PARAMOUNT MORTGAGE - LENDER'S BLOG

As the year 2010 winds down and agents begin to look forward to increasing their income next year, Bernice Ross, Master Certified Coach and real estate trainer, wants them to ask a question.

“Which real estate activities will be the most dollar-productive” for my business in 2011?

What are the most dollar-productive activities?

To find out, your need to consistently track your activities and determine how much time and money you spend to close each transaction. Be sure to include all the “hard costs” of brochures, Web advertising and open house supplies.

Subtract the hard costs from your sales total to establish your net income before taxes.

Next, calculate how many hours you spend at appointments, open houses, and closing the transaction. These costs are known as “opportunity costs.”

To illustrate, if it takes you 10 hours of opportunity time to close a $200,000 property and 60 hours to close a $600,000 property, your dollar-productive time will be higher for $200,000 properties.

Using these numbers, you could close six $200,000 properties in the time it takes to close one $600,000 property. In other words, you would close $1.2 million focusing your time on $200,000 properties vs. $600,000 by working with fewer but more expensive properties.

What are your least dollar-productive activities?

Divide the number of people you have worked with during the last 12 months into buyers and sellers.

Now determine which group was more profitable. For example, assume that you closed 10 seller transactions for a total gross commission amount of $42,500 and 18 buyer transactions for $48,000. You might assume that the 80% higher number of closed buyer transactions make it appear wiser to work with more buyers.

In this case, however, it would be smarter to work with more sellers. The reason is that your average closed commission for sellers is $4,250 vs. only about $2,700 for buyers. Working with sellers is more dollar-productive.

What market areas are the most active?

Be aware of where the hottest opportunities exist for business. Track what’s happening in terms of sales both on the multiple listing service as well as in your office. You’ll want to stay “closest to the money” and avoid the temptation to work in unproductive areas in which you have worked in the past.

Start prospecting and marketing in those active areas. When you find an area that is productive, focus your time on expanding opportunities there, then you’ll always be “closest to the money” in 2011.