Game Theory in Real Estate Sales

I am a regular reader of Matt’s have attended a few workshops, and generally enjoy his approach to business. I really like this article he just put out on his Blog…

• Posted by Matthew Ferrara on December 14, 2009

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Recently while teaching a social media strategies workshop, one of the brokers approached me during a break. In essence, while he admitted to being dragged into the social media world reluctantly, he was just about furious with my suggestion that agents play games online. It’s bad enough they are wasting time in these social networks, was his point. To suggest they should spend time farming, killing vampires and running a mob gang was simply stupid. How are REALTORS supposed to make sales while they are playing games online. Let just see, shall we?

As usual, let’s start with the research. Last year, more than 50% of home sales were to first time buyers. The average first time home buyer was 30 years old, and the vast majority are under the age of 44. The move-up seller is also squarely within the 30 and 47 age bracket. From a real estate standpoint, the target buyer and seller for the next few years is essentially Gen X and Gen Y. With less than 19% of sales happening with consumers over the age of 55, let’s just say the 401k-home-equity-drained-downsizer is not going anywhere for quite some time.

Now let’s assume an operational premise: Successful real estate sales requires brokers to sell real estate the way buyers want to buy, not the way they (or sellers) want to sell. Of course, we know this lesson goes largely unlearnt in the industry, as the proliferation of newspaper and postcard marketing are two of the three pillars of failure for most brokerages (constant recruiting being the third). But for the sake of argument – and hope for the future – let’s assume that someday soon this lesson will be understood and brokers will sit down and ask themselves:

How does my customer use the internet?

Not, how do I want to market homes to customers? If we leave it to brokers, we know exactly how they want to market homes – even online. We don’t even need to mention them here – but a fruitless search through REALTOR.COM should prove the point. And when it comes to social media, the case becomes worse, not better. Just based upon the number of friends updates I’ve had to “hide” in Facebook lately, it’s clear that many agents have not understood that social media is about relationships, not e-blasts of their overpriced listings or open house dates.

If we think about how the real estate target buyer uses the internet – especially social media – we’ll see that games are vital, not incidental, to our marketing strategy. Playing online video games isn’t just an introvert’s pass-time any more. Farmville has more than 72 million active users. That blows away every real estate website – combined – if you consider these visitors play multiple times a week, and often for 20 minutes or more per visit.

Now would you like to play a game?

There is nothing comparable in online real estate marketing as we know it to game-playing online. Of course, the activities are different: REALTORS are simulating their product catalog online, and game players are entertaining themselves. But the objectives are not dissimilar: REALTORS hope to connect with their sphere of influence via their websites, and game players are already connected to their sphere of influence – and interact with them nearly daily – through the gaming nexus. Social media gaming, in other words, is just another excuse to get together with friends.

Of course, some of those friends may also be clients – past, present or future. It’s no different than the days when we used to play games – like golf or bridge – with our networking buddies, past clients or Association friends. It’s simply moved online – because so has the consumer. Keep in mind that Gen X grew up playing Atari and Nintendo games; and Gen Y doesn’t know fresh air exists. The 20-something buyer literally evolved online, interacting with friends online via XBox and Playstation, while exploring dungeons and foreign planets. Their sphere of influence was largely virtual. And unlike the coffee shop or golf course, it met just as regularly.

Online.

This is why social media game playing is a powerful sales tool. It connects people to people, not people to machines. Gen Y doesn’t want to “search your website” and then wait for someone to return their email (assuming they ever do). They already eschew search engines, preferring to ask their friends what cars to buy, schools to attend – and agents to use – via social networks. They don’t talk on their phones, and they don’t check voice mail. They don’t go out to play – so they won’t be seeing their Baby Boomer laywer or accountant or hairdresser or real estate agent at the local pub or health club.

In fact they won’t see them at all – if those people won’t show up online.

Gaming is about relationships. Competitive “war” games let Gen X’ers pit their mobsters, vampires or poker hand against their peers’. Collaborative games like Fishville, Farmville and Cafe World let Gen Y’ers play nice with the collective. But note that none of these games is played alone. They all involve playing with others.

And that means building and maintaining relationships.

Relationships, which are the heart of successful sales practices. In the past, relationships were built by a traditional sales theory that revolved around an advertising-prospecting-proposal structure. Maybe that sales structure is evolving, along with the modern consumer. Decision making processes in consumption are not what they once were: Gen X’ers don’t believe one word of marketing from anyone, and Gen Y’ers are usually put-off by pushy-scary-closing methods that make up the classic Top Agent Betty Barricuda sales playbook. Even awareness marketing is changing, as fewer people use the newspaper-phonebook-mailbox channels to gather product information, but return to the “town square” model of friendly referrals and family advice.

For Gen X, it’s important to use trusted vendors their peers prefer. For Gen Y, advice from the family, extended but reachable online, is more powerful than any price inducement.

That’s why playing games online matters. It’s a chance for sales professionals to make friends and interact in non-traditional sales environments. They can play winner-loser games with Gen X prospects, and earn their respect through game-play competition. Such respect can later be translated into sales propositions and referrals in the future. Gen Y prospects can become part of your company’s family by participating in collaborative games, egg-hunts and “sims.” They will readily accept new connections from anyone working toward the same goal. Later, when the goal becomes buying or selling a home, they will be primed to trust someone who they have already worked with to reach a (entertainment) goal.

Clearly, playing social media games is time well spent building relationships that are the foundations of future business. There’s no doubt that the next generation of real estate consumers is socialized and prefer to interact through this medium. And it’s not just younger generations of consumers: According to a study done in the last 5 years for AOL Games, “women over the age of 40 play most often and spend the greatest number of hours per week doing so, beating out both adult males and teens of both sexes.” The study also shows that adults are more likely than teenagers to play online games. Maybe that’s why Nintendo’s marketing strategy for the Wii features people of all ages – young to old – playing together.

Now it’s time for the real estate industry to understand that social media can build relationships that turn into business.

And isn’t that the name of the game?

Professional Real Estate has been in existence for over a century. It has survived recessions and depressions, changes in governments and legislation, and limited service brokerages and consumer trends alike. More changes can be expected in the future, but we need to look at the past to see how the industry has survived and thrived. Most consumers are still well prepared to pay fair prices for great service of a value. Look at the criteria I’ve just identified. Fair Prices, Great Service, and Value. It’s important to understand that consumers are prepared to pay fair prices. In every industry there is a range of prices and perceived value. If people only wanted the cheapest, there would be no BMW in Cars, there would be no Rolex in watches, and there would be no 1^st Class on planes. No, people are prepared to pay a fair price, but you had better be able to demonstrate the Value. People who offer less for less (such as limited services brokerages), will only succeed if we fail to educate on why a Full Service Office is able to offer them more, and provide them more value. People WANT more value, it’s your job to demonstrate it, and then provide. When you are meeting with clients, or potential clients, you need to be able to fully educated consumers of the full range of services you can provide as their Professional Realtor. More than just advertising, more than convenience, more than hours of operation. Be sure to talk about advice, counsel, professional service, reputation, longevity in the business. Look at other top brands, and identify those feelings of luxury and service, but for a FAIR PRICE, not a high price. Great service starts in educating your clients about what they can and should expect from you, and then you deliver it.

When you look at successful vs. less successful Realtors, you have to ask yourself, what the difference was. Generally all Realtors receive the same education through OREA, and Realtors at the same Brokerage are exposed to the same training and development opportunities. So why do some excel and other not? To say that the successful Realtors have been in the business longer is not the answer, as we were all “new” at some point. The answer lays in having a sound business plan that focuses on doing those each day that will lead to success. And when you look at what those tasks are, you have to wonder why more people are not doing them. So here is my Top Three list of things you should be doing on a regular basis to position yourself for success.

1. Open House. We know that with only a few exceptions, top Realtors in our office continue to do regular public open houses. We can show a relationship between success, and exposure to the public through holding open house. If you are looking to generate new leads, few places are better than having a paid advertisement with your contact information, followed by a captive audiences of potential buyers and sellers that the house.
2. Opportunity Time. Again, taking regular shifts with Opportunity Time works! When we ask successful agents what activities they did in the few FEW YEARS, working the opportunity desk is high on the list. It’s a great way to field incoming calls, and convert them to appointment. If you are not getting success off Opportunity Time, don’t come off the list, set up and time to learn and practice your skills at handling incoming calls and inquiries.
3. Phoning Everyone. Successful Realtors understand the value of the relationship in a successful career. As a Realtor you need to be in contact with your sphere of influence 12-16 times per year, and at least two of those contacts must be in person or on the phone. So each day you should have a list of past clients, friends, family, sphere of influence, out of town Realtors etc, to call and talk with, and better yet, set up a coffee or lunch appointment to stay in touch and talk about the business. Having a coffee with someone who already knows you, likes you, and trusts you has a far better chance of producing a referral or a lead than does…hoping someone will call.

So whether you are 3 months in the business, 3 years or 10 years, if you business isn’t at the level you would like it to be, ask yourself if you have a business plan, and if that plan outlines all the activities you have to be doing on a regular basis to lead to a successful Career.

Let’s face it, in this business we all need holidays, the ability to get away from the job and re-charge the batteries. There’s no doubt to the importance and value of working on yourself by stepping away, but will your business be where you left it when you come back? I’m talking about the way you manage your holiday coverage (and in doing so, I’m talking about the way we cover other people’s business). Having a reliable and competent person to cover your business while you take a break is a vital aspect of you business model, and the decision as to who will cover you is a critical business decision. The person who covers you when you are away is representing you in dealing with your clients, potential clients, and other Realtors. We’ve all tried to book showings or work offers and had a tough time dealing with the covering rep. Here are some things to think about before you go away, it will help you have a better time, and have you come back to a strong business.

Choose wisely. Be sure the person covering you shares your core values for dealing with clients and peers, and has a similar work ethic and style. This will make the transition easier for clients who may be concerned about the level of service, and it will protect your reputation in the market place with your peers.

Review the files. Set a time before you leave to review each file that you have on your books. Active listings, active buyers, deals that are pending, deals that are firm but not yet closed, and deals that recently closed that may need follow up. Be sure your covering rep understands the personality of each client, how / when they liked to be contacted, the history of the file, and what your expectations are regarding each file.

Introduce and show. You should find a time to personally introduce your covering rep to each of the clients that you have. It is a great way to bridge the gap, and at the same time, demonstrate the listings that they will be covering so they have a high level of knowledge of the inventory you’re are carrying.

Report. You should make it clear to your covering rep, and as a covering rep you should prepared to provide, a detailed report of all of the activities that occurred during the time period of covering. What showings, by whom on what date, and what the follow up was…what houses did the buyers get exposed to, see in person, and what the feedback was…and so on. The covering rep should update the agent who has just returned so they have the same level of knowledge.

Call your clients. Once you have returned and met with your covering rep to get the report, call all of your clients to let them know you are back and working, and review the update you had from the covering rep. Ask each client if they were satisfied with the services offered while you were away. Remember, you’ll go on holidays again, so you need to make sure you have a great agent to cover you, a great agent in both your eyes, and those of your clients.

Try those 5 steps and I’m sure you’ll enjoy your holidays more knowing that your business is in capable hands, and your clients will appreciate the efforts you take to ensure they are cared for every step of the way, even if you were on the beach!

I was reading some interesting articles on closing sales, and when to close, and found a really neat article that talked not so much about the art of closing a sale, but more about identifying when a client my be ready to be closed on. Just a different point of view. If you have a Buyer, looking at homes and you think you may have found “the one”, just ask yourself these four questions.

1. Does your client want the house. And I mean, are they excited and have enthusiasm for this home, or are they just settling. Remember, it’s more important that they are happy, than it is that you get paid.

2. Does your client need the house. Depending on how well you did your Buyer Counselling Session, this may be the first opportunity you have to find out how motivated they are. Do they NEED to move. Do they NEED to move NOW, and if so, this is the time to close.

3. Are they able to afford it. This isn’t just a question of mortgage qualification, but also of use and enjoyment. If they can’t afford it and you don’t get a deal firm, then you’ve wasted every ones time. If you get a deal done only to have a client scraping by each month, you’ve failed to keep their best interests at heart and help them make a sound decision.

If you get a favourable answer to each of these questions, then it’s likely time to ask them a closing questions. What’s that you ask? Well try “would you like to put in an offer?”, and then wait. Remember, silence is the best form of pressure to put on client. Wait for their answer, because if you speak first, you lose.

It’s not uncommon in Real Estate for the month of August to be a bit slower than the other summer months. It’s not a surprise, because transactions are mostly based on family needs, and in August, the family needs a holiday! And you know what, so do Realtors. If you know that you’re trading will be slow in August, you should use that time to work on your own business, and take some holidays yourself. Here are a few things I’d be doing to help get ready for an active Fall Market.

1. Focus on getting Listings for the fall. The more listings you have, the better your long term career.

2. Update your contact lists. In this day and age, data management is critical. Have your contact lists 100% accurate by removing people no longer around, and continue to add people weekly.

3. Update your marketing. Look at flyer’s, post cards, web sites, and be sure they have your most current photo / content / contact info.

4. Phone your past clients. Ask them how their summer is going, and learn if they or anyone they know is thinking of making a move!

5. Use the nice weather to walk your farm area. People will be out working on their yards, playing with kids and visiting neighbours, so it’s a great time to walk around and say hello, and begin a conversation.

6. Check school board websites. Look for information on new schools, changes to boundaries, and be aware of changes to the transportation guidelines!

7. Finally, clean your office and your files. It’s always good to have clean and accurate files, and it may trigger you to do follow ups, and find more names to add to your data base!

There are lots more things you can do, so visit your Manager / Coach and talk about it.

When I do training for new Realtors we talk several times about the importance of making decisions based on personal safety. Here is an article today based out of London, Ontario that shows why. I’ll post the link and the text.

“A London real-estate agent was sexually assaulted while hosting an open house, police say.

Police are investigating the mid-afternoon attack Sunday at a home on Waterloo Street near Cheapside where a man entered the home and “sexually touched” the agent around 3:30 p.m.

The suspect then left the home on foot and was last seen walking north on Waterloo Street.

The victim was not injured.

The suspect is described as a white male in his 40s with short brown hair and weighing 250-275 pounds with scruffy facial hair and an overall “dirty” appearance. He was wearing a black baseball cap, white plaid long-sleeved shirt, black, faded, sweat pants and flip flops.”

One of the most important duties we perform as Realtors, on behalf of our clients, it our efforts to discover material facts as they pertain to a home we are looking to market. This post will act as a refresher on some the standard efforts a Realtor should take on every marketing appointment, and I’ll follow up with a separate post for buyers.

Working for the Seller

Many newer Realtors are so excited to get an appointment to potentially market a home, that they forget to go by my recommended affirmation, which is “if I can’t sell it, I don’t want it”. A sign on the lawn, with your name on it, of a home you DIDN”T sell, is not the kind of advertising you want. You should look at each home professionally, and decide if it is a home that you want your name on. When you evaluate a home, start at the sidewalk and look (just like the buyer will). Look at the roof, look at the exterior and the windows, are they in good repair? Is the driveway / walkway in good shape / safe? As you walk around the exterior, check for grading, cracks, brick damage etc. Are they near water, would the GRCA be involved, is there any additions put on? It is your job to notice these patent defects, so that when you talk condition with the sellers, you are on the same page.

As you walk through the house, you have to make the same observations, and begin to question your potential clients. As you move through the basement, look for obvious signs of water and cracks. Have a look at the electrical system, the plumbing other structure. At this point though, you should be talking with the owner, and asking “tell me about….what do you know about…have you ever had…” and learning about the history of the home. The standard SPIS would create a very thorough potential questionnaire. Pay particular attention to showers and baths, kitchens under sinks, attics, insulation (vermiculite may have asbestos), old tiles / siding that could have asbestos, aluminum / knob and tube wiring, termites, galvanized plumbing, and anything that should have needed a permit.

You should have a complete understanding of a home before you even go near the pricing of a home. You need to price with condition being a major contributing factor. Top agents will go one step further and have a Pre-Listing Home Inspection to really know what is going on. A little money on an inspection could save thousands off a potential re-negotiation due to a surprise on a home inspection initiated by the buyer. Any Realtor that calls should be confident that you are aware of and sharing facts about the home as well. Issues known up front don’t kill deals, it’s the ones that come up after, and most of those are preventable. We know that over 80% of todays buyers rank condition as an important element of home, and that they will pay more for a home in better condition. After your personal inspection and Pre-Listing Inspection, you’ll be able to offer or Concierge program as a way to help your sellers make repairs and improvements that will make their home more salable.

Remember, it’s your duty to discover facts, contributes to good Realtor relations, provides great customer service for your client, and keeps your name off a house that you’d never be able to sell because it is priced wrong for it’s condition. Looks for my next post on working with Buyers.

At our recent sales meeting I talked about how the expectations of Buyers and Sellers are a lot like a moving target, changing all of the time. It wasn’t that long ago that a listing agent who have professional photographs taken, and a video tour made, would have been considered a media giant, and a agent who actually created a feature sheet was going above and beyond, but no longer. Buyer expectations have changed, but Realtors have not. A Buyer today has an expectation of lots of great photos, a video tour, a feature sheet, information about the home etc. Doing those types of activities for your clients are important, but they are not going above and beyond, it should be considered base service.
Buyers are looking at lots of home, and they need a reason to pick your clients. We know that a Buyer makes a decision to purchase based on lifestyle choice, and are willing to pay more for a home that meets their needs. We also know that the quality of a neighborhood is a top category when making a decision to purchase, which is in line with lifestyle.
When we market a home to a Buyer, either as their Buyer Representative or as a Listing Realtor, we need to be doing a better job about talking about the lifestyle, and quality of life a purchaser will have in the new home. Talk about improvements the home has, but then discuss how that will impact their use and enjoyment of the home. Talk about the size of the home or rooms, but then explain why that is important and valuable to the Buyer. Talk about the neighborhood, who lives there, what they do, what activities are available, where they will shop, what they do for entertainment…etc. Paint a picture, construct the argument for them as to why a given home is the perfect one for them to buy. Show them the sizzle!

Those of you who attend my coaching regularly will attest to the fact that I promote regular, effective and consistent prospecting. Here is an article of got off of the blog of Jessica Hogg, who references a list below of effective prospecting thoughts. This is definitely worth a read….

60 Tips From The Superstars by Mike Ferry

Skills

The skills a real estate person has are the foundation for a productive and profitable career. The skills are either made of steel and cement or they are made of sand. Obviously, one is lasting and strong and one goes away with the slightest amount of adversity. To make your skills strong, exact scripts, dialogues and techniques must be practiced daily.

They must be learned and ingrained into the subconscious mind. We are still one of the only industries where basic skills are not required. Because of this, each salesperson has to take the time each day to improve on the specifics of what they are saying and what they are doing. Without skills the agent must rely on waiting or buying as a means of getting business.

Remember, that waiting and buying are very time consuming and very expensive and it’s very difficult to control the responses you get.

SKILLS

1. Developing the ability to set, maintain and follow a goal oriented daily schedule is critical to one’s success. Each of us must develop the skill of not only setting the schedule but then create the discipline to follow it daily.

2. To increase your skills you must determine what motivates you as an individual. Some of your options are: more money, more recognition, debt reduction, savings for investments or retirement, or you may be motivated by something as simple as intense competition within your office or your area.

3. Prospecting results come as a result of patience and an understanding of the time required to get those results. You must complete a 90 day prospecting cycle to develop the skill of prospecting required to add 20% to your business annually.

4. Prospecting intensity is critical …. You should never stop your prospecting because you have or have not generated a lead. Generating or not generating a lead is not the issue, it’s the discipline of completing the prospecting process that is the issue …. this requires intensity on your part.

5. The objective in prospecting is to get appointments …. not leads. When you get a lead, you must qualify it immediately and close for an appointment, otherwise you’re going to be spending too much time doing lead follow up later.

6. We generally do not prospect for any one of a few reasons …. discover which one is stopping you. For example, we don’t have any scripts to use, we can’t handle rejection, acceptance or embarrassment or maybe it’s something as simple as poor time management skills because we’ve never created the schedule referred to in point number one.

7. We have to create the habit of never going on a listing presentation until we’ve pre-qualified the seller 100%.

8. Your listing presentation must be designed around questions. The answers to these questions will give you enough information to decide whether or not you want to take the listing. Remember, you and only you, decide if a contract is going to be signed.

9. When you ask a question, you must be able to stop talking and listen to the answer being given …. then you must respond to that answer.

10. You must develop a response to every question and objection you receive while prospecting, presenting, closing and negotiating. This is the easiest way to not only build confidence in yourself but to also have the customer have more confidence in you.

11. You know when a seller’s motivation is lower than it should be because they demand ….. a much higher price, extensive marketing and a lot of personal service. You must learn to walk away from these types of listings.

12. To increase our skills we must develop both strong, positive and negative consequences to our own behavior and then have somebody hold us accountable so we make sure we are using the skills we are being taught so we don’t continue to make the same mistakes repetitively.

13. You can control the response and the effectiveness of your prospecting by controlling both the quality and the quantity of the contacts that you are making.

14. When prospecting you must learn and use every word of the script, not just the words you are comfortable with.

15. If you’re uncomfortable making lead follow up calls, it means that you either do not have a defined script or you don’t have a lead.