Understanding the Process

The Transition broker used to be one of the hordes of Haystack brokers crammed into a territory in competition with one another, vying for the attention of decision makers. They will always be there, constantly coming and going. What separates the Transition broker from this horde will be his ongoing commitment to the contacts within the four corners of his community.

Haystack brokers wandering around the Transition broker’s community are flitting from one area to another, not focusing on establishing relationships with contacts. They are blindly hoping to find that needle in the haystack, the deal that has eluded them and which they think could be behind the next door.

Many times the Haystack broker will, in fact, stumble through a door and by dumb luck or good fortune discover a real requirement or a potential deal. I called this broker the Last-Broker-In. Suffice it to say that the Last-Broker-In is making old-fashioned Haystack brokerage cold calls.

But the Transition broker is different because he does not make cold calls. He makes only warming calls on contacts he knows personally and who know him. Each time he meets with his community contacts he gets to know them a little better and establishes greater rapport and confidence. Loyalty and commitment are the eventual by-products of warming calls, which makes warm calls more effective than cold calls.

Contacts Become Clients

As decision makers get to know the Transition broker better, they come to understand that he is the go-to broker in his territory. The broker begins to create lasting value for himself. He differentiates himself from Haystack brokers who are just knocking on doors, cold calling a territory.

The Transition broker becomes a reliable fixture in his territory and a source of valuable information for his contacts. As decision makers come to appreciate the broker’s commitment to their area, they come to rely on him as a source of market insight, which only a truly dedicated and competent professional can credibly provide.

Over time, this reliance generates confidence in the Transition broker as a knowledgeable professional and establishes his dominance over cold-calling Haystack brokers. His personal contacts will believe that he has their best interests at heart and has strategic insight to provide.

Once decision makers come to understand the value the Transition broker represents, they will turn to him for help because he has separated himself from the brokers who are merely commodities in the local marketplace. This is the point at which the Transition broker separates himself from the Last-Broker-In. This is the point at which contacts become clients. This is the point where hard work and diligence start to pay off.

Relationship brokerage is a long-term commitment. There is a constant process of conversion within the Transition broker’s community. There is churning and turnover, with new companies constantly relocating to the area. The decision makers in those companies need to become contacts, and eventually clients and personal promoters.

Clients Become Promoters

The ultimate conversion is the conversion of contacts into clients and promoters. Once the Transition broker has done a deal with a client, the value of that client does not disappear, lying dormant for years until a new requirement for the client’s company arises. The reward for a job well done is recognition of the broker’s value to the client who appreciates good work and the quality of service provided.

It is a normal human reaction to want to reward a job well done. After finishing an especially enjoyable meal at a fine dining establishment it is customary to leave a gratuity. Everybody goes through the same calculation in determining how large a gratuity the waiter has earned. Based upon the value of the waiter’s contribution to the enjoyment of the evening, the gratuity can range from mere acknowledgment to great appreciation.

The same dynamic happens every time a broker works on a potential transaction, whether the deal actually closes or not. The very fact that the broker worked on it, and did his best for his client, earns him credit in the mind of his client. His client will want to reward him. There is a normal human inclination to express great appreciation and additional acknowledgment for a job well done.

Promoters Give Referrals

When a client appreciates the service that a broker has rendered over time, he will look to provide some acknowledgment of faithfulness and hard work. Since the client may not have a commissionable transaction in the immediate future, he will be open to do something else for the broker. In a subtle way the broker is in a position to suggest to his clients that there is something that he would appreciate by way of acknowledgment. He can ask for referrals.

Referrals are a gigantic acknowledgment of faithful service, and they can many times represent even greater opportunity for a commissionable event than the original deal. When a client refers his friends or colleagues to a broker with strong commendation of the broker’s professionalism and competence, then that client has been converted into a personal promoter.

A promoter is a reliable source of referral business for the Relationship broker. Personal promoters provide referrals on an ongoing basis because they are players in the real estate market, especially in the community where the broker claims special expertise.

The confidence that a competent broker inspires in his promoters escalates the volume of business potential over time, and this potential grows exponentially over the course of the broker’s career. Eventually it becomes possible to base a career on the referral business generated from one’s promoters. Just look at the most successful brokers in any real estate brokerage office. How do you think they become the most successful brokers in the office?

There needs to be a constant element of conversion involved in managing the Relationship broker’s community. It is a never-ending task to convert impersonal company names into contacts, contacts into clients, and then eventually clients into personal promoters.

Even within each category there is an ongoing conversion of good clients into great clients, and good personal promoters into great personal promoters. It is for this reason that every day in the brokerage business is challenging and rewarding … even if the broker does not make money on any given day.

The Transition broker must spend a tremendous amount of time getting to know the names of the 400 companies within his territory, identifying the 400 decision makers within those companies, and establishing personal relationships with those 400 decision makers over time. This represents a significant investment of time … and that is exactly what the broker is doing: he is investing time in his future.

No Better Time

There is no better time to implement Relationship brokerage than now. Most brokers are feeling the cumulative effect of slow market conditions which have been persistently dispiriting many in our profession.

As a consequence, competitors are less quick on the draw than they once were, and have increased the length and number of vacations that they are taking. They are working on their golf handicaps and learning how to fly-fish, waiting until the market turns around. But they have not gotten the word: the market has turned around (or for the pessimistic among us: is turning around). The number and velocity of transactions has started to brighten the horizon.

Assuming that the early bird will get the deal, each broker is faced with a choice. Be the early bird–or join your competitors on vacation. Time spend developing client relationships now will assure that you are not the one that hears about deals after they happen, rather than making the deals yourself and depositing the commission into your own checking account.

Half of a broker’s business should come from within the four corners of his community and the other half should come from referrals. These are two sides of the same coin. In other words, all of your business should come from implementation of Relationship brokerage.

It is a broker’s presence among his contacts within the four corners of his community that provides the basis for the development of personal promoters on a consistent basis. Referrals come from personal promoters who are in the broker’s corner and willing to refer him to their friends and colleagues in the knowledge that he will provide a quality service.

Relationship brokerage leverages a broker’s activity into increased referral activity. Without a network of personal promoters who can be a reliable source of referrals, then there are no referrals. The only way to cultivate promoters is to establish personal relationships with them over time.

The only way to establish personal relationships over time is by being present among potential promoters and providing ongoing, consistent and reliable services that justify referrals from these promoters. If you have no community, then how can you possibly generate referrals from personal promoters?

Reach for the Stars

Many times a broker is betting the farm, swinging for the fences, putting all his eggs in one basket, reaching for the stars. Whatever cliché you want to call it, all brokers dream of the big deal that will make the difference between having a boat and owning a yacht; between vacationing in the backyard or in retiring in Tahiti. Admit it! Even you have put all your chips on the table, betting that one monstrous deal would close and make you a wealthy person.

Even when that does happen, you will still need all the help you can get. You need personal promoters working to support your interest. You need inside salesmen. The trick is how creatively to identify potential personal promoters and to create the network necessary to escalate those contacts to personal promoters as inside salesmen.

So, in the end, it all still comes down to relationships and Relationship Brokerage. A broker needs to be persistent to become a Relationship broker.

Before concluding our discussion I would like to share the story of “The Persistent Bastard” (we will call him Tim). I want to tell you about Tim’s brief career as a commercial real estate broker because he was the ideal case study of what faithful implementation of the concept of Transition brokerage can do for a broker’s income.

You have probably already figured out that Tim is no longer in the business because I referred to his “brief career.” But I had great hopes for Tim when I hired him as an industrial broker many years ago. Tim had worked in his family’s business selling janitorial supplies door to door. He was a very personable young man. He loved cold calling and came into the business with a lot of enthusiasm. I was confident that I would be able to channel Tim’s cold calling skills into warm calling proficiency. I was a bit too optimistic.

Tim started as a Transition broker from his first days in the business. He was off to an aggressive start and everything looked great. Tim warm called three hours per day, three days per week, and three days of follow-up for three months before returning to his reset point at the beginning of each quarter.

He followed the program of Transition brokerage with great discipline and never wavered in his commitment to become a successful Relationship broker. However, it turned out that Tim was undermined by a faltering economy and was never able to translate his enthusiasm into transactions. Nonetheless, he did well everything just as he was taught to do.

Since he was following the principles of Transition brokerage without wavering, Tim had soon contacted all of the decision-makers within his market. Being a very personable young man, he was well on his way to creating relationships with contacts in his area. At the end of his first year he had become an expert in his community.

All the contacts in his community knew him, and he knew most of them; he knew about every transaction before it happened and he did his best to have his finger in every transaction. But he had made little money. That did not dissuade Tim from his daily commitment because he was convinced that he would make money eventually if he committed to achieving his five prioritized objectives in the proper order.

Tim made it his goal to meet the decision-maker of one large company in his area with whom he had never been able to connect. He had stopped into the decision-maker’s office once a quarter, left his business card and followed up for three days after each visit over a full year. That meant that the decision-maker has heard Tim’s name at least 16 times during the year. Adding the e-mails sent in Tim’s Touch-12 program, the decision-maker had heard his name 28 times without ever having met him.

One day at the start of Tim’s fifth quarter in the business he again stopped into the office of the elusive decision-maker. As he walked into the lobby, a gentleman in an expensive suit exited from the inner sanctum. The gentleman asked Tim who he was. Tim responded confidently that he was Tim from NAI Capital and that he was there to see if he could help the company with its real estate requirements.

The gentleman took a step back. He looked Tim over from head to foot, and finally said, “You’re Tim from NAI Capital? You are one persistent bastard! What can I do for you?”

Tim again asked if there was anything he could do to help with the company’s real estate requirements. The gentleman said that there was nothing that Tim could do to help because he had a close personal friend who was a broker. And besides, there was no building that would meet his company’s requirement.

He told Tim that he needed a 200,000 square foot warehouse and that it had to be in the immediate area of his current facility. He knew that there was no such building available on the market in the area, so he was resigned to wait until the right building came on the market. He did not have long to wait.

As luck would have it, two of Tim’s teammates the day before had just listed a 205,000 square foot warehouse down the street. The property was not yet on the market. Tim started to hyperventilate. He scrambled back to the office and excitedly told his mentor broker what had happened.

Pretending that he was calm (though in fact very excited at the prospect of out-maneuvering the decision maker’s Relationship broker as the Last-Broker-In), the mentor broker returned to the facility. He asked if the decision maker would sign a short-term agreement recognizing NAI Capital as his exclusive agent if Tim were able to show him a warehouse building which seemed to meet the company’s requirement.

Confident that there was nothing available to see, but willing to hedge his bet, the decision maker signed the 24-hour exclusive right to represent the company. Calm as could be, Tim opened the front door, pointed down the street, and asked, “Is that building close enough?” It was.

Tim left brokerage a month later to return to his family business when his uncle needed help with their janitorial supply business. But on the way out the door, Tim was handed a check for $200,000.00 as his share of the commission for being such a dogged Transition broker.

He really was a Persistent Bastard.

by Bob Scullin, CEO, SIOR

The best example of the dynamic of Relationship brokerage is a letter I recently sent to one of my most successful brokers. He has been a commercial real estate broker for more than 25 years and considers himself as a perennial Transition broker. Despite his remarkable and consistent success, he takes seriously the tenets of Relationship brokerage and considers each year to be a five-quartered challenge to be as successful the next year as he was the prior year.

After going through the process of meeting with his sounding board (and his spouse), he met with me as his manager to review his business plan. In follow-up to our meeting, I put together the letter below (with some obfuscation to mask the bashful broker’s identity) to memorialize what he had committed for the next year.

Remember: Transition brokers figure out what successful brokers did to become successful. Then they do what successful brokers did to become successful. This letter will demonstrate what one perennial Transition broker does to achieve his high level of success as a Relationship broker.

Letter to a Transition Broker

Thank you for investing your time to meet with me today to review your business plan for the 5-quarters of next year. I truly respect and appreciate your willingness constantly to re-examine your path to success and to adjust your approach to the business when the opportunity for renewal is laid at your feet. This is one of those opportunities.

We will consider that next year has a fifth quarter which is a bonus within which you will get a quick start in determining your business objectives and meeting them by the end of the New Year. The fifth quarter of next year started on October 1 of this year.

As we discussed in our forecast and review session today, you have committed to implement Relationship Brokerage in its entirety and to review your progress with me on a monthly basis for all five quarters of the coming year. Since you are prepared to make such a commitment, I would like to lay out the outline for implementing the plan on a practical level.

1. You have already completed and reviewed with me your NAI Capital Business Plan for the five quarters of next year.

a. You have inventoried your skills and talents as a professional.

b. You have described your ideal client who can benefit from your skills and talents.

c. You have established your revenue target for next year.

2. You have determined your “reset point” and committed to begin each quarter at that point.

3. You have identified your four-cornered community and will focus on implementing Relationship Brokerage within that area.

a. Your community will consist of approximately 400 contacts, but the geographic spread of the community will not be established until you have implemented Relationship Brokerage described below for 90 days.

b. At the end of each 90 days implementing the program you will return to your reset point and begin the process all over again.

c. Whatever geographic area you covered in the preceding 90 days shall constitute your community.

d. The size of your community will expand and contract organically as experience teaches you which contacts are not worth the investment of your time during any particular quarter.

4. You have agreed to structure your weekly activities around thinking-in-threes within the four corners of your community for three hours per day, for three days per week, with three days of follow up, for three months, and then starting all over again at your reset point as specified in Relationship Brokerage.

a. You will warm-call on Mondays from 9 AM to noon.

b. You will warm-call on Thursdays from 9 AM to noon.

c. You will spend one hour every afternoon in follow-up by telephone with any contact you may have not been able to meet in person on Monday or Tuesday of each week.

5. You have acknowledged that it is necessary for the contacts in your community to accept you as the go-to broker in your community.

a. In order to accomplish that objective you will personally visit each of your targeted 400 contacts on a quarterly basis.

b. If you are unsuccessful at personally meeting a particular contact when you visit the place of business, you will telephone the contact once a day for the next two days and attempt to schedule a personal meeting.

c. If you are unsuccessful at getting in touch with the contact after two attempts by telephone, you will follow up with an email letting him know that he will receive monthly market-information reports as part of your Touch-12 Email Program.

d. If after the contact hears your name four times in that quarter (once when you dropped off your business card at the place of business followed by three follow-ups), and has not returned your call, you will discontinue the effort to reach the contact during that quarter.

e. At the beginning of each quarter you will return to your reset point and begin the process of warming calls on your developing relationships all over again.

6. You have agreed aggressively to combat the strongest competitors in your community and to approach their best clients as targets of opportunity to exploit on an ongoing basis.

a. You will aim to replace your strongest competitors as the most reliable commercial real estate broker in your community.

b. You will demonstrate to your strongest competitors’ best clients that they are better served to deal with you going forward.

c. You will seek to benefit in some way from every potential transaction made by your strongest competitors, even if just using the advanced information to your benefit with other contacts.

d. You will endeavor to get referral business from your strongest competitors’ best clients as they come to know you as a reliable professional who is always present in the area where they have interests.

7. In order to eliminate the possibility of frustration in implementing Relationship Brokerage, you have agreed to establish your five objectives in the proper order as follows:

a. Your first objective is to commit to your four-cornered community.

b. Your second objective is to establish a personal relationship with and be known by every decision-maker in your community.

c. Your third objective is to know about every transaction within your community before the transaction is consummated.

d. Your fourth objective is to have your finger into every transaction so that you benefit in some way from every transaction that happens in your community.

e. Your fourth objective is to make money. We agreed that making money is not your primary objective. Rather, it is a by-product of effectively implementing Relationship Brokerage on a consistent basis.

8. In addition to faithfully following the steps of Relationship Brokerage outlined above, you will maintain existing relationships with 100 contacts outside your community on a person-by-person basis as a normal part of good relationship management.

9. You have agreed to meet with me one-on-one on a monthly basis to review your progress in accomplishing the goals and objectives of Relationship Brokerage.

a. You will complete in advance of each meeting the Business Plan Review form and track on it your progress towards reach your income goal for next year.

b. You will seek to build an inventory of listings of properties for sale or lease in your community.

c. You will develop and track prospects for sale and lease transactions, as well as additional listings, on an ongoing basis.

d. You will commit not to change the location of your community since you cannot abandon relationships that you have committed to work so hard to develop.

In light of your commitment to conform your brokerage activities to Relationship Brokerage, I will commit to meet with you monthly to act as your sounding board to evaluate your activities as they progress toward accomplishing your aggressive revenue goals for the five quarters of next.

Manager’s Assessment

The reader might be curious how this particular broker did during the business planning year outlined above.

As evidence of his commitment to, and mastery of, the principles of Transition brokerage, this eminently successful broker qualified for NAI Capital Club last year, and for that matter 13 out of the past 15 years.

This broker is a great example for Transition brokers to emulate as they commit to do what successful brokers did. He does consistently what successful brokers did. Maybe a better way to say what I mean is that he is one those successful brokers.

Other brokers would be well counseled to follow the same business plan that this broker follows.

Just imagine: all this time you have been thinking that there are four quarters in a year. But when it comes to business planning, the idea of a four-quartered year is so last century. It may be hard to get beyond that misunderstanding, but it is major jump forward once you realize that there are five quarters to the business planning year. Okay, maybe I need to explain that in a little more detail.

Up until now we have talked about a lot of concepts which must be incorporated into the Transition broker’s business plan. There is so much to get done that it seems like a daunting project. Nonetheless, to attempt the transition from Haystack brokerage to Relationship brokerage without a business plan would be like the pilot of a jumbo jet flying from Los Angeles to Boston without a flight plan. It is not a very good idea.

A pre-flight check by the airline pilot is analogous to adding an extra quarter to the beginning of each year and making productive use of the extra time to create an even better business plan. Enlisting a “crew” to assist in the process reduces the impact of premature self-congratulation for a job well done. The broker should let others help him decide whether he did a good job drafting the business plan.

Review with Sounding Board

Every pilot has to pre-flight check his aircraft before he even sets foot in the cockpit. He checks the weather; he checks the flight crew; he checks the exterior of the plane. When the pilot eventually straps himself into his cockpit seat he knows that he is ready to welcome passengers aboard and proceed with confidence towards their destination.

It is the same process for the Transition broker. His business plan for the year should start well in advance of New Year’s Eve. And just as the pilot works as part of a crew to bring his flight to a safe landing, so too the broker should work as part of a crew to help him accomplish his goal of making the transition from Haystack brokerage to Relationship brokerage.

The broker must rely on at least three other persons to help him accomplish his five prioritized objectives. First the broker should prepare a draft business plan for the next year and tweak it so that he is confident that it accomplishes the five prioritized objectives of Transition brokerage.

He should then sit down with a trusted advisor as a sounding board and review the draft business plan in detail. This is critical to the eventual success of the business plan. The person serving as sounding board needs to understand what the broker has committed to accomplish, and be in a position to critique the broker’s plan.

After meeting with the sounding board, the Transition broker again reviews each aspect of his business plan and revises it to benefit from his sounding board’s wise counsel. Once the sounding board’s recommendations have been evaluated and incorporated into the draft business plan, there is one more review that I strongly recommend.

No one has more interest in the Transition broker’s success than the broker’s spouse or significant other. For that reason I propose that the broker should consider asking him or her to review the near-final business plan. It is not likely that the broker will get a better critique than from a spouse or significant other who has vested interests in the broker’s success.

The Transition broker is now in position to incorporate any suggested changes and to assess his readiness to commit to the business plan. Once he arrives at that point it is time to sit down with his manager and review the business plan for the following year.

Review with Manager

The first meeting with the manager is the first of a series of at least five business plan reviews that the broker will have with his manager over the coming year. It is important that the broker and his manager be on the same page, and that they jointly commit to make sure that the five prioritized objectives of Transition brokerage are both understood and accomplished.

During each quarter of the year the broker should meet with his manager to review his faithful implementation of the business plan. This serves as a trigger reinforcing the broker’s commitment to return to his reset point at the end of each three-month period.

If the broker can establish a rhythm of implementing the business plan in three-month modules, then it accomplishes a number of important goals, including the expansion of the concept of thinking-in-threes by meeting with his manager every three months.

If the business plan is structured in three-month increments, then the broker can program himself to go back to his reset point and begin his warming calls all over again at the end of every quarter. It also presents an excellent time for the broker to review his progress in accomplishing his five prioritized objectives and to renew commitment to his business plan.

Just like the airline pilot flying across the country with constant reference to his compass heading and GPS readout, the broker uses quarterly meetings with his sales manager as a way to implement course corrections as necessary to make sure that he is doing what he committed he was going to do.

It is therefore important that the business-planning year consists of five quarters instead of four quarters. By pre-planning to implement the Rule of 500, to accomplish his five prioritized objectives, to establish his four-cornered community, to start thinking-in-threes and planning to succeed, the broker is well on his way to becoming a Transition broker.

Have you ever heard of String Theory? If you are not too well versed in particle physics, quantum mechanics or general relativity, you can breathe a sigh of relief. The title of this chapter applies all the concepts and principles we have discussed to this point in the context of commercial real estate brokerage. So let’s get to work applying String Theory to Transition brokerage.

Pretend that you are sitting in your favorite barbershop getting your hair cut. Suddenly you get the inspiration to become a barbershop specialist. You figure that there are not too many brokers focusing only on barbershops, so the competition will be light and the upside could be great. On your lap you hold a spool of string which will turn out to be a most useful tool in helping you in your new specialty.

Clarifying Goals

First you realize that you need to figure out where your territory will be. Then it occurs to you that “territory” applies only to Haystack brokers. You are a Transition broker and you have a different objective. Your goal is to establish a “community” of barbers and you decide to select your favorite barbershop as your reset point. So you tie one end of the string around the barber pole in front of the shop and get to work.

You would research in advance to identify the names of all of the barbershops in the area. Then you would find the names of the barbers who own and operate those shops. Armed with that information you would then start to visit barbers so that they all come to know you, and eventually you will know all of them. You have started to realize the objective of knowing and being known by all of the contacts within your target market.

Every time you meet another barber you become a little more of an expert in the area of barbershop brokerage where no one else is doing what you are doing. You start thinking-in-threes and dedicate three hours per day, three days per week, with three days of follow-up, for three months contacting only barbers spread out in a concentric circle away from your reset point.

At the end of those three months you give a strong tug on the string that you have been lugging with you. Since you chose to work in concentric circles out from the barbershop that you designated as your reset point, you can now use the string to measure the radius of your community. Only after the fact, at the end of those three months, you are able to draw four corners around the geographic area encompassing the roughly 400 barbershops visited during that first quarter.

Since no one else knows as much about the barbershops you have visited, and no one else has taken the time to establish relationships with the barbers in your community, you know more about your chosen specialty than any other commercial real estate broker. In the course of your visitation over your first three months of cold calling you started to build relationships or at least got to know the names of the barbers within your community.

At the end of those first three months, your cold calling career ends and is replaced by warm calling. During that process you will learn about all transactions which are pending and which might take place in your community. Since you will know about all those transactions in advance you have the realistic possibility of having a finger in every transaction. This further establishes your credibility as a barbershop specialist and makes your value even greater among your barber contacts.

Since you know all of the barbers in your specialty market, and since you know about the comings and goings of all contacts in your community, you are truly an expert. You are in a position to use that market expertise to accomplish your final objective, which is to make money. Obviously it took a significant investment of time to arrive at that final objective, but as the expert in the area you can reasonably expect to outperform all other brokers who lack your expertise and have no relationships with the barbers inside your community.

String Theory serves as a reminder that at the end of your first three months in your new specialty that it is time to return to your reset point. How long is the string and how far away did the new barbershop specialist get from his reset point? That is not able to be determined until after three months, and it also depends on the type of market targeted by the Transition broker.

Size Doesn’t Matter

For instance, it is obvious how the metaphor of String Theory might apply to a geographic territory. But suppose that the target market is spread out over the whole country. Suppose that the Transition broker has targeted state universities, or local branches of a major corporation in all 50 states. If the broker works major accounts or corporate solutions, the boundaries could be far distant from the reset point. The target market could be regional, statewide, national or worldwide. Nonetheless, the principle still applies: the length of the string is a function of time (three months), not of physical distance (no matter how long that sting might be).

A Haystack broker might have taken the string, stretched it out from the barber pole at the reset point, planted it somewhere in the distance and drew a circle to determine his territory. He would have cold called for as long as it took to contact all of the barbers within the territory he created in advance. Let’s say that it took the Haystack broker six months to cold call all of the barbers within his territory.

During those same six months the Transition broker made two warm-calling rounds of his community and made great inroads establishing relationships with all the barbers in his area. When the barbers are in need of market expertise they will likely first contact the Transition broker because they have started to get to know him personally and to recognize him as an expert in their area of interest.

String Theory serves the useful purpose of preventing the Transition broker from going further than three months away from his reset point, regardless of physical distance. The size of the community is determined by how far the broker got from his reset point with the investment of three months in the field. At the end of those first three months, and every three months thereafter, the Transition broker returns to his reset point, starts visiting his target barbers all over again and enhances his relationship with each and every one of them.

Over time the Transition broker fades away and a new Relationship broker starts to emerge.

The Transition broker’s assistant is working at a 9-to-5 job. The broker has no expectation of his assistant working before- or after-hours because the assistant is working a “job” for a set compensation. But the Transition broker himself is not working at a job. He is establishing a career in a profession which far exceeds the demands of a 9-to-5 job.

If the broker is expecting that brokerage is a 9-to-5 job then he has made a mistake and needs to reconsider his career path. The question is more what the broker can accomplish during the typical workday from 9-to-5. These hours are the sweet spot for selling and should not be used for less productive tasks that can be otherwise accomplished outside those hours.

Now we have a time-frame within which we can place the broker’s daily activities. Since he needs to contact his decision makers at least once every 90 days he must commit to thinking-in-threes. That means that the broker needs to dedicate three hours per day, three days per week, with three days of follow-up for three months.

All in a Week’s Work

Let’s assume that in a typical week there are 40 hours during which the broker can be productive, meeting contacts and developing them into personal promoters. How does he make the most effective use of those 40 hours (see “Planning to Succeed” below)?

• 9 hours per week are spent warm calling in his brokerage community
• 4 hours per week are spent following-up with contacts he was not able to meet
• 5 hours per week (let’s say) are spent having lunch in his favorite greasy spoon
• 22 hours are spent in important activities such as showing properties, making appointments, handling e-mail, travel time, attending personal client and office meetings, augmenting training and paperwork.

The broker may say that 22 hours are not enough to get done all of the things that need to be done during a typical week. And guess what—he is surely right! So what does he do? What he does not get done from 9-to-5 gets done before or after those hours.

Three Hours per Day…

In his commitment to achieving the goal of becoming a Relationship broker, the broker may be tempted to over-commit his time to warm calling his community. I counsel against warm calling for more than three hours per day for the reason that a disciplined approach in a practical program minimizes the likelihood of burnout and reduces the probability of frustration.

In order to justify the time dedicated to warm calling it must be a distraction-free zone during which electronic tools are banned while the broker focuses 100% of his attention on interacting with decision makers.

The hardest part of the warm calling commitment is starting the process. Once the first door is opened and the first contact met, the rest flows easily. So to fit nine hours of warm calling into the week it is better to commit three episodes of three hours each, rather than nine episodes of one hour each.

Three Days per Week…

I propose that the broker picture the work week as 10 modules of potential three-hour warm calling periods. As part of his aggressive business plan, the broker selects three modules over three days which he commits to warm calling in either the morning or the afternoon.

Every broker will have personal reasons for selecting mornings instead of afternoons, afternoons instead of mornings, or his favorite three days over the other two days of the week. It makes no difference what the broker chooses, as long as he makes the choice and commits to warm calling on those three days per week.

Three Days of Follow-up…

It is entirely possible, if not likely, that the broker will not be successful meeting every decision maker when he makes his first visit to the decision maker’s place of business, or places a telephone call if that is the only way to contact the decision makers in the broker’s community. That is where the three-day follow-up factors into the plan.

Let’s say that on the first day of the quarter the broker personally visits a decision maker and is not successful at meeting the contact personally. He leaves his business card and promises to follow up. There are actually three days of follow up:

• On Day 1 the broker calls the decision maker and, if he is unsuccessful at reaching him, leaves a timely and informative voicemail message, promising to call back the following day.
• On Day 2 the broker calls the decision maker and again, if he is unsuccessful reaching him, leaves another timely and informative voicemail message.
• On Day 3 the broker sends an email to the decision maker promising to include him in the broker’s monthly Email Touch-12 program which will provide valuable market information for the decision maker’s use.

This follow-up program is important because it amplifies the effort expended in trying to contact the decision maker in the first place. Remember that the second objective of brokerage is to know or be known by every contact within the four corners of the broker’s community. This program contributes greatly towards accomplishing that objective.

Three Months and Then…

At the end of each three month of warm calling the broker returns to the reset point. The transition broker is looking to establish relationships with the decision makers within the four corners of his territory and deepening those relationships on an ongoing basis. Those ever-deepening relationships mature into personal promoters who refer business opportunities to the broker as the foundation for a fruitful career.

Even if the broker never talks to a specific decision maker, that decision maker hears the broker’s name 28 times in the course of a year.

• Personal visits  -  1 per quarter or 4 per year
• Telephone calls/voicemails -  2 per quarter or 8 per year
• Follow-up emails  – 1 per quarter or 4 per year
• Touch-12 emails  -   1 per month or 12 per year
• Total name-dropping – 7 per quarter or 28 per year

This does not reflect a very vibrant opportunity to develop a personal relationship with that elusive decision maker, but it does achieve the objective of making sure that the broker is “known” by contact within the four corners of his community.

The Trapdoors

There are a number of perfectly justifiable distractions that might prevent the broker from thinking-in-threes. But they are justifiable only in the sense that, while they indeed need to be done, they cannot be done from 9-to-5. In that sense they are trapdoors which can destroy the broker’s commitment to success. Trapdoors must be avoided at all costs.

Conducting a disciplined program of warm calling is not an easy task. Creative brokers have no difficulty coming up with an unending list of trapdoors to explain why they are unable to warm call for three hours per day, three days per week, with three days of follow-up for three months. But unless the broker starts thinking-in-threes, he is really just a disciplined Haystack broker.

Writing proposals, doing surveys, preparing correspondence, enhancing computer skills and paperwork connected to transactions should not distract the broker from his commitment to Transition brokerage as he works his way towards becoming a Relationship broker.

The broker should never be distracted by generating marketing materials, clerical documentation, personal business or any otherwise valuable activities from 9-to-5. All of those activities need to be accomplished “on the broker’s own time,” outside the sweet-spot selling hours.

Please read Appendix 2: The Persistent Bastard about one notorious, though eventually failed broker, and how he made $200,000 thinking-in-threes during his first year in brokerage. That story in itself might serve as the best example of why Transition brokerage works so well.

Now that we understand the importance of establishing and prioritizing the objectives of Transition brokerage, we need to consider how best to get the job done. If the broker is to know and be known by every contact in his community; know every transaction before it happens; have a finger in every transaction; and finally make money, then the basic building block is determining a four-cornered community.

A key step in the implementation of Transition brokerage is the determination of a reset point. For the first three months of his program the broker is doing the same thing that the Haystack broker is doing: cold calling or dialing for dollars. Once he finishes those first three months his inclination is to continue his old habits of cold calling and chasing the next deal.

But the Transition broker’s main differentiator is his return to his “reset point” which consists of a specific geographic point in his community. That reset point is a specific property, company, office, intersection, personal client or any other reference at which the broker will begin his quarterly activities. At the beginning of each three months of activity he will return to the reset point and repeating his warming calls for the next ninety days.

At the beginning of every quarter the broker returns to his reset point to begin the campaign of warming calls all over again for three hours a day, three days a week, for three months (as we will discuss in the next chapter “Thinking in Threes”). The goal is to control the community so that each of the contacts within the community knows him personally and sees him on a quarterly basis. This establishes his credibility as the go-to broker in his community.

It is a test of the Transition broker’s commitment whether, after those first three months in his community, he returns to his reset point and begins the process all over again. It is this discipline which separates the emerging Transition broker from the former Haystack broker. By returning to his reset point at the end of each three months, the broker clears the first major hurdle in accomplishing his strategic plan.

I think of this as the Golden Gate Strategy. We all know that the Golden Gate Bridge is painted constantly in a never-ending project to maintain the structural integrity of the span. No sooner is the painting of the bridge completed than the painters go back to the beginning and start all over again.

I mentioned earlier that there is danger of relapse at any point in the emergence of the Transition broker. The first indication of pending relapse is whether the broker returns to his reset point at the end of each three months. There are myriad reasons to delay returning to the reset point, and creative brokers can expand that list with hardly any effort.

It is important to understand that those four corners cannot be determined in advance. If the broker sets out to meet every contact within a predetermined area, it might take him six months to meet all decision-makers within the area.

Since the goal is to create personal promoters out of decision-makers by establishing personal relationships with them, meeting them every six months is not often enough to get the job done. They need to be contacted in person at least once every three months.

How Big is Big

The actual geographic size of his community will be determined only after the first three months of implementing the program. The four corners of the community will be drawn around the geographic area where the broker made personal contact with decision makers during the first three-month cycle.

In my experience (I am an industrial broker in a primary market), concentrating on a geographic area where businesses are arrayed door to door and street to street, I could reliably count on contacting an average of 10 people in each 3-hour day of warm calling. That meant that my community was compromised of 400 decision makers. But that may not be typical of every broker’s community, depending on the parameters of his brokerage practice.

The physical size of a specific street-broker’s community can be small or large, depending upon the criteria established in advance. The broker will be targeting contacts who meet the criteria of his business plan and industry focus. That could mean that, like me, he is meeting with decision makers of warehouses in an industrial area. Or it could mean that he is meeting with companies in high-rise office buildings. In either case his geographic area could be relatively small.

On the other hand, the broker may focus on owners of retail shopping centers and his community could be quite large. That might also be the case if his target contacts are doctors or medical practices spread over an entire county. The geographic size may vary, but it consists of whatever number of people he can meet by spending three hours a day, three days a week for three months in the field.

That means that the broker, starting from his reset point, contacts all of the decision-makers who fit the criteria of his objective. Those decision-makers might be involved in office, industrial, retail, investment, multifamily, medical, senior living, land or any other specialty area of real estate.

They might be small-, medium- or large-sized users of a specifically zoned type of space. They might be tenants or landlords. They might be buyers or sellers. They might be individuals or institutions. They might be concentrated in a small geographic area which could be horizontal or vertical. They might be spread out in a large geographic area based upon the type of criteria the broker has selected to describe his community.

Only after the first three months of warm calling will the broker stand back and look at the location of decision-makers and identify where they are arrayed on a map. If the broker then draws a perimeter around those decision-makers he will establish the four corners of his community. Whether the community is geographically tiny or huge is not important. What is important is that within those four corners are the individual persons with whom the broker has started to build personal relationships.

Within the four corners of that emerging community the broker is the undisputed expert. No one knows all of the decision-makers within those four corners better than the new Transition broker. No one knows better what transactions have happened in recent history. No one knows better who is moving around or out of the community. No one knows better who needs more space, less space or different space. No one knows better where every transaction is before it happens. No one has a better opportunity to have his finger involved in every one of those transactions.

Angels on the Head of a Pin

I am not sure how many angels can dance on the head of a pin (if you know, please let me know, okay?), but trying to figure out the answer is like of like trying to figure out how many decision makers fit within a Transition broker’s community. My experience was that I had 400 people individuals in my community, and I use that as one metric to establish a goal for the number of relationships that a Transition broker needs to have.

How many people will fall within a specific Transition broker’s community depends on a number of factors. One such factor is especially problematic. The goal is to establish personal relationships with decision makers, but suppose the broker is not able to meet personally with them because they are spread far apart, or are accessible only by telephone rather than by warm calling in person.

If no broker is able to meet personally with decision makers in their places of business, and they are accessible only by telephone (e.g., portfolio managers or bank managers who are spread throughout the nation), then using the telephone to contact those decision makers is an acceptable alternative since the use of the telephone does not place the broker at a competitive disadvantage.

Competitive brokers are not meeting those decision makers in person. If competitive brokers can address contacts only on the phone, then that is the medium that the Transition broker has to use. The question is how many decision makers the Transition broker’s community includes. I will concede that I do not have better than a guess like how many angles can dance on the head of a pin, but it is well more than 400.

That begs the question of how personal the relationships with those decision makers could really be, but since all other brokers are competing on the same plane, the Transition broker has to do his best to distinguish himself from competitive brokers and meet with decision makers in person at some point along the way.

There are five prioritized objectives for Relationship brokers which must be accomplished in this specific order.

• Focus on a four-cornered territory
• Know and be known by every contact in the territory
• Know every transaction before it happens
• Have a finger in every transaction
• Make money

Since we have already discussed each of these objectives in previous chapters (see here and here), it is worth spending time discussing what brokers might assume is the first objective, but which is in fact the last objective of commercial real estate brokerage: make money.  

Every game has metrics for success. If we look upon brokerage as a game, it too must have its own metrics for success. We all assume that the obvious metric for success in brokerage is how much money a broker makes as a result of his activities. But that is a false assumption and spells the difference between failure and success for the Transition broker.

First Four Objectives

It is important to understand that while making money is one of the five objectives, it is not even among the top four objectives. Making money results only from the effective implementation of those first four objectives. If the first four objectives are accomplished, and accomplished in the order presented, then making money is a consequence of a job done well.

Even for the highest-earning brokers, or for those who close a lot of deals, paydays following transactions can be relatively few and far apart. Yet a good broker works hard every day to earn those sporadic paydays. So if making money happens only infrequently, how do we establish goals that are achievable to ensure that each day’s objectives can be realized and provide a sense of fulfillment and accomplishment for that day?

Frustration and a sense of failure result from working without achieving a sense of accomplishment for prolonged periods. Each day should have an objective that is within reach. That is why I place making money as the last of the five major objectives of brokerage. The broker will not make money every day. To establish making money as the broker’s main objective means that most days would pass without achieving success. Nonetheless, every day he can make strides in accomplishing his five main objectives.

Once the broker determines his territory (objective #1) and sets about developing relationships with decision makers in the territory (objective #2), he will soon know about any transactions before they happen (objective #3), which will give him a chance to have his finger in every transaction (objective #4).

The broker can be productive every day when he uses warming calls to deepen relationships with decision makers and advances towards becoming an expert within the four corners of his territory. By keeping his objectives straight he is creating a sustainable career for himself over time rather than just doing a job that produces daily cash flow.

He can approach each day with great enthusiasm knowing that four of his top objectives are within reach regardless of whether the broker actually makes any money (objective #5). He should always remember that making money is the last of his five main objectives, and that it is actually a by-product of accomplishing the first four objectives.

The Fifth Objective

If just making money were the primary objective of life, then the average person would not be happy.  On the contrary, the average person is quite happy. So too, the average broker does not find happiness and professional fulfillment in just making money. There are other important objectives in his professional life. It is by achieving those other objectives that he reaches a sense of satisfaction on a daily basis.

If the broker achieves those other important objectives he will also eventually make money. If he loses sight of the importance of those other objectives and spends all of his time chasing the needle in the haystack, he will revert to Haystack brokerage and all his hard work to create relationships with his contacts would go down the drain.

It is primarily by understanding that making money is not the most important of the five objectives that we most clearly see the difference between Haystack brokerage and Relationship brokerage. The Haystack broker is constantly chasing a deal which will generate an opportunity to make money, thereby completely disregarding the fact that there are four more important objectives.

Since the Haystack broker is focused only on his next payday, he is not concerned with establishing relationships with decision makers who are just a means to the end of earning a commission on that day. He has neither the time nor the inclination to bother with personal relationships because they are too time-consuming to establish and maintain. His sole objective is to make money, and whatever does not contribute to making money in the short run is not worth the effort.

It is for that reason that the Transition broker is in an especially vulnerable position at the beginning of his move from Haystack brokerage to Relationship brokerage. Up until that point his only concern was closing his next deal. There is a constant temptation to revert to that sole concern and forsake the broker’s new-found commitment to establishing relationships.

The Transition broker understands and prioritizes his five objectives, which must not only be accomplished, but also be accomplished in the prescribed order. Unlike in his former life as a Haystack broker, the Transition broker must be on guard to keep his priorities straight and appreciate that making money is not the first objective for doing what he does.

I contend that every successful broker has to establish personal relationships with 500 decision makers with whom the broker will do business directly, or from whom he will generate referrals. Those 500 contacts form the backbone of the broker’s business and distinguish the Transition broker from the Haystack broker.

“Relationship” implies a subjective dynamic ranging between the extremes of knowing someone casually and being best friends. The same wide spectrum exists in Transition brokerage because relationships are an outgrowth of continually meeting decision makers as they come and go from the broker’s territory.

Relationships do not happen overnight. It is the Transition broker’s goal to “know and be known” by 500 people starting with the first person he visits on his first pass through his territory, and then revisits after he returns to his reset point at the beginning of every three months.

As time goes on, and as decision makers come to know the Transition broker better, relationships deepen. As the Transition broker’s familiarity with decision makers grows and matures, those decision makers become more reliable sources of referral business. Establishing relationships defines the process of Transition brokerage.

It is from these decision makers that the broker receives referral business, which makes it seem like the Relationship broker closes lots of deals without much effort. With all the effort spread over years of relationship development, the reaping of referrals may seem to come without much effort today. In a way it is the perfect example of being an over-night success after ten years of hard work.

The number of decision makers is inversely proportional to the quality of the broker’s relationships with them. The number of relationships can go down as the quality of the broker’s relationships goes up. For example, at the start of his abandonment of Haystack brokerage, the Transition broker must have 500 relationships because those relationships are embryonic and will build over time.

The Transition broker eventually evolves into a Relationship broker. In the beginning he seeks to “know and be known” by 500 decision makers. As quality of the Relationship broker’s long-term relationships increases, the number of relationships needed to support his brokerage business goes down.

There is of course one obvious question: where does the Transition broker find 500 decision makers to fulfill the Rule of 500? Let’s consider that they come from two clearly definable sources.

100 Network Contacts

Every experienced broker has relationships with about 100 people who have previously interacted with him in one way or another. Maybe the broker came to know those 100 people because he dealt with them in the past and they moved away from his territory. Maybe they are portfolio owners or were referred to him by others. Maybe he knows them as part of his networking groups or done business with them as service providers. They can come from any of a myriad of similar connections.

The point is that the broker knows and is known by about 100 people who are geographically spread out beyond the broker’s territory and with whom the broker has contact on an ongoing basis in one connection or another. The list may grow or diminish as time goes on, but the additions or deletions should keep the list of contacts at roughly 100 contacts.

The broker interacts with this core group of 100 relationships by default because they have common business interests or network connections. The broker does not have to create a structure to keep in touch with those 100 players in his business arena. He keeps in touch with them in the normal course of doing business together.

This network of 100 relationships is the foundation of the Rule of 500. The rest of the 500 relationships come from within the Transition broker’s territory. That means that the broker has to establish relationships and know and be known by 400 decision makers within his territory. How does he go about identifying those 400 contacts and starting to form personal relationships with them?

400 Territory Contacts

Once he makes the commitment to switch from Haystack brokerage to Relationship brokerage, the Transition broker targets a specific four-cornered territory as his own (see “Four Corners” below). Within those four corners the Transition broker engages in a constant process of establishing relationships with decision makers who eventually become clients and promoters.

This territory is not an area that the broker cold-calls once, and then abandons for another area, looking for the needle in the haystack; hoping to find a random deal; doing the same things that other brokers are doing. Other brokers are cold calling and may even stumble onto a random opportunity to make a one-off deal. But those deals will be few and far between. Once the deal is done and there is no residual value, the broker targets another area and starts cold calling in search of yet another deal.

The Transition broker eliminates cold calls from his practice of brokerage. He makes only warming calls on people whom he knows, and will come to know better over time by implementing the quarter-by-quarter focus of the program which we call Relationship brokerage (see “Thinking in Threes” below).

The Transition broker first researches the names of companies within the territory. He then augments the list of company names with the names of the decision-makers responsible for real estate within each firm. Then the Transition broker begins the process of meeting in person each of the decision makers in what will become his future territory.

At the end of the first three months of Transitional brokerage, the list of companies in his database morphs into the names of about 400 actual persons, decision makers who know the broker and get to know him better as he conducts his quarterly warming calls him.

The decision maker with a personal relationship will accept the broker’s phone call; wave him past the receptionist into the inner sanctum; share information with him; trust him with inside knowledge of how the company can use the broker’s help. Such relationships imply trust, loyalty and commitment. It takes time to establish such relationships, but that is the objective of Transition brokerage.

This conversion of those company names into personal relationships with decision makers is the basis for Transitional brokerage. It is the primary purpose for getting out of bed in the morning and approaching each day’s objectives as achievable, realistic and within reach (see “Five Objectives” below).