Few will question that it’s easier to become a multi-million dollar producer in real estate in 2008 than it has been in the past. And why should they question that assertion?
- Prices are higher than ever (unless you’re in the Phoenix market, where we’re at 2004 or earlier prices in many areas, or in California, Florida, etc.)
- All it takes is a handful of transactions and you’re there (even though buyers have more choices than ever, financing’s more difficult to obtain than in the past and many, many potential buyers remain on the fence waiting for the final announcement that the bottom has been reached.)
- Even a blind squirrel can find a nut now and then (actually, no argument here on that one though there are limits to the amount of low-hanging fruit most of us have to grab.)
Like everything else in real estate, what it takes to become a multi-million dollar producer is local. If you’re in the midwest where prices still routinely start with a “1”, it’s going to take a few transactions to get to the $2 million mark in sales. Average even $150,000 transaction and you need more than one closed deal per month to reach the multi-million level.
But Jonathan, it’s so much easier in Phoenix and other places where prices ran up.
Really?
In 2004, my first year in the business, my median sales price was $160,000. Since then …
- 2005 – $225,000
- 2006 – $235,000
- 2007 – $237,950
- 2008 – $233,000
Okay, big guy, but that still means you only need nine transactions at that median price to reach $2 million.
Absolutely true … and guess how many agents aren’t reaching that mark? More than one-third of all “active” agents across the country did not have a single commission check in 2007, according to RE/MAX founder Dave Liniger. Zero. Nada. Bupkus. At the 2006 Century 21 commission, a company-wide goal was set of somewhere around seven to eight closings a year.
Eight closings? A goal? Really? If that’s the stretch goal, I’d hate to think what the real target might be.
None of this is to say being a multi-million dollar producer is a sign of competence or that reaching that level should be the high point of an agent’s resume. At the same time, someone who chooses to advertise that they have sold multiple million dollars worth of homes in a given year shouldn’t be stigmatized.
There are thousands of agents who would give almost anything just to cash one check.
Genuine Chris Johnson
July 5, 2008 at 4:52 pm
Shiver me timbers, it’s Genuine Chris.
There are thousands of agents who would give almost anything just to cash one check.
No, there are a lot of people with desire, but are unwilling to expose themselves to anything resembling rejection. These people may think they want it, but they want comfort and familiarity more than a transaction.
ANYONE…can knock on doors or pound the phone and grind out 25 deals a year, in damn near any market. They just have to give up their ego and notion that the ‘business will just come to them.
Larry Yatkowsky
July 5, 2008 at 5:17 pm
@chris,
just when I was about to trade in my ego-runners for blog-bucks you come along and shut the burner off in my balloon. .>)
Future Real Estate Invester
July 5, 2008 at 6:20 pm
I think the good agents have to have more than just talent to make sales. Becoming established in a community takes time and patience, something I think a lot of people lack.
Jonathan Dalton
July 5, 2008 at 7:11 pm
Even if anyone can, Chris, not everyone does … and that goes back to my original point. Why scoff at those who are actually generating the business when there are many, many, others who aren’t?
Genuine Chris Johnson
July 5, 2008 at 7:20 pm
Well, you say that there are 1000’s of agents that give almost anything to cash one check. That’s not true. Their ego and fear of rejection gets in the way.
And blogging…still not prospecting.
It is lead generation, but as writers words matter.
Jonathan Dalton
July 5, 2008 at 8:10 pm
What’s the difference between prospecting and lead generation, Chris?
Genuine Chris Johnson
July 5, 2008 at 8:30 pm
Easy.
Lead generation is broader. It encompasses many things: prospecting, Pay Per Click, IVR signs, etc.
Prospecting is a specific activity that has the prospector exposed to the risk of rejection.
Jonathan Dalton
July 5, 2008 at 8:37 pm
Interesting definition. I’ve never heard that one.
Along those lines, though, if someone reads my blog and elects not to hire me then that would be a rejection. Or doesn’t it count as an actual rejection because I didn’t have to be in front of them when it happened? If it’s the latter, then I suddenly feel better about much of my one-time dating career as I was rejected 30% less than I’ve always thought.
Genuine Chris Johnson
July 5, 2008 at 8:56 pm
You weren’t rejected if you didn’t have to hear it, anymore than someone that got an ad …
it was a nonresponse.
Ken Smith
July 5, 2008 at 9:00 pm
I never understood the reason for placing “multi million dollar producer” on a business card or other advertising. On the other hand I don’t get why anyone would stigmatize someone for doing so.
Jennifer in Louisville
July 5, 2008 at 9:41 pm
For me, I really try to concentrate less on what everyone else is doing, and just keep my eye on what I’m wanting to get accomplished. If I’m happy (and my customers are happy), then thats all that really matters to me in the end. That being said, I do find it discouraging that such a low bar is placed, and so many persons fail to cross it. Again, another reason for me to keep on truckin’. 🙂
Jonathan Dalton
July 5, 2008 at 9:45 pm
Ken – I’ve got the line on my main website mostly because I haven’t taken it off, and also because I have a sales award listed on there I won next year but didn’t win the next. No particular rhyme or reason to it.
Chris – I see the difference. I think we’re fundamentally different, though. I understand all of the Tom Hopkins/Floyd Wickman “every no brings you close to a yes” theory. At the end of the day, though, I’d just as soon focus on the steady flow of affirmatives coming I receive electronically. Getting a dozen doors slammed in my face isn’t going to lead me to a yes, to my own personal philosophy. It just means I spent an hour or so in 106-degree heat that could be used more effectively elsewhere.
Great for weight loss. Not so great for the bank balance.
Jonathan Dalton
July 5, 2008 at 9:47 pm
Jennifer – who’s to say it’s a low bar? If you need x dollars to live comfortably and you need y dollars in sales to make the x, then who’s to say you need to go beyond y? You would. I would. But that’s not necessarily everyone’s makeup.
And who knows … maybe there’ll come a day when I decide striving for z when I’ve already made y is far secondary to working on Legos with the kids or trying to beat the damn FIFA 2008.
Paula Henry
July 5, 2008 at 10:34 pm
I think the fallacy instilled in the consumers mind with the “Million Dollar Producer” tag, is that those real estate agents make a million dollars. As you have stated , one-third make nothing! So, while you could have been a million dollar producer at one time, it doesn’t mean anything this year.
I have sold my multi million every year and I strive to make each year better – I don’t need an award – or a tagline – just some time off.
Ken Smith
July 5, 2008 at 10:52 pm
“maybe there’ll come a day when I decide striving for z when I’ve already made y is far secondary to working on Legos with the kids”
Kids can do that to you. Know that my willingness to be available 24/7 has ended and if that costs me business to bad as my daughter is more important then any sale that might happen.
Erion Shehaj
July 5, 2008 at 11:11 pm
I would normally be inclined to scrutinize Jonathan’s statement that:
But last year, I was talking to a Realtor friend of mine from AZ that I had met on Active Rain and he told me he hadn’t seen a commission check since August.
It was December!
Bob Schenkenberger
July 5, 2008 at 11:20 pm
I don’t think it’s easy, but, it’s not that hard. C’mon agents who use the “multi-million dollar producer tag” are doing so to stroke themselves. You know it, and I know it. It may even give them some traction to the end consumer, but I doubt it.
For those of us in the industry, why would we care what others are saying to promote themselves. To me worrying about this is like worrying about the agent with a 10 year old glamour shot on their business cards. It doesn’t make sense to me, but what do I care.
Unless the consumer does their homework, come closing time, they will see the production tag and picture may not match the agent getting the check.
Jay Thompson
July 5, 2008 at 11:55 pm
Not too long ago my old broker left a message, “If you want your million dollar producer plaques, please come get them.”
I don’t plan on stopping by.
He used to make me fill out the form every year. It was a PITA. And I’m glad I don’t have to do it any more.
It’s only 106 on the west side? 😉
Genuine Chris Johnson
July 6, 2008 at 6:08 am
JD-
I get it. But it’s good for bank balance. I think prospecting is good untill 100-150 deals a year. I attained 50 in my best year (average sale =171k.). Spent less than 2k on advertising, and was with RE/MAX so I kept the bulk. Or, rather the IRS did.
What I do’t want is people to disuade agents from trying things that clearly work. That’s the thing that pisses me off. If you’re doing less than 40 deals a year, you should spend some time prospecting. I don’t know that every no leads to a yes…but I do know that it’s a numbers game.
I haven’t door knocked all that much. But I can say that I generated 1 transaction for every 3 hours of door knocking. I myself freely admit that I had a fragile enough ego that it was tough to do. But 1 every 3 hours. HAd I done it for 10 hours/week I would have had one source that could get 150 deals.
-Chris
Teresa Boardman
July 6, 2008 at 6:55 am
Our median prices still have 2’s in front of them but the market has really changed as far as who is buying and who is selling. I sold a 59K house last week, my absolute lowest ever sale. I also have a $134K in the hopper. In my first three years in the business a $135K sale I had was my lowest. As for the number of deals, there have been like 20% fewer sales this year than last, which was 33% down from the year before. I am not a mathematician but I am noticing that the balances in my bank accounts have leveled off a bit. I am also noticing that I show far more homes before the buyer buys one, and my listings are on the market much longer. I have cut expenses and am contemplating some other big changes. The simple truth is that I am exhausted, and finally worn down to the point where I don’t want to have as many sales as I do. I want a life again.
Chuck G
July 6, 2008 at 8:38 am
Teresa,
You know this better than anyone, with all of your experience and success. NOW is the market when you absolutely want to mash your foot to the floor and take everything you can. We are going through a (hopefully) once-in-a-career inflection in the real estate industry, where the puzzled and downtrodden underproducing agents will leave the market in droves, leaving more clients and deals for you and your committed team.
It will change back to the positive again…it always does. Take a deep breath, and a little vacation, and jump back in!
Elaine Reese
July 6, 2008 at 9:21 am
When I began in this business, I developed a business plan and a target market. I determined that as a single agent, I could time-wise only do ‘X’ number of transactions per year AND still give the attention to them that was important to me. Based on the income that I needed to support myself, I determined that I needed to target buyers/sellers of a certain price of home. I set that plan in place nearly 10 years ago, and it’s still working.
During my long tenure in the corporate world, we had a General Manager who had a favorite phrase for our time management: “If it doesn’t move the business forward, don’t do it!” The “it” was tasks that we might be doing – sometimes called busy work.
I think there are many agents who do the “busy work” without evaluating the ROI of the endeavor.
Jonathan Dalton
July 6, 2008 at 9:25 am
Future investor – sorry I missed you. It takes hard work. Ah hell, I sound like my father-in-law.
Paula – wait … I’m not going to make a million?
Ken – my 9-year-old can operate my lockbox key (relax, kids … only let her play with the shackle code). Is that a bad sign?
Erion – I was having lunch with someone the other day and talking about my fallow period this year, which extended for roughly six weeks. He still was waiting for his first check of the year. You could hear my jaw hit the table.
Jay – I’ve got one of those plaques … my son picked it up off the office floor where it was buried in a pile of rubble. Ruby Award’s on my desk, multi-million’s gone. Which reminds me … the bastards still have mine from this year, too.
Number 1 Home Agent – you’re a scraper and I hope you burn in hell.
Chris – we agree on one thing. “What I do’t want is people to disuade agents from trying things that clearly work. That’s the thing that pisses me off.” I feel the same way when I read that blogging doesn’t count as a business generator. (Not going to debate lead generation/prospecting as I don’t see the need for flagellation to succeed.)
Teresa – I guess this means I’m now buying you the drink at Inman and not the other way around. I was where you were back in November … the activity in bank owneds has simplified some things in that people are making decisions a little quicker in that market lest the home disappear.
Norm Fisher
July 6, 2008 at 9:32 am
Teresa,
Time for an admin assistant? After working from morning til night almost every day last year, I made the plunge. $30K is a small price to pay to get your life back. You may even find that you have more time for clients, as well as yourself.
Paula Henry
July 6, 2008 at 9:38 am
Oh Jonathan – I do not doubt your ability to make a million this year 🙂 but, I bet it won’t be for the plaque and award.
Teresa – I am where you are and even with buyers agents – I want some time to relax and am considering an admin assistant as suggested by Norm.
Vance Shutes
July 6, 2008 at 3:51 pm
Jonathan,
I read your article after reading Russell Shaw’s article on the Pareto principle. Or, more accurately stated, that 7% of the agents are doing 93% of the business. This is undoubtedly true.
Think about it. In a challenging market, only the true professionals are going to be able to survive and thrive. That’s why we’ve gone from 20/80 to 7/93. I suspect that the numbers may swing even a bit further toward 5/95. So, fewer and fewer will achieve that coveted “Multi-Million $ Producer” tag.
What worries me more is the future of our industry following these challenging times. Who knows how long this will last? But given the average age of agents is now around 52, and the average age of brokers is around 56, the future looks alternately exciting and bleak. Exciting, because it will be really fun to do business with those agents who survive – fun, in the sense that we will have a shared experience. Bleak, in that we’ll all be a bit older.
We’ve all seen the numbers out of our local boards – that the monthly “orientation” sessions for new agents have been cancelled due to lack of enrollment.
So, who’s going to fill the shoes of those of us who choose to retire a couple of years into the next upswing? Who’s going to serve as the “broker of record” for the companies we now work for?
That’s what keeps me up at night. Not the “Multi-Million $ Producer” tag.
Bill Lublin
July 6, 2008 at 8:56 pm
@Teresa- I hear you about the burnout, Been there, done that, and they didn’t even give me a t-shirt. Take a trip, walk the mean streets and take photos and remember that this too shall pass. However, I’ll buy you a drink at Inman too, and one for BoomerJack (if he doesn’t come then you drink his too). Oddly enough, a little relief in the market and it all gets better.
@Chuck G. This is my third time with a market like this (though I think this one may be worse then 1990 and better then 1980. In any case, nothing in our business lasts forever, good or bad.
@Chris I disagree with you I think lead generation si what happens from prospecting – though I understand your definitions.
@Jonathan – I think the consumer does like the awards and titles, because it allows them to feel more confident in the expertise of the person they deal with. In my office, one wall is covered, floor to ceilign with awards and plaques that I have received. I probably have as many in boxes (the advantage of longevity) but almost everyone remarks on them when they first come to the office, so they obviously register in their minds.