Winning the Real Estate game with Unorthodox Battle Plans

Since I earned my real estate license, I've settled into a role as my team's lead generation specialist (among other odd jobs.) It fits in well with my previous experiences as a psychology teacher, writer, and marketer. In order to learn more about how others generate leads, I've spent months poring over other agents' lead generation "battle plans." I've noticed a few trends. Specifically, there seems to be four types of agents or, on a larger scale, agencies.

The Four Types of Agents

• Traditionalists: This group is comprised of mostly experienced, aging agents that have been in the field for more than a decade. They rely on the classic real estate agent skills that were developed before the Internet dominated the market. The Traditionalists advocate ideas like door-knocking and cold calling; they still take out classified ads in newspapers and plaster their picture on park benches. Their lead generation methods are hopelessly outdated, but that fact is disguised because they get a ton of referral business based on their reputation as a competent agent. After all, they HAVE survived in a cutthroat business for a long time. They passed the "survival of the fittest" test. A key for this group - their methods are worthless to young agents for lead generation, but do have some value. Those skills teach the basics of persuasion, which is an important foundation for sales.
• Charlatans: Okay, many of these people aren't "charlatans" in the sense they're selling us snake oil. This group consists of agents that have discovered (or more commonly "copied") a particular gimmick for lead generation, gave it their own twist, and are now selling the method itself instead of real estate. These are the people that are constantly trying to sell their methods to other agents, usually with grand promises their "revolutionary" method is the golden goose that will push agents to the next level. The Charlatans rarely deliver on the promises, especially over time. The reason is simple - their methods require novelty and are only novel for a short time before everyone else adopts it, thus ruining the method. Amusingly, the charlatans produce enough marketing material to make it ridiculously easy to reverse-engineer their methods, which is exactly how we generate a lot of our leads right now at a fraction of the cost they would otherwise charge. These people make a good living off the many, many agents fighting to establish themselves. Speaking of those agents...
• Sheep: Sheep are the masses of agents that don't generate enough income to actually survive, let alone thrive. Most are newer licensees. They almost always team up with and learn from Traditionalists, OR they pay the Charlatans large sums of money to generate leads. Most of the sheep eventually get discouraged and fail as they lack the drive or creativity required to develop their own battle plan. 
• Innovators: These are the folks that really fascinate me, mostly because they're secretive. These are agents that are using a truly unorthodox strategy to generate leads. These agents are typically younger and successful. They seem to thrive where everyone else fails. Wisely, they do not publicize the methods. They are not flashy. They understand their methods are the reason they're successful, and they know the advantages conferred by the of the unorthodox strategies would disappear if others copied them within their particular market. This group is very easy to identify as they generate high volume but keep a very low profile. 

The Quest to Learn from the Innovators

Since I am tasked with generating leads, I spend an inordinate amount of time studying methods. Identifying, learning, and reproducing the Charlatans' methods doesn't take much time, so I spend most of my time hunting down and talking to the Innovators. Unfortunately, they're an elusive bunch that do not like publicity. Luckily, I'm a charming guy. :-)

I've managed to talk a few of them into revealing enough of their methods to shed light on their battle plans,but none were willing to give me the whole picture. Over the coming weeks when time allows, I'll document a few of their stories here on the Realty Beaver blog. To protect them from their competition getting wind of and copying their methods, I'll use fake names and only approximate locations. 

Stick around; it'll be fun. I'll share stories of the agent that created a mathematical formula to find buyers, an agent that bribes secretaries, and an agent that uses the paranormal. Per each individual's request, I'll omit many of the behind-the-scenes details, but it should be interesting nonetheless. It'll be a fun journey!

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The Real Estate Broker Business Model is Dead: Part Two

“The old ways are dead. And you need people around you who concur. That means hanging out more with the creative people, the freaks, the real visionaries, than you're already doing. Thinking more about what their needs are, and responding accordingly. Avoid the dullards; avoid the folk who play it safe. They can't help you anymore. Their stability model no longer offers that much stability. They are extinct, they are extinction.”
― Hugh MacLeod

If you didn't read the first post in this series, stop reading this one and read that first. This one won't make much sense otherwise. This is the link:

The Real Estate Broker Business Model is Dead: Part One

Okay, now the good stuff. I ended the first post with a question - what is the one thing keeping the real estate industry as we know it afloat? I walked you though the process of technological diffusion and why technology kills entire industries. The real estate model is on life support, but what IS that life support exactly? What's the one thing that, if it goes away, the real estate broker business model immediately dies?

Like how I build suspense? ;-)

Let's do it a little longer. Seduction is fun, after all.

What are the Signs of Demise?

I personally knew about ten people that were successful real estate agents prior to getting into the field. They gave me an incredibly skewed view of the industry. It would be like assuming the average weekend basketball player's skill off observing NBA Hall of Famers. 

Once I started getting involved in the industry, I got to see all the warts. And oh man, there are a lot of warts. I realized there were a ton of agents that were incredibly desperate. Some of the peculiar observations included:

• The age of the average realtor. It's old. Like, really old. 
• The age of the successful realtors. This was even more telling.
• The sheer number of people successfully profiting off agents... like people promising to have the next great lead generation "system." I call this the "Amway" phenomenon (the corporation makes more off selling "how to sell our junk" resources than actually selling their shitty products. 
• The business model used by established, franchised businesses. New agents are recruited not for their skill in buying or selling. They're recruited so the "team" has a new source of quality leads via the new recruit's sphere of influence.
• ...and a few others. Here's a decent summary. 

The real tell-tale sign, though, was apparent when I started analyzing the mounds of data that's relevant to the industry. That's when I had a few epiphanies. There are a slew of tech companies that are spending huge sums of time, resources, and money to kill the one thing that prevents them from completely dominating the industry. 

That one thing that's keeping us on life support?

Our MLS systems. 

That hodge-podge of local databases loosely stitched together is all that's keeping the old model alive. Amusingly, a lot of people seem convinced the system is too big to fail.

That, of course, is the famous last words every dead industry muttered before they were proven wrong. We could spend weeks making a list of industries that were killed by technological development. Instead, I'll share this Bon Jovi meme because, you know, he's right:

The MLS Seriously Sucks

I've talked to a few technology-challenged folks that believe the MLS system does amazing things. "Incredibly powerful" they say. "Capable of amazing things!"

Yeah. If we were living in 2003.

I've found praise for MLS software is a good predictor if that person still uses an AOL email address. The fact of the matter is every single MLS system I've seen in action is poorly designed and lacks the functionality seen in some of the bleeding-edge real estate portals. The systems can do some amazing stuff, but there are hundreds of software solutions that do more with greater simplicity. 

This is understandable. The MLS is maintained by people that probably aren't leaders in tech innovation. It's maintained by people that buy and sell real estate. Nor do our local MLS systems have the venture capitalist funding of tech startups. Most importantly, our MLS systems will NEVER have an advantage. They will die.

I know what you're thinking - as agents, we control the MLS. How would it die if we all use it?

That's just a more nuanced way of believing the MLS is too big to fail.

The MLS is vulnerable precisely because it's big. Size = cost and inefficiency. Someone can and will develop a better system. Hell, most of us are unwittingly teaching tech startups how to kill our own MLS. How many agents do you know that use a consumer portal like Trulia or MarketLeader? Unbeknownst to many, every one of these companies collects and analyzes data, then use it to refine their products. At the time of writing, most of these companies have already become reliable sources of leads for younger people. Few agents seem to understand exactly how or why these companies are so good at generating (then selling) leads. In a nutshell, it means they beat us to the punch. Their ability to get eyes on their website is better than our ability to convince people in our local area to let us buy and sell their houses. 

That's a big deal.

We are slowly becoming slaves to companies that generate leads better than us. And they're getting better. And better. And better.

At some point, more and more companies will use systems like RedFin, only they'll develop their own replacement for the MLS. They'll hire cheap, desperate agents to carry out one particular task (like "Jim shows houses, Tina writes the listings, Cindy takes the pictures, Wade does the negotiating, etc.) It's the law of mechanical Turks (Google it if needed.) And of course new agents are going to jump on board... it's far more financially advantageous to join the big company for a salary then try to out-compete all the experienced agents that have spent years building a customer base. 

It is, after all, a numbers game. 

So What Do We Do?

Is all hope lost? Seems that way, right? If we see the writing on the wall, are we all just dead in the water?

Maybe. 

Maybe not.

In the last post, I talked about the diffusion of technology and the percentages of the population that fall victim to disruptive technologies. Some people assume learning to master the technology is the key. It's not. It's a trap. 

The technology itself, which you pay for, is constantly evolving. Right now, you're a necessary component in a process. The people selling you the technology could just keep doing what they're doing and enjoy the profits they make from you. But they don't because another company will continue to advance, thus making the Luddite tech companies as obsolete as you. In other words, there's always pressure to move towards a monopoly. This is the mechanism that will assure the death of the current real estate model. Our MLS systems have given us a monopoly of sorts, and the tech companies have the ability to create a fundamentally better monopoly. 

You CAN survive, but you have to find a path that's completely different than the path you're on right now. Furthermore, your future path can't rely on exploiting the current model of real estate. Remember, it's going to die.

My Crackpot Advice

The irony, of course, is that any established real estate agent is going to laugh at my prediction. Why? That's the Luddite Effect I talked about. Want to see it in action today? Check out news stories that interview taxi drivers. They are genuinely convinced Uber and Lyft aren't a serious threat to their industry. Shit, they don't even realize their industry is already dead.

So goes the The Luddite Effect. 

For the handful of you that DO heed my advice, get creative. Pay very close attention to exactly how the big real estate portal websites operate. There's tremendous opportunity in the future, but it's going really unorthodox and will probably require an outside perspective.

Me? I'm personally leveraging my outside education, work experience, and even hobbies. There are some things technology really cannot do, at least not for a while. That's the niche I'm aiming for.

As a new real estate agent, I have little interest in wasting time learning "the trade." Instead of memorizing scripts, honing my cold-calling skills, or spending twenty hours showing condos to indecisive newlyweds with unrealistic expectations, I'm studying data. I'm learning how and why people use social media on various devices. I'm spending time developing algorithms that can identify likely buyers and sellers based off unusual but predictable behavioral antecedents (like, for example, women that increase their underwear budget by more than 100% are roughly 50% more likely to sell their house within the next 18 months.)

Why am I doing this instead of following the path every new agent takes? Because following that path is a really, really stupid gamble. I have far more faith in my own ability to master skills lead generation and conversion than I have faith that the career of "real estate agent" will still exist in five years. 

In the interim, things aren't necessarily bad for everyone. Unlike teaching (per the past post), there are some incredible opportunities in real estate today. That's obvious by the number of people that are succeeding despite everything I've posted in these two posts. Unfortunately, their success has a shelf life, which is directly tied to the continued existence of the MLS. The moment it's replaced by something better, those that don't have alternate plans will be forced to become slaves to whichever company manages to pull the plug on the MLS. 

But Wait, Why Listen to You?

The short answer: You shouldn't.

The long answer: First, this is just one person's analysis, and I'm an outsider, too. Furthermore, odds are good I do not personally care about you because I do not know you, therefore I do not care if you heed this warning or not. I'm not selling you anything. I'm not recruiting. I'm merely reporting. If anything, this is written so I'll have an "I told you so" record to brag about should the prediction come to fruition. Yes, I might use it to springboard a career as a psychic. 

Hopefully, the people that will read this will keep their eyes open a little wider than they have thus far. Do your own research. Come to your own conclusions. If you DO come to the same conclusion, connect with me. I like discussing this shit, but it's obviously not a topic the general public necessarily cares about. And like Hugh said in the quote at the beginning of this post - avoid the dullards. Bring on the creative types, the freaks, the visionaries!

At any rate, I do with you good luck. Despite what I said earlier, I DO care about you to the extent successful people make the world a better place than unsuccessful people.

I want you to be one of the winners. Yeah, I know. It makes you very, very uncomfortable. That's precisely why you should listen to my advice.

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The Real Estate Broker Business Model is Dead: Part One

The current common business model used by almost every real estate business in the United States is, for all intents and purposes, dead. Technology is in the process of killing the industry as we know it.

Bold prediction, huh?

My Background

Realizing the vast majority of people that may read this blog have no clue who I am or what my background is, this part is relevant. 

My undergrad degrees are in experimental psychology, social history (studying how people behaved in the past and how those behaviors change over time), and social studies (covers economics, geography, sociology, along with overlap with psych and history), and my Master's degree is in educational technology. That's the study of how to implement technology in classrooms so students receive the greatest benefit possible. Technology is expensive, so the degree basically teaches how to do an elaborate cost/benefit analysis do make a decision on any given piece of technology. Part of that process is evaluating what is known as the "diffusion of technology."

Diffusion of technology studies how emerging technologies are going to affect groups and individuals. As it turns out, the introduction of technology and it's effects are really, really predictable. But it always results in a prediction that is ignored because of what I like to call the "Luddite Effect." More on that later.

Anyhow, I was also a high school psychology and history teacher for twelve years. I decided to leave the profession due to burn-out. However, I also saw the writing on the wall. Teaching as I knew it was a dying profession due to... you guessed it... technology. 

Teachers had long assumed the skills they brought to the table (namely personalizing what they teach to each individual student in a caring, supportive way) could never be replaced by technology.

Guess what?

They were wrong. 

It takes a teacher about four or five years of hands-on experience in the trenches (the classroom) to develop the skills to learn how to reach different kids effectively, thus becoming a "great teacher." That on-the-job training costs school districts about $225,000 per teacher. That one teacher can teach about 30 students at one time with good results, and up to 40 if we accept mediocre results. In a school of 1,00 students, we'd need 33 teachers if we want good results and 25 teachers if we want shitty results. 

The cost? 

If we want good results, it'll set a school district back $7.425 MILLION. Even if we go the cheap route, it'll set a district back $5.625 million. That's a lot of tax payer money, huh?

We have web-based programs today that can teach every student in that school more efficiently with better results for, according to the research I did years ago, about $500 per year. That's a total of $500,000. 

As they say, it's a numbers game. 

Not to spend too much time on this issue, but I bet a lot of you are asking why this isn't happening now. Why are your school districts pissing away so much money? The answer? Human nature. This is where the Luddite Effect comes into play. 

Quick and dirty history lesson: The Luddites were textile workers in 18th century England. They made clothes. New technology was introduced (looms, spinning frames, and other technologies that came about during the Industrial Revolution) that threatened their livelihood. Instead of adapting, they resisted. Eventually it led to rioting as the Luddites tried destroying all the new technology. The military was called in and the rebellion was put down. Violently. 

Since that time, the term "Luddites" is used to describe any population that refuses to adapt to new, disruptive technologies that affect their livelihood. This happens all the time in all fields. When the technology is disruptive enough, the people that can't or won't adapt lose money. Luddites start by ignoring the new technology. Then they make fun of it. Then they organize a collective resistance. But that resistance is ALWAYS futile. Again, it's a numbers game. Eventually, they lose so much money to the new technology they can no longer feed their kids. Yet they just keep doing the same thing they've always done until they end up dirt-poor with no options. 

You don't want to be a Luddite. 

So anyway, teaching is a profession that's on the cusp of collapse. The only thing preventing it is that collective resistance which, in this case, takes the form of labor unions. How can you tell this is happening? Look at the disruptive technology and see where they're spending their cash. Not surprisingly, the folks that are developing and selling this adaptive educational technology spend a huge sum of money on lobbyists to support political candidates that are trying to weaken the teacher unions. The tech companies know exactly how to overcome the Luddite resistance. 

We've witnessed this exact same diffusion of technology pattern in all kinds of fields throughout history. Here's a short list:

• Automobiles killed the horse and buggy industry
• The cotton gin killed the slave industry in the Antebellum South (this was a good thing)
• John Deere invented the steel plow, which killed the farm hand industry
• The telegraph killed the Pony Express
• Thomas Edison invented the light bulb which killed the oil lamp industry
• The commercial aircraft killed the passenger train and passenger ship industry
• The transistor killed the vacuum tube industry
• The home PC killed the computer mainframe industry
• The cell phone is killing the landline phone industry
• Email and social media is killing the postal service
• The Home Depot and Lowe's are killing the handyman industry
• Online travel booking websites killed the travel agent industry
• Uber and Lyft are killing the taxi industry

Aside from the last three items on that list, here are a few other modern careers that will die due to technology:

• Electronics repair
• Wallpaper hangers
• The entire IT field
• Anything related to the publishing industry (did I mention I'm also a professional writer?)
• Anything related to manufacturing, especially high-tech stuff like semiconductors. 

All of these fields are well on their way to dying. Hell, I just saw an ad for an iPhone app 

So Real Estate is Different, Right?

The most difficult part of prognosticating the death of an industry is talking to people that are part of that industry. We all desperately want to believe we can keep doing what we're doing today that leads to success and get the exact same results forever. We usually acknowledge we'll have to make some adjustments along the way as our field evolves. Unfortunately, few people understand that some evolution will brutally wipe out all but the most adaptable. 

When we wake up in the morning, pour our cup of coffee in our "World's Best Agent" coffee mug, and look our our back window, we don't see a triceratops.

Yeah, dinosaur erotica is a thing

Why?

Most of the dinosaurs couldn't overcome the radical change that that led to their extinction. Simply put, they didn't have the means of staying warm. BAM! They're all dead. Except, of course, for the handful of reptiles that DID have a means of staying warm.

And that's the key - understand what's happening and identifying exactly what is needed to survive. But that requires A LOT of change. And people don't like change.

When I was a teacher, I realized the people that would thrive were the people that were making and selling the software that could replace teachers. I had no simple way of capitalizing on that without spending a huge amount of time and money learning an entirely new field. Instead, I opted to leave the profession. 

So back to real estate.

Having had discussions with a lot of people that were oblivious to the death of their profession, I can predict exactly how current agents (and brokers) will react to this... to the point where the reaction can be quantified:

• 2.5% of you figured this out months or even years ago, have already made alternative plans, and are already profiting handsomely.
• 13.5% of you realized this, but don't quite know what is needed to survive. Coincidentally, this is the group that erroneously believes there will be some "Jerry Maguire" moment where all you'll have to do is get back to the roots of the industry and you'll be fine. 
• 34% of you see the writing on the wall, but aren't quite sure how or why the industry is dead. This group is also susceptible to the Jerry Maguire fallacy. 
• Another 34% of you are ignoring the writing on the wall and blindly focusing on the properties you currently have in escrow, how many leads you're getting from the big portals like Zillow  and Boomtown without realizing Zillow is using them to learn how to make them obsolete.
• Finally, 16% of you are completely fucking clueless. You will be the first to die. 

When I first got involved in the field, I didn't quite understand the landscape. I knew some people made a lot of money, so I assumed the industry was relatively healthy. Being the research dork I am, I immediately started looking for ways to hack the system. Lots of agents seems to follow the exact same path. Some succeeded, most did not. I wanted to find a way to avoid playing that game. Turns out the answer is amusingly simple if you understand the nuances of human behavior AND you're not emotionally or financially invested in the current model of real estate. 

Along the way, however, I encountered A LOT of disturbing indicators that the real estate industry is well past the point of no return (I'll share those in the next post.) The industry as it has existed for years and years is precariously close to death. Like the teacher unions keeping the teaching profession on life support, the real estate industry is being kept alive by... can you guess? 

The answer is simpler than you probably think. 

In the next post, I'll share what's keeping the industry on life support. But make no mistake, the industry is already brain-dead. It's merely a matter of time until the pain of keeping it alive is greater than the pain of it dying.

For funsies, let's see if any of my readers can guess what's keeping the current industry afloat. If you have a good guess, leave a comment! 

Honestly, I really want to identify others that see the writing on the wall. Your situational awareness could be invaluable in the future. Specifically, that second "13.5%" group I mentioned earlier. 

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Be Yourself: The Most Ignored Advice in the World

Yesterday, I posted a review of Fredrik Eklund's excellent book "The Sell." In the first chapter, he discusses the idea of "being you." The problem with most salespeople (and the general population) is that we really do not like being authentic. It makes us nervous. People might not like the "real us." So we create a facade.

This is abundantly clear in the world of real estate. To date, I've found very few agents that seem to be comfortable being themselves. The vast majority seem to be conforming to what they believe a real estate agent is supposed to be. They dress the same, talk the same, and use the same channels to gain their chunk of their local real estate market. 

In his book, Eklund gives quite a few real estate-specific tips. Not surprisingly, I see a ton of agents copying him exactly. They assume because HE successfully implemented the tip, THEY will see the same results. Of course they do not because, fundamentally, they're not Eklund. Eklund's shtick works for him because he leverages his own unique traits. If we had a clone of Eklund, it would make sense to copy him exactly. Otherwise, it's a stupid strategy.  

One of my all-time favorite authors in Hugh MacLeod. In his excellent book "Ignore Everybody", which should be required reading for all creative types, hammers this point home throughout the book. From his "Gaping Void" blog (which is just a taste of the book's content):

"Piccasso was a terrible colorist. Turner couldn’t paint human beings worth a damn. Saul Steinberg’s formal drafting skills were appalling. TS Eliot had a full-time day job. Henry Miller was a wildly uneven writer. Bob Dylan can’t sing or play guitar.

But that didn’t stop them, right? So I guess the next question is, “Why not?” I have no idea. Why should it?"

All of these wildly successful people were wildly successful even though they kinda sucked at the skills their profession requires. They were successful because they discovered their own path, and that path mitigated their shortcomings. 

Back to Eklund. 

There's a good reason he makes his point in the very first chapter in the book. If you fail to learn this lesson, you will fail. Minimally, you will never fully actualize your potential. His quote sums the idea up perfectly:

"Every day - no matter what your station in or your line of work, - you are selling yourself. You. Are. Your. Brand. And. Your. Product. In business, it's important to know your product, but it's more important to know yourself and what you bring to the table. People trust what's genuine."

I personally embraced this advice years ago, and the positive effects have been overwhelming. The moment I stopped trying to copy successful people is the moment I started attracting a genuine audience. 

"But wait," you exclaim, "isn't it good to learn from those that are actually successful?" They continue "Why reinvent the wheel?"

Here's the key. Do not copy successful people. Instead, learn what they do and why it works for them. Then do some experimentation to test their methods using your own strengths. If an idea works, keep it! If it doesn't work? Abandon it and consider revisiting it at some point in the future. 

This self-experimentation is done to enhance your brand, not to define your brand. You have to be you. Find your own voice, then sing from the mountaintops!

For funsies, here's a few examples of me "singing in my own voice." Yeah, I'm kinda weird. But I have fun. And I've learned that makes for a killer combination when it comes to influence. Trust Eklund's advice. Trust my advice. Be yourself.

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Book Review: "The Sell: The Secrets of Selling Anything to Anyone" by Fredrik Eklund

Fredrik Eklund is a bit of a rock star in the real estate world. As one of the nation's top grossing agents and a star of "Million Dollar Listing: New York", Eklund is one of the most recognizable agents in the world. This gives him ample credibility as the author of "The Sell: The Secrets of Selling Anything to Anyone."

And I knew nothing about him prior to reading this book. 

Before starting the licensing process, I didn't pay attention to industry news. I also don't watch much reality TV. After reading the book, I just might add his show to my rotation. The book is that good. 

As the title suggests, the book is a basic guide to selling anything. While Eklund is involved in real estate (thus making the information even more valuable to real estate agents), he does an excellent job of generalizing the advice to anyone that's involved in the sales game. 

The book is broken down into three sections. The first section covers issues related to you as an individual, such as being authentic, identifying your motivations, how to look good, how to take care of yourself, and the basics of social interactions.

The second section covers topics like finding clients, persuasive communication, and basic negotiating.

The final section includes advice on recruiting team members, getting attention, and how to operate your business. All three sections combined create a surprisingly comprehensive collection of selling advice. 

I've encountered most of the concepts in psychology (one of my undergrad majors) or in other business books (from folks like Seth Godin, Chris Guillebeau, and the dudes that wrote "Rework.") I had ample opportunity to test the theories and ideas as a high school teacher. Nothing hones your selling skills like trying to make school engaging for 150 apathetic teenagers every day for two decades.

I digress.

Eklund's genius utilizes the same formula I've used in my own writing. He's entertaining, shares ample personal stories, and has a knack for distilling complex ideas in easy-to-understand language. Together, this makes the book an easy read. 

If I had a complaint, it wouldn't be about the book itself so much as how the book seems to be used. Eklund spends A LOT of time making the point that successful people follow their own path. They don't simply copy those at the top. Despite this, I see FAR too many real estate agents implementing the exact same ideas he uses as examples. As expected, those attempts at mimicry fall completely flat. 

Sigh. 

Based on the comprehensive information and easy-to-understand format, this book should be required reading for anyone new to sales in general and real estate in particular. In our office, this book will probably be THE foundation of our new agent training. 

Buy the book from Amazon by clicking this link!

Have you read the book? Share your thoughts in the comments section!

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The Greatest Hurdle to Becoming a Real Estate Agent?

My journey to becoming a real estate agent started approximately five months ago. I was sitting in a mall parking lot broiling in the summer heat (it was like 103° F outside) waiting to pick up some Uber rides. I had been using Uber to supplement the income I receive from writing projects. Normally I supplement that income with substitute teaching, but the job dries up during summer vacation. Anyway, the summer heat sucked. I was scrolling through my Facebook feed and I came across a post from Adam, one of my teammates from my mma gym. My friend (and another fellow teammate) Damian was looking for a new agent to join his growing agency. I figured "What the Hell, why not?"

Fast forward five months. I took the required classes. Passed the salesperson test. Now I'm just awaiting the approval of my application to the state bureau of real estate. Prior to deciding to take this journey, I did a little research on the profession. Apparently about half of all new licensees do not make it to their first anniversary before leaving the profession. That's a shockingly high number.

It also explains the sheer volume of "recruitment" letters I've received since the state announced I was taking the test (which must somehow be a public record... thanks California.) Interestingly, these letters aren't of the "apply to work with us" so much as "this is what we can offer you; PLEASE JOIN US!!!!!" The tone of the letters makes the point obvious - "recruiting" isn't a culling process to identify the best candidates. "Recruiting" consists of throwing as much pasta against the wall as possible and hoping something sticks... which is a tell-tale sign there are a whole lotta people that wash out.

So what's the big problem? Why do so many people fail? 

As it turns out, the issue is simple. Most people fail because they run out of money.

Even though the education, testing, and licensing for real estate is relatively inexpensive compared to other professions (it should cost less than $2,000 or so), it's extremely difficult to make money in the beginning. It takes time to break into an established market, make a name for yourself, and begin building a client base. As a real life example, I met a teacher who's spouse is a real estate agent. This agent has been an agent for three years. They've sold exactly zero houses during this time. None. Nada. The agent lives entirely off their spouse's teaching salary. If it weren't for that salary, this agent would have (and probably should have) washed out of the profession within the first year because they would not be able to afford to live. This problem is, without a doubt, the biggest obstacle new agents face.

Me? I'm incredibly lucky in this regard. I already have two sources of passive income from the aforementioned books and affiliate advertising on my various blogs, I can still work as a substitute teacher, and my wife has a full time job. On top of all that, my agency is generously (and wisely) set up to help us new agents weather this phase. Until we're licensed, we act as real estate assistants and earn income for non-salesperson duties. After being licensed, we're provided with leads to help us build that client base. All of this, coupled with a rather minimalist lifestyle, adds up to a great formula for surviving that income chasm. 

My Advice

If I were advising people that were interested in a career in real estate AND they wanted advice from someone that's going through the process currently, I would offer the following tips:

• Save Money! This is a biggie (and the one I really failed.) Having a repository of funds to pay the bills would go a long way to bridging that early lull in income. At a minimum, I would recommend saving enough to cover three to six months of expenses, and ideally have enough savings to cover an entire year. 
• Develop passive or semi-passive income streams. I did this in lieu of the big savings account, but the idea would be to combine these two strategies. Passive income is defined as income that requires no time or effort on your part; semi-passive refers to income that takes very little time or effort. There are a million possibilities here that goes well beyond the scope of this particular article. Google it.
• Don't quit your current job. This one is a little controversial because any amount of time spent working on anything besides real estate will, in all likelihood, slow your development as an established, successful agent. However, it adds a ton of security you wouldn't have otherwise. If the previous ideas are not feasible, working another job would be an undesirable but effective solution. Ideally, you'd want to be able to work this job during times that does not interfere with your work as a real estate agent. 
• Have a plan to develop leads. Leads are the lifeblood of a real estate agent. Again, there are a million ways to generate leads, which goes beyond the scope of this article. Without leads, though, you will fail. Do research and develop a plan. 
• Live frugally. It's far easier to spend less money than it is to make more money. Curtail excess spending. Eliminate debt. Make a budget. avoid major purchases.
• Pick your agency wisely. As I alluded to earlier in the post, some agencies are ideal for new agents. Most are not. Any agency that gives you the opportunity to earn income without having to actually sell a house is probably going to be better than an agency that's just going to throw you to the sharks. Some may offer an actual salary. Others, like my agency, act as a team and pay for doing various administrative tasks. Agencies that provide leads can also be a huge boost to new agents as it helps develop that all-important client base. 

If you're a new agent and you follow these steps, odds are excellent you'll avoid becoming one of those 50% of new agents that "flunk out" of the profession. 

Current long-time realtors - do you have any advice? 

Real Estate Salesperson Test Prep Review: Pocket Prep

For the last few weeks, I've been preparing to take the California real estate salesperson test. I've used a few different materials, including my textbooks from Kaplan, some Youtube videos, and a wide variety of free online practice tests. Over the last week, however, I've gravitated to one exclusive resource - Pocket Prep's California Real Estate Brokers & Salespersons app for my Android phone. 

This app has been nothing short of amazing. It features a 500 question test bank covering all facets of the subject areas covered on the test, including:

• Contracts
• Financing
• Laws of agency and fiduciary duties
• Practice of real estate and disclosures
• Property ownership and land use controls and regulations
• Property valuation and financial analysis
• Transfer of property

The app allows you to set up practice tests of varying length (I choose 10 questions) and offers explanations for the answers. When a test is completed, you're given an overall score and a score for each subject area. Under the "test history" section, you can view all of your test results both overall and by subject area. That's handy because it gives you insight to the areas that need the most work, which can then be used to tailor the practice tests. The app also features a question of the day and |tips and tricks" section, both of which can help supplement the practice tests. 

I initially used the free version with a limited question bank, but soon purchased the full version. At $25.99, it was the most expensive app I've ever purchased. However, it was the best value of any of the study prep options I researched AND far surpasses all the free resources available on the Interwebz. 

Having spent years reviewing running gear on my Barefoot Running University blog and "adult" products on my Sexpressionists blog, I'm well-versed in the review game. That includes noting the positives and the negatives about any given product. This app presents a weird situation where I can't note any serious negatives. While it would be great if it were cheaper, it's still a far better value than all the other test prep shit floating around out there. The versatility, customization, and thoroughness of the app make places it in a category by itself. I HIGHLY recommend this app to anyone studying for the real estate salesperson test.

Some more screenshots:

The test question format

Individual test results

Cumulative test results... yes, I need work. ;-)

Settings

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The Saga of My Hot Tub: A Study in the Difference Between Real and Personal Property

In real estate, the terms "real" and "personal" property come up regularly. What exactly do they mean? REAL property is land and everything permanently (more or less... Father Time has a tendency to assure nothing is really permanent) attached to a piece of land, like buildings, trees, or that maypole you  installed that was inspired by the local Renaissance fair. 

This is where the term real estate comes from. Sometimes things like crops are considered "personal" property, but that's another topic for another day.

Personal property, on the other hand, is anything that's not real property. This almost always includes everything that isn't real property. Got it?

Excellent!

The Hot Tub Saga

Way back at the turn of the millennium, I was a young high school teacher in Michigan purchasing my first house with my practice wife (aka "first marriage".) We had hired an experienced agent as our buyers' agent to help us find our dream house. After searching through the MLS (that's the database we use to list houses for sale), we identified about seven houses that met our criteria. 

We toured all seven. None were spectacular, though one house was interesting. It was a 2,200 square foot house that took up the entire lot. The only other space not occupied by the house was narrow driveway on one side... which happened to be the opposite side of the house where the door was located.

It was one of the dumbest designs ever.

Anyway, since it was the cream of the crop, we were preparing to make an offer. Hours before submitting the offer, another house came on the market. It was owned by a couple that both taught in my same school district. We decided to hold off on the offer for a day and look at this new house. 

We were glad we did.

The new listing was spectacular. It was filled with ornate, turn of the century woodwork and thick oak floors. We fell in love instantly. The best part? It had a hot tub on the deck in the back yard. In Michigan at the time, that was a bit of a rarity in our price range. I absolutely love hot tubs, especially those that aren't communal. What can I say; I like being naked. The hot tub was listed as a feature of the property on the MLS, so we assumed it was part of the deal. It looked something like this:

We decided to write an offer for the new listing. Because we had already looked at every house in the price range, we knew this was undoubtedly the best of the best, so we wrote a full-price offer. The sellers were ecstatic to receive a full-price offer (in a buyer's market at the time) in a matter of hours. In fact, they were so excited, they decided to submit a counter-offer for the same price but without the hot tub.

Needless to say, I was pissed. I wanted that hot tub, damn it! Our agent went to bat for us by arguing that the hot tub was a fixture, which is personal property that's attached to the real property, much like a furnace or dish washer. They were arguing that it wasn't a fixture because it was only wired to the house, not actually secured to the deck. 

Their agent, sensing this particular house was the best in the price range given our immediate interest, wisely advised the sellers to wait and see if more offers would be coming in.

We were kinda screwed. 

Even though the hot tub should have been included given it was included in the MLS listing, we knew fighting for it legally would be an expensive endeavor that may cost us the house. We relented and allowed them to exclude the hot tub from the offer because we really wanted that particular house. The sellers, feeling bad for the whole issue, let us "keep" the hot tub for a few months before moving it to their new house. 

The Lesson Learned

The loss of the hot tub taught me an important lesson about the difference between real and personal property, and what is considered a "fixture" that would normally be included in the purchase agreement. The rule of thumb: If it's permanently attached, it's real property. If it's movable, it may be considered a fixture in which case it's negotiable (like in the case of the hot tub.) If it's not attached, it's considered personal property. If it's considered personal property, it could still be included in the purchase, but I would recommend the sale be executed separately from the real estate deal. 

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San Diego: Eleven Reasons Why I Love It!

A few years ago, my wife and I decided to quit our high school teaching jobs in Michigan and travel the country in an RV with our three children (at the time ages six, five, and two) and our niece. We were conducting running clinics in conjunction with Merrell while also promoting my two books, The Barefoot Running Book and Never Wipe Your Ass with a Squirrel. This'll give you an idea:

Anyway, our travels lasted about two years and covered approximately 50,000 miles. We visited forty-six states and spent significant time in about thirty. We got to see pretty much every major city and geographic region. After all of our travels, we were free to settle anywhere.

We chose San Diego.

Why? San Diego County was, without a doubt, the single best area we visited. We liked the area so much, we spent about a month here during the travels. Having lived here for three years, it's easy to see why this is such a desirable relocation destination. Here are some of the things that caused us to fall in love with the area.

1. The beaches. Sand. Surf. Sun. Bikinis. 'Nuff said.
2. The mountains. When we first moved here, we were still very active in the trail running scene, and San Diego has countless great trails covering all kinds of terrain. We could train for pretty much any kind of race without leaving the county, including moderate elevation between four and five thousand feet. Since we don't run as much, we still appreciate the sweet mountain views we have from our living room. 
3. Mexican food. We love food. We really love Mexican food. We've spent significant time in Texas, New Mexico, and Arizona and can safely say San Diego's Mexican food blows the rest out of the water. 
4. Our gym. San Diego is known as a hotbed for mixed martial arts and Brazilian jiu jitsu. My wife and I train both at one of the oldest in the city - the San Diego Fight Club. It's a great way to stay in shape, build confidence, and let off some steam. 
5. The weather. Specifically, the sun. Back in Michigan, we had constant cloud cover from the Great Lakes (54% of days were mostly cloudy.) It sucked. Here in SD? We get FAR more sun (32% cloudy), especially away from the beach and the "marine layer" (what the rest of the country calls "fog.") And the temperature? At the beach, it's pretty much always between 65° and 75°. If you want moderate heat and more sun, go to the inland valleys. Want cold? Go to the mountains (it snows there!) Want extreme heat? Go to the desert east of the mountains. 
6. The diversity of people. Especially the hotties. Around half of San Diego's population came from outside California. It creates a TON of diversity, which gives the region a strong multicultural feel. And the hottie part? We have miles of world-class beaches, tons of outdoor exercise opportunities, and a huge military population. All that adds up to an exceptionally fit population, which makes trips to the beach even more enjoyable. 
7. Very few bugs. In Michigan, we had seasons such as "black fly season", "mosquito season", and "deer fly season." If you went outside and there wasn't snow on the ground, you could count on being inundated with some sort of flying pest. San Diego, given how little rain the area receives, has very few insects. This last year? I killed one house fly. All year. If you hate insects, you'll love San Diego.
8. The casual dress and attitude. Flip-flops and board shorts every day? Yes please! This is a function of the general easy-going attitude that dominates the region. The pace of life in San Diego is a lot like Hawaii... it's exceedingly stress-free.
9. Ample entertainment possibilities. We don't do a lot of traditional "tourist" adventures, but San Diego has a wealth of activities. Sea World, Legoland, water parks, museums (including the USS Midway), piers, festivals, farmer's markets, strip clubs, wineries and breweries... you name it, San Diego has it. 
10. East County is a lot like the Midwest, but more laid back. So my wife and I both grew up in relatively rural areas with a strong small town feel. The East County area sandwiched between the inland valleys and the mountains has a distinct rural feel while still providing all the amenities of the urban lifestyle. Specifically, we get a lot pickup trucks, tattoos, and country music. 
11. Close to LA, but not too close. Before spending time in the area, I assumed Los Angeles and San Diego were basically the same city. Damn, was I wrong. Each city has its own unique vibe. LA is busier, has more traffic, and feels a lot more like urban sprawl. San Diego is more laid back, easier to navigate, and slightly more conservative. LA feels like Dallas, Houston, or Nashville; San Diego feels like Austin or Seattle. 

There you have it. Eleven reasons why we decided to stick around San Diego when our travels came to an end. 

San Diego peeps - why do YOU love San Diego? Leave a comment!

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Passing the Real Estate Salesperson Test

In my last installment, I discussed the process of studying for the California real estate salesperson exam. In this installment, I'll tackle the actual taking of the test. As I discussed in that last post, the test is computerized, consists of 150 multiple choice questions, and has a three and a half hour time limit. A score of 70% (105 questions) or better is required to pass. Since it is a qualifying test, you don't get rewarded for scoring higher than 70%. Hell, they won't even tell you your score if you pass.

With that in mind, I'll propose a 24 hour plan that, once executed, will dramatically increase your chances of passing the test the first time. I'm working off the assumption that you've a) successfully passed all the required coursework and managed o retain or study enough to actually be able to answer 70% of the questions correctly, and b) read the "Understand the Psychology of Test Writing" section in the previous post. 

Before I jump into the actual plan, there are a few prerequisites:

• Know progressive relaxation. This is a cool trick that completely relaxes your body in a matter of minutes. Relaxation is important because anxiety reduces your ability to recall information you've stored in long-term memory. The idea is to lie down, slow your breathing, then systematically clench and relax muscle groups around your body. With only a few trials as practice, you'll get good enough to be bale to go through the progression while sitting in your seat immediately before you start the test. A more detailed guide can be found here. 
• Irrational self-confidence. Back when I was a teacher, the power of expectation never ceased to amaze me. Simply telling a kid "Wow, you're one of the smartest kids I've ever had in class" immediately before taking a test would result in anywhere from a 10 to twenty percent jump in their score over their average, all because it boosted their self-confidence. You can do the same trick by repeatedly telling yourself "I'm a great test-taker!" The funny thing? You don't even have to believe it.
• Cramming. Cramming for tests gets a bad rap, probably because teachers assume that last-minute cram session is all the studying their students do. But cramming really does work. The trick is knowing exactly what to cram and when to do it, which I'll discuss in a minute. 
• Caffeine or no caffeine? Caffeine generally helps increase attention and facilitate memory recall, but it can also increase anxiety. My rule of thumb: Test with the exact same amount you used for studying, no more, no less. That idea is based on the concept of state-dependent learning, which I discussed in the previous post. 
• Bootstrapping and retrieval cues. "Bootstrapping" is a testing term that refers to the process of answering the easiest questions first, then using them as memory retrieval cues for the more difficult questions. The real estate salesperson test lets you jump around, so this is a valuable strategy. 

The Plan

The day before

We'll start our test-taking plan the day before the scheduled test date. This is the most important study day you'll have; take the day off. The goal for this day is to review ALL of the material that'll be on the test and identify the stuff you definitely know, stuff you kinda know, and the stuff you do not know. I accomplish this with two legal pads, one labeled "KINDA" and the other labeled "CLUELESS." There's no need to make a note of the stuff you already need to know. 

Start in the morning and work in blocks of 15 minutes with 15 minute breaks. During the study blocks, either review the summaries of each chapter in the "real estate principles" book OR go over practice questions. When you encounter a question you can't immediately answer, add it to one of the two legal pads depending on your familiarity with the definition or concept. 

The purpose of the blocks (versus one huge study session) is to prevent the serial position effect, which happens when we remember things at the beginning and end but not in the middle. By breaking up the sessions with breaks, we can dramatically increase our capacity to encode (memorize) all the material. 

Once you get through all the material, review your "KINDA" legal pad. Just by virtue of studying all of the material, some of it will be committed to memory. Place a check next to the stuff you definitely know, then review the remaining material.

Next, go to the "CLUELESS" legal pad and do the same thing. Check the things you definitely know, then add the stuff you kinda know to the "KINDA" legal pad. Now review the stuff you do not know.

Repeat this process until you know everything OR run out of time. At the very end of the test session, review the "Understand the Psychology of Test Writing" section of the last post. Ideally, go to bed early enough to allow for seven to nine hours of sleep. 

As far as other logistical considerations, make sure you drink plenty of water and eat several healthy meals. Avoid extremely greasy foods, food with a lot of fiber, excessive alcohol or other drugs, and rigorous exercise. I also like to know exactly where the testing will take place, so I map the route via Google Maps and estimate the travel time with traffic. I also gather all required documents and other materials the night before, like forms, identification, an approved calculator, etc.

The day of the test

Wake up several hours before the test. Go through your normal morning routine (breakfast, showering, dropping a deuce... whatever.) Skim both legal pads. By now, you should have far more than the minimum required 70% of the material committed to memory... this review is just icing on the cake. Just like the previous night, review the "Understanding the Psychology..." section. 

Once you finish reviewing, I found a short, relaxed walk provides just enough distraction and light exercise to put me in the right state of mind before leaving for the test site. Dress in comfortable, quiet clothing. 

Gather all the required documents and other materials, your two legal pads, and anything else you might need. Drive to the site. Since most testing sites have strict rules on what you can and cannot bring into the testing site, I prefer to arrive about 30-45 minutes before the report time, then do a last-minute cram session in the parking lot. Weird, but it works. 

Once you enter the test site, do all the required logistical stuff like filling out forms, signing in, turning off your phone, etc. When you're in your seat and ready to take the test, go through the progressive relaxation routine one last time, then repeat to yourself "I am going to ace this test!" repeatedly until it's time to begin. 

Once the test starts, use the bootstrapping technique to answer all the questions you definitely know, then complete the questions you're pretty sure you know. If you studied correctly, you should already have more than 70% correct... but don't give up just yet. Hopefully the questions you did know provided enough information to allow you to answer the tough questions. If not, apply the multiple choice principles from the last post. 

If time allows, review all of your answers. I like to do this on the off chance I made a mistake and marked the wrong answer. I almost always leave my first choice instead of second-guessing myself unless I have overwhelming evidence my initial answer was wrong, but your mileage may vary. I've found I tend to get answers wrong when I change them, but, according to our best research, this isn't always the case. 

Once you're confident you've done the best you can do, submit. Of course you'll have passed because, well, my advice is awesome! Save the dancing until you leave the testing facility. 

Once you've passed the test, next up is completing the application process, then you're well on your way to becoming a real estate tycoon!

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