The Senior Agent with Barry Lebow
Is your real estate business saleable? If so, what is the value? Have you built a business that would allow you to sell it if you were to move or retire? The bigger question, if you answered no to these questions, is why not and what are you going to do about it?
There is an old saying, “Old Realtors never die, they just run out of commission.” It may be cute or a cliché but given my 43 years in real estate I have observed too many agents who have worked hard but in the end still needed the next deals to pay for past debts. Given that there are just shy of 100,000 Realtors in Canada, limited numbers leave this industry or retire properly. As they age, as health becomes an issue, they lose their earning power and fade away.
In most businesses or careers, one thinks about their future and how much money they will need to enjoy their retirement. Not so with real estate agents. Yes, some are savvy and invest in the product they sell, but not many.
One overlooked asset is what is referred to as a “book of business.” This is nothing more than your own client base and your service record. Over the years I have heard of books of business changing hands from a low of $25,000 to a high of $150,000. Say an agent moves from one community to another and wants to accelerate their success in the new town. They can buy an established book of business and within days be back in the game.
A book of business is not just a simple client base. It reflects your contact history, your marketing, newsletters, your advertising and a record of your success. Good agents work their client base but also keep good records of all contacts. A “contact” is not a client but the number of times a year you connect with your client in any manner.
What bothers me is that more brokerages do not teach their new agents how to retire. They do not discuss exit strategies and how to build a book of business, which is a hard asset.
Building a book of business takes years. It is a systematic approach to the business of real estate. One thing is obvious in professional real estate – top producers for the most part have one common trait, they are organized. They have systems in place and they work on their business.
The sale of a book of business obviously depends on the size of your market, the state of your local market and how many clients are prepared to accept working with the new person. Your records have to be good, they have to be accurate and they have to show that the buyer of your business can make a living from your client base. The volume of calls you get is also a measure of the worth of your book of business.
An exit plan is just that, an exit plan. The book of business is a saleable asset. To receive little or no money down and then a referral fee on every potential deal in the future is not a true exit plan. What if the buyer/agent just is not good enough, or is sloppy or gets ill? Remember, no banking institution allows the deposit of a post-dated cheque.
So, no matter where you are in your real estate career, take a good hard look at your business and focus on making your book of business valuable, viable and transferable. You deserve an exit plan.
Barry Lebow, a long- time columnist for REM, returns to the fold after a hiatus of almost two years due to personal and business reasons. Barry started as a Realtor in 1968. He is an appraiser, arbitrator, Realtor and educator. Today he specializes in being an expert witness in stigma and agency matters but is most active as founder and CEO of the Accredited Senior Agent professional designation program for Realtors, which now has 700 members and continues to grow. A long-time writer, author and speaker, he is considered one of Canada’s most dynamic real estate facilitators. 416-784-9806; Email [email protected].
