This idea is so simple and easy to justify and can greatly increase your net profit per transaction.
Number 8 – Get paid for doing what you are already doing – administrative tasks
As the real estate broker you are required to maintain secure records of the real estate transaction for a number of years. This administrative task can be a rewarding one by ensuring that your organization receives a reasonable fee for assembling, filing and protecting the real estate transaction documents.
Document archival fees are common practice in many markets and technology such as Profit Power can ensure that the fees are properly collected from the buyer and seller and added to your revenue stream.
With NAR stating that the average company profit in a single real estate transaction is somewhere in the $100.00 range, document archival revenue can add a significant amount of ‘profit’ to the sale transaction.
Assume a $50.00 document archival fee on each side of the sale transaction. Using the NAR profit average of $100.00, an additional $50.00 increase per side is a huge increase in the company’s bottom line.
Assumptions (multiply by your actual numbers):
1 branch office
25 agents
25 transactions per month (300 sides per year)
$50.00 document archival fee per side
Result - $15,000.00 additional revenue added directly to your bottom line
Using NAR $100.00 average profit per side the $15,000.00 would be like adding 150 more sides to your transaction total for this branch office
Once again this is for a single branch office. If your firm has multiple branch offices, the results just get better. Get paid for doing what you are already doing and increase your profitability without increasing your transactions. This is just smart business!
Wednesday, February 28, 2007
Monday, February 26, 2007
Partner, Partner, Partner and Partner some more
Here is another simple, easy and profitable idea for your consideration.
Number 9 – Increase revenues and take advantage of strategic partnerships for one-stop-shopping convenience for consumers
Buyers and sellers too, want and demand ‘full’ service. They are more educated, sophisticated and savvier than ever before. They are busy too! In this economic reality that requires both husband and wife to be working to enjoy the rewards of home ownership, they need, want and demand ‘one-stop-shop’ convenience.
This trend is nothing new! But yet it is surprising how few real estate organizations are providing the ‘one-stop-shop’ environment that buyers and sellers not only want but are willing to pay for and leaving this golden opportunity to the sales associate who at best might be of some assistance.
Forget the fact that as real estate service providers your firm should be offering a full menu of options for buyers and sellers and just think about the increased revenues that are available for simply doing what the buyer and seller want your organization to do for them in the first place. If you do not have a strategic alliance with mortgage, title, insurance and other ‘full service’ organizations, then now is the time to jump in and reap the rewards. Strategic business partners are eager to reward organizations for new business you have passed along.
Strategic partners provide a ‘win-win’ scenario for real estate firms, their agents and the real estate consumer. Buyers do not want to be running all over town looking for the best mortgage, title, escrow, insurance, home warranty and other related service companies when they make the decision to purchase. Sellers also require professional services when selling their property.
How much can an organization owned by your company earn from origination fees for these services? Each firm will have their own specific strategic alliances, so the following example is just a ‘guesstimate’, but investigate this on your own and you will see why the leading real estate organizations have strategic business partners to increase their bottom line.
Assumptions (multiply by your actual numbers):
1 branch office
25 agents
25 transactions per month (300 sides per year)
$250.00 mortgage origination fee per side
20% of transactions use your strategic mortgage partner
Result - $15,000.00 additional revenue added directly to your bottom line
Using NAR $100.00 average profit per side the $15,000.00 would be like adding 150 more sides to your transaction total for this branch office
Now take this simple example and apply it to the many other services that are directly related to a real estate transaction:
Title
Insurance
Home Warranty
If your company is already aware of and taking advantage of this ‘one-stop-shopping’ opportunity, then the objective would be to increase the current success rate to a much higher number which is of course can happen when the client is ‘owned’ by the firm and not your agents.
Technology, like Profit Power, can create an automated pipeline that instantly informs your strategic business partners when a new buyer or seller has made the decision to buy or sell. Now your company’s business partners can take immediate action by contacting the client and offering them their professional services earlier in the sales cycle.
Each ‘lead’ can be tracked and monitored for post sale review and analysis to ensure the consumer is being properly served by your strategic partners and that your ‘one-stop-shop’ efforts are being rewarded. Many of today’s leading real estate firms understand the importance of providing the ‘one-stop-shopping experience’ and they are adding tremendous revenues to their bottom line. What a great way to increase profits on each sale when sale transaction numbers are not as robust as in the past.
Your firm will need consider RESPA and you will need to talk to your legal experts to get the correct information before implementing the ‘one-stop-shop’ business partner strategy.
Number 9 – Increase revenues and take advantage of strategic partnerships for one-stop-shopping convenience for consumers
Buyers and sellers too, want and demand ‘full’ service. They are more educated, sophisticated and savvier than ever before. They are busy too! In this economic reality that requires both husband and wife to be working to enjoy the rewards of home ownership, they need, want and demand ‘one-stop-shop’ convenience.
This trend is nothing new! But yet it is surprising how few real estate organizations are providing the ‘one-stop-shop’ environment that buyers and sellers not only want but are willing to pay for and leaving this golden opportunity to the sales associate who at best might be of some assistance.
Forget the fact that as real estate service providers your firm should be offering a full menu of options for buyers and sellers and just think about the increased revenues that are available for simply doing what the buyer and seller want your organization to do for them in the first place. If you do not have a strategic alliance with mortgage, title, insurance and other ‘full service’ organizations, then now is the time to jump in and reap the rewards. Strategic business partners are eager to reward organizations for new business you have passed along.
Strategic partners provide a ‘win-win’ scenario for real estate firms, their agents and the real estate consumer. Buyers do not want to be running all over town looking for the best mortgage, title, escrow, insurance, home warranty and other related service companies when they make the decision to purchase. Sellers also require professional services when selling their property.
How much can an organization owned by your company earn from origination fees for these services? Each firm will have their own specific strategic alliances, so the following example is just a ‘guesstimate’, but investigate this on your own and you will see why the leading real estate organizations have strategic business partners to increase their bottom line.
Assumptions (multiply by your actual numbers):
1 branch office
25 agents
25 transactions per month (300 sides per year)
$250.00 mortgage origination fee per side
20% of transactions use your strategic mortgage partner
Result - $15,000.00 additional revenue added directly to your bottom line
Using NAR $100.00 average profit per side the $15,000.00 would be like adding 150 more sides to your transaction total for this branch office
Now take this simple example and apply it to the many other services that are directly related to a real estate transaction:
Title
Insurance
Home Warranty
If your company is already aware of and taking advantage of this ‘one-stop-shopping’ opportunity, then the objective would be to increase the current success rate to a much higher number which is of course can happen when the client is ‘owned’ by the firm and not your agents.
Technology, like Profit Power, can create an automated pipeline that instantly informs your strategic business partners when a new buyer or seller has made the decision to buy or sell. Now your company’s business partners can take immediate action by contacting the client and offering them their professional services earlier in the sales cycle.
Each ‘lead’ can be tracked and monitored for post sale review and analysis to ensure the consumer is being properly served by your strategic partners and that your ‘one-stop-shop’ efforts are being rewarded. Many of today’s leading real estate firms understand the importance of providing the ‘one-stop-shopping experience’ and they are adding tremendous revenues to their bottom line. What a great way to increase profits on each sale when sale transaction numbers are not as robust as in the past.
Your firm will need consider RESPA and you will need to talk to your legal experts to get the correct information before implementing the ‘one-stop-shop’ business partner strategy.
Sunday, February 25, 2007
Wecome to my new blog!
Welcome to my new blog. My hope is that I can share some simple ideas for creating more profitability within your real estate organization. Real estate brokerage is a business and I have been fortunate enough to serve it for the past 25 to 30 years.
Over these many years of working side by side with some of the most successful real estate organizations in the country, I am often surprised by how real estate firms get distracted by day to day stuff and either forget to do the obvious things that can help their organization to be more profitable or just haven't taken the time to think about the easy way to make more money.
So this is my attempt to pass along some simple ideas that can really deliver results. Technology is at the root of many of these ideas, as technology can take a task that would be normally too tedious or time consuming and turn it into a simple daily process. Simple is good. Simple is easy. Simply is sustainable.
My blog will start by providing ten simple ideas that can really add up to increase profits. Some are long term strategies while others can be put into place right now. I would really like to hear from you if you feel that my suggestions are working for you or better still, you already are doing some of the things I am recommending and have some great stories to pass onto others.
You can reach me at ron.hurak@gmail.com if you have any suggestions, ideas, comments or just want to share some thoughts.
Thanks.
Over these many years of working side by side with some of the most successful real estate organizations in the country, I am often surprised by how real estate firms get distracted by day to day stuff and either forget to do the obvious things that can help their organization to be more profitable or just haven't taken the time to think about the easy way to make more money.
So this is my attempt to pass along some simple ideas that can really deliver results. Technology is at the root of many of these ideas, as technology can take a task that would be normally too tedious or time consuming and turn it into a simple daily process. Simple is good. Simple is easy. Simply is sustainable.
My blog will start by providing ten simple ideas that can really add up to increase profits. Some are long term strategies while others can be put into place right now. I would really like to hear from you if you feel that my suggestions are working for you or better still, you already are doing some of the things I am recommending and have some great stories to pass onto others.
You can reach me at ron.hurak@gmail.com if you have any suggestions, ideas, comments or just want to share some thoughts.
Thanks.
Saturday, February 24, 2007
Make it happen!
As Bob Dylan sang out in the 60’s, “the times they are a’changing”
The real estate marketplace has seen eight to ten years of unbelievable growth and prosperity and it was unrealistic to believe that this trend would last forever. The good news is that the transition to a more ‘normal’ marketplace seems to be a ‘soft landing’ rather than the catastrophe that fell upon the real estate industry in 1990. And many market analysts are predicting a bottom to the slide by the middle of 2007.
No one likes to have lower numbers. For some, the response to slower sales is a ‘knee-jerk’ reaction that would cut everything that can be cut and weather the storm. This of course, is not a bad strategy, but it should not be the only one. There are other opportunities for reducing costs, increasing revenue and getting set for the next wave of better times to come.
In the boom times, everyone was too busy to review existing business operations, processes and procedures. Why bother when the cash flows are high and the profits are a ‘given’? However with a marketplace that is less hectic and profitability is the key to continued success, now is the best time to take stock of your organization and make the improvements that the busy times would not allow your organization to do.
Implementing new proven technology solutions is one area that can create tremendous benefits and provide real measurable value to your organization. Older technology that is antiquated can really cost your firm more money than upgrading and will most certainly inhibit future growth when the marketplace, once again, shows signs of rapid growth and prosperity. Will you be ready?
The marketplace is what it is and impossible for anyone to control. You have to work with what you have. This means squeezing every dime of profit from every deal your firm makes. Proven technology solutions allow your company to get more accomplished with less people and apply profit-making strategic plans that can see your bottom-line grow even when the number of transactions is down from that of previous years.
To grow you business during these transition times and ready your firm for the future, here are ten great reasons to upgrade to the next generation technology today and take advantage of the opportunities that proven solutions can bring.
Using the David Letterman count down method, here are ten great reasons for using proven technology solutions to add more profitability for your real estate operation.
Number 10 – Take control of your future - develop a post marketing campaign for future sales
Now that time permits your administrative team to do so, take control of future clients. When sales are busting at the seams, nobody considers the market conditions seven to ten years out, but ‘good’ businesses become ‘great’ businesses by doing those things that their competitors are not doing.
Everyone in the real estate industry knows that the buyer and seller that just closed that deal today will be a prospective client in the next seven to ten years. Marketing 101 clearly states that it is far less expensive to maintain an existing client than to create new ones, so creating a ‘post-marketing’ campaign to earn the loyalty of existing clients just makes good sense!
Leaving this vital task to your sales associates is a weak strategy of false hopes and assumptions. Very few sales associates are disciplined enough to create and maintain a ‘customer loyalty’ program and even if you have some that are motivated to make the extra effort, it is unlikely that the sales associates with your firm today will be with you seven to ten years out.
Sophisticated real estate firms understand the importance of ‘owning’ the buyer or seller at the start of the selling cycle. Many firms are wrestling with the ‘agent-client’ relationship and very much want to modify that relationship to one that is more ‘company-client’ where the sales associate is a minor player in the sales process.
There are many reasons to create this loyal relationship between the company and prospective client, but the overwhelming reason is sound economics, even possible survival of your real estate organization. In an era of all time low profitability on real estate sales, it is imperative that real estate firms find new revenue opportunities without the interference from the sales associate.
Clients want ‘one-stop-shopping’ (see Reason # 9 to be posted soon) and they are willing to pay for the convenience, but to take advantage of this exciting revenue opportunity, the relationship with the client must be started by your real estate firm so that mortgage, title, insurance, home warranty and other ‘services’ offered by your strategic business partners are not re-directed to other service providers by your sales associates.
Here’s an example of how your company can increase profits, albeit more long-term, when clients are ‘company-owned’. Past buyers and sellers that have been involved with your organization can become future ‘leads’ that can be distributed by your firm to new agents and where your company can receive an off-the-top ‘referral fee’ for the lead, just like any referral lead given to an associate. Let’s do some math to illustrate the economics of this strategy.
Assumptions (multiply by your actual numbers):
1 branch office
25 agents
25 transactions per month (300 sides per year)
$200,000.00 sale price
3% gross commission per side
50% of agents will leave your firm within the next 5-10 years
75 past customers will be orphaned each year (out of the 300)
50% of orphaned customers will return to your firm when buying or selling (37.5 clients) through customer loyalty campaign
25% off-the-top lead referral fee paid to your firm because customers are now ‘owned’ by your company ($1,500.00 referral fee commission)
$56,250.00 additional commission revenue earned
$100.00 per client per year customer loyalty campaign cost ($30,000.00)
$26,250.00 net profit received from customer loyalty campaign
Using NAR $100.00 average profit per side the $26,250.00 would be like adding 262.5 more sides to your transaction total for this branch office
This illustrates the significant potential increase in profitability and for just one branch office. How many extra sides would this branch office have to make to generate this kind of additional profit?
The easiest way to ensure that you have total control of the client relationship is to create a post-marketing loyalty campaign that has those precious clients coming back to your company and not the sales associate that has long left your firm.
Implementing modern back office technology such as Profit Power can properly capture the buyer and seller data at the time of the sale including the post-sale address of the seller and automate the customer loyalty campaign activities.
All that is required is a simple operational change that asks your administrators to take a few extra seconds to properly collect some additional contact data and you are well on your way to creating a sound strategy for future prosperity and taking ‘ownership’ of the sales process. More to come!
The real estate marketplace has seen eight to ten years of unbelievable growth and prosperity and it was unrealistic to believe that this trend would last forever. The good news is that the transition to a more ‘normal’ marketplace seems to be a ‘soft landing’ rather than the catastrophe that fell upon the real estate industry in 1990. And many market analysts are predicting a bottom to the slide by the middle of 2007.
No one likes to have lower numbers. For some, the response to slower sales is a ‘knee-jerk’ reaction that would cut everything that can be cut and weather the storm. This of course, is not a bad strategy, but it should not be the only one. There are other opportunities for reducing costs, increasing revenue and getting set for the next wave of better times to come.
In the boom times, everyone was too busy to review existing business operations, processes and procedures. Why bother when the cash flows are high and the profits are a ‘given’? However with a marketplace that is less hectic and profitability is the key to continued success, now is the best time to take stock of your organization and make the improvements that the busy times would not allow your organization to do.
Implementing new proven technology solutions is one area that can create tremendous benefits and provide real measurable value to your organization. Older technology that is antiquated can really cost your firm more money than upgrading and will most certainly inhibit future growth when the marketplace, once again, shows signs of rapid growth and prosperity. Will you be ready?
The marketplace is what it is and impossible for anyone to control. You have to work with what you have. This means squeezing every dime of profit from every deal your firm makes. Proven technology solutions allow your company to get more accomplished with less people and apply profit-making strategic plans that can see your bottom-line grow even when the number of transactions is down from that of previous years.
To grow you business during these transition times and ready your firm for the future, here are ten great reasons to upgrade to the next generation technology today and take advantage of the opportunities that proven solutions can bring.
Using the David Letterman count down method, here are ten great reasons for using proven technology solutions to add more profitability for your real estate operation.
Number 10 – Take control of your future - develop a post marketing campaign for future sales
Now that time permits your administrative team to do so, take control of future clients. When sales are busting at the seams, nobody considers the market conditions seven to ten years out, but ‘good’ businesses become ‘great’ businesses by doing those things that their competitors are not doing.
Everyone in the real estate industry knows that the buyer and seller that just closed that deal today will be a prospective client in the next seven to ten years. Marketing 101 clearly states that it is far less expensive to maintain an existing client than to create new ones, so creating a ‘post-marketing’ campaign to earn the loyalty of existing clients just makes good sense!
Leaving this vital task to your sales associates is a weak strategy of false hopes and assumptions. Very few sales associates are disciplined enough to create and maintain a ‘customer loyalty’ program and even if you have some that are motivated to make the extra effort, it is unlikely that the sales associates with your firm today will be with you seven to ten years out.
Sophisticated real estate firms understand the importance of ‘owning’ the buyer or seller at the start of the selling cycle. Many firms are wrestling with the ‘agent-client’ relationship and very much want to modify that relationship to one that is more ‘company-client’ where the sales associate is a minor player in the sales process.
There are many reasons to create this loyal relationship between the company and prospective client, but the overwhelming reason is sound economics, even possible survival of your real estate organization. In an era of all time low profitability on real estate sales, it is imperative that real estate firms find new revenue opportunities without the interference from the sales associate.
Clients want ‘one-stop-shopping’ (see Reason # 9 to be posted soon) and they are willing to pay for the convenience, but to take advantage of this exciting revenue opportunity, the relationship with the client must be started by your real estate firm so that mortgage, title, insurance, home warranty and other ‘services’ offered by your strategic business partners are not re-directed to other service providers by your sales associates.
Here’s an example of how your company can increase profits, albeit more long-term, when clients are ‘company-owned’. Past buyers and sellers that have been involved with your organization can become future ‘leads’ that can be distributed by your firm to new agents and where your company can receive an off-the-top ‘referral fee’ for the lead, just like any referral lead given to an associate. Let’s do some math to illustrate the economics of this strategy.
Assumptions (multiply by your actual numbers):
1 branch office
25 agents
25 transactions per month (300 sides per year)
$200,000.00 sale price
3% gross commission per side
50% of agents will leave your firm within the next 5-10 years
75 past customers will be orphaned each year (out of the 300)
50% of orphaned customers will return to your firm when buying or selling (37.5 clients) through customer loyalty campaign
25% off-the-top lead referral fee paid to your firm because customers are now ‘owned’ by your company ($1,500.00 referral fee commission)
$56,250.00 additional commission revenue earned
$100.00 per client per year customer loyalty campaign cost ($30,000.00)
$26,250.00 net profit received from customer loyalty campaign
Using NAR $100.00 average profit per side the $26,250.00 would be like adding 262.5 more sides to your transaction total for this branch office
This illustrates the significant potential increase in profitability and for just one branch office. How many extra sides would this branch office have to make to generate this kind of additional profit?
The easiest way to ensure that you have total control of the client relationship is to create a post-marketing loyalty campaign that has those precious clients coming back to your company and not the sales associate that has long left your firm.
Implementing modern back office technology such as Profit Power can properly capture the buyer and seller data at the time of the sale including the post-sale address of the seller and automate the customer loyalty campaign activities.
All that is required is a simple operational change that asks your administrators to take a few extra seconds to properly collect some additional contact data and you are well on your way to creating a sound strategy for future prosperity and taking ‘ownership’ of the sales process. More to come!
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