Episode #27 - Five steps to build the foundation of your business!

Introduction

• Host: Bob Mangold, the Listing Coach
• Episode focus: Real estate success stories, current market insights, and foundational business strategies.

Success Stories

• Chicagoland Agent Success: 652 attendees at an open house, showcasing the effectiveness of the Home Boss listing process.
• Boston Agent Achievement: Sold a property for $239,000 over expected value with a quick cash offer.

Market Insights

• Despite media portrayal, the market has opportunities.
• Real estate transactions are active with successful listings being a common occurrence.

Business Strategy Breakdown

• Previous episode recap: Three stages of a real estate business - building foundation, growth, and wealth.
• Focus on building a solid foundation to foster growth and personal wealth.
• Encouragement to join the Real Estate Asset Advisors Facebook group for further discussion and sharing.

Economic Indicators

• Mortgage market update: Producer Price Index and Core CPI show increasing costs, indicating inflation pressures.
• University of Michigan Consumer Sentiment Report shows a drop, reflecting consumer pessimism which may impact home sales.

Five Key Steps for Building a Business Foundation

1. Business Model Independence: Create a model that generates cash flow without continuous personal effort.
2. Build a Database of Likely Sellers: Manage a robust database to actively engage potential sellers.
3. Develop a Referral Network: Establish a local, national, and global network to enhance business through referrals.
4. Establish Value Propositions: Clearly define and communicate the unique benefits your services offer.
5. Implement Systems for Multiple Revenue Streams: Utilize systems that allow earning from various sources within each transaction.

Closing Remarks

• Reminder of the importance of business foundation for future growth.
• Invitation to connect on the bi-weekly Elevate Business Briefings and to utilize resources like the Home Boss process.

Engagement and Resources

• Encourages listeners to engage with the podcast through the Facebook group and check out additional resources for deeper understanding and implementation of discussed strategies.

Next Episode Teaser

• Continuation of in-depth business strategies to enhance real estate success.

Join our Facebook Group at: https://www.facebook.com/groups/realestateassetadvisors

Visit our website to watch replays of our Wednesday "Elevate Business Briefings" at: www.RealEstateAssetAdvisors.org

Download a copy of my book, "If you list, you last!" at www.IfYouListYouLast.com

Transcript

  Hey, welcome fellow listing agents, Bob Mangold, the listing coach here with episode 27 of the, If You List, You Last podcast. As always, thanks for listening, sharing, and downloading. Now, I want to start off this week, give you a couple of success stories to keep in mind that The market is not as bad as what the media is reporting.

Certainly transactions are down and interest rates are higher, no question. But one of my agents in the Chicagoland market had an open house this weekend,  using the listing process, the Home Boss listing process, and had 652 people there this weekend alone, more than 175  of them on Sunday, Mother's Day. I wouldn't even guess that one.

And then another one of my agents in Boston, Massachusetts  had 355 people in the weekend before and ended up selling his listing for 239, 000 more than he thought it was worth. doing a CMA and it was a cash offer, all contingency, 10 days closing. So guess what folks, there's business going on out in the marketplace.

It's not all gloom and doom. So keep your head up. I, we've got agents out there taking listings every week, sometimes two, three, four of them in a week.  and don't let it get you down. Keep doing what you need to do to go out and get that business. So last week I gave you an overview of the three stages of a real estate business and I hope you were able to think through that and dig a little bit deeper and look into your business and maybe started to make some adjustments or the worst case scenario is you sat down and started making a little bit of business planning or notes.

So this week what I want to do is break down the five steps that you need to put in place  to build a solid foundation in order to achieve growth and personal wealth, right? So just to recap, last week we talked about the three foundational pieces you need, meaning you need to build the foundation, you have to have growth, and then you start building wealth.

So today I want to focus on the building the foundation. What does that look like? So that's what we're going to go into today. Now, as always, make sure you join our Real Estate Asset Advisors Facebook group so you can join in on the conversation, share your thoughts, comments, or questions on any of the topics I discuss.

right here on the podcast. If you're interested in being a guest on the podcast,  let me know, but do that through the Facebook group, right? Now, if you have a topic or conversation you want me to talk about on the show, go on over to the Facebook group and share your request. So with that, let's get started.

Let's get into this week's mortgage market update. So as I record this, literally on Tuesday morning, The producer price index, which measures wholesale inflation, was reported for the month of April. Now the headline PPI increased by a half a percent, which was higher than the expectations of three tenths of a percent.

On a year over year basis, the PPI increased four tenths of a percent to 2. 2%, which was in line with estimates. What that means, folks, is that the cost of producing goods  is going up, right? Now, core CPI, which I don't understand why this is even a thing, but it is, core CPI is the same except it strips out food and energy prices.

Let's be honest folks. What's the two biggest cost of living increases in terms of inflation over the last four years? And it's food and energy prices.  But nonetheless, that's how they do it. The government, again, we can work with all the numbers we want. But that increased by a half a percent month over month, which was much higher than expectations of two tenths of a percent.

So year over year, corpse PPI remained flat at 2. 4%, which was in line with estimates. But again, remember core CPI or PPI strips out food and energy prices. Everything else, I don't want to say who cares, but those are the two biggest drivers of inflation. And right now, inflation is not our friend in the real estate business.

Later on this week real estate sales and then builder information starts, builder starts will be out later this week. So that will give you a little bit better idea. And then I also wanted to share the University of Michigan Consumer Sentiment Report that came out for May. The reason that's important, folks, is it gives us a look into what the consumer is thinking and feeling.

It's not predicated on any, numbers or reports or anything like that. It's how does the consumer feel? So the headline number from that is that it dropped from 60 or drops to 67. 4 from 77. 2. They estimated that it was going to be 76. 2 and it dropped all the way down to 67, which was the weakest number in six months.

What that means to you and I, means consumers are not feeling very good about the economy, their money, any of that, which doesn't bode well for home sales, right?  Now, just because I say that doesn't bode well for home sales, trust me folks, there's plenty of people out there  that need to sell a house.

They're getting relocated. They could be in the military corporately, right? Senior citizens moving down people getting divorced. There's still plenty of business out there. It's just putting your head down and focusing on it. Now, the inflation expectations that the consumer was expecting. Sits at 3.

5, which moved three tenths of a percent from last month. That's, the biggest influence on that was they're expecting higher gas prices, which I would agree with them. In the long run, it moved from 3 percent to 3. 1%. Employment fell by 15 points, which is the softest number  since August of 2011. Now what that means, folks, is that we have people that are completely concerned about losing their job.

So when you fall 15 points, that's the lowest number in 13 years. People aren't feeling really good about their jobs, which again, maybe I don't want to buy a house right now. And then unemployment, they expect to rise That number moved from 32 to 40. So that eight point surge in unemployment expectations is unusually large.

It's about double the size of the typical month to month change. Suggesting that the consumer views on the labor markets have materially changed in May. They're not feeling good. Income fell. This is from people reporting this now. Fell six points. Meaning, they expect their income to fall. That's the lowest level since August.

2014, say that one fast, excluding the pandemic. Their spending intentions are very low. Remember the number one driver of the economy is consumer spending and the consumer is reporting, hey, we're going to cut way back.  So it's important to understand how your customers are feeling, what they're thinking and how all that works and how that relates to the real estate market.

So I wish I could report better news, but I can't. But at the end of the day, folks, I just need to tell you the way it really is.  And so it allows you to start adjusting maybe your conversations and things like that. with the consumers that you're having. Okay. So with that, let's get into the five points of how to build a foundation.

So the first point I want to share with you is build a business model  that doesn't rely on you to do all of the work to generate cash flow. Think about that for a minute. Do you work  simply because you have to generate cash flow? Have you built a business that revolves around your life? Or have you built a life that revolves around your business?

And if you're not earning money when you don't work, whether that's sleeping or what else, whatever else it would be, then you don't have a really good business model. It just means you have to work till the day you drop. And that's not a good thing. So let's go through some of the things that you should consider.

Number one is only focus on listings. Why is that? If you think about it, if you're the listing agent, you're actually employing all the other agents in your market to bring your buyers, their buyers, to see your listing so that you both get paid. You're, when you're the listing agent, you're actually employing all the other agents in your market.

When you're the buyer's agent, you're the employee. Trust me, there's more money in being the employer than being the employee.  And then referral fees from buyer's agents. So for my agent that worked that had the 650 plus people at his open house, he had three other agents working that with him.

And the truth is they were actually overwhelmed because we didn't expect that much traffic on Mother's Day weekend. But at the end of the day, what he does is all the deals that they pick up, they pay him a 30 percent referral fee. So when you're doing listings and you have open houses, especially the way that we do an open house,  you're going to have buyer's agents that pick up transactions for that and pay you a referral fee, right?

So they're out showing homes, writing contracts and doing all that. And when that closes, You're getting paid. All you did was take the listing and schedule the open house. Number three,  you need to outsource the marketing and clerical tasks. Number three, you need to outsource the marketing and clerical tasks. 

Here's the thing folks, my next point is also always use a transaction coordinator. At the end of the day, if you're doing clerical tasks, Then you're going to be paid like a clerk in any business. Either you're the assistant doing assistant work,  or you're the rainmaker. The only way to take and generate business that doesn't rely on you for the cashflow is to be the rainmaker.

Not doing clerical tasks. If you're doing that, if you're doing like 15 an hour work,  you're worth about 15 an hour. If you're out taking listings, scheduling open houses, putting your systems in place to manage those open houses, to have systems in place that could be duplicatable, that's how you generate cash flow without you having to do all the work.

Next, what about using AI and automation?  There's so many things that you can use AI for that you just. don't think about, right? The other day I was making an Excel spreadsheet and I couldn't figure out the formula for it and literally it was driving me nuts.  And I just went into ChatGPT and said, hey, can you figure out this formula?

And poof, they gave it to me. Last night I did the same thing. I needed to take and make a graphic. I went into ChatGPT and in under a minute I had a graphic done that probably would have taken me about half an hour to do. And so you've got to start using AI and automation to become more efficient. I'm looking at actually being an investor in an app that would actually handle the entire transaction once you write a contract.

It would, set up escrow and it would do all these different things for you and eliminate all those tasks. If you can build that into your business, you become more efficient, meaning you don't have to work as much.  And then finally, you have to build a business model where you get paid like a broker, not an agent, right?

This conversation I have with a lot of agents.  Why does somebody go out and start their own company? Because they go out and let's say they hire a hundred agents and every time an agent closes a transaction, they get a piece of it. If you're the agent, you got to be the one closing the transaction, giving up a piece of it.

Why don't you structure your business  where you get paid like a broker, not an agent. Now you don't have to go out and start your own company. We're at eXp. We have that where we have a brokerage inside of a brokerage. And it could be expanded anywhere in the world. And you get a piece of every transaction from that.

That's being paid like a broker, not an agent. So number two, key point. Build a database of likely sellers. And what that means is you need to have a minimum of, call it 5, 000 people. Between 5 and 10, 000 people in a database. Most of you think that's really hard to do. We could get that done in under an hour.

And then you start making a minimum of 25 touches a day. Notice I said touches, not necessarily calls. If you'll make calls, you'll make more money. Now let me just give you an idea.  One of the things that you can do in terms of calling, you don't have to be a hard sell. Hey, my name is Bob Mangold and I'm a local agent and I'm just reaching out to people in the neighborhood to see if there's anything I can help you with at all.

Whether it's a referral to a service provider, Somebody to help you take care of the lawn or anything like that. I believe it's important to get out into the neighborhood and help my neighbors. Anything I can do for you. Anybody could make that call. And even if that's the only call you did, that would still be better than nothing. 

Now you say, database of likely sellers. What does that look like? You FSBO's expired, cancelled. I've done shows and I've done podcasts on how we use the Home Boss and how we get in and how we're able to take and do that. How Robert is traveling the country and still taking two to three listings a week and all he does is talk to FSBOs and expireds.

That's not necessarily a database, there are systems that you can set up where it gets delivered to you every day. But what about people getting divorced? This Thursday I'm doing a webinar on being able to find divorce leads in a county.  People that are getting divorced, folks, it doesn't matter what the interest rates are.

It doesn't matter what the economy is. We know, statistically, 67. 5 percent of every homeowner who gets divorced will sell their home in the next two years. The question is, are you out in front of that? Are you marketing to them now? Are you staying in front of them now?  Where they become You become recognizable to them.

And then we have seniors, right? Seniors are responsible for 65 percent of all the listings last year. Do you have a database of those people to be in front of? What about flippers? What if you started working with, just call it five flippers who flip five houses a year, that would be 25 listings for you.

Now you've got to give them good reasons to hire you. And I'll talk about that in a minute. What about people going into probate? Those people need to sell a house in most cases. And then what about having a database of renters that your buyer's agents could call, but most importantly for you, you could invite them to your open houses.

You could be mailing information to them every week to drive them to your open houses so that your buyer's agents could communicate with them. That's what having a database can do for you, right? When I talk to agents, I go, how many people a day do you talk to? And they go none, or one or two. You're not going to make a lot of money talking to one or two people a day, folks.

And the number one reason  that they don't do it. Number one, they're afraid. Number two, they don't know who to talk to. If you have a database you're building a business. You build a database. You build your scripting so that you know what to say to people. If you're calling, if you're door knocking, if you're mailing, we're going to talk about some social media things that you could do.

But at the end of the day, you have to be in front of those people. If you had a database of 5, 000 people and they seen you, let's call it two to five times a day, more than a hundred times a month, what's the likelihood you're going to get business from that? Do you have a plan for that? Do you have a structure for that?

And if not, that's part of building your foundation.  Number three of building your foundation, build a local A national and a global network of referral partners. Nationwide and global, right? I know locally you're not going to build a database of people that are going to, another agent unless you live in a really big market, right?

If you're in a city the size of Chicago or Phoenix, you're not going to go from the north side of Chicago to the south side of Chicago to sell a house or to even work with a buyer, right? So depending on the size of your city, you could build a network of that. I know an agent who does a tremendous amount of business, meaning in excess of 50 transactions a year, 100 percent from referrals from other agents across the country.

And she's created a whole little system of her green envelopes that she sends them a referral fee check and all that other stuff. It's very cool, right? If you listen to our interview with Alexis a couple weeks ago, you heard when she first found out, or when she first started, she tapped into the referral network that is available at her company, which was EXP, that there's a whole global network, both local, national, and globally.

And she just simply researched where were people coming from into her market, where were they moving to, and she started to associate with those agents in those markets to pull referrals. What about insurance agents, probate attorneys, divorce lawyers, CPAs? Mortgage people, financial advisors, there's a ton of people that fall under the umbrella of senior care providers,  right?

Estate planning attorneys senior healthcare facilities, move out estate planning, or I'm sorry, estate sale providers.  Like we could put together a list of 25, 30 people. What if you went out and found two, just two of each one of those, and all they did was refer you to two people a year. Folks, that's a hundred transactions right there.

You go, why would an insurance agent need me? I want you to remember that cause I'm going to talk about  that in the next one. But if you're wanting to start talking to more people, go out and talk to local businesses that could refer business to you. Does that make sense?  Now you don't have to worry about spending money on lead generation and all these other things.

Folks, building a nationwide network of referral agents and all these business partners that can refer you business,  that's free. That doesn't cost you anything. And if you get really smart, you could start interviewing those people, create video content and send that out to your database. Hey, you know what?

I did an interview with, Joe Smith, who's a probate attorney. I thought you might find this interesting. That's what you can do when you have business partners or referral partners. So you don't have to be afraid of calling them, right? Number four, build your value propositions. If you're in the foundational stage of your business, or you don't have this one answered because Listen folks, the commission settlement has created a massive need for you to figure this out.

If you can't tell somebody why they should hire you, they won't.  If you can't tell a buyer why they should write a check to you if they needed to, they won't. So let me give you an example. For us,  for a seller, we can take and guarantee them the highest market value for their home.  It only takes us 14 days to sell their property or get it under contract.

It'll cost them half of an old fashioned sale. It'll cost them half of what you're doing. Now, if you've listened to the podcast, it might be episode two, three, whatever it was, somewhere down there. You'll understand how we do that because we still pay the buyer's agent. We just do it differently. For our buyers, this is critical.

And folks, I can tell you for more than 30 years, I've made a tremendous amount of money. by having this conversation with people.  What we do is help you pay off your home in 7 to 10 years using a 30 year fixed mortgage. If you are buying a 400, 000 house, I can show you how to save more than 400, 000. 402, 000 to be exact. 

in payments and interest and the money that you would have paid to the bank will help you accumulate a million dollar cash, a million dollars in cash in your retirement fund  with money that every other agent or lender will have you give to the bank. Now what's important for you to understand,  that does not include the equity in your home.

That's on top of it. If you were to buy a 400, 000 house right now in 30 years, appreciating it 4%,  which is the national average. It's been that way for decades. Your house in 30 years is worth 1. 279 million. If you have a million dollars in your retirement fund, I helped you take and accumulate a net worth of 2.

2 million dollars. Is that worth you coming out of pocket to pay a little bit of commission if you had to?  I know my buyers think so, but what do you think? What do you have is a value proposition to tell people why they hire you. So that's a critical part of building your foundation. All right, and then finally is build systems to get paid more than once. 

from every transaction. Okay, make sense? What does that mean? Referral fees is part of that, right? If I do an open house and I have buyer's agents and they pick up whatever it is, two, three, four transactions, and I have them pay me a 25 or 30 percent override that comes in the form of a referral fee, right?

Now I'm building referral fees. What about affiliate fees?  Are there different things that you could do to help those homeowners save money that you could be paid affiliate fees  every month on? For most of you listening to this, you close a client and you don't get any more income from that client.

What if there was a way that you could do that? And there are systems in place that you could build into your business to do that. And then what about overrides for growing the business,  right? All of us have grown somebody else's business over the, over time period, right? And maybe you get a Starbucks gift card or something like that, or maybe you get an Attaboy, a slap on the back.

But if I'm going to help somebody grow their business, then I want to get overrides on what I helped grow. And I want an ownership stake in it. I'm not going to take and build a business that does over 3 billion in production without getting a piece of it,  without getting overrides on it. And then I want to take and make sure that I'm in a place where I can do something like that.

Then I want to create revenue through strategic referrals, right? If I have a  network of providers, right? Divorce attorneys, CPAs, and I've got 25 of them, let's say. And all they do is refer two deals a year to me.  I have 50 transactions. That's recurring revenue through strategic referrals.  And then if I have this excess money coming in and I have money from having an ownership stake,  folks, I encourage you to start acquiring real estate.

It's the number one asset. For the average person to create wealth in the United States. Why in the world are we not acquiring real estate?  Why are we still renting? And I know that could be a function of cash flow and qualifications and things like that. But if you actually sit down and build a business with a strong foundation, that once I have this foundation in place,  I have a model that I can prosper in, then I can focus on the next step, which is growing the revenue.

And as I have more revenue, more more income, maybe an ownership stake that I can turn into.  start acquiring that real estate and start acquiring other assets that can generate revenue for you right so like at exp you get stock in the company did you know you could sell  covered call options on a stock and get money every month It's income.

It's free income. It doesn't matter if the stock goes up or down. It's income. You can use those assets to produce income for you.  You can use real estate, right? It's a long term rental. It's a short term rental. It's an Airbnb. Why aren't we acquiring assets that generate more cash flow? So I wanted to give you these ideas so that you could sit down in a little bit more detail.

Last week was a little bit an overview this week. I'm giving you quantifiable things that you need to sit down and figure out about your business to be able to give you the business that you want. Not that you accidentally bump into.  Again, I started out with, did you build a business that revolves around your life? 

Or do you want to build a life that revolves around your business? Here's a general idea for you. If you're a buyer's agent and somebody calls you up at. six o'clock on a Saturday afternoon and wants to go look at a million dollar house and you were supposed to go out on date night or, something with the family. 

You're going to drop all that and go show the million dollar house, aren't you? That is a business that works around your life. If you had the listing and they were going to take and send over a contract you don't have to do that tonight, do you? You could do that on Sunday and you could do that on zoom in 10 minutes.

Build your business.  Or build your life around your business.  Don't build your business. around your life. Because 30 years from now, you'll regret all the things that you missed out on.  So with that, I hope that helps you get a little bit more detailed view. You'll sit down this week, start making, ideas on it.

And folks, if you ever want to schedule a call with me, My Calendly link is www. brainstormwithbob. com. So I'm more than happy to jump on a call and, give you some ideas or answer questions and maybe help clarify your thoughts and your vision. So feel free to do something like that.

So it's brainstormwithbob. com. And then don't forget to jump on our bi weekly Elevate Business Briefings every other Wednesday at 1 p. m. Eastern Time. Just go to www.elevatebusinessbriefings.com. And then if you want a more detailed information on like the Home Boss process and a lot more detail on the things that I talk about here, how we use that, just download my book at www if you list you last.com.

So that's it for this week's show. We'll talk to you next week. And remember if you list you last,  talk to you next week.