Tracking these numbers will help your real estate business thrive
Be the smartest person in the room. Impress your customers, eclipse your competitors and be that person who knows everyone. Sign up for the 2022 Virtual Events Package to unlock access to new content every month. You’ll be able to chat live with experts, listen to discussions on the go, and watch replays. Register now and you’ll also receive virtual access to Inman Connect New York in April – don’t wait!
While many real estate agents and brokers get into the business because they thrive on building relationships, if they want this business to succeed, they can’t ignore the numbers, according to Inman Connect Now panelists Thursday. .
Numbers are “the language of business” and “really tell a story,” said Dana Cadena, associate broker and certified real estate trainer at Keller Williams in New Jersey. Cadena spoke at a session titled Keeping Your Eye on KPIs, or Key Performance Indicators.
“Without the numbers and these KPIs, we can’t improve what we don’t measure,” she said. “So it’s a way to measure and make sure we’re on the right track. It really informs our decisions to move forward to bulletproof our businesses. »
The KPIs its agents focus on lead from one to the other: number of outbound contacts; conversions into appointments; conversions to signed listings, signed buyer contracts or signed leases; conversions to pending ads; conversions to closures; gross commission income; and profits.
Panel moderator Wendy Forsythe, Chief Strategy Officer of Fathom Realty, noted that there are leading and lagging indicators.
“Your contacts are a leading indicator,” she said. “I know that I am still working today for the company of tomorrow. So how many contacts I make today are going to go down the funnel to turn into those commission checks tomorrow. No contact today, no commission check tomorrow.
Ian Hoover, owner broker at Deacon & Hoover Real Estate Advisors in Pittsburgh, Pa., said that as a small broker, he focuses on profit margin and deal count.
“[I track] how many trades we have coming up and how much are our actual trade fees because at the end of the day if I make enough trades and have enough trade fees, we can pay the bills, keep the lights and give a good quality product to our agents,” he said.
He keeps an eye on the net profit per transaction and compares it to the net on his income statement.
“Is this net number per transaction really equal to what our net number is on our P&L?” he said. “If not, where are we spending our money so that we can really get our numbers down and know what we’re doing so we can continue to grow and achieve our goals?”
If he doesn’t have enough incoming transactions or if he doesn’t earn enough per transaction, he will focus more on revenue-generating activities, according to Hoover.
“In our particular brokerage, we focus on business-generated leads because we earn a bit more commission on those,” he said. “What we really focus on is driving numbers and doing business with our agents, because no. 1 which brings more money in the door, no. 2 who keeps our agents here because we give them business.
Cadena said his brokerage’s “best secret weapon” is GPS, which represents goals, priorities and strategies. The goal is a SMART goal, she said, meaning it’s specific, measurable, attainable, repeatable and time-sensitive. The goal guides the company’s three main priorities, which are then linked to five action-oriented strategies.
“It’s the easiest way to put a business plan on a single sheet of paper,” she says. “Your strategies really inform the priorities to activate, which leads you to set this goal at the top of your business plan.”
GPS allows agents and brokers to adapt over time, according to Cadena.
“If you’re not on target for your annual goal, say by the end of the first quarter of the year, you’re allowed to adjust your sales,” she said. “You can deliberately pivot to just isolate your numbers. If you have to catch up on a certain number of dates for this conversion to translate to GCI, well, you have to turn up the heat in the kitchen and really cook at the end of the game because, listen, nothing’s gonna work unless we do.”
His brokerage checks their GPS weekly on so-called Fantastic Fridays. Then, at the end of the month, the brokerage looks at the agents’ income statement and pays close attention to gross commission income, which means that price and sales growth should increase.
“If the GCI is flat or even a bit down, we cut back on offers and it doesn’t have to be,” she said.
Forsythe added: “We know that nationally the commission percentage rate is going down. But that’s where we peel the KPIs and we can see the behaviors that lead to that result.
Hoover said he also checks a weekly “pipeline” report to see how many new agents are bringing in.
“It helps us predict what we have coming up so we can really plan and adjust accordingly for our business,” he said. “And then the most important thing: we have a great accountant, and we receive our P&L reports on the 10th of the following month. It really allows us to dig deep into our business. Where do we make our money? Where do we spend our money? Are we profitable? How profitable are we? We can really dig into that and make sure we run our business accordingly and effectively.
Cadena stressed that it’s not just business that brokers and agents should check, but also themselves.
“[Do] an inward check to make sure you’re whole, happy, and fulfilled,” she said. “Frankly, I re-analyze my strengths. As adults, we have gained our strengths and [I] strive to plan business around my strengths. So if something goes wrong, it’s probably a key tool, system, or person that can help us get back on the path we chose to grow up on.
Hoover said that during the pandemic he decided to “really reinvest in this business and really help my agents more with their business,” so he meets with his top team leaders and top agents once a month to go through review their goals, their pipeline, what they are working on, their struggles.
“I know if they hit their goals, at the end of the day, we hit our goals because we’re really focused on goal setting and we have our annual goal meetings that we do every year,” he said. he declared.
According to Forsythe, frequent review of KPIs and accountability are essential.
“If you’re an agent, if your broker doesn’t have these regular meetings with you, find an accountable partner, whether it’s a coach, a peer, a family member, like someone just in your sphere that you can have this accountability conversation with,” she said. “I’m a big fan of dashboards. What’s that scorecard? It’s my KPI [and] what other goals I may have in my life that contribute to my well-being and all those factors that contribute to success.
Cadena said his brokerage has a centralized tool called “the 411” that tracks weekly, monthly and yearly personal and professional goals.
“One of our go-to tools is, what are we doing each week to impact the month to impact the year?” she said.
The panelists finished with each other’s top takeaways:
- Forsythe: “My best advice to all of you is to sit down and write down all the important numbers for your business. Then figure out how do I track them and set up that dashboard because once you do that it will give you so much power in your business that you can use.
- Hoover: “Know your numbers. Update them all the time.
- Cadena: “Hold every dollar accountable. Make sure it’s an investment in your business rather than just a band-aid for that widget you’re not using. Question all the expenses of your agent business because you will find money. Second, be so specific about your strengths and what, in your agent activity, gives you the most energy. Do this. And really use the clocking card, 411, and GPS to hold yourself accountable. Make sure you have a predictable income in our industry.
Email Andrea V. Brambila.
Like me on Facebook | follow me on twitter