More videos from this series
There’s no other industry more like it, why? One, we’re the only industry in the world that know where our customers live. That’s the first part. You know what I mean?
We know, I mean, people come to me all the time and go, “I can’t believe it, that real estate company just listed Brown Street,” and I go, “Well, let me ask you a question about Brown Street.”
I said, “How long has Brown Street been there for?” and they said “Oh, 80 years?” “How many times you’ve been past Brown Street?”
“A thousand times.”
“Was it there yesterday?”
“Yeah.” “You know who owns it?”
Top of the computer… “Yeah, Mr. And Mrs. Smith.”
So, Mr. and Mrs. Smith has Brown Street there for 80 years. You’ve been past a thousand times. You had everything you need to list at home, except the one thing that mattered. The relationship with the person who owned it.
We’re the only industry in the world that knows where our customers live. That’s one part. But that’s all the stock-ins. Let’s talk about the stock-out. It’s the most unusual industry in the world. Why? Because we actually have to make a number of sales before we get nothing. I got to make a sale to Sam to list her home. And that’s a sale in itself. What most people think is that we actually have two sales to make. We actually have three.
I make a sale to Sam as sale #1 to get her listing. When I sell the house to Mark, that sale #3. But the most important sale in this climate is the sale to reposition Sam’s thinking on price. That’s sale #2, and it’s the most important in this climate. And yet you go to most businesses and they have plenty of structure around sale #1, a little bit of structure around sale #3 and actually no structure around sale #2, which is the stock management part of the business.
I’ll let you know in a market like last week, where the market’s pretty tough, there’s heaps of stock under market, and I asked ’em, I put the three sales on the board: sale #1, sale #2, sale #3. I said, “I’m going to give you 10 marbles, and I want you to allocate the marbles to where you think the most important sale at the moment is.”
Most of them went, you know, sale #1, the sale of the vendor. Most had four marbles, then three marbles in sale #2, and then four marbles on sale #3, which is the sale of the purchase.
They asked me what I thought, and I went, “zero, ten, zero.” If I came into your marketplace today, I said, “stock’s falling off the trees, it would take me 20 minutes to get the stock.” And if I sold seven houses in the next fortnight, ’cause I had a good stock management system, all of a sudden I’d have all the buyers in the world once I got the prices right, and every consumer in the market would want to list with me, because I’ve sold all the properties.
Stock management is a way of thinking. It’s a complete process. How strong are your stock management systems? You know, because they’re the things that are going to set you apart for the next cycle.
We use a process called ‘sequence of sale’. So, the sequence of sale, the first step in the sequence of sale is traffic. So, as the markets get challenged, traffic comes out of the system. Already we’re hearing people. I might get many people through my opens as I once was, enquiries dropped off. That’s called ‘organic traffic’.
So we have another traffic, which is called ‘driven traffic’. So the good agents know they need inspections to actually give the vendor the feedback.
So step one is traffic. So we monitor traffic and we don’t rely on organic traffic, you know, I’ve been saying to my staff and I own my business in Surfers Paradise with Andrew and Greg, was, “No one’s going to turn up to your open this weekend, but if no one does, I’m gonna kick your arse,” meaning, you’ve got to get on the phone and drive traffic to the stock.
We use the the traffic to build a platform. The platform is a platform with information, feedback, offers, price feedback. Our research show in Western Australia that when we have a well-managed vendor report, we have a 30 per cent clearance rate.
So, if you aren’t doing vendor reports, I say to every agent that doesn’t use a vendor report that, “isn’t your vendor unlucky they chose you?” Because you’ve given your vendor a 30 per cent less chance of selling their home. Not when the market was booming and the market was booming, you could have stuck a carrot in your ear and done anything, and you still would’ve sold. But in this climate now, vendor reports are pivotal.
And the next piece is reposition. So traffic, platform, reposition. So, you can reposition two ways. Price for me. The highest clearance rate of stock in our business is a piece of stock that was a private treaty and we convert it to an auction.