July 3, 2019
People from all over South Jersey come to our real estate school to get their NJ real estate license. We get that. They want classes to help them pass the New Jersey state real estate licensing exam. Yet as those late-night TV commercials say:
But wait! There’s more!
Incredibly, some real estate schools have instructors who have not sold a house in 30 years—or have never sold real estate at all! Garden State Real Estate Academy only hires instructors who are actively working as professional Realtors®, and who have years of experience in real estate. We are therefore able to pass on to our students countless tips and much practical advice on how the be successful from the moment they earn their real estate license.
A recent article in Real Estate magazine cited some statistics that tell a lot about our industry:
- $91 The cost of climate-related natural disasters in 2018.
- 692,000. The number of new-home sales in March—up 3 percent from March 2018.
- The level of confidence in an April survey of builders nationwide. Any number above 51 indicates that home builders have a positive outlook on the new-housing market.
- 9%. The percentage that rents have risen year-over-year as of February 2019.
- $20,851. The average amount a homeowner spends to sell their home, including commission, taxes, and home improvements.
Why Should I Care?
Real estate agents live in a numbers world. For example, we need to know:
- Current mortgage rates.
- How to qualify a buyer’s home affordability.
- How to calculate closing costs.
- How to help a seller determine their net proceeds when we sell their property.
- How to evaluate comparable sales to arrive at a recommended price that our buyer clients should pay, and at which our seller clients should list their homes.
Know Thy Numbers.
Yet those are external numbers. They are used in our interactions with our clients. Arguably, it is even more important to know the numbers of our own real estate practice. A mediocre agent will plod along for years, hoping that this promotional idea will work today, and will be chasing another idea tomorrow. True professionals know their numbers like the proverbial back of their hands.
You should, too.
- What is the average sales price in your marketplace?
- What is the average commission?
- What is your return on investment on your various marketing tools? Do you track the dollar value of responses you get as a result of your advertising on Zillow, Realtor.com, etc., or do you just let them charge your credit card every month without the slightest idea of whether that is an investment—or money down the drain? (A survey I conducted last year showed that I was earning 16 cents for every dollar I spent advertising on Zillow. I eliminated that expense and it had no adverse effect on my lead generation).
- How many cold calls do you have to make to get one appointment?
- How many appointments do you have to make to get one buyer- or seller agreement under contract?
- What percentage of your listings and buyers actually get to settlement?
- What percentage of your gross commission income (GCI) do you spend on:
- Admin expenses
- Client services
The Payoff for You
By knowing your numbers—and checking them every quarter to see if you need to make adjustments, you can make informed, intelligent decisions on how to run your business. You will know how hard your dollars are working for you, and where those dollars could be invested to earn you a greater return on investment.
How do you start? Ask your broker what the average sales price and commission-earned is in your market area. Then keep track of your activities that lead to a commission, such as lead generation, marketing, advertising, etc. You can then compare your numbers with others in the industry. One of the best books ever written on this subject was Gary Keller’s The Millionaire Real Estate Agent. It goes into meticulous detail on what percentage of your GCI the most successful agents in the country allocate.
And if I want to use a benchmark for my real estate business, let it be the actual numbers shared by the 100 top Realtors® in the nation!
The book costs $15, but if you would like a free copy, email me at David@GSREacademy.com
David C. Forward is a licensed real estate broker and instructor and was first licensed as a Realtor® 31 years ago. During his career, David and his business partner sold more than 450 homes in South Jersey. He is now School Director of Garden Real Estate Academy, has won numerous awards for real estate sales, is a much-requested public speaker who has addressed audiences on six continents and is the author of 14 books. David can be reached at David@GSREacademy.com