Working Hard Versus Working Smart
It's fitting to start my blog with this topic. I've known lots and lots of new agents who thought they were working hard, but they weren't working smart. Most never lasted. If they'd been working hard and concentrating on the right things, it would have been a different story.
Even though this blog is designed for residential agents, I want to start with a true story about a commercial agent I know very well. He worked hard, there's no question about that, but he never understood until too late that he'd never advanced his business.
Sam (not his real name) got into commercial real estate a couple of years before me in 1982. I got to know him well and actually learned quite a bit from him. After several years, I joined another brokerage and Sam went out on his as a lone wolf agent. He's been doing that since then working out of his home office.
Sam is no idiot. He has a business degree and works hard. He's very disciplined about not wasting time during business hours and diligent about making his cold calls and follow-up calls every day. When he gets on a commercial deal he's very thorough and detailed with his information. He loves that part of the business as most agents do.
Sam is one of my best friends and we talk very frankly. Only in the past 10 years or so he's finally admitted he never had a winning business strategy. He's still living from cold call to cold call and after 35 years you can imagine how much he hates doing it. He's also making the same mistakes today he was 35 years ago.
It took Sam 25 years to finally move from notecards to a computer database. He's just not a forward thinking business person, but he's an excellent agent once he gets on a deal. That's the part of the business he loves, but we all do.
Where Sam Went Wrong
Sam lives and dies by the cold call. It's all he knows but at this stage in his career he should never have to make another cold call. His former clients and even new prospects who've heard how good he is should be calling him asking for help. By staying under the radar for so long he's made himself invisible to almost everyone.
No-one I know has ever said they enjoy cold calling and new agents have an understandable fear of cold calling ("call reluctance") so they just don't do it. I'll share a story later about a cold call I made early in my career I'll never forget. It devastated me, but also toughened me up.
What eventually caught up with Sam was he never made any effort to build any kind of exposure for his services through marketing. He wasn't thinking long term, just deal to deal. You can be the very best at what you do, but if no-one knows you, you're never going to get any benefit from it.
When agents work smart and properly market themselves, they should see their business increase over the years even though their cold calling slows down. In fact, they just don't have the time to make calls because they're too busy working on deals.
Sam knows he's painted himself into a box, but it's too late to change now. Nearing the end of his career, he's resigned to cold calling for the next five years until he can retire, and he's really burned out.
How Much Does Sam Make After 35 Years in the Business?
Sam considers $250K to be a very good year for him. That's a good amount of money and new agents reading this are probably thinking what's wrong with that? The problem is Sam was making the same thing 30 years ago.
Sam hasn't raised his game nor his income level after all those years. When you factor in inflation, it's eaten into his $250K. He's making less and less the longer he works.
By working hard and not working smart, Sam squandered the advantage he had of being in the business for so long. He didn't capitalize on that and now, newer and hungrier agents are coming into the business chipping away at his business relationships. Although he's finally learned how important it is to stay in touch with your clients and building loyal business relationships, he's lost a lot of clients along the way.
Other Mistakes Sam Continues to Make
At least two to three times a year Sam will call and tell me how he got "burned" on a big deal. It might be an office warehouse building he showed to a buyer or maybe a big lease he was working on with a tenant. Those can easily be a $50-$60K commission or more.
Something bad always seems to happen. Another agent showed them a property he missed, maybe there's an agent and relative involved, maybe word came down from corporate to use another agent.
When Sam tells me these stories, he knows my first question will always be "Did you have the exclusive right to represent the person?". His answer is always "no". When I ask him why not, he'll either say "the guy wouldn't sign one" or "I didn't think he'd screw me" or "I just didn't want to ask him to sign something".
So Sam spent all his time doing research for the client, possibly taking them around showing them buildings, running a comparable marketing analysis and then someone swoops in and takes the deal away from him. For someone as smart as Sam to make that same mistake over and over is just baffling to me.
There's no telling how much money he's lost over the years by not being more assertive and asking for the exclusive right to represent. If the person didn't sign it, he should have just thanked him for his time and walked away.
Not closing the deal is bad enough, but he'll never get the time back he wasted on talking to the to building owners and other agents, compiling all the information, and then re-driving the area to make sure he had everything covered with FSBO's.
Sam was chasing a rabbit rather than spending that time finding someone who would sign an exclusive right to represent so he knew he was going to get paid.
If a buyer or tenant prospect will not sign an exclusive right to represent, red flags should be flying all over. Try to find out what their objection is. Explain to them that technically you're representing the seller or landlord without that right to represent them. If you can't convince them after that, something's wrong. I suggest just parting ways with the prospect in a nice way and let some other agent roll the dice with them.
Always Remember this ... as an agent, all you have to offer is your time and information. Once you've given that away to someone, you have nothing.
What Sam Did Right
Of course, Sam did a lot of things right too. He's still in business and making a good living. As I mentioned, he was always prepared when he went into a listing appointment. He was very thorough and knew his market. I always knew he'd work to get the best deal he could for his clients.
Sam made some very nice land and building sales, but not nearly at the pace I know he'd like to see or I know he really deserves. He works harder than most brokers I know.
Sam also taught me a lesson in my first year. He had just closed on a nice sized commission, around $30K if I remember correctly. That was a big commission for anyone in our group and 33 years ago it was a big deal. To me, having never closed a deal, it was a fortune.
I didn't think I'd see Sam for at least several days after that closing. I figured he'd be kicking back and enjoying it, but he was the first one in the office the next morning cold calling. That impressed and told me I'd better never get lazy when I started making money because my competition wouldn't be taking time off.