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What The Shifted Real Estate Market Means To Your 2011 Business Plan
As the year comes to a close, it’s critical to build a map that puts you on the right path to achieving your goals. From lead generation, post-closing to managing the office, the systems you put into place today will dictate your success tomorrow.
In The Millionaire Real Estate Agent, Gary Keller created a comprehensive set of systems to improve and maintain key elements of your business. Integrating these models and systems into your business plan for 2011 will set you on a course toward success. Here are some highlights, pulled together from Keller Williams Realty’s best agents and resources to help you build the best business plan for 2011.
What is a business plan?
Dave Norberg, top agent in the La Mesa/East County market center, says a business plan “should be a very short plan, two to three pages at the most. It’s something you can carry with you or easily review over lunch. The business plan is simple because if it’s too difficult then nobody can follow it.” At its basic level, he adds, the business plan “tells you where to go, what to do and when you’re supposed to do it.”
Having a business plan in place each year gives you the opportunity to set high goals, and breakthrough the ceiling of achievement toward a new level of success. It’s what the best of the best in any business create and it’s a not-so secret, secret to reaching all your financial goals.
The Four Fundamental Models
Every millionaire real estate agents interviewed for MREA followed four key models: Economic Model, Lead Generation Model, Budget Model and the Organization Model. They represent the four areas everyone must ultimately tackle if they want to practice real estate at a high level.
Take the Economic Model, for example. It states the three keys areas that you must focus on:
1. The numbers you must hit: Assuming that the average sales price for the Millionaire Real Estate Agent will be $250,000 and that she will earn an average of 3 percent commission on each sale, it can be concluded that if earning $1 million in net income is your goal, we can conclude that it will take 320 closed sales each year to reach $2.4 million in GCI. This divides into 160 listings and 160 sales*
2. Appointments: The economic model has a beginning and an end. The end is your net income that you receive, and what causes your net income starts with the beginning activity – appointments. The truth is, if you don’t have the appointments, nothing else happens; therefore, they become the critical point of focus for your economic model.
3. Conversion rates: Converting leads to appointments and converting appointments to listings are huge drivers of your economic success. Ultimately, appointments converted to seller and buyer listings converted to sales equals gross income!
*Conversion rates may vary depending on a number of factors, including current market conditions, the effectiveness of your presentation, the quality of the leads, and the consistency of your follow-up.
What the shifted market means to your business plan
Gene Rivers, operating principal of three market centers in Florida and KWU Master Faculty Instructor says there are several critical activities that every agent must include in their business plan in order to achieve success in 2011:
1. You need to do more appointments
2. You need to write more listing and purchase contracts
3. You need to do better presentations
“Because more and more pieces of the home buying and selling process are falling apart, you need to increase your numbers for them to come out right on the end,” Rivers says. “You have to have sharper tools and better presentations to get the listing and the buyer. You have to know your market at a higher level and you have to get the homes priced right so buyers will buy.”
What’s the most important piece of the business plan?
According to Rivers, the most important thing to have in your business plan (and as Norberg reminds us, have by your side as a reminder of your goals) is to know the number of appointments you need to make in order to reach your yearly goals.
“Plot those numbers out every week,” says Rivers. He also emphasizes the power of listings.
“An agent’s success in 2011 is directly related to the listing inventory they have on January 1, 2011. If you want to hit your numbers, and you have your yearly net income in mind, then you should have 1/3 to ½ of your annual sales goals in listings on that day.”
So for example, say you want to sell 50 houses a year. Then you’ll need 16 to 25 listings on January 1. Why 16 to 25? “There’s a variation because conversion is not a given. Contracts fall through the cracks and homes are taken off the market – you have to take that into consideration from the start,” he says.
New to the business?
Agents new to the business have every opportunity to build a solid listing inventory before the end of the year in order to kick-start the best 2011. If you’re new or struggling, Rivers emphasizes “you have six weeks to start attacking it right now. Most of your competition is headed out for the Holidays. If I was a new agent, I’d do everything in my power to make 16 to 25 listings.” And after that?
“A lot of agents find themselves steeped in the business of getting those homes sold and forget to continue lead generating. The best lesson I can teach is to keep a pipeline of listings. So when you sell two homes in January, you take two additional listings. When you sell three in February, you take three additional listings.”
Rivers also offered a final piece of advice for agents new to the business: “Go on one or two appointments every week. The ones who do this will master the art of the presentation and land more buyers and more sellers.”
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