After going through a massive business failure almost 10 years ago, Chris decided to give real estate a try. He’s always been attracted to this industry because of the many different things one gets to learn from it and how there are no limits on personal growth.
Chris started doing really well as an agent. But eventually, he found that the work that needed to be done was taking too much of his time. He started to lose flexibility and freedom which are some of the main reasons why he went into this business in the first place. This led him to build his own brokerage in the summer of 2011.
Unfortunately, things didn’t go as well as he had planned. From a profitability perspective, he knew he worked harder but he realized that he made less money now than he did a couple of years back. He ended up literally burning his business down to the ground and started to implement Gary Keller’s MREA model. Today, Chris is the founder of Watters International Realty which is one of the most respected teams in Central Texas.
In this episode, we talked about how Chris took his business to the next level and who are the first three key hires to hitting $1M in annual GCI.
Top Takeaways:
01:36 Why Chris got into real estate
02:12 What made Chris decide to build a team
05:55 How much do you need to make to afford leadership to help you run the business
07:16 The one skill you need to master to become wealthy in real estate
08:26 Who your first hire should be from a leverage perspective
13:36 The 3 things a listing agent should be focusing on
16:09 What are the 3 unique phases of the growth curve
21:09 One of the biggest mistake people make when hiring an agent
23:14 The 3 things to look for in candidates while within the 90-day probationary window
25:36 The value of creating a conducive environment to set people up for success.
To get a FREE copy of Chris’ book, The Million Dollar Real Estate Team, go to
https://www.themilliondollarrealestateteam.com/
Episode Transcript:
Brian Charlesworth 0:35
Alright, everyone, we're back. Hey, Chris. How's it going?
Chris Watters 0:38
Hey, good. Sorry, guys, little I'm working from home my four year old came. I feel like with a sledgehammer trying to beat my door.
Brian Charlesworth 0:45
Great. Chris has been in handcuffs by his four year old but anyway, great. It's been a while Chris. I used to talk Phil, like I used to talk to you almost every day. And it's been too long. So it's great to see your face.
Chris Watters 1:00
Yeah. Likewise. Glad to connect again.
Brian Charlesworth 1:03
Yeah, so I know, Chris, I don't know that a lot of people know that you're the founder of Watters International Realty. Maybe tell us a little bit about that to get started today. Because I just think it's something that most people are not aware of. So
Chris Watters 1:17
Yeah, so basically, almost a decade ago, I had just gone through a massive business failure, I invested in a bar and restaurant in 2009. It was meant to be just, you know, kind of a passive investment kind of deal. And it went totally bust. And, you know, I had always been super attracted to real estate, because of you know, how you get to learn a lot of different things like marketing, working with clients, you know, you get to wear a lot of different hats, and it's exciting and fun. And you don't have any limitations on your growth. And so, in 2010, I got started full time in real estate, and did like most people, open houses expired, withdrawn. And I started doing really well, as an age I started, you know, selling a lot of homes and making really good money. And then one of the reasons I got into real estate was because, you know, there was this idea of like flexibility and like the freedom, this component of freedom. And, you know, like my first year, and I'm like holy cow, you know, I'm like on the phone till one o'clock in the morning, I'm waking up at six, like, I'm running around the hair on fire. And I'm like, there's got to be a better way of how to do this. And so I started, you know, going down this path of building a brokerage in the summer of 2011. And I recruited 20 agents in the summer of 2011. And after a year, the following summer, in 2012, I was looking at, like, our total number of closings and what we had done and profitability and stuff. And like, honestly, I was so busy. And so in the weeds, like I wasn't paying attention to financials, and like, you know, like I was just going, going, going going. And I realized that made less money in year two, then year one from a profitability perspective. And I worked even harder. And I'm like this is not why I got into this business. And so I literally burned the thing down to the ground. And I started implementing the MREA model with Gary Keller, you know, the book he wrote, and I started implementing that model and, you know, grew super fast, we burned the team down, we grew to by the end of 2013, we did 325 transactions, and I was with this very new team. And when I look at it between 2010 and 2013, we netted a million bucks. And like, you know, the business just radically changed. And, you know, we started having, what's that?
Brian Charlesworth 3:39
No, I said that that all started just by reading that book and shifting the way you were doing business.
Chris Watters 3:45
Yeah, I mean, I stopped you know, there's the agent count brokerage, like your, your business is predicated on recruiting tons of agents. And your profit margins are really small. Or there's the agent productivity business where you like you have less agents, but productivity is really high. And so like in the team-centric business model, you know, you spend a lot of time and money investing into your agents to help them have success. And so I made the decision in 2011. Like, I didn't want to have a bunch of mediocre agents. And that's when I made the decision to start going down that this team-centric model. And I always had these grandiose plans of like, you know what I wanted to do, just from a business perspective, and called the company waters International Realty and I was running the business on my girlfriend's red IKEA couch. When I had that business fail. I couldn't afford my rent. I was literally living with my girlfriend on her couch. And it was a very humbling time. Okay, so so Watters International Realty. Now, you guys, I mean, I guess that's part of what I wanted to share. You guys have a national franchise. How many locations Do you have across the US now? So we have 14 locations in the US and one in Canada. And then we're launching one in South Africa, Greece, and Guam.
Brian Charlesworth 5:01
And it's really a super unique model where you guys are actually training people how to how to get their team to, or small brokerage to do a million dollars of net, is that correct?
Chris Watters 5:15
Yeah, I mean, our goal is to is predicated on agent productivity. And it's like the bootstrapped, it's like the bootstrapped roadmap for, you know, building a team-centric brokerage?
Brian Charlesworth 5:28
Yes. Okay.
Chris Watters 5:29
It's like a business-in-a-box solution. And it's all the things we, you know like I started, I implemented the MRE a book, and I started finding a lot of like, flaws and challenges and obstacles, as I implemented, I mean, I learned a tremendous amount. And I'm not discrediting the book by any means. But like, you end up breaking the model. And the other thing I discovered is like, the organizational chart is a little bit too small, you know, in order to like, get to where you are a true CEO, or a true owner, where you're just collecting monthly distributions, and you have people running the business, your revenue has to be substantially higher than two and a half million dollars, which is what the book says, you have to have substantially more than 2.5 million in gross commission, in order to afford leadership to help you run the business.
Brian Charlesworth 6:16
Yeah, I think that's the thing is people look at, okay, I'm bringing in $300,000 a month, or I'm bringing in $200,000 a month, that's $200,000 a month, that's two, two and a half million like you're talking about. But if you're paying for a, you know, a great leadership team, and you have people on salary, that money can go pretty quickly. So anyway, thanks. Thanks for sharing that. Chris. Let's dive into your, your topic today on the first three key hires to make sure you're hitting a million dollars of annual GCI.
Chris Watters 6:50
Yeah, so I think first off, The really important thing for people to reflect on is, is to have a little bit of emotional intelligence and self-awareness around their own skills as a salesperson, you know, I think a lot of people get into real estate and they, you know, become, you know, very relationship driven referral base and all that stuff. And I'm not saying that stuff isn't good. But like this, you know, it's we're called real estate salespeople for a reason, because like, we're salespeople, and there's a skill you have to develop to become a great salesperson. And the bridge, the bridge to wealth in real estate is learning how to convert people that have no idea who you are. That is like the one skill that if you can master that, that is the bridge to wealth in real estate is how to convert people that have no idea who you are because that's ultimately how you have a really scalable business. That's how you start using Sisu and dialing into the conversion metrics and learning like where can you improve your skills? Like, for example, is it Do I need to improve my skills on the inside sales front booking appointments? You know, like, am I calling a bunch of people but not setting appointments? Or am I going on lots of appointments, but I'm not converting them into, you know, agency agreements, or maybe I get a bunch of people under agency agreements, but then they don't, you know, turn into closings, like at the very beginning of like, as rainmakers are so low producers, you don't want to ask yourself, like how am I personally developed the sales skills to convert people that have no idea who I am. And the reason that's important is because if you're going to build a big business, and you're going to help other people be successful, you have to teach them that skill. So specific to the first three key hires is once like once you have really honed in your skills and master your skills to convert people that have no idea who you are, and you feel confident your ability to teach others, you one of your first key hires from a leverage perspective is an assistant getting an executive assistant. Now I know the idea of an executive assistant can sound daunting, because an executive assistant, you know, you may have to pay him 45, 50, 55, 60,000 depending on where you are. And there's, there's a way to scale into an executive assistant. First you can outsource, a courier a photographer, you can leverage a virtual assistant for a fraction of the cost. We use a job posting portal that's actually in the Philippines called onlinejobs.ph. So there's, you know, there's a lot of companies that will help you find VAs, and then they mark up the hourly rate, and they're great, by the way, like I'm a customer of myoutdesk.com the great, great service. But if you feel confident in your ability to hire VAs and like interview somebody and hold them accountable through, you know, Google Chat or using zoom or whatever, you can go post a job posting on onlinejobs.ph and recruit a VA. And so, you know, you scale in these key people like, you know, photographer, courier, maybe a VA, and that's how you can work your way up to affording an executive assistant but that is your first key hire is an executive assistant so that you as a solo producer can increase your gross revenue, and then you're going to get to us a certain point where you just don't have enough time in the day because you know, you're busy, you're closing a lot of deals. And like, you just can't take on any more clients. Like there's, there's literally a law of diminishing return. And there is a ceiling on your income, you know, people go into real estate saying there's a ceiling, there's no ceiling on your income, I'm here to tell you because I've lived and breathed that there is a ceiling. I mean, you know, I was drinking so much caffeine like I was I started having panic attacks, because I was consuming so much caffeine, because, you know, I was closing 70-80, you know, transactions in the summer of 2013. That's when I went on my last listing appointment, and that in those first six months of 2013, I went on 267 listing appointments. And I remember to this day, because I was sitting in this house doing a listing appointment, and I literally started having a panic attack in this appointment, because like my mind is just was so overwhelmed. I mean, I people, my clients would call me and like, I would have to talk to him for five minutes before I could even remember who they were. So there is a law of diminishing return from an income perspective where you have to create some leverage for yourself. And so the second key hire is hiring a buyer specialist that takes on your buyside clients, work sign calls, helps you with open houses, if you have like buy sell deals, for example, like give those buy sell transactions to that agent, like if I think one of the biggest mistakes people make is especially people aspiring to be team builders is like, they get into a mindset of scarcity and fear. And they don't want to hire a buyer's agent. Or if they do hire a buyer's agent, they only want to give them certain leads, you know, they don't want to give them assign calls. Which by the way, those are the fastest converting leads are the sign calls. And as a genius, these aspiring team leads want to cherry pick and like you can't do that you got to set your buyer agent up for success. And just remember that, you know, if you give them a charity, if you will, they're also going to reciprocate and close a deal on top of that to make up for the revenue that you're giving them in your commission split. So that's the second key.
Brian Charlesworth 12:04
Yeah, yeah, one of the things I wanted to ask you and not to back up a little bit, but you talked about, you know, there is a law of diminishing returns. I don't think I've met anybody other than you that has studied this quite as in-depth and experience not just studied but firsthand. Like, what is the max that you can expect from a listing agent? Because I know you have buyer's agents, you have listing agents, you don't have a team where that everyone just does everything. So in that role where these listing agents are just going on appointments, they're not even setting their own appointments. What is their Max, what can you get away with having them actually do because you talked about yourself going stir crazy 200 and something listing appointments. So what is that fine line?
Chris Watters 12:59
Yeah, I mean, I've like I've pushed the limits, like literally physically mentally push the limits. And then like it took me years and years and years to figure out, like what's the sweet spot where you create balance for your listing agent, for example, where you're not running them ragged, they have financial success, and you're optimizing conversion. So what I've discovered is like there's basically you know there are different levels of listing agents based off their skill. So a highly skilled listing agent that is working on a team that has the infrastructure in place, like you know, you've got a courier photographer or transaction coordinator, you know, if the listing agents just focused on three things, listing agent focus is number one on converting listings going on the appointment and winning the listing. The second thing they focus on is weekly success calls following up with a client with weekly success calls. And the third thing the listing agent focuses on is anything that requires influence, these are the only three overarching things that a listing agent should focus on. Once your team gets more established, and you have more infrastructure and when I say influence, what I mean is they focus on contract negotiations, things that may come up during the inspection period, anything or potentially maybe price reductions, like anything that requires leading the consumer in that direction, to get the desired outcome. That is what I mean by leading with influence. So those are the three overarching things. So once you get the infrastructure of your team put in place, a listing agent a, you know, like mediocre listing agent, maybe a little bit newer listing agent, worst case, the worst case should be able to sell 80 listings a year. Now I've if you have like an amazing, highly talented listing agent that's very efficient. they've mastered the skills of presentation, market expertise, building rapport, all the basics of being a great salesperson. The upper echelon of limit I've seen over the last 10 years is 130 listings taken per year. I have a listing team in Austin for example of I think we have six listing agents and the worst performing one sells in the low 80s per year, and the best-performing one sells between 125 and 130 listings.
Brian Charlesworth 15:10
So, and again, I think it's important for people to know you run your business as a true business, your listings, your listing agents are focused on those three things. They are not setting their own appointments. Right. Okay, so I didn't mean to take you off topic. But I think that's just super valuable information that I wanted to make sure we got out there, Chris.
Chris Watters 15:32
You know, all these numbers I'm sharing are what I would call like, predicated on like a version 3.0 team, that's more advanced, you know, like, the topic today is about the first three key hires. And so I wrote this, I don't know, I wrote a book that I basically documented my journey of building a real estate team. And what I and as I started helping other people around the country do this. And what I realized is, you know, it's about doing the right things in the right order. And so like, what works, and what I would call the early climb is radically different than what you should be doing and what I call the awkward teenager stage. So I kind of look at these phases of the growth curve like this. So like zero to 150 closings, roughly, is what I would call the early climb, from 150 to 300. closings is what I call the awkward teenager stage. And then from 300 to 500, is explosive growth. I know that doesn't sound like explosive growth, going from just 300 to 500. But the reason it's explosive growth is because in that phase, you're developing your leadership team that is going to help you run the business so you can actually plan and this is the final stage when you get north of 500 transactions, or roughly four to 5 million in GCI. The next stage is what I call The Great Escape. And this is when you exit the business and your primary role becomes like the chairman of the board, like you have a weekly, you know, you might have like a weekly check in with your leadership team. And you might be involved in quarterly strategic planning sessions. But it's truly when you're able to, you know, give people autonomy to run the business without you. So those are you know, the three unique phases of the growth curve. So, again, back to the topic, today, we're talking about kind of version 1.0 people nearly climb and the first three key hires. So first is the executive assistant, we talked about how to scale them up. The second key hire is a buyer's agent. And I think it's it's impactful. Like really set them up for success. Don't just personally cherry pick deals like set them up for financial success. And then your third key hire is an inside salesperson. So an inside salesperson is somebody that helps book appointments for you. I recommend that the inside salesperson only focuses on setting listing appointments, and not buyer appointments. The thing we've had the most success with on the buy-side is having like lead police, somebody that basically is like, you know, ensuring that best practices for lead follow up are facilitated with each individual agent. And so like, for example, you know, our lead police, if you will they log into Sisu. And they're looking at their pipeline, like for example, how many appointments did they set? How many did those, you know, did those turn into wins when they met them face to face, how many of those turn into closings. Ultimately, your job as a team leader, Coach business owner, you know, our job is to create a clear and unambiguous career trajectory path for real estate agents to find financial success. And so our job is to help them knock down these dominoes from a skills perspective. So first skill they have to master is inside sales, setting the appointments, they can log in to Sisu That second skill they have to master is outside sales. That's like when you actually get face to face with someone the process of getting them committed to working with you. And then the third pillar they have to master is market expertise. So like understanding the market setting good expectations, and walking them through the process of closing on a deal. And so those are the big three overarching skills you're trying to develop in an agent. And then if you're trying to really scale your business, the final thing you're trying to help develop and people for the ones that want to do it and are showing signs of leadership is leadership. You know, once they've mastered those sales skills like you want to position them to become leaders within your organization.
Brian Charlesworth 19:12
Okay, I'm just making some notes here, Chris, I think this is great. So you're saying starting a team, you're going to hire your executive assistant, then your buyer agent, you're going to make sure they're successful. The third thing you're going to do is you're going to get an ISA that's going to make sure that you as the business owner, are out on all of the listings at that point.
Chris Watters 19:33
Yep. Those are the first three cars. And one little small nuance that we have learned is I think for a lot of people probably watching this a lot of people watching this are in a position where they're very high performing salespeople, and they're having a lot of success. Most people watching this are in that position. And so for a lot of us, I think the thing we start thinking is like anybody can do this, you know, like we kind of like are blown away. There are so many agents out there only selling four or five homes. And so I think you have to take a moment and like realize like you actually are kind of like a navy seal in the real estate industry, for most people watching this, right. And so you know, when you think about some of the most successful organizations on planet Earth, the one thing that they have mastered is the recruiting and selection, most importantly, the selection process. So like speaking of Navy SEALs, for example, if you have ever seen on the Discovery Channel, they talk to you about like, hell week, and like all this stuff Navy SEALs have to go through. So if you're building a team-centric model predicated on agent productivity, you're tracking all the metrics, appointments, wins, deals close, if you're, if that's the business model, you're trying to grow, you need to build a recruiting and selection machine like you have to have a flywheel to find people because you're looking for an exceptional individual. And so one of the biggest mistakes I see a lot of people make when it comes to hiring your first agent is they only hire one, they hire one person, and then they train they spend all their time training them up. And it's one of the greatest mistakes you can make. Because the probability of finding someone that's going to be like a navy seal, if you will, is it you have a 30% success rate. So I've had, I've had hundreds, maybe 1000s of people come to my door now, like actually come to work for us. And we on average, we average a 30% success rate. So the thing I, the thing I always say is that the interview process for any sales-related position is BS. Like the interview process for any sales-related position is BS. Like I've taken every single recruiting class training class, I've given out tests galore. I've done you know, group, I've done it all. And like if you go and study what these amazing organizations do navy seals, there's a nonprofit organization that's incredible, called Teach for America, in the finance world, they've got like Goldman Sachs, you know, if you've seen the movie with Will Smith called the pursuit for happiness, you know, you hear about him, like, you know, going through this six-month program not getting paid anything, and they, and they, and they tell this room of 30 students, whoever sells the most, and whoever gets the highest test score becomes a broker within the organization. So like, think about the quality of talent that the company is bringing in. And so the biggest mistake every team builder makes is they hire one person, and they put all their eggs in that one basket, and they spend months and months training them and giving them technology and giving them leads, and they fumble, and they're incredibly frustrated. And so to flip the probability of you finding a successful buyer's agent, you actually need to hire five at a time. And that may seem overwhelming for a lot of people. But the thing we have discovered is over the course of 90 days, you're going to identify who is your solid keeper, like, Who's the one solid person that's gonna be your ride or die, and like help you take the business to the next level. And so you have to hire several people to increase your probability of finding the right one. And there's, you know, there are basically three key things you're looking for in those in that 90-day window. So in the first month, a lot of people that are building teams think you're looking for somebody, that's a great converter, you know, like, they're booking appointments and all that kind of stuff in the first month. And like, that's, that I mean, that's what I'll just be honest, that's what I did. I used to think that's what I needed to I need to do observe in the first month was like how well they did at conversion. But the truth is, like, if all of us on this seat on this Sisu call really reflect back on our journey of becoming great salespeople, like we've fumbled a lot in the first 6, 12, 18, 24 months of our career, you know, like, I think back to when I was a real estate agent at the beginning, like showing my first house. Like I was like panicking over using this Supra ekey. Because like, when the sun was shining a certain way, the infrared light could be blocked, and it wouldn't open the lockbox, like I'm, you know, like, the things I was worried about at that stage were so like, trivial at this point. But they seem like such a big deal for me at that point. You know, it really was a hindrance to my growth in my mind. But my point is, is it takes a long time to develop the skills of a salesperson like it doesn't happen overnight. So if the thing you're looking for when you recruit a new agent in the very first month is are they a culture fit? So one of the books I highly recommend people read is called culture code. And the author, what he says is when he studied all these highly productive groups, the number one and the first indicator, the very first indicator of success was how people felt about one another, which is a very intangible thing. And so in our first 30 days of like, helping an agent be successful, yes, we like you know, go through classes and role-playing and all that kind of stuff. But like, that's the first thing we're trying to observe and like, I'm sure For people watching this, you've had people in a position where, for example, like they come and join your team, and like, you know, first or second week, they like got their arms back, you know, and they're very contrary and questioning your advice, it creates this bad energy. And so like your job as a team lead in that in those first 30 days is really to pay attention to behavioral cues, from a distance. So for example, you know, like, I think everybody on Sisu, that's in sales would say, you know, 80% of your success is predicated on your mindset. And so like, for example, when it comes to culture, and like helping have an impact on our salespeople, you know, our job is to create a conducive environment, to set people up for success. And to do that we have to help control mindset. And so that's predicated on hiring people that have similar core values and create a certain feeling when they come in the office. So like, everybody's probably seen Wolf of Wall Street with Leonardo DiCaprio, like, right, like, you know, I'm not like saying, Go do all the illegal stuff. But you know, if you're a salesperson, like think about the environment, like you'd be excited, this high energy results-driven, right. But like, imagine having a few people in that environment that are like, very negative nancies, like asurion, that, you know, they, you know, it's like all these external things they bring into the workplace, right? Like, it's gonna become like cancer. And so like your job as a leader in those first 30 days of hiring somebody is like, and this seems so intangible, but it's like, Listen to your gut. How do they make you feel in those first 30 days?
Brian Charlesworth 26:30
This is awesome advice. We're actually out of time. What is the name of your book? I want to make sure everyone's aware of that.
Chris Watters 26:35
Yeah, it's called The Million Dollar Real Estate team, because you can go buy this on Amazon, but it's, you know, I think it's like 20 bucks or something. Let me see if I've got a special link. That'll give it to people for free.
Brian Charlesworth 26:46
After you drop off, Chris, can you just stay in and drop that into the comment section? Yeah, I just put it in there. Okay. Awesome. Thank you for joining us today. It's always a pleasure getting your nuggets and wish we had more time, but we'll catch you next time.
Chris Watters 27:03
Yeah. Thanks for having me on.
Brian Charlesworth 27:04
All right. Thank you.