“20 Minutes of Successful Niche Secrets – EPISODE 32”,
Where I coach Andrew Reid on how to increase his referral base while targeting a Niche Market
“20 Minutes of Successful Niche Secrets – EPISODE 32,”
Where I coach Andrew Reid on how to increase his referral base while targeting a Niche Market
Glenn: Hi! It’s Glenn McQueenie, and welcome to another edition of my 25-Minute Success Series Podcast. Today, we’re pretty excited because we have Andrew Reid from Advisors Realty Brokerage in Toronto. How are you doing today, Andrew?
Andrew: I’m feeling great, Glenn. What about yourself?
Glenn: Good! Oh, I’m doing fantastic. Thank you so much for taking time to join me on this podcast. I’m really excited to explore and see where this is going to go today. So before I start, can you just give us a quick minute or two minute summary of how long you’ve been in the business, where you are now, and then where you’d like to go? And then we’ll just go on a great exploration together.
Andrew: Alright, that sounds good. Glenn, I’ve been selling real estate for approximately 13 years now. Just a little bit about my journey is I started off, and it was a tremendous struggle. I was so close to walking away from the business. But about year three, things started to turn around for me, and I started doing a couple of transactions every year (enough to take care of myself). What has happened over the last, I would say, five or six years is I’ve kind of plateaued. I do approximately between 20 and 30 deals a year, and I’m just stuck there. It’s pretty much a solo operation that I run. I do everything myself, so I know that I’m going to have to implement some systems to grow and to get those numbers up. What I’d ideally like is about 50-60 transactions a year. I’d feel very comfortable there. So that’s a little bit of a rundown on me.
Glenn: Well, that’s really interesting. It’s not unusual, too, for a lot of people coming into this business to take a couple of years to really get going, because a lot of the real estate training courses that we have to do here are more like, cover your Broker’s ass and don’t go to jail, and have really nothing to do with building a sales team or a sales business or knowing how to lead-generate, or even get along with people. Hopefully they’ll change that sometime in the future. But you’re a survivor! You’ve been doing this for 13 years, and your production level’s pretty good right now. I mean, that puts you probably in the top 3% or 4% in the Toronto Real Estate Board, which is pretty admirable, because there are 49,000 people competing to get really 110,000 sales, or maybe 220,000 transactions. So what we’re finding (and I think this has really come about in the last couple years), is there’s this segmentation happening in the market, where a lot of the big teams are getting their unfair share of the business. Have you noticed that in the area that you work?
Andrew: Oh yes, for sure. It’s actually something that I’ve been talking to my wife about. She sells real estate as well. (Well, she used to. It’s more of a part-time thing for her right now). But we’ve noticed that the teams have gone from, I think it was about 10% of the transactions up to about 50 or 60% if I’m not mistaken. I might be off with my numbers, but I know that they’re growing massively.
Glenn: Yeah, and it’s becoming a big deal, because then on the other end, you have so many agents coming into the business now. Every party I’m at, when I hear someone switching careers, they’re either going into dog walking, personal training, yoga, or real estate. There are only four things they seem to ever want to get into right now. So a lot of agents – well, here are the stats – they’re losing 19% of their client base every year because one of their favourite client’s or good client’s or past client’s brother’s daughter’s boyfriend or brother’s wife or some family member has just got their real estate license, and now they feel an obligation to keep it in the family. Have you experienced that?
Andrew: You know what? I’m lucky in that way. There’s been very few that have gone in that direction. I’ve heard some of them speak about doing it, but then they never really followed through with getting their license. So I do get quite a bit of repeat and referral business in my pipeline. I just know that I can utilize it better.
Glenn: Good! Well, that’s the thing. It’s funny. When people used to say, “Should I get into real estate?” I’d be like, “Oh, yeah!” Now I’m like, “Oh no, no, no. It’s really tough! You should never go there. That’s ridiculous.” Okay. So you’re doing pretty good business right now. It’s mostly repeat and referral, and you want to get up to about 50 or 60 deals. So what is your plan to do that? Who’s your perfect client right now? I guess that would be a better question.
Andrew: My perfect client is a first-time homebuyer who has their down payment saved up, or someone who already has owned a piece of real estate for the last five or 10 years, you could say, and they’re ready to upsize. And for the first-time buyer, they’re ready to move into their first home. Actually, I’m going to be showing a property to a past client (unfortunately she ended up separating with her husband), so it’s kind of like she’s in the market for the first time. She’s starting all over again. I’ll be showing a property soon to her. So that is typically the client that I work with – someone who is at the entry level of the market, or someone who is selling their first home and buying their second home.
Glenn: Right. Okay. And where are they now, and where do they usually move to? Or do they stay within the same neighbourhood?
Andrew: Well it’s funny that you ask that, Glenn, because when I first started selling real estate, most of my transactions happened within Toronto, and every year, I’m being pushed further and further out east. So I started in Toronto, and then most of my transactions happened in Pickering and Ajax. Then all of a sudden it was Whitby, and then all of a sudden it was Oshawa, and now it’s Bowmanville, Clarington. So most of my business is happening in Durham, and most of my clients are coming from Durham and the east end of Scarborough as well.
Glenn: So for those people listening who don’t really know what we’re talking about, most of his clients were really close to him before, and then it was 5 or 10 miles away (or 20 km). Now, Clarington is probably 60 km away (25-30 miles away from Toronto at least).
Andrew: I would say that price has forced people out, further east. So that’s what’s going on.
Glenn: Okay, so let me ask you this question, because you’ve got a couple of niches, and the whole idea in my book – I’m really talking about people. Just bring your natural strengths of who you are. Don’t try to be like every other agent. Just be you, because everyone else is already taken. And bring it to a target market of your perfect transaction, right? It looks like you have two primary niches right now. One is helping first-time people buy, and then the other is people moving up. So let’s just talk about the move-up for a second, and we’ll go back to the buyer. The move-up – how much are they selling their house for, and how much are they buying for, typically?
Andrew: I would say they are selling their house for between $550 and $650 is typical these days for a starter home, and then they are buying between $700 and $800,000 – somewhere in that range.
Glenn: Right. So it’s pretty typical. On a move-up, most people upgrade about 50-60%, right? Anywhere from 40-60%. And then their next move-up, as they get into their later forties, is going to be up to luxury if things are going really, really well, and then they’ll probably upgrade 100%. So every time you do that one move (you move them from here to there), you’re about $1.4 million in gross sales volume. Would that be accurate?
Andrew: Yeah. Yeah, that’s accurate.
Glenn: Right. So it’s probably about $30,000-$35,000 in gross commission. About there?
Andrew: I would say roughly. Yeah, you’re pretty well bang on.
Glenn: Right. So if you want to do 50-60 transactions, we really just have to find 25 or 30 people, right?
Glenn: Which is two per month, right?
Andrew: You got it.
Glenn: So once you start realizing how few people you actually need, it’s really easy to design a lead-generation program around it. What I’ve learned is that what you focus on expands, and people grow into the conversations that you’re having with them. So when you meet someone for the first time at a party or something, and inevitably someone says to you, “Hey Andrew, what do you do for a living?” – what do you say?
Andrew: I tell them that I sell real estate for a living.
Glenn: Okay. So are you open to some coaching? We’re just going to change your language just slightly on that.
Andrew: Absolutely. 100% I’m open to it.
Glenn: Good. So if our target is helping people move up from one home to another home, then the more we start telling people that we’ve just met (or people we already know) that we just helped a family move from one home to another home, and they were able to get more money than they thought they were going to get for their house. They were able to buy the move-up home cheaper than they thought they were going to do, and now they live happily ever after, because they’ve got the right school district for the kids, or it’s right next to the GO Station, or they’ve got the perfect backyard for a swimming pool – all those great, we call them “winning formula stories” in real estate.
Glenn: The more you just auto-default to saying this – and I want you to practice this over the next little while – you’ll start watching that that’s the only type of referrals you’re going to get. I’m not saying blow up your business right now and just do this. I’m just saying keep doing what you’re doing in your business 80% of the time. But 20% of your time, let’s start focusing really closely on this, because that’s a good compensation level for selling two houses. If we did that twice a month, you start getting close to $600 or $700 or $800,000 a year, which will give you more money to pay down your debts, build your wealth, and get more freedom of time, money, relationships, and purpose. Does that make sense?
Andrew: Oh, yeah, 100%. That’s exactly where I want to go.
Glenn: Perfect. So next time you’re at a party, and someone says, (inevitably it comes up) “Hey, what do you do for a living?” I would just say this: “I’m in real estate, and I really focus on helping young families move up to their dream homes. I just recently helped this young couple. They had two young kids under five, and they wanted to move to the perfect school district, because that’s what parents think about when their kids are that young. We were able to get them this amazing four-bedroom house with a massive backyard and a pool steps to the school they always wanted to go to for way less than they thought they were going to get. It just worked out so perfect, because then we sold their house on the back end for way more than they thought. So with that difference that now they don’t have to spend, they were able to do all the renovations and improvements they wanted to do to this home now, instead of having to save up five or 10 years from now.
Andrew: That is a very compelling story that you just told someone. I can definitely see how I need to change my language, because I know that that’s going to have people asking questions and wanting to do business with me.
Glenn: That’s right. And then the great thing is, you tag on the referral request, right? And the referral request happens at the very end, where you go, “I just found another house like that, but I don’t have anyone else who’s moving up into Clarington right now. Who do you know that’s thinking about moving in Clarington?” It’s a very specific request. I learned this from a guy named Joe Stumpf a long time ago: the more specific your referral request is, the more chance you have of actually getting it. If I was to say to you, “Who’s a great friend of yours who has three kids?” That name would pop right into your brain.
Andrew: Oh, for sure. Yeah.
Glenn: At a much deeper level than if it was, “Who do you know who’s thinking about buying or selling?” It’s just so weak. The final part is just that people learn by stories and metaphors all the time, because that’s how we were raised, with nursery rhymes and all those things. People love a good story. Don’t you love to be at a party or sit around and hear someone tell a really good story?
Andrew: Oh man. Come on, man. I love it! I absolutely love it. That’s the way a story gets branded into your mind, right? You’ll never forget it.
Glenn: That’s right. So they just opened the door to let you tell them what you do, but you’re very specific on what you do. And you can change this script depending on who you’re talking to. If it’s a first-time buyer, and you think they’re young enough they don’t have a home or whatever, and they’re like, “What do you do?” You go, “Oh, I’m in real estate. I just helped someone who had been renting for five years buy their first home. Honestly, they never thought they were going to be able to afford it, but we were able to get such a good deal because the market’s shifted right now, and get way less than they thought while the interest rates are really low right now. Finally they’re out of that rental condo, so they don’t have to schlepp their groceries up the stairs anymore and do all that crap. I’m going over there for a BBQ next week.” These are the winning formula stories that people love to hear about.
Andrew: Yeah. I can definitely see that. I’m going to work on that this weekend.
Glenn: So here’s the second step. I want you to go through your database right now, and look at everyone who’s been in their first-time home for two or three years, because we’re finding most people actually move between year three and five now, on their first home.
Glenn: Right? I would argue that 80% of first-time buyers move in five years. Has that been your experience?
Andrew: Honestly, you’re bang on with it. I’ve had clients that have moved with me three or four times already. It’s nuts. It’s every three, four – actually, four years seems to be that magic number. They call you because the mortgage is going to be up next year, and they’re like, “Yeah, I’m ready to do something.”
Glenn: Right. But what’s changed now that I found is that more people are going online and starting their search a lot earlier right now. It’s just like, “Oh, just looking, just looking, just looking.” But that’s why I want you to contact them around year three, because we’ve all had that situation where all of a sudden, one of your good clients ends up – you get the phone call, and it’s like, “Oh, we just bought a house!” And it’s like, “Oh my God. That’s so great. I’m so excited for you.” And then they go on to tell you how great their house is, and, “Oh, by the way, they had to list it with the person they bought the house with, because they got such a good deal on it, and they gave them a break on the commission,” right? Has that happened to you before, Andrew?
Andrew: You know what? I’m very, very glad I’ve had to deal with that call maybe, I would say, a handful of times in my life, and I learned from it quickly.
Glenn: Yeah. And it’s okay, because they don’t owe you anything. It’s our responsibility to keep in touch with them. When they poll buyers and sellers, 80% of them said they’d use their agent again; yet only 22% of them do. And most of it’s because we drop the ball, so I’m not blaming anybody. But if you think about it, and go through your list over the weekend, over the next week, and look at everyone who’s been sitting in their house for two or three years right now, I want you to call them and just ask them two questions, okay? You don’t even have to write these down. I’m pretty sure you’re going to be able to remember them. The first one is “How are you?” And the second is “How’s your home?”
Glenn: And don’t talk about real estate. They’ll bring it up. That’s what you have in common. They’ll bring it up. Don’t ask them for referrals. Don’t violate it. All you’re doing is called the two-question referral call. Our record right now I think is, one of our people we’re coaching called 39 past clients and got 14 referrals from it. I think you should be doing that every year with your clients, just as a check-in call. “Hey, I just drove by your house, I was just thinking about you. How are you? How are you doing? And how’s your home?” And they’ll tell you, “Oh, we love it! Oh, it’s fantastic!” Or “The bathroom broke,” or whatever. If my client said, “Oh, we’re having a problem with our downstairs bathroom,” I personally would just send a plumber over. It would be on my dime, just to fix it and “wow” them. But what you’re going to find is you’re going to catch them earlier so they don’t fall out and just walk into an Open House and go, “Oh my God, I bought the place!” Right? Number two is their age group. They’re about to move up, which means all of their friends are about to move up, too. So when they’re out on the weekend, and someone’s like, “Oh, yeah, we’re thinking about moving up.” “Oh, well I just talked to Andrew yesterday.” And guess what? Your phone number is on the top of their cell phone. It’s so easy for them to pull out their phone and just give them that number. It’s much easier then, because they’ll be in a conversation six months from now, and they’ll forget about you, because they’re thinking about kitchens or renovations or whatever, and someone goes, “Oh, we’re thinking about moving up,” and they’ll go, “Oh, that’s great! Where are you moving to?” And that’s the difference.
Andrew: Yeah. I can see it. I can see it.
Glenn: Yeah. And then the third thing I would suggest you do is start doing a video CMA for all your past clients every year. It’s such a cool tool. I was with a financial planner, and I would never really hear from him. And I was thinking, I’m pretty sure he’s checking my stuff, but he doesn’t really call and go, “Hey, Glenn, I’ve been checking your stuff.” But I thought, what if he videotaped himself looking at my portfolio on his computer screen, and said, “Hey, Glenn, it’s Jim. How are you doing? Listen, I’m just looking at your portfolio right now. I think things are pretty well. I don’t think we have to move money anywhere. I think we’re all in the right place, but I just thought you’d want to know. Talk to you soon! Bye!” and sent me that video? What would you feel if that happened to you?
Andrew: I’d definitely feel like this guy has my best interests at heart, and he’s looking out for me.
Glenn: Right. So that’s what you do! You grab your phone, you’re on Toronto MLS, you pull up their street, or their neighbourhood, and you can just go through your client list. Do five a day, or whatever. It doesn’t take long. It takes like 30 seconds. And you’re just like, “Hey Joe! It’s Andrew. How are you, buddy? Listen, I’m just looking in your neighbourhood right now because I was showing homes there the other day, and looking at some of the recent sale prices, and man, you’ve done really, really well!” (You’ve got to bring all your personality into this, Andrew). “Looks like your price is up about $80,000 from when you bought a couple years ago. Just thought you’d want to know that. Talk to you soon. See you later. Bye!” Boom. Nothing specific about moving. You’re just coming from contribution, saying, “I’m thinking about you, I care about you, and you matter.”
Andrew: Yeah. That’s beautiful. I’ve actually done that occasionally, but I haven’t done it in a system. I’ve done it before with clients. Say you’ve worked with them, and a year has gone by or year and a half, and you know prices are up in their area quite a bit. I’ve called them, or I’d send them a text, or I’d send them the listing of a property that sold that was similar to what they bought, and they’d always be excited. They’re like, “Oh my God! That’s great news, Andrew! Thank you for passing it along to me.” So I can see why you recommend it, and it is something I just need to create a system for so that I do it more often.
Glenn: Yeah. Here’s your system: set a reminder in your calendar at 9 a.m. that says, “Send five video CMAs today.” That’s your system. It’s so simple to do, right? And you’ll just find you do it. And then here’s the last thing I’d tell you to do, or see if you’re open to. It’s cheaper for your clients to move up today than it was in March, wouldn’t you agree?
Andrew: Oh, that is absolutely 100% true, yes.
Glenn: So what’s the difference in the dollar value of your typical client moving up now, compared to moving up in March?
Andrew: Oh, I would say that at least they’d be saving 5% on the buying end. There’s so much inventory out there right now that I know that for sure, they’d have a pick of what it is that they want, and they’re not going to have to be fighting anyone to get it.
Glenn: Right. And what about their house? Has their house gone down much, or not?
Andrew: My typical client? No. We’ve been fortunate. A lot of the homes that my clients have bought recently – somehow we avoided big bidding wars, and they didn’t have to get too crazy with going over the asking price. So they’re in pretty good shape.
Glenn: Right. See, the beautiful thing is, if you look at some of the sales that occurred at the end of March in the 905 (which, for those people listening, is the phone district just outside of Toronto), those prices went up almost 30% from January to the end of March, and now they’re back down. There are so many listings sitting out there right now, but the great thing is their back up property hasn’t gone down that much. I think that compared to what their friend bought months ago, they could save 20% or 30% on that purchase. And more importantly – if they could get a mortgage now when rates are low (they’re 2.7% right now, or maybe 2.95%) – there’s never been a better time to move. I always find it crazy that when the market’s roaring and prices are going up really quick, all the buyers line up to buy. And now when we have this market where it’s paused a little bit, they all go, “Oh, no, I’m not going to do it.” And they don’t realize – they are paying the price, but they’re really buying a monthly cash flow.
Glenn: At the end of the day, they’re going to save $200,000 or $300,000 on what they would have a month ago, so that saves them about $800 or $1,200 a month in mortgage payments, and they’re going to be able to move up for smaller than they ever have, at the cheapest interest rate they’ve ever had. If you were to do a special report and send it out to your clients, or start telling this story when you’re at parties, and just start saying, “You know what? It’s the best time I’ve ever seen for somebody to move up right now.”
Glenn: You send an email, and just give examples, right? The exact same thing that I’m talking about, where it’s like, “Listen, your house was worth $800 or $650 in the peak. Now it’s $600. But the place you wanted to buy was $1.1, and now it’s $820.”
Andrew: There you go.
Glenn: And it’s only $220 to move up. It’s $800 a month. Now you can have the house you always wanted, and you’re going to save over $800 a month on a monthly cash flow, and that means you will save probably $110,000 in interest costs over the amortization of that mortgage.
Andrew: Wow. When you put it like that, so detailed, and the exact dollar value that they’re saving – that’s something that I need to get better at.
Glenn: Yeah. People love facts and evidence. Because you have to remember: everyone shows up with a closed mind. It takes a little while to get that mind to open, but most people are closed-minded when they show up. When they meet you at a party, and you say, “I’m in real estate,” their closed mind goes, “Oh my God.” They’re not saying, “Oh my God! I can’t believe I met another real estate agent! This is the best thing that’s ever happened to me!” Right? That’s not what happens. A lot of them are like, “Oh, that’s interesting.” Or some of them go, “Oh boy, I hope they’re not going to start talking to me about real estate.” But when you start telling interesting stories – how you were the saviour and you protected your clients and that you advocate for them (because that sounds like exactly who you are, Andrew) – now you build a bigger niche. Now you get to really help more people move up, and then you just perfect this model. And then I would tell you to backfill your system. Once this gets going really well, I’d tell you to open a rental division, to start getting renters. Find another agent who just does rentals, because that’s going to give you a pool of your division to get your first-time buyers in, and your first-time buyers are going to be the pool that’s going to lead to the move-up buyers coming up. So you just build a whole ecosystem.
Andrew: Yeah. Yeah, that sounds perfect. That’s the way to knock them down, right?
Glenn: Yeah, that’s awesome. Alright, was that worthwhile? Did you get some ideas?
Andrew: Oh, man. I appreciate it, Glenn, so much. I definitely got some ideas, especially creating little stories that I can share with people – short stories that will pique their interest and lead to more questions and more conversations. And it’s all about relationship-building, right? So it’s perfect. I really appreciate you taking the time.
Glenn: Awesome! Well thank you, Andrew. Thanks for being our guest on our podcast here, okay? So I’ll talk to you later! Thanks a million for joining me today!
Andrew: Thank you, Glenn. Take care.