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8/14/2019 Busines Plan Real Estate Agent

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Real Estate AgentBusiness Plan


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Threats

Competition

With two classes, and high school diploma, and age limit, anyone can become a real estateagent. These minimal criteria are what separate Me Realty from the competition. This is athreat because every newbie that sells two or three homes one year and quits, is taking two orthree sales away from Me Realty. As of January 2005, there were over one million licensedREALTORS registered with the National Association of Realtors. This national associationpromotes real estate as a career, further increasing the likelihood of increased competition.

Government

Government involvement with interest rates, regulations governing real estate transactions,and involvement with who can sell real estate effects the entire industry. Interest ratemanipulation can increase or decrease the demand for real estate financing. Regulationsgoverning real estate transactions will require continuing education and knowledge toproperly ensure compliance. The continued government involvement will increase the timeneeded for education, reducing the time devoted to income generating activities. Lastly,government involvement with control who can sell real estate will have a large impact oncompetition. If the government continues to allow financial institutions and banks access tothe real estate market, what will stop insurance companies and retail companies (Wal-Mart,Target, etc.) from entering real estate sales.

Lower CommissionCompetitive forces may create downward pressure on sales commissions. The competitivenature of real estate and ease of access to the industry will decrease the commission rate onhomes. This can only be combated with direct inquiry and sales finesse. Customers/clients

will work with an individual who is providing added value and the perceived increased valuethat experience, knowledge, and confidence provide. The downward pressure will alsoincrease the number of sales needed to reach financial goals.

Other potential threats: salaried salespeople become a reality, discounted commissions to 1.5percent, and acceleration of homebuyers' use of the Internet.


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Company Analysis

Name

Me Realty, LLC is a one-person real estate company based in Metropolitan, State. The name MeRealty, LLC was chosen because it describes the business and brand. Me Realty is buildingbrand recognition for long-term client satisfaction.

Mission

The objectives for the first three years of operation include:

To create a real estate company whose primary goal is to exceed customer's expectations. To increase the number of clients served by at least 30% per year through superior

performance and word-of-mouth referrals. To satisfy clients real estate needs and wants profitably. To develop a sustainable real estate business that generates value for customers. To uphold the ethical codes set forth by the State Real Estate Commission.

Company History

The principal, Gadda Mooga, has a BS-Marketing from the State University and an MBA fromUniversity of State. Ms. Mooga has over five-years experience in retail sales, ascending toDepartment Manager at Retail Store, a small pet store. As Department Manager, Ms. Moogawas responsible for customer service, inventory orders, and selling pet supplies. This experiencehas taught Ms. Mooga how to overcome customer objections, different closing methods, andhow to manage multiple tasks. These skills have built an excellent foundation for a successful

career in real estate.

Current Situation

Market SituationReal estate has experienced three years of unprecedented growth and success. Fueled byhistorically low interest rates, new and existing home sales have exceeded prior years salesrecords. Various economists predict a real estate bubble, which will effect home values and real

estate sales. The bubble burst theory is highly speculative and one that most real estateprofessionals are cognizant of but nothing to be alarmed. Historically, rising interest rates haveadversely effected home sales by reducing the number of individuals buying and selling homes.Individuals will always need basic shelter and homes satisfy that need.

According to the Multiple Listing Service, the market Me Realty, LLC will be competing had4 705 sold residential units in the last six months with 1 776 currently pending This is a very


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made in sales volume, gross commission income, net commission percent earned and total deals.These last goals will be used to measure and adjust the assumptions already discussed.

Goal #Sales Volume $3,900,000

Gross Commission Income $75,000

Net Commission Percent Earned 2.8%

Total Deals 26

Legal Form of Ownership

Me Realty, LLC is organized as a limited liability company that offers more protection than asole proprietorship. Ms. Moogas rental properties are also under the LLC designation, furtherinsulating the principal from legal issues.

Resources/Technology/Development

When Is a Real Estate Agent a Realtor?

Me Realty, LLC is a REALTOR as Gadda Mooga is a member of the National Association ofRealtors, the world's largest professional association. The term Realtor is a registered collectivemembership mark that identifies a real estate professional who is a member of the NationalAssociation of Realtors and subscribes to its strict Code of Ethics.

Founded in 1908, NAR has grown from its original nucleus of 120, to over 1,000,000 memberstoday. NAR is composed of Realtors who are involved in residential and commercial real estateas brokers, salespeople, property managers, appraisers, counselors and others who are engaged in

all aspects of the real estate industry.

Members belong to one or more of 1,700 local associations/boards and 54 state and territoryassociations of Realtors and can join one of our many institutes, societies and councils.Additionally, NAR offers members the opportunity to be active in our appraisal and internationalreal estate specialty sections. Realtors are pledged to a strict Code of Ethics and Standards ofPractice.

Working for America's property owners, the National Association of Realtors provides a facilityfor professional development, research and exchange of information among its members.

Professional DevelopmentMe Realty understands that to be a professional requires continual growth and improvement.Much like corporations and their quality and continuous improvement initiatives, Me Realty has


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Audience. This is the specific target market in a particular segment or geographic area.

o Me Realty will concentrate on the Meadowstream and Elk Scent neighborhoods

o Me Realty will work the For Sale By Owner web sites.

Differentiation. This is setting the company apart from the competition and offering aunique value-added service. Me Realty hasnt determined this, but will answer thefollowing questions; how will Me Realty approach sales that will set them apart fromothers in the market and whom will they appeal to.

Media. This is the communication method used to reach the target audience.

o Print advertising; brochures, business cards, and real estate magazine

o Company web site and broker web site.

o Community involvement in the Meadowstream and Elk Scent neighborhoods

Action plan and schedule. This is the schedule of when each step will occur. This isthe to-do list that will make the marketing plan successful and achieve the results. Belowis a list of tactics Me Realty will use to reach the target market.

March -- spring greeting post-card/letter with flower seeds, to family and friends reminding themthat Me Realty sells real estate. This will give them a reminder prior to the busy spring/summersales months. The reminder will place Me Realtys name in their evoke set and instant recall

before they sell, buy or refer an acquaintance.

July -- sponsor a 4th of July neighborhood (Meadowstream & Elk Scent) with flags.

Fall/Autumn - distribute yard waste bags with Me Realtys logo to former clients, friends andfamily.

December -- Holiday cards to former clients, customers, friends, and family

Budget. Now that the marketing plan is in place, it needs fuel to move, thats thebudgets role. The budget must be used efficiently, otherwise the message will be sentbut no one will receive it. Me Realty has set an advertising budget of ten percent ofearned commissions, or $7,500. To get started, the company will purchase businesscards, personal brochures, directional signs, and personalized sold bags, and allocate tenpercent of all commissions to develop other marketing materials


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Sales Promotion material such as newsletters, cards, letterhead, flyers, brochures,

pens, and key chains will be purchased throughout the year and passed out duringopen houses, meetings, and listing appointments. As discussed above, Me Realty willsend periodic notices to past clients/customers with varying messages. So therecipient doesnt grow tired of receiving the mailers, each communication will relay adifferent service provided by Me Realty and personalized when possible. $1,000

1. Personal Selling2. Public Relations

a. Articlesb. Press releasesc. Interview

3. Advertisinga. Most costlyb. Most used

Sales StrategyMe Realty, LLC sales strategy is to emphasize comprehensive research and in-depth productknowledge. Me Realtys goal is to know everything about the clients home, neighborhood, andcommunity, before the agreement is signed. This approach is likely to turn prospective clientsinto long-term customers. Buying and selling real estate is a because people are often cautiouswith their property decisions and offering a comprehensive solution will likely allay theirconcerns because Me Realty, LLC is willing to work extra hard to research all options.

The time needed to provide the high level of service will be more than the typical agent provides,but will have great dividends.

Commission Code (Cooperating Commission)The cooperating commission structure continues to decrease with just over half of all residentialdetached homes sold in the last six months, paying less than two percent to cooperating brokers.This means that sales people are earning less per transaction on a percentage basis than agentsdid in years past. This also means that sellers are becoming more cost conscious and squeezingdollars out of the transaction.

According to the MLS, these are the last six-month cooperating commissions

Rate Frequency Percent Cumulative Percent1 8 1 0% 0%


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Below is a top ten list of the competing real estate companies and number of licensed agents.

Company # of Agents

Holding Company Realty 659Sandy Real Estate 426

Rock Solid Realty 177

Difference Maker Realty 157

Millennium Real Estate 136

Climate Real Estate 57

Weird Al Realty 51

Chutes Realty 38

Smalltown Real Estate 27Cake Real Estate 15

Below is a top five list of competing agents.Name Annual

DealsAverage $

DealDays onMarket

Commission Strategy

Person One 202 $180,132 64 5-7% Team of six

Person Two 170 $187,736 47 5-7% Team of nine

Person Three 154 $186,689 51 1%, 2.7%,4.9%

One assistant &brokers staff

Person Four 133 $125,603 37 5-7% One assistant &brokers staff

Person Five 125 $273,778 51 4-6% Team of four

Each competing agent has a different brokerage contract that ranges from a commission split of60/40 to 100%. The top five agents each earn 100% commissions and pay a monthly fee to theircompany/broker. In addition to the monthly fee, these agents may also pay a marketing fee,administration fee, and advertising fee to the broker.

The second level of competition is all the For Sale by Owners, or FSBOs, who believe they cansell their home without a licensed agent. The number of FSBOs has increased in recent years,and as homeowners become more and more knowledgeable, they will become a major force inthe market.

FSBOs are better organized with several web sites catered to thrifty homeowners. For a flat feeand monthly subscription, the FSBO business will provide a magazine ad, signs, Internet ad, andsales training. This market is wide-open for an entrepreneur looking to enter real estate withoutthe licensing requirements.

Th hi d l l f i i i l l d h Th h b ild d


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Barriers to Entry

According to the state real estate commission, the only three requirements to become a real estate

agent are; 19-years-old, high school diploma or GED, and two real estate classes. These barriersare attainable for virtually anyone. In order to increase the barriers to entry, Me Realty, LLCwill pursue additional training and classes. The additional training and real estate classes willdifferentiate Me Realty, LLC from the poorly skilled agents. Me Realty, LLC will have moreknowledge to handle customer inquiries, overcome objections, and salesperson negotiations.

In addition to education and training, Me Realty, LLC will get involved in civic, social, andcommunity organizations. Being visible in the community and being recognized as a civic

leader will increase credibility and further create barriers for less astute agents.

Change Mechanisms

This section details the internal and external factors that may effect Me Realty in the short andlong-term. The company must have a contingency plan in place to prepare for change. MeRealty believes the changing economy and the acceptance of e-commerce will change the real

estate paradigm. The company believes that interest rates will increase slowly over the nextcouple of years and the economy will slowly grow. These changes will adversely effect realestate sales. Consumer acceptance of e-commerce and Internet confidence will increase aconsumers reliance on electronic medium. This change is acknowledged and addressed throughthe companys use of their Internet web site and electronic commerce mechanisms. Me Realtywill have a searchable web site that will provide access to all the areas listings and informationon recent sales. The site will be used to generate prospects and leads. The site will also havecutting edge technology that isnt currently used by any other real estate professional. This

technology will allow completion of the documentation and submission to Me Realty withoutevery interacting with the client.

Me Realty is also trying to identify trends in real estate that will completely change the businesscycle in less than a decade. Reading real estate magazines and industry rages is a way thecompany can stay current with trends and predictions and design ways to mitigate the changes.

ConclusionIn conclusion, Ms. Mooga is excited about the real estate opportunity that has been presented.With this business plan as a roadmap and broker support, Me Realty will achieve the short-termand long-term goals. It will be difficult with may aches and pains along the way.


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Real Estate Agent Software

Income Goal

Per Year 75,000$Estimated Income Goal Per Month 6,250$Estimated Income Goal Per Week 1,442$Estimated Income Goal Per Day 208$How Many Hours Worked Per Week 30

Estimated Income Per Hour 48$

Average Sale Price 150,000$Average Earned Commission 2.8%

Commission Split with Broker 70%Total Average Net Sales Commission Per Deal 2,940$Total Number of Deals Needed Per Year 26Percentage of Cancellations/Expirations 25%Total Number of Deals including Cancellations 33

Total Number of Deals to Close Per Month 2

Total Number of Deals to Close Per Week 1

Percentage of Deals - Listings 60%Total Listing Deals before Cancellations/Expirations 20Total Listings that will Successfully Close 15Total Buyer Deals that will Successfully Close 11

Appointments

Appointment Closing Percentage 5%Appointments Needed Per Year to Reach Listing Goal 39Appointments Needed Per Month 3Appointments Needed Per Week 1

Prospects

Prospects Needed to Get One Appointment 10Prospects Needed Per Year to Reach Appointment Goal 390Prospects Needed Per Month 33Prospects Needed Per Week 8

SmallBusinessPoint.com, Inc. Work Estimator


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Plan vs Actual

First Year

Prospects January February March April May June July August September October November December Total

Plan 33 33 33 33 33 33 33 33 33 33 33 33 396

Actual 30 30

Monthly Difference -3 -33 -33 -33 -33 -33 -33 -33 -33 -33 -33 -33 -366

YTD Total -3 -36 -69 -102 -135 -168 -201 -234 -267 -300 -333 -366 -366

Appointments

Plan 3 3 3 3 3 3 3 3 3 3 3 3 36

Actual 0


YTD Total -3 -6 -9 -12 -15 -18 -21 -24 -27 -30 -33 -36 -36

Active ListingsPlan 2 2 2 2 2 2 2 2 2 2 2 2 24

Actual 0


YTD Total -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 -22 -24 -24

Active Buyers

Plan 1 1 1 1 1 1 1 1 1 1 1 1 12

Actual 0

Monthly Difference -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -12YTD Total -1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 -12

Goals for the Week/Month

I am working on:

SmallBusinessPoint.com, Inc. Real Estate Agent


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Graphs

Five-Year Forecast

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

BaseYear

1st Year 2ndYear

3rd Year 4th Year 5th Year

Total Anticipated Annual Revenue

Total Expenses

Net Operating Income Before DebtService

Debt Service & Cash Flow

$-

$5,000

$10,000

$15,000

$20,000

$25,000

BaseYear

1stYear

2ndYear

3rdYear

4thYear

5thYear

Net Operating IncomeBefore Debt Service

Debt Service

Cash Flow

SmallBusinessPoint.com, Inc. Real Estate Agent Graphs


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Annual Operating Budget

Income

Gross Scheduled Listing Income 45,000$

Gross Scheduled Buyer Income 30,000$

Gross Scheduled Income 75,000$Income From Other Sources 500$

Total Anticipated Annual Revenue 75,500$

Expenses

Advertising/Promotion/Cards 7,500$

License Fees/Lock Box/MLS Dues 2,500$

Automobile -Gas/Maintenance 1,100$

Cell Phone/Pager 1,200$

Internet/Computer 1,500$Insurance (Car, E&O, Health, Other) 1,200$

Administrative/Office Rental 3,600$

Income Taxes & Social Security/FICA 43,500$

Savings 3,600$

Other -$

Total Annual Expenses 65,700$

Net Operating Income Before Debt Service 9,800$

Annual Debt Service $5,659

Cash Flow $4,141

SmallBusinessPoint.com, Inc. Real Estate Agent Annual Operating Budget


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Expenses

Description Percent

Income Tax Rate 50.0%

Social Security/FICA 8.0%

Estimated Annual Cost Increase 5.0%Estimated Annual Sales Increase 5.0%

Estimated Annual Other Income Increase 10.0%

Expenses

Description Annual Amount

Advertising/Promotion/Cards 7,500$

License Fees/Lock Box/MLS Dues 2,500$

Automobile -Gas/Maintenance 1,100$

Cell Phone/Pager 1,200$Internet/Computer 1,500$

Insurance (Car, E&O, Health, Other) 1,200$

Administrative/Office Rental 3,600$

Income Taxes & Social Security/FICA 43,500$

Savings 3,600$

Other -$

Total Annual Expenses 65,700$

Debt ServiceCar Loan Amount 24,000$

Number of Year's Financed 5

Annual Interest Rate 5.8%

Annual Debt Service $5,659

SmallBusinessPoint.com, Inc. Real Estate Agent Expenses