Real Estate at a Crossroads

by Gregory Charlop

  Success will beget success. Associates with the top sales in any given area will vacuum up most of the future listings in that neighborhood.

  As powerful as marketing or brand affiliation can be, I doubt that either of those can carry more weight than a proven track record of success. And since the effectiveness of each salesperson is quantifiable and readily available, no puff piece or glossy brochure will convince a customer that you’re better than you are. The proof is in the pudding, and it is out there for the world to see.

  A second way inbound clients will discover you is via review sites like Yelp and Trulia. While long popular for restaurants and coffee shops, Yelp is playing an increased role in rating professionals. You can expect that more and more of your clients will hop online and rate their experience with you on one or more rating sites. And your potential clients will read those reviews.

  Nobody wants to work with a jerk, and if you develop a bad online reputation, it may be tough to recover. There are enough agents out there that homebuyers can afford to select someone who matches their personality.

  Homelight and similar sites represent a third way for home sellers to find agents. These sites function like virtual matchmakers. Customers enter their location and the site suggests agents based on their proprietary algorithm. In essence, the website serves as an intermediary between the client and the associate - no brokerage involved!

  There are two consistent themes to these online services. You will be judged by your performance, and your agency doesn’t matter. Technology lifted the veil, and your successes and failures are there for the world to see. No more hiding behind clever marketing or large brokerages.

  This transparency will create a further consolidation of sales among the top agents.

  The 80/20 Rule

  You’re probably familiar with the 80/20 rule, also known as the Pareto Principle.[1] The idea is that 20 percent of the effort creates 80 percent of the results, or 20 percent of the salespeople generate 80 percent of the sales. In most instances, an elite group of top performers are responsible for most of the results. The rest of the sales are distributed along the long tail represented by the rest of the agents.

  As more and more home sellers gravitate towards the top agents (since they now know who those top agents are), the 80/20 rule will likely intensify to 90/10 or even 95/5 in most markets. The top agents will attract more clients which will further solidify their status as top agents thereby attracting even more clients. It will become a virtuous cycle with the top associates vacuuming up the sales while everyone else is left fighting for the scraps.

  This is great news if you’re a top performer. Each sale will improve your score on the matchmaking sites, generate more positive reviews on Yelp, and increase your appearances in MLS searches via Zillow and Realtor.com. As a result, you’ll enjoy more inbound success and secure more clients. When you close those deals, you’ll gain more positive reviews, matchmaking connections on Homelight, more hits on the MLS, and the cycle will continue.

  Life will be good!

  Unfortunately, the news is not good for everyone else. If you aren’t a star, the internet’s unprecedented transparency will work to your disadvantage.

  Your upset former customers, lack of experience, or bad deals will alarm your prospective clients. Clever marketing materials and prestigious brokerage companies won’t protect you from the harsh light of a troubled history. When customers select between your beautiful website or the associate who sold the house down the street for a killer price, you already know who they’ll hire.

  As a result, you cannot count on a prestigious brokerage firm to fill your pipeline. All you have to rely on is yourself. Your skills, history, work ethic, and market positioning are all that matter now.

  Your clients are changing

  You might ask, why should we expect such a sudden change in the marketplace? After all, rating sites and Zillow have been around for several years now, and there are still lots of real estate agents out there making a living.

  There are two major reasons to predict a massive shift in real estate sales. The folks buying and selling houses are younger, and the use of the internet for home purchases has exploded recently.

  Despite being derided as adult campers in their parents’ basements, Millennials are out there buying homes. In fact, Millennials comprise a third of all home buyers—the largest segment of the market—and 36 percent of Millennials now own homes.[2] To have a successful real estate career, it’s likely that you’ll need to appeal to this demographic.

  These younger home buyers were raised online. They take the web for granted. It is a natural part of their life.

  They don’t go out to stores to shop, they turn to Amazon.com. Real estate is no different. While it’s true that even Millennials rarely complete an entire home purchase online, they use the internet for as much of the process as possible. They are initiating their search, browsing, researching, and comparing online.

  Here are the numbers: 44 percent of all homebuyers initiated their homebuying process with an online property search. Most do this even before contacting an agent, speaking with friends, or driving by homes. And 99 percent of Millennials and even 89 percent of older Baby Boomers search for homes online.

  Even more incredible, almost half of Millennial homebuyers placed an offer on a home sight-unseen.[3] With each passing month, more and more people will depend on the internet to research homes - and to research you!

  You must be ready for these new clients. If you aren’t on the forefront of the online marketplace, you will be left to a shrinking pool of prospective homebuyers that haven’t yet embraced the new ways of doing business.

  And if you are not well-positioned to take advantage of the internet, you will either need to change strategy or change careers. Sadly, a time will come when most new agents will drown and even experienced but average pros will disappear as the elite soak up all the prime deals.

  What can you do? For those of you considering a career in real estate, we’ll cover how to launch your career later in this chapter. For now, let’s take a look at how mid-career pros can survive in today’s changing landscape.

  Target specific buyers

  Will clever advertising help you compete? In other words, can you compensate for a history of lackluster deals with a slick advertising campaign? The short answer is: maybe.

  Modern advertising techniques are beyond the scope of this book. This technology is improving and changing every day.

  Having said that, targeted campaigns aimed at specific buyer segments will likely be effective. For example, Facebook, Instagram, and Google campaigns designed to promote your expertise in particular neighborhoods or niche market segments can work. You can potentially promote yourself as an expert in a particular community or neighborhood by blanketing the internet with targeted ads.

  With clever use of keywords and audience targeting techniques, Facebook and Google can help you zero in on your specific audience. For example, you could arrange for your ads to show up anytime someone mentions your community in a Facebook or Instagram post. Repeat exposure will make your name familiar to would-be clients.

  If you couple the advertisements with offers for free services like a market analysis, you might be able to position yourself to win business with the force of your personality.

  Unfortunately, advertising is an expensive approach. It’s estimated that the average agent spends about $400/month on ads.[4] While the internet has driven down the cost of targeted ads compared to the old days of print media, it still remains remarkably expensive if that’s your only way of acquiring customers.

  You will have a hard time running a successful business if you're totally dependent on advertising to drive business. You need inbound traffic.

  Outbound vs Inbound marketing

  Outbound marketing is what most of us traditionally think of as marketing. It includes TV and radio commercials, email blasts, mailings and other printed materials, billboa
rds, and our favorite: cold calls. Outbound marketing is when we scream at our audience, interrupt them, and attempt to gain their attention.

  When that commercial intrudes on your favorite show or that pop-up sneaker ad appears while you’re reading the news, that’s outbound marketing. And every time you make a cold call during dinner or send a potential customer a postcard, you're attempting to interrupt them and capture their attention.

  Although we’ve historically spent lots of time and money on outbound marketing, it has a low yield. A 2017 HubSpot report (State of Inbound 2017) revealed that only 16 percent of marketers felt that outbound marketing generated the highest quality leads for their teams.

  The problem is that people just don’t like to be interrupted. There are a lot of advertisers competing for attention, and they are all shouting at the public. Frankly, people just try to tune out the noise. And most of your advertising, unfortunately, is noise.

  Inbound marketing focuses on attracting clients through content. Common examples of inbound marketing are blogs, social media posts, and search engine optimization. I would argue that MLS portals and review sites are also a form of inbound marketing since folks use those technologies to find you. Your reputation is another form of inbound marketing as homeowners seek out successful agents. These forms of advertising don’t aim to interrupt folks. Rather, they seek to attract consumers by offering them something free and searchable.

  Success through technology

  Don’t rely on the old ways of reaching clients. Branded notepads, little ads in the corner of magazines, and cold calls just aren’t going to cut it anymore. Nobody cares about those things except in particular niche markets. Prospects are online and on their mobile phones (although not for talking). And, they don’t care about your business card.

  Technology will turbocharge your business in three different ways. First, you can use the web to find and connect with clients through inbound marketing. Next, you’ll use modern real estate focused customer relationship management (CRM) programs to groom potential homeowners. Finally, you'll need to harness the latest apps to close deals quickly and successfully.

  “I think agents need to utilize technology for organization and automation,” said Darren Johnson, co-founder of Agent Zip. “They need a website with a feed of homes that will give them analytics on what homes and features their prospects are searching through. The MLS is no longer a physical book; you need your own website that is very intelligent. Pair it with a good CRM and you have a solid foundation. I get mind blown when I hear agents say they don’t have a website,” Johnson added. “I think every single agent needs to utilize retargeting. If you go on Nike's website and you start looking at shoes, you're going to start seeing those shoes follow you on other sites. Through Google display ads, through Facebook—that’s all retargeting. I notice many agents don't retarget their visitors. I think it's one of the most underused tools out there and it has the highest rates of conversions.” Click here to read the full interview with Johnson.

  Let’s review some technological gems with the usual caveat that by the time you read this book, some of these companies may have changed, folded, merged, etc. You can always keep up with the latest by visiting my LinkedIn page and signing up for my free daily Alexa

  show, The Real Estate Flash.

  You can get the show by saying “Alexa, enable The Real Estate Flash!” Then, each morning, ask Alexa to play your flash briefings. I’ll be there sharing the latest industry news, current trends, coolest technology, and top interviews. It’s the easiest way to stay up to date with the evolving world of real estate technology.

  Search, social, and local

  You need to be where your clients spend their time. Now you can be in their cars, bedrooms, offices, vacations, and everywhere they go thanks to the magic of Facebook, Google, YouTube, and Instagram.

  Search and social media. That’s where you want to be.

  While the best strategies to optimize these channels are well beyond the scope of this book and change daily, here are a few basics.

  First and foremost, you want to be present on at least some of these channels. It probably isn’t necessary to be engaged with all of them (that would be overwhelming). Pick your favorite two or three and get involved.

  My recommendation: optimize your inbound marketing efforts with these platforms and experiment with some outbound techniques.

  Snag inbound traffic with Google using a technique called search engine optimization (SEO). Use SEO correctly and Google will point potential clients your way rather than to your competition. Don’t assume that clients will find you on native search unless you put some effort into SEO. Do some reading or consult with an expert to find the best techniques for SEO and put Google to work for you.

  You can also experiment with some outbound advertising on Google. Did you ever notice Google search results in bold on the top or side of your screen? Those are sponsored results. Google has sophisticated tools to help you create your own paid search results. You don’t have to spend a lot of money to test whether this tool will work for you. For example, spend $20 per day for a week and see whether that drives you any new homebuyers. It’s fun and easy to try! You can do the same with Google’s smaller and less expensive competitor, Bing (www.Bing.com).

  An interesting emerging platform to engage with the local community is Nextdoor.com. It allows you to create a free business page.[5] If you’re an active user, you can become the face of the neighborhood. You can use Nextdoor’s tools to showcase your listings and generate interest among the locals. The platform appeals to real estate agents because all of the users have verified addresses (they live nearby) and nearly three quarters are homeowners.

  Experiment with social media

  Social media is the new king of the internet. Facebook, LinkedIn, Instagram, Twitter, and perhaps Pinterest and Snapchat are the new faces of client engagement online. Your neighbors are on Facebook. Your potential clients are already looking at houses on Instagram and Pinterest. And, homebuyers are perusing your competition’s LinkedIn profile as you’re reading this.

  Willie Sutton was asked why he robbed banks, and he famously replied: “Because that’s where the money is.” The internet and social media are where your customers are. Most homebuyers turned to the Internet first when looking for a home, and nearly three-quarters of all Americans use social media.[6]

  Surprisingly, many real estate agents today aren’t as sophisticated as the bank robbers of old. Not enough agents are using social media. Almost a third of agents don’t use social media at all. Half of real estate agents admit that keeping up with technology is one of their firm’s biggest challenges in the coming years.[7]

  You can do better. Join one or two social media sites and set up an account.

  How should you use social media? Engage with your community by providing useful content and experiment with outbound advertising. We will discuss content shortly, but first let’s address social media advertising.

  Google, Facebook and other social media giants empower you with sophisticated advertising targeting. Take a few minutes and review the Facebook Ads Manager. You’ll be amazed by how specifically you can target your desired audience. In many ways, Facebook knows more about its users than their friends do. Use that power to your advantage!

  Just like with Google advertising, I suggest that you create a few Facebook advertising campaigns. Test some different messages and audiences and see how it goes. For as little as $10-20 per day, you can experiment with laser-precision ads. Check them out, it’s worth a try. In a recent survey, 81 percent of social media users believe that social helped bring in clients.[8]

  When you’re experimenting with social media advertising (or any advertising, for that matter), remember that you are actually testing two different things: the message and the ad itself. The message is the primary point you’re trying to convey in the ads. Are you the neighborhood expert? Do you have the best sales in the area? Do you have ac
cess to a lot of off-MLS deals? Do you have an interest in certain buyer categories like the elderly or international buyers? Without testing these various messages on ads, you won’t know which are most attractive to your target audiences.

  The second thing you’re testing with the ads is the format, appearance, targeting, and placement of the ads themselves. Are they better on Facebook or Instagram? Are your prospective clients young professionals or retirees? Does your ad look better in red or blue? Is your call to action (CTA) clear?

  For example, imagine you place an ad on Facebook for a week targeting young homeowners. You emphasize your connection to the international community and your ability to locate and deliver international buyers. To your disappointment, very few people click on your ads. What went wrong?

  It’s possible that your target audience is wrong. Maybe young homeowners in your area don’t want to sell. Perhaps your message is wrong. It could be that these people do want to sell, but they don’t care about whether you can find international buyers. Or, it could be that you found just the right target audience and you have a terrific message, but your ad is so ugly or subtle that nobody bothers to click on it. Agh!

  You won’t know what works unless you experiment. Once you find the right combination of message, audience, and advertisement, you will feel like Facebook is printing you money!

  Think this is too much work? I’m telling you, optimizing your social media advertising is much more fun (and takes less time) than those cold calls you’ve been making. You’ll see.

  Please note, although this chapter focuses on Facebook as the quintessential social media platform, all of the same arguments and reasoning apply to the other social media sites including Instagram, Snapchat, Pinterest, etc. You should direct your time and energy to channels that you and your target audience use most.