Today’s reader question may be one of the most commonly asked questions, and a pretty tough one to answer. Every new agent is looking for the quickest path to get their first closing, but it can be really hard to figure out which direction to take. The answer is not the same for everyone, but I’m going to give you some advice on how to decide what is best for you.
Thanks to Paul for sending in today’s question.
Is it better for a new agent just entering the market to concentrate on listings for sellers or act as a buyer agent representing the buyer?
Here’s my short answer: You will probably get a closing faster if your first client is a buyer. And it will probably be easier for you to sign up a buyer than a seller right away.
Ok, now onto my reasoning, and on to my long answer which is a hell of a lot more complicated than my short answer.
I say that getting a buyer can be easier for a couple of reasons. First of all, it is a lot easier to convince a buyer to work with a new agent than it is to convince a seller (most of the time anyway). You see, a buyer’s position is very different from a seller’s. The seller has to trust that you are going to price their home right and properly market it. If you do something wrong, in their mind they could be losing thousands of dollars on the sale of their home. Buyers tend to look at the situation a lot different. Basically they think that you are just showing them a bunch of houses until they pick one they like. I know, I am kind of stereotyping right now, but I have worked with enough buyers and sellers to see this type of mentality over and over. I believe the sellers mindset is due to to psychological state called loss aversion, which is a tendency that most people have that makes them strongly prefer to avoid losses over making gains. Thinking about it is a little strange, but many experiments have been done, and people almost always work harder to avoid losing over gaining. They often times go to extremes to avoid losing a little, when they could have just accepted the small loss and made huge gains if they had looked at the situation differently. So the mindset of a seller is that they don’t want to lose any money on the sale of their home. The mindset of a buyer is that they are gaining an asset, a new home. Loss aversion does not come into play in the buyer’s scenario. (If you want to read a short, but really interesting book on loss aversion that will make you totally change the way you look at just about every scenario in your life, check out – Sway: The Irresistible Pull of Irrational Behavior. Great book.)
Wow, I think I got a little carried away with that! The honest truth is that a listing or a buyer are a good way to start out, but you have to choose one and just go for it. If I was completely starting over, I’d start out by going for buyers and try to snag some listing along the way. Here’s what I would do.
My Plan For a Brand New Real Estate Agent.
The first thing I would do is call people that I already know. At this point I wouldn’t specify whether I was looking for buyers or sellers; I’d just be fishing for any sort of lead I could find. I would go through my cell phone and call every single person. My calls would go something like this:
“Hello so-and-so, this is Justin Razmus. I’m actually calling you really quickly to let you know that I got started in real estate. I took all the classes, passed the state exam, and got my license. Do you think you could possibly help me out with one thing? It could make a huge difference for me. (Pause for answer. They will probably say maybe, but they want to know what it is first.) Can you tell me, of all the people you know, who would be the most likely be the next to even think about buying or selling a home? (Look at how that question is worded. If they know someone who’s thinking about it right now, they will most likely tell you. But even if they don’t, you get them thinking about who might even be thinking about buying or selling some day. This greatly increases your chance of getting a lead.) What is a good way for me to get in touch with them?”
That is one of the fastest ways to get leads. Here’s a little more advice. When you call, get straight to the point just like I did in the script. This is a business call, so don’t start it out by pretending you are calling to catch up. As soon as you get to the business part of the call they will see right through you. So just be honest. They will get it. It’s OK to call people and ask them to help you out with a referral. I’m sure you would gladly return the favor if they called and asked you the same thing, right?
The next thing I would do is start looking for buyers. After I went through my whole list, it’s time to start bringing in leads from other sources. What are buyers looking for? A house! Where do over 85% of buyers look for houses? On the Internet. What is one of the biggest websites that people search for houses on, that also lets you post ads on it for free? Craigslist! That’s right, I would start at Craigslist. The first thing I would do is find agents in my office that have listings. I’d ask if they have them on Craigslist. If they say no, I would ask if I could post the ads on Craigslist for them. Of course you have to provide value for the agent so they will agree, so here’s what you do. Tell them that you will post the ads with all of their contact information. The only thing you want to do is add a link so people can sign up for your buyer email list. So you are advertising the agent’s listing and name for free, and in exchange you are hoping a few of the people that see the ads will click the link and go to your email sign up page. It’s a win-win.
The way this whole craigslist thing works is pretty easy. You make a craigslist ad with a listing. Right at the top and bottom of the ad, create a link that says something like “Click here to get our newly updated foreclosure list” or something along those lines. It has to be something that people want. Ok, so they click the ad. They now go to a website that has the exact same headline as the link they clicked. On the page is a sign-up form that asks for name, email, and phone number. They fill out the form, and you get their contact information. Now you set them up through your MLS to be updated whenever any “foreclosures” (REO’s) hit the market. Also, you call them immediately and thank them for signing up. You then ask if there is anything specific they are looking for so you can make a note and be sure that they get it first. There you go, that was your first lead from the Internet. Keep doing it. In a larger city, if you are posting 30 to 40 listings a week, its completely possible to get 100 leads a month. I’ve done it before.
Naturally, some of the buyers that sign up for your list will be sellers too. Most sellers start looking at other houses online well before they list because they want to see what is out there. So if you keep up with bringing the buyer leads in, you will get listings too.
Next step: Diversify your marketing.
You don’t want to put all your eggs in one (or actually two) baskets. So right now you have your list of friends that you keep following up with to get referrals, and you have your Craigslist marketing campaign. Make sure you are doing both of these really well, and then look to adding other things when you are ready. Here are a few ideas:
- Set up free profiles on Trulia and Zillow.
- Set up paid account on Trulis and Zillow (read more about that here).
- Post ads on any free classified sites you can find. Google it, there are a ton of sites. More exposure is better.
- Ask every agent in your office for referrals. Tell them you will take any buyer or listing that they don’t have time for. Assure them you will do an excellent job and pay them a referral fee.
- Host open houses for other agents in your office. Make sure you have every person sign in, and follow up with them the next day.
- Before the open house, go knock on all the neighbors doors and talk to them. Invite them to the open house. Ask for referrals from them while you are at. Use the same script you used when you were calling your friends.
- Go to networking events to meet new people. Ask them for referrals.