For the 455th episode of Mail-Right Show, Robert Newman and Jonathan Denwood invited Steve Shull, the founder of Performance Coaching, to explore and discuss practical methods that will help realtors maintain their hard-earned full 6% commission on this challenging market we have today. Steve Shull is originally from Bucks County, Pennsylvania, a former NFL player for the Miami Dolphins, and became a fixed-income institutional salesperson. In 1991, Steve transitioned to real estate in Southern California, quickly excelling with a remarkable record of closed transactions. He co-founded the first real estate coaching program in 1993 and has since become a leading figure in performance coaching globally, logging over 60,000 hours of one-on-one sessions. Robert Newman founded InboundREM, a marketing company specializing in real estate lead generation and SEO, to get started with inbound marketing efforts. Meanwhile, Jonathan Denwood co-founded Mail-Right, a lead generation system that offers exceptional WordPress websites, ranging from theme-based and semi-custom to fully customized designs.
This episode will delve into leveraging technology to refine sales pitches, valuable knowledge that empowers you as an agent, and how to take charge of your career to thrive in any market.
Be the Favorite Agent
About a year ago, Steve Shull had an interview discussing the concept of being the apparent choice when presenting. The idea is referred to as “The Favorite,” which emphasizes the importance of being the apparent choice when presenting to potential clients. The notion stems from the idea that agents do not win or lose business solely based on their value proposition or ability to articulate their worth. Instead, it is about positioning oneself as the obvious choice before the conversation begins.
This perspective comes to Steve after reading Chris Voss’s book, the author of Never Split the Difference, and adapting its principles for the real estate industry. The negotiation tactics detailed in the book align closely with the dynamics of real estate transactions.
Agents often face challenges in securing full commissions and maintaining their value proposition amidst market changes. The concept of “The Favorite” helps agents navigate these challenges effectively by applying the concepts of “The Favorite” and integrating proven negotiation techniques.
Importance of Building Trust Over Emphasizing Value
In real estate, sellers know who they will list their property with. This is what we call the favorite, and it’s based on trust and a sense of connection. Agents who fail to identify whether they are the “favorite” or merely a secondary option may face challenges in securing listings.
When an agent is the seller’s favorite, there is an 80% or higher likelihood of securing the listing. On the other hand, being the second option reduces the chances to less than 20%. Agents should prioritize a preliminary 15-minute call or Zoom meeting with potential clients to determine standing. The objective is not to discuss services or outline value propositions but to uncover whether trust has been established. When trust is established, objections over commission fees are often superficial. They will pay you the fee because they want to work with you.
However, being the favorite does not guarantee a seamless agreement on fees. Sellers may still push back on commission rates once or even twice—not as a rejection, but as a way to ensure they are not leaving money on the table, so agents should carefully assess the intent behind the objection. Sellers who trust their chosen agent may question fees to “fish” for justification rather than to challenge the agent’s credibility. In contrast, sellers may attempt to undermine the agent’s pricing entirely when an agent is not the preferred choice. Recognizing the difference between these scenarios is critical for addressing objections effectively.
Real Estate Commissions
The landscape of real estate commissions has also shifted significantly due to the settlement of the National Association of Realtors (NAR). Previously, commission structures were confined to a 5-6% range, with sellers typically covering the buyer’s agent fees. However, the settlement has decoupled these commissions, allowing greater flexibility. Sellers now pay their listing agent, and buyers pay their agent independently. This change has created an opportunity for agents to reevaluate their fee structures. While many still adhere to the outdated 5-6% range, those willing to embrace the new system can charge based on their expertise and the trust they build with clients.
For agents who recognize the shift, this presents a chance for a “pay raise.” Most sellers are accustomed to commission rates of 5% or 6%. Introducing a slightly adjusted fee, such as 3.5% or 4%, is unlikely to surprise them. These rates are perceived as reasonable and maintain competitiveness in the marketplace. On the listing side, establishing a minimum fee of 3.5% sets a firm foundation.
Meanwhile, on the buying side, a minimum fee of 3% ensures consistency in earning potential. Top-performing agents who adopt this strategy can position themselves to earn up to 6% or 6.5% commissions regularly. For agents who apply this structure effectively, these rates become standard practice, and many agents are already implementing this model to consistently achieve these rates, establishing a clear benchmark for professional compensation.
Customer Relationship Management (CRM) System for Lead Generation
As outlined in Steve Shull’s book Real Estate is Not Rocket Science, success in the field boils down to a progression: contacts lead to leads, leads lead to appointments, appointments lead to listings, and listings lead to sales.
In the beginning, lead generation is a crucial aspect of the business. Several methods to generate leads include cold calling, door knocking, contacting expired listings, hosting open houses, networking, and marketing. It’s essential to choose the approach that works best, as there is no single solution. However, as coaching has evolved, the focus has shifted towards managing leads effectively using a CRM (Customer Relationship Management) system. The CRM is simple, with three main components: organizing the right people into four key groups—active clients, leads, past clients, and sphere of influence. Each group is defined, and the goal is to ensure that all contacts are categorized correctly.
A critical aspect of CRM success is managing it for at least one hour daily. Staying in touch with clients regularly is vital to building a repeat and referral business. To succeed, agents must position themselves as trusted advisors, always putting their clients’ interests first. This can be achieved through a method known as tactical empathy, which understands what others are thinking and feeling and then makes them feel understood by articulating these thoughts and feelings back to them.
Mirroring, a technique used within tactical empathy, helps people feel understood. Using this framework, agents can quickly determine the status of a potential deal. This method contrasts with the traditional approach, where agents might spend hours preparing for meetings and waiting anxiously for a client’s decision. In the past, an agent might go on a listing appointment, spend hours preparing and presenting, and then wait days to hear the client’s decision.
Furthermore, understanding different client personalities is essential for building effective communication. There are three primary types of clients: assertive, accommodative, and analytical. Each type has a different communication style. Assertive clients prioritize results, accommodators value relationships, and analysts focus on data. Recognizing these differences and adapting communication to make the client feel heard and respected improves understanding and trust with clients.
Digital Marketing and Traditional Sales Methods
Deciding on a persona for online interactions is crucial. Being real and consistent can appeal to a specific audience rather than trying to be everything to everyone. This is particularly important in digital spaces, which offer wide reach. Unlike traditional methods, which might involve calling a small list of people, digital platforms allow communication with thousands, even millions of people. However, the key to success in digital marketing is speaking in a tone that resonates with the right audience to engage them, just as in traditional sales methods, where personal connection plays a pivotal role.
The core principle of sales, which is making the experience about the customer rather than yourself, remains the same across both methods. Digital platforms amplify the ability to build relationships, offering the chance to make personal connections on a larger scale. While traditional sales still require physical presence and direct interaction, digital tools can help scale this relationship-building process by reaching unlimited people.
