The two trophies most builder sales operations covet are more qualified traffic and more sales. An often-overlooked way to attain both is a well-thought-out and executed participation program for Realtors.
Many times, for whichever reasons, companies that are desperately trying to sell homes do not have any type of program aimed at cultivating real estate agents, or the plan they do have is not implemented very well.
Consider the sales potential you can unleash by taking these first steps toward establishing a cooperation program.
On a map of your market area(s), draw circles from each of your sales offices in quarter-mile increments. Inside those circles, plot the number of active real estate offices and their approximate number of sales associates. In most cases, you quickly will see how many salespeople work within a few miles of your offices. The best part is they are in the same business as you.
These salespeople can be induced to work for you and will not expect any salary or draw. In fact, they are not paid until they perform. Typically, agents are compensated out of closing proceeds, which means you do not have to borrow or use your own funds before the actual sale and closing occur. Compare that option to the thousands of dollars spent on advertising, an expense that must be paid for at the time of purchase and may or may not generate a deal.
Many builders and marketing directors feel that 2, 3, 4, or more percent is too much commission to pay a broker. However, Realtors’ sales fees and related expenses should really be thought of as an advertising expense for your prospect-generation program. Real estate associates can deliver qualified traffic, which in some cases is more effective than what advertising accomplishes. A well-conceived cooperation program should be judged from the big-picture perspective as to how it relates to the overall budget. For example, if one-third of your sales are with cooperating brokers earning 3-percent commission, your overall cost for that function could be as low as 1 percent for all sales revenues.
Map your way toward successful relationships
There could be hundreds, maybe even thousands, of real estate agents within a few miles or just down the block from your model centers who could be motivated by incentives to sell your homes. To identify the prospects, use these tactics:
• On a map, identify each of your individual model centers (retail sales operations) and draw concentric circles representing approximately one mile each.
• Within those circles, identify the locations of all real estate offices.
• Place a red pin on the map at the specific location of real estate offices with approximately five or fewer associates.
• Place a blue pin on the map to designate real estate offices with approximately six to 25 associates.
• Place a yellow pin to mark real estate offices with approximately 25 or more associates.
This exercise will enable you to quickly see the locations and the number of potential agents in relative proximity to your sales offices.
Find the producers
Don’t just court the top producers in your market. Find and attract experienced producers who specialize in your price range, product type, and geographical area. Sometimes the top sellers amass sales by collecting commissions on properties that they referred to other Realtors to sell because they didn’t have the time or expertise to sell those properties themselves. Rather than asking a broker about the office’s top seller or a local realtor board to identify the market’s top producers, make a habit of seeking out those agents who actually sell homes in your price range and geographical area.
One way to find the right agent is to access the Multiple Listing Service and track all the monthly closings and resales in your marketplace. Note the names of the selling agents. Make a point of meeting those agents and their brokers. Introduce them to the opportunities and procedures in your company’s sales program.
The adopt a “new kid” program
New Realtors are entering the profession in your marketplace every month. The number of fresh faces could be as few as five or as many as 500, depending on the size of your market. New agents have several characteristics in common that render them more receptive to your invitation:
• They have shown a level of interest and enthusiasm to be involved in real estate by simply making the investment in time and money to study and obtain their licenses.
• In the absence of experience, they lack the contacts to quickly obtain listings and make sales on their own.
Your objective is find them, become their friend, and show them how easy it is to sell your homes.
The local Board of Realtors usually publishes a monthly roster of newly licensed agents and the offices with which they are affiliated. Send these new hires a handwritten congratulatory note, welcoming them to their new profession. Three or four days later, call the Realtor. A first conversation might go something like this. “Hi, _________. Did you get my note? Good. How’s business?” Their answer probably will be some kind of camouflaged positive response. Then ask, “Do you have very many of your own personal listings?” He or she probably will say no. Then ask: “If I could show you a way that gives you direct access to approximately (state the total dollar volume of all homes you could sell in the next year) of brand new homes over the next year, would you be interested?” Wait for response, which will most probably be yes. “Great, well I’d like you to become my joint venture partner and I’d like to become yours. When can we meet?” Schedule a specific date and time to meet at your office.
When you follow through with your prospects, make a big deal out of their very first visit and their first sale. Write personal notes, send thank you letters, and take them or send them to dinner. You should even send a gift basket after their first sale. The basket should have a helium-filled balloon with “Congratulations” printed on it and a thank you note. P.S.: Hopefully, the gift can be delivered to the agent’s office at a time when he or she is not there.
Managing the Realtor relationship
Don’t be concerned about your Realtor partners making sales. Instead, focus on your agents building legitimate pre-qualified traffic to see your homes. Sales should occur at the rate of one for every three-to-five presentations of your properties to properly pre-qualified prospects.
Every Realtor cooperation program should include the following tenets:
• Be consistent with your policy. Do not change your guidelines every other month as sales rise and fall. Lack of consistency will cause confusion and apathy.
• Put your registration rules and commission procedure in writing and have a copy signed by each registered prospect.
• Communicate often with the agents through newsletters and open house meetings and always let them know what you have available in terms of price and occupancy. Realtors treasure partners who keep them in the loop. So copy them on all written correspondence from your company to their customer. Touch base with agents frequently, particularly during the period between accepting the offer and closing.
The right relationship mindset
Think of your relationship with Realtors as if the agent population was the downline in a multi-level marketing organization chart. Sales networks within multi-level marketing companies such as Amway or Nu Skin start with one person. That individual solicits people to work under him or her and in turn they solicit more people to work under them, who in turn solicit additional people. Eventually the participants build a network in which the recruits for a particular agent represent the downline.
Consider each real estate office as lead members of your downline and an office associate as an agent on another level on the downline. As with network marketing, success in building your downline of Realtors is about educating, recruiting, training, and motivating others to sell your product.
In-house and outside sales teams
Successful cooperation does not happen overnight. The most successful programs are the direct result of a company taking the initial step to demonstrate an openness and willingness to work with real estate agents, followed by constant personal contact with individual associates. This process calls for building a personal selling relationship.
Also, your own staff should not be penalized for selling your properties. Their compensation for direct sales should be exactly the same commission paid to an outside sales broker.
To generate long-lasting success, create special incentives for rewarding top sellers. Think of real estate agents as an extension of your own staff and treat them as such. Establish recognition programs like Realtor associate of the month, quarter, and year awards. Publicize these achievements in newspapers, billboards, and even the local Realtor board association’s newsletter. Remember, agents are customers, too.
A final message. Realtor or outside broker sales should only serve as a supplement to your traditional sales. Depending on your specific marketplace conditions, outside sales should comprise approximately 35 percent of your total sales, but generally no more than 50 percent.
Bob Schultz is president and CEO of Bob Schultz & The New Home Sales Specialists, a management consulting and sales firm based in Boca Raton, Fla. Schultz is the author of two best-selling books, “The Official Handbook for New Home Salespeople” and “Smart Selling Techniques,” and was named a Legend of Residential Marketing by the NAHB. He can be reached at firstname.lastname@example.org.