Thursday, October 05, 2006

1 Lead = 15 Deals

HouseValues MasterMind Call Notes

Featured Speaker: Pam Fisher, Seattle, WAModerator:
Scott Smith, Vice President of Customer Success

This Mastermind has been involved in real estate for three and a half years. However, the term rookie really does not apply. This MasterMind agent has found her niche which has earned her approximately $200,000 in commissions’ year to date. Having done approximately 40 deals in 2006 totaling $10 million in volume, this agent has taken multiple transactions to a whole new level.

Scott: So the market has changed, what are some of things that are affecting you; you talk about competing more to get the listing?

Pam: One thing now that it is turning to a buyer’s market, we have to convince the sellers to be more realistic in their pricing. We also have to educate them as far as commissions go, there may not be as much discounting going on right now because we need to be able to draw the buyer’s agent in. There is probably twice as much inventory on the market now as there was last year so buyers have more to choose from so the buyer’s agents are going to be showing the houses that have better commissions. We now have to be able to justify that to the sellers as well.

Scott: So you not only have to convince sellers to price their home properly, but also have to convince them that the commission rate they pay is a great way to market to other agents?

Pam:That’s right. You can actually end up not making as much money or loosing money if you don’t offer a competitive commission to the buyer’s agent.

Scott:Would you be willing to share any of your transaction data for 2006?

Pam: Counting what I have in escrow right now, which I think is 9 transactions, I will close about 40 transactions for approximately $10 million in sales volume and approximately $200,000 in commissions.

Scott: You have pretty impressive numbers for only being in the business for three and a half years. Where are your transactions coming from?

Pam: My first year I started with a company that had a team concept and the team leader trained everyone on the HouseValues system and gave everyone HouseValues leads so I basically learned to be a Realtor through doing everything the HouseValues way. This really jumpstarted my career; probably gave me a two year head start on everybody because I was receiving on average 15 HouseValues leads per month from my team. My first year, I think I closed 24 transactions and about 20 or so were HouseValues leads. Then my second year I closed 27 deals and I would say 21-22 were HouseValues leads.This year I’m at 40, and because I’m getting more repeat business and referrals the percentages are a little bit different, but I would still say that at least 25 of the 40 are HouseValues as well.

Scott:It sounds like when you got started, aside form the HouseValues leads, you really didn’t have any other form of prospecting?

Pam: I really didn’t. I was a teacher before in a private school so I really didn’t have any kind of reserve and didn’t have the money to go out and get other leads or do mailings, and I didn’t have a real sphere of influence that you need. Besides from working a few FSBOs, this was my main source of leads. I know I wouldn’t be in business today if I didn’t have HouseValues when I started. I made the most of every lead.

Scott:At the beginning of the call we shared a little about you working with investors and getting multiple transactions. Can you share a little about how that came about and how you cultivate that business?

Pam:I had a couple of investors, Trent and George. Trent wanted to find a piece of land and build a house and sell it. He was kind of unrealistic in what he wanted to pay for land, but we eventually convinced him that he needed to spend more money. Anyway, he got the land, built the house and sold it in May 2005. This all started in January of 2005.George and his wife were flipping properties, and they started helping Trent out finishing up his house; doing some painting and things. The market was turning here where it really wasn’t making any sense to fix and flip properties because sellers were still getting top dollar for distressed properties so there wasn’t enough room for a good profit. They started talking to Trent.We all got together and talked about what it takes to get started in buying vacant land and building properties. George got his General Contractor’s license. I started researching how to fit all the pieces of the puzzle together. It took several months to find the land and figure everything out. Finding the vacant land and building houses isn’t going to work in every market, and even around here we have to go out to the more rural areas where people might be interested in buying five acres and building a home, and where land is a little cheaper.George brought in three couples. Each couple is buying two or three lots and George is managing and overseeing the projects. They are all putting in their own sweat equity to do the painting, landscaping, and all that type of stuff. By the time they sell the homes, I think I have 13 listed right now and when the others close I’ll have 22 all in the $400,000-$500,000 range; they should realize a profit of $25,000-$60,000 per home. They’ll sell those and then buy another piece of land (or maybe two pieces) for the one they just sold because the bank will see they have a track record.

Scott: You are really managing not just a real estate business, but a small business of cliental really helping to grow a business as well.

Pam:Right. When we got started the only person who knew anything about building was Trent and he had built the one house we did together and it took him a year to get everything all finished. He’s got six in escrow now and by the end of the month he’ll have ten listed with me. He’ll probably get into a short plat next year where he is doing 10-20 at a time.There are other clients from HouseValues that I’ve brought into the group. If people fit the profile of being able to do some of the work themselves, of having a good credit score, of having a little money in the bank, being entrepreneurial, then I’m going to approach them with this scenario of building homes. You don’t have to be a contractor to do this either because the companies and the lenders we are working with allow you to build one or two homes as owner builder or as building and selling spec homes.I wanted to tell you the story of Dion. I got his lead in March 2004. I had been an agent less than a year. I received his lead one morning and by that afternoon I was at his house dropping the prelisting packet off. He invited me in and I took a tour of his home. His wife had left him and he was thinking he might have to sell his house so he wanted to know what he needed to do to fix it up.It turns out they didn’t get divorced and we didn’t sell the house. But a year later he had bought a distressed property from his friend and fixed it up and now he was ready to sell that. We sold that in June 2005. Then last summer he and his family moved to North Carolina. In September 2005 we sold his residence and this year I sold his rental which I double-sided. Someone called on his residence, and since it was already sold, I listed their home and found them another home.Dion is one of these entrepreneurial types of people and even though he is in NC we maintained a friendship and stayed in touch. He decided to get into the investor group. He just closed on two pieces of land that I’m overseeing with George, so even though Dion is in NC he going to be doing this as well. I just listed two properties for him, one at $450,000 and one at $475,000. George will be the project manager and we’ll get those sold in a few months, then he’ll probably buy two more.So, I’ve got at least four deals per year with Dion and if things go well he says he has lots of friends who are interested in doing this. This could grow into an excellent source of referrals as well.

Scott:You’ve shared stories in the past about some of the leads you’ve had that on the surface looked like lemons but turned out to be very interesting transactions. One of those is a story about a manufactured home lead. Can you share that?

Pam:Oh yeah that is pretty funny. My very first listing was a manufactured home in a senior park. It was October 31, 2003 and I took a year long contract for $75,000 for just the manufactured home because the lot itself is rented and not purchased. It was in a nice park and it turned into about a million dollars of sales volume which is about $25,000-$30,000 of commissions. What would happen is a buyer would call on it and they’d be interested in retiring there until they found out interest rates were very high to finance a manufactured home. So these folks ended up selling their family home and buying a condo. Then another couple came along who actually did buy the manufactured home. They bought through me so I doubled-ended the transaction. I sold their home, and someone called me off the sign for their home and even though it was sold I did pick them up as a buyer and we bought them a home. So that is seven or so deals off one $75,000 manufactured home. Just the next month I listed a $525,000 view home and got an offer in 32 days and then nothing else came of it. You would think the view home would be a way better lead, but it turns out the manufactured home produced a lot more income for me than the higher-end home.

Scott:We’ve talked a lot about how you work the investor market and how you got your clients in the beginning. Where else are you finding clients?

Pam: I have an ad in the NW Real Estate Magazine and I get a couple of calls per week from that. I don’t really rely on it for steady new clients; it more helps me to get listings because sellers like to see their homes advertised. I also have a little ad on that page that asks “Do you need land? I have access to listed and unlisted land and I can help you with the entire process, etc…” I get a couple of good leads from that part of the ad every time.I also have an 800 24/7 free hotline and I use sign riders; it’s a call capture system. People call for information on my listing and I call them back and hopefully pick them up as a new client. I’ve gotten much more business from this than just putting out fliers. It seems people rarely call me off the fliers, but if I’m out of fliers they call the 800 number and I call them back. I just started this a few months ago and I have already picked up a few solid clients.

Scott: Sounds similar to Internet leads, rather than just giving them something to go away with you are able to capture their phone number and then do what agents do best which is build that personal relationship.

Pam:You need to follow up and follow through. You have to build a relationship. I put every lead into Market Leader no matter where they came from.I have probably fifteen people looking for land right now and I had been doing the searches on my own everyday through the MLS instead of putting them into Market Leader, but I finally put them into Market Leader last week and now I can keep track of when everybody has seen their listings and now they know that I’ll email them everyday with new listings so they don’t worry that I’ve forgotten about them.

Scott: It sounds like it could be a challenge to manage fifteen people looking for land because many of them may be looking in the same areas?

Pam: It can be. Some of them may just be looking for one piece of land to build their home on. Those are almost harder because it has to be the perfect piece of land so they could take a while. In the process they will lose out on pieces of land because the good land goes that day for full price. The investors are a little easier to deal with because they aren’t invested in it emotionally, so if it makes sense to buy that piece of land then they’ll go ahead and do it.

Scott: Sounds like you are using the listings to inform them, and they come back and tell you if they see something they like?

Pam: Right, and I always tell them to go out and look at the lot and then if they like it to give me a call because I can’t run around looking at land with fifteen people.

Scott: Overall, how do you manage your database and stay on track with it?

Pam:I use Market Leader. I follow the process for both HouseValues and JustListed leads. When a new HouseValues lead comes in, I call and introduce myself and ask if they have time for a few questions about their home. Then I ask a few questions like how is the roof, the structure, the landscaping, etc. This will get them talking and they’ll tell me if they were just curious or thinking of refinancing, or if they are serious about selling. Then I explain that I will be sending the information they requested. I also let them know that I will be dropping off a hard copy and most people think that is great. If I get an answering machine, I leave a message to let them know what I’ll be doing. Then I send the pre-emails, send the CMA or listing, the post emails, use the campaigns, then drop off a pre-listing package, then continue to follow up. My package includes the tax records, the mini CMA, charts and statistics from my MLS, the pre-listing package, a copy of my ad, a calendar and pen, a gift certificate from my lender which is for a restaurant, spa, or the hardware store. We don’t pay for those gift certificates; my lender has relationships with those businesses. People always like something of value.When I do my hand delivery, I introduce myself as Pam from HouseValues. I ask them if they had a chance to look at the evaluation online. We normally get to talking and they either invite me in or I try to get an appointment. No matter what happens, we’ve now established a relationship so I can keep in touch with them. If they are not home I leave the package and follow up with a phone call or email later.

Scott: Sounds like you have a rigorous process that you use time and again?Pam: Right. It is all about having a system, and working that system.

Scott: What is the one thing you would want our listeners to take away from the call?

Pam: A couple of things. You need to have relationships and you need to have systems. HouseValues already has effective systems in place; you just need to use them. Also, you need to have marketing in place to back it up because every listing presentation is more competitive these days. You have to show them your arsenal of tools. I even do virtual tours, broker’s opens, e-fliers to 18,000 agents in the Puget Sound area. If you have all that it will help establish the relationship with the client. When they are confident in what you do, they will work with you and they will send you referrals.

Scott: To wrap up, when you say a system you mean more than just Market Leader to follow up with leads—your system is the overall relationship you have with your clients and the expectations you set up front?

Pam: Right, and I think when the agent takes control of the relationship then they control their business.As an agent you need to emphasize the system when you speak with buyers or sellers. For example, say ‘I meet with buyers on Wednesday and Friday and this is how I work. You must be pre-approved, we look at listings on line, we cover lending and financing, etc.’People are impressed with this. They see I’m a professional like a doctor or attorney; I’m not going to jump up and run whenever they want. You run your business, your business doesn’t run you.

© 2006 HouseValues, Inc. All rights reserved.