USA Property Broker

USA Property BROKER

With

http://www.cashflowgold.com.au/

Goal

To understand and develop an

Action Plan for the practical

operation of a real estate office

Overview

1. Definition of management & the management process

2. Bridging the transition into management

3. Recognizing management & leadership characteristics

4. Identifying and utilizing your resources

5. Designing accounting systems to manage for profit

6. Understanding your staff

7. Marketing and statistical reports

8. Building a successful management plan for your firm

Class SurveyPlease complete the survey (handout #1)

Survey Results

1. Years in business: ___1-, ___2-5, ___6+

2. Job function: ____ Owner, ____Manager,

_____ Sales Person, ____ Not in Real Estate

3. Size of Real Estate office: __ 5-, __ 6-15,

___ 16-25, ___ 26-50, ___ 50+

4. Number of branch offices:

5. What did you do before real estate?

Workshop AMove into small groups (about 4-6 people).

List all the jobs in a real estate office.

1. 7.

2. 8.

3. 9.

4. 10.

5. 11.

6. 12.

The Management Decision:

Should You or Shouldn’t You?

• Hard work, not as glamorous as it may

appear

• Can be agonizing, lonely, emotionally

draining

• Not everyone is “cut out” to be a manager

• It’s OK to be a sales person

• Do you really want to manage?

Management Responsibilities:

Necessary Resources

1. Time: allocate between “must”, “should”, “could” and “don’t” do jobs (handout #2)

2. Systems & information: records, forms, reports, policies

3. People: seek, select, train & retain the bestsales & support staff

4. Money: personal assets, investors, bankers, lines of credit

5. Equipment: office furniture, machinery, signs

Management Responsibilities:

What jobs does a manager do?

A. Planning/Goal Setting

• Define your market: find the need

• Establish company goals based on filling the need

a. Short term (survival) goals

b. Profit goals

c. Growth goals: when?, where?

d. Perpetuation/regeneration/continuity goals

Management Responsibilities:

What Jobs Does a Manager Do?

B. Organizing People to Produce

1. Establish an organizational chart

a. Everyone should know his/her ownaccountability & reporting responsibilities

b. Everyone should know everyone else’s accountability & reporting responsibilities

2. Delegate

Management Responsibilities:

What Jobs Does a Manager Do? C. Keys to Managing Your Time

• Schedule yourself (handout #2)

• Delegate to lowest paid competent staff

• Pay for good clerical help

• Help sales people solve their own problems

• Upgrade sales staff

• Replace yourself: hire assistant manager(s)

• Close your door when you’re not MBWA

Management Responsibilities:

What Jobs Does a Manager Do?

D. Staffing

1. Selecting the Sales Team

a. Application (handout #3)

b. Interviewing Process (handout #4)

2. Selecting the support team (handout #5)

3. Your success in achieving your goals

depends largely on your ability to motivate

the staff on both a group and individual level

Management Responsibilities:

Workshop B

Complete the Office Task Analysis Chart (handout

#6)

1. If nobody is doing a particular job, leave blank

2. If two or more persons are doing/supervising a

job, note that fact

3. Compare these tasks with your list from

Workshop A; what are the differences? Why?

Management Responsibilities:

Workshop C

1. What are my strengths?

2. What are my weaknesses?

3. Which jobs am I most skilled at?

4. Which jobs am I least skilled at?

5. Which jobs should I delegate?

MEASURING RESULTS

“Your goals are meaningless

unless you keep score!”

Discussion & Review

1. Form small groups: discuss the

resources (see slide #7) you’ll need to

a. plan,

b. organize,

c. manage,

d. staff your company

2. Appoint a leader to report to the class

Company Income

• Accounting system: a true method of reporting

and controlling your money

• “The funds remaining from gross income after

all sales & listing commissions, including those

to co-brokerage firms, have been distributed.”

• Success measured by gross sales volume is

meaningless

• Number is very useful in mergers & acquisitions

Company Income:

Variables & Percentages

• Variables include:

size of operation

high/low periods of business activities

proximity to large metropolitan area

efficiency of operations

expansion of programs

local customs

• Percentages used are averages of offices surveyed by the National Association of REALTORS (NAR)

Average Expense PercentagesAll Commissions Paid

60.4%

Net Return

4.2%

Sales Managers Salery

3.9%

General Business

Expense

5.8%Telephone

5.6%Occupancy

7.5%

Advertising

6.4%

Saleries

6.1%

Company Income:

“Desk/Associate” Costs

• Needed to determine minimum production necessary from each sales person in order to “break even”

• Desk cost = annual expense of operation*

number of available desks**

* = exclusive of commissions paid on sales

** = whether occupied or not

• Per associate cost used when some or all salespeople are home officed; divide by # salespeople

• Homework: Calculate your desk/associate cost, bring to class tomorrow

Budgeting to Manage

Company Income

• Consider seasonal variations, business cycles,

growth plans

• Include all expenses that can be anticipated

which gross income needed to pay expenses

and desired profit

• Prepare budget minimum of 1 year in advance

• Primary responsibility of management is

controlling expenses & income

Real Estate Income:

Common Commission Options

1. Split commissions

a. 50/50, 60/40, … 90/10

b. split between salesperson & company

c. as salesperson earns more, split increases

2. 100% commissions

a. salesperson receives 100%

b. salespeople pay desk cost, most or all of business expenses

3. Salary or salary plus commission

Establishing Your Budget

A. What gross income can you expect?

1. Total of sales associates’ goals (handout

#7) adjusted to “reality”

2. Convert to gross commission income

(# closings x average price x commission %)

B. What commission plan will you use?

C. Expenses for a real estate office (handout

#8): one time start-up and monthly

Establishing Your Budget

D. What are your company objectives?

a. break-even/survival?

b. expansion, growth?

E. Company income

a. If you split commissions, what split will be necessary to break-even?

b. If you use 100%, what desk costs will be necessary?

Establishing Your Budget

F. What will your net profit be? (company income – expenses)

Is it worth the liabilities?

If not, make adjustments:

a. cut expenses

b. increase productivity

c. add sales personnel

Budgeting Suggestions

1. Be conservative in forecasting income

2. Be realistic in forecasting expenses

3. Allow flexibility until you have a “track record”

4. Prepare a contingency budget for a worse or better

year than expected

5. Compare actuals with budget every month

6. Let staff help: get their suggestions

7. Compare your budget with “industry standards”

Managing People:

Types Salespeople

1. Employee: A person hired to

perform services for another who is

subject to the other’s control.

2. Independent contractor: A person

who contracts to do something for

another who is not subject to the

other’s control.

Managing People:

Nature of Sales Agents

• Character: capable of independent thought &

action, aggressive, competitive, creative,

enterprising, self-confident, self-motivated

• Security: irregular hours, no salary guaranty

• Earnings: based on individual effort & hours

• Other jobs: most have had other jobs

• Reality: in spite of all the rules brokers set up,

agents do what they want when they want

Managing People:

Management Styles

1. Control

* employs rules & procedures that provide close

control over subordinates

* reduces sense of freedom, tends to treat people

as objects, minimizes personal incentives

2. Leadership

* management by example

* uses participative decision making

* results in improved morale, high production,

increased retention

Developing Your Sales Agents:

GOAL SETTING

1. Sales agents base goals on their needs

2. Manager’s goals are based on agents’

goals

3. Manager’s role: guidance & follow-up

4. Goals must be written and be a

commitment

5. Goals must be realistic, specific,

measurable

Goal Setting Suggestions

• Quarterly one-on-one performance reviews by

manager (handout #9)

• Bulletin board showing individual and company

progress toward goals

• Voluntary public commitment by agents to goals

• Encourage agents to relate money goals to

number of sales, listings, contract necessary to

meet goals (use handout #7)

The Skills & Desires of

Good Managers: A Self-Test

WORKSHOP D (handout #10)

1. Please complete this self-evaluation

without discussing answers with others

2. Move into a small group; discuss

a. What is the easiest thing to do?

b. What is the hardest thing to do?

Matching Your Skills & Desires

with the Job of Management

• If your skills & desires don’t

match, find someone else to

manage!

• If your skills & desires generally

match, delegate where you have

shortcomings

The Jobs of Management:

Motivating

• Creating an atmosphere in which agents can

develop to the limits of their capabilities

• Know each agent’s needs & desires

• Motivators: education

setting a good example

fear

opportunities

recognition & rewards

The Jobs of Management:

Training• Opportunities: orientation, regular sales

meetings, one-on-one

• Include field training & a “mentor” system

• Include: role-playing, audio-visual aids

• Include individual counseling at least

monthly

• Budget time & money for training

The Jobs of Management:

Training Subjects

1. Listing procedures

2. Selling procedures

3. Forms & systems

4. Financing

5. Showing techniques

6. Open houses

7. Closing techniques

8. Negotiating

9. Presenting the offer

10.Ethics

11.Disclosure

12.Agency duties

13.Market analysis

14.Staging

15.Advertising

16.Government regulations

The Jobs of Management:

Knowing Top

Consumer Complaints (U.S)1. Failure to disclose

property defects

2. Lot size and lot line problems

3. Misrepresentation

4. Errors in contract language

5. “Deep pockets”!

6. Failure to clarify agency relationships

7. Failure to explain financing

8. Poor communication & follow-up

9. Property management

10.Sewer & septic problems

The Jobs of Management:

Teach Agents Liability Reduction

1. Document statements & events

2. Watch out for “red flags”

3. Answer specific questions carefully

4. Encourage use of other

professionals

5. Avoid predicting the future

Data Collection & Analysis:

Why Do You Need It?• Determine if & how your plans are working

• Show where business is coming from

• Basis for setting goals, plans, budget

• Use for training, guidance, counseling of agents

• Basis for money planning, cash flow projections

• Show growth patterns, strengths, weaknesses

• This month’s/year’s actual records become next month’s/year’s guide to management action

Data Collection & Analysis:

Listing Data• Market share

• Source of business

• Geographic area of influence/area trends

• Sales price ratio: sales divided by list price

• Life of listing in days (list to contract date)

• Number of listings per sales agent

• Percentage of listings sold, expired, withdrawn

• Determine trends by monthly comparisons

Data Collection & Analysis:

Listing Control Systems

1. Competitive Market Analysis (CMA)

(handout #11)

2. Form for recording information during

initial property inspection (handout #12)

3. Complete listing files: all notes, forms,

documents

4. Listing follow-up procedure

Data Collection & Analysis:

Advertising Control System

1. Record source, time & nature of every inquiry

that results from advertising

2. Determine media effectiveness based on #1

3. Cost of ad call: cost of advertisement

number of consumer calls

4. Conversion rate: # of consumer calls

# of appointments made

5. Use data to increase effectiveness of ads

Data Collection & Analysis:

Sales Data

1. Source of buyers

2. Buyer profiles

3. Average sales price

4. Average # buyers per sales agent

5. Percentage who actually buy

6. Market share

7. Determine trends by monthly comparisons

Data Collection & Analysis:

Sales Agent Production

• Schedule quarterly goal review sessions with each agent

(use handout #9)

• Measure results against goals

• Adjust goals as needed

• Review Satisfaction Survey results (handout #13)

Data Collection & Analysis:

Keeping Records

• Who: lowest paid competent staff

• Time reduction: use forms

• Management by “gut” feel may work

in exceptional markets but it’s

devastating in sophisticated markets

in which everyone else is using

computers!

Data Collection & Analysis:

Decisions Based on Data

1. Planning budgets & goals

2. Where to spend money

3. Where to save money

4. Directing sales agents

5. Sources of business

6. Growth patterns & trends

7. Strengths & weaknesses

A successful real estate

company is always based on

good management!

GOOD MANAGEMENT

Requires:• Management & leadership skills/competencies

• Desire to be a good manager

• Sufficient resources

• Written, realistic & measurable goals

• Accounting systems ($ and data) to manage for profit

• Marketing & statistical reports

• Understanding both sales agents & staff

We hope you’ve enjoyed this class.

We hope it will increase your success.

I’ve certainly enjoyed being with you

and have learned from you.

USA Property Broker

More Information Visit http://www.cashflowgold.com.au/