Realtor Success, Girl’s Volleyball, Eating Frogs and Pareto

vilfredo pareto

Five years ago when my oldest daughter started middle school volleyball, I declared to her after observing a few matches that I could coach a winning team by doing just one thing. I would, I told her, spend every practice having every girl practice serving. 100s of serves each, every practice. Not until every player could serve with 90% success 90% of the time would we even practice anything else. And by serving well and consistently, the team would win every game. Of that I was certain.

And now my youngest is playing girls middle school volleyball, and nothing has changed on these middle school teams. I watched two matches last night. If a coach, at that level, were to do nothing other than teach every kid how to serve the ball over the net with 90% success, that team would win every game even if they lacked the ability to do anything else.

How did I become an expert at girl’s volleyball? Simply by observing the mathematical fact that very few serves are successfully returned. Often, less than 10%. Get a serve over, you get a point, 9 out of 10 times. And most players can’t get a serve over. Thus, the games are reduced to a contest of missed serves and missed returns, with very few actual volleys back and forth.

At the level of play I was observing, the team who got the most serves over the net won, period. To confirm this, I even kept a scratch sheet one match, tracking the number of serves made and missed by each team. And the theory was proven. No team ever wins without getting the most serves over the net.

Having run out of magazines to read around the house this month, I perused my bookshelf of old books the other night and pulled down my old copy of Eat That Frog! and started rereading it. There on page 19 is the chapter about the 80/20 rule, or Pareto’s Principle. Vilfredo Pareto would have been a successful Realtor because he would have understood how to use his time and focus his efforts. The rule says, simply, that 20% of our efforts account for 80% of our results. Or, stated the other way around, 80% of what we do accounts for only 20% of the results. We should, therefore, figure out what activities or efforts produce the most solid results, and focus on doing a lot of those things and less of the other. This is actually the same observation about serving that one can make while watching middle school girl’s volleyball.

Were I to coach a 7th grade girls volleyball team and employ my serving theory, my team might not consist of the most well rounded players, but they’d know how to serve consistently and we’d win every game. We’d be champions by doing just one thing really well with consistency.

So what’s this have to do with real estate and whether Realtors are successful or not?

It has everything to do with it. When other agents or even regular people we know ask me and Sylvia “how’s the real estate business?”, and we say, “great, we’re staying really busy”, they often seem surprised. “I thought it was a terrible market in Austin and everybody is really slow, how do you guys stay busy?”, they ask. The question is answered in 5 simple words…

…We have plenty of leads.

That’s it. Nothing more to it. We’re not necessarily smarter, more efficient or better organized, but we do know how to get business. Real estate is a lead generation business first and foremost. If you can’t generate leads, nothing else matters, period. Your just like the team that can’t get any serves over the net. You’re not going to win.If you don’t have leads, you have nothing to do. Your job is not selling real estate, it’s finding people to work with and earning their trust and confidence. That’s your job. Selling real estate is just the service provided, and you do need to know how to do that, but your main purpose as a Realtor is to get in front of and/or found by people who might need your help to buy or sell a home in Austin.

This isn’t a secret. It’s well known. But it’s not known in a way that is reflected in the things most Realtors spend time doing. Instead, a lot of time is wasted on keep-busy stuff that is not lead generating in nature. I observed this daily when we worked at the “big brand” office with 700+ agents from 2005-2009 (the largest single location real estate office in the world) and saw the new agents come and go.

A new agent would walk in our office and ask stuff like “do you think I should have my home phone number on my business card?” or “what database do you use to keep your contacts”, and I’d say, “it doesn’t matter – that’s not what’s going to make you successful or not. Have you sent a letter to everyone you know letting them know you’re in business?”.

And they haven’t, because they don’t have signs yet, or don’t have cards to send with the letter (I don’t care, send it anyway), or they haven’t detailed the car yet, or previewed enough houses, or got a new laptop yet, or taken enough training classes, or whatever. There’s always something keeping agents in the “getting read to get ready to get ready”, mode. Meanwhile they still have no leads, no appointments, no listings and no buyers because they’re neurotically fretting over meaningless stuff, the 80% of things that don’t really matter, while doing none of the 20% stuff.

If you’re an Austin real estate agent who has no listings and no active buyers, here are a few things you can do today, this afternoon, that will help you get busy again.

1) Knock on doors.

That’s right. Print 200 fliers with your information (or just take some business cards), budget 4 hours, get in your car, drive to a neighborhood, and go knock on doors in your farm area. The flier doesn’t have to be perfect – that’s not what will matter. Don’t spend three days neurotically wordsmithing and fussing over your flier! When someone answers, say “Hi I’m {Your Name}, Realtor, and I’m hoping you know someone who needs help buying or selling a home. Are you thinking about selling in the next 90 days?”

If you know how to ask the right questions, the rest will take care of itself. The Rookie of the Year for Keller Williams Realty in 2008 did nothing but knock on doors in one of the worst markets in Califonia. He knocked on more than 20,000 doors in 12 months, which sounds like a lot, but if you divide by 50 weeks, it comes out to about 80 doors a day 5 days a week. That could be knocked out in 2 to 4 hours each morning. It costs nothing but time and printing costs and you’ll lose weight and look better after a month or two. And you’ll have some listings.

2) Cold Call

That’s right. Pick up the phone and call people you know and ask if they or anyone they know needs help buying or selling a home. If you don’t know anyone, call FSBOs from Craigslist, or expired listings from the MLS. This works, but few do it. It might take 200 calls, but you’ll have a listing.

3) Open Houses

When Sylvia returned to real estate sales with Keller Williams in 2005, she had nothing going on so she previewed vacant homes and found a staged and vacant listing she liked in Circle C, called the listing agent, got permission to hold an open house, then sold it to a lady who stopped into the open house that weekend. This is unusual luck, but luck happens to those who put themselves out there, and she wasted no time getting out there.

Open houses are a numbers game and the best way to meet buyers who are actually taking the time to drive around and look at homes. Yes, some weekends are duds, many lookers are not serious, but that doesn’t matter. It’s a numbers game. If you are out there, and have taken the time to learn the area schools, other listings and surrounding amenities and businesses such that you can speak articulately about the pros and cons of the home you’re hosting as well as the neighborhood in general, you will attract a buyer looking for a smart agent like you. And you’ll soon have a serious buyer to work with.

None of the above three things cost much money. They all produce faster results than almost any other lead generation activity. And guess what? … these are the same things that worked in 1972 before there were even answering machines, cell phones or pagers. Nothing has changed. The leads are at the properties they own, or at the open house you’re hosting, or on the other end of the phone call you just made. That’s where the leads are. Where are you? On facebook? Twitter? Taking a nap? Standing around the coffee pot lamenting your lack of leads? Do what Pareto would do, go do the 20% stuff.

These 3 business building activities all require consistent and repeated effort. But any agent with too much free time and not enough money should be doing these things instead of wasting time on facebook, sending tweets or whatever else is on the 80% menu.

Posted by Steve
6 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Jim - 6 years ago

“Your job is not selling real estate, it’s finding people to work with and earning their trust and confidence. That’s your job. ”

And that’s the sad fact about real estate. We spend more time chasing new clients then helping existing ones. People who do end up our clients also pay astronomically high commissions to cover all the time wasted playing the numbers game with the leads who don’t result in a sale. Of course people will feel 3% is a ripoff, and rightly so, they just don’t know why exactly it’s like that.

Brokers keep encouraging more and more agents to get licensed since to them there’s minimal cost. They don’t care if the agent quits within 6 months, as long as the broker can collect the split from the agent selling to his “sphere of influence”.

There’s simply way too many agents. Even if all of them did the hard work to generate leads, they’d still all be broke. In fact, it’s only because most agents don’t do anything that others even have a chance. There were 15000 sold listings so far this year, and that covers all of the Austin area, Round Rock, San Marcos, etc. There are almost 11000 Realtors in Austin. Even if every transaction has 2 agents involved, that’s about 3 sales per agent so far this year. Hardly a decent income, and that doesn’t take into account that many of the listings are really cheap, many are sold by out of town agents, and some are listed by Builders.

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Alex Cortez - 6 years ago

With information being readily available to consumers, it’s becoming less of a ‘sales’ industry and more service-related. Consumers don’t want to talk to salesmen, they want advice from experts. However, your point of being a lead-generating business is spot on. Whether through open houses or ineternet (both PPC and organic), the need to constantly generate leads is critical. Very well-written post, Steve.

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Pasadena Homes for Sale - 6 years ago

Great real estate tips! I have to market aggressive to get many Pasadena homes for sale. It’s no mystery that if you work hard, you get results.

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Steve - 6 years ago

Hi Jim,

Yep, that’s basically it. We do a LOT of uncompensated tasks for clients who never close. But that’s ok, it’s how the industry is structured and I think it works despite all the anti-Realtor and “Realtors are paid too much” chatter that constantly is out there. I doub;t we’ll ever see a day where buyers pay up front by the hour.

And, really, sellers don’t want the demand side reduced by forcing buyers to make a financial commitment prior to looking. Sellers want a buyer who is “thinking about buying” to come see their house and fall in love, so in that way, it’s a win-win.

And those of us who have sold to a lot of buyers understand that there is a process, that includes looking at homes, that buyers have to go through before deciding if this is what they really want to do. But we still have to know how to be good consultants and help people make good decisions. And sometimes the best decision is to not buy right now.

Steve

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Sam - 6 years ago

Yep,

This is why I like reading Steve’s blog. I wish I’d read it years ago when I played at being in real estate. Notice I didn’t say I worked in real estate. I did everything but get clients. I had to get business cards. Then I had to get a website. Then I had to tweak the website. Then I had to try and blog about something I had no practical experience; real estate. You don’t need business cards, internet, blogs, or websites to start a business. Yes these factors do help, but what really helps is paying clients. Use methods that are proven to work and work them. If I had just gone out and door knocked 5 hours a day and cold-called 2 hrs a day 6 days a week imagine how that would have changed my outcome? That’s what I learned from my venture into real estate and I’ve taken those painful lessons forward to a new business start-up. Money doesn’t just jump out of client’s pockets and clients don’t just show up because you started a business. It takes work, planning, and money. It’s a business not a past-time or hobby.

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Laura "Ole" Olesen - 6 years ago

The volleyball analogy is fun! While that may not be the case for the collegiate or even high school level, it certainly makes sense. Just as it would make sense to say that for 1st grader t-ball, hitting the ball would be the one skill I’d teach. 🙂

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