by Michele Newbern Gillis
Staff Writer
Times aren’t good, as any Realtor knows. The buzzword is “adjusting” and the reality is that the cycle is at a nadir.
In order to stay afloat, experts say Realtors need a system and focus on four main principles: business planning, professionalism, organization and
“Without a system and a checklist,” said Martha Dickerson, a manager with Coldwell Banker Walter Williams Realty, “things may be left out.
“Agents should not rely on just their memory to get things done. They need a system for each type of prospecting they do, such as calling on FSBOs, expired listings or sphere of influence.”
Sheron Willson, a broker who’s also a trainer for Prudential Network Realty, recommends that agents first determine individual annual goals, then break those goals down into monthly, weekly and daily categories.
Coaching is also important. At Prudential, each management team includes brokers and certified real estate coaches.
Sandi Wagner, a manager with Watson Realty, teaches a class to agents on strategic planning that covers business and marketing plans as well as budgets.
“All real estate agents are truly owners of their own company inside their brokerage, so consequently they need to run their business as a business,” said Wagner.
Without a business plan, many agents allow their business to run them instead of the other way around, she said.
“Instead of creating a stream of customers, they take what comes their way whenever it happens, which wastes time and money,” said Wagner. “Many agents fly by the seat of their pants and are surprised at the end of the year what their income turns out to be.”
Wagner recommends new agents read the Michael Gerber book “The E-Myth,” which gives insight into to what is needed.
“Many say they sell houses because they ‘like people,’” said Wagner. “In this market, it won’t be enough.”
Day-to-Day Activities
Starting new agents off with a daily plan that includes attending classes, meetings and daily prospecting activities helps lay the foundation, Willson said.
“In today’s real estate business, it may appear that being independent is a good thing, but experience tells the pros that no agent is an island,” said Willson. “I see real estate as a team effort.
“The more an agent follows the business plan, the more successful they become and the more independent they can be.”
This is why Willson includes vacations, special events and other goals in the very early stages of the business plan. “If we plan for the success and the reward for the success, then it will happen.”
But being an independent contractor can be quite challenging as Realtors have to be self-motivated since they really don’t have a “boss.” They are their own boss. “Most important for the agent is to establish goals and turn them into a number of closed transactions,” said Wilson.
By following the business plan and working it daily, it can create motivation and help agents successfully make the goals as set forth in the plan.
In her strategic planning class, Wagner focuses on agents working on themselves. She talks about creating a plan, how to have a balanced life and creating a system to create a consistent income stream, another important factor.
Finances
“Agents need to set up an account to put aside one-fourth to one-third of their commissions to pay into quarterly taxes,” said Dickerson. “If they can start this discipline from the beginning of their career, they are less apt to get into financial trouble later. They also need to set aside 10 percent of their income to use in advertising and promotion.”
Expenses such as marketing, taxes, insurance, gas and travel, cell phones, laptops and Web sites all add up.
“An agent should not rely or expect to rely on the brokerage to cover the expenses,” said Willson. “Sure, it is great that a broker may offer marketing allowances and other support but the broker’s contribution should be only an initial foundation.
“Personal marketing, along with advanced marketing for customers, education, dues, and everyday expenses, should be part of the budget plan.”
Marshall Gunn, a certified public accountant with Gunn & Co., works with Realtors to help them organize finances. Gunn said Realtors need to think about their finances before they even get their first check.
“To become a Realtor, they have to take the class and take the test,” said Gunn. “It’s like the party doesn’t start until you get all dressed up. So, until you get all of that, your expenses are not tax deductible. Once you get dressed up and get your license, its time to play.”
Gunn said Realtors should ask themselves, “Am I doing this because I am a Realtor?” If the answer is “yes,” it may be tax deductible.
“They are going to get some business cards printed up, do some advertising, join Realtor associations and have dues out the wazoo,” said Gunn. “There are probably only 10 or 12 categories...[and] those are the lifelines of a Realtor.”
Once they’ve been in business for awhile, Gunn said Realtors might want to think about incorporating, especially if they are netting more than $50,000 after expenses.
“Traditionally, what we’ve told clients to do is take a third of the money at closing and drop it into a savings account,” said Gunn. “That is for their silent partner, Uncle Sam.
“Then, roughly a third of their closing money will go to operating their business and another third is going to go to operating their home.”
Gunn said if Realtors live by that formula, they are usually in pretty good shape come tax time.
Gunn said he encourages Realtors to talk with a CPA or tax preparer familiar with the real estate business before the end of the year.
When a Realtor first comes to him, he likes to find out where they are financially and help them hunt for deductions that many they don’t know about.
“Don’t miss deductions and continue to keep plowing those fields,” he said.
Organization
“Many agents do not have organizational skills,” said Willson. “There does also come a time in a successful agent’s career where part of the planning includes having a qualified personal assistant at least part time. This should be part of a long-term plan.”
Wagner said that sales is nothing more than a combination of systems, and the more systems an agent has the better the organization will be. Just make sure agents spend time becoming organized and not just trying to ‘get organized.’
Established Realtors
“The very best thing an agent can do to improve their business is track and put into writing what they are accomplishing each day,” said Dickerson. “If they are not meeting the goals they set for themselves, then they will not be on target to earn what they planned.
“You do not need to wait to the end of a year to find out you have failed. You can know by looking at your past week and your past month. No self-examination, no improvement.”
Willson said it is never too late to ask for help.
“We believe that training and coaching are critical — just think about any successful business,” Willson said. “Only those who continue to learn, adapt and grow continue to be successful.
“If you always do what you’ve always done, you always get what you’ve always gotten.”
It’s on ongoing process, she said, that includes continual review and frequent coaching.
“The business plan needs to be flexible but not liquid,” said Willson. “Tweaking a business plan is good, but constantly changing it is not. Accountability is a very necessary part of managing a business as a business. ”
Gunn said there’s nothing wrong with taking a look around and emulating successful Realtors.
“There is an old saying, ‘You don’t know what you don’t know until you know you don’t know,’” said Gunn. “Look at the people who are successful and find out what they are doing and do it.”