How to Build and Scale a Successful Real Estate Business
Want your business to be more successful? Want to grow without the consequences? We’ll show you how to do it better and more often.
It starts with a simple goal. I want my brokerage to be #1 or I want to go from 80 transactions to 800. Whichever you choose, there’s a question that needs answering: How do I do it?
Looking at your real estate business, you know the key to success is growing — which can mean growing the team, expanding into new markets, or even both. Ultimately, you want the business to grow farther, faster, and more effectively.
But the road has speed-bumps. How do you maintain quality service among dozens of agents? How do you reach the goal without burning out resources … and even people?
You want to do more, but you also want to do better. Growing a successful real estate business starts with a new mindset:
This will be your tutorial to building and scaling a successful real estate business. Let’s begin …
The Ground War + Air War
If you’re looking to spread amazing experiences and create success for more people (and in more places), here’s the most important thing to remember: To scale faster and better, you need to treat it like you’re fighting a ground war, not just an air war.
During the air wars of World War II, pilots were ordered to drop bombs and strafe general areas in hopes of crippling the enemy. Oftentimes, the attacks did little, due to inaccuracy. Not long after, Allied leaders learned that without ground operations, victory was impossible. Any force — or energy — put to a goal needed to climb through the muck and push hard.
The same applies to real estate businesses. Leaders know a quick PowerPoint presentation, a few days of training, or an inspirational speech won’t cut it if they want agents to adopt a new process or change a behavior.
Reed Moore, owner of RMG Real Estate Experts and leader within the Keller Williams franchise, mentioned the key to long-term change is to instill success habits. Forming a habit takes time and it takes saturation. You need to talk about it, teach it, reward it, highlight it, and do it over and over … until the team internalizes it.
Winning the Real Estate “Ground + Air” War
Listen. The first question you have to ask is: What is my winning aspiration?
Remember, we’re building a successful real estate business — not a team that settles for okay. If you’re not seeking to win, you’re wasting people’s time and resources. Wars aren’t won by half-assing the idea. In better words from Ron Swanson (from Parks & Rec), “You need to whole-ass it.”
From there, your winning aspiration will set the frame for all the other choices. So, what’s your goal? Is it to be the market’s #1 real estate team for first-time homebuyers? Or is it to close 200% more deals? Or maybe you want to expand into another state.
To achieve any goal — to win the real estate war — answer these questions:
This will work as your business strategy. Now, you know what areas and what things you need to do … to build a successful real estate business. By taking it slow in the beginning, it allows you to scale faster and better later on. Patience, grasshopper.
*Note* — Don’t underestimate the challenge to winning this war (i.e. building a successful real estate business). This isn’t just a marathon. Scaling and building a better business is like running a long race, but not knowing how long the race will actually last or where it’ll end.
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Scaling the Team Up: The Buddhist vs Catholic Approach
Operations always start small. Reaching new goals means building up (i.e. scaling up) those operations.
This could mean expanding your # of real estate agents from 2 to 10, or 10 to 20. This could mean servicing multiple MLS markets versus just one. Some of you may want to open a new office in a city outside the county (or state).
Within these choices, there are two approaches: the Buddhist path or Catholic path. Here are the differences:
- With the Catholic approach, your aim is to replicate processes and practices, verbatim.
- With the Buddhist approach, your aim is to have an underlying mindset that guides why, but leaves the what and how up to tweaking/editing.
Basically, will you be the In-N-Out fast food chain, where local “customization” is shunned, or will you be like KFC, who adapts their menu to the country they’re serving (their menu is vastly different between USA and China)?
When you expand the business or expand into a new city, will the structure be the exact same (Catholic approach) or will it be customized to the area/market (Buddhist approach)? Example: Just because your real estate agents work well with a specific process, it doesn’t mean your support staff will perform the same. You need to figure out — as you build the team — what approach is best for the business.
The key thing to remember is the learning curve. Teams within the real estate team or staff between different offices will have a learning curve. No one is going to magically know what the brain-children learned during their growth. It takes time to create the same success.
For Jeff Cohn, owner of Omaha’s Elite Real Estate Group (associated with Berkshire Hathaway HomeServices), he took a simple approach when growing his real estate brokerage. As he gathered more business and more agents, he hired more support staff. Some of his first “operation” hires were a transaction coordinator and a marketing director. As he hired more agents, he hired more support staff.
Jeff Cohn knew as his team got bigger, he needed something to keep them unified. Every decision his business makes answers a simple question: Will this make us elite? Is this something an elite team would do?
By wrapping his team around a culture, he created accountability. Everyone is held to the same expectations. To learn more about his success, check out his workshops: click here.
Eric Pearson, founder of Pearson Smith Realty, took a slightly different approach with his real estate team. He scaled from 15 to 100+ agents — with BoomTown — by building a careful onboarding process that focused on the “why.” Now, he operates by using simple maintenance plans for his agents. Ultimately, he created a win-win culture for his business and agents — that way they customize what tasks they do to create their own success … but within the bounds of his structure.
See Which Technology Successful Brokerages Build Around. Click Here.
Motivating Change: Hot Causes, Cool Solutions
As your real estate team grows or you introduce new processes (to improve service), there’s change to be had. And we know change isn’t easy, nor do people adopt it readily. Getting there means you have two choices: Change their beliefs or change their behavior. Both are essential tasks.
This is why Robert Sutton and Huggy Rao’s strategy for “Hot Causes, Cool Solutions” is key to building a more successful real estate business. By communicating a hot cause — i.e. sharing stories, symbols, language, reasons, etc — you draw out emotions that tie to a belief. These emotions are motivators — the reason for doing the change.
Think about the Founding Fathers before the Revolutionary War. If they didn’t stoke the fires of “a better world without British rule,” how many people would have rallied together in their cause? They used stories of businesses falling prey to taxes, common citizens being oppressed by British soldiers, and so on. People were stirred to action.
Getting your real estate team to change their behavior, unfortunately, needs more than just a hot cause (i.e. emotional reasoning). It needs a cool solution to help.
Let’s revisit the Founding Fathers. When they presented the cause for rebelling against British rule, they gave people a way to do it. They asked for people to sign petitions. They asked people to join the Continental Army. They had a cool solution for going against the British — tied to a hot cause.
Facebook does the same today. Their mindset is “Move fast and break things.” This can be frightening, considering the impact of “breaking something.” But Facebook believes it leads to future innovations. They believe it so much, new engineers hear veterans talking about personal stories, where they wrote code and broke something. Then those new engineers start to build new code, and sometimes break stuff.
They live the culture — so you can see where hot causes and cool solutions create a change in normal behavior (where engineers typically play it safe in pushing new features live).
Doug Gieck, Production Manager at 8z Real Estate, instills change by leveraging FOMO (fear of missing out) on other people’s success. When a rookie agent comes into the mix, adopts BoomTown from the get-go, and closes $7 million in his first year — that causes some jealousy among veteran agents. They realize, “BoomTown really does help make things easier.” Then, people start to change their behavior and beliefs.
From there, it’s a waterfall effect. As more people adopt new systems (like BoomTown) or change behaviors, others start to take notice. It cascades through the whole business, and suddenly you have a much more successful real estate business.
To change both belief and behavior at the same time, here are some strategies to use for your real estate business:
Accountability refers to the expectations set upon you. For your real estate business, what responsibilities have you decided for your team members? What do you want them to accomplish on a daily basis, or weekly basis?
Scaling accountability across multiple team members requires a thought-out process and a system to regularly check on them. But there’s a catch-22. You don’t want those processes and systems to interrupt what makes real estate brokerages (or agents) successful. You want the accountability to improve their success metrics, like more closed transactions.
The saying, “Many hands make light the work,” is a dangerous half-truth. When framing accountability across multiple teams or members, think about what you can subtract too. Not just adding more work. Where can you decompress the tasks for your real estate agents? Your support staff?
One of the keys to success is enforcing roles, according to Gill South from Inman News. From the dozens of real estate brokerages and teams she’s interviewed, she’s realized the teams who are successful have roles for their staff. They know which role they have to play, and the leader makes sure everyone fits together like a well-oiled machine.
Gill also recently talked to Tami Bonnell, CEO of Exit Realty, and there’s a consensus. Real estate agents can’t just be left to do their own thing. Successful real estate firms need to have strong systems and training if broker/owners want their agents to be successful … and to subsequently receive residual rewards from their success.
As a final note to accelerating accountability across a real estate business — before you labor to spread something marvelous, you need to first drive out bad behavior. What kills service-related industries, like real estate, is … bad service.
You’d be surprised to see how many leaders don’t take the obvious path. “Sour apples” (i.e. bad employees) who don’t work well within your team structure or culture should be rooted out. Otherwise, the perception of your business will hurt in the face of consumers.
Reduce tasks. Focus on the work that creates success. BoomTown Grow.
Cut Cognitive Load to Improve Success
Naturally, as you build and scale your real estate business — to fit your goals — new processes are added. You add technologies to streamline tasks. You add more people and put them in roles. You add new rules to conducting business. These additions are necessary to creating success, but the onslaught of “process” and information can overwhelm team members.
Researchers call this “cognitive overload.” Baba Shiv, a marketing professor at Stanford, did a study relating to this. He split students into two groups. One group memorized a two-digit number (“17”). The other group memorized a seven-digit number (“2245389”). Before they recited the number, he had the students walk down a hallway, where he offered a choice of fruit salad and chocolate cake.
Students who had to recall the seven-digit number were 50% more likely to choose the cake. Why? The mental effort required to remember those extra numbers persuaded them to take the easy way out and gobble down the less healthy cake.
Adding more rules and process to your team’s workload can overburden them and in some cases, convince them to take shortcuts. If you’re trying to build a reputable brand, that’s a big no-no.
The solution lies with the law of subtraction. We mentioned it before. As a leader, you’ll need to see where you can add to build a successful team, but also where you can subtract to remove impediments to their success.
You only want your team members to have tasks and systems that help them focus on their success metrics. It’s the reason why the Marine Corps shrank their basic combat fighting units from 12 to 4 during World War II. When you have a 12-man squad, it becomes much harder to control them under the stress of battle. Intuit also lives this philosophy with the 2-pizza rule. Teams can be no larger than the number of people who can be fed by two pizzas — which helps them stay nimble and able to react quickly.
For Eric Pearson, he makes sure to give his real estate agents the time to focus on their goals. The atmosphere at Pearson Smith Realty is 100% agent focused. He’s made sure to provide the right systems, tools, and support to make them successful.
Similar to Eric’s business structure, Cody Gibson, owner and CEO of Portland Real Estate Group (Keller Williams), has kept his team focused on activities that generate results. Nothing more, nothing less, he says. By focusing solely on production, his company’s actions have always been unified and cohesive … to support that focus.
*Remember* — When cutting cognitive load, turn your attention to what matters most and away from what matters least. If you want your business to be successful and your agents to be successful, focus on what does that.
To Build Success, Make People Squirm
As we close out this blog post, here’s a rule of thumb to follow: If you aren’t upsetting people, you aren’t pushing hard enough. This goes for you too.
When building and scaling your real estate business, you’ll have no shortage of ideas and thoughts. But don’t feel afraid to kill those ideas. Sometimes, they are bad. Measure everything you do, and keep it focused to what you define success as.
As a leader, you are a poet and a plumber. Part of your job will be communicating, creating belief, setting goals, and inspiring others — a role of a poet. The other side will be finding the solutions and executing on the goals. You’ll be answering how to get there, like a plumber.