BY JAMES HUSSAINI June 17, 2015To successfully get your next listing, and every listing after that, you need to have two primary steps as part of your strategy: listing preparation and listing presentation. Many brokers don’t prepare enough or take the time with the potential seller to fully pave the way to ensure they get the listing. If you are not ready, your close rate of getting the listing will not be impressive. By qualifying your knowledge and displaying your capabilities, the choice will be much easier for the seller, and they will agree that you’re the right person for the job. 1. Listing preparation You’ve received a call and someone is interested in having you list their property. While some brokers will rush out to sign the deal as fast as possible, a better plan is to prepare yourself properly with the information about the area. By creating the right information package, you will set a higher standard than others and better position yourself to sign the deal. There are three phases to your listing presentation. Phase 1: Deliver your information package Your information kit introduces yourself to the client, as well as details your qualifications. This introduction is important because should you make it to the listing presentation you won’t have to sell your experience and suitability again. Included in this package, besides your qualifications, should be your recent sold listings, your local real estate board’s housing report, feature sheets and your marketing plan. There are other items that you might want to include such as testimonials and other personal brand information that sets you apart. Ideally you will deliver this information package to the client’s home or workplace, so the client has it available to read through at their leisure and before your first meeting. I highly recommended that after you drop off the package you visit the property and tour the immediate area. Visiting the area is helpful so you have a visual of neighboring properties when you prepare your comparative market analysis (CMA) for your presentation. You should also include a personal note stating what time you will call them to go over the package and answer any immediate questions they have. Phase 2: Prequalify the client At the predetermined time (as your note stated in the information package), call the client and ask the questions that will help you to better understand the property, why they are selling, and other details that will make up part of your listing presentation. Additional questions you should ask are:
The most important question, which you need to ask and get a positive response for, is: “When we get together and what we discuss makes sense to you, will you be ready to sign the listing agreement?” Now you will set the time for the listing presentation appointment. Be certain to request that the seller has these documents on hand for the meeting: property survey, mortgage statement, tax bill and floor plan (if they have one). Phase 2: Prequalify the client At the predetermined time (as your note stated in the information package), call the client and ask the questions that will help you to better understand the property, why they are selling, and other details that will make up part of your listing presentation. Additional questions you should ask are:
The most important question, which you need to ask and get a positive response for, is: “When we get together and what we discuss makes sense to you, will you be ready to sign the listing agreement?” Now you will set the time for the listing presentation appointment. Be certain to request that the seller has these documents on hand for the meeting: property survey, mortgage statement, tax bill and floor plan (if they have one). Phase 3: Prepare yourself “To be prepared is half the victory,” Miguel de Cervantes said. You need to be ready, in a variety of ways, to win the confidence and the listing that the seller is offering. Be sure to have your toolkit that contains: clipboard for note-taking, calculator, tape measure, seller’s net sheet, prefilled-out listing agreement and your CMA. Also I’d recommend having a tip sheet for preparing the home for showings, a step-by-step guide on the process of property sales and a small gift to leave with them (notepad, pen, fridge magnet, calendar, etc.). About the CMA The most important item contained in the CMA is the period you use for comparative pricing. Too old and the data is unreliable; too new and market fluctuations are not accounted for properly. Be prudent on the side of cautious optimism with the pricing so the seller will be comfortable with your pricing suggestions. Also, take into account neighboring properties, give latitude to the seller’s particulars without skipping on the most important value-based points such as: condition, size, location, amenities, supply and financial options. By investing your time into a professionally prepared CMA, you will gain the client’s confidence in your abilities and their willingness to sign you as their broker. Remember to dress and act professionally. You want to impress the client not only with your qualifications, but your personal presentation, too. Dress appropriately, carry a briefcase and be prepared as if this were a high-paying job interview — because it is. Stay tuned tomorrow for “The right way to get the property listing: Part 2,” which will cover listing preparation, making your exit and beyond the listing. James Hussaini is the founder and president of Realty Point. Email James Hussaini. Read the article in INMAN
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The new rules of real estate team building: Part 2 - Throw the old schools of thought out the window5/19/2015 BY JAMES HUSSAINI May 19, 2015 Read “The new rules of real estate team building: Part 1.“ There are many real estate team-building models available to use as your framework. The model I propose is one that focuses on a “core membership” centered on collaboration. Ideally, the core member relationship should be structured upon a sense of ownership. You have to make your core members feel as though they are one of the owners — like they share the same destiny. A sense of ownership can become the primary motivator for your team members to take their performance to the next level. Initially, you will attract your core members and add new team members as your sales grow. Consider your core members as “department heads” for your team. In the beginning, each core member will be both in charge of their department and also responsible for handling the details and tasks of their department. Once the business grows, each department (core member) will recruit personnel accordingly. This structure will give core members the opportunity to advance their skills and talents by focusing on a particular aspect of your business. Growing your team, one member at a time In today’s age of absolute relevance for content marketing, the online marketer should be your first core member right at the inception of your brokerage. You can add additional core members as your business grows. Obviously, before adding any member to your team, you should have your office protocols and processes in place. Below is an explanation of growing your team in five phases: Phase I: The two core members you will need at the launch of your sales team are a real estate sales professional and an online marketer. In the beginning, in addition to sales, the real estate professional will handle general administrative tasks such as typing offers, listing agreements and so on. In addition to online marketing duties, the online marketer will handle customer service and retention responsibilities, as well as community content writing, as shown in the chart below: All marketing efforts should focus on community content writing and neighborhood promotion. You have to select an area to focus on and then prepare material and content to become the brokerage of the community eventually in the long term. After selecting a particular “farming area,” which can be a neighborhood or a group of people, you will research and write about community developments, events, sales, etc. There are a broad range of methods to establish your team in your targeted community. At the time of writing this article, search engine optimization and social media community engagement are the two most effective ways of establishing your brand and business reputation online. Phase II: Once your sales grow, one of the next members you want to add to your team is a “buyer specialist” because serving buyers occupies most of your time in phase one. This individual should enjoy dealing with people, in addition to excellent sales and communication skills. The key qualification for this position is having the patience for handling buyers’ inquiries and demands that can be overwhelming at times. If you are planning to grow the rest of your future “buyer specialists” under the command of this individual, in addition to the above skills, he or she should have leadership qualities. Phase III: At this stage, your sales are keeping you entirely occupied, and you would prefer to hand over paperwork details to an administrator. Your time is more valuable than what you will be paying an administrator. This individual should be detail-oriented and trustworthy because they will be handling your paperwork and general office administration. In addition to the paperwork, your administrator will take over the responsibilities of “customer service” and “customer connection” from the list of duties of the online marketer, as he/she might also be overwhelmed by this point. Keep in mind that “customer service” is offering a high quality of personalized service to your clients during the transaction, and “customer connection” is staying connected with clients after the transaction. There are ample opportunities for this customer service and customer connection person to serve your clients between the time the relationship starts and a deal closes. But more importantly this individual will focus on keeping in touch with clients long after closing through online and offline efforts to help build your client list and referral network. Phase IV: Perhaps, at this point in your business, the broker of record might want to divide his or her attention in attracting talent to the team. Therefore, you need to recruit a “seller specialist” to handle the listings. This individual is perhaps the most important person on your team, as his or her name will be used and branded on your brokerage listings. Therefore, it might be better to consider to make him or her part of the ownership within your business structure. Should you decide to add to your team a seller specialist to lead your “listing sales team,” additional skills are to be considered for this position. The most important responsibility of the “seller specialist leader” is to generate sales initiatives, systems, methodologies and sales training. Only by improving your seller specialist sales skills you can add to your bottom line. Maximizing your team’s potential through training and coaching is a priority throughout this phase. Phase V: You have to remember that in the long run attracting top-producing talent is the best way to grow your business. One of the primary stakeholders in your team has to focus entirely on salesperson recruiting and community relationship building. Your business has to participate, and even sponsor, at the community level to nurture and build your brokerage reputation and brand. This individual can be the broker of record, one of the stakeholders, or you might recruit a new team member depending on following talents and skills: 1. Talent recruiter (human resources) The most crucial issue for the success of your team is to attract sales talent. The talent recruiter will focus on attracting the best talent in the industry to your team. This person should enjoy social networking and meetings. Of course, your marketing person or department will assist in the process of recruitment by connecting with individuals through online communities and platforms. 2. Community connection liaison As mentioned earlier, your team should focus on a particular neighborhood. The main mandate of this position is to build your team’s image in the community through community engagement and involvement. The liaison focuses on keeping up-to-date with the latest developments and amenities. Your team will try to bond with the community and participate in events as much as possible. The most important aspect of this responsibility is to write consistently about the community and promote this information online through your blog, social media groups, etc. Boutique brokerage team model As you can see throughout this process, we now have multiple stakeholders, and everyone involved works as a team with one goal. Therefore, you might choose to promote your primary stakeholders to partner in your brokerage. There are different structures that you can select for your partnership but you, as the owner of the brokerage, should remain the decision-maker. Remember that this team building model is not about an individual’s image or brand but rather your brokerage’s brand and reputation. Therefore, instead of promoting an individual as the brokerage representative, your brokerage name becomes established within a community. This is a new way to bring corporate-style branding to your real estate brokerage, which adds to your credibility. You have to remember that this is also the best way to transfer your business to the next generation and have a legacy to leave behind as it is challenging to transfer an individual’s image to another. Depending on the management and leadership of individuals that built the business, the image and brand of a brokerage can be alive forever. Whichever method you use to attract your team members, you have to have an accountability system” in place, otherwise, your brokerage will not perform to its highest potential. Eventually your brokerage structure might look as below: The progression from being the only salesperson in your boutique brokerage to having a full sales team in place, as shown in the five phases above, can confidently begin with the position of “marketer” being your first hire. As your sales grow, you will be hiring for the additional positions and specialized talent needed for your sales team. Over time, by hiring the best people you can, your brokerage will grow and create the business you envisioned from the start. Read “The new rules of real estate team building: Part 1.“ James Hussaini is the founder and president of Realty Point. Email James Hussaini. Read the article in INMANBY JAMES HUSSAINI April 27, 2015 In this article, I will lay the foundation of the “new brokerage model,” which takes away many of the fears, enumerated later, that traditionally go along with starting your own brokerage thanks to technology, outsourcing and shared space. I would like to disclose outright that even though you can outsource most details of operating a brokerage, all of the final responsibility belongs to the “Broker of Record.” Top performing real estate brokers have been dreaming of having the business benefits of both worlds. On one hand, they want to “own” their own business and on the other hand they do not want to “own” the operational headache of a real estate brokerage. Now it’s possible to have your cake and eat it, too. The “new brokerage model” makes it possible for top producers to transform from a “salesperson” to a “business person.” This opportunity is made possible by the latest advancements in technology and behavioral changes both in consumers and real estate professionals. We are all marching toward conserving what we have by sharing our resources. The trend is that the business owner doesn’t have to do everything himself or herself. One can outsource different aspects of a business. A real estate brokerage is no exception to this trend. This new business model will give the owner of the brokerage a greater opportunity to focus on the sales side of the business. As an example some businesses outsource their marketing efforts while others outsource their administrative responsibilities. In the real estate industry the administration side of the brokerage is the most time-consuming and tedious work that every broker/owner prefers to hand over to someone else. Administrative tasks prevent the brokerage owner from generating revenue. Instead of focusing on sales, recruiting and training, the broker is caught up with administrative hassles. As per the Real Estate and Business Brokers Act (REBBA 2002), the Broker of Record is the signing authority and responsible for all aspects of conducting the business of the real estate brokerage in Ontario. Having said that, the Broker of Record should always read and review before adding their signature to brokerage paperwork even if the services are completed in-house by brokerage staff. The responsibility doesn’t go away when done in-house by someone other than the Broker of Record. The final authority is one and the same. It goes without saying that whoever takes the responsibility of handling your administrative paperwork should be qualified for the task. A wide range of brokerage services can be outsourced, but the ones that occupy most of the resources and are the most tedious tasks are: 1. Deal with administration In order to bring a deal to the closing table, there is a lot of coordination and paperwork that goes on behind the scene. A ton of details and paperwork are exchanged between the brokerage and interested parties such as lawyers, lenders, insurance brokers, etc. Your time, as a top performing real estate professional, is worth way more than handling these tedious tasks. And if you hire someone to do it for you, you will still need to supervise that individual. But more importantly, it might not be financially feasible to hire an individual to coordinate and close your deals in a boutique brokerage. The ideal option for you might be to outsource this service and let someone else take care of this headache for you. 2. Accounts management In order to protect the interest of all parties involved in a real estate transaction, REBBA 2002, for very right reasons, is the legislation that has strict parameters for brokerages to conduct their business and is overseen by The Real Estate Council of Ontario (RECO). The main mandate of RECO is the protection of the consumer through a fair, safe and informed marketplace, and all brokerages are obligated to adhere to the requirements legislated by REBBA 2002. Naturally, these rules and regulations generate a vast amount of checks and balances which leads to a copious amount of detailed record keeping. There are compliance regulations about how funds are disbursed and how documents are filed and managed. Each and every detail has to be adhered to as per RECO regulations. These details can be extremely time-consuming, require a lot of attention and plenty of patience to fulfill the requirements. For example, every brokerage is required to reconcile all accounts (trust, commission, general) each and every month. This duty is a tedious process. Even if you utilize some of the latest software available, it still needs an individual to reconcile each item of the transaction. There are many other operating tasks that are going to fully occupy your precious time. You are better off to hand-over this responsibility to someone else who is capable. 3. Receptionist services It is part of the real estate brokerage business norm to be open for long hours during the weekdays and weekends. One of the tasks that is required to be taken care of is handling calls and arranging showings. Like any other task in a real estate brokerage, there are many details behind the scene such as showing instructions, appointment confirmations, broker paging and handling all sorts of client and broker inquiries coming to the brokerage. In addition, any communication such as fax, email, mail, etc., needs to be handled accordingly and promptly. Technology has made it possible to be mobile, and you might be able to handle your reception services from anywhere, but not having a receptionist in a reception area might reflect poorly on your image. Not having a receptionist in place could negatively impact your brokerage reputation. Although hiring a receptionist should be a must for a brokerage, it might not be a financially feasible option for everyone. This is where the new brokerage model comes in, and you can have access to the services of a receptionist. It is much more cost-effective and headache free. More importantly let someone else be responsible for hiring, firing and monitoring the staff. 4. Shared office space One of the main obstacles of opening a real estate brokerage is the cost of office space and interior furnishings required for a real estate business. The initial setup cost could easily get into the tens of thousands of dollars which is a sizeable risk even for top producers. More importantly, the commitment of paying office rent each month is an obligation in which most top producers prefer not to partake. Therefore, some brokers choose to work out of their home, which can tarnish their image and others do not dare to establish their own real estate brokerage for this very reason. The new brokerage model proposes to open your brokerage in a shared office environment where it is a move-in ready space. All furniture, interior design, printing equipment, internet, phone systems, etc., is in place for you. All a broker has to do is just move-in. The risk on the brokerage owner is much lower as there is no significant upfront cost, and further because it is a shared resource, the cost of monthly rent is very low compared to independent office space with a long-term leasing commitment. Predictability and stability for you All the above four points of the new brokerage model create stability for your business. The biggest challenge for a business owner is unpredictability. On one hand, the expenses such as phone bills, internet bill, utility bills, office supplies, etc., can fluctuate greatly and unexpectedly. On the other hand, handling staff schedules can be unpredictable and aggravating. Sometimes there is no staff showing up while other times they might quit without notice. As the owner of the business, you have to fill in the position which could be very daunting and costly for you. It can take you away from prior important commitments. The unpredictability of business is one of the other main reasons that brokers do not dare to step out, take action and open their own brokerage. By opening your brokerage with a shared resource model, not only does it fix your monthly operating expenses at a very low amount but also gives you confidence that someone else is taking care of making sure that everything is functioning properly. Develop your business? By taking charge of administrative hassles, you are getting yourself dirty with day-to-day operations of the business. You are not opening your own brokerage to take you away from your business. The least is that you don’t want your business to decrease. By getting involved with the daily operation of brokerage administration it is more than likely that your revenue will suffer badly. Even if a portion of your focus is shifted toward administration, the details of paperwork takes you down with it. Once your focus is shifted, even if there is time left in your day, you cannot bring your focus back on business development. You are worth way more than handling administrative hassles when compared to income potential. Once you decide to hand the administrative hassles to someone else, you now have to choose one of the two paths you want to follow: either to focus on your sales or develop your own team and focus on managing your team. Of course, you can do both at the same time, but it might not produce optimal outcomes for you. Just imagine a world where you don’t have to worry about the paperwork, and you can simply walk into your office and either prospect for new deals or work with your team members to expand your business. Step forward and be an owner Top producing real estate professionals have always preferred to establish something of their own for many different reasons. Some might want to leave a legacy behind while for others it makes perfect business sense. In the past, there were obstacles for an individual to open their own brokerage ranging from initial hefty setup cost to high monthly payment commitments. The broker is responsible for monthly payments whether their brokerage makes money or not. It is a risk that a lot of people are not willing to take, especially if they feel comfortable in their current employment. The new brokerage model takes away all these worries. There is minimal initial upfront cost as there is no office leasing involved. More importantly, there is no significant monthly operating expenses as almost all aspects of running a brokerage business is shared. Further, even staffing is handled by a third-party, which leaves a lot of room for the brokerage owner to focus on the developing their business. The beauty of operating out of a shared resource brokerage centre is that a brokerage can expand at any time it wants. Therefore, this new brokerage model offers the best of both worlds; making you an “owner” with no hassles and commitments and providing exceptional room for business growth and expansion. So go ahead, leverage your resources and take advantage of this new brokerage model. James Hussaini is the founder and president of Realty Point. Email James Hussaini. Read the article in INMANBY JAMES HUSSAINI April 16, 2015The debate between the value of working under the umbrella of a big-name brokerage and opening your own brokerage under a “boutique” name goes back as far as when the first broker negotiated a plot of land for two sheep and a goat. The broker then took home wool and goat milk as the commission. Your brokerage’s name versus your success On one hand, the brand recognition value of a large real estate franchise cannot be understated. You have immediate recognition as a real estate professional when you use the name of the franchise brokerage, whereas the boutique brokerage name might not have that type of distinctiveness about it. Of course, individual effort and accountability factors are often overshadowed when tied to the name brand. The advantage of professionalism and success is more on the side of the boutique brokerage owner and entrepreneur and the reputation he or she has built. In Ontario and many other locales, a real estate salesperson starts a career at a brokerage. They must be employed for a minimum of two years prior to being eligible to take the “real estate broker course.” Upon successful completion, they become a registered broker and can open their own brokerage to become the “Broker of Record.” In real estate, your expertise is learned under the wing of someone that has walked the same path. Yet, they have achieved what many real estate professionals do not aspire to, which is owning their brokerage. Earned, not given Remember, an individual’s success is earned — not handed to them. Client leads through the brokerage office are not arriving on your desk fast and furiously. You must network, meet and greet, market and push your individual identity to become a reputable broker. Every contact is a potential client, if not today or tomorrow, then maybe years down the road. Referrals are based on your initiative and connectedness, not by virtue of someone else’s name. Often real estate salespeople shift from one brokerage to another because of lack of sales training, nonexistent support through challenging times and unfulfilled promises of leads being provided while monthly brokerage fees increase. Changing brokerages and maintaining your sales volume is a good indication that it’s your sales ability and work ethic that provide the foundation for your success, not your brokerage’s name. You understand what works for you and try to find the right employment to ensure that what you need to continue your success is available to you. Brokerage alternatives As you seek out alternatives to your current brokerage, you might ask yourself:
Shifting from brokerage to brokerage seeking long-term sales success might not be in your best interest. At some point in their career, every real estate professional must answer the question (if not to others, then certainly to themselves), “Do I have what it takes to own a real estate brokerage?” It’s easy to find the answer, just look at your past income statements. If you’re paying too much tax compared to other professions with comparable incomes (your accountant can help you with that answer), then yes — your sales are established and your income needs protecting from the tax man. Franchise or boutique? The next answer you need is whether to open a franchise brokerage or a boutique brokerage. The benefits of each are varied but almost always start with two questions:
With these answers the undertaking of moving to a different brokerage, and maybe even opening your own brokerage, will become crystal clear. You are now starting the journey to becoming a true entrepreneur by adding business owner to your list of real estate achievements. James Hussaini is the founder and president of Realty Point. Email James Hussaini. Read the article in INMANBY JAMES HUSSAINI April 13, 2015My last article covered the initial steps to starting your own real estate brokerage. Let’s continue with the next steps once you’ve created and registered your business, hired your staff and found your location. Day-to-day administration There are a lot of hassles in operating your own brokerage. Obviously, the more salespeople you have, the more paperwork involved. Some of the regular but crucial duties are: Transaction coordination With every deal that gets to your desk, you have to handle the details. You have to start with making sure that you have all required documents. In order not to scratch your head each time to remember, you should have a “Transaction Checklist.” With recent changes in regulations, having some of the documents is crucial. In addition to document collection, you have to coordinate constantly with the lawyers of both sides for closing the deal out. Fund disbursements “Trade Record Sheets” are instrumental in directing your fund disbursements. Once the deal is closed, it is time to disburse the funds through proper channels, such as bank accounts, to different sources, such as brokerages. Understanding the funds disbursement procedure is at the core of brokerage process. If you don’t have a proper process in place, you are taking the risk of jeopardizing your brokerage license with the Real Estate Council of Ontario (RECO). Accounts reconciliations Reconciling accounts is at the heart of RECO’s requirement for real estate brokerages. A broker of record is required to reconcile all accounts on a monthly basis. Of course, there are many other paperwork requirements, but account reconciliation is the most important one. It is a crucial task, but it is the most daunting. No one likes to do their monthly reconciliations. It is very time-consuming and needs a lot of patience. Brokers of record and managers are tempted to postpone this crucial and “boring” task. Accounts reconciliations are at the pinnacle of importance compared to all other details of all the accounts that you have to record and report. Your annual tax filings require accounting files, which is another topic in itself. Although there are many accounting software programs available, such as QuickBooks, that might make your life easier, all reports and reconciliations still need your involvement and signature. Filing and record-keeping Of course, a brokerage is required by both RECO and the Canada Revenue Agency (CRA) to keep records of all transactions. Brokerages are constantly referring to their paperwork long after closed transactions for many different reasons, not to mention RECO inspections, FINTRAC record requests and CRA audits. It is important to have a filing system in place at the time of inception of your brokerage; color-coding has been proven to be one of the most effective methods of organizing files. With the rapid developments in technology and online storage, not only are a lot of hassles taken care of, but also one can access their transaction documents from anywhere, anytime. Supervising staff Not only do you have to prepare plans and processes for your staff, but more importantly you have to make sure that you implement those processes. Planning is much easier compared to implementation, especially when it comes to your staff. You might have the best systems and online management software to handle all aspects of your brokerage, but it still needs your monitoring. No matter how reliable and trustworthy your staff is, you still need to be involved and engaged with them. Industry and regulatory changes Like any other industry, there are rules and regulations that govern the real estate industry. The rules are written in stone and still change, sometimes without notice. With recent rapid advancements in technology, the changes are more rapid than ever before. These changes can come from regulatory bodies within our industry or outside. Some of the organizations that can impact on your brokerage business are:
You have to keep yourself up-to-date with the changes in your regulatory environment. Not only do you have to be aware of changes to regulations and compliance issues, but you have to make the necessary changes within your systems and office processes to show that you are following the rules. Managing ongoing overhead and operating expenses Perhaps none of the above concerns compare to the stress of the risk of money coming out of your pocket each and every month whether you are generating revenue or not. You not only have to pay your office rent but also your payroll and many other regular miscellaneous expenses, such as phone systems, Internet, after-hours answering services, equipment rental, supplies, etc. The worry about ongoing expenses against cyclical revenues is usually the greatest concern that stops most brokers from opening their own real estate brokerage. Overcoming obstacles and implementing solutions Real estate brokers operate in a “risk versus reward” economy. There is no hourly wage, only upfront expenses and time spent with a cyclical paycheck based solely on completed deals. When you decide you are worthy of the challenge of brokerage ownership, after having examined and solved the obstacles as described above, it’s time to take your real estate career to the next level. The benefits of owning your brokerage, for the true entrepreneurs, outweigh the risks because the risk involved is minimal. One of the solutions of keeping your ongoing expenses manageable, and on budget, is based on the current trend of the “sharing economy” and is similar to “business center office services.” When you can hand over the majority of nonselling tasks to experienced and competent staff that you pay on a contingency or flat-fee basis, you can budget your expenses. This delegation allows you to always recognize your income potential with every deal that crosses your desk. This model not only takes care of tasks and details but also cuts down the cost of office setup, renovation, furnishings and even administrative staff. With recent disruptions in our industry, now it is possible to open and manage your own brokerage without the hassle. Read “A step-by-step guide to launching your own brokerage — Part 1” here. James Hussaini is the founder and president of Realty Point. Email James Hussaini. Read the article in INMANBY JAMES HUSSAINI April 03, 2015 Despite all its benefits, what discourages top-performing real estate brokers from owning their own real estate brokerage? In the same way that business ownership is not for everyone, brokerage ownership is not for every real estate agent. In addition to the desire to own a business, there are certain qualities that define a true entrepreneur. None of these qualities are as important as the internal courage to take calculated risks. If there is no risk at all, it will not be a lucrative business. A businessperson is a risk taker with a “type A” personality, with exceptional leadership skills and the ability to guide others past the concerns of the business risk. That risk must be tempered with vision. A risk without a predetermined strategy in place is similar to playing soccer with no “goal posts.” A business leader has a planned outcome in mind before taking action. A businessperson’s leadership skills allow him or her to push, pull and prod others of the necessity of the vision and plan. The above qualities alone will not take your business to success. In addition to risk-taking and leadership skills, you need managerial qualities to power your business. Those are the three traditional defining attributes of the business owner. If you are lacking in any of these three areas, can you still become a broker? Or are you forever destined to be an agent, standing in the shadow of your broker of record? There exist very successful entrepreneurs who break that traditional mold and have learned that by leveraging the skill sets of others in areas where their own skills are not strong, they can acquire the experience, education and drive to achieve success by utilizing a strong workforce that becomes the foundation of their business. Successful and proven franchise models do exactly that. With defined goals that follow a tried-and-true business playbook, coupled with constant testing and improvements to processes, a franchisor provides franchisees with a system that only requires the business owner’s desire to succeed. Franchisors are not only selling their brand names but also their ideas, systems — and, more significantly, their track record. Brokers can focus on revenue generation, the fuel that drives business, instead of testing and adapting a playbook as the market around them changes and evolves. The franchisor has the ability at all times to see the bigger picture providing a valuable back-stop to business decisions that might otherwise cripple a singular business owner. For those who are brave enough to consider opening your own real estate brokerage (my own market area is Ontario, Canada, so I also detail specifics required for Ontario Realtors), you will need to assess the following areas: Business creation and registration One of the hassles that deter real estate brokers from opening their own brokerage is the initial work involved in establishing a corporation and all the paperwork involved. There are a lot of important details when setting up your own real estate brokerage that need to be followed, and often in a specific order. 1. Brokerage application and registration paperwork Filling Real Estate Council of Ontario (RECO) and Toronto Real Estate Board (TREB) forms requires a truly detail-oriented individual. In addition to forms, you have to coordinate other paperwork such as your police background check, transfer forms, bank account setup and signature cards, and so on. You need to be aware of each step of the process and constantly coordinate and follow up with different agencies and individuals. You will need to organize your action plan to get through the initial stages or assign someone who is detail-oriented enough to handle your registration paperwork on your behalf. 2. Incorporation and business registration These two areas will require the services of experienced lawyers and accountants to guide you through the steps. From the choice of business name to the type of corporation your business will adopt, the decisions you make will be need to be coordinated with your brokerage application and registration. You will also need to register and open your Canada Revenue Agency accounts, provincial tax and employer accounts, and other government accounts for filing and reporting compliance. 3. Creating systems and processes In order to operate your brokerage efficiently, you have to put processes in place, even if you are the only registrant or employee in the brokerage. There could be a wide range of processes that you want to establish ranging from office procedures to closing policies. Some of the basic processes to be established are: transaction process, funds disbursement process, trade record sheet process and your recruitment process (if you are recruiting new team members). In addition to systemizing your processes, you might have to work on having an extensive office policy and office culture policy prepared. Planning ahead will save considerable time, effort and headaches when they are needed as your brokerage grows. 4. Searching for office space After crunching your numbers and deciding to open your own brokerage, you have to figure out where you want to locate your office. If you are opening an independent brokerage, you are free as a bird. If you want to be part of one of the established franchise brands, you are restricted as to where you can open your doors. Your franchise brokerage boundaries are more limited in cities, as most territories are already taken in major urban centers. Once the location of your brokerage is determined, you have to start searching for office space within your area. While searching for office space, you have to tackle issues such as type of property, size of space and parking access. The biggest issue about office space that most brokers do not feel comfortable about is the long-term lease commitment. Generally speaking, most office spaces are for a term of five years, which is a significant expense commitment, especially if it is a larger space. In addition, you need at least the first and last month’s rent deposit. Some individuals run their brokerages out of their homes, which I absolutely do not recommend, as it might tarnish your image. You have to ask yourself: Does a home office instill confidence in my ability and success to my clients? I would confidently say that if you are planning to open your brokerage out of your home, you are probably better off staying at your current brokerage. 5. Office furniture and equipment Now that you found your space, you have to start looking for furniture and equipment that fits and matches with your business’s personality. But before moving in the furniture, your office space might need renovation or at least cosmetic touch-up. You have to plan all these steps and, more importantly, reserve time and money to complete them. The cost of renovations and furnishing could easily run up into the tens of thousands of dollars, depending on the size of your office and your interior decorating choices and options. 6. Hiring administrative staff Before your office door opens, you should probably hire someone to answer your phone calls, and you might also need to hire someone else to handle your transactions: a deal secretary. As you can already appreciate, you have to go through the process of interviewing, employee selection and training. You need to first internalize and digest the process of your office yourself, and then transfer it to your staff. This in itself can be daunting for some brokers. This is just the beginning — next week, look for the second installment of the guide to launching your own brokerage. James Hussaini is the founder and president of Realty Point. Email James Hussaini. Read the article in INMANBY JAMES HUSSAINI March 25, 2015 Every generation lives through, and inspires, change. Although personal values might remain a constant across generations, the tools and information available to help make decisions changes with the times. The mere access to information, generally speaking, does not make people smarter. They need to know which information sources to trust as they wind their way through life. Millennials have lived their whole lives with technology at their fingertips, but does that make them more independent of needing helpful advice and a knowledgeable professional by their side? Certainly not. Does technology replace the important aspects of a real estate agent’s value or does it enhance it? I would suggest that technology enhances the capabilities of a real estate agent’s efforts when used appropriately. And I’d suggest that because of that technology, which is available to all, expectations are higher that the real estate agent’s knowledge is more comprehensive about neighborhoods, local services and the general livability of any particular home in any specific area of the city. In the auto sales industry, the buying cycle has been shortened through consumers’ use of technology to research and select the vehicle of their choice. The car sales cycle 15 years ago was four to eight trips to several dealerships that had the type of vehicle a person was searching for. Now they start online, and when they are ready to make the purchase, they head to the dealership that has their choice in stock, which greatly shortens the sales cycle. The available tools for today’s homebuyers far exceed any basic MLS listing. Those tools require real estate agents to exhibit their knowledge in a variety of channels to make sure potential homebuyers’ search results will yield that real estate agent, which, in turn, will shorten the homebuyers’ sales cycle. It’s very easy to find out everything a homebuyer would want to know about a neighborhood including transit, schools, neighborhood shopping and entertainment venues. Even local crime rates can be found online. Niche and neighborhood expertise is what millennials want to find their real estate agent is capable of — just as any other buyer does. This is no different from home sales of 30 years ago. The real difference is that anyone with basic online search skills can find the information, and millennials are just savvier at finding that information online and deciding if the source is reliable. It’s up to the real estate agent to package the information in a way that provides real value to their client, to understand how to position themselves online to be found and to be the real estate professional who exceeds expectations. Reposted with permission from Realty Point; read the full white paper. What do you do to specialize your service for millennials? Please share in the comments section. James Hussaini is the founder and president of Realty Point. Email James Hussaini Read the article in INMANIs email simply a tool you use for communication or is your inbox running your business?
All too often we fall into the habit of creating our daily to-do list based on the messages we have waiting rather than managing the real priorities that our business requires. You can increase your productivity by avoiding your inbox for the first hour of your work day and allow yourself the freedom to think about what you really need to accomplish during your day. Instead of dealing with your email as the most important thing you do, use that first hour on planning your day with setting tangible goals in mind. There is a hierarchy to communication that will help you implement a manageable plan of action. Phone calls first, text messages second and email last. Usually this order prioritizes what your clients see as important and allows you better control of your time and productivity. I remember reading somewhere, years ago, that email was never meant to be immediate. So why do a few unread messages sitting in our inbox overwhelm everything else we need to do? Give yourself a break from the morning email routine you’ve fallen into and you’ll dramatically improve your daily productivity. Here’s some handy email tips to consider:
Why the traditional brokerage model is obsolete? What Inman's research says about the industry?2/10/2015 BY JAMES HUSSAINI February 10, 2015 Traditionally, a real estate salesperson joined a brokerage for the power of its marketing and name recognition, relying on the “higher power” to drive leads and sales. Changes to the commission split structure put more and more marketing responsibility on the individual. The shift to social media and enhanced online networking systems has dramatically lessened the power of the brokerage over the individual and now provides less and less value to the successful salesperson. 1. Changes that broke the brokerage model. There has been significant shifts in the real estate brokerage industry and none of the changes has been as significant as lower commission splits. Today the commission splits are ranging from as low as 95/5 to a couple of hundred dollars per transaction going to the brokerage. As you might imagine, with such low commission splits, a brokerage can survive only with a very high volume of sales. The margins of gross income and profitability is constantly dropping for the typical real estate brokerage. On one hand, there are not enough resources to properly manage and train the salespeople, and on the other hand the broker of record is constantly looking to generate more revenue to cover his overhead and expenses. Basically, most brokerages are operating “hand to mouth,” and a shock to their business, such as a couple of their top-producing salespeople leaving, can jeopardize their business. With the intention of protecting their business, brokerages are recruiting any licensed salesperson walking into their office. One of the main tools used by brokerages to attract real estate salespeople was and still is the promise to give them leads. The basis of that “promise” ranges from doing “duty time” at the office to online sources. In most brokerages, if not all, this promise is rarely kept. The brokerages cannot keep their promise either due to lack of resources to generate the leads or the number of leads generated is much lower than the number of salespeople. Further, even if brokerages provide leads, they are usually of very low quality, which salespeople consider a waste of their time to pursue. Moreover, the brokerages promise to provide “full coaching” and “hands-on training” for salespeople joining their brokerage. Again, due to a lack of resources, most brokerages cannot afford to provide the training required for their salespeople. As a result, most salespeople are not fully equipped to practice “properly” and “professionally” in the field. Additionally, most salespeople are not compensated for the cost of the technology they do use on a daily basis. With the increase in functionality of smartphones and tablets, the costs associated with the use of technology has shifted from the brokerage to the salesperson. Nowadays, there is another promise used as a recruiting tool to attract salespeople and that is online marketing and branding. It is very challenging to practically carry out this type of promise, as “online branding” is very “personalized.” In today’s age of “content marketing,” each individual salesperson has to be engaged with the online world and create their own individual brand and identity. This may involve writing blogs, posting videos, being active on social media, etc. … Practically, it is almost impossible for a brokerage to brand salespeople individually, as it needs a wide range of resources to accomplish this time-intensive task. So this most recent promise, along with previous ones, cannot be practically delivered even if brokerages had good intentions of carrying through. The lack of supervision, training and coaching has led to another phenomenon in our industry — a significant increase in part-time real estate salespeople. On one hand, these salespeople receive a big commission check, once in a while, which excites them to stay in the real estate industry, while on the other hand they are not confident enough to leave their full-time job for a long-term real estate career. Basically they are not dedicated enough to be fully focused on their real estate career or professional development. As a result, most real estate brokerages have become more of a babysitting and license-stacking office. Real estate salespeople are not fully invested into their career and therefore the rate of making errors or “unprofessional conduct” is high. The broker of record is constantly putting out fires that are created by salespeople, mostly by part-timers. Instead of having a long-term vision to properly train and manage salespeople, brokerages are busy handling issues created by their untrained salespeople. Unfortunately, the real estate brokerage industry has brought this upon themselves by constantly and continuously discounting their services. Conversely, despite receiving higher commission splits, the salespeople feel that they are not getting the level of services they expect from their brokerage, such as training, coaching, and, more importantly, their broker of record being a sounding board and offering support for their transactions. When salespeople do not perform well, they blame their brokerage for their lack of performance. This situation could lead to an environment of lack of confidence in the brokerage. As a result, salespeople are moving from brokerage to brokerage looking for those “promises” to be delivered. 2. Salespeople are the owners of their own “brand.” Salespeople who push forward to establish their own online brand often do not seek out the help of their brokerage other than to see what available tools they have access to. In fact, the traditional real estate brokerage franchise is not in a position to help the salesperson build their own individual online marketing plan, as each salesperson has their own unique characteristics and they can better create their own unique online footprint. In the past, brokerage and franchise branding might have provided some value to the image of individual salesperson, but in today’s online marketing world each individual is better off to create their own brand image independently. For this very reason, most salespeople do not see the value behind the concept of paying the so-called “monthly franchise fee,” and this issue is reflected in Inman’s most recent survey of independent brokers, published on Jan. 5, 2015. Although personal branding has always been the biggest differentiator in the real estate sales industry, now it is the main “primary motivator” for the consumers of today. The expectation of today’s customers is “customized services” that align with their values, lifestyle and specific needs. There is no longer a “one-size-fits-all” strategy that built brokerages in decades past. Each client expects to be treated as an individual. Traditional brokerages and franchises have systemized their processes and provided a “one-size-fits-all” model for their clientele base that is no longer relevant to the expectations of the client. The role of real estate professionals is even more important today than ever before, as clients expect the prompt delivery of customized and personalized services. This trend is clearly demonstrated in a recent survey conducted by Inman. “Brokers and real estate professionals surveyed by Inman say local control of branding and technology gives indie brokers the ability to craft nimble, profitable businesses that can adapt quickly to local market conditions — without the burden of franchise fees.” 3. Consumers pay the price. Our primary mandate as professional salespeople is to protect the interest of our clients. I am not sure how we can serve our clients to the level of service that is expected when we have not received professional training and ongoing coaching. As mentioned earlier, consumers expect “personalized” and “individualized” services when they hire a real estate sales representative. I would like to remind my colleagues that 80 to 90 percent of successful real estate sales professionals’ business is based on repeat clientele and their referrals. You cannot expect to build your business if you don’t have a solid “fully satisfied” clientele base. 4. What is the solution? Our industry is no longer seeing much of any value in the traditional real estate brokerage franchise model, and, as a result, the opening of independent brokerages are the route more brokers are taking. Real estate professionals are rapidly moving toward establishing their own brokerages under their own name and creating their own brand. They prefer not be attached to the “traditional brokerage” image and, more importantly, want to take advantage of incorporating their real estate practice for tax saving strategies and taking charge of their own future. Interestingly enough, “nearly 9 out of 10 Inman readers surveyed (86 percent) think independent brokerages are becoming more popular among real estate agents.” This trend is prevalent in the U.S., which is more or less reflecting our industry here in Ontario as well. Inman points out that “while 71 percent of affiliated brokers surveyed by Inman report that they have thought about going independent, 97 percent of indie brokers say they aren’t considering joining a franchise brand.” The real estate professionals who investigate the feasibility of opening their own brokerage very soon realize the overwhelming overhead cost and significant amount of time required to handle the administration of the brokerage office. Moreover, additional resources are necessary to meet RECO requirements and be up-to-date with changes in rules and regulations. Generally speaking, most of them are successful as salespeople, and they prefer to be out there selling properties and not stuck in an office to shuffle through papers and accounting reconciliations. Further, we can appreciate that a good salesperson is not necessarily a good administrator, a good bookkeeper or a good manager for that matter. For these very reasons, there are a high number of successful real estate salespeople who do not dare to open their own independent brokerage despite all its advantages. Reposted with permission from Realty Point; read the full white paper. James Hussaini is the founder and president of Realty Point. Read the article in INMAN
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AuthorBelieving education is power and has the ability to generate wealth – Jamshid has made a commitment to sharing his knowledge and expertise in the real estate. Categories
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