The Greatest Leverage in Real Estate

by Chicago Agent

By Dirk Zeller

There is a growing belief that creating a large team of producing agents under you creates the best leverage in the business. There are more agents today trying to create leverage through people than ever before. While I agree this approach is valid, you must ask yourself if now is the right time for you to make that play. Are you personally ready to build and use that time? Most importantly, have you used the easiest and greatest form of leverage in real estate before you start exploring people leverage?

The greatest, easiest and most profitable leverage in real estate sales is becoming a listing agent. Too many of us are not using this leverage to establish the foundation of our success. We are getting drawn into the more-people-bigger-team mentality before we dominate as listing agents. Once you have the skills and production of a champion listing agent, you can then build a team more easily with producing agents.

Being a champion listing agent spawns opportunity that carries new risk and high rewards. As a champion listing agent, you will enjoy these benefits:

1. Gaining leverage by employing numerous people to work for you at no cost
How many licensed agents are in your board of Realtors? That will be the number of people you will employ to sell your inventory each day. The best part is that all of these people working for you cost you nothing. There are no wages, withholdings, taxes, insurance, workman’s compensation or equipment changes (telephone, desks and office supplies). There are no expenses of any kind. Now, I know that many of you are saying, my company covers all that with my buyer’s agents who work for me. That may be true, but you still have to manage these people and deal with personal problems, mistakes, low motivation at times and interpersonal office politics. All of those still need to be controlled and managed with leadership exerted to produce a result.

If you focus on being a great listing agent first, you don’t have to manage and lead any of these agent co-ops out selling your property until they actually write a contract to present. You employ all of these co-op agents for little time investment, no cost and no risk. With producing agents on your team, you take a risk in terms of your leads and how they convert them. You invest large amounts of your time to train, coach and direct them to success. Champion listing agents eliminate the risk and receive the reward.

I want to stress, again, I am not anti-team or anti-buyer’s agent. I do, however, believe we, in our excitement to achieve a champion team real estate practice, take higher risk and lower net reward avenues because we heard an “expert” claim success, or because we really didn’t evaluate the return on investment or evaluate the risk/reward equation.

2. Generating multiple streams of income
The residual value of a listing, in terms of additional business creation, brand recognition growth, market share and market presence, develops leverage. By taking a listing, you are, in effect, creating a storefront from which to sell your services. A listing creates sign calls, ad calls and Internet leads to convert to both buyers and sellers. It allows you to raise your personal profile in a neighborhood to generate future business. An agent who works with buyers almost exclusively has no profile.

What is a listing worth to you beyond just making a commission from the sale? One of the numbers I tracked was additional revenue and additional transactions created through securing a listing. For me, I tracked an average of 1.68 transactions for every listing I took. By pounding a sign in someone’s yard instead of working with a buyer, I enjoyed the leverage of another .68 of a transaction. Track the buyers generated and converted from your listings, the sellers who buy through you and listings you generate additionally because you sold the house down the street. I am sure that you will find leverage from every listing you take. Your ratios will be as good or better than mine.

3. Maintaining a client even if the transaction fails
When representing a seller, if a pending transaction fails to close, you still have a client. You can put the home back on the market, salvage the relationship and sell the home. With the buyer, they have the option to not do business with you in the future. They can decide to use someone else to represent them on their purchase. The seller provides more security to your income should something fail to close or go smoothly.

4. Gaining control of your life
As a listing agent, you will be able to create a business devoid of the weekends and multiple nights that most agents must work. You can build a business that is more family friendly for your children and spouse. While you are away, you will still be creating growing activity on offers if you are a listing agent.

I remember very few Monday mornings (after a nice long weekend at a vacation home) when there wasn’t a contract waiting on one of my seller’s homes. I didn’t know about it until I walked in the door on Monday morning.

5. Investing less time per transaction
It takes less time to represent a seller than a buyer. There will be a transaction every so often that will be the exception to that rule, but over time, the seller is clearly a lower investment of time. Because the seller uses small amounts of your time, this enables you to invest that time elsewhere to create more income.

I believe that our focus as the lead agent or Chief Rainmaker, of a champion team isn’t to achieve a 50/50 mix of buyers and sellers. The objective is to be weighted to the seller side. The only way your mix should be at 50/50 is if you have two or more buyer’s agents working for you. Listing agents, ultimately, dictate the marketplace. They set the terms, conditions and the control level of the marketplace. Your leverage benefits need to be established as a strong listing agent before you hire your first producing agent assistant, like a buyer’s agent.

Dirk Zeller is an agent, an investor and the president and CEO of Real Estate Champions. His company trains more than 350,000 agents worldwide each year through live events, online training, self-study programs and newsletters. He’s the widely published author of “Your First Year in Real Estate,” “Success as a Real Estate Agent for Dummies,” “The Champion Real Estate Agent,” “Telephone Sales for Dummies” and over 300 articles in print. Visit RealEstateChampions.com for more information.

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