What is more important to you – selling for a record price, or selling a record number of properties?
This should be a no-brainer. Of course turnover counts far more than individual sale prices for any agency. So why do so many agents spend so much time and effort chasing the best properties?
In point of fact, most agents would do far better chasing the worst properties especially in good times when they will sell without too much trouble. The vendors tend to be much more easily satisfied and happy to refer you on to others.
The larger point that tends to be overlooked is that real estate for an agent is a numbers game. There are three critical equations:
- In your target canvassing area, how many genuine appraisals do you get called into, and what percentage does this represent of the total number?
- What percentage of your appraisals results in listings?
- What percentage of your listings results in a sale?
You should be continually plotting your results and subjecting yourself to harsh self-examination. By ‘genuine’ appraisal I mean appraisals that subsequently lead to listings. If you are only getting, say, 10 per cent of the possible appraisals in your area, then your chance of scoring listings is too low. What do you need to do to increase this to, say, 20 per cent?
Much worse is a failure to convert appraisals to listings. It is better to convert two out of four appraisals (50 per cent) than two out of 10 appraisals (20 per cent) even though the number of listings achieved is the same. This is because you are not burning as many valuable leads and wasting so much of your time.
Likewise, what is your conversion rate of listings to sales? Ideally this figure should be close to 100 per cent. If it is beneath 80 per cent then you are either doing something wrong in how you are listing the property, such as over quoting, or your selling technique is poor.
Having identified any weaknesses, you can try to do something about them. A decrease in your results also serves as an early warning that something has changed that needs to be specifically addressed.
(Blog courtesy of RP Data)
ABOUT THE AUTHOR
Gil had a stellar career in real estate for over 20 years. He was a franchisee and top salesperson of L J Hooker then Richardson & Wrench before going independent. His achievements included more than 1,700 sales at an average of 100 properties a year during his last decade in the business, and an amazing 80 per cent market share in his local Sydney area. His largest residential sale was the amalgamation of 18 properties for $27 million. Gil subsequently completed a PhD and now works as a university lecturer, as well as consulting to RP Data.