We have an interesting dichotomy between scarcity and abundance in our industry.
Many are drawn to a career in real estate sales due to the lure of uncapped income potential, glamorous social media posts and a proliferation of European cars, however, the reality is the majority of real estate agents are earning relatively ‘average’ income across the board.
Why is this?
There is no shortage of advice and formula for success available at our fingertips.
There are several theories as to why some agents excel where others struggle to carve out an enduring business, but I think we need to explore the concept of scarcity mindset and how the structure of our industry reinforces this consistently.
Firstly, a brief explanation – a scarcity mindset is one where the brain overly fixates on a lack of resources, in the extreme example you could look at someone living hand to mouth – on the poverty line, focus turns to the fundamental need to put food on the table or keep a roof over your head.
What this does is cause the brain to consume an excessive amount of energy and capacity on fixing that fundamental problem.
This short-term focus inhibits the ability to think longer term and make decisions for future growth.
Scarcity mindset also reinforces the belief that if someone else has some of the resources you’re trying to secure, you will create a perception that there is less of that resource available for you.
So let’s look at how this theory is overlaid in our industry.
Firstly, the establishment of your business requires calling strangers, knocking on their door and asking for business, where the typical turnover rate of an average Australian suburb means about 95 per cent of the people you talk to won’t want what you’re selling.
From Day 1 the messaging is that there isn’t much opportunity when you look at this example.
Let’s move on to buyer work, how for 10 people who come through a property, maybe one or two will be motivated to make an offer.
Many conversations and much time will be spent dealing with rejection and reinforcement of the theory that there aren’t many buyers for each property, fuelling the perception that it can be hard to make a sale and carve out a living.
The listing presentation process doesn’t help either, when typically you’re vying against multiple competitors to secure the right to make the sale.
Where this scarcity mindset really damages us is that it reinforces the reliance on a ‘catch and kill’ business model.
If you’re working on the assumption that you don’t have much opportunity to create business it will cause you to compromise, and these compromises almost always damage your return and often the return of your customers.
Here are the typical tell tale signs that scarcity may be driving your decision-making:
- You sacrifice your call sessions. An appraisal or offer comes through and you cancel your scheduled call session to attend to the unplanned interruption because you tell yourself if you don’t do that, you will lose that opportunity.
- You compromise on your A-Grade listing process. Desperation for stock means you will take the listing at any cost. Commission will be cut, (often at our own offering rather than the vendor’s insistence), method of sale recommendations are forgotten and you cut essential marketing assets. The short-term focus on getting the listing compromises your long-term business model.
- You sell auctions prior. As buyers’ behaviour changes and offers aren’t flowing freely it can reinforce the scarcity mindset. The first thing we see with agents who drop the auction process is that they start to sell more before auction day. This is underpinned by the belief that there is only one person who will pay the right price and the process won’t work in this instance. Rather than taking a systematic approach to producing offers and bidders, you succumb to the belief that you have lost control of the process.
- You don’t invest in your business. This is one of the biggest hurdles growing agents need to overcome. We all know that this industry requires more than 40 hours per week to operate a sales EBU at an adequate level, however a fear that increasing the team will only take from profit rather than generate revenue stops many from taking the essential step to scale for growth.
When you start to think about it, the whole business model is set up to reinforce these beliefs.
Ask yourself, are you working in a short-term mode?
Are you compromising on what you know will grow your business due to a deep-seated belief that there just isn’t enough to go around?
So how can you protect your business from short-term, scarcity mindset?
The answer is as simple as checking your thinking and behaviour around your actions.
Have a look at your daily activities, are you reacting to what pops up or working to a structured plan for growth?
The best example of a growth activity in your business is consistent, scheduled call sessions where you communicate with your customer base.
The style of communication isn’t about short-term gain such as, “Do you want to sell your house?”
Rather, it’s a long-term focus on providing great service and building a meaningful relationship that will ultimately result in an abundance of business flowing to you.
Plan your conversations to provide interesting and valuable information about what activity is happening in your suburb, infrastructure changes, improvements to community services, updates around the economy and suburb pricing trends.
Think about the type of conversation that would be valuable for you to receive and make a 12-month plan around these conversations.
How much of your week is focused on longer term, business growth activity versus short-term reactive activity?
The solution is simpler than you may think.
