How to make 100k/year in RE sales!

[Andrew_A]

Did that get your attention? :D

Our lecturer at TAFE presented the following formula for generating 100k/year in RE sales. His contention was that as well as being a people business RE is also a numbers game. His figures were based on Gold Coast data, and his formula was given around September 2003, it would need to be tweaked now,

100,000 = your yearly commission

* To generate 100k you will need 250k in gross commissions (the agent gets 40% of gross commissions)
* Average commission = 6,000 based on a 240k median sale price
* = 41 sales per year
* listings needed to make 41 sales = 50 listings based on a listings/sales ration of 5/4 (anything lower being shabby)

Before the listings:

* 1200 contacts will be needed (Door knocks, phonecalls)
* 1200 contacts will give 100 appraisals
* 100 appraisals will give 75 listing presentations
* 75 presentations will lead to 50 listings.

How hard is it to get 1200 contacts?:

* Contacts gathered from Door knocks 10%, Phone 10%, Referrals/Sales by owner 5%, Letterbox drops 10%, Open homes 65% (most of the people who go through open homes are potential sellers).
* If an agent works 280 days a year then 5 calls a day adds up to 1200.

So: the formula is ::

280 working days x 5
=1200 calls/contacts
=100 appraisals
=75 Listing presentations
=41 sales per year (4 per month)
=$6000 average commission
=$250,000 gross commission
=$100,000 commission for you.

WaySolid

[Aceyducey]

Where's the time spent selling the properties?

I agree that RE Sales, like most other sales, is about the numbers...

However good REAs work by improving their figures.....1,200 contact to give 150 appraisals...150 appraisals to give 130 listing presentations, etc etc.

Cheers,

Aceyducey

[Andrew_A]

Aceyducey,

If you make 5 calls per day on that formula you will have some time left over to sell, so that part hasn't been forgotten.

The lecturers point was that 100k was his benchmark for success and that it wasn't even particulary difficult to match the figures in his formula, if you wanted to put in more work or could improve the ratios then of course you would earn significantly more than 100k/year.

WaySolid

[Harris]

and I thought all real estate agents would atleast make 100K per year... :confused:

Aceyducey,

If you make 5 calls per day on that formula you will have some time left over to sell, so that part hasn't been forgotten.

The lecturers point was that 100k was his benchmark for success and that it wasn't even particulary difficult to match the figures in his formula, if you wanted to put in more work or could improve the ratios then of course you would earn significantly more than 100k/year.

WaySolid

[Aceyducey]

So on that basis,

Either there are very few real estate agents making five calls a day.....or the instructor's %s are incorrect ;)

Cheers,

Aceyducey

[Mikhaila]

No Acey, the lecture is theoretically correct…He/She just has to be reminded about what you have as a signature - “In theory, there is no difference between theory and practice. But, in practice, there is.” :p

[willair]

WaySolid,
ALL sales are a numbers games,in real estate it may well come down too
investor attitudes,Taxation,but everyday it becomes more complex.
If you are already in real estate sales on the gold coast what do you think of the market on a whole as of today,some people say that on the gold coast sales are slow
everything is overvalued by 27%.Good luck with your sales career,it better to enter in soft slow market,and build a honest reputation,then you will last your first year in the industry,the first year will be the test,most dont last in the first 12 months..
willair..

[qaz]

I would be more interested in way to generate income in property zero down, such as flipping. That I would pay to attend.

[David E-Noosa]

Good numbers there Waysolid.

The numbers have been used since I started in RE back in '92 and for a newbie they are good as gold, the difference is doing the things the others fail to do. Its not difficult being better than the average, just most can not maintain the constant focus.

My bro is in RE on the Gold Coast and doing rather well, but then its all the hard work he has done to get there and contacts made on the way.

For example I get almost every listing I try for, but then at least 90% are referral, word of mouth from one happy Seller to another.

The comment that "I thought all RE agents would earn over 100k" is far from the truth, most do not and never will. But then with the average sales price hence commission getting higher it gets easier to be a "star" than it ever was.

In the US you can be a super star agent and only sell one property per month, their commissions are far higher (10% of sales price as eg)

Most of us do it because we love the negotiations, the sale and commission is a byproduct of being a good negotiator which in essence is what you are paying for.

[bornfree]

I thought 4 sales per month is easily achievable, 4 per week is more realistic.

[David E-Noosa]

Most agents would kill to be able to average one sale per week over a year, like everything its never as easy as it looks. Granted its posible and in fact highly likely that some will sell 10 or more a month at times (specially during the past 18mths) however its not the norm.

The period we have just been though has seen an explosion in new RE offices and agents, just like '95 only the best will still be here in the next 12mths. But then this is getting off topic.

[crest133]

100 appraisals = 50 listings ?? :eek: Yeah right, all RE salesmen wish !!!
50 % strike rate would make you top gun anywhere and the licencee would be happy to adjust the commission structure while taking you to lunch 3 times a week and chauffeuring you to all the calls.
cheers
crest133

[Rolf Latham]

Hiya

JUst to throw a curve ball and use Mortgage Brokers as an allied business example

We know from our own stats that 72 calls to people on a qualified list means 2 appointments means 1 sale.

The figures for averages ar scary

10 000 plus registered brokers in oz now writing 4 billion in loans a month

Based on an average of 650 per 100 k commission, the average broker is making 2600 per month before expenses.

There are brokers making in excess of a mill a year, and there are many more running at a loss.

Basic guidlines are good in that they put some simple numbers behind the mystique, but Id have to agree with the agents here, a 50 % close on a listing followed by sale is dream world.

ta

rolf

[Kevin Hockey]

Did that get your attention? :D

Our lecturer at TAFE presented the following formula for generating 100k/year in RE sales. His contention was that as well as being a people business RE is also a numbers game. His figures were based on Gold Coast data, and his formula was given around September 2003, it would need to be tweaked now,

100,000 = your yearly commission

* To generate 100k you will need 250k in gross commissions (the agent gets 40% of gross commissions)
* Average commission = 6,000 based on a 240k median sale price
* = 41 sales per year
* listings needed to make 41 sales = 50 listings based on a listings/sales ration of 5/4 (anything lower being shabby)

Before the listings:

* 1200 contacts will be needed (Door knocks, phonecalls)
* 1200 contacts will give 100 appraisals
* 100 appraisals will give 75 listing presentations
* 75 presentations will lead to 50 listings.

How hard is it to get 1200 contacts?:

* Contacts gathered from Door knocks 10%, Phone 10%, Referrals/Sales by owner 5%, Letterbox drops 10%, Open homes 65% (most of the people who go through open homes are potential sellers).
* If an agent works 280 days a year then 5 calls a day adds up to 1200.

So: the formula is ::

280 working days x 5
=1200 calls/contacts
=100 appraisals
=75 Listing presentations
=41 sales per year (4 per month)
=$6000 average commission
=$250,000 gross commission
=$100,000 commission for you.

WaySolid

To take a line from a great Aussie movie - Tell him he's dreaming :D

At the moment listings to sale ratio is about 2:1. Many owners are withdrawing from sale because they can't get last years prices anymore. Others like a property opposite me is still for sale, been on for 6 months now and onto their 3rd agent. We told them 340k in the beginning but they wanted more, now they won't get that.

75 presentations to get 50 listings. If you get that ratio you are in the top 10%. Mine ratio is around 80-85%, but I only deal with past clients and referrals. It takes a long time to get to that stage. This also doesn't encompass all the Free appraisals you do either. My new salespeople can do 35 appraisals in a month and get 3-5 listings. In the beginning you have to build a database, a funnell of prospects for the future. $6000 av comm is a bit low but the av. salesperson will get around $2,700 from an average sale, but this varies depending on where and what you are selling.

By the way, Michael Knight at ReMax Redcliffe sells 30-40 per month himself. His goal is to earn 1.5 million this year. I for one will be surprised if he doesn't, he is a freak, and a good bloke too. He knows it's a numbers game and he does BIG numbers. He also works 4 days a week and has 3 months off every year. He has 3 personal assistants all who have to make 100 calls per day, they do 15-18 open houses on weekends. 30 sales at $7000 av comm per month, you work out the numbers. His philosophy is to book a holiday he can't afford.

Time for bed.

Kev

www.nundahrealestate.com.au