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Archive for May, 2011

I was recently asked for my opinion on what a newly licensed real estate agent needs in terms of education and direction at th4e outset of their career. I decided to crerate a white paper of sorts and I thought it might make a great blog post. So here it is.

Incidentally, for my AMERICAN readers, you’ll come across the word “associate” in this rant. That’s because, if you can belive it, here in Calgary we’re, by law, not permitted to call ourselves Real Estate “AGENTS”. While every consumer in North America is familiar with the term and recognizes what it means, the big shots here decided it was to binding for a consumer to seek out an “agent”. It makes absolutely no sense whatsoever but, like everything else attached to organized real estate in Alberta, if you don’t like it, move on!! They make little or no effort to keep us in the industry here and would NEVER do anything to be similar to other jurisduictions in North America.

Introduction and Foundation:
Beginning a career in Real Estate and naively thinking it’s simply a case of selling 50 or 60 homes each year is a common mindset for new associates. While a positive mindset that appears to be unflappable is commendable, in fact, many come into the business with absolutely NO understanding of how it works. I have met and worked with associates who’ve joined the ranks of “REAL TOR” from essentially every walk of life but after some time learning the ropes and trying to make it, readily agree that succeeding is MUCH MUCH harder than expected. For most, reality sets in.

Your request for three things crucial to success in a very punishing business are likely NOT the three things everyone thinks about as they chose real estate as a career. Interestingly enough, I would like to conduct a study of every full time CREB member to determine their path into the industry. I wouldn’t be surprised to find a very low percentage of members that went to secondary school for the sole purpose of pursuing a career in residential Real Estate. Let’s face it, without a plan, a method, an understanding, or a vision, failure is imminent. Has CREB or AREA even built a set of formal education courses to offer at the secondary level? U of C or U of A should be sending graduates with business degrees into our industry more frequently than they are.
However, putting aside all the corporate spin, all the media hype, and those ridiculous CMHC predictions and propaganda constantly spouted to keep consumers happy, clearly Calgary’s current market is NOT an easy theatre to succeed in. Similar to other sized markets in both Canada and the US (Denver, Tucson, Austin, Seattle, and others) our local fall out rate is truly embarrassing. This despite what is supposed to be one of the key local economies in Canada.

Frankly, in my estimation CREB does little or nothing to promote greatness in its associates. True, they move forward in what feels like a careful and strategic support mode for their members but truthfully, CREB has evolved into somewhat of an administrative labyrinth and seems to simply languish behind a veil of almost insurmountable obstacles for new associates trying to succeed. Creating a corporate culture that preys on associates and simply treats them as individual revenue sources is, in principle, wrong. From its trade restricting rules and regulations to a collection of over-priced, out-dated services put in place to simply funnel money into its coffers, CREB seems to have long abandoned its role as partner in a successful career.

Let’s face it; it’s easy for a government sponsored entity that’s in essence a monopoly to hide behind red tape under the guise of promoting training, mentorship and guidance. In fact, in this scribes opinion, CREB has side stepped its TRUE responsibility by simply shuffling it out to the private sector and offering no navigational expertise to a new associate. The lack of options sponsored by the CREB bears this out. But if the Board’s stand is to allow individuals to seek out their own guidance, and by it’s ongoing lacklustre offerings of success oriented programs continues to accept as NORMAL the horrendous failure and fall out rate that’s as embarrassing a statistic as it could be. Instead of simply reacting to conditions that arise, why not be PROACTIVE in helping to direct a new associate’s career. Doing this would present CREB in a much more favourable light and help them work towards a better partnership solution for its members

Partners care about each other in a business relationship because they EACH have a vested interest in each others success and each SHOULD be willing to do whatever necessary to help the success emerge sooner. After almost 15 years as a member of the CREB, I honestly don’t recall a time when any type of an encouraging relationship existed that didn’t entail me having to pay for yet another dull boring course or session that truly has little or no relevance in my career. Just because CREB says its good doesn’t really make it so. The relationship needs to foster growth, sustainability, and success for the associate quickly.

Calgary’s market could easily sustain a second board or association. Removing the monopoly status and attitude that exists in the building would only breed a healthier work environment for the associates required to be members. Not to mention reduce the ridiculous cost structure associates are faced with daily. New associates find the ensuing costs VERY excessive and this is simply in place to pay for the mistakes made in establishing a working model.

So, to foster a think tank as to how a 5500 group of agents can be MORE successful over all, here are the three things I believe should be mandatory for every associate coming into the business. (I’m relatively confident these ideas will NOT be embraced as they don’t represent traditional, old school thinking. But for new associates in 2011 to be given a career road map that includes methods conjured in the 60’s and 70’s is just plain wrong. In a general sense that causes much stress and frustration, and careers are wasted.)

1. CORRECT COACHING AND TRAINING: (Should be MANDATORY for every new associate – NOT optional)
SCOPE: Allow enough time to help an associate see the value in working with an already accepted and well documented coaching program. Present a cross section of coaching programs and how they have affected other associates careers
OBJECTIVE: To infuse an associate with a desire to seek out rewarding coaching relationships for the duration of their career.

EVERY newly licensed associate needs to receive advice, seek out, commit to, and pay for an outstanding success and performance oriented Coaching Relationship from another associate whose mandate is to train based on their personal success. That “Coach” needs to have had TREMENDOUS success. That being said, it’s NOT going to be an office owner/manager/trainer that hasn’t sold a house in 20 years and simply takes a new recruit through the motions established by his franchise contract or agreement and it shouldn’t just be an “agent in the office” who has also embraced the franchise or the office. Those “motions” were already poorly taught at Real Estate school. Oh and let’s face it, Real Estate school has little to no interest in seeing associates succeed. It’s a bureaucratic revenue source low-standard licensing requirement deemed necessary by CREB, CREA, AREA, and RECA. The curriculum for basic Real Estate licensing classes doesn’t teach business principles, certainly doesn’t teach lead generation, it has no real understanding of correct marketing (used by OTHER successful small businesses),and in fact spends a good portion of it’s teaching time sharing and extolling methods initially developed in the 60’s. Though it’s been adjusted somewhat for the modern day, its quest is roughly hewn to simply help paying students pass the required licensing exam, the idea of truly succeeding in a punishing business is certainly not at the forefront of the curriculum.

Incidentally, learning to succeed, based on a predictable success model that has stood the test of time keeps revenue flowing to the administrative side of the business, something the industry authorities desperately need.

What makes this such an important decision? Simply, stepping raw, into something you’ve never done without any real help or guidance is the most common failure-formula that exists. Can you imagine being thrown the keys to a Formula One race car and being told to get in and compete at the highest level? Ridiculous thought, as doing that would almost cause certain death. But what if you could spend 3 months at formula one race car school in Daytona or Phoenix? What if the instructors who taught you raced during the season and taught the skills when they weren’t racing? What if after a highly detailed instructional 6 month period you could develop the focus, direction, and skill set that would have you competing in a few short months? What if part of the race car school program had the student sitting in a back seat, watching the driver perform right from the cockpit of the car? How would that help you accelerate their skills? Tremendously and it would further REDUCE the prospects of failure and GREATLY ENHANCE racing and driving skills, ultimately allowing you to develop habits and strengths to build on so that quicker than learning and failing alone, an appropriate skill set is developed and the future foundation for competitive racing is set. In the world of business, this is natural and required.

Please tell me you see the value…

New associates come into the business and hear about it from their broker/owner/manager/trainer who may have not even sold a house in 15 or 20 years yet he/ she claims to be completely up to date on the latest and greatest? The race car analogy makes sense. In a very tough industry, one that’s been set to affect a new associates failure very quickly, the right coaching relationship can bring immediate help, focus, discipline and insight, and, most importantly, the right method for moving forward successfully rather than just guessing what to do.

All successful people, whether in the world of sports OR business have coaches. A coach brings organization, winning strategies, potential and nurtures the natural talent and helps a new associate channel those qualities into a successful, repeatable and systemized routine. A coach’s focus and mandate is to help a new associate create a business that serves the greater need. A coach quickly helps a new associate see the difference between a business and a job. A correct business model allows the associate to have a life because the business rolls on, creating revenue daily without the associate having to be responsible for every task that takes place. A good coaching relationship draws out discipline and insight, yet builds on accountability where necessary enabling a new recruit to become a GREAT associate quicker. A good coaching relationship allows a new associate to PUSH through self conceived barriers and ceilings, exceeding their predetermined limits by helping to understand and see the “big picture” and then organizing the business model so it’s fully attainable. One day you look up and success is right there for the taking.

I’m not talking about a “motivational” coach. Anyone with great potential and drive already has the motivation to go as hard as possible until results are attained. My view centers around the importance of creating a transparent growth curve that’s carefully and deliberately nurtured along using experienced, proven and established performance standards. A new recruit, seeking out the help of a driven coach, should NOT be expecting to experiment with things unproven or untested or newly conceived ideas. A new associate, under the watchful eye of a performance coach expects his/her coach to bring a very successful INDUSTRY RECORD to the equation and impart that to the new recruit. The new associate MUST be willing to do what they’re told, accept the fact that successful people have traveled the road long before and have left clues to their success. The chosen coach won big at this game and is more than capable of directing a newly formed career in the same direction.

This concept of coaching applies in the cases of every great achievement. Every champion Olympian utilizes a team of coaches. The greatest sports hero’s of our day quickly extol the benefits of being coached and driven to a level of success they didn’t know how to get their on their own. Successful business people, movie stars, authors and other well known personalities ALL regularly talk about the role their coaches played. Many will admit to a team of coaches, constantly directing and helping.

LEAD GENERATION (Creating significant OPPORTUNITY every day):
SCOPE: Present a very detailed overview of what a REAL, business oriented lead generation system really is.
OBJECTIVE: To help newly licensed associates clearly distinguish the differences between long out-dated prospecting programs and teaching them how to adopt lead generation, business strategies that can quickly enable closings and that can grow an associates business quickly.

Quickly attaining a predictable method of creating and completing sales transactions then repeating the process over and over again should be the paramount, second mandatory requirement for all new associates.

If CREB really wants to end or at least help these new members avoid the wildly fluctuating rate of closings and commissions, then paying attention to how associates generate new business is crucial. Almost every associate comes new to the business with monthly, systemized debt and financial requirements that come monthly with predictability. CREB’s mandate should be to engage new associates into a systemized approach at creating commission income. Every successful business has built their model around systems that serve the greater good. If I walk into the CREB office, there are numerous systems that serve CREB well. There are systems in place for everything.

The singler most powerful word in Calgary Real Estate and the one that has the most noticeable effect (either good or bad) on an associate’s career is “Closings”. Talk to an associate with lots of closings on the horizon and there’s an air of accomplishment and confidence. Contrast that discussion to one with an associate under pressure to pay bills and service debts with NO commission on the horizon and you quickly perceive discouragement, helplessness, and desperation. There is a huge difference between busy successful associates working from a position of plenty and those working from the position of desperation.

Predictably attaining enough closings to create the first associate mentioned above takes a Lead Generation strategy coupled with the skills to convert leads to commissions. However, typical new associate training sees them running the gauntlet, attempting every conceivable method known to the industry for the past 40 years. Frankly, without understanding that a LEAD GENERATION strategy is crucial, associates are left to beg, plead, cajole, and do virtually ANYTHING for a lead. (Just think about some of the silly and ridiculous things REALTORS® have done for the sake of new business – have you ever seen doctors, lawyers, or engineers do those?) Their business is 100% dependant on them if they are to succeed. (Remember the famous “closer” scene in Glengarry Glen Ross where Jack Lemon’s character just pleads for more and better leads?)

Since when was calling people out of the phone book, a database or some other list LEAD GENERATION? Since when did licensed, certified professional people have to fall back to the begging status to do business? Why is it that real estate associates think the only place to glean new business and subsequent closings comes ONLY as a result of their own begging, cold calling, and labour intensive efforts, done repeatedly with limited or no success? Incidentally, if the associate gets sick or is unable stay engaged those activities, how does that associate pursue success and excellence? Where do the leads come from if an associate is unable to perform those assembly-line, mind numbing activities? Based on common standards, that leaves the associate UNEMPLOYED because of the terribly vulnerable position old school methods of prospecting commonly put a REALTOR in. If the typical modus operundi sees new associates doing the same things over and over again with essentially no results disaster is not far behind. Doesn’t sound like much of a success building, franchise prototype to me? In fact, it’s hardly a formula for success at all, especially if the only contributing factor is as susceptible to failure as that. McDonalds knows exactly what new store owners need to do and, in fact, require every new owner (investing as much as $5 million) to follow their success regimen and Lead Generation strategy to the letter. Why? To avoid failure! CREB could easily heighten the standard by looking to models such as these to help agents learn where their business should be coming from.

An effective lead generation strategy that serves a business like a doctor, a lawyer or an accountant provides a steady stream of new business opportunities (closings) every single day. Successful associates see the value in constantly adopting these better and much more effective methods and then testing and monitoring them until predictability exists. Successful business owners implement lead generation mechanisms so effective that imminent success automatically follows. In fact, a correctly monitored lead generation formula creates predictability in any type of business, something sorely lacking in the supposed business models of new associates failing in the Calgary market.

NAR (the National Association of REALTORS®) correctly tells us that the current failure and fall-out rate for associates industry wide is unprecedented. Interesting how success in this industry is closely related to the ability to create closings. Success oriented and high performance obsessed entrepreneurs employ correct, direct response methods for finding and creating new opportunities every single day. They do it over and over and over again. They build the process into their business model and they grow and leverage around it, like ANY other successful venture in the community. Yet typical real estate associates, struggling to even understand where opportunities exist are so pathetically desperate to find a deal will stoop to the lowest standards to convince a prospect that they are a good fit.

An effective and predictable lead generation strategy taught and implemented with the help of a coach who’s already been down the road will do more for an associate’s career than anything else, including the time wasted at unnecessary courses on self awareness, time management, and computer skills. Once engaged in the business of working with people to buy or sell a home, the large majority of associates simply flail from one idea to the next not able to sustain an normal living because they have not attained that much needed predictability or sustainable method of growing or increasing their business.

Every NEW associate needs to ask themselves, “Where will my livelihood come from?”? I expect most associates go through basic real estate school with a listing or two lined up for themselves once they’ve received a basic REALTORS® license. They may have lined up a buyer or two who, despite their lack of experience, are willing to let their family relationship or their friendship work in their favour. But what about sale # 3 or 4 or 5…what about the ongoing financial requirements that need to be satisfied?

Learning an effective lead generation strategy implemented over a multi-level platform serves the associates business very well and will continue to do that for the rest of their career.

Adopting, Embracing, and pursuing SMALL BUSINESS EXCELLENCE: (Isn’t a newly recruited associate simply a new small business?)
SCOPE: Present a very detailed overview of how small businesses work and why it’s crucial to set yours up as soon as you start your new career.
OBJECTIVE: To help newly licensed associates clearly distinguish the differences between having a job in the industry and building a business, an enterprise, or a long standing venture. Using well tested and accepted small business fundamentals, an agent’s career quickly blossoms and success becomes the natural by-product.

The manner in which a newly licensed associate begins their career and their early focus on its inception will largely determine the level of success they’ll enjoy later, as time passes. Unfortunately, simply working hard isn’t the recipe for success anymore. You’ve hear it said that there’s working HARD and there’s working SMART. I believe that working RIGHT is even more important. Small business is a tough go but it has unbelievable benefits when done correctly.

Teaching small business principles to a newly licensed agent clearly helps attain a higher standard sooner and provides a platform for many career enhancements. Despite the odds being against them early, newly licensed associates can attain a level of autonomy that serves them very well. But how do they learn that if they are simply told to sit in a room and cold call?

Mindset is the crucial factor as they will go one of two ways, depending on their choice of influence. Either they’ll learn the value of working “ON” their business like all successful business owners do or they will stay put, simply working day-in and day-out “IN” the job they think they have in real estate. The latter will greatly diminish their chances of success. Some recent stats show agents spend as much as 90% of their time engaged in customer hunting activities and doing nothing else to foster growth.

Understanding things like taxation, incorporation, insurance, accountability, profit sharing, and sustainable growth, leverage, employee relationships, Alberta labour requirements, and so much more are crucial things to learn early in a new member’s career. While this may seem like overkill for a newly recruited associate, obviously there’s a very discernable disconnect in this regard. New associates come into the business and few seem to have any understanding of how a small business works, let alone an understanding of how to set themselves up so the LOOK and ACT like one. In the world of commerce, business is set up to serve its owners. If an associate comes in to the industry NOT understanding the concepts of leverage, lead generation, autopilot marketing, and technology, they’ll simply follow the majority, doing every conceivable task and their income is totally dependant on their efforts to get produced. By the way, the majority of agents FAIL inside of their first TWO years. Not a great track record to follow.

The majority refuses accept that there are better ways to grow a business. As an example answer this: When is the last time you were cold called by a doctor or a Lawyer? When is the last time the local dentist, accountant, or dry cleaner knocked on your door looking for new business? I travel extensively and never once has an American Airlines pilot walked up to me in an airport lounge encouraging me to fly with him instead of the UNITED plane I’m booked on. The thought of such things actually makes us chuckle because it’s just silly. Things like that contain predictable failure. Yet how common is it for a real estate associate to call you at dinner looking to talk to you about listing and selling, without even knowing if you are planning it in the near future? Guess what, that has the same level of predictable failure.

Successful business has adopted strategies tested, proven and accepted by consumers in the western world and those strategies have caused incredible growth for the owners and partners. Why is this SO foreign to real estate associates? Why is it so difficult to understand the value of implementing these business fundamentals in to a real estate career, establishing a business model that serves their greater need much better than the old traditional, grunt methods of working as a REALTOR?

Again, as the reader of this paper, you may think that Rick is completely off his rocker. Comparing a brand new associate to a successful small business is not a rational thing to do, you may think. OK, that may be the stand of the establishment but here’s what you need to consider as well in that light. For the most part, not withstanding the poorly attended courses put on by CREB, the typical associate has NO concept of such matters and the failure rate, industry wide is as embarrassing as it could be. If I were a member of the board of directors at CREB working in a position of oversight over the ranks of associates in Calgary, I would feel completely embarrassed knowing there’s so much more the organization I work with could be doing to IMPROVE the lives of associates in Calgary. It’s easy to fall into a predictable, underperforming daily routine, not overly concerned about the well being of associates when in fact collecting a salary every week is the norm. It’s easy to exist like that without accountability or performance requirements.

If an associate is to succeed, they really need to be taught how to succeed as a business. Business takes on numerous formats but ALL successful businesses rely on an established foundation of fundamentals that every associate should learn BEFORE starting out.

Thanks for the opportunity to share my ideas with you; I’ll look forward to hearing from you in the near future.

Rick Brash

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