COACHING TIP: The True Measure of a Successful Real Estate Business


This is probably - not the toughest, because it's really not difficult - but this is where it's gonna come together. Your ability to enlist people into this thing that you're building, and to be able to transfer your skills to people. So as far as selling skills and whatnot, but then to bring the proper leverage in on the admin side is super, super important.

Is Your Ladder against the Right Building?

We already covered making sure your ladder is against the right building to start. Unwinding something, a little bit some of you have experienced, it's really painful to kind of tilt the ladder over and hope everyone doesn't fall off. So know what you're getting into and knowing what you want it to look like.

The whole splits thing I think is an important conversation that we can have tomorrow. Our goal on the buyer side is a 60% gross margin. So after we pay our agents it's 60% gross margin. And the listing side is running at 27% cost and 73% gross. The goal is 75% on that side. That's what ends up happening with the 25-35% off the top, and the 30/40/50/60 with 10% off the top.

What's Your Net Margin?

So whatever that looks like for your market, I think those are targets that are worth going after. Some people mentioned I met a person selling 680 homes. Someone else sent me an email, saying, "We came back from EGS and I talked to people selling 900 homes and 700 homes.

I know nothing about these people so I can't speak to it, but ask someone like that 2 questions: What's your gross margin? After you pay your agents, what's left over percentage-wise? Most of them probably won't know the answer but if they do, it may not be what you think it is. 

So what's your gross margin, and what's your net? And just see if they can have a good, logical conversation around that. Because if that person gives you the right answers on those two, I promise you you're gonna want to spend more time with that person. And just pick their brain and get to know them.

But most are mini brokerages, with splits that are a 30+% ∆ versus what the model should be.

Audience: So your blended is around 65%.

65 to 66%.

Audience: And that includes transaction fees, right? Do you put vendor income up there, too?

Yeah. So I could strip out vendor income and make it higher, but it's in there.

Tracking Your Margins

So everyone has to know their margins, especially - so who's not working with buyer, but still doing listings, and ultimately gonna step out of listings? So when you take yourself out, when you chop off 30% of your gross commission and you're paying someone, re-run the numbers. The business tracker lets you do that pretty easy.

In fact, for all your deals you could filter yourself on all your deals and just put yourself in at that split. And see what your business would look like, what your margins would look like. And if they're not north of 60%, you really have to rethink what you're paying your agents and if they're really adding value to the process.

So if a buyer agent makes $100 Grand on my team, I'm making $150K, and they're happy with the hundred. But if they're making $60K it's not because I don't have the tools necessary for them to make $100K. It's because they're not making things happen to get to a hundred.

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