Why contacts to closings jumped to 34 to 1 in a shifting market

Ren Jones00:05

You’ve done that many, many years, Sarah. I’ve done that many, many years, taking 6, 8, 10, 12 listings a month with ease every week.

Sarah Close00:12

That’s exactly right.

Ren Jones00:12

You just take two or three listings every week for years, so these things can be done.

Sarah Close00:18

And it’s more—

Ren Jones00:19

But you have to use a formula. It’s a recipe. It’s a contact sport, folks.

Sarah Close00:23

Very much a contact sport.

Ren Jones00:25

And you need to be talking to these people.

Sarah Close00:27

Yes.

Ren Jones00:27

And if you’re talking to these people in a very disciplined way, helping only the ones that need help now and nurturing the ones that don’t, staying in touch with the ones that won’t and following them along. But don’t put too much effort into following along — keep getting new ones.

Sarah Close00:40

That’s all right. Yeah, you can.

Ren Jones00:42

Because that next 10 people you talk to, one of them needs you now.

Sarah Close00:45

That’s exactly right.

Ren Jones00:55

It’s that time. Welcome to Roadmap, how to take three listings a week until you’re ready for more. Each week we interview a great agent who’s consistently taking several listings each month, and you get two for the price of one. We encourage you to take notes and apply as much of the knowledge as quickly as you can, and then use the copycat principle. So my co-host and I are going to help you get your unfair share of business in a changing market. We’re in a changing market. Let me introduce my co-host, Sarah Close. Hi, Sarah Close.

Sarah Close01:32

Hi, Ren. Thanks for having me today.

Ren Jones01:34

Sarah owns and co-owns several real estate offices in Southern Ohio, and does a fabulous business, and has a team who also sells a lot of real estate. What’s the goal for the sales this year and the team?

Sarah Close01:49

The goal is 250.

Ren Jones01:50

And you’re tracking 250?

Sarah Close01:52

We’re tracking a little behind, but we’re getting caught up.

Ren Jones01:55

All right, well, there you go, so that’ll be a lot of fun. So today, one of the things — we’re in a bit of a changing market, which is exciting.

Sarah Close02:03

Right.

Ren Jones02:04

There’s always a huge opportunity when a market changes, and we have a little bit of upward pressure in interest rates, and it’s got people looking at this very differently. And real estate agents that are on the ball — just like you remember when Covid started, those agents that figured out what the strategy was had an amazing business.

Sarah Close02:23

Absolutely.

Ren Jones02:23

Well, guess what? At times like this, it’s changing again. And we wanted to go over how to get your unfair share of business in this wonderful market.

Sarah Close02:31

Absolutely.

Ren Jones02:32

Because it’s a little different strategy, so we wanted to go over that — take notes. Don’t just think you’re going to absorb it all. Write these things down, go apply them, and then reach out to us in about two months and tell us how it went.

Sarah Close02:48

Absolutely.

Ren Jones02:49

What do you think, Sarah — you have how many agents in your company? Is it 550, 580, somewhere in there?

Sarah Close02:55

Yeah, we’re just a little under 550.

Ren Jones02:56

All right, okay.

Sarah Close02:56

And our market, as Ren mentioned, covers kind of the Southern Ohio area — we have agents that work in Ohio, Kentucky and Indiana. And we’re seeing the same things that everyone is seeing nationwide. The real goal is to make sure that we stay on the right side of the news, and anytime there’s a shift in the market, there’s an opportunity for agile agents to make adjustments to assure their goals aren’t impacted by the market, but rather that their business strategies are directed by the market conditions out there. So it’s a bit of a mindset and a bit of a focus — the news isn’t happening to you, it’s how you’re responding to what’s actually going on out there.

Ren Jones03:44

Exactly. And keep in mind, everybody out there knows that the news is designed to upset you, because if it didn’t, you wouldn’t watch.

Sarah Close03:53

That’s right. No eyeballs over time.

Ren Jones03:55

So you know the headlines are misleading, and even the story can be sensational but not necessarily an accurate picture.

Sarah Close04:04

Yeah, absolutely, absolutely. We’re moving out of a market that I would call maybe a speed-based market, where the agents that were throwing up a lot of units were often the people that could get there first to make sure their client got into the auction for that particular house. And we’re transitioning — very quickly, I’d say — to a skill-based market. All of the fundamentals that we talk about career-long are really coming back into play, and that is great news for professional agents.

Ren Jones04:40

It certainly is, because if it had continued much longer, as we’ve seen in the past when it goes that long, then there’s commission erosion, because they don’t think they need your help.

Sarah Close04:50

That’s exactly right.

Ren Jones04:51

They will use some discounted services because they need your help, but they don’t…

Sarah Close04:56

That’s right.

Ren Jones04:56

Now they actually—

Sarah Close04:59

If so many people are needing to move, that certainly diminishes a little bit of the value, at least in the eyes of a consumer, that professional agents are bringing to the table. So you’re going to see a very big change in the real estate agent herd between the amateurs and the professionals. The professionals are going to take advantage of this market, make changes, and be agile to increase their market share. And market share gained in a changing market is market share that’s not lost. So it’s a really opportunistic environment if you’re ready to take advantage of it.

Ren Jones05:40

It certainly is. And this is the time where we have to do a lot of homework, study specifics. You can’t speak in generalities, you can’t say, “Oh, Mr. Seller, Mrs. Seller, the market has slowed down.”

Sarah Close05:55

Yeah.

Ren Jones05:55

They watch the news too, and it has and it hasn’t, so we need to be very exact in what we say. If you’re an agent working mostly buyers, you do feel a slowdown, because the pool of buyers — the 25 people that would make an offer on one house — is now only nine people making an offer on one house. If you’re on the listing side, you don’t notice as much. It takes a little longer and you have to price it a little better. The greed sales are not necessarily selling like they were.

Sarah Close06:29

Right, that’s exactly right.

Ren Jones06:29

Just normal priced houses are selling, so if you’re on the listing side, it’s not so bad.

Sarah Close06:37

That’s absolutely right. If you think about the key to a business being listings — you know the phrase “list to last” and all the jingles that go along with the efficacy of listing — it’s not because it’s false, it’s that it really makes an enormous difference right now. When you have a healthy listing inventory, which we now all have the opportunity to achieve, and that’s besides seeing that background information you don’t get to see if you’re just on the buyer side.

07:28For example, if a property sells at full price in three days, and maybe three months ago that would have brought 15 offers with appraisal gaps and no contingencies — if I’m the buyer, all I’m seeing is that final price. If I’m representing that seller and I only see one offer come in, but I’m still selling at the same price the buyers are seeing, I now can understand that change and that nuance to the market, which I’d otherwise be blind to if I’m not participating on the listing side to see in full daylight all the details of that activity level.

Ren Jones08:11

Wonderful. And if we can encourage, in a variety of ways today, how to spend more time on the listing side — get there in a routine way, not just accidentally because your buyer needs to sell to buy.

Sarah Close08:23

Exactly.

Ren Jones08:24

So let’s take a look at one thing — let’s look at supply, because we’re saying the supply’s improved, sort of.

Sarah Close08:34

Right.

Ren Jones08:36

If you look at the last 12 months, it got down to 1.6 month supply in January, and it’s back up. It started a year ago at about 2.5, it’s up around 3 now, the latest data from the Fed. It’s showing around three month supply.

08:58Now, people are like, “Oh, three month supply, what does it mean?” Well, think about it — a normal market, where it’s not a buyer nor a seller market, is a six month supply. So we are still heavily in a seller’s market—

Sarah Close09:13

Absolutely, yeah.

Ren Jones09:13

…at 3, which is a delightful number if you’re a listing agent.

Sarah Close09:17

Absolutely.

Ren Jones09:18

It’s a delightful number if you’re a listing agent. So you want to be on the delightful side of the business. If you’re on the buyer side, it’s still not a happy number, because there are fewer buyers and there’s still not much supply.

Sarah Close09:32

True.

Ren Jones09:32

But that makes it a little easier, though there are fewer buyers out, so that could be a wash. But generally speaking, get on the listing side — buy a little insurance here.

Sarah Close09:44

Yeah, no, that’s good advice. And at the end of the day, the primary source of our business, our database, never changes — that’s the absolute cornerstone of every professional agent’s business. When we’re in a market that is changing, if our database was producing a specific level of output in a heated market, it’s reasonable to assume that same database can’t produce that same output as things change. So a real focus in every agent’s daily routine needs to be not just communicating with the existing database, but adding to it.

Ren Jones10:34

Right, your database rules — that’s huge and very important. In the last three or four years, many people stopped feeding the database because it was producing enough, and you have to keep feeding it with the people you don’t know as well as the people you know. The people you don’t know that you want to add are part of the core — they’re getting married, getting divorced, moving, or somebody died. That’s the core business. Finding the people that plan to sell their home, or were trying to sell it, and don’t have a real estate agent — if you go after those targeted areas, you can, in a very predictable way, take two or three listings a month. And if you’re already doing that, take a couple more than you’re taking now — some of you are taking 5, 6, 8 a month now, congratulations, but adding to that and really having a fabulous year.

Sarah Close11:39

Absolutely, absolutely.

Ren Jones11:39

So that’s where we want to spend our time — adding, going after those people you don’t know that have an immediate need. And being the market expert, because if you have the statistics and the microcosm — whatever your little part of town is, say there’s 5,000 homes there — you can say, “There were 87 homes that sold there in the last 30 days.” Historically, in the last three years it’s been 95, now we’re at 87, still a very good number. Or, “It’s taking 13 days on average to sell, and it was taking nine, so it’s not off by much.” You need to be very exact with people, and then they will embrace you as the authority.

Sarah Close12:34

That’s exactly right.

Ren Jones12:35

If you speak in generalities, they’re like, “Well, she watches the news, he watches the news.”

Sarah Close12:40

Right, “That agent’s not telling me anything.”

Ren Jones12:41

“You’re not telling me anything I can’t guess.”

Sarah Close12:44

That’s exactly right. The phrase we hear a lot is “being the local economist of choice.” That doesn’t mean you need to whip out the Wall Street Journal every morning, but it does mean you’re very intimate with the granular details in the market you want to be known as the professional in.

13:07That idea of mind share — if you’ve got deep mind share with a very narrow group, the likelihood of them looking for another professional outside your presence is greatly reduced. If you can list a house down the street and then pick up one on the cul-de-sac, that’s a huge game changer for really getting a dialed-in, focused business. It’s go big by getting really small, and then working gradually out from there.

Ren Jones13:47

There’s a great stat resource that one of our Roadmap guests a couple weeks ago mentioned — he has his agents go to Mortgage News Daily and watch, because the information available makes you a market expert. You won’t hear good news in the news — you’ll hear when rates go up, not when they go down. Anybody think mortgage rates have gone down? Well, they did, okay?

14:17So take a peek at this — a month and a half ago the rates were up about 5.89. Now they’re at 5.30.

Sarah Close14:31

Right.

Ren Jones14:31

That’s off Mortgage News Daily. And there’s all kinds of housing news and articles — you can be an expert in this, and you need to have those resources at your fingertips. Your local MLS, unfortunately, you almost need to take a class to use it, but most MLS systems have great stats if you can figure out how to use them.

Sarah Close14:54

Absolutely.

Ren Jones14:55

And if you know somebody that can help pull those reports for you, that can be a valuable tool as well.

Sarah Close14:59

Absolutely. I do think the staff at our MLS is extremely skilled at using and manipulating that data, and very willing to walk someone through what that looks like. There are also overlays like broker metrics, a service that takes MLS data and puts it into charts and graphs. Just knowing where those are, and being very familiar with how you’re going to tell your number story, is very critical.

Ren Jones15:36

And for many of us, it’s not in our DNA to do that, so just ask somebody who’s in their DNA to pull reports like that, or call the MLS and say, “Hey, how can I get this stuff without taking a course on how to do it?”

Sarah Close15:51

Right, right.

Ren Jones15:52

Because if you have that information and can just say a few sentences that are really solid numbers, they’re going to be attracted to you, because they know you know specifics and can protect their equity in this process.

Sarah Close16:07

That’s right. And help them understand what those metrics mean — not just “these are the metrics,” but “here’s what this means to you,” and help them apply that. Because ultimately, our job as an agent is to help the consumer make an informed choice that helps them reach their goals, and we can’t do that if we can’t provide the information that supports knowledge of the market conditions. That’s why we’re there, that’s why they hire us.

Ren Jones16:39

Absolutely. So when you’re looking for people, you’ve got to find the ones that are ready now. “I can only help you if you’re ready to buy now. I can only help you if you’re ready to sell now. We can stay in touch, I can update you, but price is a moment in time, the market is a moment in time. And when you’re ready, we can help you.”

Sarah Close17:02

Yep, absolutely. So it’s communicating with your database that you understand what’s going on in the market so you can help them make those decisions if they’re having a life event, and it’s adding to that database.

17:19There was an interesting study done by a group out of Tampa, Gene Rivers, who runs a very successful business there. They discovered that prior to the last shift, contacts to closings was about 24:1. During the last shift, that number went to 34:1 — a 42% increase in the amount of outgoing lead-generation energy needed to get the same number of closings. That’s part of why it’s so critical to stay focused not just on the existing database, but on perpetually adding to it, so we’ve got that garden we can harvest from.

Ren Jones18:10

So if you’re communicating back and forth with 24 people a day, you need 10 more a day.

Sarah Close18:19

Exactly.

Ren Jones18:20

And if you’re only doing 12 a day, yeah, you’re going to need 18 a day to make that number.

Sarah Close18:26

That’s exactly right.

Ren Jones18:27

Or 17 a day.

Sarah Close18:27

That’s exactly right.

Ren Jones18:28

From 12 to 17 to make that number happen. So run the math, calculate that — those are good numbers. Again, it’s 24:1 in a great market, 34:1 in a shift — 34 conversations or contacts to one closed transaction. Is that correct?

Sarah Close18:46

That is correct, yeah, and at least that’s the information they had. But Ren, one of the things we talk about a lot is being very dialed into your own individual numbers. Now is the time to get very specific and purposeful about tracking exactly where your business is coming from, so you can laser-focus your efforts on the streams of leads most effective for you.

Ren Jones19:09

Right, because your numbers aren’t your numbers. I know plenty of people that can talk to 8 to 10 people a day and set one or two listing appointments.

Sarah Close19:33

That’s right.

Ren Jones19:34

And then you have people that talk to 8 to 10 people a day and may not set one appointment all month. So it’s about who you’re talking to, your skill level, your closing level. It’s important to go where the fish are biting — an old fishing rule. Number two, bring a lot of skill, bring the right bait, bring the right skill to the whole process. That’s the copycat principle. People that watch this Roadmap show, if you do what they’re doing, you’ll get what they’re getting. And we have plenty of people taking 6, 8, 10 listings a month.

Sarah Close20:07

Absolutely.

Ren Jones20:10

You’ve done that many, many years, Sarah. I’ve done that many, many years, taking 6, 8, 10, 12 listings a month with ease.

Sarah Close20:16

That’s exactly right.

Ren Jones20:17

Every week, you take two or three listings, every week for years. So these things can be done, but you have to use formula — it’s a recipe. If the recipe’s off, it doesn’t work.

Sarah Close20:30

That’s exactly right. When I look back at some of the historical numbers in our marketplace, primarily with Cincinnati being the center of that, our weakest year was 2011, and in that year we still had about 32,000 real estate transaction sites. So it’s important to remember that even when we’re hearing about a market change, the amount of business still available for professional agents is more than enough to reach your goal.

Ren Jones20:59

Okay, make that relative — so 32K in a bad year, what was last year?

Sarah Close21:05

Last year we had about 27,000 units, so call that, what, 4,000 sites?

Ren Jones21:11

54 over 32, okay.

Sarah Close21:13

Yeah.

Ren Jones21:13

So it’s still about 65, two out of three.

Sarah Close21:15

There’s a lot.

Ren Jones21:16

Two out of three. So you just have to do one and a half times what you’re doing to get what you’re getting. So really it’s just about…

Sarah Close21:25

It’s a math problem.

Ren Jones21:26

It’s a math problem, right. It’s a contact sport, folks.

Sarah Close21:30

It’s very much a contact sport.

Ren Jones21:32

You need to be talking to these people.

Sarah Close21:34

Yes, exactly.

Ren Jones21:34

And if you’re talking to these people in a very disciplined way — helping only the ones that need help now, nurturing the ones that don’t, staying in touch with the ones that don’t and following them along, but not putting too much effort into following along — keep getting new ones.

Sarah Close21:48

That’s all right, yeah, you can.

Ren Jones21:49

Because that next 10 people you talk to, one of them needs you now.

Sarah Close21:52

That’s exactly right. And we talked about it, again, in the SHIFT book — that’s a really interesting resource, especially in this time. I’d highly recommend everyone spend some time with that publication.

Ren Jones22:02

Yeah, if you’re part of Keller Williams, they have a book called SHIFT, but anybody can read it.

Sarah Close22:07

Anybody can read it, you can get it on Amazon.

Ren Jones22:09

She’s dialed into that with her franchise, so that is a wonderful book.

Sarah Close22:15

Yeah, there’s a lot of information — I don’t care where you work, it’s applicable.

Ren Jones22:16

It reminds me of something Gary Keller said to me one time. He goes, “Predicting the future is a fool’s game. But we know where we are right now, and right now these are the ways to get where we need to go.”

Sarah Close22:29

Right, yep. And Ren, it’s that idea of knowing what the market of the moment is — what types of transactions are people more likely to be having now, what types of people are more likely to be transacting as the environment is changing.

Ren Jones22:42

Right, right.

Sarah Close22:42

Life events are never going to change. Are you going to see some people have some financial changes? Perhaps. It’s being thoughtful about where you’re going to be looking for your clients, and then developing a marketing message that’s meaningful and applicable to those individuals who are able and ready to transact business and are motivated to do so.

Ren Jones23:04

Right. Because I don’t know about you, the highest interest rate I worked under was 13%. When we went down to 8%, we thought it was paradise.

Sarah Close23:11

Yeah, exactly, exactly, that’s exactly right. I believe — and I might be a little off on this number — that the historical interest rate tracked since 1990 is about 5.83%. So helping a buyer understand that what’s happened in the past several years is not the norm — those are the types of things you need to be weaving into your dialogue in your buyer consults, to help them take action now.

Ren Jones23:46

Mm-hmm, yeah, right. If you have some stats, sometimes it means showing them a couple simple charts so they can grasp this. Sometimes they’ll understand it from the charts, sometimes they’re like, “I don’t know what all this means, but I know she does, and I’m going to trust her because she understands it.”

Sarah Close24:08

Right.

Ren Jones24:09

So be that expert.

Sarah Close24:10

Yeah, that’s exactly right.

Ren Jones24:11

This is awesome stuff, Sarah. This is awesome stuff. I think for many people watching, you have two choices. The next 12 months can be your best ever, or one of your best ever going forward.

Sarah Close24:25

Absolutely.

Ren Jones24:25

Or you can react to what is a goal of newscasting — to upset you and make you cower — and that doesn’t work too well.

Sarah Close24:38

Yeah, Ren, you’re exactly right. “Here’s what’s happening in the marketplace” is one piece of input. The second, equally important piece, is how you choose to frame the result of how this affects you. If you look at the market conditions and frame that as your opportunity, then back it up with very purposeful action, you’ll set yourself up for a beautiful arc in your career — with market share that can’t be taken from you, because it will have been hard won in a more challenging time. And if some of your peer group takes this as a “woe is me, I need to bow out,” that’s going to create that much more opportunity for you. So “lean in” is the message.

Ren Jones25:30

Right.

Sarah Close25:30

Absolutely, lean in.

Ren Jones25:30

That’s the good news, because one out of four, one out of five — the ones that just had one toe in the water at the height of this are going to take their toe out, and that leaves a lot more for you. So I want to welcome more of you onto the listing side of the business, where you can make more money and have the time to enjoy it.

Sarah Close25:51

Absolutely, absolutely.

Ren Jones25:52

So if this pushes you a little bit more to the listing side of the business, welcome. Where have you been? We’ve been waiting for you.

Sarah Close26:00

There’s plenty of room.

Ren Jones26:01

That’s it, that’s it. Thanks again, Sarah, this has been great, and hopefully this helps several people out there in their trajectory of wealth.

Sarah Close26:12

Absolutely, absolutely. It’s a great market for growth.

Ren Jones26:14

Great, thanks everybody for being here. Join us next week for another exciting show.

Sarah Close26:20

Take care, thanks for coming.