Coaching Your Real Estate Clients on the 10 Percent Theory of Sales

I'm not breaking any news by saying that real estate markets have slowed across the country. As a real estate professional, you are well aware of this fact. So instead of wasting time revealing what you already know, I'd like to share a tip that could help you increase your real estate sales -- in a slow market or any other kind of market.

It is the 10% theory of real estate sales, and it's a theory I have embraced for several years to good effect. But in order for the theory to have a positive effect on sales, your clients must understand it as well as you do. In other words, you can help your clients succeed by coaching them on the 10% theory of real estate sales.

The 10% Theory of Real Estate Sales

This principle states that only a certain number or percentage of homes will sell each month within a specific neighborhood, and a house will not sell until it enters into that top percentage of real or perceived "deals." For example, lets say the top percentage in a certain neighborhood is 10%. This means that if a home owner in the area wants to sell their home, they will need to be in the top 10% of real or perceived "deals" within that area. If they are not, they will need to break into the top 10% of deals for next month or the home will still not sell. The actual percentage number will fluctuate with area and time, but the concept itself will hold steady.

What This Means to Sellers

For sellers, the most important thing they can do is get into that top percentage of homes that are selling, and get there quickly! This can be done a few ways, but remember first that perceived value is just as important as tangible value. Perceived and tangible value can be created by a combination of proper marketing, benefits, and competitive pricing.

More often than not, home sellers do not mind the first two factors, but find the third (competitive pricing) to be excruciatingly painful. Despite the pain, real estate owners need to have their Realtors evaluate the market and get their property priced according to what has sold in the current month. This needs to be done quickly, because time is not the cure when new listings are coming up every day. New listings make it even tougher to get into that top percentage.

If your seller client says things like "I can just wait for the right buyer/market" ... or "I don't really need to sell" ... or "I need xxx dollars despite what the research says," then the best advice for that client in this market might be to just get out of the market. This truly is not a time for unmotivated sellers to "play the market" and just see if they can get some unjustifiable price. For motivated sellers who really want to sell, careful adherence to our top percentage principle will help them find buyers and ultimately get their home sold.

What It Means to Buyers

Home buyers also need to understand a few things about the current market. Despite what the headlines read, the best deals on the market are selling, and often selling fast. To illustrate this point, we operate a section on our website that we call the Orange County hot property of the week. In it, we post some of the best deals to be found on property in all types of price ranges. In the current market, we must update this section at least every week and a half. Otherwise, the site becomes outdated and the good deals are no longer available. This speaks volumes as to the health of the market!

Basically, if home shoppers want to become home owners by finding a good deal, they need three things -- good help, reasonable expectations, and the ability to move quickly. The best way to achieve these things is to let a local real estate team help in finding these good homes.

Conclusion

Real estate is a joint effort between the agent or broker and the clients they represent. In order to achieve success, both parties must understand the market in the same way. This kind of shared knowledge comes from the agent coaching the client on the path toward success. And often that path lies within the ten percent.

Short Sale Real Estate Investing - Pit Bull Theory

You’ve decided to get involved in short sale real estate investing, and you have a deal working. A distressed seller has asked for your help, and you’ve even gotten to first base with the lender. Negotiations have begun, but have stalled out because there seems to be some apathy on the lender’s part for getting this deal done… what now?

Here’s the scenario- Mrs. Motivated called you six days ago with a house she needs to sell right away. Her husband walked out, leaving her saddled with payments of $900 per month, way over her head. She’s two month’s behind, with a mortgage balance of about $110,000, and a house value of about $125,000. Perfect conditions for short sale real estate investing.

Your initial calls to her lender went well. You reached Mrs. Motivated’s collections supervisor, who referred you to the lender’s short sale real estate investing department, otherwise known as “Loss Mitigation”. Ah, lenders and their silly names!

Miss Mercy, in Loss Mitigation, informed you that you would need to submit an offer, accompanied by proof of funds, to her office on a form that she would provide. You happily complied, offering $90,000. Your hopes were high.

Miss Mercy has now applied the brakes in dramatic fashion, thus smashing your cherished little hopes, and those of Mrs. Motivated. On the phone, Miss Mercy expounded for several minutes on her bank’s policy, “never, under any circumstances whatsoever,” to accept an offer lower than the mortgage balance. And here you had been foolishly led to believe that short sale real estate investing was not only possible, but welcomed.

What to do… what to do?

You could definitely turn tail and run for the hills, leaving Mrs. Motivated at the mercy of… dare I say it, Miss Mercy! But that would go against your goal of helping Mrs. Motivated, putting several thousand dollars in your pocket, and being mega-successful at this game called short sale real estate investing. All fine goals which are not, by the way, mutually exclusive.

You could call Miss Mercy and rail against the system, pleading Mrs. Motivated’s just cause, and pulling at Miss Mercy’s heart strings. After all, that’s why you started short sale real estate investing in the first place. Fat lot of good it will do you!

Or, you could do what other smart, savvy, experienced practitioners of short sale real estate investing do… implement Pit Bull Theory.

Pit Bull Theory states, “I will NOT give up until I have gotten my huge, powerful jaws around the throat of the lender and shaken until the deal either closes or dies.”

How, then, does one close their jaws around a lender’s throat and shake?

Simple.

You try back doors, front doors, and side doors, until you run out of doors. That’s what makes short sale real estate investing work, and to find out how to make it work for you, you’ll want to read more about it at Short Sale Real Estate Investing. Go ahead, it's free!

Now, go make more offers!