4 Steps to Building a Real Estate Economic Plan

By October 26, 2018 Blog 1, Business, Productivity

On December 6th, I’m hosting the first ever Business Planning Webinar! Join me to get a head start on 2019, register here:  http://bit.ly/BizPlanWebinar 

The reviews are in for the 2019 Business Planning Workshop:

“[Susan] helped to break down the scary details & make them doable!” -AH

“This is the structure I needed! Thank you!” -LS

“Inspired &  motivated!”  -PM

Achieving success as a realtor can feel like random, often favoring the lucky. However, experienced and successful agents know the secret to building a predictable and stable business. That secret? Develop a consistent lead pipeline by always prioritizing making contacts. This is where your economic plan begins; let me share 4 vital steps to help guide you.

Step 1: Determine your income goal.

This is the fun part! How much money do you want to have earned by the end of next year? There’s a fine balance between reality and pipe dreams. Keep income goals realistic yet remember that even if you shoot for the moon and miss, you’ll land amongst the stars.

Step 2: Figure out how many closings are required to achieve that goal.

Calculate the average commission of a closing based on either your personal history or area market data. By dividing your income goal by the average commission per closing, you arrive at the number of  units or sides required to generate that income goal. In our example, let’s assume a goal of 10 closings for next year. To get even more exact, figure out your current seller/buyer closing ratio. Now, of those planned 10 closings for next year, you can calculate how many will specifically result from working with listings and buyers.

Step 3: Determine, on average, the number of contacts required to get a closing.

This is done by looking to your data from last year, hopefully as a result of using some sort of tracking system. The number of contacts to a closing is determined by dividing the total number of direct contacts made (people you spoke with specifically about real estate) by the specific number of transactions closed. Agents working with Susan Rose Coaching are encouraged to track their numbers and as a result, we can provide you with the following data for 2018.

  • New agents (1 year in the business): 869 contacts per closing
  • Mid-level agents (2-8 years): 275 contacts per closing
  • Experienced agents (9+ years): 122 contacts per closing

Step 4: Do the math.

The last step here requires some easy math and the result outlines how much time, per day, you will need to spend lead generating.

First, figure out how many actual days you intend to work accounting for holidays, vacations and days where you just don’t “want” to work.

Let’s assume you take 2 days off during the week and a generous 8 full weeks off for the entire year. That leaves us with 220 workdays in the year.

Now, use 7 minutes as the length of each contact. This length varies, of course, but it’s a good metric for our purposes. Finally, plug all your information into the following formula

  • (# of contacts per closings) X (2019 # of closings) = Total contacts required in 2019
  • (Total contacts required in 2019) X (7 min/contact) = Total minutes required to lead generate
  • (Total minutes required to lead generate) ÷ 60 min/hour = Total hours required to lead generate
  • (Total hours required to lead generate) ÷ (2019 work days) = Hours per day required to lead generate

We’ll assume, in our example, a mid-level agent is planning. Their goal is to close 10 transactions and work 220 days in 2019, which means they need to lead generate 1.5 hours per day. That’s only 90 minutes…easy! How? By creating and adhering to a daily time blocked calling schedule. Do that and watch how the chances of achieving those 2019 goals skyrocket!

Obviously, this is a very simplified version of what’s required to become a successful real estate agent. For more guidance and inspiration, join me December 6th at 12:00pm for a FREE Business Planning WEBINAR!

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