Although profit is the most important thing to most businesses including Real Estate, but we need to determine what’s the most important single number or measurement that leads to making a profit or even more profit.
In real estate, numbers and statistics are vitally important not only to measure business KPI’s (key performance indicator) but also to convince clients, Buyers/Sellers about facts in order to lead them to make sensible decisions.
For example, when a Seller has an over inflated idea about the value of his/her property then comps for the same area and for similar houses can show selling prices over the previous 12 months, selling prices and number of houses sold at that price. And also the number of houses unsold and the average prices of those unsold ones.
Numbers are very important in real estate and some examples that come to mind are as follows:
- Its current homes on the market in past 12 months vs. previous 12 months.
- Current days on the market in the past 12 months vs. previous 12 months
- Number of homes sold in the past 12 months vs. previous 12 months
- Average sold days on the market in the past 12 months vs. previous 12 months
- The current average sold price in the past 12 months vs. the previous 12 months
- A pricing strategy guide according to the available inventory 0-2 months inventory Price with the market to 10% above the market 3-4 mos. inventory price aggressively with the market 5-6 mos. inventory price with the market to 5% below market 7-12 mos. inventory price 10% below market 12-+ mos. inventory price 10% below market
- 55% expire or are withdrawn
- Market absorption Analysis can be applied to tell if a Seller’s home can be sold quickly and for more money
We should all recognize that there are several strategies of selling houses and distinction in their specialization and the type of Buyers or Sellers that we are targeting. The one commonality however is making a profit and your approach to this depends on what kind of business you are in.
For the Realtor, profit is link to the number of houses sold and in turn to sell the houses you have to get listings. To get the listings you need to get appointments to see the Seller to evaluate their home for condition specifications, and features. It will be necessary to make a presentation to the Seller using statistics to show the housing market for the area and to demonstrate an agent’s track record successfully selling similar houses in the neighborhood. Once, seller has been won over it is necessary at this point to lead the Seller to a sensible conclusion about asking price that fits in with their timeframe and the market. And at this point ask them to sign the listing. However, no agent will convert 100% of his appointments into listings, a good number is somewhere in between 40-50% So if you set a budget to sell 100 houses per year, you gonna need more than 200 appointments or 4 appointments per week to achieve this.
Therefore, the key number of importance to Real Estate Agent is how many Sellers’ appointments they achieve weekly and annually:
Formula
From these statistics based on the amount of profit that you want to make you’ve got to decide how many appointments u need to get every week/every year to achieve the number of homes that you’re going to sell to make the amount of profit that set as your target or budget.
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