Real Estate Business Planning Report

Real Estate Business Planning Report

By Bob Fitzgerald

 

 

Question… what is the difference between knowing what to do and actually doing what you know?  The answer is FOCUS.  As real estate agents, we lose focus because we do not have a plan…. or we don’t look at the plan we have.  Let’s change all that right now!

 

 

PART ONE: HOW MUCH MONEY DO YOU NEED?

 

1. What is your cost of living per month? __________

 

2. How much of that expense is covered by a spouse or any other “outside real estate income?” __________

 

3. What is the difference between #1 and #2?  __________

How much income do you need from real estate to pay the monthly cost of living?

 

4. How much is your average NET commission check? __________

After you pay expenses, your office and your taxes… what is left for you?  It is critical that your plan be based in reality and the reality is… the income you keep, right?

 

5. Based on your average NET commission check, how many deals do you need to break even each month? __________

 

 

The problem is that too many agents simply break even!  It is time to break the cycle…

 

 

PART TWO: HOW MUCH MONEY DO YOU WANT?

 

1. How much NET income do you really want? __________

What payoff would cause you to pay the price and develop a solid real estate business?  Remember, if the payoff isn’t worth the effort we simply give up too soon and never accomplish the goal.  Think Big!

 

2. How many closed transactions are required for you to hit this NET income goal for the year? __________

 

3. How many of those deals will be listings sold and how many will be buyer- controlled sales? __________

(Hint: 30 deals or less is 50/50; 50 deals is 75% listings sold/25% BCS; 75 deals or more is 90% listings sold/10%BCS)

 

4. Understand that the listings will automatically bring the buyers.  So, the next question is how many listings do you need to take for the year? __________

This number will reflect your market conditions and your ability to price a home.

 

5. How many listing appointments do you need to go on in order to take those listings? __________

A typical agent should target 70% listing appointments to listings taken.  Example: 30 listing appointments will equal 20 listings taken which will cause 15 listings to sell to go with 15 buyer- controlled sales for a total of 30 closed transactions with a NET commission of $5000 per deal yielding $150,000 for the year.

 

6. Now, divide this number of listing appointments by 10 months. __________

Take two full months or eight full weeks off…  vacation time, personal time, sick time.  So based on the example above, 30 appointments divided by 10 months is only 3 listing appointments per month.  This is very realistic!  The key is the word CONSISTANCY!  You are assuming a FULL 10 months of prospecting, lead follow up, time management, focus and effort.  What has to happen for you work smart for 10 months?  For information on my Legacy One- on- One Coaching Program, e-mail me at coachbobfitzgerald@gmail.com.

 

7. The next question is the most difficult.  How many prospecting contacts do you need to make to past clients, centers of influence, expired listings and for sale by owners for you to set these appointments? __________

A strong agent will have a contact to appointment ratio in the 20s and a typical agent will be in the 30s.  So, if I need to set 3 appointments per month and I need 30 contacts per appointment, then I need 90 contacts per month.

 

8. Divide this number by 20 working days if you will prospect 5 days per week or 16 if you plan to prospect 4 days per week.  You can see that you don’t need to prospect much if you are simply consistent… day in and day out. __________

 

 

PART THREE: ACTION STEPS

 

The key aspect of part three is the word… ACTION.  What do you need to DO?

 

The simplest way to develop an Action Plan… is to rate yourself in each of the following areas… on a scale of 1 to 10.  After rating yourself, ask yourself this question:  What do I need to DO differently to become a 10?  Limit your action steps to the two or three most important things you need to DO differently in each area of the business.

 

1. Past Clients/ Centers of Influence:  Do you have a list? Is it organized?  Is it quality?  Are you calling them several times each year?  Are you asking for business?  Are you getting referrals?  Remember, if each person on your list simply knows one person this year that will buy or sell a home you have a gold mine here.  Again, for my Referrals Now Report, that will cover the 5 biggest mistakes agents make and why we don’t get more referrals and the 2008 Referrals Now Script… e-mail me at coachbobfitzgerald@gmail.com.  It is FREE of charge.

 

2. Prospecting For New Business:  Do you prospecting daily?  Do you know the scripts?  Do you know your numbers?  Do you know how to handle objections?  Is your mindset strong? Do you have systems?

 

3. Lead Follow Up:  Do you ask great questions?  Do you have all your leads qualified?  Do you have a system for follow up?  Do you keep them organized?  Do you have great timing?  Do you know what to say? Do you need a great lead follow up script?  e-mail me at coachbobfitzgerald@gmail.com.  It is FREE of charge.

 

4. Closing for Appointments:  Are you just talking to people or are you going on appointments.  If you are not meeting buyers and sellers we can not make money.  Can you close?  For my new script called Closing Sequence (2008), again,  just  e-mail me at coachbobfitzgerald@gmail.com.  It is FREE of charge.

 

5. Pre Qualify Appointments:  Are you wasting too much time with people that are not motivated… people that are not reasonable… people without the ability to move or people that don’t want to hire you?

 

6. The Listing Presentation:  Are you getting at least 75% to list with you at the right price?  Are you focused and organized on each appointment?  Are you in control of the conversation?  Do you know how to discuss the market?  Do you know how get the right price and a full commission?  Can you close?

 

5. Price Reduction Skill:  Do you know what to say?  Do you know how to use market stats and media?  Are you persistent?  Are you communicating weekly with your sellers?

 

8. Buyers:  Are you wasting too much time with buyers who don’t purchase?  Do you have buyer minimum standards?  Do you have a buyer presentation?  Do you have a buyer process and buyer systems?

 

9. Time Management Skill:  Do you have a schedule?  Do you follow your schedule? Do you have systems?  Do you prioritize?  Do you organize?  Are you disciplined?

 

10. Mindset:  Are you motivated?  Do you have specific goals?  Are you making quick decisions or are you putting things off?  Are you complacent?  Are you lazy?  Do you compromise or fight for success?  Do you recover quickly from setbacks?  Are you steadfast or ready to let fear and failure define you?

 

So, simply define what you need… get clear on what you want and how the numbers break down… and begin improving in all ten areas by taking action for the next 90 days.  Every 90 days, go back and complete step three again.

 

Good luck!

Let’s build a Legacy Together,

Bob

 

www.FitzgeraldCoaching.com

www.coachbobfitzgerald.wordpress.com

 

How to get a FULL Commission

 

Commission is a very sensitive subject.  Let me start by saying that most agents make way too big a deal about the commission objection.  Let’s get right to it.

 

In many cases the seller isn’t “committed” so saving money by paying discounted commission.  Often, they are simply asking if it is possible.  The difference between the seller asking you if you’d be willing to take a lower commission and the seller who refuses to list with you at a full commission is a big distinction.  If you’ve made a strong presentation and they ask you about commission… simply say, “Mr. Seller, I appreciate you asking but in fairness to all of my clients… my fees are always the same.”  Then continue as if they never asked.

 

The problem is NOT that they aren’t convinced… it may be that you are not convinced so let me continue.  How much are we really talking about in most cases?  One percent?  Two Percent?  Translate that into dollars.  If you were to list a $200,000 home, then even 2% is only $4,000.  Would the seller take a cash offer at $196,000?  In most cases with a huge smile all the way to the bank!  Yet, they are going to choose the person to bring that offer or worse yet… negotiate that offer over the first $4,000 of negotiating room.  As the average sale price goes up, the commission the seller is trying to save becomes less and less significant yet in the mind of most agents… because of the size of the commission, they are more and more likely to cut it.

 

Speaking of the negotiating process…  Have you ever sold a home to a buyer that would have paid thousands of dollars more than they had to because of you got them a great home at a great negotiated price?  Yes.  Have you ever sold a listing for a negotiated price greater then the seller was willing to take?  Yes.  So you ARE worth a percent or two more!  Start taking about the buyers and sellers who have saved thousands, even tens of thousands with you and you’ll stop feeling like you should compromise your value.  How to get a full commission is a secondary issue to your belief system that you can and deserve to get paid for the service that you provide.

 

Having said that, the next thing we need to understand is why so many agents and even companies will discount the commission as a business model.  In making an argument for your value, it is often important to help the seller understand why the others do what they do.  In this case, offer a discounted commission.  It is simple really… have you ever had a great listing in a nice neighborhood and your phone rang off the hook with sign and ads calls?  Have you ever decided not to put up a “PENDING” sign because you wanted to keep the buyer calls coming?  What commission do we normally get if we have a buyer- controlled sale?  Usually a full 3% or more, right?  In truth, we can make a lot of money getting buyers of our inventory even if we don’t sell the listing or make money on the listing side.

 

So, educate the seller.  Do the math for them.  “Mr. Seller, If I were to take a 4% listing and give 3% to the selling broker, I’d make $2,000 as your listing agent.  I have expenses, a split with my office and taxes.  That doesn’t leave much, does it?  So why would an agent or company agree to do that?  If the home doesn’t sell and each month I can pick up just one buyer off the sign or my ads… I will make a full 3% or $6,000 every time I sell a home to that buyer.  The majority of buyers will purchase a home other than the one they called on so the listing can be the best source of new business the agent has. 

 

In a market where the majority of homes listed do not sell month in and month out, do you really want to hire an agent that has more financial incentive to keep the home on the market than they do if they get it sold?

 

This is just a start but remember… you are worth it.

 

Understand the Real Estate Market and Pricing

The market is a function of simple supply and demand. In real estate, supply is the total number of active listings and the demand is the total number of buyers purchasing every 30 days. (New Pending)

The total inventory… divided by the new sales… is called the monthly supply of inventory. For example, a typical market may have 25,000 homes for sale and 2500 new sales per month. That means the market has a 10 month supply of homes. 

Here is what happens to prices:

0 to 1 month supply of homes, prices are rocketing higher with crazy multiple offers.

2 to 3 month supply of homes, prices are going up steady

4 to 6 month supply of homes, prices go flat

7 to 10 month supply of homes, prices begin to fade

11 to 15 month supply of homes, prices fall

16 to 20 month supply of homes, prices fall hard

21 to 25 month supply of homes, prices free fall

 

Remember, each price range or geographic area will have a different ratio. The higher end may be at a 18 month supply where as the low end might be at a 4 month supply. In this example… Prices are dropping like a rock in the high end and holding steady in the low end.

 

The key is to watch this number each month. When the monthly supply of inventory reverses direction and starts getting smaller we have reached the bottom and started to come back. Prices will not return to appreciating levels again until the inventory has “sold off” to a 4 month supply again. (2010)

 

E-mail me for my full report on running a real estate business in a declining market.