The Real Deal

The 5-8 year short term debt cycle enters its new phase. After unprecedented growth, we move into contraction. Since the GFC world banks have flooded the market with cheap credit. Cheap money leads to an increased supply of cash. People rushed to the banks, borrowed money at low-interest rates and bought. They bought houses, cars, trips overseas, filled those houses with goods and services. It’s been great. Every time you spend, you help someone else earn an income. That’s the growth phase in the economy. As peoples income grow they spend more, asset prices increase with more demand, and generally, the overall population feels wealthy.

You then reach a point, where consumers come to the end of their borrowing capacity. They can’t get an extra $1m from the bank, so in the last run of growth to keep up these new lifestyles, they rush to last-minute financial products, like credit cards and now AfterPay, which is non-assessed credit. They finally realise that they can’t keep spending as they have, and at some stage, they need to start repaying the debt they’ve accumulated.

The mood of the market changes and people begin to repay the debt; they pull in their spending. As they do that peoples income drops as fewer people are spending as much money in the economy, and there begins the contractionary phase of the cycle.

Some people are forced to sell assets, as income drops, they can’t service their loans, and as there are fewer people in the economy to spend cash, asset prices come back. With more supply of houses and less income production, that fuels media speculation about a house price crash. The reality is the government usually then steps in at the appropriate points to help the economy land softly – measures like a first home owner grant, reduction in stamp duty, reduction in interest rates or government grants like the famous $1,000 tv grant, are put in play to re-stimulate the economy. We call that the short term debt cycle, and it happens over and over again over a 5-8 year period. The great thing is once you know it, you can read the market, so you know what to do next. Ray Dalio’s 30-minute video on economic principles is a much watch. https://www.youtube.com/watch?v=PHe0bXAIuk0

What’s fascinating is media commentary and poorly articulated opinions by market commentators send shockwaves across the general public. In January alone headlines like Auctions no longer work, sets panic into the market. These headlines are backed by stats, 800 properties sold in Sydney this week via for sale, and only eight via auction. Industry specialists know the auction market doesn’t return until mid-February, but yet the unhelpful headlines persist. Remember if for sale is so successful, why they don’t publish a for sale clearance rate at day 28, so we can measure apples with apples? The truth – as days on market increase, great agents need a process to sell properties in 28 days or less.

So here’s how to ride the rapids, and produce more income than ever before, regardless of the economic cycles.

Invest in relationships
The depth of the relationship demonstrates the real needs of the customer. Customers only move if they are dissatisfied, have a vision they are compelled towards and are prepared to make the first steps. You build relationships by being relevant, frequent and consistent. Relevancy determines frequency. When there is a listing or sale, pick up the phone, let your customer know, because you care. Be interested.

The decline of social spends with digital saturation
Technology doesn’t recognise recessions or economic uncertainty. It maintains its progress. However, as it does, plenty is caught out investing in areas that won’t yield results. Social is billed as the great panacea; however, when everyone including retailers and big corporates rushing to attract more of the eyeballs, we start seeing spends increase to get in front of fewer customers as there’s so much demand for eyeballs that can only consume so much social content. The other challenge is curation. Newspapers, when they were at their best, were great, general news was at the front, followed by business, TV guide, classifieds including motoring and real estate then sport. Social, however, is all of that all of the time in no order – it’s a mess at best. Phone addiction is real, and big techs recognition of it is starting. Apple’s release of screen time is making people aware of what they are doing. And anecdotal evidence is people are switching out. Well thought out, engaging content and strategies always win, powerful stories etc., but seeing an agent post about ‘open for inspection life’ has run its course. As incomes contract, my prediction is it’ll be the first things agents cut from their spend.

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Increases in average fee
In the previous set of conditions, it didn’t matter who you chose; properties would sell. In the new market, the agent you employ has a massive bearing on if you’ll get sold. The ability to navigate the conditions of the day, to achieve a sale, to know what to do, make you worth more than you’ve ever been before. Increased service levels, combined with ever precious consumers, clearly demonstrates that leaders will lead, and slowly increase fees. Margins are required, as you need profits to reinvest, to reinvent the service. .5% might not sound a lot, but for some businesses, that’s a 25% increase in total fees per transaction. If volumes drop in sales (which they will in some markets, but not in others) than fee growth is critical for surviving and then thriving.

Mergers and acquisitions
New agencies that have opened over the last five years and have relied on sales income alone to cover fixed costs will have to tighten their budgets. Ideally, you want re-occurring revenue models, like property management and the blended fee like finance, conveyancing and connection referral fees, to drive more revenue. That reoccurring revenue needs to meet fixed costs so that sales revenue can be the profit or cream. Even agencies that bought property management rent rolls will have some challenges, especially if those revenue streams are funding rent roll debt from the purchase and not yet contributing to covering fixed costs. The logical move is mergers with other firms and acquisitions, which is ok, as with scale comes massive opportunities for cost savings and bigger play strategies especially around where Landlords live. New strategies around increasing total customer spend, the lifetime value of a customer and the frequency of spend will nail overall growth.

10-15% fewer agents required
Some heat will come out of boom markets, like project sales, apartment sales and the speculators, which will see in some markets periods of adjustment, requiring fewer agents to service the market. We’re already seeing it. A changing of the guard as some retire, move on or fail to adapt. It’s refreshing as great agents take market share and the great renewal in business savvy agents emerge.

Lead source shift
With fewer attendees generally at open homes, new lead sources will need to be worked. Personal networks, past clients, social proof marketing, and Landlords will create plenty of opportunities if you adapt. If you only rely on opens, you open your business to risk.

Overall this is an incredible market. Australia is one of the best markets in the world. We have a relatively stable government, amazing real estate, tightly controlled credit markets to prevent bank failures, great revenue opportunities and an appetite to buy the great Australian dream.

This is the market when great agents are made. They’ll thrive in these turbulent conditions. With an election, Easter and potential changes to Capital Gains Tax and Negative Gearing there’s plenty to keep ahead of, but we predict that our clients will have the best year of their career by sticking to the basics and placing bit bets on tried and true methods of being a real deal maker.

This article first appeared on Elite Agent: https://eliteagent.com/the-real-deal-josh-phegan/

Ep 176 – Investing In Relationships

This High-Performance Podcast for Real Estate Agents features Josh Phegan and Alexander Phillips on the need for investing in relationships to separate and differentiate from the competition. Alex tells how he builds relationships from the first meeting and explains what service really is. Josh notes that making it better for the customer gets better results than competing on fee, and Alex then illustrates an example of how that works.

Josh describes delivering the customer experience through teaching systems, intensity and focus, and driving momentum and consistency. He defines what a brand really is, and how to create those customer moments that set you apart and get you a better fee.

Ep 175 – Powerful Routines

In this High-PerformancePodcast for Real Estate Agents, Josh and Alexander Phillips discuss powerful routines. Alex begins with building consistency and accountability and doing your daily routines right. Josh notes the importance of counting outcomes as well as activities, and setting intention from the start. Alex emphasises the need to identify the reason why you’re sitting in front of a vendor so that you can effectively progress them.

Josh ties choosing the right lead sources together with momentum and consistency to make conversions. He describes building relationships of relevance, and Alex shares his best three lead sources for generating business.

Where to start with Prospecting

The last 50 listings won by the office tell you more about the way that business wins than anything else. The 80:20 rule identifies that 80% of your results, come from 20% of your activities. So what are the 20% of the activities that get the result? And is what you’re being told to do, consistent with how the business has won it’s last 50 listings?

When you first start out, it’s easy to feel confused, trapped and swamped, with a million ideas, strategies and industry dogma thrown your way. But it doesn’t have to be that way.

Here’s the simple way to cut through for wild success.

1. Leverage off every person you already know.
When I work with brand new people, I get them to write a list of 100 people they already know who own property in an area the office can sell in. The challenge is, in the post-mobile phone era, we’ve become incredibly lazy, and rarely do budding students complete their homework.

In the new world, I now get people to go to their Facebook, LinkedIn, Instagram, Snapchat, WeChat, WhatsApp, and mobile phone contact list, and write out every single person who already owns a home, or has someone close to them that does (i.e. parents for the younger ones).

The first job is to find out where they live, down to street level detail. Short of holding a fake wedding to get the addresses (good idea), you then have to take those people and add them to your real estate database. Every agent in the office has to use the same database, for the system to work. Once you’ve got the minimum data, first name, surname, email address, mobile number and street address, then we can put the power of systems that work, to work.

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2. Existing clients of the firm.
It’s called the lifetime value of a customer. Every person you meet on average will complete five real estate transactions in their lifetime. The goal is to work with the existing customers that the firm has already had interactions with and ensure the relationship is strong enough for you to win the right to serve, at the exclusion of any others pitching for the business.

In the firm you’re in today, there are 100’s if not 1000’s of clients on that database. Past clients that deserve an annual checkup – just like the dentist does for your teeth, to past market appraisals (where we need to work this dissatisfaction with their current situation) to buyers who have/haven’t bought, but already own.

It’s important to get the street address for each into your database, so then you can put the systems to work. Plenty of sales reps will tell you they own the data, yet when we work with the clients, they can’t even remember the name of the sales rep who sold them the house.

Our extensive research reveals that 70% of random real estate agents surveyed, can’t even remember the name of the sales rep they bought their car from. A car purchasing transaction takes 3 hours, the same amount it takes to buy a house. The client didn’t choose you, they wanted the house, so you have to work at the relationship once they’ve bought.

3. Landlords and tenants.
I break these out into a separate category as the industry doesn’t see them as existing clients. Rather silos that should never be spoken of in a sales environment. The reality, Landlords live somewhere. When was the last time your agency called every Landlord to offer them a market appraisal on their principal place of residence to give them an idea of what’s it’s worth so that they can make a better decision for the future?

Think using their untapped equity to renovate, upgrade (buy and sell) or buy an additional investment property (grow the rent roll), sell a property you have listed, or sell a new home (development) you are representing in the market. Second to that are the 1000’s of tenancy applications that are received every year, where one simple question opens them right up, do you currently own property locally? If yes, where?

4. Community Connections.
Who in your local community already knows all the people you want to know? Local schools have a list of all the parents that live in the school zone; local cafe owners have a network of loyal locals who they talk to regularly. Get in front of the people who know people and watch your business thrive. I built a relationship with the local pizza restaurant, the owners Danny, Ange and Joe, went on to refer me 11 listings a year and all it took was genuine friendship, being interested in them and having a coffee with them every Friday at 2 pm.

Now that you’ve got all these lead sources, now what’s your intention? How do you strike it lucky, and move from amateur to pro?

There’s a 10 step system that makes your business bulletproof, but you have to be prepared to work the long term, not the short-term hits that the industries addicted to.

Social proof is the dominant lead source, and the easiest way to transition is to use a new listing at the beginning of the customer journey.

1. When your business lists a property, search for all the people you already know. Search based on that street and the three surrounding streets. Get good at using search in your database. If you’ve followed the above steps, you’ll have an abundant list of locals to call.
2. Print and call the list. We never want to have to search for the contacts again. Filter it, then call everyone on the list. If you are breaking new ground, the easiest way to get past awkward is to call it out. “Hannah, it’s Josh, I just thought I’d give you a quick call, you wouldn’t believe what happened at work today! We listed a house around the corner from you at number 25 Smith Street. I’ll be there on Saturday 10 am for 30 mins if you wanted to see it or drop in and say hi. By the way, how are things with you? And how’s the house? Would it be ok if I let you know when number 25 sells, and what it makes? The secret to that call is to make it super casual, get permission to call them when it sells and seek out dissatisfaction through the simple question ‘how’s the house?’.
3. Send them a direct mail letter, with a copy of the brochure. Follow through, get it into their hands, so you can drive the fear of missing out. We live in a society where fear drives consumers, use it to your advantage.
4. Take that list to your open home, to see who turns up.
5. Just listed DL to go to 500 houses in the neighbourhood to further layer your marketing, in its reach and frequency.
6. SMS all the people you called and remind them of the open on a Saturday morning.
7. Invite them to the auction, via email, SMS, or direct mail.
8. Set up your auction day, flags, boards and crowd, so people can see you being successful.
9. Call them when the property sells. Let them know the sale price if it can be disclosed, as then what does that make your place worth? ‘It’s just a little service that we love to provide, where we pop down to yours to give you an idea of what it’s worth, so then you can make some better decisions for the future, would that be ok?’. Killer dialogue converts and language matters.
10. Send them a direct mail letter with a summary of what happened during the campaign. Think enquiries, inspections, second appointments, contract requests, offers, number of bids. Also, consider the amount of competitive bidding received, that’s the difference between the starting bid and the final bid received.

Now that you have a system, you understand the importance of getting the residential address of every person you know, get to meet or already have met. Then you just work the system, doing it over and over again. If you do that you become highly valuable to past clients, market appraisals, buyers and tenants who already own, landlords, and your network.

You now have a system for success, and all you need is:
1. The desire to do it and not follow industry dogma.
2. Template letter for the just listed and just sold campaign summary letter.
3. A database that has search functionality.
4. Discipline to get the details, use forms like a buyer enquiry form, a tenant application form and a potential landlord enquiry form, to be the source of the triggers that identify locals who own in the area.
5. A mindset, of being coachable.

Become a student of the game, work it lovingly, and everything will change for you.

Ep 174 – How Market Changes Affect Availability

This High-Performance Podcast for Real Estate Agents features Josh Phegan and Alexander Phillips on how market changes affect the availability and the decisions you need to make as an agent. Alex tells how he looks at the current market when selling multiple properties for a client. Josh adds the importance of setting a level for the sales, and Alex includes benchmarks and comparisons. Josh brings up the situation of over-supply and under-demand, to which Alex offers some options for getting those properties sold.

They discuss evaluating to the sale, removing some listings to restrict supply, filtering and directing potential buyers, and choosing stock according to the kinds of buyers and buyer interest you’re working with.

Routine

If you’re going to be a great agent you’ve got to have routines. In my Coaching Tip this week I’ll show you how to use a routine to make sure you’re on the phones, getting in front of people and making things happen.

The most important routine is what time you go to bed because you need to start each day with energy and clarity. It’s about setting some really clear times for getting to the office, having meals, getting in front of clients – everything that’s important.

Routine ensure you are getting everything you need when you need it. It’s about simple things you can prepare for on a weekend so you won’t have to do them during the week. It’s also about setting hard-line appointments that help others work with you in a much better way.

Setting a daily directions meeting maintains clarity for your team around what success looks like. A proper check-in at mid-afternoon shows where everyone is and what still needs to get done before close of business, which helps you get the best out of every day.

You may think it sounds boring, but the reality is that routine will set you free. Find the routines that are most powerful for your business, get the things that are critically important set in your diary, and then let the diary run your life.

I hope you’ve enjoyed today’s Coaching Tip, and I look forward to seeing you here again next week.

Getting Clarity Of the Mission

Of all the things you can do, there are only a few that you should. My Growth, Leadership and Management Tip this month is about getting clarity of the mission as a great business leader.

Your mission is important and you need to know every component of it. Everything you do must be about the mission, starting with understanding your revenue streams in order to drive them. That reoccurring revenue stream is the most important part of your business.

Most businesses are underfunded when they start out and they have no buffer when the markets change. You have to be able to cover your fixed costs and eventually own your asset bases. It’s critical, then, to have the clarity to make good decisions.

Keeping your mission front and center changes the way your business operates. Specific initiatives scale to become bigger lead sources. Ultimately you’ll get better results with your existing customers, and that keeps your marketing costs down.

The real focus of business growth is not just about income. It’s about building the value of the business and serving the greatest number of customers. Getting clarity of the mission will show you exactly what to do – and not do – to achieve it.

I hope you’ve enjoyed this month’s Growth, Leadership, and Management Tip, and I look forward to seeing you here again next month.

Ep 173 – Setting Goals as an Agent

In this High-PerformancePodcast for Real Estate Agents, Josh Phegan and Alexander Phillips discuss guidelines for setting goals as an agent. Alex offers his tips for new agents and also those who have been in the industry for years. Josh notes that the better you understand the goals you want to achieve, the better your outcomes will be. They discuss the kinds of goals you may want to set, and Josh breaks down what a goal looks like. They talk about getting intentional about your core basic numbers, and Alex explains how writing down your goals helps you stay in the right mindframe to reach them.

Josh notes the importance of reviewing your goals often to stay on track, staying healthy by being consistent, finding a mentor to show you exactly what you need to do, and he sums up with the only reason a goal isn’t achieved is that you don’t have a system for it.

Fix The Leakage

One of your biggest mistakes right now is that you’re not doing enough with your existing strengths. In my Coaching Tip this week I’ll tell you how to fix the leakage around all of the leads you’re losing by not seeing what you already have.

The first thing I look for when I walk into a business is whether they’re working with their opportunities, or doing other things that won’t get results. What you need to do is print a list of all the people who have bought from you and contact them.

Those past clients are good customers. If you already have a set of known leads like that, why wouldn’t you call them? These are clients who have a problem they want to solve, and they’ve contacted you to help them do that. And it’s actually more expensive to find a new client than to work with an existing one.

A lot of your hesitation is about fear and capabilities you need to build, so I’ll give you some simple dialogue to help you ask the right questions and book appraisals. Some people you call are going to say no, but the ones who say yes are the ones you can build a relationship with. They’ll also give you good referrals.

So call all of your past clients, do the annual checkups, do the market appraisals, and fix the leakage by using the leads you already have sitting inside of your database. Call every buyer who ever inquired about a property and talk with them. Find your strengths and start working to them, and you’ll change the momentum in your business.

I hope you’ve enjoyed today’s Coaching Tip, and I look forward to seeing you here again next week.

Ep 172 – Maintaining the Right Levels of Energy

In this High Performance Podcast for Real Estate Agents,  Josh Phegan and Alexander Phillips discuss the need for maintaining the right levels of energy. They begin a discussion around dealing with the negativity agents encounter from clients, the media, and other sources. Alex tells how your mental headspace and viewpoint on the market affect your energy. He also recommends dropping clients who sap your energy and focusing on dealing with the people who actually want to deal with you. Josh notes the benefits of asking the client “Why now?” to find out their reasons for selling or buying.

Alex tells how he recovers from a “No” phone call to approach the next call with better energy towards getting a “Yes”, Josh notes that when the customer is in pain is when they need you most to ask great questions and help them make better decisions.