Justin Ball with The Jessica Ball Team RE/MAX Traders Unlimited (Ball Homes LLC) and RE/MAX Traders Unlimited Commercial Division describes how he and his wife started their career in real estate. Justin discusses how they started helping retiring agents come up with a succession plan and how to transition their sphere of influence to their successor. Justin discusses the importance of building the skills that makes the retiree stand out into the successor for future success. Justin also shares suggestions for younger agents on how to build relationships with potential retirees.
Please check Jessica and Justin Ball’s book “Succession Planning for Real Estate Agents” here.
If you’d prefer to watch this interview, click here to view on YouTube!
Justin Ball can be reached at (309) 256-1576.
This episode was brought to you by Real Geeks.
Transcript
D.J. Paris 0:00
This episode of Keeping it real is brought to you by real geeks. How many homes are you going to sell this year? Do you have the right tools? Is your website turning soft leads and interested buyers? Are you spending money on leads that aren’t converting? Well real geeks is your solution. Find out why agents across the country choose real geeks as their technology partner. Real geeks was created by an agent for agents. They pride themselves on delivering a sales and marketing solution so that you can easily generate more business. Their agent websites are fast and built for lead conversion with a smooth search experience for your visitors. Real geeks also includes an easy to use agent CRM. So once a lead signs up on your website, you can track their interest and have great follow up conversations. Real geeks is loaded with a ton of marketing tools to nurture your leads and increase brand awareness visit real geeks.com forward slash keeping it real pod and find out why Realtors come to real geeks to generate more business again, visit real geeks.com forward slash keeping it real pod. And now on to our show.
Hello, and welcome to another episode of convenient 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 in just a moment, we’re going to be speaking with top producer and succession expert Justin ball. Before we get to Justin, a few quick announcements first announcement is I have a cold. So if you’re hearing my voice sound a bit different from normal that is expected. Or at least I I assume it’s going to sound different, because it sounds different to me. And I appreciate you listening throughout. And of course this week, we’re recording four episodes while my voice is pretty shredded. So I will do my very best, I’ll probably maybe I’ll shut up more than normal, which I think will be appreciated by our audience. So you can hear from our wonderful guests who share these amazing secrets of success in it. Also, I wanted to say thank you because we just crossed over a million downloads several weeks ago. And we’re really honored about that. And thank you to everybody for helping us get there. And we we’ve actually had 115,000 unique visitors or downloads I should say. So 115,000 people have downloaded at least one episode of the show, which is really amazing. And we’re so grateful like wow. So, but there’s a lot more people that need to hear it. So please just tell one more person. Think of one other real estate professional that could benefit from hearing from top producers like Justin send him a link to our website. Website is keeping it real pod.com We can stream every episode we’ve ever done right there. And last, please leave us a review. Tell us what you think about the show. If you’re listening on Apple podcasts or iTunes or Google Play or Spotify, Stitcher, Pandora, wherever podcasts are served, let us know what you think. Leave us a review. Tell us what you like tell us what you don’t like so we can keep improving because this show is for you. And now on to our interview with Justin ball.
All right, today on the show. Our guest is just involved from the Jessica ball team with REMAX traders unlimited in Peoria, Illinois, which happens to be where I grew up. also author of the book secession planning. I’ll say that again, secession planning for real estate agents I have a hard time with secession. But let’s tell you a little bit about Justin. Justin ball is a realtor and a commercial broker with the Jessica ball team at REMAX traders unlimited also ball homes LLC and REMAX traders unlimited commercial division. Now his wife Jessica founded the team in 2017. And after several years of Justin being the highest performing the lowest paid unlicensed assistant around he finally got his real estate license in 2021. Justin and Jessica are getting ready to release their book succession planning for real estate agents monetizing your business in retirement, which is coming this month. The book is a strategic and tactical guide for agents looking to retire or grow their business and sponsoring broker owners wanting to keep their retiree sales volume and former clients business in their brokerage for agents working to grow their business This book will help you navigate becoming a successor to a retiring agent, Justin’s background in customer relationship management, CRM systems, marketing, lead gen and sales funnels support the team as it continues to grow. And as the industry of real estate changes faster than it ever has, with the introduction of new technology, I’d like everybody to take a look at the succession planning book, which you can find by visiting the website ar e succession.com. And I’ll spell that just in case you might not have a direct access to that, by the way, we will have the link in our show notes, but it is R E S U S, sorry, let me start that over R e su CC e s s io n.com. Once again, our e su CC e s s io n.com. You can learn all about the ideas of what you can do with your business when you’re nearing retirement, and also how you could possibly look for other people that might be retiring and work out an arrangement with them. Justin, welcome to the show. excited to have you.
Justin Ball 6:01
I’m really glad to be here. Glad to be joining you.
D.J. Paris 6:03
Well, I was I was pleasantly surprised. Oftentimes, embarrassingly enough, I don’t always do a tremendous amount of research on my guests. I know the talking points. And I know approximately, you know what I need to go over in the course of the interview. But it’s one of the things I often forget to do is check to see where people are from sometimes I know. And other times, I have to just a few minutes before I go live, go, Oh my gosh, I have to figure out where they’re located. And I was so pleased to find out your Peoria person, you and your wife because of course, that’s where I grew up. It’s near and dear to my heart. I really enjoy pyaari I think it’s a was a wonderful place to grow up. And I’ve even I’ve been in Chicago for 20 plus years, I I still really love Peoria. And I’m glad to be speaking with an agent there and also an author and you and your wife. So thanks for coming on our show. And the first question I always like to ask, although we sort of know a bit about your story, but maybe you can even talk us through the entirety of of how your wife and you got into real estate. But I’d always like to go back to the beginning. And then how you guys got started, you know, obviously talked about helping your wife as she was growing, growing her REMAX practice, and then eventually deciding, hey, we need to write a book about succession planning, which to my knowledge, and we get pitched by publicists who are representing authors in the real estate space, almost daily, by the way, and I have not yet seen an AI maybe there are books that tackle this topic. But we’ve yet to be approached by anyone. So we’re so excited to chat, because I think this is a topic that our audience definitely would like to hear. They’re building this book of business. What happens when they retire? And oh, yeah. What about people who are retiring now? What can you do to maybe, you know, partner up with them. So really excited to chat with you. But can you start us all the way back to the beginning, and how you guys got into real estate.
Justin Ball 7:53
But so my wife was in federal law enforcement and probation. And once we started our family, she said, I’m ready for a new career. I have several people in my family who are realtors, and really sat down talked with us about the business that seemed like a great fit for my wife. And she started her team and things really took off. And every year has just gotten a little bit better. I like to think I play a big role in that as an unpaid unlicensed assistant bringing all my marketing and CRM expertise into things. But she has this incredible empathy and compassion for working with families during these major life decisions going on. And time and time again, we would get these emails within the brokerage and it would say, So and so is retiring, please come to a happy hour cocktail party to see them off in style or to have cookies or whatever it may be. And I thought, where’s their business going? Like just what happens? Because in these cases, it wasn’t that, you know, please contact so and so for referring people to them or their area of expertise. It was literally just people who were locking the door and turning the lights out. And this is really an opportunity to do succession planning. That’s great for retirees to earn money, great for people who are looking to build their business and expand their business and then really for brokerages to keep that business with in their brokerage. And so I said to Jessica would when we were talking to someone thinking about retiring, let’s set up a program and a contract to generate referrals and start to work on taking over working with their sphere of influence because they were a really well connected individual in the community. And we went out and started looking for how do you do this? And just like you said about there’s nothing out there. There are handshakes and contracts and things that happen behind closed doors and privately but there’s really no information publicly about how to plan a succession plan, how to really transition that sphere of influence and book of business from a retiree to their successor. are and how to monetize that in retirement and make money from those referrals as a referral network agent. And this is where the book was born, we literally just started from scratch. And the more that we started to dig and talk to contacts across the country, and even just here in Peoria, Chicago, we found out people were writing these contracts all the time, and there was no consistency to them. And so we sat down and started the two year process that was really writing the best practices for an agent who’s retiring to earn money for referrals. And for an agent who’s taking over as their successor to really get the most out of those referrals and providing continuity to their book of business.
D.J. Paris 10:43
Yeah, wow, you said a lot there. And I want to just set the stage before we get into any sort of detail about first, just this myth that you have obviously talked about in the book, which is this idea that real estate, because it is largely transactional in nature with respect to commissions and fees, everyone listening knows, there hasn’t, I don’t think anyone’s figured out a way to do a fee based model where, you know, somebody pays you a percentage of something every year, which is typically how financial advisors do it, which when we look at like the financial advisor model, which used to be more transactional, and it was stockbrokers. Now, it’s assets under management, and they typically charge a fee, typically a percentage. And so when a financial advisor retires, it’s a pretty obvious thing, because they have this built in, you know, whatever it is 1% of fees of all the assets under management coming in sort of no matter what. So it’s, it’s a real obvious sort of transition, you could say, why can give this to somebody, and maybe you work on an arrangement where you keep some of it and, and, and but the money is automatically coming in. But then there’s this idea that, well, wait a minute, real estate is transactional in nature. So how do you actually have a business to sell? Necessarily, and I know that there’s a lot of people listening that think, well, I didn’t realize I was I was building something that actually has value once I leave. So I can we just dispel that myth, to to get started and just first set the stage that there is a business to sell or transition.
Justin Ball 12:18
Yeah, there absolutely isn’t. In my other life outside of real estate, you know, we talk about buying businesses and determining their value and their EBIT and multipliers and this, but for your average real estate agent, or small team, the business is the sphere of influence, and the book of business that they built all of those relationships that are out there, and people who think of them as their realtor and who refer them out there. And so the work that an agent has done for 1020 3040 years, and building this book of business, and these clients has a value, and they can continue to earn on it through referrals to the book of business that’s there. And I think, you know, right now, there are a lot of real estate agents who pay a lot of money to generate leads. And I loved listening to your episode with crystal Mesa where she was talking about not paying big companies for leads and generating your own leads. And this is exactly what that is low acquisition cost of no acquisition costs to get new leads in and then paying the referral fee on the back end. So you know, when we talk to agents thinking about retirement it is we build these contracts with their successor. And as they refer business or businesses made from their sphere of influence, they’re paid a referral fee and a retirement or referral network for things and there is value business, even agents who are only doing 12 transactions a year, there is still money to be earned and justification for keeping their license and a referral network.
D.J. Paris 13:50
Yeah, and it’s, it’s interesting, and I don’t know how it works in every state, I imagine it’s state specific. But I know here in Illinois, we have in fact, we, we have one here at our own company, which is called we call it a holding company, which is for which all a holding company is in Illinois, at least is a managing broker who is not a member of a local association, which means that all of the brokers underneath that managing broker also cannot become a member of the local association of wherever the agent might be listed. And what it basically means for everyone listening who’s unfamiliar with this term, is that an agent can keep their license active, but they can’t practice real estate. So they can’t represent buyers, sellers, renters, but they can still refer business to other agents from anywhere in the country and still get paid on those referrals. And it’s very popular here in Illinois, I think our holding company that we have has, I think we have about 550 agents in it. I imagine most states have some version of that. So that is something to think about. As you you know, maybe you’re nearing retirement Do you want to figure out a way where you can still earn income, you know, have finding or finding a brokerage that’s somehow just willing to hold your license. And maybe you don’t have to join a local association. There’s certainly those those firms as well. But But I know that that we built our business, we built a holding company strictly because we saw an agent or a need for that. And so that’s a great, I’m sure that’s a part of one of your strategies is once you get to that point where you’re no longer practicing, but you still are able to earn but my question, my first real question is, for everyone who’s listening, who might be younger, who’s like, well, retirements, a good deal aways away, this is an opportunity for for the younger agent to even make relationships with retiring agents, or people nearing sort of that stage of their career where they might want to consider succession planning, and start to maybe even present them with an idea that says, hey, you know, let’s talk about retirement. And I’m curious if that’s a major part of the book, where you’re talking about how do you go out, by the way, and also, if you’re on the younger side, and still sort of, you know, build these relationships?
Justin Ball 16:03
Yeah. And so that is exactly a chapter is about how to choose a successor. And if you are a younger agent, or an agent that’s still growing their business, how do you become a successor. And I think oftentimes, there’s a lot of agents out there who are retirement eligible, who aren’t pulling the trigger, making a plan or setting a date, because they don’t have a plan for what things look like after that, for how to care for their, their family, their their, you know, provide this continuity, again, that’s out there. And so talking to your managing broker about who might be a good fit, identifying some people that you could possibly build a team with, in the interim, the data from NAR is staggering. And I just had to share that and I wrote it down here, please 300,000 realtors in the United States over the age of 60, and 65,000, don’t expect to be selling real estate in two years. So in our home state of Illinois alone, there are 7000 people who don’t think they’re going to be selling real estate in two years, and 2400 of them are over 60. So the the future is ready for these succession plans to be happening. And I don’t think we’ve ever approached someone about a succession plan. And they’ve said like, hard No, leave me alone. I’m offended. You ask? The worst case scenario is I’m still going to work for another five years come see me in three or four years. Yeah. And that’s fair. Yeah, absolutely fair, there are some people who want that. And there are others who just said, this has been on my mind. And you’re giving me a really good reason to start to put pen to paper and create a tangible plan for doing this. And so for those younger agents, or those agents who are still growing their business, this is literally a chance to acquire a book of business that you’ll pay a referral fee on for one, two, maybe three years. That’s generally the type of contracts that we build. And then this is your sphere of influence to work for a lifetime. And, you know, you hear so much about the lifetime value of clients and the fact that it isn’t just one transaction, it’s one transaction now a transaction and five years a referral for other family members. And so this is an immense chance to grow your business through someone else without paying for these leads, and the leads that come through as referrals. Close most of the time. I mean, I would say our close rate on these is probably 85 90%. Because someone has done the work the retiree of priming the pump of I trust this person, I’m giving your referral to Justin, he and Jessica are going to help you buy your house, sell your house, downsize, upsize, sell off your investment portfolio, whatever that may be. So it’s
D.J. Paris 18:47
interesting, I see there’s so much opportunity here for either the retiree, or the upcoming retirees perspective, that they can go out and start, you know, either talking to their managing broker saying, hey, who in the firm would would be a good person to partner with as I sunset out, or on the other side, the younger agents looking towards some of the older agents, like you were saying here in Illinois, 1000s. And 1000s of them have this ability to, to possibly retire and I don’t suspect either side, the younger agent, or the older agent are getting a lot of phone calls about this right now. So it’s a real opportunity. And it probably there’s probably a bit of an education component to it. But I would imagine it’s a pretty interesting phone call and I know if I were a an agent, I don’t know if I would do it if I was a brand new agent, although that’s possible too, because then you could become somebody’s like apprentice or work with them specifically with the intention of, you know, learning all their skills so that when they when they sunset out you’re the person but it’s a real opportunity on both sides to start, almost prospecting other agents, not to try to recruit them so much as as to partner with them. And this is a huge opportunity and I’m curious once you find somebody who on either side where you’re going, Okay, we’re gonna work something out. I’m curious on what you recommend, because you said, Boy, the close rates are so high 85 90%, which is pretty incredible. If you think about this, like, there’s really no other lead source that doesn’t come from your direct sphere of influence, which is not what this isn’t someone else’s sphere. I mean, it might be part of your sphere, but most likely, it probably isn’t. And to get an 85, or 90%, sort of, you know, hit rate on someone else’s book of business is pretty impressive. So I’m curious once you find somebody, and you do work out some sort of financial arrangement, which I know the book goes into different models for how to do that. How do you recommend that the older agent start to introduce? Or do you recommend that they somehow introduce their successor, what’s sort of the process for getting their sphere of influence aware of what’s happening and who you’ve chosen to be your person?
Justin Ball 20:59
Yeah, this is incredibly important. And this is where the magic happens. The contracts are formalities, the ability to transfer trust and brand from a retiree to their successor is really what it’s all about. If you know, if I said what’s the best practice 18 months to two years is ideal. Because that gives you time to really start co marketing and CO branding, on all of the postcards and farming and emails and client parties that a retiring agent is doing while you are ready, you know, preparing this transition in there. And for them to say this is my team. So when people call if they’re buying their second home, getting ready to move to Florida and retirement, those people aren’t surprised when it’s getting handed off. And they start to see this as a coherent package of people in there. But really the client events and you know, if there’s a client who is a repeat buyer, or investor or does any of these things, having the chance to shake hands and introduce the successor to those clients really put your personal stamp on them saying, This person is on my team, when you call my phone number, you may get my team member doing this, you should have great confidence, they’re going to treat you like this. And we talk a lot in the book about when you find that partner, that successor and retiree that want to work together. What makes the retiree an amazing agent, is that they’re compassionate, and they sit down and they develop these deep relationships, and walk people through start to finish is that they are an incredible marketing and have a great marketing program to sell houses, is that they are deeply analytical and help evaluates rental properties and flippers and people who are doing long term buy and hold activities. And how do you really instill those things that the person sphere of influence loves about them, and respects about them to the successor, and it takes all shapes and sizes. That’s why it’s not a one size fits all, it’s really finding a pair and a match that works out really well and then transferring that trust over to him.
D.J. Paris 23:13
I love that. And I and you know, you said something earlier about starting the planning or announcing to the clients that that you’re you know, you’ll be heading out to the into the sunset, you know, 18 to 24 months, and that gives the, the the successor time to get introduced to the sphere of influence. But also it gets the successor really acclimated to how that producer does conducts business. You said, as you mentioned, talking about things like what qualities do they do they demonstrate because at the end of the day, that’s probably the most important thing is can I duplicate or replicate those experiences for this person’s book of business? Can I do I have that the ability to to be as empathic as as the person who their clients know and love and trust? And I imagine, you know, probably I’m curious if you think like even taking a personality assessment might be a good idea, like a DISC profile or something to that extent to where you could say, Okay, I’ve got this I’m in theory, I’ve got the same skill set, or the same qualities personality, because I imagine that’s just got to be critical.
Justin Ball 24:26
It is. And it really it’s why getting to know someone asking your managing broker and talking with them about are they a good fit? reveals? Are you good to work together and that transition time? I would say some of the worst or the least productive succession plans we’re doing is where someone says, I’m moving in two weeks here is the box of all of my signs and my database and my paper files. And we don’t have that time to sit down and say what are your clients love about you? What would your sphere of influence say makes you really great ones Someone makes a referral to you why are they making that referral to you directly as a person? And then how do we begin to replicate some of those activities or build that skill set? And I think what’s been really fascinating is, those skill sets may not always be up to speed with the time. So how do we change something like, I’m looked at as a great resource for this neighborhood? And how do we bring new technology into, alright, we’re gonna use brevity as a CRM, and we’re gonna send everybody in your sphere, this price evaluation tool, so that we’re taking the work that you’ve done to another potential level, with the ambition of our future earnings and that continuity of service.
D.J. Paris 25:46
Yeah, that makes perfect sense. I also think it gives, you know, with the sort of 24 month, ideally 24 month, lead time, it gives the younger agent, the ability to develop some of those particular skills that the retiring agent, you know, already has and mastered. And I’d say, you know, if you spend two years focused on, you know, a certain set of skills that maybe you feel weakened, you’re going to be a heck of a lot stronger than two years. And I think you’re right about if possible, being able to even join the team of that agent, before they retire really helps set the stage for, you know, sort of just trust because that group in your case, you guys have, you know, the Jessica ball team with REMAX traitors unlimited. So this idea of of ideally, they would, they would join your team, and then you could slowly roll out, here’s my new team member, just so everybody knows, when they when I when I retire, you know, so and so is going to take amazing care of you. He’s he or she is going to be around for the next couple of years absorbing everything really making sure they understand you know, how I take care of my my clients. But it is it is such a neat idea. And I think that so if I’m a younger agent, how might I go about maybe working to secure one of these relationships? Do you have suggestions about how you may want to approach a retired or a broker who may be considering retirement or maybe isn’t considering retirement, but technically, could if they were brought an idea to let them know that they could still earn income while they go out of production?
Justin Ball 27:24
I think it’s really important to approach those conversations with a sense of empathy and a sense of respect. coming in saying I’m looking to take over your business starting point. But say, you’re an agent who I’ve watched, who is working from referrals and who I really respect for the book of business you’ve built? How can I learn to develop this? And have you ever thought of mentoring or bringing someone on as a teammate or thinking about succession planning when you’re ready to retire? And I think that opens the door for the conversation. People may say, I’m not interested in mentoring, I’m not interested in doing this. Or I’ve been pressured by my wife or my husband to begin thinking about retirement. And this is a perfect time that we may be able to do something over the course of the next two or three years because I really am ready to make this decision and plan my own retirement.
D.J. Paris 28:18
Yeah, it’s such great. And I want to also mention the book website. Again, for everyone listening who’s who says, gosh, I had no idea that succession planning can exist in the real estate sort of brokerage model. And the website is our E succession.com. Those be a link for that in our show notes. But there’s a link directly to purchase the book on Amazon. And also they’re going to have very shortly a an audiobook format, as well as a paper, a paperback version. So definitely check out our e succession.com. But let’s talk about two. This is something that is not really being discussed at the brokerage level, I suspect, managing brokers don’t really understand because it is a transaction. I’ll give you a perfect example. So I have I have a very close friend who is nearing retirement. He is a home inspector. And he is very well respected in his in the Chicagoland area. Very busy. But his he himself. He is a one man operation. And he has a couple of years left and then he’s going to retire and I had said to him, Well, how do you how do you transfer that business you built up over 40 years goes, boy, I don’t think I can because I don’t have an apprentice. I don’t have somebody. And really, if somebody were to partner with me, you know, they just would be buying a phone number basically and the phone would ring and you know and so he is even unaware that the same sort of process could happen, where he could bring on somebody start introducing them to his referral sources which are real realtors and start saying, Hey, here’s my guy, or here’s my woman who’s you know who’s going to be taking over, they’re going to be shadowing me or, or doing this. And I’m going to mention this book to him because even though he’s not an agent, although maybe he technically is an agent, but he’s, you know, his business is being an Inspector, he has a couple of years to really get this figured out, and his phone rings all the time. So I know I would, I would love to have that. But But I think you’re right, it’s critical that the retiring agent really introduces the apprentice or the person who would be taking over as early as possible. And as often as possible, just making sure that everyone understands sort of, you know, what’s happening here.
Unknown Speaker 30:41
And I think to this is, this is one of the other fascinating things when people call that agent and they’re referring business back to us. Some of the clients appreciate that it’s a team, other clients don’t even realize that those folks who have moved from Peoria across the country, Randy, you literally just say, Oh, this is excellent. What I’m going to do is I’m going to send my team member Justin to help you with this. Continuity is invisible in that, and the trust is still there. And the brand is still there in that sense. But I’m, I’m really worried, too, you know, you talked about your friend, that’s the home inspector, this is the reality, I think with a lot of baby boomers, and this is where there’s a lot of information out there. A lot of these service businesses are going to be ending in the next five to 10 years, and there aren’t these plans for how to do it. And they’re really critical to our economy and for the real estate world. In general.
D.J. Paris 31:37
Yeah, it’s, it’s such a great, a great thing to to talk about. And again, it’s just not really being talked about. Because we think, as it’s so easy to dismiss the idea as all my clients, you know, they like me, and you know, but if they like you, and they understand that, at some point you’re unable to service them, or perfect examples you gave is, hey, I moved, I’m now only in, you know, my local community half a year, or I’m a snowbird, you know, I do the Florida thing during the winter, or I just retired all together, but having somebody that you can refer to, and then I’m curious on when, when you do find this partnership, whether on either side of the transaction, making sure that that newer agent really understands not not just the qualities, you know, the things like empathy and compassion and calm and, but also understanding the expectations around how much or what actual activities that person engages in while they have a client, right, like making sure that if the retiring agent calls every single client of theirs, while they’re in the middle of a transaction every two days, you know, some agents have those kinds of policies where it’s like, I make sure I call everybody once a week, whether we have any news or not about their particular transaction, and then bring on a new agent, making sure that those those two agents really understand what the expectations are, I think is like you were saying, you go through the qualities, and I’m sure you go through the activities as well and say, you know, what are you doing on a daily basis, because that new agent is likely going to have to duplicate, you know, those those behaviors?
Justin Ball 33:19
And then those are the kinds of questions that we asked when we kind of match people up? Do you text your buyers and sellers? Do you have these regular emails that you send out? Are you a person who goes to people’s house and sits down at their kitchen table and has a cup of coffee? And engages? Or are you really high tech, and you do everything through transaction management digitally and remotely? And really, you know, again, identifying what makes your brand so that we can begin to replicate some of that brand, or at least the best practices of it?
D.J. Paris 33:54
Yeah, that’s a really good point, too. And it could even be as simple as how late do you respond? How quickly do you respond to a client request? What happens if it’s 11pm? And you’re up and you see the little SMS message or an email or phone call come through? Do your clients expect me to answer that phone call? Or do they understand that I’ll get to it first thing in the morning? Or what’s the expectation really understanding that so that the agent that’s coming in, really has a clear set of guidelines around here’s what’s expected, and I’m agreeing to do XY and Z. And I imagined the more detailed and written out and agreed upon by both parties it is the clearer and better probably smoother it goes.
Justin Ball 34:39
It is and again the the time to plan and learn that is critical. I don’t know that I can say that two years or 18 months is like the optimal amount of time but certainly having the ability to work with someone for six months up to that point so that you’re going out on visits, you can shadow them in the office and you can Learn what you don’t know. I mean, this is this is an opportunity to pass down the legacy of the secrets of real estate agents made agents amazing over the years. And it, it just kills me what I see people retire, and the brokerage loses that business and the clients go with the first realtor that they find online. And really the secrets of service that are going to withstand the test of time are lost in that transition and transaction.
D.J. Paris 35:30
What type of financial arrangements do you typically see? So the the retiring agent, you know, you were mentioning, maybe they, they, they actually exit out from actually receiving referral commissions a certain number of years. But for that, in that first year, once the agent is out of production, maybe their licenses in a holding company, like we mentioned, but they’re still able to earn referral commissions. What type of financial arrangements Do you Do you see is sort of most common. So what’s the split? What are the splits typically look like from the retiring agent to the the person taking over the book?
Justin Ball 36:06
Yeah, so as we write the different types of contracts, and there, what we see most often and what we recommend is three years of paying out specific referral fees. And as you can appreciate, we don’t have a standard set fee or a course royalty in there. But as we talked to agents across the country, I would say we saw referral splits as high as 40%. And referral splits broadly around 25%. As we recommend, or as we work with agents, putting those together, we oftentimes say, because an agent could refer to anybody, and we’re making this exclusive contract, let’s front load the amount a little more in year one, and then reduce it gradually over time. Although we do have tools in there for valuating a book of business, if you’re going to pay a flat rate to an agent for taking over their book of business as opposed to referral fee, or in a lot of cases and incentive pay. And I really like using that instead of pay after your one of, you know, we’re gonna if you, if we sell more than 2 million, or 4 million or $5 million worth, we’ll give you $5,000, or we’ll give you 10,000, or 2000, or whatever the number may be, especially because it varies region to region based on your average home sale price and average commission, but it keeps the retiree hungry and engaged. And so that they really are being diligent and sending those referrals, every opportunity that they get. And we as the successors are really being diligent and following up in there. So three years tends to be a really good amount of time, I like seeing incentives in there. And we generally will write in some additional features about if you’re selling your personal property or real estate discounts on those things, because they may be keeping a home here, or selling off a package of investment properties or any number of things.
D.J. Paris 38:02
It’s really interesting. That’s such a such a great answer. And thank you for sharing that I was just thinking, in a previous career a million years ago, I was a financial advisor, and we were a fee based model. So we would take as I sort of was mentioning that earlier, the idea of collecting someone’s investment portfolio, and then charging them a percentage of the assets under management, which is pretty much how almost all financial advisors do it these days. So you would have in that industry, and I’m sure it’s still happening there, those books of business were very valuable, because even if there wasn’t an obvious transfer of power, the firm unless the client cancelled their, you know, took their investments out of the portfolio, didn’t really matter who was who was managing it, as long as those fees kept coming in. And so those were tight, those financial advisors who are retiring, are very valuable. And they are getting called by financial advisors everywhere. And I used to fantasize of, of getting one of these calls from one of these retiring financial advisors saying, I’ve got this book of, you know, $300 million. And I want to, you know, share it with you. And we’ll figure out a, you know, a way to compensate us both, but it never happened. But it’s because it’s so common, that there’s whole industries built in the financial advisory world of trying of helping people with succession planning, because it’s so incredibly lucrative. This is a kind of a newer thing that isn’t really as widely understood in the real estate side, because again, we think of it as transaction focus. And of course it is, but there is that so I guess my point is, if I was a financial advisor back when I was and if I would have started calling. You know, if I had a list of people who are financial buyers who are nearing retirement, they probably would be like, you’re the 25th person that’s called me Get lost. I don’t know you. But I suspect that real estate agents who are nearing retirement aren’t getting these phone calls. So So I think this is such a huge opportunity that number one, most retiring agents haven’t really thought about succession planning, other than maybe chatting with their managing broker about like, you know, do you have an idea of what I should do, but there isn’t any real formal process around this. And that’s what you guys really have created in the book succession planning for real estate agents. But also you do that you do consulting work as well for agents, is that correct?
Justin Ball 40:22
It is. So if you are a person thinking about retirement, or if you have identified a successor already, we offer consultation services to come in and help you set up that contract, help go through those activities of transferring trust and introduction to clients. We do presentations to brokerages, which I think is where a broker owners can really make hay because, you know, providing this presentation to their agents who are both, you know, retiring and aspiring to grow their business can set those up and keep the business in house. But I think one of the things, you know, some of the things that we do that are so far beyond what we’ve just talked about are the value of things like a domain name, the value of things like website content, the value of things like, investor lists, a lot of these assets that are a little less tangible, in the sense, and really how important the CRM or the database is of the retiree. And so we talked about, you know, there are probably some really nice clean succession plans where it’s, I’ve downloaded my nice comma delimited spreadsheet to give to you to import it. And there are the here’s my file cabinet for the last years. And there is even another level of I really don’t have anything, I just pick up the phone when the phone rings, and we have to recreate an entire database from brokerage history and activities that are there. I’m curious,
D.J. Paris 41:56
without obviously sharing, you know, any confidential information about people that you’ve helped set these up? What kind of income have you seen? And again, it all depends on the amount of transactions and obviously, where somebody is located and the price average price of properties. But you know, I imagine there’s a lot of people who you’ve helped who are retiring? Who, yeah, they can always refer business, and maybe they would, but they don’t have a real structure for, you know, taking taking their book of business and keeping it moving. With with the the newly licensed agent, it’s just yeah, if my phone rings, I’m retired, I’ll pass it over to you. But that’s not really what we’re talking about. We’re talking about an actual plan of, okay, here’s how you’re going to introduce your clients to me, here’s how I’m going to gain their trust. Here are the expectations on both sides, and what kind of income you know, and I know it’s a wide range, but we’re talking about a lot of income, that that retiring agent could still be retaining every year, just based on putting a plan like this together.
Justin Ball 43:01
Yeah. So it is really hard when you talk about such different types of people. But I’ll give you kind of a summary that we talked about in the book if you average an agent’s last three years of production. And let’s say that on average, they produce 15 million a year and gross sales, you can expect that out of that first year of business to do about 1/3 of that through their referral network. So if somebody is saying I average 15 million a year in sales, we can generally expect to close $5 million of that through their referrals in the first year. And then we just see it dwindle a little bit each year, is there a little further removed from the process. But I think that this brings up a really good point, you kind of set me up for this one, which was really good. You what you don’t want to do is let your your average annual sales decline, decline decline because you’re putting off the planning. And you’re maybe mentally checking out a little more. Yeah, sure. The time to do it is when you still have this robust book of business that people are still hearing from you and engaged with you to be doing that transitional work and keeping it high. And it’s it’s really challenging when we see some great agents who, maybe five years ago, were averaging 1015 7 million, whatever it may be, and that when you look at their last three years, the average is 3 million because of just the natural decline of their engagement in the business and the amount of time that they want to be working versus if you had that partnership setup. Even before they retired, they could just be referring the daily business that they can’t handle or don’t want to handle to their partner.
D.J. Paris 44:48
I am really, really excited about this. I rarely in all of the episodes that we’ve done, I think we’ve done 300 And a close to 50 I believe I’ve yet to tackle this particular topic. I just see so much opportunity for somebody either retiring or somebody, you know, in the process of building their business and making these connections. Again, it’s this is this are these are phone calls that probably that retiring agent are not getting a lot of. And so this is a great, especially if you’re young and you don’t have a huge sphere of influence it you know, you can work out an arrangement with a retiring broker, but you have to, you’re probably gonna have to approach them first. You know, if you’re lucky, they may approach you. But I always assume I’m not that lucky. And I certainly wasn’t that lucky when I was a financial advisor. All those years ago, maybe I wasn’t very good. But I certainly wasn’t getting those kinds of calls from retiring agents. So I think this is this is something that you have to go first, no matter what side you’re on, whether you’re the retiring agent, or you’re the younger agent, you’re trying to find a partner, you really got to got to think about it. And you got to start making connections. And I think you’re so right, is think about the agents that you meet out at showings that you like, if you can’t think of anyone in your immediate firm, or maybe you’re just a tiny firm without many options. Boy, I’m sure there’s agents out there that you like, and probably agents that you don’t get along with as well. And finding those people that you go boy, that I bet it’s uh, you know, they really seem to treat their clients while we all sort of know who those agents are. Those are the agents to chat with, I would think at a very minimum place to get started. But again, I just don’t think most agents get these kinds of phone calls. And I know you’ve written a book on it, but and you guys don’t appear to be nearing retirement yourself. But, you know, I just suspect most agents don’t get these calls. Is that Is that accurate?
Justin Ball 46:40
I would say 100% accurate, as we’ve talked to some brokers and as we’ve talked to agents, and as we’ve gone through this several times, it is never even on people’s radar generally is is a totally fresh conversation. And like you were saying about approaching agents that you respect, it comes off really genuine, if I were to say, I really respect the work that you do, I would love to be at a you know, a point in my career, where I’m doing the level of business getting the referrals you are and not paying on the front end for all of X, Y or Z and the services. And people generally, what if you’re the successor approaching a retiring agent? Generally they’re flattered? I would say, Absolutely. And they may say, you know, I’m planning on bringing my son or my daughter in and creating this sharp plan, or I’ve already talked to x person. But that’s, that’s the worst response.
D.J. Paris 47:36
So thanks, but I already have someone,
Justin Ball 47:40
the sky’s the limit. And the worst answer is no or not right now. With
D.J. Paris 47:45
there’s nothing more flattering than that sort of phone call. And but a you know, assuming it comes from a genuine sort of place, and, and I gosh, I just see all the opportunity out here for that. And so for everyone listening, just consider think about your current book of business. And do you have some, you know, do you have some free time? I think in particular, this is really helpful for people who move to a new service area, maybe where they’re not as familiar, they don’t have a sphere of influence, or somebody that is ultimately familiar with that market incredibly well knows the agent knows the agent feels, you know, feels like they could definitely take over those responsibilities. But either way, I sort of see it fitting just about anyone, unless you’re just so incredibly busy, that you wouldn’t even have time to take on someone else’s book. And that’s its own problem. Good problem, I guess. But still, you know, you could still figure probably figure out a solution for that. But I almost wonder if we’ll start to see teams, even dedicate somebody to you know, going out and finding these relationships, you know, because as you mentioned, so many baby boomers are retiring, and nobody’s talking about this. So I really want everybody because I’ve been talking a lot about it myself on this on this episode. And when I get really excited about things I talk a lot, so I apologize for that to Justin. But guys, I am telling you, this is a huge, huge opportunity. Please go get the book visit our e succession.com. Again, that’s our e su CC e s s i o n.com. It’s called succession planning for real estate agents available on Amazon. It very shortly there’ll be an audiobook version and other ways of consuming this content. But you can also reach directly out to Justin and his wife, Jessica’s team. They do this for agents, they will help you. What’s the best way Justin that somebody should reach out if they go gosh, I would love to consider doing this.
Justin Ball 49:44
Yeah, certainly our our email addresses and our phone number are on the website. Mine is justin.ball@remax.net you’re welcome to use the website there’s a request information form. We’re avidly On Facebook, Instagram, Jessica ball homes. If you also have any referrals for the Peoria area, you’re you’re welcome to reach out to us. And we would be happy to treat your clients wonderfully as well in there.
D.J. Paris 50:14
I think it’s great. And I’m just excited for after all these years of doing the show to have my first hometown guest on the episode, which is a very exciting for me, because I have very fond memories of Korea. So if there is anyone out there who either has clients looking to move to Central Illinois, or maybe you already live in central Illinois, and you’re looking to work with a top agent, Justin and Jessica, from from the from Remax traitors Unlimited, would be honored to speak to and we also found out that their office, there’s a, I used to see a doctor, actually in the building that Justin and Jessica work at, which is particularly cute for me to remember. But guys, this, this would be a team that that I would consider partnering with. And also whether you know whether it’s a referral, or even just if you’re looking to find a great Realtor in the central Illinois area, they are your team. So definitely reach out to them. And you can also find them on their website, Jessica ball homes.com. But definitely check out the book. This is the first of its kind. This is a conversation that as soon as brokerages start thinking about this, you’re gonna hear a lot more about it. So I feel this is a great opportunity to get ahead of the curve. And I also we’re launching a new show on our podcast in the next couple of weeks. And I can’t really I don’t want to reveal it quite yet, just because we’re the name may change. But it’s going to be a news focused show. And I’m really excited to be announcing that shortly. However, I want to get you guys back on that show, because I want our journalist to do a deep dive. And he really, he’ll he’ll be a great, great asset to have a better even deeper conversation about this topic. So again, succession planning for real estate agents is the book, visit our e succession.com. also reach out to Justin and Jessica in the event that you want them to help you figure out succession or finding a successor. Also, just reach out to them. If you have any sort of business, they would love to earn your referrals, just Cabala homes.com. Justin, thank you so much for being on the show is really a lot of fun to talk to a fellow purion. And also just love the love succession planning. I’m so excited that for you guys. And I hope that we can sell a lot of books for you, because I think this will end up making agents on both sides of the transaction, a tremendous living. So definitely keep it in mind and on behalf of our audience want to thank Justin for showing up providing a tremendous amount of value. And on behalf of Justin and myself, we want to thank our audience for sticking around listening to our episode and we ask that you just do two quick things to help us continue to grow. Number one, tell a friend I think of one other real estate agent that could benefit from hearing this great conversation with Justin, maybe somebody who’s nearing retirement, or maybe somebody who’s brand new to the business who could use a mentorship or an apprenticeship, send them a link to this episode. Best way to do that is just go to keeping it real pod.com all of our episodes you can stream right there. And then also please leave us a review we could really really, it really helps it’s helpful for us to understand what we do well what we could improve upon. So whatever app you might be listening to this in if you are listening via some sort of app, leave us a review. Let us know what you think of the show. It really helps us get better and better. So Justin, thank you so much. And we will see everybody on the next episode. Thank you
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