Guest contributor Don Yoakum shares his thoughts on the popular Real Estate Team business model.
This is part 1 of 7.
The Lost Call
By Don Yoakum
The sign call has proven to be one of real estate’s best lead sources. The conversion rate of leads to sales is superior to nearly every lead source except a referral. The average time from the lead being generating to actual sale is less than most sources, particularly the internet. Sign calls are also geographically specific, making them especially attractive to “local area experts”.
A challenge in today’s real estate environment is that listings have shifted from the “Local Area Experts” to REO and Short Sale specialists. These listing specialists have equipped themselves to support the unique needs of their sellers. The sales tend to be more transactional in nature and require significant infrastructure to support. This leaves the listing specialist little or no time to take the very calls that could sell the properties.
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What most listing specialist have done to address the sign call challenge is to let the calls go to floor agents, hire buyer’s agents, or refer calls for a referral fee. These solutions have produced mediocre results.
Floor agents: Floor time, which is when an agent sits at a shared desk in their office waiting for the phone to ring from sign calls. This strategy produces mixed results for a number of reasons. First, it is typically serviced by new or lower producing agents, which are reluctant to engage in more proactive and productive activities. Second, the agents have rarely seen the properties personally and are not likely familiar with the local community issues. The calls are coming in from all geographic areas in a county and in some cases multiple counties.
Buyer’s agents: When this concept was introduced in the early 90’s, it was thought to be the answer for listing agents that preferred to not work with buyers. Now, with over two decades of effort it has proven to be a near complete failure. First, because the agents that are willing to work at a reduce split tend to be new or of lower quality. Second, like floor agents they are taking calls on properties over a wide geographic area. In many cases on homes they have not seen and are generally not familiar with the local community issues. When a good buyer’s agent is in this program, like clockwork in six to nine months they leave the team, and become a competitor to the listing agent to pursue sales at a higher commission split. If they are not good, which is far more common they are generally terminated.
Part 2 coming tomorrow…