In commercial real estate brokerage you will make plenty of mistakes on the road to progress. In sales, leasing, and property management, there will be issues, challenges and mistakes. Every day there will be issues to work through and potential diversions to disrupt your efforts.
Let’s face it; the industry can be complex and competitive. You will not win every client or listing that you chase, although you should win more times than you lose. There will be challenges in your career and sometimes you will make the wrong choices (or no choices at all). The key message here in commercial real estate is that you can learn a lot from your mistakes and the mistakes of others. You can make adjustments to your efforts; that is how you progress.
A Real Broker Mistake
Let’s take a broker story as a case in point. You will learn from this story just how easy it is to divert and take the wrong directions in our industry.
This is a 2014 story of real ‘mistakes’ of a real estate person working an inner capital city suburb in industrial property sales and leasing. Here are the facts of the market to set the scene:
- The sales and leasing season for a calendar year in the location was typically mid-February to late November in each year. That means most listing business generated could be derived during that time. The property market always declined significantly between December and early February.
- Around the change of financial year in June to July, things usually slowed for a few weeks in both business and investment. After that time the activity ramped up again for the balance of the year.
- In the location things were generally active and ordinary. In other words the sales and leasing deals could be completed with specific brokerage and agent effort. Some businesses and investors generally were looking to move or invest, so there were things that could be achieved locally. The opportunities were there for those brokers and agents that could focus on prospecting, and stay on task.
So let’s look at the story about this agent. For the purpose of the story I will call the person ‘Rex’ (name changed for obvious reasons). Here are some facts about ‘Rex’ and what happened to him in 2014.
- Rex is not what I would call a highly experienced agent. He still has a lot to learn about commercial, industrial, and retail property. He had graduated into the commercial segment following many years in residential. He did what most real estate people in such situations do; he had started to work industrial segment given that it is not overly complex and yet it is reasonably active as a segment.
- After a couple of very slow years trying to make things work, he changed brokerage again and started a new location. He had a good start to the year between March and July 2014 due primarily to his prospecting activities including growing his market share in a particular location. He had learnt how to prospect and had taken steps to deliberately grow his market share through database creation and direct marketing. He was talking to a lot of people in a regular and ongoing way. Soon his database was growing and enquiries were coming in.
- Before I go too far here, I will go back to the point that Rex still had a lot to learn about certain market segments and property types. Commercial real estate is like that; there are many things to learn, and personal experience will usually be the only way to achieve the learning curve and local knowledge. So Rex was still an ‘ordinary’ agent learning about the commercial, industrial, and retail segments.
- In early 2104 his prospecting activities had created some positive results. Given that personal level of success and momentum, he had converted a few good investment listings in a location where investors liked to purchase property. He took his new listings to the market using the auction method of sale. It was the middle of 2014, and the right time to do property auctions.
- So the auction campaigns started. He had created some reasonable levels of enquiry from each campaign given that he had a few good listings to market in a comprehensive way (quality listings will always create that marketing advantage when it comes to property enquiry).
- Whilst the auction campaigns were underway, Rex did very little direct prospecting and new business generation. He simply focused on his new listings (that was a bad move).
- So back on the listings he had, whilst there were not a lot of buyers active on each property at that time, there were still a few good and interested buyers, and that was really all that was required to get the listings locked away on successful contracts.
- He had sufficient enquiry to convert and close on the sales of all three listings at around two million dollars each in sale price. Rex had achieved a reasonable level of personal income through commissions. It should be said that this was the first reasonable income Rex had achieved for quite some years and that income was only as a direct result of his prospecting and personal effort.
- With the commissions created, Rex started (falsely) to think that he was a ‘top agent’ and the ‘go to man’ for the location (this type of self-belief can be a real problem, and in this case was). After his recent sales, he took a short break from the business with a brief holiday, and forgot about prospecting entirely for the rest of the year. This was in September 2014. Essentially he did not prospect for new business between September and Christmas in that year; he was still living off the enjoyment of his recent sale commissions. His ‘ego and attitude’ were however still quite high at the end of 2014. That is what you call a ‘false belief’ leading to ‘real shortcomings’.
- When January 2015 arrived, Rex had no listing momentum and flow, no new stock, and no commissions in the pipeline. This is where the problems started to occur. He was running out of money and had no momentum in the marketplace. He was starting to consider family and lifestyle problems that would soon evolve.
- To cut a long story short, at the start of 2105 Rex knew that he had to find another segment of the property market in which to start afresh. Whilst he still had plenty of self-belief, he had little self-process; he had to start rebuilding his momentum, career and market share. He had let himself down when it comes to property activity, diligence, focus, and action.
When you look at the facts from the story, Rex knew exactly what to do, but consistently failed to take the required action. His inflated ‘ego’ from the July sales in 2014 had shifted his focus away from the things that matter (prospecting). The market soon moved away from him and the good listings went elsewhere. There are always plenty of competing agents ready to take up on the mistakes of others and that was exactly what happened to Rex.
The moral of the story
This is a real story from the property market (Rex is not the person’s real name). We can learn from this.
We will all make mistakes in the industry, and Rex is not unique or special. He failed to see what was happening and then failed to do something about it. He should have adjusted his focus and activities earlier rather than later. He should have kept his ‘ego’ in check. Confidence is a good thing; ‘ego’ is not. Develop plenty of confidence in our industry from the deals that you dot, but keep the ‘ego’ out of the equation as it will not attract the clients or transactions.
There will always be ‘peaks and valleys’ in our business. When you are at the top of your game, still focus on the small things and the important things. Build your confidence.
Commercial real estate is an industry where the rewards are large and generous for those that take correct actions in a regular and ongoing way. We should all learn from our mistakes and adjust our actions accordingly. Look for the mistakes and resolve them. We can all learn something from Rex.
So let’s fast track the full six months now to the middle of 2015. Rex is still struggling in the marketplace to gain any traction and listing activity of consequence; he is not a prospecting directly, logically, and effectively into the location. He is losing ground.
He is now trying to take any shortcuts possible. He has become desperate and disorganised. He has failed to understand that he was and still is the problem to his current situation. Unless he changes his personal actions and focus, nothing will improve. It is quite likely that Rex will soon be slipping out of the industry.
The central message
There is one fundamental message that flows from the story. You can learn from the mistakes of others in the industry, and you can also learn from your own mistakes. The important thing here is that you do quickly see where the mistakes are happening, you learn from them, and you adjust your efforts specifically and consistently. Make the adjustments sooner rather than later and track your progress. That is how you can succeed in commercial real estate brokerage.