If you’ve been in or around the real estate industry in the last 30-40 years, you’ve probably heard something along the lines of “get listings and control the inventory,” “listings are key,” or “the name of the game is listings.”
And more recently, you may have heard many people talk about how buyers are gold, so you should go after buyers in this market. The idea being that listings aren’t selling, sellers are upside down, and that since there have been seemingly so few buyers (either by lack of motivation or ability to purchase), to have a buyer is the key.
So which line of thinking is correct?
Where should you put your focus?
In theory, both strategies have merit. However, one will work better for you as a business model and in the long run.
That is to focus on listings.
You increase your chances of getting paid – If you price a listing correctly, it will sell…even in this market. Whether or not you have the buyer, you get paid when the listing sells.
You increase your chance of getting paid MORE – Having listings will bring BUYERS. They may or may not buy the house they called about, but you now have a buyer that you didn’t have before, and never could have found if not for the listing you took. So, you might double end your listing, or the listing might get sold by another agent (most likely) and you take your new buyer to another property. Either way you get paid for TWO transactions.
Also, most sellers are looking to buy something else. If it’s in your market, that’s TWO transactions because you’ll get paid when the listing sells, and when you sell them a house. If they’re buying out of your market, you can always be the referring agent and get 25%.
By the way, notice that just having one listing can exponentially add to your income – Seller A becomes Buyer A, Buyer B calls about Seller A’s house and buys it or another house, but Buyer B needs or wants to sell and becomes Seller B. If you do the math, that’s a possibility of 4 transactions, and I didn’t even account for Buyer A possibly buying one of your other listings, or you possibly getting your own buyer for Seller B. Granted that’s a best case scenario, but it happens (it happened to me many times in my selling career), and it started from just taking one listing.
Having listings will bring buyers – You want to work with buyers? Get more listings. Buyers call in on listings. There’s really no other way to predictably find buyers then to have listings for them to inquire about.
You’re not left holding the bag – If a deal falls apart, and many do in this market, you still have a signed listing contract, and the house goes back on the market. Most deals these days are falling apart due to either buyer remorse or inability to get financing. So, if you’re working with the buyer you may no longer have a client at all. They either no longer want to buy a house, or CAN’T buy a house.
Sellers are easy to find – They’re called homeowners. Everyone who owns a house could be a potential seller. Some of them actually advertise that they want to sell (FSBO’s). Some of them already tried to sell and their agent couldn’t get it done, so they need you (Expireds). You could make the argument that everyone who owns a house is a potential buyer, too. However, typically they have to sell first before they can buy.
You don’t have to wait – Finding buyers is hard, you have to wait for them to call you. And these days most companies don’t do floor time, which is good ’cause no one’s really calling. Typically companies ration the call-in’s/internet leads to the listing agent. So, if you don’t have listings, how are you going to get buyers to call you anyway?
You’ll catch it on the flip side – This market isn’t going to last forever. Eventually more houses will sell and prices will go back up. And, creating a listing inventory isn’t an overnight happening, you have to work at it consistently. So, as you create the habit of consistently generating leads, and taking well priced listings now, you’ll realize the short term benefits of some of the selling now, and the long term benefits of them selling like hot cakes when the market turns.
Now, all that being said, I’m NOT saying to never work with buyers. I’m simply saying that having listings is a better way to ensure that you get paid, and paid more often.
I understand that many agents would rather work with buyers, and that’s okay, just know that you’re swimming against the stream. You have to work harder and for longer periods of time to get a transaction done. And, unless you have a buyer’s broker agreement signed, there’s no guarantee the buyer will use you not matter how much work you’ve done. I will admit that if a buyer calls you and they have to sell, that’s the possibility of two transactions…but again, you can’t predict that, and in the time you spent waiting for them to call you could have found dozens of sellers who are going to also buy.
There are typically two reasons why an agent would rather work with buyers: 1. fear, fear of rejection, 2. don’t know what to say.
You see, if a buyer calls in, you already know they’re interested. Psychologically, it seems easier and less confronting because they called you first and asked about buying something. It doesn’t feel like you’re trying to sell them.
Conversely, there’s a big stigma attached to “cold calling,” door knocking, FSBO’s and expireds. It represents all sorts of fear, failure and rejection…especially if you don’t know what to say or are afraid of getting objections.
You can choose to do your business however you’d like. And by no means am I suggesting an either/or approach. If you work with sellers, you don’t have to completely forget the buyers. Just think about your business for a moment. If you are working mostly with buyers, ask yourself why. Be honest with the answer; fear has a funny way of hiding itself. “I like working with buyers” is many times a thinly veiled way to hide the fact that you think buyers are easier to deal with, that you”re scared of sellers, or not sure how to get listings.
Ask yourself if you want to do more transactions and make more money. Then ask yourself if you know how to do that. Really try to figure out how you can increase the amount of buyers you work with.
Many agents really won’t know the answer to that question. They don’t actually know how to increase the number of buyers they work with.
What you’ll probably find is that most roads will lead you back to taking more listings to attract more buyers.
*If you want to know what to say and how to say it to get more listings, so you can get more buyers, call us for a free no-obligation coaching session, or visit us at www.yourethedifference.com and check out our products and telecourses.