Several years ago, Jack Schwager released a book detailing several interviews with successful market traders. In the book he asked them about lessons learned and how they became ultra successful investors. This is a great book and strongly recommended for all investors. The title of the book is, ” The New Market Wizards – Conversations with America’s Top Traders” and you can find it at Amazon.com, including a Kindle version.
However, as I was reading this book, I realized some of the lessons shared apply directly to real estate agents and our businesses. I’ll share a little from the book and then explain why I feel this advice might be helpful for us. Sound good?
One of the experts interviewed was Randy McKay, who turned $2,000 into $70,000 in his first 7 months of investing. He went on to winning trades in 18 out of 20 years investing. To see how incredible this track record is, spend a few minutes studying the results of some of the most popular mutual funds. There’s no comparison. The author of the book asked Randy Mckay the following question:
“You were a winning trader right from the start. Is there anything different you did that helps explain that early success?”
Here’s Randy’s answer:
“One of the things I did in those early years that worked was analyzing every single trade I made. Every day I made copies of cards and reviewed them at home. Every trader is going to have tons of winners and losers. You need to determine why the winners are winners and why the losers are losers. Once you figure that out, you become more selective in your trading and avoid those trades that are more likely to be losers.”
When Randy mentioned that he copied cards and reviewed them at home, he simply meant he reviewed and studied all of the stock trades from each day. This is obviously great advice for someone looking to improve their investment results. However, when I read Randy’s answer I couldn’t help thinking in terms of our clients.
To show you what I mean, I’ve re-written Randy’s answer for us:
One of the things I did in those early years that worked was analyzing every singe prospect I talked throughout the day. Each night, I made a list of each prospect, each client, every offer, and any sale and studied them at home. Every real estate agent is going to talk to a lot of people and you need to understand who are the best possible clients. You need to determine what prospects are wasting your time, which prospects can lead to a sale and where each one came from. You need to find out where the unqualified prospects are coming from so you can avoid them in the future. You also need to understand where your best clients are coming from so you can get more of them. Once you figure this out, you can be more selective in your marketing and avoid spending time and money on prospects that won’t turn into sales.
What I’ve found in all of my years in real estate is that there tends to be a commonality amongst your best clients. Once you find this commonality, you can easily shift your marketing to attract better clients with less effort. The same applies to your worst clients. You know the what I’m talking about. The clients who are extremely demanding, unreasonable in their expectations and a complete pain in the ass to work with.
The only way you’ll find these commonalities is to take the time to study every client you’ve had throughout the year. This includes every buyer you worked with, regardless if they bought a home or not. It also includes every seller you met with to discuss selling their home, even if you didn’t list their home.
Try and detail everything you know about each person you worked with and see if you can find commonalities you can learn from for 2011. I’ll give you two examples to help you see what I mean:
1. In my real estate business, I performed a study similar to the one I’m suggesting you perform and found that most of our clients were in good physical shape. They worked out, exercised, ran and were very active. I could leverage this finding in my marketing by advertising at local gyms and/or by renting lists of people who read fitness related magazines in our area. I could mail a postcard to this list offering a free report and audio CD. Every person who responded would be a higher quality lead based upon commonalities of my best clients.
2. On a recent scuba diving trip to Cozumel with my local dive shop, I realized that most of the male divers owned Harley Davidson motorcycles. This could be leveraged simply by renting a list of Harley owners withing a certain distance from the dive shop. An invitation could be mailed to each Harley owner inviting them to a Scuba Discovery day.
The next question Randy was asked by the author of the book is as follows:
“What other advice would you have for traders?”
His answer was:
“The most important advice is to never let a loser get out of hand.”
I believe this advice applies directly to our business, too!
Once you realize you’re not going to get a sale, you need to let the client go. You know what I’m talking about – that gut feeling you get when you realize the buyer isn’t going to make an offer. Or when the seller won’t adjust their asking price to a reasonable number. As soon as you know you’re not going to be able to help the person buy or sell a home, you have to step back and refer them to another agent. It doesn’t make any sense whatsoever to continue investing time into a buyer or seller where you’re not going to make a sale. Learn to cut your loses quickly and move on to the next opportunity.