How This Crisis Will Benefit Well Run Real Estate Teams

Hey, what's up, Business freedom podcast listeners. This is going to be a fun one. And I'm trying to think how to title this one without just pissing some people off. And the title, the working title I have right now, and this came while I was running in my neighborhood. I went for a nice 62 minute run today. Slow run, 5 miles, 62 minutes. I do all of my thinking when I'm out on the road. I'm calling it the upside of this crisis for well run Real estate teams. So just to say there's an upside to this crisis is sort of, I don't know, a little provocative and I don't know, I'm not gonna overthink it and I'm gonna explain what I mean by it. I was on a live webinar, I guess it was a podcast slash webinar. It was live, it was for Red X and this was last week and there were folks on their live asking questions and I forget her name. There was a solo agent on there that didn't have a lot of years in the business and wasn't, you know, top producer or, you know, wasn't a top producer, wasn't running a team or anything like that. She asked the question like, what tactical advice would you give someone in my shoes, essentially? And I don't think she was selling a lot of homes and I was doing the best I could to give this agent advice. And then it finally dawned on me that the actual advice I would give someone if they were like close to me and they wanted to stay in real estate for the time we're about to enter. I'm going to do a separate podcast on some of the predictions or what I see coming for real estate in the 6, 12, 24, 36 months. I'll save that. So with those thoughts in mind, the best advice I could give her was in your market, you should find a really well run real estate team and if you're willing to do the work, find a well run real estate team that can provide all the things I'm going to go through here on the podcast. And that's really the best advice I could come up with for this agent. It wasn't, I don't know, I mean, I could sort of give a pep talk and, you know, explain what I did to go from, you know, 44, 27 to 44 to 58 to 118 to, you know, and my growth journey over 400 sides in 2014 or so. Something in me just wanted to let this person know that it's okay to look at a real estate team as an option. And I think what kind of triggered me was she started going down the path of, you know what, what brokerage would you recommend I go to in a time like this? And I couldn't honestly say that any brokerage has anything figured out right now. Like, you know, we're in the, one of the. We are in the top KW market center in the world. And our average production in our market center is seven homes. That was last year, I think. So the average agent in our market center and there's 600 agents in our market center with seven homes. Do the math on 275,000 average purchase price on seven homes. Most of those agents aren't making a whole lot of money. And so that was my advice and it led me to the thought like I'm going to do an episode here on the podcast what this means for a really well run real estate team. The opportunity to absolutely crush it when it comes to being a safe haven for the folks that just can't figure it out on their own. And I would say the last four or five years have been more frustrating to be in the real estate business than it was back in the Great Recession. In the Great Recession, everybody was getting out of real estate. You know, we went from 15,000 to 5,000 agents in a three year period. And so there I just kept my head down and did my work and then people took notice and I didn't even have a recruiting system per se back then, but really good agents with, you know, I remember at the time I picked up four agents in 2010, the year we went from 58 to 118 sides that were, they had like 30 years combined real estate experience, the four of them to my, you know what, two, three full years at that point. And so I've got three things I want to go through with you and I want to first explain the difference between traditional real estate team and a really well run real estate team. I call it a high performance real estate team. It just so happens that my real estate team is called high performance Real Estate Advisors. And the concept was taken from something I read in E Myth. It's called high performance organizations and they talk about a high performance culture. And it's really different than certainly an agent in a brokerage like an agent in a brokerage. There's no accountability, there's no cadence, there's nothing. So I'm talking about a traditional team and a high performance team. So hang with me here. I want to explain What a traditional team is a traditional team and I talk to a lot of them. They come into our world because there's no accountability for expenses and no accountability for people. And so it's not set up to provide the very best experience for buyers and sellers. We've been talking about buyer and seller experience for three years now in our, in our, in real estate B school. And so most of these real estate teams that I see, and I have a sneeze coming on here, most of these, it's because we got guinea pigs for my daughter. Most of these real estate teams that we see do not have anything close to a high performance culture. They're a loose collection of people. The team leader is typically buying a lot of leads. So they're not actually doing any marketing, they're not actually attracting buyers and sellers to them. I've talked to folks that are spending upwards of $100,000 a month on Zillow. There's an agent in my market that's at one point spent $75,000 a month on Zillow. Ironically, that agent had to sell a lot of homes to even make a living, my market. And so no accountability for people, no accountability for expenses. And that leads to a low margin real estate team where the team leader has to sell homes to make a living. And typically the team leader is spending an ungodly amount of hours in the business. The money isn't there and they're super stressed. So you've heard me talk a lot about time, money and stress. And, and so that's a typical scenario for a traditional team. And you'll know it. If you see a team in your market where the team leader sells a lot of homes, yet they have a big team, it's because the whole thing is set up the wrong way. We've got an agent in our market, the team leader, he's a bigger team than we are. He sells, I think about 100 homes a year out of their like 500 homes. And it's just not a business. Like you'd like to think of it as a business, but you simply own the place that you go to work, you have a job, you do not have a business. And so let me shift gears. So that's number one, just, that's a traditional real estate team. The key difference is this is point number two. I want to go through the key differences here and it's culture, cadence and focus on results. So let's go into culture. A high performance team has a culture of productivity and accountability. Right or wrong, these Folks are committed to being accountable and being productive. And so there's a very small percentage of the population that wants to be accountable and they want to be productive and they want to track their numbers and they're willing to do the work. That's number one, that we see the difference between a traditional team and a high performance real estate team. Number two is the cadence. And so there is no cadence. And what I mean by cadence is if you're an agent on a traditional team, chances are there's no accountability for your time. And I get the whole independent contractor thing and you can't tell them what to do. It doesn't matter. There's no focus on new business development. And so minimum three hours a day, 50 minutes laser focus, 10 off. 50 minutes, 10 off. 50, 10. So two and a half hours over a three hour period is the bare minimum of new business development you must do as a real estate salesperson to be successful in this industry. And if you're not doing that, you're not going to be successful. And that's the bare minimum. And so a traditional team, the team leader has no idea what's going on with their team members and there's no tracking and it's just a loose collection of folks. The third difference is a focus on results. So a high performance real estate team is absolutely results driven. The team owner is not worried about top line as much as they are profitability. And they've set it up in a way where the results that matter most are what they're getting for their clients, their buyer and seller clients. The buyer and seller clients are the teams, they're not the individual agents, they're the teams. So your salespeople only have a small role in the overall transaction. Traditional teams, a lot of traditional teams have their agents close transactions, they're dealing with all repair negotiations. They're the wrong person. If they're a good salesperson, they're the wrong person. In the contractor closing part of the transaction, they're showing homes. They leave the office at noon to go show a home and they never come back. And you know, how could you possibly show homes for six hours in the afternoon? And you know, so there's just a big difference in the cadence, but also the results and the focus on results from ownership perspective, that's point number two. Number three is really the question, what do you do? If you are listening to this and you feel like I'm talking about you? When I talk about traditional real estate teams where it's low margin, you're probably Giving away too much commission, you're providing all the value that most high performance real estate teams do. You're just not holding your expenses accountable, you're not holding your people accountable. And so your gross margin, after you pay your agents and your broker, there's not enough left to pay all that overhead and then still have a profit. And you're not providing great service to your buyers and sellers. And everyone's doing a different version of a presentation, everyone's getting a different client experience. It's just not a real world class business. And so here's what I would do. If you're in that ballpark there, it's typically we've done it one of two ways. So the first way is not recommended. If it's beyond repair and none of your folks are going to fall in line with the culture of productivity accountability and you're in this sort of hamster wheel of having to sell a lot of homes, you're making less money than you did as a solo agent. Now you have a real estate team, some of that. The only solution to some of those teams, and not all of them, is to scale way back, get things right from an economic model standpoint, cut out the expenses that you don't need and start to rebuild. Doesn't mean you have to go all the way to zero. We've helped folks go from 4 million GCI making 500,000 to scale back to 2.5 million making 750,000. And ownership is not in production. So it's not what you make, it's what you keep. And most of our industry is so mesmerized by top line production that they forget to even ask the question if they're talking to someone who's a top team leader. How much money do you make? I had the opportunity to talk to a guy does 1200 units. 1200 units and yeah, about 1200 units, if I remember correctly, about 6 million GCI. Wait, no, it wasn't 1200 units. It was, it was 6 million GCI. And the profit of the business was no more than this guy's personal production. The profit of the business was no more than his personal production. So he had this and he was dubbing what he had as a real estate team when in fact it was a brokerage. It was a not profitable brokerage. He was giving away 90% commissions to his agents and he was going around telling everyone he had a real estate team and big ego and just completely full of shit. And pardon my language, if you're listening to this with the Kids, kids there. What has to happen in a situation like that is you have to identify. So the second way to deal with it is identify the folks on the team that do fit what you want to build and then scale it back so that you can sort of move the business in the right direction with a core set of folks that really want to do this at a higher level and they're willing to step up and be productive and fall into some cadence of accountability because they want to do more. You know, you'll be surprised that folks crave accountability. We're just afraid to give it to them. So anyway, hopefully that's helpful because I think the opportunity for a well run real estate team, just like the advice I gave this person that was on the Red X webinar, is you have what they need. You know, in my business, it's been built in a way where it exists to thrive in a time like this. You know, the last three or four years before the COVID crisis, nobody needed a real estate team. Everyone was just like, willy nilly, you know, this is easy, deals come, you know, it's not real challenging, that sort of thing. That is getting ready to stop. We went from, like I said, 15,000 agents to 5,000 up to 17,000 now and we're getting ready to go back down to 6,000. This, this shift, this crisis is going to trigger a shift, in my opinion that's not going to take a few months to clear up. I'm going to do another podcast episode on that. I'm going to do the next one on that. So tune in for that. If you're at a point in your journey where some of what I went through here sort of strikes a chord and you know that you need help to navigate through it. If you're on the low end, a top producing agent at 500,000 to we have folks come in at 5 million that need to rework their financials and their economic model and figure out return on investment for lead sources and get that cadence of accountability and productivity instilled in their team. If that is you, the only thing I have to offer you is a conversation. Just go to real estate B school. A business growth strategy session is your opportunity to connect with one of my business coaches that can help you and has actually been through this journey. And if that's not where you're at right now, I've also got marketshifttoolkit.com, which 12 trainings from our actual live trainings with our members that I put together to help someone who's struggling right now. And so if that's you, go to marketshifttoolkit.com if you know you need to talk to somebody, go over to realestatebschool.com and we'd be happy to have a conversation. Much love, much respect. We'll talk soon.