Potential vs. Patterns & Why You Need to Be the CFO of Your Real Estate Business

So how does a guy go from being an inside sales agent on a real estate team to selling over 300 homes a year and doing that really profitably, only working a few days a week. If you missed our last episode, I had Dan Jones on real estate team Builders and he dissected his journey from. He started out on my real estate team so. So he moved here from Hilton Head, South Carolina to be with his mother as she was going through some health challenges and she ended up passing away and ending her time here on earth and just got to know Dan and he had a big vision to start his own business and I supported him in that vision. I launched real estate B school. I came alongside him and we got after it. Dan went from 60 to 105 to 165 to 225 to 275 to 300 plus sides in his real estate business and he gave us his journey. He broke it down. This concept of working like 10 men to teaching 10 men how to work. The journey from player to coach. Not everyone that is an awesome player can be an awesome coach, right? Just like sports, right? Just because you are a great player doesn't mean you can become a great coach. I think Michael Jordan might be a good example of that. He was a better player than he ever was a coach or I think even an owner of a basketball team. So Dan broke it down in three buckets and I want to give you a little bit of perspective on his journey, what was important to him and his journey as it relates from this transition from player to coach, but give you my perspective on it. So the cadence of real estate team builders is going to be, we are going to interview someone who has, is running a high, high functioning real estate team that's super profitable. We'll dive deep into their business, find out what is the secret sauce that allowed them to do it and then I'm going to follow up and go a little bit deeper on some of those things. And so Dan broke it down into lead sources, accountability and culture, which included core values. So I want to lump the first two together into tracking. You know, it is really hard to scale a profitable real estate team without knowing your numbers, without becoming the CFO of your business. And I remember when Dane and I, this was the early days of his journey in making the shift from player to coach ultimately to owner of his business. He would come in once a month. We were physically in the same market. So he would come into my office, we would sit down, he would review his numbers on A legal, a yellow legal pad. He would write all of his expenses, all of his set met signed like he would do all of his tracking on a single piece of paper for the entire month. Now that's not the way he runs his business today. Yet at the time he knew that knowing his numbers was so important. He wasn't going to let his lack of maybe time or ability to focus on getting a bookkeeper or you know, running a spreadsheet or getting a tracking system up and running. He was going to track it no matter what. And so a lot of team leaders we see, and this comes after talking to over a thousand of them on strategy sessions and coaching hundreds of team leaders over the years, is that there is no tracking in place. You're not the CFO of your business. You hope that if you just sell enough homes, there's going to be enough money there and oftentimes there's not and you're left selling a bunch of real estate. So you're, you're in personal production while you're running a real estate team, real estate team. And it's a recipe for disaster. And so not only knowing your lead sources, but knowing exactly how many leads are generated, how many of them are, are say yes to an appointment, how many of them actually show up for an appointment, how, how, how many of them actually sign a buyer loyalty agreement or a listing agreement? How many actually go under contract and close? So how much does it cost you to acquire a lead and then even just sit down for a face to face consultation? If you don't know that number and you're spending money on lead sources, I promise you, you have no idea where your money is going. We tracked, we did radio for a decade and tracked its effectiveness over time and found that it in the beginning, the early stages of being on mass media, I could spend, you know, $200 to show up at the front door of a listing. This was still when I was back in my days when I was going on listing consultations cost about 200 bucks. So we would run advertising on a couple local stations, people would call up, we'd set consultations, I would show up at their front door. It cost me about $200 to show up for the opportunity to earn at that time an $8,000 commission check. It's pretty decent. I knew my conversion rates, I, I knew how many listings, you know, conversion to get it active on the market and then on the market to under contract and closed. So it was a good proposition. That number went up to over $2,000, $2,000 to get to the front door of a seller that might be interested in selling. And yeah, granted, the commission check might have gone from 8,000 to 12,000 over a decade or so, but the cost to knock on a front door increased tenfold. And so the opportunity wasn't there anymore. And that only came because we were high level trackers, right? We tracked our numbers, we became CFOs of our businesses. And that's one thing in real estate B school, that we will not allow you to spend money on anything unless you track everything in your business. So that was accountability. And accountability includes the accountability, holding the expenses in your business accountable. Anything you spend money on, it has to either grow the business or treat the client better so you get more referrals or make the process smoother. We don't do any ego spending in our businesses in real estate B school, meaning we don't spend money on something just because it strokes our ego or it gets us a transaction that's not profitable. Right. There's a lot of folks out there right now buying business that's ultimately driving them out of business because that business is not profitable. That brings us to culture and core values. And here's where I want to spend the bulk of my time. Because I feel like in the area of people, this is my biggest failure and my biggest achievement. And I was willing. I almost wore my T shirt that said be comfortable with the uncomfortable. When it comes to building a real estate team, you have to get comfortable with failing in the area of people. Dan spoke specifically. I had some notes here. Let me make sure I can grab them about making the right hires. And there's one thing that I have failed in over and over and over again. And at the same time, those repetitions, those failing forwards. Because I'm always failing and falling down and I'm getting back up and I get a little bit forward, you know, I take a couple steps, then I fall down and I get back up. That's been the key to my success. Not because I'm naturally gifted as a leader, not because I'm naturally gifted as a systems builder or a marketing person or a salesperson. It's my ability to fall down, get back up, take a couple steps, fall down, get back up. So in the area of people, there is one thing I need you to understand. This is not preaching, this is teaching. Because I failed here over and over again. When you are sitting down or evaluating a person, you have to make a clear line between their potential and their patterns. And let me Tell you what I mean by this. This is actually inspired. If you're watching the video version of this, you can see I'm wearing a T shirt from Elevation Church. Started going to Elevation church back in 2009. The pastor of Elevation Church, we've since moved on to another church, but the pastor, Steven Furtick, and he gave a sermon series called the Power of Potential. There was one of probably a five part series. One of those sermons in particular, there's like a minute long video on YouTube if you Google Steven Furtick Relationship advice. F U R T I C K Relationship advice. Like a minute long video where he talks about patterns versus potential. And he does it in the context of a, a girl in relationship with a boy. So, so, so. And he gives examples of like, like ladies, like why would you think that a guy that's in debt, that plays video games all the time, that has a porn addiction, magically is going to turn himself around? You see all this potential in somebody that has only shown a pattern that is, you know, less than awesome. Right? So we want to see potential in people. Yet the patterns are like these sirens, these red sirens that are going off like, hey, I haven't achieved anything in my life up to this moment in time, but I'm going to come onto your real estate team. I've got my license in hand, I'm going to come onto your real estate team and all of a sudden I'm going to apply the discipline, the perseverance, the learning ability to become a world class salesperson. You've just got to trust me on it. And I've seen time and time again team leaders and I've done this time and time again that we want to believe in the person's potential and we want to ignore their patterns. Patterns link right into core values. So to the core values that I've held near and dear. In my journey in business growth has been we embrace accountability and discipline and we, we hustle and work hard. So just think about those two and think about the probing questions you could ask somebody in the context of getting to know them before you go into business with them. And what patterns could you reveal by asking a question? Hey Lars, give me some examples. In college, you know, how you hustled and worked hard, you know, well, I maintained a C average and I didn't do any extracurriculars and I didn't hold down any jobs. Right. So you can actually explore like, so tell me, in college, did you have any part time jobs? Did you play any sports? Were you involved in any like. And not that I don't even think that the grade point average is an indication of anything other than the ability to study the right way, but being able to maintain a 3.7 GPA, having working the whole time, playing a varsity sport in college and, you know, holding down, you know, doing some internship and doing extracurricular activities, that's somebody that has the ability to hustle and work hard and make stuff happen. And then we embrace accountability and discipline. So, Lars, tell me, give me an example of how you hold yourself accountable and what discipline, you know, means to you. Be like, well, you know, I'm currently 50 pounds overweight. I spend Thursdays, Fridays and Saturdays. I go out with my buddies and I drink a lot and I eat a lot. I sleep late on those mornings. I've got fired from my last job because I wasn't able to report on time. There's no way we would hire that person. Yet the indicators are right there. We can just say, hey, listen, what system do you use to stay on task and to make sure that you. You're accomplishing things that are important to you? I had a guy pull out, and he ended up being an awesome inside salesperson. I had a guy pull out a. He had his whole morning routine, and this was a young guy in his early 20s, his whole personal plan in morning and evening routines on a piece of paper that was in his wallet. And I was like, man, there's a pattern there of somebody that wants to succeed, that if I plug them into my system, the chances that they succeed are that much greater because they already show this pattern of a willingness to hustle and work hard, a willingness to embrace accountability and discipline. Probably our third most important core value is we. We have a positive attitude. You cannot teach someone that has a negative outlook. The glass is always half full. You cannot teach them how to be positive. So patterns versus potential, specifically as they relate to your core values, specifically as that relates to how you let people into your world, that will save you so much pain in the future. So here's what we covered today. Become the CFO of your business as it relates to lead sources and squeezing the lemon, squeezing the juice out of. And keep squeezing that lemon out of everything you spend money on in your business. That this cadence of accountability around set, met, signed. How much it costs to set an appointment, how much it costs to meet somebody you know? And if you bring agents into your world, the whole business is set, met, signed. How many appointments did you set with buyers and sellers today? How many did you meet today for the first time and how many agreed to do business with you. Set met signed is the entire cadence of a real estate sales business. And that's whether you're solo, you have an admin, or you're building a real estate team. And, and then we talked about patterns versus potential as it relates to culture, as it relates to core values, and specifically, how can you identify the true person by their patterns and almost ignore the potential? Right. We want to believe that people are good. We want to believe that people are going to show up and do the work necessary to, to succeed in real estate sales. But the reality is that it's a hard business and not everyone succeeds. So you've got to take action. The focus of real estate team builders is that we give you actionable content. My challenge for you. What are the one or two things from Dan Jones interview to this debrief and my take on it, and how are you going to apply them to your business today? Take action right now.