Real Estate News and Information in Silicon Valley: Real estate math

Thursday, August 17, 2017

Real estate math

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Dear Reader,

You want to make more money in real estate next year.

At least I hope you do. You didn't get into real estate so that you could just be average.

But you might have said the same thing in 2014 and 2015 too. "Next year is going to be my year in real estate."

Every year, the majority of real estate agents talk about making more money.

Just like every year, we talk about eating healthier, losing weight, going to the gym. But in the end that's all it is: talk.

How many of us actually stick to our goal of getting into great shape? Studies show the answer is fewer and fewer of us every year.

And the same goes for your real estate goals. Fewer and fewer agents are moving up into the "big league" of agents who are making $100k+.

The "middle class" of REALTORS is disappearing. Today agents are either killing it or getting killed. Either you're so busy that you can't keep up with all the customers, or it's a ghost town and you're lucky to meet one new customer per month.

But guess what? There's a reason why people never achieve their fitness goals and why agents continue to make the same amount of money each year.

And it's not the reason you think. It's not because we don't want it bad enough. It's because we're taught to write down our goals and that's it.

But there's one more step you can take after writing down your goal for 2017, and it will literally double your odds of finally achieving your income goals.

It's a simple mathematical formula.

Average agents write down their goal in then sit back and wait for the few customers that happen their way.

Mega-producers use this formula to calculate their next step. But there's no reason to let the mega-producers monopolize this formula, because the average 6th-grader could do it.

Here it is, I'll show you.

All you'll need is a few numbers. You should already know these numbers, but if you don't they'll only take a few minutes to look up.

1.	Average sale price in your market

2.	Your effective company split (notice I said "effective" -- that means your real split after all the fees and calculus)

3.	How much money you want to make in 2017

Ready? It's so simple you might miss it. But this formula is the difference between actually achieving your goal or repeating 2014 and 2015 when nothing changed.

Step 1: Take your income goal. Let's say it's $100,000. That's a good goal. It will put you in the top 10% of agents.

Step 2: Now calculate your average commission. Average sale price X average commission split.

Let's say average sale price is $320,000. It may be higher or lower in your market. Then multiply it times your 3% commission side.

$320,000 X .03 = $9600.00 gross commission

Step 3: Now calculate your net commission after your company split.

Let's say you have a great company and you keep 75% after it's all said and done.

$9600 X .75 = $7200 net commission.

Step 4: Calculate how many transactions you'll need to close in order to hit your income goal of $100,000.

$100,000 ÷ $7200 = 13.9 closed transactions (let's call it 14)

Now there's one final step and it's more important than all of the others combined.

Step 5: Calculate how many customer leads you'll need to close 14 deals. Yes it's possible to calculate this number with total precision.

According to the NAR the average agent closes 1 transaction out of every 24 customer leads. Now some agents will expect to close more, and some agents will close less, but I want to use the statistical average to guarantee your income goal.

14 deals x 24 customer leads = 336

That is your magic number. If you can capture 336 leads in 2017, hitting your income goal of $100,000 will be but a formality. You will have effectively already achieved it before you even start.

For many of you, 336 leads might as well be 3 million leads because you're used to getting about one or two referrals a month.

But 336 leads is only 28 leads per month. Most agents don't get anywhere near that number. And if they do they are probably low quality leads from Zillow that have been sold to five other agents before you call them.

But I and many others capture 60-70 inbound leads per month without spending any money at all on advertising. All you need is a lead capture system.

Here is an email from an agent who used the formula above and then got my Ultimate Website system to capture his "magic number" of leads.

And guess what? He's hit his income goal two years in a row. I'll let you read it in his own words.

Dear Matt:

Two years ago I was starting from scratch. I had worked for years as an assistant until I finally decided to branch out on my own. The problem was I had no pipeline and no leads!

That's when I found you and your technology.

Now only two years later, I feel like I am living the dream. I generate over 100 leads every month on the Ultimate Website System. I work from a home office and I'm able to follow up on all these leads as my schedule allows from home.

My income has doubled two straight years in a row just by following your simple formula.

I've never had more freedom and free time, yet I'm earning more money than ever before. This system has allowed me to literally change my family tree.

Over the last two years I've had many agents call me from around the country and I tell them all the same thing: Follow the formula to the letter. It works.

Thanks for playing a small part in making my dreams happen!

Matt Mouser

I've read this email at least a dozen times and it still inspires me. It reminds me, my Ultimate Website system is exactly what I wish I had when I got into real estate.

While you're dreaming of making more money next year, think about where you're going to get those 28 customers (or whatever number you calculated for yourself).

The truth is I don't care that much if you get my system or if you get it somewhere else or if you build your own.

The important thing is that you have the tools to capture new customers -- as many as you want/need -- on demand.

If you solve that problem, all of your dreams are within your grasp. The only thing that might stop you from getting my Ultimate Website system is if it's sold out in your market. You can find out in less than 10 seconds. Just click the link below.