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How not to lose money in your real estate business

Most people get into real estate expecting to make a lot of money. And it's true. Real estate commissions are huge, and someone you know might be looking to sell and move up right at this moment. But there are also lots and lots of agents out there too. You see their ads and postcards everywhere. They couldn't all be successful, could they?

How can you avoid the wrong path and stop pouring needless money down the drain? Wouldn't it be wonderful to get a head start, find a few customers, make money, and continue growing your business - without spending a fortune?

It's Simple, and It's Not.

You see, getting the salesperson or broker license is only the first step, and far from becoming a successful real estate agent. Have you had experience in building a profitable, growing business from scratch? Have you been successful in professional selling prior to this career?

Many of us have not. If your answer is no, making a lot of money in this field and building a long-term successful business is nearly impossible without getting the right help.

Here are eight ways you could quickly lose money and hair in this business

1. Not running your business like a business

Are you still thinking like a salesperson, chasing prospects, and working on a deal by deal plan?

You have to run your business as a corporate CEO. Elements of a successful business include how you acquire new customers, generate repeat and referral business, manage your time and the time of your assistants, automate and achieve efficiency in front and back office tasks, continuously differentiate in ways the market cares about, control your budget, stay ahead in technology, and plan for growth.

It is not a trivial job description. It should be no surprise that over 80% of real estate agents close less than eight deals a year, and the top 10% of agents generate 90% of the business! The good news is, you can learn how to do it well and join the top producer rank.

2. Not having a lead-generation marketing plan that works

Do you know that the most expensive advertising is often the least effective? Mass marketing is a thing of the past. Complex media choices of today push thousands of messages on the air, in print, in the mail and through the Internet to an average consumer daily. What message will stand out, and how much will it cost to deliver to the right person at the right time?

Choose your market, and customize everything. Narrow your focus, deliver a consistent message and value relevant to your prospective clients, and you have a chance to dominate your market.

In addition to choosing a focus, an optimal lead generation plan also includes three systems that can run on autopilot: a farming system, a referral-based marketing system and a team marketing system. What is in your lead generation plan?

3. Not being able to convert leads into sales

Most agents make the same mistake of how they rely on lead generation, i.e., ways to acquire and chase leads. For a consistently growing and profitable business, you need to work on how to help a prospect solve problems, and how to convert leads into sales.

You see, real estate and mortgage lending represent an industry worth over $100 billion in commissions each year. Leads are everywhere. Anyone who needs a roof over his or her head, and does not pay for it in all cash, is a lead. You know there are many opportunities around you. Anyone of your neighbors could be looking to sell and move up or down, or invest in another property.

How would you get them interested in talking with you, and to trust you to help them? Selling is not a numbers game. It is a game of skills and approach. It is not what you sell. It’s how you sell it.

4. Turning your clients away because you don't have what they need

Beyond marketing and selling skills, how do you maximize new business and referral opportunities? How do you profit the most from your current client relationships? How do you stop chasing from one deal to another?

It costs 6-7 times more to acquire new customers than to keep existing ones. Don't let them find someone else with products or services that you cannot offer. ”Customer For Life” is every agent’s aspiration, but how would you make them loyal? Simple birthday cards and refrigerator magnets won’t cut it anymore. You need to have a way to track your clients’ changing lifestyle and continue to build a value-based relationship, even if it means offering a different product or service.

Costco’s success is based on a masterful merchandising strategy, offering the most used high-quality commodities at the best pricing. What is your merchandising strategy?

5. Not having the expertise superior to your competitors

Skills are the foundation, and there is no substitute for knowledge. Modern real estate has become increasingly complex. You need new, additional knowledge to create competitive advantage.

Become an expert in real estate, mortgage lending, anything and everything relevant to your clients’ pains. Read as much as you can. Go to classes. Work with a mentor on and off the field. Team up with other experts in the office or the industry.

You need to stay ahead of your clients and your competitors, or you will fall behind.

6. Not pricing your services correctly

More real estate business models are appearing on the horizon from full-service to discount to flat fee, online to offline, and everything else in between. Regardless of which model you employ, make sure your time is well compensated for. Understand the financial aspect, opportunity costs, and the costs of doing business, line item by line item. How do they compare with other agents?

Did you really think you would get more referrals by doing that one deal for nothing?
A successful business is a profitable business. Get used to being filthy rich.

7. Not planning for growth

Your business needs to grow, or it will become stagnant and gradually die. How did you do last year, and how do you plan to do this year?

You don’t plan to go out of business in 5 years, do you? New business is the critical bloodstream of all successful businesses. What will be the new sources for business next year, or in the next 5 years? Where will your revenues and profits come from that do not exist today?

Raise your goals for the top and bottom line, set a goal for new business each year, and make sure they happen.

8. Not getting the right help and support

Real estate today has been completely redefined by new technologies, savvy customers, skyrocketing home prices and hundreds of new competitors each month.

Brokerages and mega-teams have declared war on your customers. You cannot go it alone anymore. You will need to partner with someone who has a professional support system, newer tools and technologies, and the leadership to help your business grow.