The Craziest Things I’ve Heard from Big Players in the Industry

Hey there. Welcome back to the Business Freedom Podcast. Lars Hedenborg, founder of Real Estate B School co founder of High Performance Real Estate Advisors in Charlotte, North Carolina. Today, I want to chat about something. I wasn't sure what to name this episode. This is a rant. This is the Good, Bad, Ugly edition. This is where I get to speak my mind about what I'm seeing in our industry. And I was at an event recently, an industry event, and I almost started by saying the stupidest things I've heard from some of the biggest players in the industry. But I changed it to the craziest things I heard recently from some big players in the industry. Big teams, team leaders, turn coaches. And just my take on all of it, number one, I want to say a guy who I respect immensely, who's built an unbelievable coaching business. Tom Ferry was the keynote speaker at Boomtown Unite and opened by saying, and I don't have context for it. I've never been coached by Tom Ferry. I know he's got a gazillion clients that love him. He dropped no less than 50F bombs in his talk. And he said, and I wrote it down in my notes, he said, let me tell you exactly, or close. He says, y' all don't have. Maybe he didn't use the word y'. All. He said, you don't have enough lead sources. You need six, seven, eight, nine lead sources. And about puked when he said that. Team leaders, agents, we don't need more lead sources. We don't need more lead sources. You know, I've coached guys that are doing 65 sides on four page lead sources, yard signs, and a database to scale to 265 sides on two paid lead sources. That same business, you know, less is more. We need to go deeper on lead sources and not wider. You know, in my own real estate team, you know, we've cut out all home paid home search leads, got rid of Zillow, right? And I don't, I don't promote Zillow. And I don't know if Tom does or not, honestly. And I'm not picking on him. Just what he said, I'm picking on. That was the craziest thing I probably heard here recently. Another crazy thing. Two guys giving breakout sessions. I did a session at this event. Two other guys giving breakout sessions. One was saying that we should give away, as team leaders, we should give away more of our. The goal is to give away 70% of the commission check. And the guy runs a good business, sells lots of homes. In his quote Unquote team. And the thing that I want to tell you or make sure you understand about your economic model, this is straight up economic model talk, a little education, is that you've got gross commission, so total revenue. You've got your cost of sales, what you pay your broker and your agents, which equals your gross margin. After gross margin, you need to pay for leads. Marketing. Leads and marketing is one category. People is another category. You know, staff salaries, and then your overhead, your rent, your phones, and all those. All those things are your third category. So if you're giving away 70% to your agents, you're still gonna need to pay your broker. You still need to buy leads for those agents. You still need to have some level of support, you would think. And you still. You got to have some overhead and physical space to give them. So you're starting at a 30% gross margin. The reason why I think that's risky is because you're not going to be able to serve buyers and sellers at the highest level. You're placing a lot of faith in those agents of yours to go do the right thing by their buyers and sellers and to deliver an amazing experience to them. And I just don't buy it. Our model is the opposite. You know that the goal is to build a system that is so strong, the system is what helps buyers and sellers. And you plug people into the system. And if you do that properly, you don't need to pay more than 30% and be out of production. And then it's October 10, 10, 10% lead gen, 10% people, 10% overhead. So between 30 to 40% with the team leader totally out of production. 30, 40% profit before taxes. So that was the second craziest thing I heard. And there's another guy in there, which he gives 90% between 80, 90% of weight to his agents, telling people how to build real estate teams. And it's like, oh, somebody, I want to just stick a fork in my eye when I hear these things. So that was crazy. And these guys aren't stupid. And personally, they're nice guys. They're just teaching a different model. Make sure. Before you take advice from somebody, make sure the model that they're teaching fits the business that you're trying to build. We are building a business in Charlotte, North Carolina, that is the best in the world at helping buyers and sellers. To do that, we need gross margin. We need to not pay out all of the. The commission check to our agents because we reinvest. We're a good steward of that gross Margin. We're putting back into the business what needs to be put back into the business. So that was the second craziest thing I heard. Let me think of the third craziest thing that I heard. It was probably just the conversations. So we were there as a sponsor and I got to speak on the stage and just having conversations with real estate team leaders that are struggling. And, you know, my heart goes out to them because as an industry, we're not really teaching the fundamentals of business. You know, I gave a presentation where I talked about, you know, there are six key drivers to a real estate business. It's most coaching companies and most agents just worry about, you know, attract, convert, deliver, right? We attract a lead, we convert it to an appointment and a client, and then we deliver a service. We get paid. And, you know, when you do that at a high level, you create like living hell for yourself. So you're really enslaved to the business. The drivers that most agents are missing is that you need to create your future. We call that the roadmap driver. You need to know your numbers. We call that the finance driver. And you need to harness talent. We call that the people driver. Without those three other drivers, you will be enslaved to your business. You cannot have true business freedom. And so in these conversations with probably a few dozen team leaders over the course of two days, it was. I talked to a guy that was spending last year, he spent 30,000amonth on Zillow and he did 1.3 million GCI. So do the math on that. About 400,000 on paid leads. So that's 30% of his GCI on paid leads. And the model calls for 10%. And he's spending money on leads, hiring agents and thinking agents are going to solve the problem of growth in his business. I talked to a guy that spends $100,000 a month on mass media, and his goal is to just to brand the heck out of himself. And there's nothing wrong with it. It's a huge agent. It's. We're finding I track like crazy. And we're finding that mass media is returning less and less and less. You know, we have cut out all paid home search. We've cut out. We're down to 9,000amonth on radio. You know, we've only ever really gone up to about 20,000amonth on radio because we just track the returns and they're not quite there. We're doing a better job on yard marketing, answering yard sign calls expired and fizbos. We do about a million from direct response, expired FSBOs, direct mail and outbound. And then our database will do about a million and a half from our database, which is high return, like 50, 50x return on the database. So the point I'm trying to make is these conversations. I just heard the craziest things. And by not following a model, you know, and predetermining, deciding what your profits are going to be and spending accordingly, you make these bad decisions on where to spend your, your money and it forces you to double, triple down on you as the team leader selling homes, which there's nothing wrong with selling homes. There's lots of individual agents that sell, sell homes. But when you're taking all that risk and all that overhead and you still have to be the one that sells homes to earn even a reasonable level of profit, it's just too risky. I did get the honor to listen to a friend of mine, Tim Heil, who I've had on the podcast here, speak to his. I'm gonna read them. It was three common pitfalls that he sees real estate team leaders doing. So I'm gonna go through them with you. Number one is to compromise your system for top producers. So it's our job as a team leader to build the system and plug people into the system, not to acquire a bunch of agents and hope they're going to build your business. And that led into number two is that the common pitfall is to add agents as the lever to fuel growth. That's backwards. You build the systems to generate the business and the business generates the opportunity to bring people on your team. So we have, you know, on my team we have two inside sales, one showing agent and four outside sales that will do 3.6 million GCI this year. Very tight knit, high, high level of client experience. 7, 17 total. So there's 4 on leadership, 7 in sales, and then 5 or 6 admin. About 17 total on the team. And so a tight knit, highly orchestrated client experience team of specialists all going in the same direction to serve our buyers and sellers at the highest level. That was number two. Number. Number three is a pitfall is to lose sight of the core metric. The core metric is listings taken or listings activated. On our team, it's activated listings every year, every quarter, every month, every week. We have a goal for how many listings we're going to activate, meaning turn active on the mls. And that's our core metric. It's our one thing forever and always. We'll never go away from it. So your team is your predictable system. It's not this loose collection of agents like most of the teams that are out there. So that's a bit of a rant. It's all I really have got for you. There's crazy things being propagated in our industry and the only thing I can tell you is just understand where the person is coming from that's giving the advice they're giving. So I have never been coached by Tom Ferry. The dude is super smart. He runs a massive business. He has 90 people in his sales force. He runs a highly like a dialed in sales team. He's got like 27 people in his marketing or something. I mean he runs a monster business and so it's not a critique of him as a coach. I could definitely not I can definitely leave leave the language behind. It's more so of that comment about we need more lead sources is complete lunacy. When we started focusing on the way we serve our clients on our real estate team, we went from about 1 out of 10 clients would refer a buyer or seller to us before they left the closing table. Now we're at about between 4 and 5 out of 10. And this is in the last 18 months we've been building a very specific way to generate business just by the way we serve our clients. And that's where the business is going. Right? Consumers are experiencing these amazing experiences in every other industry except real estate. And it's about time that we upped our game in our industry. So much love and respect and we'll see you on an episode here soon. And the only there's nothing to sell you ever. If you're a team leader and you're struggling, small or large team and it's not quite what you thought it was. What was in terms of profitability or time freedom or stress, that's when you have to reach out and just either go to realestatebschool.com and grab a business growth strategy session. And there's no gimmicks around that. It's just a conversation about if what we do is a good fit for where you are in your business journey or go directly to rebs strategysession. Com. And I mean that like heartfelt. If you're struggling, then you got to take action. You got to get on the phone with us. We'll talk to you later. See ya.