Building a real estate sales business is hard. These 7 steps will take you into the top-20% of agents in your market.
Real estate changed my life.
- It allowed me to make money than ever before
- It exposed me to incredible people
- It became my entry point into the broader world of business
But I was incredibly naive when I started.
No one told me how hard it was to build a real estate sales business.
- No one told me that 50% of agents sell 1 or fewer properties each year
- No one told me that 1 in 10 realtors renew their license after the first two years
- No one told me to expect to make no money in the first year
And I’m glad because none of that ended up being true for me.
They apply to the average agent.
Do you plan on being average?
I sure didn’t.
So I set a ridiculous goal: to sell one house per week. I had no idea how rare that was.
Then I got to work.
The Momentum Problem
As a newly-licensed realtor, you have zero momentum.
You don’t know anything about anything that matters. You don’t know your documents, your presentations, your scripts. You don’t understand inspections, appraisals, titles, deeds, or surveys.
Most new agents think clients are going to beat their door down the day they get their license.
They think they will post the “Big Announcement” on social media and then business will pour in.
And yes, that announcement post will get lots of attention.
But wait until you see how much action your next few real estate posts get.
I’d expect crickets.
Why?
Good News/Bad News- the 80/20 Principle
Here’s the good news and the bad news:
The day you get your license, you enter the pool of professional agents competing for clients.
That means you, the one with no momentum, are competing directly with the most seasoned and skilled agents in your market.
How are you supposed to compete with the best when you have no experience and no momentum?
That’s the bad news.
But it’s also the good news.
It took me about six months to learn, first-hand, about the Pareto Distribution, AKA the 80/20 principle.
The 80/20 principle is a statistical law discovered by an Italian economist named Vilfredo Pareto (hence the name) that says 20% of the inputs in an unregulated system produce 80% of the outputs.
Examples:
- 20% of soccer players score 80% of the goals
- 20% of musicians sell 80% of the music
- 20% of criminals commit 80% of the crimes
- 20% of authors sell 80% of the books
And guess what? 20% of realtors sell 80% of the properties.
This is where the good news comes in.
Even though it is true that 20% of realtors sell 80% of the properties, it is not true that the SAME 20% of realtors sell 80% of the properties.
Agents are shuffling in and out of the top 20% constantly.
That means it is possible for you to enter that upper-echelon of the agents in your market…if you do the right things.
But what are those things?
Now we are approaching the heart of the issue.
What are the right actions to build momentum?
By far the most frustrating aspect of my first year was not knowing exactly what steps to take to make progress.
I went to all the classes, workshops, and masterminds, but no one seemed to be able to tell me precisely what to do to build this business.
Me to my broker: “I’m so fired up to get going! What do I need to do?”
My broker: “you know, get out there and sell some real estate.”
Me: “Okay…but what exactly do I do to do that?”
My broker: “You know…just get out there and do it, kid.”
For the longest I thought the top-producers were just holding out on me. Not wanting to share the secret sauce.
Overtime I came to realize that most didn’t know how they were doing it. Worse still, the majority had their business essentially gifted to them.
Some had been handed a business from an already successful parent.
Others had worked as a new construction agent for many years.
But I didn’t have any of those advantages. I wasn’t even from the city where I was selling.
Years later, a mentor taught me that the way to be successful at anything is to do the right things in the right order at the right time.
Take the following 7 steps, in this order, to make your first year as an agent great.
1. Commit to giving real estate your very best effort for a full 12 months
Don’t ride the emotional rollercoaster.
If you make this commitment and mean it, then you won’t take the setbacks so hard.
It took me many discouraging months to earn my first dollar as an agent.
In my darkest moments, this commitment is all that got me through.
And you know what they say, the night is darkest just before the dawn.
This comes back to the momentum issue. Making this commitment and seeing it through is the secret to solving the momentum problem.
Don’t worry about the results (appointments, listings signed, contracts created, and closings) at all.
Focus all your attention on the inputs, on the controllables, on the lead measures, on doing the work. Trust that your rewards will come.
Without this step, none of the rest matter because you won’t be around to do them.
2. Treat real estate like a j-o-b (because it is)
If you are like me, you are getting into real estate because you want freedom. Freedom to go where you please, do what you want, and earn lots of money.
As the great Jocko Willink says, “Discipline equals freedom.”
The number one reason why most agents fail is that they simply don’t try.
They sleep in or “work from home.” They take advantage of all the perks of being an entrepreneur before ever doing any of the entrepreneurial work.
So I treated it like a job. I went into the office every day and attended all the classes, agent open houses, and caravans.
This straight-forward step is enough to separate you from most new licensees.
3. Immerse yourself in the industry
I immersed myself in the industry from the beginning. Surrounded myself with it.
This is the only way you can learn at fast enough pace to achieve escape velocity.
Here’s how:
- Find a mentor. I interviewed 7 brokers and asked them all the same question. Who is going to be my mentor? Only one of the seven had an answer. That’s who I chose.
- Read the right books. Real estate is an old, established industry. Many, many people have come before you and built huge businesses. Some of those people learned so much in the process that they literally wrote a book on it. Read those books…know what they know. Easy peasy. The old adage “realtors don’t read” is very true. That (can be) a competitive advantage.
- Master your standard documents. This is a phenomenal early step because it is easy and foundational to your newly forming skillset. The best way to do this is ask your mentor to make a list of all the standard documents. Then sit down with that stack of documents and a highlighter. Highlight every word you don’t understand. Then ask your mentor to go over everything you highlighted. Do this a couple of times and you’ll know more about those documents than most of the agents in your market.
- Develop and hone listing (seller) and buyer presentations with practice. Presentations allow you to drive the flow of appointments toward the right outcomes.
- Begin mastering primary scripts. If you are new to sales, don’t let the word “scripts” scare you. They are just standard ways to speaking to the same kinds of people. Think of them as tools.
- Preview homes in your market. Search for all the vacant homes that are listed for sale in the areas you want to sell. Then setup agent previews for a bunch of them (previews are when agents view properties without a client). Then get in your car and go see those houses. Great sales people know their product.
4. Write about Every Step of the Journey
Buy a little notebook or find a cool digital writing tool and write about the whole journey.
You are an entrepreneur now, and entrepreneurship can be WILD.
Problems pop up you don’t expect. People do crazy things. Setbacks occur. Surprising positive things happen that seem like gifts from the universe.
I truly never could have successfully survived the emotional washing machine that was my first year in real estate without my journal.
I wrote about the problems I faced as best as I understood them. I wrote about potential solutions to those problems. I wrote about how scared, excited, depressed, and anxious I was.
Plus, your primary job as an agent is communication, mostly in writing (emails, text messages, social posts, contracts, offers, client paperwork).
The more you write, the better real estate professional and entrepreneur you will become.
5. Say Yes to Everything
In the beginning, I said yes to everything.
I went to the office every day, greeted every administrator and agent in my office, and asked them if there was anything I could do to help.
A dirty little secret in the industry is that most agents get their first few deals from other, more established, agents.
Imagine this:
I am the top-producing agent in your office. My business is huge. I have several different contracts and listings ongoing constantly.
I get a call on the sign for one of my listings. The potential client on the other side of the phone lets me know he wants to look at a house on the other side of town that’s one quarter of my normal, average sales price.
It’s not worth my time to drive over and handle that.
I would rather keep focusing on my normal business. But I don’t want this customer to go un-helped, so I book the appointment to show the house.
Guess what I do at this point?
I think about what new agent I could refer this client to. Everybody wins. I win because I get to earn 25% of the commission just for referring the deal. The client wins because he gets an agent who will be excited to give him the attention he deserves. And the new agent wins because they get an opportunity to make money and build momentum.
But do you think I go look at the new agent directory at my office and start cold calling? Hell no. It’s a top-of-mind issue. Whatever agent pops into my mind, that’s who I use.
So…how can you become top of mind for the top producers in your office and market? Show up to the office every day. Spend as much time around them as possible. And more than anything, continually ask how you can make their life easier.
Remember, top producers are not going to go out of their way to help you. They won’t beg to mentor you. They have little time and less patience and just want to run their business and make their money.
When I played football, we used to say “out of sight, out of mind.” If I wanted to play, I had to stand by the coach with my helmet strapped up. When the time came to call someone in for my position, guess who he called?
The final point here is that you never know what deals will come from doing a great job, so no price point is too low for you at this stage.
I helped clients buy very cheap houses in my first couple of years who ended up referring wealthy family members to me later on.
Just say yes and do the best job you can.
6. Set up a CRM
CRM stands for Customer Relationship Management system, and you must have one.
Your CRM is the house for your database of clients and potential clients. It is the hub for your business.
This is another one of those easy-to-do things that set you apart. Most agents do not have a database setup.
Isn’t that insane? How do they know who to help or when they helped people in the past?
Insider Tip: set your database up outside of your brokerage. If you build your database inside some software that your brokerage provides, guess what happens when you inevitably decide to move to a different brokerage?
Yep, they keep your database.
Setup your database and begin collecting names, numbers, emails, and addresses from the very beginning. You will thank yourself greatly in the future.
7. Play the Game
It took me almost a year to learn exactly what the game was that I was trying to play.
Let me save you a year’s worth of work in a couple of paragraphs.
Hopefully this one insight will be worth the time you took to read.
A little thought exercise:
•When do you get paid as an agent? At closing. When the buyer officially gives the seller the money and the seller exchanges the property for it.
•Where do closings come from? Contracts. Closings come from finalized, contractual agreements entered into by property owners and property buyers.
•Where do contracts come from? Clients. Property owners and property buyers who have officially hired you to sell their property or represent them in their purchase. This means they have signed an agency agreement.
•Where do signed agency agreements come from? Appointments. You meet with the client to learn how you can solve their problems and share those solutions with them. I have only worked with a small handful of clients in my career without meeting with them first. And those came way later as a result of referrals from clients I did meet with.
•Where do appointments come from? THIS IS THE CRITICAL ISSUE. Appointments come as a result of having real estate conversations with property owners and property buyers in your market.
This is the unavoidable, inescapable reality of the real estate business (and most other sales businesses, I imagine).
The number of deals you close is directly downstream from the number of real estate conversations you have.
- Some percentage of conversations will result in appointments
- Some percentage of appointments will result in clients
- Some percentage of clients will result in contracts
- And some percentage of contracts will close.
The better you are at your job, the higher you can push the conversion rates at each of these junctions.
To play the game properly, focus 100% on the primary thing you can control: number of real estate conversations.
Once you have a basic understanding of the industry, your market, and your role, then turn every work day into a game to see just how many conversations about real estate you can have.
Closings are a lagging measure of real estate conversations.
I started with For Sale By Owners, or FSBOs. I called 200. Went on appointments with 40. Took one listing.
And that was my first listing ever. I closed four transactions from that listing.
I wish you could have seen the faces of the agents in my office when I told them I took a listing from a FSBO. They couldn’t believe it. They didn’t think it was possible.
But I just read about it in a book and tried it. Until it worked.
To play the game, focus on real estate conversations.
Conclusion
My first year in real estate was one of the most challenging and rewarding years of my life.
Getting the business up and running was so much harder than I thought it would be, but I proved to myself that I could do it. And that year turned into the jumping off point for my career.
I ended up closing 43 properties in my first full year as an agent, which wasn’t quite my goal of one property per week, but it put me into the top-3 agents in my brokerage.
If you are just getting started in the industry or considering it, I hope these ideas encourage you.
Happy selling.