Real Estate Prospecting

This is an overview of the book

Real Estate Prospecting: The Ultimate Resource Guide by Loren Keim

Keim's bio: Mr. Keim is a graduate of Lehigh University and owns a Century 21 franchise in eastern Pennsylvania.

Key point: You will not make a great living at any company waiting for the phone to ring.

Mr. Keim's story is a pretty interesting one. During the mid-1980's, while he was in his early 20's, Keim made a bunch of money because the market was super hot. Being young and naïve he thought he was really something special. He also thought the market would stay like that forever. So he convinced his father to spend his life savings buying into Century 21. Not too long thereafter the market turned and his father found himself facing foreclosure.

Keim mentioned the old cliché that necessity is the mother of all invention. With the prospect looming that his father could lose his house, and it would be Loren's fault, Keim realized he badly needed to invent some new clients. He knew the one way to do that was by prospecting. Loren was indeed able to right the ship and things are going just fine for him these days. This book is his attempt to pass along what he learned and what he teaches to his team.

Keim says that to prospect is to select a target audience and let them know you have something to offer. According to Loren, “In the Real Estate Industry, as in most sales professions, prospecting is a dirty word.” He says that far too many agents enter the profession and think they can sit and wait for the phone to ring with people responding to advertises, direct mail, etc. Keim warns, “You will not make a great living at any company waiting for the phone to ring.”

“Prospecting, however, is not simply picking up the phone and calling possible buyers and sellers. To be effective, prospecting must be a consistent planned process. Your goal is to create a steady flow of business into your pipeline that will result in above average income.” Ultimately you're going to want to implement both short-term and long-term prospecting plan. But, I'll get to that in a minute.

First you want to select your target market. As you know, the real estate business in highly competitive and the best method you have to succeed is through specialization. If you simply want to list and sell any house you come across, you'll find yourself right in the thick of tons of competitors. Even to say that you focus on existing single family homes is not specific enough. Especially if you're fairly new or wish to seriously grow your business. Keim recommends selecting two markets and it's best if they're counter-cyclic. By selecting counter-cyclical markets you will be hedging against fluctuations in the marketplace. The two specialties that Mr. Keim first selected were historic homes and bank foreclosures. The reason being that historic homes do well in up markets and obviously foreclosures increase as the market goes down.

You'll want to do research on your targets so that you'll be knowledgeable and can position yourself as an expert in the field. Keim says that in this profession, “Your inventory is your portfolio of properties for sale or for lease. You are marketing someone else's product and being paid for that service.” This is clearly where it helps to be an expert in whatever markets you choose to target. Also you're going to want marketing skills. One of which is to understanding of the power of an expert.

“My suggestion is generally to start with either calling or knocking in neighborhoods where your firm recently sold a home, or to call through expired listings,” says Keim. Cold calling, over-the-phone or in-person, is what Keim calls a short term prospecting method. Long term prospecting involves centers of influence, advertising, farming, etc. The thing to consider is that long term prospecting takes 12-18 months to bare any fruit. For any income short of that time-frame you will want to implement short term prospecting. People that are new to the business, or even established agents that want to generate additional commissions in the near future, should utilize short term prospecting.

With short term prospecting (cold calling) there exists powerful ratios that Keim recommends you measure. For example, it will take a certain number of cold calls to get a lead, and a certain number of leads to close a sale. Once you establish what you ratios (percentages) are, you will be able to predict your income with astounding accuracy. If you're new to the business, Keim recommends asking your manager for help in guessing approximately what your numbers will be. This will help you know how many cold calls you need to make.

A thorough list of the various methods that you can use to contact prospects is as follows:

• Door knocking – the most dreaded but often the most effective.
• Workshops and seminar – free and informative.
• Client gatherings or client parties – you're the link between the guests at your gathering so inevitably they talk about you.
• Booth at events and trade shows – hasn't been successful from Loren.
• Direct mail – recipes, newsletters, testimonials, etc.

Keim is careful that we should offer something of value to our audience (prospects). When we offer something of value we, “lower the barrier of resistance a client has for calling you.” It is for this reason that Loren is a big advocate for advertisements that look like news articles. Useful information is more effective than ads that are cute or endearing. Cute and/or humorous ads do much to build name recognition but they do nothing to get the phone to ring.

If you're terrified of writing advertisements, or news worthy articles, Keim recommends you go to gooder.com where Dan Gooder and his team have various "free" reports which are available to you for a fee.

Regardless of the method you use to generate a lead, Keim says the real intention is to place each person into a system of follow-up that will build familiarity over time. Sending out useful information helps to build a relationship with your prospects. It is much like what I'm doing with these book reports. The great Zig Ziglar said something to the effect that if you help enough other people get what they want, you can have what you want.

Loren writes, “One of the primary differences between successful mega-agents and everyone else is that mega-agents create systems into which they plug prospective clients that allow follow up with those clients.” To do this most effectively you will need some sort of CRM such as ACT or Top Producer. Business and sales are very much about timing. Your follow-up system (also commonly known as “dripping”) is what will keep you in front of your prospects. And, when the time is right, you stand a good chance of getting their business.

Back to long term prospecting. One area that is vital is your sphere of influence. These are the people you know. For obvious reasons, this group should be constantly expanding. Your goal is to keep these people aware of what you do and consistently ask for referrals. It's important to remember that you don't want to be pitching these people every time you contact them. That would be a recipe for destruction. Rather you want to pleasantly, yet persistently, drip on these people over time.

Also, it's a good idea to host client gatherings as another form of long term prospecting method. This could include everything from a movie night to a welcoming party for clients that are new to a neighborhood. And, of course, farming is probably the most famous long term prospecting method. As you probably know, farming is where you select a geographic, or demographic, group of people and drip on them until you are the "go-to" realtor for these people.

Keim refers to Tom Hopkins and how Mr. Hopkins would deliver pumpkins to his farm every Halloween. Keim Realtors tried the pumpkin idea but it didn't work too well for them. Instead every year he and his team deliver American flags. Though he doesn't mention it, I have to imagine he's talking about the fourth of July. Of course, after pumpkins or flags, you need to follow-up with door knocking. Keim says, “Within 24 to 36 months of consistent contact, you should achieve a market share of 25-50% of the homes in that market.”

The short term prospecting methods include:

• Cold calling
• Door knocking
• Vacant lots
• Expired listings
• For Sale By Owner

As the name suggests, short term prospecting doesn't need to take much time in order to create clients. Loren explains, “Picking up the phone and calling people takes almost no time, and can generate immediate clients.” If you are reading this overview, there's a good chance you've spoken with me before. Keim prefers a simple and direct approach on the phone. This is where you call someone, identify yourself and simply ask if they know anyone (including themselves) who is thinking about selling their home.

Door knocking is a great option but Loren says, “Many agents use the 'mean people' excuse for not door knocking. The truth is that you will find far more friendly people than unfriendly.” Door knocking is tremendously useful in the neighborhood of a home you have just listed or sold. For maximum effect, you will want to touch each door at least three times. The first time is right after you list. The second is to invite them to the open house. And the third time is once the house sells. Again, the entire time, you're not just knocking for your health, you're looking for prospects.

With regard to vacant lots Keim suggests, “Search your local tax records for vacant lots. Call the owner and ask them if they're planning to build on the land or if they're planning to sale the land.”

“Although the expired listing market can be a very lucrative source of business, it is one market where you will run into a lot of competition from other agencies and other agents,” according to Keim. As you undoubtedly know, you're not the only one who has access to expired listings. Once a listing expires the home owner suddenly gets dozens of calls from agents. Half of these callers will say exactly the same thing because they've been trained by Mike Ferry or Floyd Wickman.

Stopping by the house that has expired is better than a phone call. There's a good chance the home owner is upset because of his recent experience with a realtor. Offering guarantees in writing is one good way to get past this resistance. But remember not to go overboard and shoot yourself in the foot with these guarantees. Another option is what a couple of Keim's agents, named Wayne and Tim, do. They pull the expired listings and drive to each house at 5am and leave promotional material, informing the owner of the situation, on their door step. This way the home owner gets the information just as they're leaving for work. This is one way to beat the crowd and get to the owner first.

In your literature Keim is big on creativity. Loren and his firm once used what he called the “Crumpled Letter Campaign.” This is where they print there direct mail piece, crumple it into a ball, and then flatten it back out before sending it. The headline to the letter said, “For your convenience, this letter has been Pre-Crumpled.” The prospects who receive the letter can feel that it's different and their curiosity leads them to open the thing. Once opened the humor of the headline gets them to read further.

As you know, statistics show that FSBO's will eventually list with an agent. But you need to be patient. Keim writes, “Rushing in and telling them about your services and why they will never sell on their own is a recipe for failure.” Loren prefers to contact the FSBO and tell them, up front, who he is and that he isn't calling to list their home for sale. Keim knows that many FSBO's do want to sell on their own. But that doesn't mean the FSBO won't let Keim help them find the next home they purchase. So he becomes their buying agent.

To sum up the moral of the short term prospecting story, Keim talks of reading about, “A Real Estate firm that had 25 agents and 25 telephones, but no desks … the story indicates the importance of getting out there and meeting people because that's where your business really is.”