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How Much Will You Make in Real Estate

Many Realtors share with me their earnings goals, especially from […]


Many Realtors share with me their  earnings goals, especially from new agents and brokers but rarely do they know how that number is reached. A practice that is rarely done is working backwards from your earning goals to a day to day business. It is very simple and tells a big story but is redly overlooked. Every major company has a strategy on what each hour per day can create over a year and beyond, with checkpoints along the way. So now that you are running a small business as a Real Estate Broker, you should be doing the same. Its simple to walk thru the questions and then go backwards. I will explain below:

How much money to you want to take home each year? This number needs to be thought out because depending on your tax strategy, it can vary quite a bit. How much money do you want to take home and put in your pocket? If you are able to write off heavily, your gross number may be close to your net.

How much Do you make on a sale? Lets say you average 3% commission on a sale and you want to make $100,000 ( lots of assumptions here). You need to close $3.3 Million in sales per year in simple math.

How many houses do you need to sell? Look at your business and target market and decide how many of those would equal $3.3 Million. With the average home price of about $175,000 you would need to sell 19 average homes. Obviously, less if you sell a high end home or more if you are selling lower priced homes.

You need to sell 1.6 homes per month.  Now the reality check begins. What kind of work is required to get to 1.6 home sales per month?

Your network and relationships will dictate how you can drum up that type of business but lets assume you know 100 people well enough to consider them a prospect. You will need to sell nearly 20% of your people a home each year in the average price range to make $100,000 gross. Is it possible to sell every one of your prospects a new home every 5 years? Probably not so how do you increase that prospect number is through strategy and planning. I always say you have to make at least 1 new prospect every week and if that takes meeting 100 people through networking and events, thats what you have to do.

I hate business cards but they are the best way for me to keep track of how I increased my sphere of influence throughout the week. In my business I have to make 20 calls to get 5 good leads which can usually over time turn into 1 good sale. So if my average commission is $6000 lets say and I want to make $100,000, I have to make 333 original calls. Wow, thats just 1 per day isn’t it.

This is where I am going, that if you take the time to plan and strategize you will save yourself the headache of empty networking and wasting a lot of time. But it takes a lot of time to go from make a small living to hitting it big. Look at the players in your market and you will notice they work a lot. They carry 2 phones that wring constantly and keep an assistant busy. They are always available and you see them at every social event. But again they are the best and they have taken the time to understand if they want to dominate the market they have to do the numbers, over and over again.

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