As a real estate agent and business owner, there are lots of things you need to know about your business in order to run it effectively. Questions that help you understand your business. Questions that help you make informed marketing decisions. Questions that prove your value and help you win and retain clients.
In order to give you and your business the best possible chance of coming out on top and winning more closings, there are 11 key questions every real estate agent should be able to answer about client generation, transactions and production, and client retention. Today, I’m going to share with you what they are and why their answers are so important to your success.
Client Generation
Most people would categorize this as “lead generation” but, to be frank, I HATE the word lead. It’s so overused and creates such a negative vibe to people who value relationships over numbers. That being said, there are some key questions you should be able to answer about how you get clients.
What is my number one source of business?
This is the number one most important question you can answer as a real estate agent. The source of your business tells you where and how you should spend your marketing dollars.
It’s also a great idea to take it one step further and track some additional info so you can answer some additional questions. Here are some specific items to track for each potential new client:
- Specific Source: What is the specific source? If it’s a referral, who referred them? If it’s an ad, what ad? If it’s an Instagram, direct message, how did they initially hear about you? If it’s an open house, how did they hear about the open house? Zillow? Facebook? Driving around?
- Connection Created: For a referral, where/how did they give you this referral? Did they call you to give you the client’s info? Did the new client just call you directly? Did they tell you about them in person? For an ad, was it a Lead Ad form? A form on your website? A direct message?
Keeping track of the specifics of the source of your clients will reveal patterns over time. Maybe you’re much more likely to get a referral from someone when you meet them for coffee versus texting them. Knowing this, you can set more face-to-face meetings with your database.
Maybe most of your open house clients come from driving around the neighborhood so you pivot some money from Facebook ads and add more open house signs and directionals. Drilling down one or two layers past the source can help you shape your efforts and actions effectively.
Other Questions You’ll Be Able to Answer:
- Who in my database has referred me the most?
- Who in my database refers me the highest-value clients?
- What type of ads get me the most potential clients?
- Do open house ads work?
- Are clients more likely to refer me face-to-face or over the phone?
How many touches does it take to create a closing?
In addition to knowing where your new clients come from, it’s also important to answer questions about the effort it takes to turn potential clients into closings. Much like how we drilled down in the previous section, here are some specific items to track to help you understand your efforts even more:
- Touches to Appointments: how many conversations did you have with someone before it turned into a seller or buyer appointment?
- Appointments to Agreements: how many appointments resulted in a signed listing or buyer’s agreement?
- Agreements to Contracts: how many agreements turned into homes under contract?
- Contracts to Closings: how many contracts actually closed?
If you track these numbers, you can easily work backwards to figure out, on average, how many touches you need to send in order to create a closing.
Let’s say it takes 3 calls, 8 texts, and 15 emails to get an appointment. Or maybe it only takes 1 call and 4 emails. Until you track it, how do you know how much effort is required for each closing you want?
Tracking this info is not only helpful to you, these stats can also become persuasive marketing. It is powerful to tell your clients that 98% of every buyer you meet results in a successful purchase. Or that you close 95% of the listings you take.
Other Questions You’ll Be Able to Answer:
- How many (appointments, agreements, contracts) turn into closings?
- What is my (list, buyer) to close ratio?
- Do my clients respond more to calls, texts, or emails?
How long does it take to nurture a client to closing?
The next question you should be able to answer is how long it takes to get a client. How long do you nurture potential clients before they’re ready to sit down and talk about buying and selling? How long does it take you to close a client?
If it takes you a year on average to nurture a potential client before they turn into an actual client, it forces you to look at your marketing and follow-up through an entirely different lens. You know it’s going to be much less about turn and burn and much more about nurturing the relationship over time.
This is also great information to share with your clients. I often have clients ask me how long it’s going to take to find a house. Sellers definitely want to know when they can expect an offer. Instead of just guesstimating an answer or simply saying, “it’s hard to know,” you can confidently say, “on average, my listings go under contract in 10 days.”
Other Questions You’ll Be Able to Answer:
- What source of clients close the fastest?
- How long does it take for your listings to go under contract?
- How long does it take for your buyers to close?
Transactions and Production
Most agents track their production to some extent and can often tell you what their sales volume is. However, there are a number of key questions you should be able to answer as it relates to your transactions, especially for your marketing.
What is my sales volume?
This one is easy. It’s simply the total dollar amount of homes you’ve sold. If you sold two $500,000 homes, your sales volume is $1 Million. This is often the most tracked stat for any agent and is used to compare you to others in your brokerage, board, MLS, and area.
What is my average list/sales price?
In addition to tracking the total volume of homes you sell, it’s also important to know the average price of homes you list and homes you sell. Since we often earn a percentage of the final price, knowing these numbers can help you forecast your business’s income.
In fact, in addition to your average list/sales price, there are a couple other items you should track so you can effectively forecast your income:
- Average Listing Commission Percentage
- Average Buyer Commission Percentage
Other Questions You’ll Be Able to Answer:
- How much GCI does my business make for each listing?
- How much GCI does my business make for each buyer?
How much money do I get for my sellers?
While it’s great to know your average list/sales price, I think those stats only scratch the surface of the information you should be tracking and questions you should be able to answer about your transactions and production. Here are some items you should absolutely track:
- Original List Price
- Contract Price
- Final Sales Price
- Concession Amounts
- Number of Showings
- Number of Offers Received
These items can create powerful marketing for you. Let’s say you often sell your listings for more than the list price. It’s very powerful to say, “My listings sell for $5,000 over list price, on average,” or “my sellers get 98% of their list price,” or “my listings receive 3 offers, on average.”
Other Questions You’ll Be Able to Answer:
- What percentage do I get my sellers of their original list price?
- How many offers do my listings receive?
How much money do I save my buyers?
Buyer agent commissions are coming under intense scrutiny lately. It’s becoming even more important than ever that you can prove your value to justify any buyer commission you expect to earn.
In much the same way that you track information on your listings, you should absolutely be tracking similar information for your buyers so you can justify your value as a buyer’s agent. Here are some items you should track for each buyer you have:
- List Price
- Final Sales Price
- Concession Amounts
- Number of Homes Shown
- Number of Offers Written (For Multiple Rejected Offers)
- Number of Offers You Beat (For Multiple Offer Situations)
If you track this information, you will be able to confidently tell your potential buyers, “I save my buyers $8,000 off the listing price, on average,” or “my buyers write 2 offers before getting one accepted, and beat out 3 other offers in the process, on average” or “I help my buyers negotiate $4,000 in concessions, on average.”
Other Questions You’ll Be Able to Answer:
- How many offers do my buyers write before winning a contract?
- How much in concessions do I help my buyers get?
- How many offers do my buyers beat out to win a contract?
Client Retention
Some agents are good at tracking client generating stats. Most agents are good at tracking transaction and production stats. Few agents are good at tracking client retention stats. Think about it. How many times do you hear agents (or marketers) talk about how many leads they got last month? And everybody knows about people’s sales volume. It’s touted in most sales meetings.
However, your database and the business and referrals that come from it will be what generates you the most GCI in your career. So, it’s very important for you to be able to answer these questions so you can understand if you’re doing a good job at retaining the clients you work so hard to earn.
How many repeat clients do I have?
It’s important to know how many clients have used you more than once. Every agent should act as if a client will be a client for life. The best way to know if you’re doing a great job is if you get repeat clients!
How many clients have I lost to other agents?
I understand there are a myriad of reasons why someone may choose another agent over you. Maybe a family member recently got licensed. Maybe they’re moving out of the area. Maybe you didn’t do a great job of staying in touch.
Whatever the reason, I think it’s important to acknowledge and track how many people in your database have ended up going another route. It can help you know whether you need to make some changes to your follow-up plan.
How many touches does it take to generate a referral?
This is a great question to be able to answer because it will inform you how frequently you need to be staying in touch with your database in order to generate a referral. Does it take 3 touches or 12 touches to generate a referral from someone in your database?
How many people does it take to generate a referral?
Similar to the previous question, knowing your referral to database size ratio will help you understand the power of your database. If you received 30 referrals last year and your database is 150 people, that means you get one referral for every 5 people in your database. If you add five more people and your ratio stays the same, you now know how many people you need to add to increase your referral count.
Conversely, if your referral ratio is one in 30, this tells you it might be worthwhile to work on deepening the relationships you have with people in your database to bring that ratio down.
We have clients who make over $300,000 in GCI with a database of 200 people and others who make $150,000 GCI with a database of 500. Knowing these stats helps you understand the quality of your database and what it might take to increase the quality of relationships, quantity of them, or a combination of both.
Wrapping Up
It may seem like a lot to track all of this information and answer all of these questions, but I promise you, it isn’t. Most of this can be done on a simple spreadsheet.
The answers to these questions are a big deal. They steer your entire business and show you where the money’s coming from. You owe it to yourself and your future success to know everything I’ve shared with you here.
If you have any questions, or if I’ve missed anything, share it in the comments! Happy answers!
Leave a Reply