99.99% of all real estate brokers work on contingency. Meaning they take on new clients and only get paid if they close.
Why does the real estate sales industry operate this way versus a billable hour or upfront model? Is it the consumer’s preference or the established industry?
We have to first look at the barrier to entry into real estate.
In Washington State to get your real estate license, you need to be 18 years old, high school diploma or equivalent, and 90 hours of courses. This low barrier to entry allows for new people to enter the professional easily.
We soon realize that getting your real estate license is not the barrier to success. It is just a barrier to entry. Let me explain.
If you went to college and got a degree in Computer Science you would probably get a job and get paid immediately. Because the barrier to entry was higher. Take a doctor, after 7 – 10 years of college when they land a job they get paid well and immediately.
The higher the barrier to entry, the higher the pay.
In real estate, the real barrier to entry is being able to survive. Half of all real estate agents won’t renew their license after 2 years.
Established and seasoned real estate brokers like working on contingency because they have clients that support them. They don’t mind new agents joining the industry because they know the true barrier is the first 6 months to 12 months.
Sink or swim.
Over the last 8 years, I have trained, coached, and lead nearly 100 new brokers into the industry. All of them made it to 2 years with predictable revenue sources.
Many make 6+ figures every single year without having to spend a dime on marketing. The average Zillow lead costs $100 in North Central WA. And they will send it to more than one broker.
We were able to lower the barrier to success. We lowered the barrier to success by giving individual brokers the tools, technology, LEADS, and relevant training in an ever-changing industry.
Nobody wants the same old cookie-cutter training that is based on referrals. Buffini, Ferry, Ninja will teach you to have patience and ask for referrals. This is a proven method but, doesn’t work for everyone.
If it worked. everyone would be working on 90% referrals.
Think about it. If Broker A asks Seller A for referrals. And Broker B, C, D, ask Seller A for referrals. Who will get the referrals? Answer: 1 broker.
It is much easier and pleasant to be in a system that attracts buyers and sellers that are ready to buy and sell. They reach out not because they know you but, because you are a professional and expert in the field.
Our team is growing. I mentioned I retired in my last e-mail. Not exactly, I have committed 100% to the growth and development of agents that want more! More sales, more support, more money and more time!
Nick McLean Real Estate Group
PS. To get proven and repeatable referrals. Acquire a new client, provide an exceptional experience that turns them into raving fans. The first-hand experience is where word of mouth originates.