Shaffer said agents have to remember the impact won’t likely be felt immediately. However, if they stay committed to the basics of excellent service, it will pay off in the long run.
“This is not a sprint, this is a marathon. There’s no magic pill to all of a sudden put you at the top; it’s a lot of work,” he said. “It’s grinding every day, it’s communicating with your current database, it’s being as proactive as possible with your current clients and it’s really doing an incredible job for each and every client you work with.”
“It’s with the understanding that you’re not going to get rich from one client, but you’re going to build a business by treating each client with the best possible service, and then in exchange, you can build your referral base on how you’re currently taking care of the client in front of you,” he added. “For me, personally, I will not ask for a referral until I deliver.”
Speedbump: Manage buyer and seller expectations ASAP
In the process of building a solid relationship with clients, managing buyer and seller expectations can prove to be a major speedbump that leads to major client disappointment and dissatisfaction, and potentially lost business if they decide to find representation elsewhere or dissuade others from using your services.
Although agents can’t totally control a buyer or seller’s decisions, Shaffer and others said they can do clients the favor of being upfront and honest from the get-go about where the market is and how it can impact their real estate goals. For buyers, Shaffer said conversations are centered around maximizing opportunities and being fully prepared to strike when the iron is hot.
“What’s happening now in 2022 is a level of entitlement and almost arrogance from sellers or maybe listing agents to where they’re the best game in town. They’re really getting as much money for the homes as possible,” he said. “Buyers are in a tough spot where they’re overpaying potentially, and they are waiving certain contingencies.”
“[When managing buyer expectations], it’s really letting them know they have to have all their ducks in a row — they have to be pre-approved, they also have to be willing to be fast, quick and nimble because when a house gets listed, they have multiple bids in the first day,” he said. “The seller will call for highest and best with a short turnaround time, so really, for my buyers, I want them to know they must have a sense of urgency.”
In addition to explaining offer timelines, Deaton said buyers must understand how bidding wars will skew their initial budget downward to account for the extra money they may need to offer sellers.
“It is tricky right now,” she said. “We have to really let them know how the market is upfront and that we’re gonna have to come in strong. If you’re only pre-approved for $200,000 we’re going have to start about $160,000, and that kind of hurts their expectations a little bit, but that’s the market.”
Hellman said she always uses data to lead into touchy conversations with buyers and sellers since focusing on the numbers helps clients flip the switch from their emotions to the simple facts of the market.
“A big thing that I’ve been trying to do, at least with inventory, is setting those expectations early on,” she said. “I try to use that very unsexy, boring data that a lot of the time is sort of a snooze fest for folks. But it’s necessary to really show them what’s going on.”
“I’ll oftentimes pull out the market stats from now in comparison to where were we at this time last year or even the year prior because I think that really helps build that context for folks who are not dealing in this every day,” she added. “I mean, I even find those numbers amazing. We’re not truly seeing how much [the market has] changed in the last year or even two.”
Finally, Lucido said successfully setting client expectations also includes the ability to find out exactly what buyers and sellers value and putting some “skin” into the transaction so they know you’re equally invested in their success.
“I’m going to share something with you that will make a big difference: Anybody can sell a house. When I go on a listing. I tell people you can hire a discount broker and you can save commissions. But do you want a discounted commission? Or do you want to walk away with more money, what’s more important to you?” he said. “So what I do is I sell the end result — I sell the net.”
“My value proposition is you are going to make more money and I’ll even put a guarantee on it,” he said. “I just did one recently, I said, ‘If I don’t sell for $100,000 or above, my commission will only be ‘x.'” [Clients] like people who have skin in the game.”
Third Gear: Drum up inventory with some strategic real estate matchmaking
As the inventory shortage continues to worsen, Shaffer, Deaton, Hellman and Lucido said real estate agents have to sharpen their strategy skills and dig into their bag of tricks to create inventory opportunities for their clients. For Shaffer, having access to off-market and coming soon listings have been a godsend for his buyers.
“I’m constantly checking every resource possible to find a good match for my client. I have access to off-market and coming soon listings so a lot of times its kind of looking under the hood, so to speak, to find some of those not so readily available homes that might be a good fit for our clients,” he said.
Shaffer also said he’s subscribed to several platforms geared toward providing market insights for top-producing agents, which have also been helpful in his hunt for inventory. “There’s a publication that is for the top 10 percent brokers in Chicago that I’m a part of [and] I partnered with another company called Zen List, which is a feed for off-market and coming soon homes as well,” he said. “There’s a lot of different vehicles that I’m using to kind of be creative and resourceful for my clients.”
Meanwhile, Deaton is utilizing a more cost-effective platform to drum up inventory: Facebook groups.
“I get a ton of business from Facebook and it is kind of crazy,” she said. “The Facebook yard sale [groups] seems to be where I get the majority of people reaching out to me and it’s usually because I’m begging for someone to let me know if they’re going to sell because I have a buyer that I need to get a home.”
“Or I’ll place my listing on there and it generates a ton of buzz,” she added. “But you know, I think it’s just because it’s my generation. That’s where all the baby boomers are.”
In addition to accessing off-market listings, dipping back into their databases to find sellers — “I have a shared spreadsheet with my wife to match potential buyers and sellers,” Hellman said — Lucido said open houses are an inventory goldmine.
“The number one way to create inventory is having a strategy to conduct your open house,” he said.
Take the exit: Don’t forget about open houses
Open houses took a backseat for most of the pandemic due to social distancing guidelines and some sellers’ fears about having scores of people in their homes. However, open houses have come back with a vengeance this spring with several of them capturing social media headlines for miles-long lines of buyers.
To make an open house a listing goldmine, Lucido said agents must engage in some old-school, door-to-door advertising before and after the open house that he calls “circle prospecting.”
“Just don’t sit there,” he said. “Knock on doors before the open house and after the open house. After you’ve sold the house, circle the neighborhood again. Tell people you got 10 offers, got nine people lost out and you need more houses in the neighborhood. Do you know anybody in this neighborhood who would like to get an extraordinary price for their home right now?”
Lucido suggests door knocking at the ten homes to the left, right, front and back of your listing since they’ve most likely been keeping an eye on the progress of the sale. “There’s got to be more hand-to-hand combat, you’re not going to conduct sales sitting in front of a computer,” he said of the method.
Shaffer said his open house protocol hasn’t changed too much from pre-pandemic and his main goal is to set the tone for buyers, who might become future clients even if they don’t make an offer on the listing he’s showing. “It’s back to basics with running open houses,” he said. “I think it’s really important is to start marketing and promoting the open house as much time in advance as possible. I like to list the home on Monday or Tuesday and when I list the property, I also will plan for an open house for that weekend.”
“It’s been really helpful to get as much traffic as possible with giving everyone enough leeway heading into the weekend,” he added. “What’s really important too is a fact sheet that spells out all the specifics of the home — the ages of mechanical appliances, neighborhood information, association information, improvements that have been done, assessments are broken down, parking, etc. Everything’s spelled out and it sets the tone for a positive experience.”
For Deaton, the only change to her open house protocol is how often she does them. Instead of being a weekend occurrence, she said she hosts them any day of the week with the primary consideration being MLS ‘coming soon’ listing rules.
“We do the ‘coming soon’ listings, and in Cincinnati, you’re allowed to do 10 days of coming soon up to when it goes active,” she explained. “The day you go active, you hold the open house because that’s going to get the most people through the house and you often get so many offers that the seller says, ‘Oh, there’s too many offers, I’m overwhelmed. You know, I just want to take one and be done.'”
“I honestly never stopped doing them. I love open houses and they’re effective,” she added. “They are still happening — they’re just happening every day of the week.”
Fourth Gear: Refine your negotiation skills (Hint: A bigger offer doesn’t always win)
In addition to navigating inventory shortages, real estate agents must refine their negotiation skills to help homebuyers make a smart purchase that helps them not only now, but in the long run. Although beefing up an offer with extra cash is often the first thing that comes to mind, Deaton said speaking to a homeseller’s other needs, such as a longer closing timeline or offering a leaseback option, can be more effective.
“It’s not always the price. Sometimes it’s the terms that gets the deal,” Deaton said. “You’ve really got to do your due diligence as a buyer’s agent and get that information.”
“A lot of times the seller may need 60 days before they can get into the house that they’re buying or building, so flexibility with occupancy is huge,” she added. “Sometimes sellers are even willing to, if they need more than 60 days, do a leaseback and lease that home back off that buyer until they’re able to move forward to their next home.”
Deaton also said things like being willing to cover the buyer’s agent’s commission or cover a portion of the seller’s closing costs have worked too, alongside waiving contingencies or offering appraisal gaps with proof of funds.
“Buyers are willing to pay appraisal gaps in this market, but sellers wonder is it truly going to come true? Can you really afford that?” she said. “It’s important as a buyer’s agent, that if you’re going to offer that appraisal gap, you show proof of funds. A lot of agents, they’ll do the appraisal gap, but they don’t provide those funds, so that’s a huge factor.”
However, if you’re relying on extra cash to make the difference, Hellman said it’s not always necessary to offer four, five or six figures above the asking price to win. The Raleigh-based broker said she’s borrowed a strategy from “The Price Is Right,” where players often win by making their estimates only slightly higher than their competitors.
“Slightly higher numbers work,” she said. “If a lot of people are going to make an offer at $525,000, I suggest that my clients go in at $526K or $527K because my point to a lot of buyers is to think about how the seller is hearing that information — they’re probably getting those offers put together in some form of a spreadsheet so that the agent can go through all of the offer terms with them.”
“So what’s going to get you in that number one slot is sometimes something as small as an extra $500 or $1,000,” she added. “That can really make that decision for them.”
Hellman said making an offer is ultimately an educated guessing game, but she’s been able to get more wins by flagging listings and making a note of the difference between the listing and closing price. “That is giving me good insight and good data where I can better predict it when we’re going to submit an offer,” she said.
On the listing side, Lucido said agents have to some sharp negotiation skills as well when it comes to working with sellers on the listing price. Although homes are still being snapped up like hotcakes, the KW expansion team leader said buyers are starting to skip overpriced listings.
“Right now I have a particular listing and it’s not selling because the seller overpriced, and if I wanted to be really blunt about it, I’d lose the listing,” he said. “So you have to lead into that conversation with lots of information. I have a program called the survival package — my assistant puts it together [and it] consists of comps, tax records and other strategies. And I go meet the client.”
“If you try to get price reductions over the phone or I have to give you bad news over the phone, you might get fired,” he added. “So you must meet with them in person and over-communicate in this challenging environment.”
Tire check: Reevaluate yourself and your business
The real estate market isn’t only competitive for homebuyers — it’s become increasingly competitive for real estate agents too. As the number of agents continues to outpace the number of homes available for sale, it can be hard for new agents to break through the noise and unsuspectingly easy for experienced agents to lose their progress if they’re not careful.
Lucido, who also serves as a coach for his more than 250 sales agents, said real estate agents must do an autopsy on their business and determine what is and isn’t working. Operating on auto-pilot, he said, won’t help agents remain successful as the market shifts into more thorny territory with rock-bottom inventory, rising interest rates and other factors that impact buyer and seller activity.
“People need to do an autopsy of where they’ve been; what has worked and what hasn’t worked for them,” he said. “How were your last six months or a year? How’s it gone? Is it working or not working? Not just what are your goals? Do you have a coach and countability partner to help you get there? What do you need to do to work on yourself? More training, more seminars, more podcasts, more engagement?”
“This is a highly competitive market [and] you’re going to need to convince people why they need to go with you,” he said. “It’s not going to be as easy as it used to be.”
Lucido said doing a business autopsy will require you to be honest about where you are, which can be difficult to do. With that in mind, he said its important to pull in a mentor, coach or accountability partner to help you get to the nitty-gritty of what’s thwarting your results.
“It’s been so easy for people to make money in this business that they look like heroes,” he said of the past few years. “We don’t need a college degree or master’s degree or a doctorate degree — my son’s a lawyer and just went through an incredible amount of studying — we don’t need that. So we need to be self-motivated in bettering ourselves.”
“So whether it’s public speaking, whether it’s dressing better, role-playing your presentation, or recording what you do, do it. What do you look like in your videos? Do you like how you look? How are you delivering?” he added. “I’ve got somebody on my team right now I’m coaching and I said, ‘What’s your challenge?’ and she said, ‘Well, I’m not getting as many listings.'”
“I said, ‘Do you have a prospecting challenge? Or a presentation challenge? Are you getting the meeting?’ And she said, ‘No, I’m not meeting people.’ I’m like, well, there’s your problem and she said she didn’t feel that confident. So we’ve got to work on her confidence. So if you work on your knowledge, knowledge gains power, and power is confidence.”
In addition to relying on a coach or mentor to help you improve, Deaton said agents need to use reviews as an opportunity to learn not only about what they did well, but what they fumbled on.
“We use experience.com for our platform reviews, and we have it set to where it’s got to be so many stars for it to post on social media automatically,” she said. “But it’s always good to know what you’ve done wrong so you can improve yourself.”
“Sometimes we just don’t gel with the client and that could be you know, the bad experience,” she added. “Or maybe I was too pushy or maybe I didn’t communicate enough. It’s always good to be able to learn from what mistakes you’ve made.”
Next, Deaton and Hellman said agents must get their finances in order so they can ride out upcoming market shifts that may slow down business from the past two years’ fever pitch pace.
“I always tell my agents to stockpile their money,” Deaton said. “You don’t know what’s going to happen in this business — I wish I had a crystal ball to see what will happen next, but [the real estate market] is not something that you can literally dictate.”
“But it’s important that as agents we keep our finances in line because if it does slow down and you find yourself going a few months without closings, what’s going to pay your bills?” she said. “So you need to make sure that you stockpile your money.”
Hellman said she’s shifted her budget to focus on her current sphere rather than trying to pull hordes of new people in. “Our past clients already know us, trust in us and like us,” she said while noting the majority of her business comes from referrals.
She also said agents must make room in their budget to support their communities through organizations and causes, which is another effective way to connect with past, current and potential clients outside of real estate talk.
“We spend our money on local sponsorships and some of the stuff that we will sponsor is just near and dear to our heart, like our son plays basketball and so we’re heavy sponsors of that organization,” she said. “But the financial return on that I can’t always directly correlate to the amount of money I put into it. But I can correlate it to how much time I spend on it.”
“When we look at it back, and we say, ‘Hey, you know, we can’t even remember that event that we helped sponsor or we never heard anything more about such and such that we took out a page in there,’ those just don’t make sense to do again,” she added. “That’s kind of how we evaluate what makes sense in terms of future spending.
Meanwhile, Shaffer said he’s redirected his budget to redesign and rebrand his website, produce videos for marketing and social media — “It has become really impactful,” he said — and acquire more clients through Zillow.
“It has been a vehicle that I use to help supplement my current business,” he said. “I can’t rely 100 percent on Zillow, but what I do is I use that as another vehicle to try to pick up clients by marketing through that platform. The way that I view it is that you know that one client potentially can lead to more clients down the road, they can refer you to friends and family, or potentially in the future when they want to sell.”
“I just understand that I might not see an ROI on my investment right away, but I’m laying the groundwork and the foundation for the future,” he added.
Fifth Gear: Build momentum and keep it
Once you figure out what works and build momentum, all four brokers said the real work and reward comes with consistency.
“This is not a sprint, this is a marathon,” Shaffer said. There’s no magic pill to all of a sudden put you at the top. It’s a lot of work. It’s grinding every day, it’s communicating with your current database, and it’s being as proactive as possible with your current clients.”
He added, “It’s really doing an incredible job for each and every client you work with with the understanding that you’re not going to get rich from one client, but you’re going to build a business by treating each client with respect and giving them the best possible service.”
Deaton and Shaffer said a huge part of keeping momentum is continually investing in yourself personally and professionally so you’re ready for whatever the real estate market throws your way.
“I always tell agents always be learning; don’t ever cut yourself off from [earning] a certification or just going to a free marketing class because the marketing changes daily, the technology changes daily, and we have to stay on it,” she said. “Last year at the RE/MAX conference, I got my certification for the senior real estate specialist because baby boomers are the big generation right now. We’re getting ready to retire, we’re getting ready to downsize and I know how to handle them.”
“Another good certification from the National Association of Realtors is for short sale and foreclosure resource agents. Although it’s not going to be like it was before, it’s coming. That’s going to be something that we’re going to see happen,” she said. “As a matter of fact, I found that there were six foreclosures today in the MLS. Know how to handle them. You don’t have to know everything, but go learn a few things and how to expertly handle it.”
Lastly, Shaffer encouraged agents to invest in their physical and mental health. “I workout for both the physical attributes and the mental attributes, because I need to be able to take care of myself first and foremost so that I can take care of my clients and my family,” he said. “It’s my non negotiable. It gives me the physical and mental energy to approach each and every day with putting my best foot forward.”