Terry Watson, ABR®, CRS®, is founder and president of Watson World Inc., a real estate and leadership training company. He is a veteran trainer and real estate broker who works for his family’s real estate firm in Chicago.
Top 7 Rookie Mistakes
If you sidestep these common pitfalls, you'll be ready for a successful career in real estate.
March 1, 2004
In the book Trump: The Art of the Deal, Donald Trump tells his key to success in real estate: If you take care of the downside, the upside will take care of itself. In other words, if you have a contingency plan for everything that can go wrong, you can’t help but succeed.
You may not end up as wealthy as The Donald, but you should approach your real estate sales career with the same attitude: If you know the top mistakes that prevent real estate professionals from realizing their full potential, you can avoid them — and take your career further, faster. Here are what I believe are the top seven hurdles that could stand between you and a successful real estate career.
- No Business or Marketing Plan. If you went into business for yourself and approached a bank for a business loan, your loan officer would want to see two things: 1) your income statement and 2) your business plan. Well, when you go into real estate sales, you are going into business for yourself. But many salespeople have no clear goals or timeline for achieving their goals. Consistently, real estate professionals who have a written business plan are more successful than people who don’t. If you don’t know where to start, you can copy a sample real estate business plan from Palo Alto Software Inc.’s Business Plan Pro. The company also offers Marketing Plan Pro.
- Not Using Resources Available to You. Even if you’re new to the industry, you don’t have to recreate the wheel. Take advantage of all the resources that are around you — from your brokerage, your colleagues, and professional organizations. Find top performers in your market or other markets and ask them to mentor you. Read each issue of REALTOR® Magazine and use all the resources available at REALTOR® Magazine Online. Each issue of REALTOR® Magazine is packed with tips from successful practitioners or trainers on how you can become more successful.
- Not Maximizing Your Productivity. If you look at top-producing real estate professionals who are selling 600-plus units a year, you will notice that they have two things in common: assistants and systems. These practitioners are multiplying their efforts and increasing their output through people and technology. According to the NATIONAL ASSOCIATION OF REALTORS® Member Profile, real estate practitioners who used at least one personal assistant had a significantly higher sales volume than those who didn’t. You may erroneously think that you can’t afford a personal assistant. But think again. If you can significantly increase your income by increasing your efficiency and the number of transactions you can close in a year, you can’t afford not to get a personal assistant.
- Not Earning Designations. Many practitioners feel that they aren’t making enough money to allocate funds for education. This is backwards thinking. You take the class to acquire the skills to increase your sales and earn more. The skills you learn and the referral relationships you develop with other students you meet will dramatically affect your bottom line and your potential for success.
- Not Purchasing Equipment as a Business Entity. Many real estate professionals purchase their laptops, digital cameras, or PDAs as consumers. This is a big mistake. If the technology breaks or you need help with the device, you will be sent to consumer purgatory, also known customer support. When you call customer support as a consumer, expect to waste at least an hour of your day. This purgatory is completely avoidable and unnecessary. The next time you purchase equipment, buy it as a business entity. You can do this by stating that you are a business when you purchase the equipment in-store, choosing the business ordering option online, or using the business-ordering phone number through companies like Dell. When you purchase equipment as a business, your customer support will be much better and less time-intensive. When you need help, you can call a support line that is reserved for business accounts. That means that you only spend about five minutes on the phone with one person, and the needed part or parts are sent overnight. In some cases, you can even get a technician dispatched to your home or office to personally fix the problem.
- Not Crafting Your Marketing Message to Prospects’ Concerns. If you base your marketing strategy on assumptions about what your prospects want from you, you could be wasting money. The NATIONAL ASSOCIATION OF REALTORS® Profile of Home Buyers and Sellers provides insights into what really matters to the typical buyer and seller. For example, it may not be wise to using marketing dollars to promote your resume; according to the survey, the average homebuyer or seller doesn’t care about your accomplishments. What they do care about is your ability to help them find the right house, negotiate skillfully, and manage the paperwork. Your marketing should target their concerns.
- No Income Buffer, Passive Income, or Nest Egg. What often kills new real estate practitioners is the concept of lag time. When you sell a house, you typically don’t get paid when the contract is accepted. The average contract is written for 45 days. In a perfect world, you would get your commission check 45 days from the date it was accepted. In the real world, you don’t always get paid on time. What could go wrong? Maybe someone forgets to order the title, water certification, village inspection, pay-off letter, survey, termite inspection, or income verification. If you're in a hot market, the title company could be backed up for two weeks or longer. The closing date could be pushed back days or even weeks. A successful real estate practitioner needs a line of credit and a financial cushion of three to six months of personal expenses to survive. You also need passive income — or income coming in from investment property so that you don’t have to be desperate to close a deal. When that check finally arrives, don’t forget to put some money aside for your nest egg.
Learn from Your Mistakes, Then Move On
Usually it is the simple stuff that derails a potentially successful real estate career, eclipses your joy in helping consumers find a home, or causes practitioners to burn out prematurely. You are where you are today because of decisions you have made or did not make. Before you embark on a real estate career — or before you try to move your career to a new level of production — take a hard look at yourself and see if you’ve been guilty of any of these mistakes. Then make the decision to not make them again. Once that decision is made, your path to real estate sales success is wide open.
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