Many people think that Realtors make a lot of money without doing very much work. I used to think that, too, which is one reason why I entered the real estate sales business a little more than a year ago.
True, a handful of superstar agents make an enviable living. But the rest of us don’t make nearly as much as the general public might believe, especially when our overhead expenses are factored in and our earnings are broken down to an hourly wage.
At the start of September–right around the time I made the second sale of my fledgling real estate career–a veteran agent suggested that I start keeping a daily log of how I spend each hour of the day.
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He also told me to keep track of every single penny I spent on job-related expenses, from the cost of printing marketing flyers all the way down to a Big Mac I might purchase as I rush from one client meeting to another.
At the end of 45 days, he promised, we’d sit down together and go through the daily log to total up how much time and money was spent on various activities. The goals: To determine which parts of my time and money were being spent on generating “solid leads,” and to fine-tune my marketing so I will spend the most hours (and cash) on future efforts to get new business.
We recently had our “45-day sit-down,” and the results were enlightening:
I spent nearly 45 hours over the past six weeks walking from door-to-door (and about $90 for printed handouts) in hopes of generating a new listing, but received nothing. Perhaps that’s no surprise, because I spent about 300 hours over the past year and more than $1,000 doing the same thing.
I spent 23 hours (and $60 in Web-hosting fees) on weekly updates to my Internet Web site, but received only 12 “hits” over the past 45 days. I spent another four hours following up on those hits, but nothing panned out.
Twenty-three hours were spent in various office meetings since the start of September. If you also work in an office–any type of office–I probably don’t need to tell you how productive they were.
Twelve hours were spent cold-calling expired listings, hoping the sellers would re-sign with me instead, but those efforts didn’t bear any fruit.
“Caravan-ing”–Realtor jargon for touring open-house events held for brokers only–took up 17 hours of my time over the past 45 days.
Another 30 hours were spent in booths at two local community events, answering questions from visitors and passing out about $100 worth of marketing materials. This one-on-one contact generated three solid leads from prospective buyers and (so far) another 25 hours of follow-up work for them: None of them has made an offer yet, but I think two of the three eventually will.
However, the biggest chunk of time over the past 45 days–a total of 67 hours–was spent “working the floor” in the office by answering calls from prospective clients who’ve seen my brokerage firm’s ads in newspapers or on the Internet.
This netted me another three solid leads and generated another 35 hours of follow-up work, from researching available properties to carting the clients from one house to the next.
Most importantly, one of the three buyers–who happened to call the very first week that I began my 45-day journal–has made a $272,000 offer on a home that was accepted. The deal is scheduled to close at the end of this week.
The seller is paying a 5 percent commission of $13,600. It will be split four ways (one-quarter to each of the two agents, one-quarter to each of our respective offices), which means I’ll gross $3,400.
Before I get the check, though, my office will deduct a total of $290 in various fees it charges on every transaction. My final check will be for $3,110.
To get that check, I’ll have spent nearly 290 hours over the past 45 days. My out-of-pocket expenses–from marketing materials to gasoline, cell-phone bills and, yes, three Big Mac combos while I darted from one house to another–totaled $662.
Of course, I also pay about $4,200 in annual fees for liability insurance, mandatory trade-group memberships, license renewals and the like. Pro-rated over the last 45 days, that works out to another $485.
So, to gross $3,110 over a 45-day period, I spent about $1,147. That works out to a profit of $1,963–before taxes.
And when you divide that $1,963 by the 290 hours I’ve worked over the same time frame, I’ve averaged a whopping $6.77 per hour.
Still, I’ve learned some valuable lessons from reviewing my 45-day journal:
- First, I should continue to spend as much time as possible answering phones at the office, and also taking part in community events where I can make more face-to-face contact with people who are motivated to buy or sell.
- I should probably cut back on my door-knocking, which hasn’t generated a single solid lead since I started in the sales business about a year ago. Using direct-mail might be a better way to reach potential clients in my area: It’s costly, but would give me additional time to spend on more promising activities.
- I obviously cannot count on my Internet site to generate lots of good leads, but will work on improving its results when I have free time.
Oh, and there’s one other thing I’ve learned: If I can’t average more than $6.77 an hour in the real estate sales business, I might as well start selling Big Macs instead of eating them.
Got tips, ideas or advice for the Rookie Realtor? Send them to Rookie@inman.com.