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Prospecting — It’s Not Just For Breakfast Anymore

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by Mary Nack

I was at a Top Producer Panel breakfast this morning. You’ve been to these kinds of things, right? The organizers pick a couple of high profile “top producers” and put them on the hot seat to answer questions about what they have done to be successful, how they got there, etc.

One panelist talked about the primacy of prospecting — and though I don’t think most people in the room wanted to hear that — it was probably the single most important thing that was said the entire morning.

When times were good, we could spend our days hand-holding the transactions and the clients in our pipeline. We could rely on referrals to give us all the business we needed. Nowadays, referrals alone aren’t adequate to preserve the incomes we had become accustomed to.

It goes without saying that we’ve all learned to get by on less. However, there is only so much belt-tightening and “right sizing” that can be done. At a certain point, you simply must have money coming in. And the only way to accomplish that is by generating more leads.

I’ve analyzed this in a couple of different ways:

Perhaps, like me, you’ve noticed that not every transaction you put together stays together. This isn’t our fault — it’s just a condition of the market. I used to pride myself on not having deals fall apart. My average was something like 1/2 of 1% — too low to even bother taking into consideration. (My definition of a deal is one where we’ve gotten through inspection and the entire amount of earnest money has been turned in.)

Nowadays, I can only count on one transaction closing for every 2 or 3 that I put together — usually because the financing falls apart. Which means that out of 40 transactions that should close (according to my definition), now only 15-20 actually do close! Nowadays, if I want 40 transactions to close, that means, realistically, I need to write 80-100 deals. That’s an alarming number!

It takes much longer to turn a lead into an actual transaction. Whereas I used to be able to take a buyer out maybe 3-4 times and write an offer — or go on a listing appt and come back with listing in hand (and count that listing as money in the bank) — nowadays it is not unusual to spend 6 months, a year, two years of sending the buyers properties, following up with phone calls, “What-up? Are you ready to jump into the market yet?”

I currently have over 40 people regularly looking at the properties I’m sending them. And I have something like a dozen sellers actively needing to put their home on the market (even though I advise most sellers not to, these sellers really must). And all this before any conversation about the increase in average market time and the consequent increase of money spent to market them.

Prices have gone down — in some cases as much as 30%. So, whereas my average sales price may have been $750,000 and my average commission in the $18,000-$20,000 range, these days, my average sales price is more in the $400k-$500k range. (Not only have prices dropped, but the affordable “first time buyer” price point is the most active segment of the market right now.) Meaning my average commission is more in the $8,000-$10,000 range ¦ maybe. Again, I need twice as many transactions just to make the same kind of commissions as I used to. Those 40 transactions I used to close? Now I need to close 70 or 80 just to replicate the same income.

All of which boils down to this hard, cold, immutable fact:

Just to replicate the same amount of money I used to make, I need to write 150 deals so I can close 75 deals.

I don’t know about you, but to do the work involved in writing 150 deals so I can close 75 so I can replicate — not even exceed, but just stay even with — what I used to make…

I’ll be honest; it’s not happening. I don’t have that much energy or enthusiasm!

Is it any wonder, then, that we’re tightening our belts, working harder and making less?

Is it any wonder we’re all feeling older, more tired and like maybe we need to find another line of work?

But here’s something else I’ve learned: “Ain’t nobody” I know not working harder — not just in real estate, but in nearly every industry I can think of. Everyone is working harder. This is what the economists mean when they say, “Productivity is up.”

Gee, thanks for the stunning insight.

Obviously, we need way more of everything in our pipeline than we’ve ever needed before! More leads, more referrals, more transactions.

Yes, prospecting must take primacy. It’s not just for breakfast anymore. To maintain some semblance of our previous lifestyles, we must spend the bulk of our days looking for new business and new leads.

By: Mary Nack, www.ezinearticles.com

DO YOU AGREE? WHAT KINDS OF PROSPECTING ARE YOU DOING?

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