By Carole Hawkins, [email protected]
Every real estate agent, no matter how hard he or she works, hits a ceiling now and again.
That’s the purpose of a business plan — to break through the ceiling, said Keller Williams master instructor Gene Rivers.
Rivers is the leader of a Tallahassee real estate team that has closed on over 200 homes a year for more than 20 years. He offered advice about business plans at the Jacksonville Women’s Council of Realtors’ November lunch meeting.
When most Realtors set goals for the next year, they just plan to do more of what they did last year, Rivers said. But if you could do more, you already would be.
“The business plan has to embrace the idea of change,” Rivers said.
For example, research shows a single agent will top out at 30 to 40 sales a year. It’s not possible to do more without sacrificing customer service and a personal life.
The right business plan adds a staff member at the 40-sales ceiling.
A lot of Realtors hire a buyer agent for the first team member. It’s the wrong strategy, Rivers said.
Buyer agents are expensive — they take half the pay. And everybody is still left with the paperwork.
Powerful businesses are built on the administrative side.
“How well organized are busy single agents?” Rivers said. “Not especially.”
That first assistant gets the Realtor organized and builds systems into the business and handles marketing and transaction coordination.
The next hire should be a person who generates leads. It’s a position that costs the Realtor $40,000 a year, more or less, depending on the size of bonuses.
“When you have someone working 40 hours a week to find leads for you, you’ll be astounded how good those leads are,” Rivers said.
Realtors can expect significant growth, as much as a 50 percent increase in appointments.
The next hire should be a buyer agent. That frees up the Realtor to focus on listings, which is the job that generates the most income per hour.
Keller Williams has 14 years of evidence that the four-person team is the backbone of very successful mega-teams all over the nation, Rivers said.
A four-person team typically produces 100 to 120 sales a year. The Realtor’s profit margin is reduced with each hire. But his or her net income goes up and earns it working fewer hours.
Realtor teams fall under the “organization” portion of a business plan — the part that relates to staffing. It’s one of four aspects of a business plan to address when looking for ways to increase profitability.
The others are:
• Economic: Set written goals of the numbers you want to hit for the year. How many listings will be taken, how many buyers will be signed up, what will the average sales price be, what will the average commission rate be and how many houses will be closed.
Reaching those goals depends on talking to a specific number of people every day, Rivers said, so decide how many contacts you’ll regularly make.
• Lead generation: An agent should decide how he or she wants to generate leads, whether it’s through expired listings, for-sale-by-owner listings, Internet leads, door-knocking or open houses.
“It is a startling important fact that you’ve got to pick one,” Rivers said. “Those who succeed at the highest level do not use 15 or 20 ways to make their sales happen.”
The most dependable source of business comes from past clients and their referrals. Build a business around that and pick one or two other strategies to focus on.
• Budget: Try to make more than you spend. Research shows marketing should cost about 10 percent of gross income. So, don’t sign on for an advertising campaign that’s not likely to produce 10 times its price in sales.
“The most constant number that we know is that, at any volume, an agent should never spend more than 33 percent of their income on overhead,” Rivers said.
Two-thirds should be used to pay yourself or your team.