3 easy steps that will help new agents achieve and exceed your professional goals.
Every new agent wants more clients but starting in real estate isn’t one of those “if you build it, they will come” situations. Think of your real estate business plan as GPS for your career. Instead of getting lost and asking for directions, you simply reference your plan and forge ahead.
In order to become a successful realtor, you’ll need to create and fine-tune a real estate business plan, assess your finances, get your realtor license, choose the best tools and systems to help you get your marketing and sales off the ground … and a whole lot more.
But the first thing that is going to make everything else fall into proper place is a business plan. The trick to successfully getting your business off the ground is to meticulously plan and organize your materials, prioritize properly, and stay on top of the status and performance of each one of these moving parts.
A business plan is a living document that maps out the details of your real estate career. It covers what your real estate business will sell, how it will be structured, what the market looks like, how you plan to sell your service, what funding you’ll need, what your financial projections are, and which permits and other documentation will be required.
- STEP ONE: Define your business first.
- Before you start organizing a business plan, think carefully about what makes your business unique first. As a realtor, you’ll need to differentiate yourself from the numerous other realtors out there. What makes yours stand out from the others? Are you planning to attend specific Real Estate activities, like buyers or sellers? What are your marketing strategies to apply to your clients? Does a certain percentage of your proceeds go to charity? Does your brand promote positive messages for investors?
Remember: You’re not just selling your service – you’re selling a combination of service, value, and brand experience. Think through these big questions and outline them before you dive into the nitty-gritty of your business plan research.
- STEP TWO: Keep it short.
- Your business plan should be a tool you use to run and grow your real state career, something you continue to use and refine over time. An excessively long business plan is a huge hassle to deal with and guarantees that your plan will be relegated to a desk drawer, never to be seen again.
- STEP 3: You can (and should) change it as you go.
Keep in mind that your business plan is a living, breathing document. That means you can update your business plan as things change. As you learn more about your customers, sales and marketing tactics that work (and don’t), and what you got right and wrong about your budget and forecast. Your plan sets out the goals you’d like to achieve, and you should use it to track your progress and adjust course as you go.
For example, a new agent might start out buying for sale by owner (FSBO) lists and cold calling to get leads, then realize they are more adept at writing Facebook ads. Maybe your greatest strength turns out to be the lead generation strategy you didn’t initially believe you would use. Because there is no right way to succeed in real estate, you would adjust your real estate business plan to fit your new lead generation strategy.
The following are the things that you can include on your Real Estate business plan, and we will highlight the “can” part. Every Real Estate plan is different, and you will be able to know what you should include and what items are not necessary.
- Write an executive summary:
It outlines the opportunities available as well as how you plan to use your unique skill set to take advantage of them. While you’re probably not going to present your plan to anyone but yourself, it’s still a useful exercise to help you get started. Your executive summary should include details about:
- The area you plan to work in (such as home price range and neighborhoods)
- What type of real estate or clients upon which you plan to focus
- A general overview of your marketing plan
- What skills you bring to the table (including marketing, sales, and business development)
For example, let’s say you’re a former advertising executive planning on working in Manhattan. In your executive summary, you could say that you plan to work in SoHo and focus on doorman rental buildings to start, and then work your way up to luxury co-ops. You might include information on the average rental or sales price, vacancy rate or your connection to the neighborhood. You could then go on to describe how you will use your advertising skills to bring in buyer and seller clients in SoHo utilizing a solid Google AdWords and Facebook ad campaigns.
- Analyze your “farm area”:
The second step in writing a real estate business plan is to assess the market you plan to work in. In the real estate industry, this is known as your “farm area.” By advertising and generating leads, you will be sowing seeds. By converting those leads to clients and closing deals, you will be harvesting your crops.
Like any farmer, you need to know as much as possible about your farm area before you begin. Because you’re new to the industry, you may want to get an experienced agent or your broker to help you with your research. Here are some things that you should know about your farm area:
- The average sales and rental prices in the area
- How long a typical home takes to rent or sell on the market
- Average months of supply, which is a measure of how long it will take for the number of homes currently on the market to be sold and is calculated by dividing the current number of homes on the market in a particular area by the average number of homes sold in that area each month
- Local demographics: Is the area mostly retired people, tech workers, blue collar workers, young families or another group? Each demographic requires different approaches to lead generation.
- The competition: How many other agents or brokerages are there in the area? How does your brokerage measure up?
- Design a marketing & sales strategy:
New agents should generally start out by marketing to their sphere, or circle of influence. Your circle of influence is the people you know who you have influence with. Your friends, family, former co-workers and business associates are all in your circle. Your goal is simply to inform them you are working as a real estate agent and to offer your services to them. Calling is generally the best way to reach out to your circle as it’s the most personal, but you can also use email, social media sites and any online forums of which you are a member.
Your next step is going to depend on the demographics of your farm area and your skill set. Because there are so many lead generation ideas from which to choose, have a look at our list of the top 47 lead generation strategies to get an idea of what will work for you and take notes as to which you would like to focus on.
Certain demographics respond best to specific approaches. For example, if your farm area is largely retirees, you may decide to generate leads with cold calling FSBOs and use a service like ProspectsPLUS! for a postcard or door hanger campaign. If your farm area is largely young tech workers, you might have better luck with Facebook advertising and a solid social media presence on Instagram.
- Detail a financial plan with business costs, funding, and revenue projections.
The next step is to work on a realistic financial plan to determine and reach your goals. To set accurate financial goals in your real estate business plan, you must understand your expenses.
- Outline Your Personal Expenses
You cannot accurately create business fiscal goals without knowing what your personal expenses are that you need to cover. Your real estate business plan needs to, at a minimum, cover your cost of living, so this is something that must be tallied carefully. Be sure to have a detailed list of your living expenses (from utility bills to gasoline for your car) and know how much you must make to cover these expenses.
Also include your personal goals, which can be anything from saving up for a better apartment (with a specific dollar amount) to a down payment on your own investment property (including dollar amount). Integrate these as part of your overall business plan, considering the fiscal goals you will have to meet to attain them.
- Outline Your Business Expenses
Being a real estate agent involves a variety of business expenses. The key will be trying to put a specific number on your professional costs, considering which of these things will be absorbed by your brokerage and what your area and clientele may demand. Here are some of the primary areas to consider when examining professional expenses:
- Technology expenses (such as phone, website, software, and subscriptions)
- Commission splits and transaction fees
- FSBO lists
- Printing costs
- Desk fees
- Professional organization dues
- Licensing fees
- Multiple Listing Service Fees
- Business cards
- Client expenses (including lunches, dinners, and drinks)
- Professional clothing allowance
- Vehicle maintenance and local travel expenses (such as taxis, Uber/Lyft, trains, and subways; may also be under personal expenses)
- Marketing fees (like Facebook ads, brochures, open house, and mailings)
- Professional education
- Determine How Many Deals You Need to Close to Reach Your Goal
Because you already know the average rental or selling price in your farm area, this one is pretty easy. Just take the average transaction side (one half of a real estate commission earned representing either the buyer or the seller), which is generally 3 percent, and determine how many deals you will need to close to break even and how many deals you need to close to reach your goal.
For example, let’s say your financial goal is to make $50,000 your first year and you have $5,000 in yearly expenses. If the average transaction size is $10,000 in your farm area, on a 50/50 split you will make $5,000 from a typical transaction before expenses. That means you will need to close 11 deals in your first year in order to bring home $50,000 in net annual profit.
- Determine How Many Leads You Need to Generate.
Admittedly the math can get a bit fuzzy here, but you should plan on closing roughly one in every 30 or so leads that you generate. When we say leads here, we mean warm leads (like people who are actively looking to purchase or sell a home). You will probably need to generate more cold leads, people who are a few months away from purchasing or selling a home, in order to generate 30 warm leads.
Writing a solid real estate business plan is the best way for new agents to figure out how they plan to succeed in their first year and beyond. In order to write an effective plan, you need to assess your farm area, develop a lead generation and nurturing strategy and come up with a solid financial plan to reach your goals. One of the most important things you can do as a new real estate agent is to be sure that you are maximizing your exposure and your lead generation strategies as well.