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How to Evaluate Your Real Estate Business for Scaling and Growth Opportunities
Aren't you tired of being too busy? You might be overextending yourself by working 12-hour days and performing every aspect of running a real estate business -- while squeezing in time with family. It might feel like you're drowning in work, barely keeping your head above water. Since you're spreading yourself too thin, you might provide a poor experience for your clients, since you're unable to give them the time and attention they deserve. Don't they deserve the best? Plus, businesses are reopening and yours might be experiencing a flood of buyers as if a dam burst. But hey, it's better to drown in work than to have no work at all, right? True, but you can have a heavy workload without feeling like you're drowning, and you don't have to sacrifice your personal life or your family to succeed as a real estate professional. You can have it all, just work smarter. If you're drowning in work, can't give your clients the attention they deserve, and can't find free time for yourself or your family, that's a good indicator it's time to scale your real estate business. Why? By scaling your business, you can reassess your processes and create the infrastructure necessary to properly manage and facilitate its growth. If you scale successfully, you'll increase your income, have more time for clients, family, or yourself, exert less energy on less important tasks, and ultimately increase your market share in your area. In this article, I will share ways to evaluate your business, provide tools to help you forecast and project your real estate business's growth, and offer tips for planning for the future. How to Evaluate Your Real Estate Business and Plan to Scale To begin scaling your business, you must evaluate your real estate business and its historical information first. By reviewing your past sales, expenses, amount of work/hours spent working, task priorities, and marketing metrics like page visits/clicks/conversions, you can assess your numbers to forecast your future performance. Since your historical information is the foundation for forecasting your future sales/profits, your projections will be more accurate if they are more detailed and thorough. 1. How to Forecast Your Real Estate Business's Annual Sales Growth Let's say you've been in the real estate business for three years. You have three years of performance data like sales, expenses, profits, and marketing metrics that you can use to forecast the future. To get the most accurate data, use your monthly performance data and its sum to determine your annual performance. To calculate sales growth, we need to calculate four amounts: # of Services Sold: The amount of monthly home buyer transactions, home seller transactions, and other ancillary services you provide that produce cash flow like referral bonuses, homeowner's insurance, home improvement, etc. Average Price of Service: The average income earned from each transaction and service you provide by month. Average Price of Service = (Price of Transaction 1 + Price of Transaction 2 +...)/ # of Transactions Revenue: The amount of income earned. Revenue = # of Services Sold x Average Price of Service Average Revenue Growth Rate: The percentage of sales growth based on the previous year Average Revenue Growth Rate = (Historical Year 2 Revenue/Historical Year 1 Revenue) -1 After you've determined your average sales growth rate, you can use it as a constant for growth to forecast the amount of potential future revenue. For example, if you earned $1,000,000 of revenue in historical year 1 and $1,100,000 in historical year 2, your average sales growth rate would be 10%. To forecast year 1's revenue, simply multiply historical year 2's revenue by the average sales growth rate 10%, then add the result to historical year 2's revenue: Year 1's Revenue Forecast = (Historical Year 2's Revenue x Average Sales Growth Rate) + Historical Year 2's Revenue $1,331,000 = ($1,210,000 x .1) + $1,210,000 Finally, complete these steps for Year 2 through 5: Year 2's Revenue Forecast: $1,464,100 = ($1,331,000 x .1) + $1,331,000 Year 3's Revenue Forecast: $1,610,510 = ($1,464,100 x .1) + $1,464,100 Year 4's Revenue Forecast: $1,771,561 = ($1,610,510 x .1) + $1,610,510 Year 5's Revenue Forecast: $1,948,717 = ($1,771,561 x .1) + $1,771,561 Therefore, your real estate business's revenue would increase by $617,717 over five years at a constant growth rate of 10% and $1,100,000 base revenue. Since real estate is highly influenced by seasons, use the difference between monthly growth rates instead of the annual growth rates to calculate projections more accurately (March Historic Year 2 – March Historic Year 1 = March Sales Growth Rate). Based on this information, you can determine the amount of monthly and annual transactions and their average prices required to hit a certain revenue or growth goal. 2. How to Forecast Your Real Estate Business's Expenses Your business expenses are the costs associated with running your real estate business. Your should have a separate bank account to keep your business and personal costs split up – it's much easier to manage and track your budget this way. The most accurate way to forecast your expenses is by following a similar process as the Sales Growth Forecast step above. First, calculate your historical monthly expenses for the past two years. If certain fees are paid annually, divide them by 12 months to calculate the monthly expense. Then compare the historical expenses for historical year 1 and historical year 2 to calculate your expenses growth rate: Expenses Growth Rate = (Historical Year 2 Expenses/Historical Year 1 Expenses) – 1 Once you've calculated the Expenses Growth Rate, you can use it to calculate the Expense Forecast for Year 1: Year 2 Expenses Forecast = (Year 1 Expenses x Expenses Growth Rate) - 1 Alternatively, you can estimate your monthly expenses and expense growth rate to calculate a less accurate five-year expense forecast. Note: If you choose to estimate your expenses growth rate, it is better to overstate and have extra budget than it is to understate and have run out of budget early. Some real estate business expenses include costs associated with office overhead, phone, vehicle, productivity software, marketing, education, training, commissions paid out, business meals, travel for work, general business, licenses, fees, and other expenses that help you do your job. Again, be as detailed, accurate and as thorough as you can if you want to the most accurate forecast. Many of these business expenses are tax deductible, so you get receive a hefty tax refund by tracking your spending in detail and reporting it the IRS on your taxes. With this information, you can properly budget, find the necessary amount of funding, etc. over the next five years. 3. How to Forecast Your Real Estate Business's Profits After you've calculated your sales growth and expense forecasts, you can use those results to estimate your profits forecast. Your profits forecast can be calculated by subtracting your expenses from your revenue. By creating a five-year profits forecast, you can paint a picture and more accurately predict the growth of your real estate business. Before you draft a plan to scale your business, you must first evaluate your historical performance so you can forecast your real estate business's potential growth more accurately. To evaluate your historical performance data, gather two years of past sales performance to determine your sales growth rate, and two years of past expenses to determine your expense growth rate. Use these growth rates to forecast your potential profits over five years. Once you've determined your profits forecast, use the results to plan your budget, set monthly/annual transactions objectives, and project the average service price needed to accomplish your scaling goals! Download the complimentary Sales Growth, Expenses and Profits Forecast Calculator to help you forecast sales growth and revenue over 5 years >>> To view the original article, visit the Zurple blog.
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Ask the Industry: What Are Your Top Negotiation Strategies?
Today, we're kicking off a new series called "Ask the Industry." Here, we'll talk to real estate professionals -- brokers, agents, MLS executives, and more -- to hear their thoughts on timely topics related to the real estate industry. Today's post features: Andrew Cristancho, Director of Marketing at Northern Nevada Regional MLS (NNRMLS) Lauren Matera, Agent with Coldwell Banker Realty in Annapolis, MD Bernice Ross, CEO and President of BrokerageUP!, Inc. and RealEstateCoach.com Joy Aumann, Co-Founder of LuxurySoCalRealty As the market remains highly competitive, what are your top negotiation strategies? Buyers should bring their best offers, but sellers should exercise patience Andrew Cristancho, Director of Marketing, Northern Nevada Regional MLS (NNRMLS) "Currently, our Northern Nevada market is as competitive as any have seen it. That — and the fact that we launched NAR's Clear Cooperation Policy in April 2020, causing us to also launch an Active-Coming Soon-No Show listing status — is causing the perfect storm of sellers accepting offers before they are ready to show. This has caused so many concerns with our brokers that our board has voted to employ a 12-month pause on the status. With all of this swirling change in our market, I would advise any buyer's agents to counsel their buyers to be ready to come with their best and finals early in the process. "In the market I mentioned above, it seems that some sellers might be tempted to jump at the first offer since those offers are coming so early in the process. I would advise listing agents to counsel their seller clients to do their due diligence and wait for the market to work. If the listing starts in Coming Soon, or is simply Active but not available to show yet, and there are several offers before showings, allow that listing to switch to a Showings-Allowed active status before deciding on a final sell price. Patience can be its own reward in this market. "Third, and this is not necessarily a negotiation tactic, but it can help you think on your feet as a real estate professional: KNOW YOUR BUSINESS TOOLS! Whether you use Homesnap, or other real estate software, decide which tools you need, then learn to be proficient with those tools. It will help you with decision-making and negotiations from contract to close." Be the most flexible, convenient offer: It'll go a long way with anxious sellers Lauren Matera, Agent, Coldwell Banker Realty, Annapolis, MD "With all the intensity in the market and buyers bringing their highest and best, I've found that one of my go-to negotiating strategies is simply flexibility. Sellers are eager to sell, but I've found that they are just as anxious as the buyer knowing they too will soon enter the market on the buying side. "If my buyers have flexibility in settlement or move-in date, giving the sellers some peace of mind is priceless. Sometimes we aren't even the top-dollar offer, just the most convenient." Keep this adage in mind: "The first one who speaks loses." Bernice Ross, CEO and President, BrokerageUP!, Inc. and RealEstateCoach.com "When it comes to negotiating, there's an old adage: 'The first one who speaks loses.' For example, if someone asks you to lower your commission, you can say, 'No.' Sit there and wait for the seller's response. They will often go on to another question. "If they press you on lowering your commission, respond by asking this: 'You do want an agent who can negotiate the highest possible price for you, is that correct?' (Wait for their response.) Assuming they say yes, respond with, 'How effective do you think I would be in negotiating the highest possible price for your property when I couldn't even negotiate a full commission for myself?' Again, 'The first one who speaks loses.'" Make a great first impression with the seller's agent — the little things make all the difference Joy Aumann, Co-Founder, LuxurySoCalRealty "Your first impression with the seller's agent starts from the minute you are requesting the showing. Build rapport with the agent so they know you're the type of agent that they want to work with. Find out what's most important to the sellers. Sometimes things like a 30- to 60-day rent-back can make all of the difference. Be prepared with proof of cash funds or pre-approval letter leaving a great impression of a prepared and motivated buyer." To view the original article, visit the Homesnap blog.
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From Plan to Reality: Making Goals and Sticking to Them
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5 Strategies To Grow Your Real Estate Business
If you have the goal of increasing your revenue every year, investing the time and energy to grow your real estate business is crucial. Growth is in your hands. There are several strategies you can implement to help you reach more clients and close more deals--you just must commit to them.
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How to Set Yourself Up for Busy Season Success
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5 Simple Steps to Scale Your Real Estate Business to the Next Level
Aren't you tired of being too busy? If you're drowning in work, can't give your clients the attention they deserve, and can't find free time for yourself or your family, that's a good indicator it's time to scale your real estate business. By scaling your business, you can reassess your processes and create the infrastructure necessary to properly manage and facilitate its growth. If you scale successfully, you'll increase your income, have more time for clients, family, or yourself, exert less energy on less important tasks, and ultimately increase your market share in your area. In this article, we'll show you five steps to scale your real estate business:
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How to Use Outsourcing to Reduce Your Workload
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7 Advanced Strategies to Grow Your Real Estate Business
When it comes to advice on how to grow your real estate business, there's no shortage of suggested strategies and how-tos out there. The problem? A lot of it can be pretty basic. If you've been in real estate for a while, do you really need someone to tell you to "know your target market" or "work on perfecting your sales script"? Of course not. If you're successful, you've had that down for years now. That kind of advice cluttering the internet is more suitable for an agent just starting out. Instead, we'll focus on more advanced strategies for growing your real estate business that might not be so obvious—and can give you an extra edge in winning clients and dominating your sphere.
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Proven Tactics of Real Estate Super Producers
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How to Thrive in Challenging Times
As we handle the day to day running of our lives and businesses in a time where the everyday has been thrown out the door, some people find themselves missing tasks that they thought of as a burden, like door knocking or grocery shopping. However, times of adversity are often when we see the best from the people in our communities. Even while members of our communities are looking for ways to distance themselves from one another physically, we're also looking for new ways to connect with one another. In the coming weeks, we'll see people leverage their technology to network and communicate with their friends, family, and business contacts more than ever before. Here are a few tools and resources you can use to thrive personally and professionally in these unpredictable times.
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Friday Freebie: 2020 Real Estate Marketing Planner
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5 Ways Real Estate Agents Can Hit the Ground Running in 2020
Real estate agents know there's no such thing as a slow season for them. During the winter months when most markets are quieter, agents need to be ramping up their marketing and prospecting efforts so they have a deep well of leads going into the busy spring season. While the season is slow for your clients, move fast to hit the ground running in 2020 with these five real estate tips:
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Rebuilding Your Real Estate Business After a Disaster
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Make Giving a Part of Your Business Strategy
Whether it's running a charity 5k, serving lunch to the homeless or simply fundraising for a cause close to your heart, having a social giving strategy in your business is a must. It's also an easy and fun way to motivate and inspire your team while giving back and connecting with the local community you serve.
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Listing Tips and Strategies to Stand Out and Sell More Homes
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How Business Strategy Can Help You Stand Out in Real Estate
Have you ever come across a billboard you thought was ridiculous? It may have made you chuckle a bit, or you may have thought it was corny. Regardless of your feelings, the fact that you remembered the billboard was an attempt to stand out from a business--and it did its job. But doing something outlandish is not the only way to stand out in real estate. Yes, you can go the billboard route and do real estate parodies on Game of Thrones, the Lego Movie, or "Thinking about moving to Canada after the elections?" However, is that how you want local homebuyers and sellers to think of you?
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5 Tips to Successfully Launch Your Real Estate Career
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Risk Management for Your Real Estate Business
As a real estate agent, you should be focused on two main things: your success and the happiness of your clients. Part of creating a successful business and keeping your clients is being aware of and managing the risks you and your clients face.
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Friday Freebie: Set (and Keep!) Your 2018 Goals with this Workbook
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[Infographic] Planning Your Best Year Ever
Was your first year in real estate everything you hoped it would be? What about your fifth, tenth, or fifteenth? When you launched your career in real estate, you likely set some goals for yourself, ones that you've tweaked and refined with experience and a better understanding of your market. Now you can probably make a decent estimate of the transaction volume you'll achieve each year. However, that's about to change. In a Secrets of Top Selling Agents webinar, Tom Ferry explained how with the right planning you can double, triple, or even quadruple your business!
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7 Steps to Creating an Awesome Marketing Campaign
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5 Steps Real Estate Agents Can Take to Finish 2017 Strong
While our strong summer market continues to keep agents busy across the country, fall is just around the corner—and you have only five months to close out 2017 with a bang! Below are five foolproof ways you can assess your business goals, tweak your projections and ramp up your business so 2017 is your best year yet. 1. Start with the goals you might not meet
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3 Tips for Agents Who Want to Open Their Own Brokerage
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How to Set Your Goals Now for More Commissions in 2017
It's a safe bet that most agents would like to earn more money in the year ahead, but do you have a plan for how you can step up your game in 2017? We're not talking about simply having vague goals in mind, but instead formulating a tangible plan that includes hard numbers for how many transactions you need to close to hit your income target, as well as how many leads you need to engage to generate those transactions in the first place. Or, as we say in the RE Technology offices, you need to plan your work and work your plan! Fortunately, with a little guidance, this is simple to do—and, it's a great time of year to start planning ahead. Here are a few things you need to keep in mind when formulating a plan for 2017: 1. Establish your baseline Before you figure out where you want to go next year, first you need to figure out where you've been. How much commission did you earn last year? From how many closed transactions did you earn this commission? How many buyer transactions closed? How many listings? Once you've figured this out, you can begin to visualize how many more transactions you need to close in 2017 to hit your income goals.
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Real Estate Retirement: What’s Your Exit Strategy?
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The Weather Outside is Frightful – Now What?
It's well-known that winter can be a very slow time for selling real estate. So what can agents do with this downtime? Well, we've thought of a few ways you can leverage this cold weather slowdown to prepare and start the spring selling season off with a BANG—and position yourself for your best year ever! First, it's important to take some quiet time and think about what goals you would like to set for yourself in 2014. What revenues would you like to generate? How much money can you invest in yourself and your business? There are great business planning tools out there that can help guide you through the process of creating your own strategic plan. What are your key strengths and weaknesses? Have you asked your customers this important question? They can give you clues about the best ways to improve your service levels and create lifetime loyal fans. You can create a simple survey with just a few simple questions on an inexpensive tool like Surveymonkey.com if you want to get a quick read of your performance. Send it out to the customers you have worked with in the past twelve months and see what you get back. Ideally, you may want to think about going even further by signing up for a program like QSC that allows you to track client satisfaction for every transaction you're involved with. Once you identify your key strengths and weaknesses, you can think about the type of training you would like to participate in. Winter is a great time to complete some education courses so can take on 2014 with new skills. What kind of training would you like to engage in to make you a stronger real estate professional? Check out the attached list of training solutions to find some ideas. It's also important to check your Association and MLS websites for training courses. Many of them offer a variety of great courses that are free or very inexpensive.
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Friday Freebie: Business Plan Builder from realtor.com®
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Best of 2013: 4 Steps to Becoming a Stronger Listing Agent
With only 10 publishing days left in the year, we're counting down our most popular articles of 2013. This article was posted back in January and is #10 in our countdown. How balanced is your business? If you're a buyer's agent with few or no listings, the strength of your real estate practice may be suffering. A healthy real estate strategy includes cultivating both buyers and sellers. After all, the two groups have a symbiotic relationship with each other. A robust pool of buyers to market to enables you to sell listings faster, while a set of solid listings helps you attract higher quality buyers. Growing both sides makes for a stronger, more well-rounded business. With the housing market making a recovery, plenty of buyers are searching for homes while interest rates and prices are still low. This can be a double-edged sword, though. While there's no better time to be a seller's agent, competition for listings is fierce. And it's no wonder—listings take only one-third of the time and effort of working with buyers! Fortunately, Market Leader's free Listing Agent Guide has outlined four strategic steps you can take to attract listing leads, convert them into clients, and sell their homes. Read on to learn more.
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5 Steps to Effective 2014 Business Planning
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5 Questions to Ask Yourself for a Successful 2014
"What's written is real, what's planned is possible," says real estate coach, author and speaker Mike Lindstrom. According to Lindstrom, too many agents only talk about what they want to do when it comes to marketing their business without investing time into setting specific goals and plans to achieve those goals. To help agents get started crafting a plan for success in the new year, he recommends that every agent asks themselves five questions: What is my purpose? What is my outcome? What is my business plan? What can I do this year to invest in myself? What can I do to change my mindset? Lindstrom was one expert selected to provide one-on-one training sessions to the winners of the 2013 HomeFinder.com Agent Makeover Sweepstakes. For more from Lindstrom on goal setting for 2014, read the transcript on the next page.
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Turning Prospects into Customers…for the Long Run
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Friday Freebie: Business Plan Builder from realtor.com®
Now is a perfect time to reassess and calculate what you need to do to get your goals on track! As we move towards mid-year, it's time to put pen to paper to figure out what is working (and what isn't). A business plan isn't set it stone, nor should it be a heavy burden. Rather, it's a roadmap that helps clarify your objectives and how you're going to achieve them. Success stems from having established goals and a plan to achieve them. Fortunately, our latest Friday Freebie makes creating a plan with achievable goals simple. Read on to learn more. Free Business Plan Builder from realtor.com® Realtor.com® offers a free tool that allows you to review last year's results, set goals for the next year, and calculate just how many activities you will need to engage in to reach your objective. This free tool is designed for agents who have set an ambitious goal for prospecting, sales and closings. It includes recommendations for the following, based on your unique business objectives: Webinars Downloads Tools If you're looking for a strong foundation to get your goals back on track, spend five minutes with this free tool from realtor.com®. It'll help you assess the tools you're already using so you can plug in solutions that deliver results. You will see how many prospects you need to acquire each month, and how many follow-up calls you need to make to position yourself to meet your goal. Click here to learn more about this free benefit from realtor.com®.
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How to Keep Other Agents From Stealing Your Leads
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4 Steps to Becoming a Stronger Listing Agent
How balanced is your business? If you're a buyer's agent with few or no listings, the strength of your real estate practice may be suffering. A healthy real estate strategy includes cultivating both buyers and sellers. After all, the two groups have a symbiotic relationship with each other. A robust pool of buyers to market to enables you to sell listings faster, while a set of solid listings helps you attract higher quality buyers. Growing both sides makes for a stronger, more well-rounded business. With the housing market making a recovery, plenty of buyers are searching for homes while interest rates and prices are still low. This can be a double-edged sword, though. While there's no better time to be a seller's agent, competition for listings is fierce. And it's no wonder—listings take only one-third of the time and effort of working with buyers! Fortunately, Market Leader's free Listing Agent Guide has outlined four strategic steps you can take to attract listing leads, convert them into clients, and sell their homes. Read on to learn more.
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Creating Actionable Social Media Strategies
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Holiday Deal: 2013 Business Plan (and Training!) from Market Leader
It's December--the year is winding down, and savvy agents are beginning to look ahead to 2013. Our latest holiday deal aims to help REALTORS® do just that. Market Leader's 2013 Real Estate Business Plan is a free-to-download guide that empowers agents to achieve definable goals. It does this by helping agents: Understand consumer needs - By understanding potential clients, you are better able to connect with them. Today's consumer begins their real estate search online, but are often overloaded with information. Market Leader shows you how to differentiate yourself online and learn how to communicate with tech savvy consumers. Identify challenges facing the agent - It's all about the leads. Learn how to generate leads, engage them, and win their business, all while having fun. See what bad habits are holding you back and how to evaluate your online presence. Explore the tools needed for success - From a straightforward website to diversified lead generation, Market Leader shows you what you need to connect with the digital consumer. Most important, though, are action-oriented goals that are clearly defined.
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Why Every Real Estate Agent Needs a Real Business Plan
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An SEO Strategy That Pays Back
Guest contributor Delta Media Group says: With so many 'voices' out there, how are real estate companies supposed to know who to listen to and what to believe when it comes to their websites and online placement (aka Search Engine Optimization)? You would think that some of the sources who tout themselves as SEO experts should have the best interests of these companies at heart. I'm here to let you know that they usually do not! With doing so many websites around the country, I think we've seen just about everything and heard just about everything as well. We see real estate companies receiving 'advice' on how they should handle customers and what should be emailed to them. We see 'advice' telling real estate companies how to handle data feeds and where to link the traffic. Well, here is some free advice that, if listened to, can generate your company millions of dollars in transactions. All links must link back to YOUR site You can not compromise on the fact that every link from all possible sources must link back to your website. This includes links from any portal, links from any emails. All traffic! While there may not be any link value and while search engines may not be able to follow some of these links, it is well known that search engines do favor sites that get more traffic. There is no way you should ever link any visitor to any website other than your primary website.
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A Geographic Farm? Do it right the first time.
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HomeGain Releases 2nd Quarter 2011 National Home Values Survey Results
Guest Contributor Louis Cammarosano from HomeGain Says: Fifty percent of surveyed real estate professionals nationwide expect home values to decrease over the next six months; Sixty-five percent disapprove of Obama’s performance as President. HomeGain, the first company to provide free instant home valuations online, announced the results of its nationwide second quarter 2011 home values survey. Over 750 real estate agents and brokers and over 2,600 homeowners were surveyed. Most real estate professionals and homeowners continue to expect home values to decrease or stay the same through the middle of the year. Fifty percent of agents and brokers and forty-two percent of homeowners think that home values will decrease over the next six months. In the first quarter 2011 HomeGain National Home Values Survey, thirty-nine percent of agents and brokers and 30 percent of homeowners thought that home values would decrease over the next six months.  
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