Welcome to our monthly feature, Close-ing Time – in partnership with TheClose.com.
In this episode Chris Linsell from TheClose.com discusses some best practices on how to select a firm that better meets your needs. Chris defines the caps that certain brokerages use for compensation. Chris also talks about the factors that make an agent feel good and grow in a brokerage while D.J. provides examples on what brokerages should do to keep agents happy. Last Chris talks about lead generation and how important it is when deciding on joining a brokerage.
If you’d prefer to watch this interview, click here to view on YouTube!
Chris Linsell can be reached at chris@theclose.com.
Transcript
D.J. Paris 0:00
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Hello, and welcome to keeping it real, the largest podcast made by real estate agents and for real estate agents. My name is DJ Paris. I am your guide and host through the show and today is our monthly series called closing time with Chris Lin sell from the clothes. This is a partnership between keeping it real and the clothes.com. And let me tell you about the clothes. The clothes.com is a kind of real estate website designed to give agents teams and brokerages actionable strategic insight from industry professionals. They cover real estate marketing, lead generation technology and team building strategies from the perspective of working agents and brokers who want to take their business to the next level, please visit the closed.com That’s th e c l o s e.com And subscribe to their newsletter so that you get notified every time they publish an article with us as always is Chris Lindh sell, he is staff writer and real estate coach for the close. Now Chris is the closes resident expert on real estate topics ranging from marketing lead gen transactional best practices, and everything in between. He’s a licensed agent in the state of Michigan. Chris has also been part of hundreds of real estate transactions from modest rural starter homes to massive waterside compounds. Now when he isn’t writing, you’ll find Chris fly fishing or performing on the stage hopefully soon with the vaccine coming of his community theaters, local productions. Although I guess you know, I don’t know his actually I’m going to ask about that. Because now we’re seeing the light at the end of the tunnel. So hopefully cool things like theater is coming back. Anyway, Chris, welcome once again to keeping it real. We’re so excited to have you.
Chris Linsell 2:28
DJ, thanks so much for having me. It’s 2021. We made it basically the same as it was like a week ago, except we’ve had a chance to drink champagne and you know, give each other virtual high fives over zoom screen. So I’m in a pretty good mood and hoping that you weren’t too
D.J. Paris 2:43
Yeah, I am. And and I was a little disappointed because social media was suggesting to me that all of our problems were going to go away as soon as the clock struck midnight. And it seems that it’s we’re still still dealing with some things. But I am excited and hopeful that 2021 will be a better year for most of us than 2020.
Chris Linsell 3:05
Oh, yeah, 100% I definitely I’ll be the first to admit, I fell under that spell to I kind of got that feeling of, of like, if we could just make it through 2020. The moment 2021 rolls over, you know, we’re just going to be canoeing down a river, great at that point. Turns out, that’s not that’s not actually the case. But I am approaching the year with a lot of optimism, because I feel like whether this is artificial or not, I’ve definitely learned a lot of lessons in 2020. And I feel more prepared. For some reason. Just waking up in the day. I’m like, okay, 2021 I got this, I know what will go I know what’s going on now.
D.J. Paris 3:44
Yeah, it’s so interesting. And there’s just so much has changed. And I think mobility, as has been one of the most interesting changes that that we and really the whole globe has has really discovered with respect to working and real estate agents oftentimes are independent, a lot of them work from home anyway. But I think a lot of non independent contractors, you know, more salaried employees, of course, are working from home and realizing that we now have the ability admin in many cases, if if our job allows for it to travel and work to, you know, move to another location. I know that I’ve been able to maintain my practice of I basically recruit real estate agents full time and I thought, oh, no, I’m going to exclusively be doing this over the phone, it’s not going to be as effective. And turned out that it has been just as effective. And really, nobody wanted to come in and see me anyway because of the conditions. So it sort of worked out. And I’m curious when we all are, or at least most of us get vaccinated, if if that trend will change or if it’ll go back to where it was. And obviously there’s a lot of industries that rely upon in person traffic, and I’m hoping that those industries recover. But at least in our industry, we’re finding that client interaction can be done a lot more virtually than in the past. And there’s now a societal acceptance about doing digital conversation versus, you know, the old analog way of getting together in person. Not to say that that isn’t still a wonderful experience. But we’re now seeing that real estate agents have been able to do virtual showings, virtual closings, a lot has been able to happen, you know, right from the living room.
Chris Linsell 5:24
Yeah, I totally agree. And, you know, I don’t, I won’t say that I invited this title. But as a part of my work on the close, one of the titles, that has been kind of unofficially given to me over over the course of of all that work is real estate technologist, because I spend a lot of time thinking about technology in the industry. And one, you know, interesting thing that I think COVID has brought on is this acceleration of technology and all businesses, including real estate, to the point that, you know, it is making folks aware that we are right now, where we would have been probably in 10 years had none of this happened. As far as the use of technology in our interactions with customers. I mean, it’s right out of the Jetsons that, you would just pick up your video phone and dial up a video call with your agent and say, I’d like to see this house and they show you around the house right on your phone, you can make an offer, you can sign paperwork, you can close, right from your mobile device. Consumers, they know they’re not they don’t go backwards on this, we didn’t go back to not wearing seatbelts, once we realized how efficient they were at saving our lives, that’s not going to happen in real estate either. And it’s not gonna happen to the real estate business either. When I say business, I mean in their agents, interactions with their brokers, with their, with their managers with the way that their business is operated. There may be some who long for the good old days, but those folks are a dying breed, we’re going to be looking forward, and it’s going to be the brokers and the managers who can look forward with their offerings for agents that are going to win in 2021. And beyond.
D.J. Paris 7:12
Yeah, and that really brings us to our topic today, which has to do with you know, selecting the firm that is the right fit. And so much has changed in the last year, that there’s probably a lot of our listeners, viewers, and just, you know, agents out there who are considering, you know, making a change, you know, that whole New Year New you thing is a real thing I know, you know, just as a background for anyone listening who’s not familiar, I am not a practicing broker. Although although I technically have a license, it’s embarrassing how little I know about how to actually use it. However, I do know a lot about recruiting realtors, because that’s what I’ve been doing for the last 10 years, basically 889 hours a day, you know, five, six days a week. So what’s interesting is this time of the year, every single year, we get flooded, our particular office gets flooded with requests from brokers saying, you know, I’d like to see what you know, talk to you guys about what what you offer. And obviously, this is the time of reflection, it’s a bit slower, most likely for a lot of us. And a good time just to reevaluate is my firm giving me everything I want and need. Am I overpaying? Am I you know, am I being compensated correctly? Or what I believe to be, you know, what is my what is my value? And, you know, what’s the cost of doing business?
Chris Linsell 8:32
Yeah, 100% this is this is definitely a conversation happening in my circles as well. And like you said, the New Year, the rolling over the calendar does tend to spur this conversation. And in my experience, a part of it is spurred by the fact that there is usually a financial incentive for real estate agents to remain at a brokerage through a calendar year or their fiscal year, if they’ve if they’ve got a cap system in place because they get a better percentage of their commission if they stay with that brokers. But once that, once they they the year rolls over and they’re back at zero with their cap, all of a sudden, those options are looking a little bit more tantalizing because they’re not saving money by staying in the same place. So you know, that’s usually where the conversation starts with me but does definitely doesn’t end there. There’s a lot of factors that go into that conversation.
D.J. Paris 9:29
Yeah, let’s do it. Let’s define what a cap is just for any listeners or viewers who are unfamiliar because this isn’t something that every firm offers. And some some firms do it and some don’t. So what what Chris is referring to when he mentioned either the calendar or or you’re rolling 12 month, you know, fiscal year. What we’re talking about there is is that some firms have a, you know, a split or flat fee depending on on how that’s structured for commissions and that if you hit a certain dollar amount or a certain number of transactions, then you know you your fees are lessened, maybe even removed altogether. But some firms have this some don’t. If you’re unfamiliar, it’s a great reason to pick up the phone to see if there are there are firms in your area that do offer those advantages. But also from a recruiting perspective, if you’re out there looking for team members, or yourself or a managing broker wanting to recruit more agents for your own firm, it’s good to know what all the other firms are doing, especially if everything’s on a calendar year. So if you know XYZ office, their their cap their year ends December 31. And you know, you’re trying to recruit some agents? Well, assuming that that’s the same way it is for all their agents than January one, everyone’s starting back over at zero, and then having to hit that cap again, might be a great time to reach out and say, Hey, by the way, you know, I, let’s talk about what we offer versus what you currently have.
Chris Linsell 10:58
Yeah, 100%. And, you know, to kind of illustrate this with a real world example, one of the, one of the big players in the virtual brokerage space is a is a broker is called exp Realty, they’re there, you know, nationwide. Now, for the most part, exp offers a, I mean, honestly, this is relatively low cap. I mean, I guess it’s all market dependent, but they offer a $16,000 cap for their agents. And essentially what that means, and I’m not an exp agent, or nor am I affiliated with their leadership. So if this has changed, since the last time I read it, please forgive me on that. But as of my knowledge, if you’re an exp agent, when you start, every transaction that you close, somewhere in the neighborhood of 20, to 25%, of your commission goes to exp, right, once you have paid them a total of $16,000, then you keep 100% of your commission minus I think there’s like some sort of administrative fee of like 150 $200, something like that. So you pay exp a maximum of 16 grand as a part of your Commission’s and you keep the rest minus that that admin fee. And, you know, you get certain things for that you get certain amenities or resources from exp, but that’s how they charge their agents for the most part, that’s that’s how they make money is that cap system? And, you know, that is that’s, that’s pretty important for some agents, especially if you’re making a lot of commission, you want to know how much you’re going to be given up and how much you’re going to be keeping yourself.
D.J. Paris 12:43
Yeah, Keller Williams has this has a similar model, which has a has a higher cap, I believe, right around like the 26,000 or $28,000. Mark, I believe, unless that’s changed. But it’s nice to know that those are two firms that have really made a huge splat. I mean, Keller Williams, of course, is is one of the biggest players in exp is becoming one of the bigger bigger players. Because, you know, I think you’re right, I believe, my understanding is they start agents out at around 75% with that $16,000 cap, and then it’s a few 100, maybe 100, or two, a couple, a few $100 After that purchase per sale, which is obviously quite, quite attractive. And then of course, there are firms that have traditional splits without caps, and but maybe they maybe they’re offering leads, or they’re offering better technology or marketing materials. And or or just Borgias brand presents, maybe they’re the big player in your local community. And maybe they’re only giving you a 70% or 60% split. However, the name recognition is so strong that it actually helps you win business, which, again, is always a debatable topic, how important the company you work for is versus your own private brand, your own personal brand. And that can be debated, you know, indefinitely, but it’s always something to consider. Because I know you know, I work for a firm here in Chicago that pays almost 100% Actually, let’s talk about that for a second. So the other the other type of firm that has become popular in the last 10 years and increasingly popular is, especially for part time agents but but also for full time agents is firms that offer a flat fee model or what they call 100%, which is kind of a misnomer because of course it’s you don’t get to keep 100% But you get to keep pretty close to that number. So firms like the one I work at, we charge $350 per sale and the broker gets to keep the rest back that also can obviously become seen as very attractive. However, I get the question a lot is okay, I understand I’m paying a lot less with you guys. And at the firm I’m currently at I have a 70% split so obviously I’m paying a lot more. But aside from the from from the Commission being different, what else is different? And it’s like, oh, there are differences. There really are and you know, there’s certain things that that we offer For and there’s certain things that we don’t offer, because of course, our margins wouldn’t allow for that. So for some agents, you know, that’s a good fit and in most larger real estate, sort of areas, geographic areas, there will likely be a 100% firm in your area. If you’re in a small rural area, it’s not as common because financially to make that model work, there needs to be at least several 1000 agents in your local area for that firm to be able to survive with that model. But if you’re not familiar, that’s another thing to consider is explore that, see if that’s a good fit.
Chris Linsell 15:38
Yeah, absolutely. You know, and this is this brings up an interesting point. Two points. Actually, the first is this conversation that we’re having, you know, this this thought of, you know, am I at the right brokerage? Should I consider a brokerage move? What’s the right brokerage for me that those those questions, a lot of this is market dependent, and you can hear DJ and I, you know, you can hear you and I talk back and forth about this until we’re blue in the face. But the Chicago market is different than the northern Michigan market, which is different from the New York City Market, which is different than the San Diego market. You can name any community in the United States, and we all have different markets and different players in those markets. So your conversation individually has to be tailored to your market. The other thing, though, that I want to make sure that I throw out here is we’ve talked a lot about money, but money is just a part of, of the of answering the question of what brokerage is right for me, you know, am I in the right place? Because ultimately, you know, this business is about more than depositing checks, and then spending some of it on getting getting more business. You know, there’s, there’s, you know, the do you feel supported in your business? Do you feel like you’re growing as a professional? Do you feel like you have a, like, physically a place that you feel comfortable walking into and bringing clients to? You know, there’s there’s a lot of factors that go into this. And I feel like especially right now, agents are evaluating these things, agents are evaluating what’s important to them, and what, what means something to them, as far as you know, at the end of the day, when they tell their family about the work that they did, are they proud? Are they proud of what they have to say? That’s a conversation that’s happening right now. So I’m really hoping that this conversation is spurring lots of conversations from real estate agents across the country to say, am I in the right place? And if you are fantastic, that’s great news. But if you’re not, what are you going to do about it?
D.J. Paris 17:43
Yeah, it’s really funny. So we have about 700, brokers that are at our agents at our firm. And, of course, nobody is under any sort of lock, locked, or sort of contract. I mean, they’re all independent contractors, anybody can leave at any moment. And what we’ve learned in the last 10 years, we we’ve been in this 100% model, what we’ve learned is, it’s really very easy. The difficult part of the job is not recruiting because of course, with our financial model, it can seem very attractive because of our structure. However, what we’ve learned is that if our support and training are not up to par, people will leave at a moment’s notice. And they will go back to a firm where they’re paying a split, even a less than generous split, because they’re getting the support and training they need. So what I would recommend to everyone listening, and I will tell you, this is kind of a funny thing, because I’m a recruiter, and nothing is not there’s nothing I love more than getting a phone call or an email from somebody saying, I’m thinking about joining your firm, you know, I’d like to talk more about it. Because I have been doing this 10 years, eight, nine hours a day, I can do this really well. And and while I everything I say is the truth, and I’m not somebody who who talks about who exaggerates claims or makes false promises, the person on the other end of the phone doesn’t know that. And what I will tell you, if you if you are interested in exploring other firms in your area, what I would recommend is not calling somebody like me who’s the you know, in charge of recruiting or the managing broker because guess what we’re really good at talking about how great our firm is what I will encourage you to do before you talk to somebody like me. And most firms have a corporate website. Most firms list their agents on their website. If not log into your MLS get a list of the agents for that particular firm and randomly before you contact the firm, randomly call a few of those agents and say, you know, I you know, I don’t know you or I do know you but I was thinking about looking at your firm and before I ended up talking to the firm, I wanted to get your personal opinion, pick them at random. Don’t ask somebody like you know, the recruiter for some examples, because of course, you know, they’re likely to want to stack the deck with people that already loved that firm, but just call some people at random and say, Hey, this is the kind of agent I am here are the kinds of things I really want. And in your experience. Do you think that wouldn’t be a good fit for me or what’s been your experience. And and that’s boy that will give you so much great information about what’s the right firm. And sure it takes a couple phone calls. And it might take several weeks to call all the different agents you want to from different firms. But if you do that, you will get the best possible information about what real agents think about being supported. You don’t have to talk about Commission’s because a guy like me can always tell you how the fees and commissions work. But what you really want to know is outside of that, am I going to be taken care of are they did they take care of you? And you want to call people to find that out?
Chris Linsell 20:33
Yeah, you know, I couldn’t agree more. And I love I love the idea of kind of secret shopping, you know, kind of putting yourself in connection instead of you know, talking to the car dealership about what car you should buy, stop and stop somebody in the process somebody in the parking lot of your go grocery store, who’s driving the car you’re considering and say, you know, I have this car drive. You know, I want to I also want to add, I do some consulting for some smaller, locally owned boutique brokerages and, you know, share a little bit of insight when I’m when I’m helping these folks with their initiatives, especially on a marketing front, one of the one of the arms of the marketing strategy that we put together is is towards agents is not not just towards selling the properties, not just towards recruiting buyers, but towards, you know, selling agents on the fact that this is a brokers you want to work for. And we break that strategy up into three components. We break it up into recruitment, retaining, or excuse me, recruitment, training, and retention. These are the three things that I coach brokerages on needing to have a handle on. If you want to create a sustaining and growing business in terms of the agents in your office. And as an agent or a broker who’s considering a move. You guys should take this information, take that insight I just shared and use it in your evaluation of particular offices or brokerages that you that you’re thinking about working at how are these folks recruiting? Are they being genuine in their efforts? Are they providing all the information I need to make a good decision? Or do you feel sold? Do you feel? Do you feel hustled towards the decision? What are the options that these offices are providing? As far as training goes, you know, and I don’t just mean for new agents, we all have things to learn. You know, I call I called the first year of your real estate career, I call it Training. After that I call it professional development. Every office should offer some level of professional development so that you leave a better professional on December 31 than you then you arrived on January first. And then the last thing is is retention. There’s got to be a strategy, there’s got to be a plan in place for an office to recognize the value of the of the agents that really are the engine of their business. If the office doesn’t have any way of showing the people who they depend on that they appreciate them. There’s there’s going to be some trouble down the road because eventually those folks are going to feel unappreciated. And if you’re a high performer, eventually you’re going to feel unappreciated. So I always talk to agents take these three insights, how are they recruiting? How are they training? How are they retaining? Do those strategies line up with you as an agent? If they do you’re in a great spot? If they don’t, you know, you might want to ask them more questions.
D.J. Paris 23:45
Yeah, my advice. Those are all great, great suggestions. My advice would be to write down everything that you want. It’s just like asking a buyer you know, what are your musts? What are your once? And what are your not that important? And write that down? And then you know, contact some of those agents and ask them say, Hey, if you don’t mind, I just take a few minutes of your time, I just want to see. And believe me agents who like working, were at the firm, they’re at love to talk about it. And they love to say, oh my gosh, you should definitely look at our firm. We’re there. They take such great care of me. And of course, you also know that the deck hadn’t been stacked, stacked in their favor before because you didn’t talk to the recruiter ahead of time. But But Chris is so absolutely right. I will tell you from recruiting, again, the recruiting part is actually pretty easy, especially if you have something shiny to show to show a broker which is hey, we have the highest commissions and the lowest fees. Okay, fine. That’s very easy. Just like selling something that’s the lowest price is probably easier. It’s selling something at a higher price. However, if you know with respect to training and support, what I will say or I’m sorry about retention, Chris is so absolutely right. I will say that there’s a couple little things that that, for example that we’ve figured out to do, that are so simple and easy, and a lot of firms don’t do them. And it actually means a lot to our broker. So one of the couple things we do, and if you’re somebody who’s listening, who has a team, or has or owns the firm, and you’re looking to keep your brokers happy, a couple of things anybody can do very few firms do it. Number one, obviously write everyone a birthday card on their birthday. That’s obvious, you should be doing that with your clients as well. But your firms should be doing that for you, or at least caught, you know, celebrating your birthday in some capacity. But also your work anniversary, do they know how many years you’ve been at their firm? Are they somehow, you know, announcing that in some way to make you feel special? And and also, every time you close the sale? Is there any sort of acknowledgment? are they reaching out to you in any way to say, wow, we’re so glad to have you congratulations. And it doesn’t have to be that emphatic. But some sort of acknowledgement is important. Now, if that if those things aren’t important to you, then no big deal. But for a lot of agents, they don’t feel as appreciated, especially because we’re so virtual these days, it’s so easy to not see agents, 99% of our agents never walk in our door, or you know, at least certainly less last year, that was the case. But even before that, it was about the same. And so we have to take a really extra effort to make sure our brokers feel that we’re not forgetting about them. And if your firm if that’s important to you, and it is not important to everybody, there are many realtors who just prefer to be left alone, they don’t need acknowledgement, they don’t want praise. They just want to be left alone. So they can build their own business. And that’s fine, too. But whatever your values are, whatever the things that that you want, maybe you do want some acknowledgement, maybe you do want a little praise, then then you want to talk to some of those agents at other firms to find out how do they recognize you, you know, when you’re doing a good job?
Chris Linsell 26:48
Yeah, oh, man, I can’t I can’t stress how much I agree with that enough. It’s it is a, it is a mortal wound, for a firm, to have the bulk of their communication with their agents be seen the firm’s name, the deductions for their Commission’s check, like if the if that’s the if that’s the the most that your agents hear from you, which is, this is how much money we took out of your commission check you are doing not only are you are you walking a very fine line, but think about what he think about as an agent, you would never do this with your clients, you would never once just only communicate with them, when it was with with an outstretched hand, you would, every single time you have an opportunity for interaction, you will be providing value for them, you would be engendering that sort of loyalty. By creating a relationship that is based in providing value a value exchange, I have something that’s valuable to you have something that’s valuable to me, let’s work together and make this a partnership. It’s the same thing with a brokerage, whether you are an agent, a broker, a managing broker, these are the things that we need to be thinking about that that client agent relationship or client broker relationship, it is the same on a lot of levels as the broker and managing broker relationship. You know, maybe the terms are a little bit different, but the nature of that relationship is actually pretty similar.
D.J. Paris 28:25
Yeah, I couldn’t agree more. And you know, when you’re in the process of evaluating firms, I would definitely also ask about your particular needs with respect to support. So Chris and I, we talked about support a little bit, I just wanted to add something to that. So at our firm, we have a policy with respect to support where we say, okay, between these hours, we’re going to be able to get back to you immediately. But what happens if it’s nine o’clock at night, on a Friday? What’s the expectation, and what I would encourage you to do is to ask those difficult questions. Now, it doesn’t mean that they have to be available at nine o’clock on a Friday, because, of course, you know, just being a reasonable human being understanding that people have their own lives outside of work, but to to ask them say, What happens if I do have an emergency at nine o’clock on a Friday or a Saturday or a Sunday? How long should I expect to be able, you know, to be able to hear back and if they just say, Oh, we’re always going to be there and take care of you. That’s, that’s what a recruiter is going to likely say anyway. But that’s when you go back and call a few of their agents and say, hey, you know, if it’s after hours, what what is the realistic expectation? Because, obviously, your clients aren’t going to know or care that the office is technically closed at five o’clock, if they have an emergency at that time. And you know, is is the firm going to give you their personal cell phone numbers to call them if it’s an emergency? Again, the recruiter is likely to always tell you that we have great support, but but really, you want to talk that through because at the end of the day support, you know, a lot of our agents never come to training, because they just feel that they don’t need it. But they all need support at some point. So support is really, really critical.
Chris Linsell 30:07
Oh, totally. And think about you know, if you’re buying that and thinking about buying a car analogy, who, which car salesman? Are you going to believe more? When you ask the question? What kind of gas mileage does this car get? Are you going to believe the guy who says, Oh, it’s great, just great gas mileage? Are you gonna believe that guy? Or are you gonna believe the guy who says, well, it gets 26 in the city, it gets 32 on the highway. And be honest with you, there are a couple of cars that do it a little bit better in the city, but our highway mileage is really efficient. I’m believing guy be every day of the week, because those sorts of specifics and the admittance, that maybe there are some limitations. Because we don’t live in a perfect world, that person has my vote of confidence, and you know, agents and firms, both of them should be shooting for that sort of realistic communication, because otherwise, there are expectations that will just never be met. And it’s going to result in, you know, disappointment or hurt feelings, and ultimately, in a business relationship. That’s just not as profitable as it could be.
D.J. Paris 31:12
Yeah, I think you’re right, I apologize. I did take out my headphones there. So my my headphone started malfunctioning in the middle of that. But But what I heard was was awesome stuff. Yeah. And I also just really want to touch on one of the biggest questions that a lot of times agents are going to ask when they’re considering switching firms, which is leads. And and obviously, firms, there are firms that do have lead programs, there are firms that don’t there are firms that claim they do and don’t there are firms that claim they do and do. But it is it is a very common question. And I was curious, Chris, to get your thoughts on how important is a lead generation? From a friend again, everyone, every broker is unique. But but as something to look for in a firm, how important do you think that is?
Chris Linsell 32:03
Well, I’ll answer your question in two parts. The first is, lead generation is important. It’s the it’s probably the most important thing that as an agent, new or otherwise, you’ve got to be game planning for it. Because without leads, you don’t have business, you don’t have closings and without closings, you’re not you’re not a real estate agent, you’re somebody with a real estate license, but you’re not working. So that’s that’s the first thing is it’s important. The second thing I would say is when it comes to having leads provided to you via a brokerage, I would invite you to remember that nothing in this life is free. No brokerage is going to be giving you free leads, you are paying for those leads. Yes, and let’s let’s just call a spade a spade here. If I own a business, and I’m providing leads to my agents, I’m taking a small percentage of the like, there, I’m passing along a small percentage of that cost to the agents so that I can make a little bit on this. There’s every time you get more people involved in the lead generation train, you’re adding middlemen you’re adding cost. And so personally, I think that lead generation provided from an office is not as important as other people, because I would rather do it myself, I can do it. And other agents, even if you’re not a lead generation expert, you can pay a company like bold leads or Zillow premier agent, or there’s 100 different market leader, there’s 100 Different lead sources out there, you can pay them directly for leads. If you’re going to pay for lead generation, I would rather have the control of being able to pay for it myself, rather than paying my broker and having them pay for it. If you are a brand new agent, and you have no budget, and you have no prospects, you need to get leads where you can get them. And if that’s from your broker, that’s great. But to me, that’s kind of the last option if you don’t have means of getting them otherwise. So if I’m advising somebody on choosing a broker, I would say that to me isn’t high up on the priority list unless you are completely out of options. Yeah,
D.J. Paris 34:26
and I could, I couldn’t agree with you more. The other option too, if you have no budget but want to participate in the online lead generation are companies like op city who do not charge up front. So in other words, they’ll pass the buyer lead over to you that they have somehow discovered and qualified, but they take a percentage of the back end, which you know, for a lot of brokers is a very fair sort of transaction. It’s really no different than a lot of firms who provide leads, and then take a percentage of the back end as well. So there even if your own firm doesn’t offer First there are firms like upcity. Who can do that for people on a smaller budget. But I think Chris is right, the idea of looking for leads from your firm for most agents, probably, it’s one of those things, that sounds really wonderful, because who wouldn’t want some some great leads? However, that’s another great reason to call agents at that firm and say, Hey, how many leads? Are you getting? You know, are they good quality? What percentage are you closing? How important are those to your actual business? And then you’ll get really the real better story because firms love to dangle that lead carrot in front of agents, because, of course, it’s a very attractive carrot. And, and what you want to do is just confirm that, number one, the leads are valid, that they’re there, they’re plentiful, and that they close at some sort of reasonable level. And what’s the reasonable level? Well, if you’re buying Zillow leads, for example, and you can close 5% of your of your Zillow leads, you’re a superstar, you’re doing great up. So the actual lead conversion is quite low. But if they’re able to help, you know, the firm is able to help get you five more sales a year. You know, Hey, that’s pretty great. It’s just depending on can the firm do that? And get that real answer by talking to the agents? Yeah.
Chris Linsell 36:17
And, you know, I would add, just in closing on this topic, if if lead generation from your broker is really important to you, I would really encourage you to ask two questions, I would ask what the typical cost per lead is, so you know, what you’re paying, you know, kind of in the ballpark anyway, of per lead. But the second and probably the more question, more important question is, what’s the typical cost per closing for this leads service, because let’s just say as an example, they provide your brokerage provides leads, and the typical cost for for that for agents is something like $200, a lead, you know, for a $2,000, or a $20,000. Commission, this would be gravy, this would be fantastic. But if you’re only closing 1% of those $200 leads, that means you’ve got to close, you’ve got to get 100 leads, yeah, before you get to a closing here, that’s $200,000 that you’re spending to get one closing, unless you’re working in the luxury markets in Los Angeles or New York City, that deal don’t work. There’s the math doesn’t line up on that. And so those are the questions, if that’s important to you, you need to be asking the cost per lead and the cost per closing. And if your brokerage doesn’t know, and especially if a recruiter doesn’t know those numbers run in the other direction.
D.J. Paris 37:46
Yeah, and I’ll just tag on to that’s really great advice. And I’ll just tag on to that, to also ask the broker, especially for firms that don’t offer leads. So hey, that’s fine. How can you help train me to get more business? And that is it really every firm should have an answer for that, whether they generate leads for you or not, because at the end of the day, this is your business and the firm benefits from more production that you do. So they should be in your corner. And they should say, okay, here are the training, you know, here’s how the training works to help you generate more business for you. And we spend a lot of time on that, blah, blah, blah. So make sure that you’re asking not just do you offer leads, and what Chris says was great as find out the cost per acquisition, the cost per lead, but then also say, you know, hey, outside of that, how do you help agents, it’s really the best quote one of the best questions you can ask how do you actually help agents grow their business? And again, you’re probably going to get a very polished answer from from a seasoned recruiter. So that’s another great question to ask those agents behind the scenes is, are they actually actively helping you grow your business? So I think this has been a great conversation, Chris.
Chris Linsell 38:54
Absolutely. DJ, this is a great time of the year to be thinking about options. 2021, we got a whole year in front of us to make it the best year of our careers. Let’s start right now.
D.J. Paris 39:03
Let’s do it. And also, let’s remind everyone, we were several, just a few months away from hopefully the end of this dark period of our world’s history. And so everyone, please stay safe and healthy. We’re almost at the finish line. So be careful. Be careful with your clients. Be careful with your coworkers, and of course out there in public and also go visit the closed.com really the best website we know about to learn how to grow your business. We’ve been talking about a lot of that here in the last half of the conversation. The clothes.com is really the best website for agents to go and learn. It’s an amazing, incredible website. The articles they write are better than anyone elses. They’re long form articles. They’re in depth, they’re researched, and they’re specifically designed to help you grow your business and oh, yeah, totally free, really great. So go to the clothes.com you’ll see some articles Chris has written they even have a pro membership option as well, which is really inexpensive. Seven and is awesome to try out as well. So go to the clothes.com. And Chris I know you got to run I have to run as well. So great timing here at the end. And we will see everyone on the next episode Chris, thank you once again for being part of the show. We We love having you in the clothes.com as partners, and we’ll see you next month.
Chris Linsell 40:19
My pleasure can’t wait see you soon.
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