A Life That POPs

I was working with a local real estate agent yesterday on a strategy to achieve one of his goals.  When we were done he declared the strategy good and decided that, barring any bad luck, success might just find him this year.

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A few weeks back I was driving my two boys to school.  They are without doubt the most beautiful boys in the world and I speak with the absolute neutrality of an objective father.  At five and seven they are also completely present.  By that I mean they live in the here and now the way most children do.  The recent past has no more meaning than the near future.  Their focus and their conscience are in the moment.  It fills them with a constant sense of wonder and never ceases to amaze me.

So we are in the car and singing along to the radio when my seven year old sits up in the back and asks: “Daddy, do you believe in good luck?”  As an adult long separated from the freedom of childhood, I was twelve different place in my head when he asked the question and none of them were the present.  I absent-mindedly tossed off one of my favorite sayings to placate him.  “No,” I said, “I believe that the harder I work, the luckier I get.”My son, however, pressed on.  “I believe in good luck Daddy, but I do not believe in bad luck.”  At this point I was blissfully reminded, once again, how very present children are and I snap out of my own thoughts.  I too get present and I pay attention.  I say to him “I do not think you can have one without the other.”  (At this point I must share a little background. I have taught my boys about the subconscious mind, calling it the “magic” part of their brain.  How it is always listening and recording everything we say.  How our thoughts have power and our words create our realities.)  I went on, “if you believe in the idea of good luck, I think you must accept the idea of bad luck as well.”  My son looked at me and said, “No Daddy.  I believe in good luck, but if I believe in bad luck the magic part of my brain will be listening and bad things can happen.  So I CHOOSE not to believe in it.”Brilliant.  He chooses whether or not to believe in something.  Everything we do is by choice; our life, our business and most definitely our results.  Success does not find us… it is a choice.

The real estate industry is a never ending source of change and excitement.  I can remember only two years ago coaching agents on what disintermediation meant, how it was affecting the mortgage industry and how it (and the internet) would affect their success.  I was never too worried that the mortgage broker would be eliminated, but some agents were more than a little concerned about their future.  As it turns out, agents are embracing the internet; they are alive and well and thriving.  So, is there a problem?

No, disintermediation is not a problem: but disbrokeration is.  Teri Lussier, blogger extraordinaire, recently posted a thoughtful article on BloodhoundBlog.  I certainly found it thoughtful.  I have been gnawing on the state of the current real estate brokerage system like a hungry dog with his last bone.  I have speculated that the current Broker based system is outdated and weathered beyond its useful life.  I am quite sure I am not the only one to have said this.  But how do we play this out?  What happens, or what is happening, as this model fades away?

I believe the new model is in place, we are just not calling it that yet.  Going back at least twenty years to when I was first licensed, the existing Broker model seems to be based on a simple premise: work hard as an agent and eventually, if you have the desire and the money and the wherewithal, you will create or purchase your own real estate shop.  You are then the Broker and you hire agents to represent you in dealing with clients who wish to buy or sell a home.  In many ways it was a grand retirement plan.  New agents counted on the Broker for everything from an office to phones; from training to accounting and from organization to guidance.  In return the broker kept a hefty portion of the commission.  It was rare for an agent to even reach 50% as it was the Broker who had taken all the risk, fronted all the bills and established him or herself as successful enough to own a brokerage in the first place.

But times change and the intermediary that is now serving less and less of a function: the Broker.  The internet has given the agent unfettered access to the buyers, sellers and available inventory.  The fluid nature of the business dictates that agents brand themselves now, making the need for a big name obsolete.  Pricing structures and commission splits have driven training out of the picture at most of the brokerages.  As a matter of fact, very few agents receive anything for free and those that do are likely “loss leaders”: top producing agents that are there not to make the brokerage money (quite the contrary); they stand as a beacon for recruitment and a large marketing tool for the rest of the agents.  Brokers are now engaged in the lowest common denominator: “putting butts in seats” and profiting on the first few deals before the revolving door swings another agent through.  I am not judging this.  As long as everyone knows up front what they are getting it is a legitimate model of business… just not a very good one.

So what is the future model of the real estate industry?  I believe there is nothing future about it.  We already see it in just about every large brokerage now.  It is commonly called The Super Team.  It looks like this: one or two agents are the named agents.  Beyond the named agent(s) there may be nothing more than a part time administrator; or there may be multiple buyers’ agents, listing agents, lead coordinators, customer service managers, marketing directors and so on.  What makes them unique is the fact that they all work for the named agent(s).  They may bring in some business of their own (and the splits on that business may be higher) but the primary responsibilities of those that work on the Super Team are to benefit the team and the named agents(s).  For instance, the buyer’s agents are charged with handling the prospects that come to them on behalf of the team. They need not worry about marketing or creating business.  In return their splits are usually less than 50%.  A listing specialist may also be on a lowered commission due to the direct feed of clientele, or they may be on a straight salary.  Most of the other parts to the team are salaried (and possibly incentivized with bonuses).  The entire team operates to enrich the named agents; to help them in their mayoral marketing - to help them become mayor for life.

Sound familiar?  It sounds a lot like the brokerage model of old.  Only there is no longer need for a gatekeeper.  If someone on the team decides they are ready for their own team, away they go.  For those who excel at real estate but have no interest in the commission lifestyle, they have found a cozy home.  It is the brokerage business of yore, but made streamlined, agile and appropriate to the long tail markets in which agents must now thrive.

Here is the best part: the Super Team has no interest in the “putting butts in seats” model because they are already rainmakers.  The only butts they want in seats are people who can get the job done and build the team name.  This model is based on the purity of profits rather than the bloat of over-rides and middlemen.  This model embraces training because turnover costs the named agent(s) money in lost transactions.  This model embraces new forms of marketing and can move quickly to opportunities.  This model is an evolution that must always happen.  As information becomes more readily available there is a natural progression: middlemen go from providers to gatekeepers to restrictors (chokepoints as Greg Swann calls them) and eventually they just become unnecessary.

While this post has gone well beyond the recommended daily allowance of verbiage, I will add two more quick benefits of this model.  One, it provides for greater specification of work, which in a free economy usually leads to greater efficiency and better pricing.  Two, it requires a lot less agents to take care of the same number of clients.  Without the constant requirement to feed the revolving door, the education level, experience level and quality level of the real estate industry as a whole improves.  Are you ready for the Super Teams?  They’re coming to a neighborhood near you soon…

I spent a good portion of today pondering Jeff Brown’s post on hyper-local farming.  (I know, I know; my ex-wife used to wonder how I was going to pay the bills too.)  In a post over on BloodhoundBlog, Jeff celebrates the vindication of his earlier thesis on hyper-local blogging - or in Jeff’s case farming - by none other than Seth Godin.  I have come to the conclusion, and you can read the post and his links for yourself here, that Jeff is recommending a cat blog.

Well… maybe not a cat blog in the common sense of the term.  But look at what he is saying:

“Imagine, if you will, a blog site having more info on your neighborhood than you ever thought existed. I don’t mean boring real estate stuff, as any yahoo can generate that boring crap. I’m talking about reading about your son Steve’s game winning, last inning double in yesterday’s Little League game — complete with pictures. Yep, each neighborhood blog would be a de facto newspaper, with all the work that goes with it.”

This is not a blog about your real estate business and it surely is not a blog about all of your skills as an agent.  Giving people that information is like delivering the newspaper to their door and just about as dead.  People no longer want their news edited and parsed for them.  They would much rather go online and research their own areas of topical interest.  In the same way, few clients these days are going to be impressed with the number of closings you had last year or the number of letters after your name.  What they are interested in (what they have always been interested in) is how these things affect THEM.

People hold a very strong interest in themselves.  That is our nature and I am as guilty of it as you are.  The main message of being a 2.0 agent is realizing that your client wants it to be about them and not you.  I know many agents realized that a long time ago, but the power to market this change in the zeitgeist has been lacking.  Until now.  The reason people post pictures of their cat is because they like their cat.  You are rarely going to earn business by posting a picture of your little ball of furry fun, but you will definitely garner the interest of your prospects by posting a picture of theirs.

A true, hyper-local farming blog is really a cat blog for everyone in your community.  There are pictures of their little league stars and stories on the school art program their children entered (along with a picture or two that they forgot to take).  There is information on their neighborhood, their street and yes even their house.  Greg Swann elaborated on this in relation to Zillow and Zestifarming:

“To other Realty.bots, what matters is the listing, an ephemeral state-change in an otherwise uninteresting terrain. To Zillow, what matters is the house…”

Not just to Zillow; to clients too.  Push is a tough way to create interest, pull is a snap.  If you succeeded in the ultimate (albeit unattainable) goal of creating a cat blog for each and every person in your farm, what do you think their interest would be? The pull interest?  Do you think you would achieve top of mind status?  If you demonstrated your level of expertise (of direct, personal expertise) by giving your clients what they crave most: themselves, how many would look to you when it was time to buy or sell their home?   How close do that lofty goal does one have to get in order to own that farm? Lots of work - yes.  But imagine that level of farm ownership.  Hyper-local farming: one big cat blog.

I spent a good twenty minutes patting myself on the back yesterday.  After reading Greg Swann’s post over at Bloodhound I linked to a very interesting post by none other than Seth Godin.  In his advice to real estate agents, Seth touches on a tech company that can help you become mayor of a zip code.  Well hot damn!  That sounds a lot like my idea for Mayoral Marketing.  I was very impressed with myself.  Seth Godin is promoting an idea that I have already promoted.  I believe my take on it was that I am becoming a pretty good judge of horse flesh when I am standing in line ahead of Seth Godin (I will pause here to allow the “I am embarassed for him” groans to die down). 

This morning the feeling in my hand has finally returned from slapping myself on the back last night and just in time too.  I check out the latest Bloodhound posts and find Jeff Brown commenting on Seth’s article too.  Only Jeff is linking back to his own idea for Mayoral Marketing (without the name) that was posted… oh, roughly five months ago.

I have brilliantly “discovered” a horse that has already claimed two thirds of the triple crown.  Turns out I am not standing in line in front of Seth Godin or Jeff Brown.  I am not even sure if I am in the right line yet!  I better work on my handicapping.  Maybe I can convince Jeff to name his winning horse Mayoral Marketing.  That way, as the loud speaker announces another win , I will feel the pride of cleaning out the stalls.

(Insult to injury, I have been forced to add a Mea Culpa category now )

How do you know when you are backing a good horse? You see the guys that know horse flesh standing in line in front of you and betting the same horse.  How do you know when you are becoming a pretty good judge of horse flesh yourself?  When those same guys are betting on the same horse, but they are standing in line behind you.  I just read a post by Seth Godin in which he touches on a new online tool that allows you to become mayor of a zip code.  It is not often (in all honesty it has been never) that I have an idea before the likes of Seth Godin, but I think I see him standing in line behind me!

Seth refrences a new online page builder (an approximation of what they do from a decidedly non-techie; for more info click here) wherein you become the “mayor” of your zip code.  I wrote previously that the goal of blogging (and social media as a whole) should be exactly that.  The difference? I don’t know that being mayor of your zip code should be the end result.  After all, geographic farms are very RE.net1.0  In the coming age of 2.0 and 3.0 real estate, you can create any community that you like.  You can farm geographically, vertically, even industrially (especially industrially).  I have advocated for some time that loan originators do this: one whole community of CPAs for instance.  The most obvious industrial choice and one that applies to agents as well as originators: divorce attorneys.  Just about everything they touch turns into a sale or a refinance.

The community is not nearly so important as what you do with it once you have built it.  In my previously mentioned post I introduced the idea of a new marketing plan that embraces all that is right and beautiful about RE.net 2.0.  You are welcome to read it here, but the gist of the matter is this: Create your very own community of raving fans… then become Mayor of that community!  MAYORAL MARKETING.  Imagine the ramifications: you need to put together a group of raving fans (isn’t that the point of all long-term marketing?), you need to make sure that the people in your community know you, like you , see you as professional and see you as successful (the basis of people wanting to do business with you).  Most importantly, however, they need to see you as the expert (the secret to all referrals): the one and only person suitable to be their… Mayor. 

Once you become Mayor your job is to keep your job.  As with any long term success plan, this one requires that you never stop campaigning and you never stop kissing babies and you never stop adding value to your community.  I will end the way I started: a horse analogy.  When you find a good horse, ride it till it’s dead… 

When it comes to success in real estate, the key has always been and will always be: leads.  The melody may change but the song remains the same.  If you want to make money in Real Estate you must generate leads.  If you want to become wealthy in Real Estate you must generate leads at a faster rate.  Everything after that is polish.  I know it is popular right now to frown on this type of characterization.  “Our clients are people, not leads” some will correct.  “I am in the relationship business and I do not view my relationships as simply numbers or leads” others will sneer.  Listen, you can put as much perfume on marketing as you like, we are still talking about a pig.  When you are in the business of selling (and trust me, if you are a real estate agent or a mortgage originator you are in the SALES business) your primary focus is generating leads.

Most all leads can be divided into a few basic categories: prospect, past client and referral.  Here is the good news.  All three types of leads are easy to generate.  You must simply be in front of people more often than your competitors.  There are a lot of ways to increase your conversion besides being in front of them: you can add value to their daily lives, you can keep them informed with trenchant analysis, you can offer discounts and free stuff; probably the most important way to increase your conversions (and the primary cause of referrals) is to convey and heighten your perceived level of expertise.  Having said all of that, go back now and look at how I started the sentence: “…besides being in front of them…”  The bottom line remains the same: you must first get in front of people before you can inform, entertain, show off or otherwise become memorable.

So why am I borrowing from Dr. Strangelove?  Because it is a movie of insane brilliance (or brilliant insanity) that stands out and makes a point in spite of itself.  Sounds a lot like blogging doesn’t it?  Social Media Marketing has made generating leads exponentially easier.  Not since the creation of the business card have we had a tool so easy to use and yet so effective in creating “top of mind status” (is everyone reading old enough to remember that concept in marketing?)  You can sit down in the morning before the day starts, or in the evening when the day is coming to a peaceful end, and type out a few thoughts or share something you learned that day.  You can report on a trend or idea that is important to your sphere.  You can generate some thoughtful discussion on what the events of the day mean to you and how they may affect your clients.  Hey, sometimes you can just put up a picture of your cat.  The beauty of it all is that, at virtually NO COST, you can get in front of people on a regular basis and remind them why they have, should or will do business with you.  Want even more reasons to embrace the land of Mayoral Marketing?  By the very act of expressing yourself you eliminate the prospects that will not like doing business with you and, more to the point, with whom you will not like doing business.  Not only can you get in front of more people for less money, but you can increase your conversion rate as well!

Willie Sutton was famously (if not apocryphally) asked: “Why do you rob banks?”  He replied: “That’s where all the money is.”  Look at the Internet and realize: that’s where all the leads are.

I had an interesting discussion with a member of the finance committee in our local Board of Realtors.  Seems that, according to their list of dues payers, membership is down almost one third.  Which is to say that over 500 people are missing from the roster.   Wearing their standard issue, rose colored glasses the board goes gleefully along with a budget based on all of these “forgetful” members catching up on their dues!  Kind of negates the very purpose of a budget but that is not why I am posting.

Where Are the Cheerleaders?                                                                                                                                                           What disappoints me is not their fiscal fantasy (pornographic as it may be).  No, what disappoints me is that they are not cheering loudly for the decrease in membership.  What is the purpose of a local Board of Realtors?  I find it hard to say quite often, but ranking near the top should be: the best interest of their members and the integrity/image of Realtors.  Given that, why are the local boards not celebrating the “thinning of the herd”?  Does it not benefit the agents who stay to have the part timers and order takers and short timers out of the business?  Wouldn’t the integrity and image of Realtors improve vastly by the departure of someone who just a year ago was flipping burgers?  Don’t the clients gain the most when the Realtors that are left are those that work hard all day and find ways to make it work in any market?

Know when to say when.                                                                                                                                                             Over on BloodhoundBlog Allen Butler recently posted on how tough it is out there and commented on those that were not ready to take on the work.  He said: “Quit kidding yourself. You’re already out of this business. You just don’t know it yet.”  Amazing words.  The people that do not belong in Real Estate should be getting out so that there is more business for the professionals that know what they are doing.   And the board of Realtors should be doing cartwheels over the decline.

How can watching a TV program make you a more successful real estate agent?  There is one reality show on right now that exemplifies referral marketing like no other.  I am talking about Survivor.  This year the producers of Survivor decided to create two teams: one comprised of fans of the show (think of them as clients) and one comprised of favorites of past shows (think of them as agents).  In almost every interaction the two teams have, the fans defer to the favorites.  They look to the favorites with an almost rock star adulation.  Why is this?  Because the favorites’ perceived level of expertise is high in the fans eyes simply because the favorites have been on the show before.  That’s it really.  By virtue of their (limited) previous experience they are considered experts in this game.

Here is the interesting part: there is no real difference between these two groups of people.  The favorites have some experience but they are not professional Survivors.  They have never seen this local or these particular challenges, so their only real experience is in creating strategy (which, for most of them, was wrong at least once more than it was right!)  The reason the fans defer so readily to the favorites is a perfect example of how people react to those that they perceive as having expertise.  The goal of all referral marketing is to increase your perceived level of expertise in front of your clients.  If they are already fans of yours (whether from watching you on TV or reading you on a blog) your job just got that much easier.

Blogging is all about creating your community and running for mayor.  The goal is an endless stream of referrals.  I do not know who will ultimately win this season of Survivor.  But I already know who owns the high ground.  If this game were about referrals, it would be all over but the crying.  Your tribe is speaking…

I just finished reading another brilliant blog post by Brian Brady: the great and powerful Oz.  (He gave up his moniker as “America’s Most Opinionated Mortgage Broker” a while back and now he is just “America’s Mortgage Broker”.  I think he needs a new nickname and “the great and powerful Oz is more than a little appropriate).  Anyway, in his post Brian says: “I make my presence known. Tony Gallegos called me “ubiquitious“. Critics have called my strategy “puking all over the internet” (but placed my results in the top 20 of all real estate bloggers). “  Now this is true and I have heard him accused of “puking” all over the Internet more than once.  Here’s the thing: he is absolutely doing the right thing and we should all be copying him, except that it would be pointless.  Let me explain:

The concept behind social media marketing has been called many things, but viral marketing is probably the easiest to understand.  Simply put, you want to be a virus (and I mean that in the best possible way) that friends, family, clients and just about anybody else that comes in contact with you spreads to others.  This is the definition of generating referrals.  The question you should be asking yourself (the question we always ask ourselves when ever we start something new in business like “creating a virus”) is WHY?  Why do I want people to sneeze me around to everyone else.  The answer may seem obvious: to create more business; but that misses a huge part of why social media marketing - and especially blogging - is so powerful.

The Chamber of Commerce Meeting… EXPLODED                                                                                                             Let me ask you a question: would you rather close 25% of 100 leads or 70% of 50 leads?  Again, the answer appears obvious but the power of blogging is found here.  Your posts are a grand resumé for everyone to read.  Think of it as the most successful Chamber of Commerce Networking meeting you have ever attended.  Instead of painfully coming up with small talk and trying to ever so smoothly work real estate or mortgages into a conversation about the garbage strike, you get to sit quietly while everyone in the room has a chance to learn about you in intimate detail.  Instead of fishing through your pocket for a business card and handing it out clumsily through the sweaty handshakes and greasy wings, your information is plastered all over the walls and hanging from the moose antlers.  In one fell swoop you have not only “introduced” yourself to one heck of a lot of people, but you have communicated to them who you really are.

People do business with people they think are like them.  I will repeat that: people do business with people they think are like them.  After everyone has gotten a chance to know you, how many in the room will call you?  Not as many as if you had kept your (literary) mouth shut.  But… the ones who do are a lot more likely to do business with you.  Now that is TRUE efficiency in marketing.

DON’T Be the Disease, Be the MAYOR                                                                                                                                        So here is another question: if you do not want to be a virus and the idea of puking all over people is a tad beyond your comfort level; if you understand the Chamber of Commerce example but have no idea where your local Chamber is located, what do you do?  Or, as I pointed out in the beginning of this post: WHY do you do it?  Because you want to be the Mayor.  If you were to talk to the great and powerful Oz, he would tell you to build a community.  Build a community of raving fans that will do business with you and refer you because they see you as an expert.  I say: take that one step further.  Your goal is to build this community and then be elected their mayor!  Think of it: a community of raving fans that looks to you for leadership.  Now you are going to want to put as many people as possible into your “community”, but at the same time it does you no good to add people that will never vote for you.  Those people are “dead” to your campaign and unless your community is Chicago, they can not vote.  You want people that have read your platform and agree with it.  You want people that know how you stand on the issues and agree with you.  You want people that believe in you because they see themselves in you.  Put your bumper sticker on every car and your poster on every light post IN YOUR COMMUNITY. 

Which bring us back to why copying Brian Brady would be pointless.  Your goal should be to get elected mayor of your community.  He is running for President… or great and powerful Oz, I get the two mixed up.

Remember: your job is helping people to buy and sell real estate, not writing blog posts (no matter how great the prose that drips from your fingers).  Get your platform out there, kiss a lot of babies and shake a lot of hands.  You are always campaigning and your are always working to earn your communities’ support.  The reward for all that hard work is being mayor for life, which equates to a lot of transactions.  MAYORAL MARKETING.  Hit the campaign trail!!

Do you know that there are only a couple of ladder manufacturers still in business in America?  The rest have been sued out of business or forced to headquarter in countries far superior to ours when it comes to litigous common sense.  People would literally lean their ladder against a plate glass window, fall through, and then sue the ladder company!  If you do not believe me take a look at the “stupid stickers” on a ladder in your local building supply store some time.  Covered with labels that basically say “Hey, if you are so stupid that you would (fill in the dumbest thing you can imagine here), then please read this ‘stupid sticker’ and do not do that”.

Now I am watching the lending industry go the way of the ladder industry.  We have a (very) small group of people going through a very difficult event: they are losing their homes due to their inability to pay their mortgage.  It can not possibly be their fault – that would leave them no one to sue.  So it is the lenders’ fault.  Now they have someone to blame.  The press eats this up.  Brian Brady wrote a great piece over on BloodHoundBlog regarding the San Diego couple that appeared on Good Morning America to discuss their lawsuit.  I have written previously about the two couples who appeared in the 60 Minutes segment.  Kris Berg has a current piece on a California couple initiating their law suit.  What do all of these people have in common (besides appearing in the media to tell their story)?  Every last one of them refuses to accept the responsibility of being an adult.  I am sick and tired of the lending industry being blamed for foisting “exotic” loans on an unknowing public.  What geniuses those lenders must be, what masters of double talk, what scam artists… what balderdash.

I spent years talking to clients about the loan process and advising them on how mortgages work and how they fit into a family’s financial health.  I gave countless presentations on full disclosure lending designed to save the client from themselves and you know what I learned?  People do not want to be saved.  They want the home they want and they want it now.

Can we please bring some honesty back into this discussion?   I watch people put more research into a $40,000 car purchase than they do a $400,000 mortgage.  Sometimes that abdication of responsibility comes back to bite you.  I can not decide which should be more embarrassing: going on national TV and saying “this was the largest investment of my life but I did not read the paperwork, ask questions or pay attention to the specifics of the loan” or going on national TV and saying “this was the largest investment of my life but I made a mistake and now I want someone else to pay for it”?  Maybe we should just create “stupid stickers” for loan packages that read “If you cannot afford to buy this home, do not buy this home.”