REAL ESTATE BUSINESS MODEL OF 2010

All of us with successful businesses know that the first key to success is having a strong business plan that shows a clear direction for the company.  Even in today’s market that still holds true.  As my good friend Bruce says, “Businesses are designed to have a profit; anything short of that just isn’t a business plan.”

With that being the case, the business model that every business is using today, whether you’re Angelo, the drycleaner, Billy, the landscaper and whether your business is big or small, is the survival model.  The name of the game is to cut and cut and cut until there’s a profit.  There is nothing complex about it.

While the “cut mentality” is good for the short-term, it’s not a business plan that anyone uses to grow their business, which is what I intend to do after the initial shock of our consolidation is complete.  I’ve lived through the cut model, now it’s time to develop a model around the business we do and how we’re going to grow market share and profits again.

The “new” business model won’t have all the frills that the old business model had and there are a couple of key components that it will have that just simply make sense.  I’d like to share with you today some of those “new” components that we’ve adopted into our overall “new” business plan.

First and foremost, part of our new business plan is to use more independent contractors and adjust several of our (now) employee schedules enabling them to have (1) more and expanded flexible hours; (2) a workspace which includes working from their home or other flex-space; (3) working only part time for us because they can do more in less time when working outside the office and (4) me voluntarily accepting these changes as an employer.  Jessica is a prime example in Stroudsburg.  What this has done is successfully thwart more layoffs or the need to replace key employees.  Instead, it has made our Management Team actually stronger than ever.  I don’t see the person in the office next to me, but I know they are there by the use of Skype, Instant Messaging and email.

For our valued hourly employee, the shortening of the office workweek was the second biggest item that worked for both management and our valued employees.  We were careful not to cut too much, but still maintain the workflow that was required.  We found that all of our employees were receptive to a new reduced work schedule understanding the economy that we all work in.  I compliment Rose for spearheading our cutbacks.

At Pennsylvania First Settlement Services our sister company, we release our title agents work schedules a month in advance and let them know what we anticipate will come in for business; like Billy, one of the most prominent landscapers in the Buck Hill and Skytop areas says, “When I have a job, I bring in the help.  When the job is over, we wait to hire them back for the next job.”  I think this technique is known as “growing” personnel slower than the revenue.  We adapted that same idea in our professional work place and it worked.  Craig watches the orders weekly now in the slow season and can adjust hours weekly if need be.

Another important thing that worked for us is cross training.  We found that when an employee was cross training it taught them to help in parts of the company where we didn’t realize they had a talent or that the talent was there and we never put it to use.  It was a win/win pilot program and Doreen, our Receptionist, is a great example of how it works.

On another note, the biggest commodity we have in a real estate company is listings and sales.  We are starting to promote a summer stimulus package which includes our co-broking transactions and giving the other broker a larger share of the commission; unheard of in our industry.  We hope that this will produce more sales and (while our intention is always to sell in-house as opposed to co-broking) it creates camaraderie outside of the office and enables us to capture a larger percentage of that valued species…the buyer and who knows, maybe Dennis, our Recruiter, can hire the listing Agent.

Having our listings for the summer season and re-listing or extending those that expire during beginning part of the season, was another big move that the company made as a whole.  We certainly have gotten the lion’s share of inventory going into the summer time, which is our busiest time–July, August and September.  Dominick takes credit for this idea.

No one likes to pay commission, but the reality is in the real estate business that’s how we make our money.  We successfully have moved the majority of our commissions to between 6% and 7%.  In the past, fees were working their way down to 5% and we’re pleased to say that we have a good amount of inventory and also at a good price, which excites other agents who want to work for our company.

Ahhh the internet!  No broker has incorporated the internet better than Better Homes and Gardens Real Estate Wilkins & Associates through (1) our corporate office in Parsippany where Sherry Chris and her team are the leaders in internet advertising; (2) The Real Estate Book online advertising which just produces a whole lot of leads for us and (3) Lead Router, a customized routing system for buyers that helps us as brokers, organize those buyers by agent and the type of real estate they want to buy.  Everyone asks me did I do the right thing by franchising and I tell him or her Lead Router is well worth the franchise fee.  Toni handles all our Relos along with her Supervisor, Jessica.  They will let you know about Relos and how CARTUS, our exclusive Relo company with BHG works.

Moreover, let’s not forget Wells Fargo.  Our Managers now review each pre-qualified buyer that calls our office or interfaces with us interested in buying a home.  You would be surprised at the number of pre-quals that they’ve done which in some cases were simply going un-attended, but not any more!  Sonia, one of their Loan Officers, is the best!

 Well thanks for allowing me the time to tell you a few of our “trade secrets”.  Overall, I couldn’t be where I am today without the great Managers, Department Heads and Staff that I have working around me; some of whom you’ve met today.

 Much success to all

 Thomas R Wilkins is CEO of Better Homes and Gardens Wilkins and Assocs. He founded the company in 1988 and at its height had 14 offices total. While still maintaining  a 15% market share and still the largest franchise office in Northeastern PA,  he has successfully consolidated his offices to two (2) with 90+ fulltime realtors. In addition to the real estate company, he is CEO of NEPA Management Assocs. and Gen. Partner of Pennsylvania First Settlement Services and a commercial Realtor at Wilkins & Associates Commercial Brokers.

Advertisements

CHOOSING A BROKER

For Better Homes and Gardens Real Estate Wilkins & Associates 5 Part Blog Recruit Series

Brodheadsville- Choosing a Real Estate Brokerage is the first and possibly the most important decision you can make when starting your real estate career. Unfortunately, most agents base their decision on commission splits without taking into consideration the most important contributions that a Brokerage can offer to a new agent’s career. Before making a decision on a Real Estate Brokerage you need to ask and receive an answer to the following questions.

Real Estate schools only prepare you to take and pass the real estate exam; they do not teach the skills needed to list and sell real estate. These skills are taught by the Real Estate Brokerage, which is why it is important to find out what kind of training you can expect to receive. You need to ask about structured training such as in office training classes, online training, mentoring programs and what kind of support you will receive from the sales manager on a daily basis. Without the proper training you will have difficulty getting and maintaining listings and buyers.  

As a new agent without a client database, the next question that needs to be addressed is lead generation. Ask the Broker how they obtain leads and how the leads are distributed to the agents. You also need to ask about the availability of floor time or opportunity time. A 70% commission split and no leads mean zero dollars.

Finally, when starting a real estate career there are expenses that are incurred before you close your first transaction. You need to know the cost of doing business as an agent for the Brokerage. Does the Brokerage have office fees, do you have to pay for signs, lockboxes, advertising, and supplies. As a new agent you want to minimize your out of pocket expenses.

When you interview with a Real Estate Brokerage you need to consider everything in order to make a decision that will help you launch your real estate career and make it successful.

Written by Patricia Balnk Toombs a VP with Better Homes and Gardens Real Estate Wilkins & Assocs. Visit them on line at www.wilkins1.com