Increase your income by specializing!

Like most agents, I started my real estate business by basically copying what everybody else was doing. I simply didn’t know any better than to mimic the agents around me who had much more “experience”. What I didn’t realize was that most of them had done the same thing when they were new and continued to operate their business in the same way. This pattern keeps repeating and that’s why most agents never achieve the level of success that they set out for. Don’t copy failure - copy success!


It is commonly said that approximately 80% of agents leave the business after the first couple of years. That is a very scary statistic and it could only be the result of a couple factors:

1. The barrier of entry to the industry is too low
2. The basic understanding of what it means to be a real estate agent is misunderstood
3. Brokerages do a poor job of providing basic business planning skills to their agents

I had fallen into the trap of being a real estate generalist. I was looking for any type of business and any type of client. If somebody wanted to buy or sell any type of real estate, I was their guy. If they could fog a mirror and had an interest in doing some type of real estate transaction, I would meet with them. I was chasing business all over town had very little efficiency.

Here are the types of business I did during the start of my career:

1. Buyers in almost any price range
2. Buyers looking for new construction
3. Buyers looking for older homes with “character”
4. First Time homebuyers in the suburbs
5. First Time condo buyers in urban areas
6. Investors buying foreclosures
7. Investors buying multifamily
8. Investors buying fixers
9. New construction listings from builders
10. Raw land listings from developers
11. Condo listings
12. Single family listings in all price ranges
13. Move up sellers and buyers


I could keep listing all the types of business I was chasing, but you get the idea. I have a feeling that you know what I’m talking about and if you evaluated your business over the last couple of years, you would most likely see a similar pattern.


There are many flaws with this plan of attack but it’s tough to see when you are in the middle of it all. Just remember, you cannot be everything to everyone. It is impossible to achieve and you are destined for failure if you attempt it.


The majority of agents copy other agents in the business. If you don’t believe me, take a look at any magazine that real estate agents advertise in. I bet that you will see page after page of little glamour shot pictures of themselves next to little pictures of the house they are listing. Since the majority of agents end up failing in the business, wouldn’t it make sense not to copy their same flawed business plan? Think about it for a minute...


Why would a buyer or seller choose you if you cannot set yourself apart from the other agents? If you are trying to be everything to everybody, you do not have a competitive advantage over any other agent.


The secret to doubling your income in the next year or two is to specialize. You gain a significant competitive advantage by picking a segment or niche in your market and becoming an expert in it. When I talk to most agents about this concept, one of their first questions is- “If I specialize in just one type of real estate, won’t I miss out on all the other business?” My answer is “Yes. That’s the beauty of it! You will get to do only the type of business you want and there will be much more of it to do!”


Let me take a moment to prove the point by asking the following:

1. Who charges more per visit- a brain surgeon or a general practice physician?
2. Who charges more per hour- a general practice attorney or a criminal defense attorney?


I’m sure now that I bring it to your attention it is obvious, but those who specialize can charge more and have a strong competitive advantage. Not only can they charge more, but they are also in greater demand. Isn’t it true that there are many more general practice physicians than there are brain surgeons? I suggest that you study businesses outside of real estate because you will find that the successful and profitable ones specialize. They do not try to be everything to everyone. Does Harley Davidson sell mopeds? Can you get a new Lexus with cloth seats? Can you get home owners insurance from Progressive?


Being a real estate agent doesn’t exempt you from the basic laws of supply and demand. The more there is of something, the less in demand it becomes. The less there is of something, the more in demand it becomes. The demand for your expertise will increase when you specialize.


I must admit to you that despite my lack of an effective plan, I had a successful first year in the business by most any standards. I also must admit to you that I was close to burn out by the end of my first year. I was doing lots of business, but I was also doing lots of work. Most of the burnout was coming from my last of efficiencies. It was hard servicing so many different kinds of clients on so many different types of properties in so many different parts of town.


There are many benefits to specializing in one segment of the market, but I want to bring your attention to a few of them:

1. You have less downward pressure on your commission rates
2. You can create systems that can be duplicated and used with each client
3. You save enormous amount of time
4. The response rates from targeted marketing improve
5. Your conversion rates from listing presentations improve
6. Most other agents can’t and won’t be able to compete with you
7. You become known as a true expert because of your focus
8. You are doing the type of business you like because you chose it!


Let’s dig a little deeper now to really give you a clear picture. It is extremely important to pick a segment of the market that is green and growing and not ripe and dying. Translation: pick a niche that has growth potential and isn’t on a downward trend. Aren't we seeing a rapidly growing foreclosure rate and a slowdown of “For Sale by Owner” listings. I know many agents are making their business plans for next year and have planned to launch a new “FSBO” campaign because they heard of a broker that had success with it. That’s another good example of copying others even when that segment of the market is dwindling.


Let’s say that because the idea of specializing has started to make sense to you and your market is seeing an increase of foreclosures, you decide to focus on becoming a REO and Foreclosure specialist. You now have made the decision to refer all your other business to other agents. You no longer take listings that aren’t owned by a bank or work with buyers that buy anything but bank foreclosures. Scary thought? Well let’s look at how you can spend the incredible amount of time that you just saved to create some amazing benefits to your new targeted clients. Here are just a few ideas that come to mind:

1. You start to write a monthly newsletter targeting people interested in learning about REO and Foreclosure properties
2. You create an investor group looking for REO property
3. You write a monthly article for the local newspaper giving helpful tips and recent foreclosure data
4. You give tours of all the foreclosed and bank owned property in the area
5. You send helpful market data to the asset managers at the local banks in the area demonstrating your comprehension of the market
6. You form business alliances with contractors that can help banks rehab their REO properties
7. You establish a website with only the foreclosure listings for your area
8. You tour only the Pre-foreclosure and Foreclosure inventory
9. You create a database of all the Banks and asset managers in your area with REO property
10. You create a class or seminar that you can give educating people on the REO and Foreclosure process


Are you starting to see how incredibly efficient and powerful your efforts can become? You will become a magnet for everything related to the Foreclosure business. While other agents are holding their fifth open house on the same listing and sending out Holiday recipes to their sphere, you are getting calls from qualified investors ready to buy and bank asset managers with entire portfolios to list. (Guess what? Banks are great clients because they are motivated sellers.) You will start to get referrals from other agents in the area for and the local media will contact you as the foreclosure expert for information.


Since you are now developing a list of qualified investors and buyers, you will start to double end more listings as you get them from the banks. You will start to sell listings even before you have to spend any money on marketing. Your average days on the market for your listings will decrease which will attract more clients. (for more information on how to work with short sales, REO and Foreclosures– click here)


Can you see how quickly you can set yourself apart from the competition? You will be more efficient, have built targeted marketing lists, saved time, increased referrals, increased your commission and became an invaluable resource for your clients.


Please give this secret careful consideration. Do not fall into the trap of trying to be everything to everybody because it will not work. You will not lose sales by specializing; your commissions and business will dramatically increase.