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  Teleclass Notes

Brad Pearson
Prudential California Realty

Building a Recruiting Machine
Carol Johnson
Brad Pearson

Carol Johnson I�m so proud to introduce our guest today. We�re very honored to have Brad Pearson, district manager for Prudential California in Orange County in Southern California. There are several Prudential Californias, and he�s with Rich Cosner, for those people in the Recruiting Network who know Rich Cosner.

Brad, welcome and thank you so much for joining us today. I�m thrilled to have you.
Brad Pearson Glad to be here.
Carol Johnson We met Brad when he was just a kid. You�d been in management for what, three days, when you came to our first conference? Tell us about your real estate experience. What was your previous experience when you were recruited?
Brad Pearson I was an agent for six years. I sold a lot of houses. I worked expireds and FSBOs�instant gratification stuff. I didn�t like sniffing around in farm areas trying to find people to sell their house. I figured if sellers already had a sign in front of their yard and the other agent couldn�t sell it, I�d make an effort at it. If sellers had a big, visible sign in their front yard, they were asking me to come to their door.

I listed 21 houses my first month in the business. From that point, it was 8-11 a month pretty consistently. My last year, I closed 57 transactions. I loved selling houses. It was fun.
Carol Johnson How old were you? You were right out of the Marines, weren�t you?
Brad Pearson If there are any Marines on here and you want to say Semper Fi, I�m Air Force. I'm a wimp. We got beat up by Marines.
Carol Johnson I don�t think anybody was doing too much beating up on you. What in the Air Force prepared you to be a top salesperson and manager?
Brad Pearson Two words�limiting beliefs. When you�re in high school, you get out and the world is a giant, scary place. Six weeks after joining the Air Force, I was ready, willing, and able to die for my country. How do you take a spoiled rotten little kid what that much maturity and in six weeks completely change his mindset into a soldier? Before I went in, I�d have never thought I could�ve done what I did.
Carol Johnson That�s amazing. When you were at our first conference, you were talking about your office. It was beat up. You had no air conditioning and hardly any desks, but you did have cockroaches. You had agents, but they didn�t know how to sell. What else describes that office?
Brad Pearson I�m glad you bring that up because if people are going through a situation like mine, I hope I can help them. I had 4,000 square feet in one of the most rag-tag, disgusting, horrible, warped-floored facilities you could ever imagine with 16 parking spaces in front to facilitate the amount of agents that I had no idea I�d ultimately hire. The company owner prior to Rich Cosner was indicted. So I came into something with a little bit of an uphill battle to start recruiting. We had about 12 agents in the office at the time.
Carol Johnson You built that office up, and then you went to another where you had about 200 agents. When I visited, it had marble floors. It was like the Taj Mahal�fancy, fancy, fancy. How did you get from Cactus Junction to the Taj Mahal and get all those agents?
Brad Pearson I used to beg Rich to get me a better building. For the first couple of months, I said, �You know that if you build it, they will come, right?� And he said, �No, if they come, I will build it.� So it was just a relentless focus on building the company so that we could have that building. Really, I wanted to get that existing group and the few I was hiring someplace a lot better than where they were.
Carol Johnson How did you get them productive?
Brad Pearson I opened up my book of secrets. Everybody who�s been an agent knows that when they were selling, they had what they believed no one else had. I had my secrets. Really, it�s just hard work. But I had all my marketing materials, advertisements, expired letters, FSBO letters�everything I ever did. This was in a market area that those agents knew who I was, thank goodness. I had a decent reputation, so it wasn�t hard going in there.

My age was a challenge, but I just unloaded everything at the first sales meeting. I said, �Here�s everything I�ve ever done. I�m going to hold classes on all this for the next two to three months until I can help your production go up.�
Carol Johnson How productive did those agents get? Did they get where you were?
Brad Pearson

No. I learned that many agents don�t have to do this, but they show up every day. Unlike me�I had to do this. At my accountability meetings, there were one or two agents there, and I was amazed the other eight didn�t come despite my belligerent request that they show up. The next week, I�d put another big push on, and I�d get two more to show up. No matter how much I tried, maybe two out of the 12-15 agents would actually get something out of it. We�ve all experienced that.

That�s when it really hit me that I needed new agents. I needed more agents. I needed agents who�d come to my classes. The agents who were there were happy with what they were doing. For some of them, we were able to increase production. But more so, I was able to win them over. They were pillars of that office, and they�d been there for a million years. They weren�t going anywhere, and they were good people. Maybe they didn�t like me at the time. But I thought if I brought in more agents, the existing agents would become productive. Rich always said recruiting is the answer. If you bring in more agents, it�ll spur the others to start selling.

Carol Johnson How is recruiting different between when you started and now?
Brad Pearson

I didn�t have a lot of reasons people should join me back then other than the fact that I was selling a vision and my commitment to help them build their business. I�m still doing that, but when you have 155-160 agents in your office, they look at you like, �How are you going to do that?�

I have two classes during the week. I have a lot of infrastructure built within the office that I�m still able to be in front of agents quite a bit. But now I have three general jobs, and I�m also spending a lot of time running around. The company is in a lot better place than it was back then.

We have built-in training programs now. We have a company trainer. We�ve signed up with a couple of national trainers whom we endorse and facilitate the classes. That helps a lot, because by the end of this year, I�d like to get up to 175-180 agents.

Carol Johnson Yours is one of the most productive offices in Orange County. Is it one of the most productive Prudential offices overall?
Brad Pearson At the end of second quarter of this year, we were for the first time in the office�s 34-year history the number-one Prudential office in Orange County in terms of units. That�s been a long time coming. We�re beating offices with a beach. We�re beating offices with way more agents. I�m proud of my group. They�re doing a phenomenal job even in this market.
Carol Johnson You built that ugly duckling office to a big office, and then you moved to another office. What was it like to leave your baby and start a new office?
Brad Pearson There are only maybe three times I�ve cried in my life. As a typical man, we usually break things and get angry to mask our sensitivities. The first one was leaving for the Air Force. The second was leaving that office and all those people I�d touched. One at a time, I hired them into that office. It was tough to leave that place. It was really, really hard. The last time was when I had my baby girl, who�s a year old next week.
Carol Johnson When you got to the new office to start over, what was it like? Did you start the same thing, teaching agents how to sell?
Brad Pearson

I came to an office that wasn�t like the other office. It had a very nice facility, and it�s been number one in its market for 34 years. It has a solid group of agents. Two were making much more than $1 million a year. Another seven or eight were consistently making more than a half-million a year. That�s a more daunting experience than walking into an office where there were nice people, but there wasn�t a lot of production.

The funny thing is, no matter where I go, it seems they�re just as happy to see me as they were back in Riverside�and I mean that facetiously. I can�t wait until I get more gray hair and people start accepting me more when I get into a new place. But here they were just as shocked and dismayed by my appearance when I was introduced as their manager.

Carol Johnson You didn�t look like you were old enough to drive.
Brad Pearson I was 32, so that�s old enough to drive�not well, but I do it.
Carol Johnson You can drive an airplane, right?
Brad Pearson Absolutely.
Carol Johnson The California real estate market has been brutal these last few years. Tell us what Rich Cosner, the owner of your company, has done to maintain that competitive edge and dig in for those tough times. How has that helped you recruit, and how has it helped your agents handle some of the tough decisions Rich has made?
Brad Pearson

The toughest thing for me was going through the changes and helping deliver the changes to the other managers. Knowing the back room finances of a business is something I never, never knew before, and I never knew it at the level that Rich and Annette have to deal with.

Staring down the barrel of what we foresaw�which is exactly what happened, a 40 percent, 50 percent, 60 percent drop in unit count in some of our markets�it doesn�t matter how good you are. You�re going to take a beating. So we started cutting and getting rid of things. We got rid of all of our contracts and went to Windows or WinForms. We went to more of an Internet than a print presence because it�s the truth that consumers aren�t looking in newspapers as much as they�re looking online.

We cut a lot of huge expenses. That was tough because you have to sell those cuts, and then you have to do agent retention. But then you still have to recruit. So half of your recruiting book goes away. A lot of the cool stuff you offered has to go away, and we went back to accountability, better training programs, and better coaching.

Most of our managers have been around long enough that they experienced the 1990s and this kind of market for dropping unit counts. Now we�re able to bring a lot more to our agents than we ever have. The managers are actually needed within the facility, where before we were there just maintaining or recruiting. Now we actually know how to function and move around in this marketplace.

Rich has got very, very aggressive with accountability. We managers are e-mailing him constantly about what we�re doing and how many appointments and interviews we�ve got. We�re on a weekly managers� meeting schedule. You show up every single week, and you have to tell him what you did. He goes around the room, face to face, and you get as much time as you need, but you�d better tell a story about how you made some calls, got some interviews, and hired some agents.

Carol Johnson He�s famous for that accountability. How many offices did he close? What happened to your management team?
Brad Pearson

Here�s what�s funny. We had three offices in one city because things were so amazingly wonderful in the last five to six years. We merged them all into one of our existing giant facilities. We didn�t lose one agent. That just shows the company does bring value. As long as you�re doing that, you can do some amazing things.

When we were planning the move, I thought, �We�re going to lose 30 percent to 50 percent of our agents.� We were prepared to lose up to 50 percent of agents when we merged them into one building, and we didn�t lose one. We spent a lot of time on the delivery, getting the agents to a special meeting�not just to a sales meeting.

We�ve learned a lot. This was an epiphany for me. If we were going to do something big, we had meetings at 7 p.m. We announced our rollbacks and our commissions, all kinds of very treacherous things like mandatory services�you have to use our services, period, or you leave, and we let agents go because they didn�t use our company services. Wow, everybody showed up because they were dying to know what was going to happen.

Carol Johnson Did you feed them dinner or give them pizza?
Brad Pearson Nope. But when we merged those three offices, we did take agents to dinner, but we took the pillars of the heaviest production office, the longest term agents, because if we got them behind us on it, when we announced it to the rest of the agents, they were all in the group to help support it.
Carol Johnson You, Rich, and your company are very profit driven. How do you define profit? Is it profit for the company, for agents and managers, or do you also factor in profit for clients? And how is it achieved?
Brad Pearson

We talk a lot about selfless acts that aren�t driven just by a commission check. I look back at when I was selling, and I followed what my dad taught because he was a small-business owner. It can�t be about the money, and the money will come.

Everybody out there knows this. We all say this, but our agents get caught up in the commission checks, which is understandable. I�m sitting here in California, where our average check in our office is about $15,000. Average sales prices are running around $900,000. It�s easy to get caught up in money and profit. But we hired an incredible trainer for about two years named Dale Lawrence. That guy really did a huge, huge transformation in all of our thinking that, yes, it�s all about the customer.

We do our best to do that, but it came down to the truth. Sometimes the truth hurts, but we�re going to tell it no matter what. Right now, we�ve got short sales and foreclosures�not in a huge way, but we�ve got people behind in their payments. Rather than trying to turn that into a sale or a short sale, we�ve been telling our agents that if those people want to stay in their house, let�s do everything we possibly can to help them keep their house. Let�s get on the phone with their lender and work out a forbearance program. We don�t want any money. What�s a better source of referral than someone whose home you saved?

Carol Johnson

When I was selling houses, I sold a couple their very first house, and it was a dinky townhouse. The husband was transferred to the area with Caterpillar Tractor, and he called me one day choking back the tears because his wife had been very sick, he�d lost his job, and they needed to sell their house.

I said, �Don�t you like your house?� He said, �We love it. We had a baby, and we don�t want to move, but I don�t have a job, and we�re going to lose it.� I said, �You don�t need to sell your house. You need a job.� I called all my customers and said, �I�ve got this kid. He�s just darling, and I think you should talk to him.� I got him a job, and he became the number-one salesperson for Otis Elevator in the Chicago Loop.

The Otis Elevator guy said to the guy who brought this kid in, �Tell me again, where did you get this guy?� He said, �From my real estate agent.� The Otis Elevator guy said, �We�ve got people transferring in; let�s get a hold of our girl,� and that was me. After that, I got all those leads. That guy was with Otis, and now his wife is in real estate with Century 21.

Brad Pearson Wow! True.
Carol Johnson It really comes back to you. I applaud you for that. Everybody should do that because I believe a lot of the problems we have in real estate now are because some lenders and agents didn�t know what they were doing and got people into deals they shouldn�t have got them into.
Brad Pearson Absolutely.
Carol Johnson Are you coaching your agents on how to work with these people? Are you having seminars?
Brad Pearson

I�ve been driving from office to office. I want to get that message out here, too, that our job is to help people become homeowners, but it�s also to help people remain homeowners. I�m all for helping investors own rental properties. But what�s driven the passion in my career is helping people get and keep their home.

Right after a sales meeting a little while ago, an agent come up and asked if I wanted a short sale. The people were behind on their payments, but they were well within the time frame to start working out a forbearance program and keep their home. I asked the agent, �Do they want to stay?� She said yes, but they couldn�t afford it. I said, �Get, right now, and start working out a forbearance program. Get them some months to get themselves readjusted. We�ve got the lowest unemployment rates we�ve ever had, so they�ll find a job. It�s just the next two or three months that are going to be tough. Why are we trying to sell them out from underneath their house?� She was excited and ran back to her car and said, �I�m going to help them keep their house!� What a deal.

Carol Johnson Isn�t that awesome? I hope everybody�s doing that, because that�s the way our industry should be. You�ve been very successful in recruiting experienced agents, and I know that sometimes managers focus only on agents new to the business because they perceive them as being so much more profitable to the company. What are your feelings on experienced agents? At what point of experience are you most interested in agents?
Brad Pearson

It�s not that I�m opposed to new agents. Remember that when I used to sell, I worked FSBOs and expireds. I don�t know if I was lazy, but I didn�t want to wait for sellers to get realistic on price. If they did it FSBO for a while, they probably had a bad taste in their mouth about their home sitting on the market forever, so it was easier to work with them if you got them at the right time. It�s the same with expireds.

With agents, I don�t want to call them expired agents, but a lot of agents are sitting FSBOs within their own office. They�ve got nothing being offered to them now, especially in this marketplace. So the recruiting calls are beautiful. There are managers who�ve been skating the last five years and are now saying, �I don�t know; I don�t have any answers.� We�re able to bring those experienced agents to the table. Plus, I can bring them over here today and get them up and running a lot faster. The work it takes to get somebody from 0 to 10 transactions is tough. To get them from 10 to 50 transactions is a lot easier. That�s been my experience, and I get excited because it�s a short road.

Plus, in any market, I need revenue now. I don�t need revenue in three or four months. So I�ll hire new agents, but only a handful of them. And if I�m questioning whether they�re serious or going to be part-time, I hand them my competitor�s business card and say, �Go here. If it works out, I�ll be calling you.� And absolutely I will. That�s an easy recruiting call, too.

Carol Johnson How is the current market affecting your ability to recruit agents? Is it easier because other managers have given up?
Brad Pearson Some have given up, and some are petrified of losing their job; they�re paralyzed. You can get paralyzed, or you can get galvanized. Believe me, when this first started happening a year and a half ago, it hit me over the head pretty heavily. I�d sit there and say, �Oh, my gosh, where�s my good market going?� Rich and Annette move forward. They�re relentless. It�s not about the market; it�s about what opportunities exist within that market. It�s a constant, constant push forward.
Carol Johnson Somebody is selling houses and it�s going to be you.
Brad Pearson You know there are enough units out there. Agents are saying there aren�t any deals, so I sent an e-mail to my agents last week. In Orange County, there will be 6,000 commission checks cut in the next 30 days. How many do agents need? One or two at $15,000 a pop, and they�re doing pretty well. Stop focusing on the big picture and the headlines, and go out and get your two.
Carol Johnson I don�t know if Bettie Meinel is on the teleclass today, but she was saying that her company had the biggest year it has ever had. It took business away from people who were blinded in the headlights. Would you send me a copy of that e-mail? I bet people would like to see it, and I�ll post it in the newsletter.
Brad Pearson You bet.
Carol Johnson Last month, you visited Mark Re. Mark was our recruiter of the year the year after or the year before you were, right? At our conference, these two former recruiters of the year decided it would fun if you came out and talked to his management team at Gallinger RealtyUSA in Syracuse. I hear you were a big hit. Some of your secrets to building a recruiting machine were on the agenda, and one was the 10 key points of profit-driven momentum. What are those 10 key points?
Brad Pearson Under each of those points, there�s 15-20 minutes of me yapping, so I�ll give you the headlines, and then if you want me to go through one or two of them, I�m happy to. When I went and saw Mark Re�s awesome group�what an incredible group�I went through your duties as a leader or manager. Too many of us are spending time doing the wrong things every single day.
Carol Johnson What are the wrong things?
Brad Pearson

I learned this in my first month of managing. I went into Rich�s office and said, �Rich, agents are complaining about the copier because it�s broken half the time.� He said, �What are they copying? They have no sales. Go out and get some agents. When we have sales, we�ll need a copier.�

Any time I spent worrying about the logistics of the operation, I was wasting time on non-productive items. A good example from when I was selling is that every second I sat in my office putting together FSBO or expired packages, or another way of putting this is not in front of a strong A client�ready and willing to buy or sell in the next 10-15 days�I was doing something I shouldn�t have been doing.

I had a list of the wrong things. It was fixing the copier and checking files. I don�t check files. I made it clear when I interviewed with Rich and Annette that I suck at paperwork, and I wasn�t going to take an administrative management job. I�m a salesperson. I�m a motivator. I want to get my people productive and get agents into the company. So we hired somebody. For a while, we were paying per file because there weren�t that many files. Then we paid a salary. Then we had a quality control person do it. That�s a non-productive activity. Unless you�re going through files to call co-op agents, you shouldn�t be touching them.

Another is micro-managing my staff. They�re all empowered, just like in the military with the chain of command. My receptionist reports to my administrative assistant. My weekend receptionist reports to my receptionist. My administrative assistant reports to me. I don�t want to deal with anything administratively or with any of my staff, because that�s just the wrong thing. It�s not going to sell any house.

Ordering supplies, cleaning the office, dealing with vendors, getting ready to get ready�any of that stuff. I went through the list with Mark�s group and they threw out a bunch of funny things managers get caught up in doing. We all can think of them, but they�re not productive.

I�ll tell you the right things to do. One, our job as managers is to create the vision, an environment of growth, a culture of ethical productivity, and hold the context of the office and the company. If my leadership tells me we�re doing rollbacks and commission splits, I don�t whine and cry at the managers� meeting. I get up like a solider, and I go into battle. They�re paying me to do that.

And holding that context isn�t, �Oh, I�m sorry they�re doing this to you. We doing this for the greater good of you and the company.� Build, recruit, retain, teach, inspire, motivate, and empower. Or just write coach. I spend no more than five percent of my time on administration. The last right thing is to deliver a substantial profit.

Carol Johnson How do you define substantial profit?
Brad Pearson We do a business plan every year and come up with our projections. Sometimes Rich will add to that because we�re being wimpy. I try the under-promise, over-deliver all the time, and it doesn�t work. He gives us budget numbers. Then I figure out how much money I want to make. I�m paid a salary plus a bonus, and I figure I need to make this much, and I�d like to make this much. I base my own business plan on that, and that leads me to desk cost and managing the money. In my biggest years, I was hovering right around a $1 million profit. Going through this transition, my goal is to hit a half-million dollar profit. My expenses are pretty big. I have a 17,000-square-foot facility now.
Carol Johnson That�s 17,000 square feet of marble and glass, furniture, and whatever. Your analogy is awesome, that you go in there like a solider and do what the general says. You don�t cry about it. You don�t get people all stirred up saying, �I know it�s not the right decision, but we�ll have to live with it.� You say, �This is the right decision, and we�re going to make it work.� That�s a great attitude and so very wise. In terms of time management, by not doing the wrong things, how much of your time does that free up?
Brad Pearson

An enormous amount. I hired three agents on Friday and in-processed them after the sales meeting today. My assistant took one, another was getting a tour from my receptionist, and I was signing up the third. Dale Lawrence, the trainer I told you about, taught me that it�s decision management. We can�t manage time. We have only so much time, and we can�t make more of it. But we can say, �At this time, I�m going to do this.�

As managers, how can we manage time when our agents come in and out of our office all day and ask questions? It�s decision management. We decide whether we�re going to succeed or fail. Agents know there are times when they can come in here and hang out, and there are times I�m making my calls. An agent came in and asked for coaching help, and it was his way of saying, �I don�t have anything to do right now.� I sat him down, closed the door, and we started calling expireds and set two appointments. I said, �Do you want to come in here again?� He said no.

It�s decision management. I�m not going to sit and talk to somebody I�m not going to buy a house from and who�s not going to buy a house from me. That agent needs to be out there getting on the phone with clients. It�s getting his decisions clear to make my day work itself out. That�s a quick conversation. Agents know my personality. It�s quick, to the point, and I pat them on the back, and tell them I love them and that I�ve got to get my recruiting calls done. I�ve got to get things productive here.

Carol Johnson One thing I always bragged about you and admire you so much for is that when you talk to and about your people, there�s love in your voice. You can feel the caring and emotion you have for your people. So I�m sure when you deliver that message, they know it�s in their best interest.
Brad Pearson

Absolutely, or I wouldn�t have retention. Somebody said once after a 20-minute presentation at your conference where I�d just gone through the business end of something, �You seem really tough and hard.�

Everybody has to know that I�d take a bullet for one of my people. As their leader, I�m in the front of the march. If they�re going on a listing appointment and they�re afraid, I�ll get in the car with them. There�s no question. I�m there for them, and they�re there for me.

Carol Johnson If you were going to build a road map for recruiting, what would that road map look like?
Brad Pearson I have five points. They�re as simple as they can be. In my opinion, you pick a competitor.
Carol Johnson Oh, this is my favorite one.
Brad Pearson It�s called strategic demolition. One, pick a competitor. Two, call all their agents. Three, mail all their agents. Four, call the agents again. Five, interview like you�ve never interviewed before by asking a ton of questions and discovering agents� pain points. Believe me, right now, they�ve got plenty. They aren�t making enough money. So how can we help them do that? The advantage rests with their pain, and then hire them. Do it again and again and again until that competitor�s profit is gone. Fling them into the red, and they�ll go away. Then you can take them over, which we�ve done plenty of times.
Carol Johnson So it�s not to start calling people in alphabetical order through your MLS. You�re picking people strategically from one company. What are the parameters for picking the right competitor to knock out?
Brad Pearson

It depends on the size and strength of the office. When I was 12 agents strong in that little rag-tag facility, I picked facilities exactly like mine. I took one company around the corner and started calling and calling and calling and got interviews and interviews. Once I got two or three people leaving, the buzz got around the office. �What�s over there? There must be something new over there. We should go see.� And it just continued.

I picked like for like. I didn�t go after the number-one company in town because I�d have to start at the bottom of the roster to get anybody, and I�d have more of what I already had. I picked a company that was in a similar facility, similar location, and just had problems, and went after it.

It wasn�t a big jump for those people to come across the street. Then I�d go after the number-two company. I�d just go after the next-biggest guy on the block. Now I go after some of the little guys once in a while, but I go after the biggest guy on the block. Because I�m the biggest guy on the block, I can go head to head with them just fine.

Carol Johnson What happens if the managers get mad?
Brad Pearson

That�s my goal. I want managers to get mad. I want them to professionally respect me, but I know all of our personal feelings tend to overwhelm our professionalism in most cases until we get that in check and under control. Honestly, they get mad. I leave them on the mailing list.

Once I start getting people out of their office, I�ll call and offer to buy them lunch. Half the time they�ll say no. I don�t know if Joe Leutsee in our Orange County office is on the line, but he probably remembers the lunch we had. Joe did a great job and came over for all the right reasons. But some managers don�t know how to fight off an attack like that. You don�t take them off the list. You want them to start making mistakes.

I�ve been on the other end and had to fight them off, but most managers can�t. They say it�s not worth it and give up. Or they start taking it out on their own agents.

Carol Johnson So when you start recruiting, the managers really notice because they�re on your recruiting list.
Brad Pearson I�m coming after them, absolutely. They�re welcome to join, too. I got into a skirmish about a year and a half ago. It was pretty nasty because we pretty much just traded groups. I traded a half a million in GCI; he traded a half a million in GCI. It was as though we decided, �Why are we playing with each other? This is stupid. We�re just beating each other up, and nobody�s winning the fight. Let�s find somebody else.� I hand it to him; the guy was good.
Carol Johnson You always talk about how if managers show their sword, you�ll back off.
Brad Pearson If people raise their sword to me, I�m coming after them hard because if I show fear, they�re going to continue to come after me. They�ll get the assault of their lifetime. I�ll have other managers in the company calling, I�ll be calling, and I�ll have my receptionist calling. They�ll know they picked somebody they shouldn�t have picked to fight with.
Carol Johnson So if they tackle you before you tackle them�
Brad Pearson I�m after them.
Carol Johnson If they�re just trying to defend themselves�
Brad Pearson It�s the best day of my life. By the way, the guy I told you about who whipped me around a little bit and I went toe to toe with him, we�re interviewing him, so he�ll probably be with the company within the next month or so. I told him in the interview, �No, dude, I don�t dislike you. You made me enjoy my job again. You really woke me up. You showed me that I could lose some people. I stopped it really quickly, but I didn�t expect it to happen, and I got complacent.� I appreciate it when they come after me. It�s good.
Carol Johnson Your attitude is everything. You take this on as a professional sport. So many managers get discouraged. An agent leaves, and they lick their wounds and go to their office and don�t come out for weeks. You can�t do that because your competitors will be right back dipping into your pond.
Brad Pearson I stood up in my office, hands at my sides, and asked, �How could this happen to me? This doesn�t happen to me. I do this to other people.� And then this sweet little old lady says, �No, it happens to everybody. It can happen to you, too. You just forgot. You need to remember.� So I did.
Carol Johnson Rich always has stressed accountability and enforcing the minimum standards. Are there different minimum standards in this market than before the market was down?
Brad Pearson

Absolutely. One day, Rich said, �Everything is a standard in your office�the appearance, the reception, your assistant, where you have your sales board, how agents write on it. You have to have standards for everything.�

We always focus on minimum production standards. Rich came out, and we did huge meetings and those evening meetings. We told everybody, �You need to be striving toward six transactions per year. If you don�t have those, you�re going to have some recommitments to make to the company.� We put together a recommitment form, and then we had meetings. We de-hired about 300 people company-wide. It was a pretty wild for 60 days or so afterward.

I followed up after that to soften the blow, because people were afraid they were going to get fired even though Rich never said those words. He just said that we�re going to do everything we can to help agents get their production up, and for those people who�ve been with the company for 10, 15 years, we understand if they�re retired. We�ve got a referral company where they can hang their licenses.

Are we perfect? Do we have everybody at six transactions a year? No. It�s a constant process. But to take the sting out, I created a form that worked well in my office. I gave it to Mark�s group. I don�t know if they used it. I wrote on the front, �What should it take to get hired at Prudential California Realty?� It�s agents� opinions, not mine. I won�t go through the whole form, but it had, How many transactions should you have to do get hired here? How many should you have to do to stay here? How many client testimonials should new or experienced agents bring to an interview with me before they get hired? What should the attire be? Over a month, I handed these things out at sales meetings and chased them down. I told agents I wanted their opinion. I made it anonymous as well.

I got these forms back, and I was blown away. The agents want standards. On the question of whether it should be mandatory that associates go through the training program, it was overwhelmingly yes. We haven�t forced agents to go; we�ve said we�d like them to go. Now, they have to go. The agents set the standard. They also felt agents should have an average of five or six transactions before they get hired here.

Carol Johnson If one agent sells six $300,000 houses and another sells three $2 million houses, is the second agent under-producing?
Brad Pearson

No. It comes back to the desk cost. Of course, I�m going to be reasonable. I had a lady do two transactions. The Anaheim Ducks won, and her husband is the assistant coach, and she did a deal with a company dollar of $50,000. She doesn�t do a ton of business, but her deals are big. So we�re commonsense people. We�re not going to run somebody out who has that kind of contribution every year. Although I�m a units guy, so I joke around that you�re still a wimp until you get your units up.

I focus on units because volume may not always be there, but we want agents to at least strive toward that six units because six units at $3 million would be a wonderful place to be. Six units at $300,000 is a comfortable place to be, although that wouldn�t get them a house out here.

It�s desk cost. Are you covering your desk cost? It�s $15,000. If not, we need to talk. That�s a really high priority for me on the back end. We�re pushing the six transactions, but the big, heavy hammer for me when I start moving people around, replacing people, taking people out of desks, or recommitting them starts when I�m losing money on them.

Carol Johnson So your agents know what their desk cost is?
Brad Pearson I gave agents a volume structure rather than a volume and a unit structure approximately based on average sales price�what it would take for them to keep their desk. Since agents tend to translate things into volume, especially in a high price range market, I�m willing to speak their language. So I tell them $3.5 million. This one will take $5.5 million. This will take $6.5 million. A private office will take about $18 million. Or you could have four agents in an office to get me $18 million, and then you have to do only a couple million. It�s fine that way.
Carol Johnson In your experience working with agents on desk cost, how many know where they are before you sit down with them? Do they have good business plans?
Brad Pearson They know. The first thing that happens when I call a meeting with agents is that they start apologizing because they haven�t been around, and they start giving reasons they haven�t been productive. That woman who asked me about a short sale apologized. Her daughter had triplets, so she�s been helping. I�m living the dream with only one child. I told her absolutely, I understand. Take your time, relax, and I�ll give you a pass.

We�re human. We understand. But agents know they�ve been gone. They know they haven�t produced. Their credit cards know they haven�t produced. Their car payments usually know, too.
Carol Johnson Sometimes when you take that pressure away from agents, they feel so guilty they�ll put the pressure right back on themselves if you do it skillfully, which I know you do.
Brad Pearson

Absolutely. But I come from the bigger army philosophy. Rich Cosner pushed at the beginning that my per-person productivity is probably not the best in the world, but my GCI is incredible, my company retention is incredible, and my profits are incredible, especially in our market. Most companies have been thrust into the red, especially here in Orange County. So I want the biggest army. I�ll focus on cleaning up that army.

I sometimes get caught up in the desk cost and the minimum standards conversation. Here�s where I spend most of my time now. I�m recruiting meat and potatoes agents. I�m recruiting anybody I can get under an 80 percent commission split who�s doing at least six or eight transactions. They do a phenomenal job for their clients, and they�ve got a great reputation. They want to grow their business from there, I�m after those agents, and I want that biggest army. If I have 250 agents, I know I�m going to bulldoze through my competitor.

Carol Johnson What are your competitors doing right now?
Brad Pearson

I don�t know because I�m not in their offices, but I look at numbers, charts, graphs, and statistics. We�ve gained about 3 percent market share while they�ve lost 4 percent, and it�s been spread out. But for the most part, we�re gaining market share against pretty formidable competitors.

You want to know what they�re doing? They�re staying in the Stone Age with many other real estate companies. While we pulled out our brand advertising, our second-biggest competitor doubled theirs and then started trying to recruit our agents. They wasted hundreds of thousands of dollars when 80-plus percent of buyers start their search on the Internet. Our agents understood it.

They�re not doing the right things. They�re focusing on us, and they need to be focusing on what�s right for customers. What�s right for customers is that we need exposure online. Viewings are happening there now. They�re not happening in the newspaper. If I want to buy something in Syracuse, I go to the Internet to find it. I don�t cold call for the newspaper. We�re doing the right things. We�re staying ahead of the techno edge.

Carol Johnson

This is hilarious because I always hear this stuff is going on in the industry. Several major franchise organizations�and they�re not all the one brand group�are frantic over their conversion of leads the franchise passes out. They�re hiring consultants to get these conversions. But all you have to do is look at their Web site. At some companies, if they�ve got 100 agents, 60 don�t have their picture on the Web site. They�ve got a store and a product, which is the agents, and the agents don�t show up.

If you were a grocery store, you wouldn�t save a whole row of shelf space for General Mills if it didn�t bring its cereal. Why are those agents on the Internet? Consumers are trying to get a hold of them and presuming that they�re working when they�re not. Some agents don�t respond for days to Internet leads. But consumers expect to get a response in two minutes.

Brad Pearson

Right. One of our competitors started using the word mandatory and hammering its agents and publicly fired agents in a sales meeting. They thought they were really cool for doing that. I could�ve got everybody to the training program by individual phone calls, asking them to come, and giving them reasons to come, not telling them they have to. These are big mistakes competitors make, and we�ve already made that mistake.

You tell people who got into a business where they can have freedom that they have to be somewhere, and they�re going to get mad and revolt. But if you call and say, �Hey, it�d really mean a lot to have you there, and I think you�ll get a lot out of it. By the way, some of the challenges you were sharing with me last week, they�re going to get addressed there, and I know someone like you will benefit from this more than most people, so I�d love to see you there.� They�ll come.

When my competitors do these things, it just launches phone calls into their office from guys like me saying the agents need to come here. You know what agents tell me? �I�d have come if they�d have just asked.� These guys are recruiting for me.

Carol Johnson

And if agents get really mad, they�ll call the IRS and say the company is demanding that independent contractors show up at a specific time. When you ask and agents come voluntarily, that�s a whole different ball game.

You have so much energy and excitement, I know people will want to ask questions. Who�d like to ask Brad the first question?

Questions & Answers


What�s your lead-in call to your other target competitor when you�re first calling that experienced agent?
Brad Pearson

I love that question because it�s the one I get asked all the time. We bought Jim Gilreath�s stack of scripts, and I still have them in the plastic. They�re awesome. But here�s what I say: �Why haven�t we got together yet? Did you hear about what we�re doing with Yahoo!? Did you hear about our online seller advantage program? You have to come over and see it even if you don�t join us because my agents are using it against you, and it costs you nothing to come. Do you have time Monday or Tuesday?�

I called an agent at one of my closest competitors the other day and said, �Steve, when are you available this week to get together?� I didn�t get into a whole bunch of other stuff. He asked why, and I said, �Because I want you here. I want you with this company. You�re a quality guy. I don�t know why you�re not here yet.� He said, �You know how it is to make a move.� I said, �That�s cool. Let�s start talking about it now so maybe by the end of the year, you�ll be here. It�s not like you�re going to be making a decision today.� So there�s, �When can we get together?� �Why aren�t you here yet?� And, �Have you seen what we have to offer?�

Carol Johnson It�s the tone of the voice and the sincerity of the one-on-one relationship; it�s not a 20-minute sales pitch on the phone, right?
Brad Pearson You all get calls every day: �Hi, if I can help you increase your business by 20 percent�� Why not 40 percent? �Okay, if I can increase your business by 40 percent�� Now I�m thinking 60 percent would be good. �Okay, by 60 percent, would you come to this informational meeting with me�� No. How about this? Call and ask me when I can get together. If I�ve heard of you already, I�m probably going to entertain it or come up with a good excuse why I can�t. Then I�m going to call you again next week. It�s simple.
Carol Johnson The one-on-one, the, �Hey, you�re a good guy, and I want you here,� says it�s you I want, not your volume, not your body to fill a chair. That�s what I want listeners to go away with because that�s what you do so fabulously.
Brad Pearson Not only that, if it takes three closes to get an agent to commit to an appointment� I like to get to the close as soon as possible. If agents say, �Tell me about this, tell me about that,� some of these calls end up with me saying, �Tell me about your business then. We�re going to spend some time and learn about your business, and I�m going to tell you how we can help you. Or I�m going to share with you things we�re using against you.� If they want to do this on the phone, I�m happy to go through it, but they�re going to end up answering a lot more questions from me.
Question Tell me about your mailing program.
Brad Pearson

I�ve got nine letters, and depending on whether I�m going after strategically one competitor, they�re going every week until I get through the nine letters. Then we take a couple-week break, make a bunch of phone calls, and then we start the same letters all over again.

Why would you send the letter? Aren�t agents going to think that�s ridiculous? If they weren�t planning to move, they weren�t reading them anyway. They start reading them when you catch them when they're thinking about moving. I did have somebody call and give me some crap one time. He said, �You sent me the same letters all over again.� I said, �Yes, I get your postcards all the time. I get your mailers all the time at my house. So I�m doing the same thing you�re doing. Come on over here.�

Then it�s personal notes. For every conversation, whether it�s a good or bad conversation, I send out a personal note. We all hear about that, but personal notes are big. And there�s always a little jab in there like, �You need to come over here to find out how we became number one.� Or, �So and so said he was amazed when I told him you weren�t willing to meet with me. We need to get together.�

Carol Johnson You can use that in your favor, too, because if agents say they got your letters over and over again, you can say, �Thank goodness, you�re getting them. I was worried you weren�t getting them because you�re not here.� Just make it a joke.
Question Do you find yourself doing the same things today as when you started?
Brad Pearson Absolutely. I�m just better at them. Believe me, it was pretty embarrassing back then. Sometimes it�s still embarrassing. Back then it was Rich Cosner beating on my window, asking me how many interviews I had, and if it was 11 a.m. and I hadn�t made any calls, I realized that by the end of the day I�d better have two appointments. It�s not just a lot more confidence. I have a lot more to offer, and I�m a bit more well known.
Carol Johnson Do you find that 90 percent of your interviews are proactive calls that you�ve made?
Question Do you find that 90 percent of your interviews are proactive calls that you�ve made?
Brad Pearson

I�m going to be honest. I�m at 155 agents, and I�m probably not calling as much as I should. I need to get back to it. That�s why I told Carol I�d do this because it gets me back on track with making calls. But if I get on the phone, two out of these three interviews were from me calling. But I�ve been calling these agents for a year, dropping notes, and everything else.

When I was making my calls, 90 percent of my interviews were because of the calls. Now that I have 160 agents, 50 percent, maybe even 60 percent, of the interviews I get are referrals. When you get a large office, everybody is sending you people.

Question Are your letters Jim Gilreath�s letters or something you developed?
Brad Pearson

I�m glad you asked because I found these letters in a closet in that old, nasty facility, and they were from the late 1980s. They were funny letters, and a lot of us probably got them when we were selling houses. I changed them up a bit and updated the logos and stuff. It�s not so much about what�s written, if it�s not too long. If it�s two or three pages, agents will never read it. These are short, one- or two-paragraph, half-page letters.

The first one starts off with you, �You were referred to me. We were speaking with several sales associates, and your name came up.� I�ve removed a lot of people from the list who I don�t want also. Then it goes on with the advantages of the company: �Did you know that Prudential has this to offer, has that to offer? We need to get together to show you some of the advantages of the company.� We just keep retouching until we get to the eighth, ninth letter, and then we bounce right back around.

Carol Johnson We�ve got more than 200 letters on the Web site, and some of them are fabulous. One of the most popular is Jim Brown�s red feather letter. So many people tell me they use that.
Brad Pearson The point I want to make is to just send something consistently because it�s a process. I don�t care what it is.
Question Brad, do you ever send directly to offices?
Brad Pearson We�ve got agents� home addresses. A couple of companies in town use the corporate address every time they sign a new licensee. So those go to the house, and we�ll stagger those in blank envelopes throughout a week so they all don�t hit at the same time. But even then, if I get one of those, they get tossed.
Carol Johnson If you�re sending letters to an office, send them in an envelope shaped like a birthday card�not long and narrow but rectangle or square�and hand-address them. They�ll get through because it�ll look like a birthday card.
Brad Pearson Here�s an idea we did with agents at Tarbell, REALTORS� in our area. Call them�what a concept�and say, �Hi, I want to send you something your broker probably doesn�t want you to see or you don�t want your broker to see. Can I get your home address?� Agents will give it to you.
Carol Johnson Sometimes you can get fabulous information if you have a high school girl or boy with an innocent voice call and say, �I�m calling for Brad. He wants to send you something, and I need your home address.� If agents say, �What�s he sending?� they can say, �I don�t know. He told me to call you. It was something really important.� That gets agents every time.
Question Brad, with the success you�ve had, how much time are you spending a day directly on recruiting?
Brad Pearson Remember, it�s about agent count. When I had 12 agents, I spent six hours a day on recruiting. The majority of my day was recruiting at lunchtime. I�d go to lunch, sit at the restaurant, and call the company that I could see from the restaurant. The most urgent situation was getting agents in the office. Now I might spend three hours a week make recruiting calls. I should I spend more, absolutely. I just hired three people on Friday, so I feel like I�ve got a little break.
Question Hi. You mentioned your agents had suggested everybody be required to attend training. Do you do that, and do agents have to pay for it?
Brad Pearson

For our training, agents pay $99 to go to what we call Foundations. It�s mandatory, but we don�t use the word mandatory. I just tell agents that to work here, that�s the deal. You sign this commitment that you�ll go. The training teaches them the contracts form. I think it�s two weeks long.

Then we offer the Brian Buffini program 100 Days to Greatness. It�s $400, and agents have to pay for it. If they�re new, they don�t have a choice. If they�re experienced, we highly recommend it, and agents usually go.

Question What�s your main strategy for retention, and was there anything you changed after you were hit by that competitor?
Brad Pearson

Absolutely. I don�t know if I�ll ever have the connection I had with that original group of 160 people. That was impervious. I walked in every day and looked at that group, and no one could touch me. I was personally involved with all their business from the beginning. Now I come into an office that�s been here a long time. I hired 70-80 people into the office, but it wasn�t the same because I was as new as they were, and they knew the group before I came here. I was just the person inviting them.

So, yes, I changed. I got back to basics, to MBWA, or management by walking around. I got back to getting close to my agents. I also got very serious about being a hero every chance I got. When a deal is going south and agents are about to lose what they�re going to make their house payment with that month, I get in the car with them and put that fire out.

In the last year and a half, I got back to the same stuff I did at the beginning. My sales meetings improved drastically with this market because now I believe I can help agents. Now agents see a tremendous value to showing up. Before, maybe I was going through the motions a little because I got complacent and busy. Then I got hit in the head, so I got back to basics.

Question I�m trying to find good systems as far as letters to send out. What�s the best recruiting letter system that lets you buy CDs with letters already laid out where you can print them out and sign them? Also, I�ve considered the Buffini program. I just ordered Danielle Kennedy and spent about $750, and it was kind of outdated. My understanding is that the Buffini program is extraordinary. I�d like your feedback on those two items.
Brad Pearson

The Buffini program is incredible. We love it. It fits for any agent you hire�new, experienced, it doesn�t matter. We sell 100 Days to Greatness. Agents making $1 million a year can take this program and infuse it into their existing system. Not only that, Buffini works with you. Let�s say you�re doing a Mike Ferry or a Tom Ferry thing. It�s a great support. It�s a great kickstand to that entire business to make it really thrive.

The other one we�re pushing hard now is Tom Ferry�s The guy is amazing. For those of you who know Mike Ferry, he�s awesome. But Tom Ferry is phenomenal, too. We�re sending it to summits, retreats, everything. We�re getting a lot out of those two programs because they�re soft but powerful. As far as the letters are concerned, one of our managers just talked Rich into buying the Recruiting Plus Program. I haven�t had a chance to look at it yet.

Carol Johnson

I saw a demo. Two of our vendors from the conference�Recruiting Plus, which is Prospects Plus, and SPI Data Systems�met at our conference. They put together a new program that if you�re in one of 23 states that�ll send the list to SPI to clean, they have a program that you just sign up for, and every new recruit who comes on or everybody at a certain whatever you want to specify gets these letters so many times.

They�re beta testing it. Go to my newsletter on the front page of the Web site. Click on �more,� and scroll down past the middle where it says �beta test.� They�re picking a few of our members to beta test this. You have to pay for it, but you can get the advantage to using it before any competitor.

It can be customized, or you can use it right out of the box, which is what I�d start with. It isn�t on their Web site. You have to call them. It�s so new that it�s not yet for sale. Only our people and their best clients are getting the chance to beta test it.

It�s past our time. When you get your newsletter, please look at the Recruiting Network Conference. It�s coming up April 16-18. Brad, you�ve been a regular. Can you tell them it�s good?

Brad Pearson It�s the reason I�m here today. The last one I was at was amazing. I got to fly out and see Mark Re�s group and learn a lot from them as well. I got some great ideas. By the way, if anybody from Syracuse is on the line, I stole your contest idea, and we had a $30 million month. So thank you very much. It was worth going. Just the ideas you get, and the people you're hanging around with, it�s just amazing.
Carol Johnson

It�s so interesting because other people have been to different people�s offices, and they�re talking to each other all the time. Tony from Scottsdale went to visit Mike from Albuquerque. Amazing things happen.

So I hope you�ll look for that in your budget. I guarantee it�s going to be my best ever. Brad, you�re always so popular with that group, and I feel like you�re a kid we watched grow up who�s becoming this fabulous, internationally known guru. So thank you so much for your time.

Happy birthday to that baby, and best wishes to you on upcoming special events. I thank you all so much. Next month, we�re going to have Kathy Ollerton, who was one of the most popular speakers at our conference last year. She does things based on the tenets of The Secret. I hope you�ll be with us. It�s going to be another great session.

Brad, if you could close with one piece of advice for recruiting in this market, what would it be?

Brad Pearson Be vigilant, and be relentless.
Carol Johnson That�s good. Be vigilant and relentless, and ink us in for next month and for the conference. Thanks to all of you, and have a great month.

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Carol Johnson is President of The Recruiting Network and Publisher of The Recruiting Pipeline web site, the real estate industry's leading source for strategic recruiting resources. She is the author of The Recruiting Revolution in Real Estate and a leading authority on recruiting systems, products and services. Her monthly Teleclasses attract some of the most influential brokers and recruiters in the industry. Her coaching has increased individual manager�s recruited volume with astounding results. For information on Carol Johnson's coaching and consulting programs call: 847-524-8487.PD