How To Make Six Figures in Real Estate

The following is an overview of the book

How to Develop a Six Figure Income in Real Estate by Mike Ferry

Mr Ferry's bio: Mike began his career with Nightingale-Conant where he became National Training Director. He then made the decision to move into the residential Real Estate field as a sales person. After a career of selling homes, Mike decided the time was right to launch his own company. Four decades later, The Mike Ferry Organization became a $50,000,000 company with tens of thousands of clients.

Key point: Do you want to make $10/hour or $100/hour? (I realize this book is kind of old school but it still has useful concepts)

As the name of the book suggests Ferry wants to help you make big money in real estate. He calls it becoming a Superstar. He says you can hang around the office drinking coffee and make $10/hour or you can follow his system and make $100/hour. Keep in mind this book was written in 1993, so those numbers need some adjustment. Also, you might find a lot of Ferry's advice to be very basic. That's exactly why you should review this document often!! Fundamentals are a big key to success.

Ferry isn't fond of measuring success strictly through gross sales volume. Rather he believes you should focus on the annual number of transactions. The main benefit of measuring the number of transactions being income stability. To consistently hit your number, in terms of annual closes, Mike points out there is clearly one activity that's most important, prospecting. Unfortunately he says, “Real estate is a direct-sales job, and many agents don't realize that – or they aren't willing to do the prospecting work it takes.”

Mr. Ferry puts it very bluntly, on page four, when he says, “Superstars prospect a minimum of three hours every day.” Mike repeatedly quotes the statistic that you need to talk to at least 100 people to get one deal, hence the daily prospecting. He is also very big on seller motivation. Ferry believes it is very important to do whatever you can to establish the motivation a seller has to sell. He advises that you only work with very highly motivated sellers. Otherwise, he says, you'll be spinning your wheels and wasting time. And, as you may have guessed, he suggests focusing on prospecting for seller listings. You get a much better return on your time and money if you focus on acquiring seller agreements. For example, “Studies show that 50 percent of the sellers are going to buy a house in the same area.” Thus, selling listings are fertile ground for buying clients.

Mike says that you need to stay in the field and out of the office. The coffee drinkers that sit around the office are worth about ten bucks an hour. To make good money you need to stay out of the office and be looking at property every day. This will keep your focus in the right place and will keep you aware of the inventory on the market. This includes going on company caravans.

To perform at a high level you need good time management. Ferry says, “The person who controls your time controls have much money you make.” Don't sit around the office engaging in politics, listening to the whiners that don't make any money. Do everything you can to stay focused on generating leads and closing deals. Once you have signed contract, turn it over to a closing officer and move on to the next deal. Mike adds that he thinks it best to stick with the same support staff, such as the closing officer, time and again.

If you're required to do floor time he reminders you to stay productive during that time and turn the calls into your leads when appropriate. In order to stay fresh and avoid burnout Mike insists that you take two days off per week and take a one hour lunch each work day. Ferry is a big advocate for personal development and fitness. To maintain the energy needed to perform he recommends adopting an exercise program and working out at least three times a week. He is also very big on reading and even gives a list of suggested books.

Back to the world of prospecting, Mike says it the backbone of your business. He states the old (true) cliché that sales is a numbers game so you're going to need to talk to a lot of people. Ferry says, “You go out to find business instead of waiting for it to find you. High-impact prospecting means that you'll be talking to a lot of people daily.” He recommends cold calling by knocking on doors.

He advises that while prospecting you take a “no” quickly and easily and move on. It is literally as simple as knocking on a door, confirming that the person you're talking to is the owner and asking them if they plan on selling or moving any time soon. Working on such a volume, it is recommended that you have and use a script. If you feel uncomfortable or have a difficulty memorizing your script, Mike suggests using what he calls Trigger Cards. These are little index cards that have your script written on them. During a cold call Ferry says you can literally read straight from the trigger cards, if you must. He says it's much better than saying something stupid or ineffective.

A helpful perspective on prospecting is to, “Go for the no's.” Since the majority of the people you talk to will not have a need for, or interest in what you're selling, it's a good idea to act as though you're collecting no's. Collect enough no's and the yes's will come. “How often should you prospect? Every day. If you're willing to talk to 100 people a day, then you're worth $100 per hour.” And to do so, “Cold doors are a superior method of prospecting.”

Open houses, Ferry says, are generally a waste of time unless you're focused on prospecting while holding the open house. A lot of the people that come to the open house are good prospects. He also touches on the concept of farming. He says, “If you aren't getting 20 to 25 percent of the business in that area, you're wasting your time. In terms of productivity, you'd be better off making cold calls.”

People that have been in real estate for a while are probably familiar with the fact that Mike Ferry loves to prospect FSBOs and expired listings. He says, “These people are the only prospects in the world who tell you up front that they want to sell their property.” In other words, they have already qualified themselves as real prospects. What's more, Ferry quotes the National Association of Realtors as stating that 94 percent of all FSBOs eventually list with a realtor and, “You don't have any competition when prospecting FSBOs.”

A big part of Ferry's modus operandi is seller motivation. To discover seller motivation you must qualify all prospects and that simply means asking questions. “Qualifying is nothing more than determining the motivation of a buyer and his or her ability to fulfill that motivation.” Don't list the property if it isn't going to sell in a timely manner. Mike says, “You list property to sell, not to feather your inventory.” Also, “There are too many good ones to waste your time on the bad ones. If you're out there prospecting every day, you're going to come across more buyers than you could ever handle.” And when you have lots of prospects you can choose to work with the motivated ones and say goodbye to the time-wasters.

I will now list Ferry's qualifying questions. He advises that you type them out on a letterhead and make copies. This way you can sit down with a prospect and fill the thing in. This will help keep you from forgetting questions. Furthermore, prospects are more likely to answer every question to help you complete the form. Some of the questions might be redundant or obvious so he says to simply use common sense.

Here are the questions:

– Is this your first visit to our city?

– Where are you from?

– How long have you folks been looking for a house?

– How many children do you have, and what are their ages?

– Where do you live now?

– How long have you lived there?

– Do you own or rent?

– How is the resale market in your area?

– Where are you employed?

– How long have you been employed there?

– What is your position with the company?

– Have you seen any homes that you like?

– How soon will you be able to move if we find the right home?

– Oh, by the way, are you working with any other brokers in the area?

– How much time do you have to look at property today?

– How long have you seriously been looking for a home?

– How many bedrooms will you need?

– How much will you realize from the sale of your home?

– Will it be necessary to sell your home to buy the next one?

– If we find the perfect home today, are you in a position to buy it?

– How much of your savings will you be able to invest in your new home?

– What price range have you been considering?

– What is the most you can afford to pay monthly?

– What do you like about your current home?

– Describe your perfect home.

This last one serves many purposes, the main one being a closing tool. Once you've found a home that fits their criteria you can go down the list and cross off each item. When you're done you simply ask them to sign the contract.

Ferry has a very firm rule about qualifying. He says, “If a prospect refuses to answer any of the qualifying questions, don't show him or her property! It's that simple.”

Here are some of Ferry's suggestions when it comes to showing property:

– Always show your personal listings first.

– Don't take anything with you except the contract.

– MMFI – Make Me (the buyer) Feel Important

– Let them decide if they want to buy or not. Meaning, always ask if they want to buy and never

presume. This means ask at every single property.

– Call first before showing property.

– Ask questions in the car. (to keep them thinking about buying)

– If your buyers are motivated to buy, keep showing them property until they do.

– Show buyers houses in groups of three. Then attempt to close. Too many choices creates indecision.

– Select the scenic route to the home. (to show the amenities)

– Don't oversell the house before showing it to the buyer.

– As quickly as possible, separate the lookers from the buyers.

– Always park across the street from the house.

– As you approach the front door, say to the buyers, “Let's look at this home as if it were vacant.”

–Once inside the front door, tell the buyers, “Let's make ourselves at home. I'm just here to answer questions.”

– Keep the buyers together inside the house. (keeps you in control)

– Try to save something good for last, but show it to them first. (so it's first and last)

– Get the customers emotionally involved with the house.

– Be enthusiastic.

– Let buyers take notes.

– Always take one car, eve if it's theirs.

– Never make a statement, only ask questions. (information is powerful)

Ferry also recommends that you ask the buyers to buy at every single piece of property. Let them decide. You never know what they'll say. And always remember, every buyer has champagne wishes on a beer budget.

When it comes to listing property Mike suggests that you always have a contract with you. Be prepared! Ferry is not a fan of obsessing over rapport, saying that you don't need to be their friend to sell their home. “You're not a friend they have invited over to play bridge. You're there to list their property for sale.” As always, Ferry recommends the use of trigger cards if necessary. Have your script written down so you stay focused and effective.

In chapter seven Mike talks about the Plan of Action, this is the steps you and your firm are going to take to sell the home. He says, “The real value of the Plan of Action is as a closing tool.” What happens if the sellers are willing to list with you, but they want you to cut your commission? Take out the Plan of Action and ask them what services they want cut!

The following is Ferry's suggested Plan of Action. Keep it mind that you can adjust it, especially considering we're in the age of the internet.

Our company objectives are the following:

1. To get as many qualified buyers as possible into your home until it's SOLD.
2. To communicate the results of our activities to you weekly.
3. To assist you in getting the highest possible dollar value for your property with the least number of problems.
4. To constantly look for the best possible methods of exposing your property to potential buyers in the market.

The following is our company's plan for marketing your home:

1. Submit your home to the Multiple Listing Service.
2. Submit copies of your listing to our company's sales staff for their waiting buyers.
3. Tour your home with my office.
4. Promote your home at the real estate board meetings for the maximum exposure to the other agents in the area.
5. Develop a list of features and benefits of your home, for the cooperating agents, to use with their potential buyers.
6. Suggest and advise you as to any changes you might want to make in your property to make it even more marketable to buyers.
7. Constantly update you as to any changes in the market.
8. Knock on 50 doors in the surrounding area.
9. Create additional exposure through a professional sign and lock box.
10. Hold an open house when possible.
11. Advertise when necessary.
12. Prequalify, when possible, all prospective buyers.
13. Make you completely aware of all the various methods of financing that your buyer may want to use.
14. Have the cooperating brokers in the area tour your home.
15. Provide for the cooperating brokers, on a monthly basis, a list of features and benefits of your home.
16. Follow up with all the salespeople who have shown your home for their response.
17. Assist you in arranging interim financing, if necessary.
18. Deliver a copy of the multiple listing and all published advertisements for your approval.
19. Represent you upon the presentation of all contracts by cooperating brokers and help you negotiate the best possible price and terms.
20. Handle follow-up and keep you informed, after the contract has been accepted, on all mortgage, title and other closing procedures.
21. Deliver your check at the closing.

Submitted by:                                              Your Acknowledgment:

_________________________             __________________________________

Now, on to objection handling. The fact of the matter is you will only encounter a handful of different objections. In other words, everyone will basically voice the same set of objections. To handle them, you first need to understand the difference between an objection and a condition. A condition is a fact you can do nothing about. If a buyer has bad credit and can't qualify for a loan, that's a condition. Shopping outside of the buyers financial abilities, etc. creates conditions.

Once you have confirmed that what you're dealing with is an objection and not a condition, please understand that objections are a great thing. Ferry tells us to embrace objections because they indicate interest. If the client doesn't raise an objection, they aren't really interested. Ferry says that the first step to handle an objection is to say, “I understand.” (or “Fine.”)

Here's the list of Ferry's seller objections:

– I want to give you only a 30-day listing.

– I've never heard of your company.

– I'll save the commission by selling it myself.

– I will list high; I can always come down later.

– I don't want to sell until I buy.

– I must check with my banker [lawyer, etc.]

– I want to think it over.

– I have a friend in the business.

– You're company is too small [big].

– Another company said that they could get me more money.

– I don't want to sell my property VA or FHA.

– I don't want a sign on the property.

That's a total of twelve objections. The idea is to have a scripted response for each objection and have that script memorized. This isn't really very hard. I believe you'd do it if you knew the real value of being able to overcome the minor resistance of an objection. Here's a couple of examples from the book.

To the objection that another agent said they could get the seller more money, you can say, “I understand. Many companies list properties at one price and expect to sell them at a completely different one. That's probably very disappointing to the seller, wouldn't you agree? Let's review our CMA together and again look at the prices, but before we do, could you review with me where you're moving to?”

And, to the objection about having a friend in the business you could say, “I understand. It's difficult not to deal with friends, but let's take a look at the services that the two companies offer. What you're really concerned with is good service, correct?” (Refer back to the Plan of Action)

As a side note I'll tell you a personal story about how even waiters use scripts. When I was younger I used to wait tables at a restaurant in Newport Beach, California. One of the requirements was that we had to use the same (house-written) script with all the tables. In order to get serving shifts we had to pass a test with a manager proving that we had mastered the script. What's more, we could be fired at any time if we failed to use the exact wording. Quite simply, restaurants like these understand that intentionally scripted words are more effective than leaving things to chance. It's the reason so many restaurants take your dessert order when they take the entree order, it flat out sells more. If you wait until the guests have eaten their appetizers and entrees they'll be less likely to order dessert.

Closing is an interesting phenomenon. It is studied at length and it intimidates a lot of salespeople. Ferry has a gnarly closing question that is very difficult to remember, it goes like this, “Will you sign the contract?” Of course, I'm joking. That fact is, if you do a good job (take the proper steps) closing is pretty straightforward. People that have to devote a lot of time and effort to closing haven't done their job in the beginning. If you have done a good job of qualifying the prospects closing is absolutely as simple as asking if they'll sign the contract.

But just to gratify the curious types I'll mention one of Ferry's closes, he calls it the Order Blank Close. In this close you simply refer to the blank contract and have the buyers/sellers help you fill it out. It is helpful to get the contract out early so the prospect sees it and becomes desensitized. When it's time to close, simply ask a question from the form and write their response down. For example, you start writing the prospects names down and then look up and ask what the date is. If they tell you, they've bought, they're ready. If they raise an objection you will need to clarify the objection, answer it and then go back to closing. That is, to filling out the contract. Keep it simple.