Real Estate Agent Business Plan
Threats Competition • With two classes, and high school diploma, and age limit, anyone can become a real estate agent. These minimal criteria are what separate Me Realty from the competition. This is a threat because every newbie that sells two or three homes one year and quits, is taking two or three sales away from Me Me Realty. As of January 2005, there were over one million million licensed REALTORS registered with the National Association of Rea ltors. This national association promotes real estate as a career, further increasing the likelihood of increased competition. •
Government Government involvement with interest rates, regulations governing real estate transactions, and involvement with who can sell real estate estate effects the entire industry. Interest rate manipulation can increase or decrease the demand for real estate financing. Regulations governing real estate transactions will require continuing education and knowledge to properly ensure compliance. The continued government involvement will increase the time needed for education, reducing the time devoted to income income generating activities. Lastly, government involvement with control who can sell real estate will have a large impact on competition. If the government continues to allow financial institutions and banks access to the real estate market, what will stop insurance companies and retail companies (Wal-Mart, Target, etc.) from entering real estate sales.
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Lower Commission Competitive forces may create downward pressure pressure on sales commissions. commissions. The competitive nature of real estate and ease of access to the industry will decrease the commission rate on homes. This can only be combated with direct inquiry and sales sales finesse. Customers/clients will work with an individual who is providing added value and the perceived increased value that experience, knowledge, and confidence provide. The downward pressure will will also
Company Analysis Name Me Realty, LLC is a one-person real estate company based in Metropolitan, State. The name Me Realty, LLC was chosen because it describes the business business and brand. Me Realty is building brand recognition for long-term client satisfaction. Mission The objectives for the first three years of operation include:
To create a real estate company whose primary goal is to exceed customer's expectations. To increase the number of clients served by at least 30% per year through superior performance and word-of-mouth referrals. To satisfy client’s real estate needs and wants profitably. To develop a sustainable real estate business that generates value for customers. To uphold the ethical codes set forth by the State Real Estate Commission.
Company History The principal, Gadda Mooga, has a BS-Marketing from the State University and an MBA from University of State. Ms. Mooga has over five-years experience in retail sales, ascending to Department Manager at Retail Store, a small small pet store. As Department Manager, Ms. Mooga was responsible for customer service, inventory orders, and selling pet supplies. This experience has taught Ms. Mooga how to overcome customer objections, different closing methods, and how to manage multiple tasks. These skills have built an excellent foundation for a successful career in real estate.
made in sales volume, gross commission income, net commission percent earned and total deals. These last goals will be used to measure and adjust the assumptions already discussed. Goal # Sales Volume $3,900,000 Gross Commission Income $75,000 Net Commission Percent Earned 2.8% Total Deals 26
Legal Form of Ownership Me Realty, LLC is organized as a limited liability company that offers more protection than a sole proprietorship. Ms. Mooga’s rental properties are also under the LLC designation, further insulating the principal from legal issues. Resources/Technology/Development When Is a Real Estate Agent a Realtor? Me Realty, LLC is a REALTOR as Gadda Mooga is a member of the National Association of Realtors, the world's largest professional association. The term Realtor is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors and subscribes to its strict Code of Ethics. Founded in 1908, NAR has grown from its original nucleus of 120, to over 1,000,000 members today. NAR is composed of Realtors who are involved in residential and commercial real estate as brokers, salespeople, property managers, appraisers, counselors and others who are engaged in all aspects of the real estate industry.
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Audience. This is the specific target market in a particular segment or geographic area. o
Me Realty will concentrate on the Meadowstream and Elk Scent neighborhoods
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Me Realty will work the For Sale By Owner web sites.
Differentiation. This is setting the company apart apa rt from the competition and offering a unique value-added service. Me Realty hasn’t determined this, but will answer the the following questions; how will Me Realty approach sales that will set them apart ap art from others in the market and whom will they appeal to. Media. This is the communication method used to reach the target audience. o
Print advertising; brochures, business cards, and real estate magazine
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Company web site and broker web site.
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Community involvement in the Meadowstream and Elk Scent neighborhoods
Action plan and schedule. This is the the schedule of when each step will occur. This is the to-do list that will make the marketing plan successful and achieve the results. results. Below is a list of tactics Me Realty will use to reach the target market.
March -- spring greeting post-card/letter with flower seeds, to family and friends reminding them that Me Realty sells real estate. estate. This will give them a reminder prior to the busy spring/summer spring/summer sales months. The reminder will place Me Realty’s name in their evoke set and instant recall before they sell, buy or refer an acquaintance. th
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Sales Promotion material such as newsletters, cards, letterhead, flyers, brochures, pens, and key chains will be purchased throughout the year and passed out during open houses, meetings, and listing appointments. As discussed above, Me Realty will send periodic notices to past clients/customers with varying messages. messages. So the recipient doesn’t grow tired of receiving the mailers, each communication will relay a different service provided by Me Realty and personalized when possible. $1,000
1. Personal Selling 2. Public Relations a. Articles b. Press releases c. Interview 3. Advertising a. Most costly b. Most used
Sales Strategy Me Realty, LLC sale’s strategy is to emphasize comprehensive research and in-depth product knowledge. Me Realty’s goal is to know everything about the client’s home, neighborhood, and community, before the agreement is signed. signed. This approach is likely to turn prospective prospective clients into long-term customers. Buying and selling real estate is a because people are often cautious with their property decisions and offering a comprehensive solution will likely allay their concerns because Me Realty, LLC is willing to work extra hard to research all options. The time needed to provide the high level of service will be more than the typical agent provides,
Below is a top ten list of the competing real estate companies and number of licensed agents.
Company Holding Company Realty Sandy Real Estate Rock Solid Realty Difference Maker Realty Millennium Real Estate Climate Real Estate Weird Al Realty Chutes Realty Smalltown Real Estate Cake Real Estate
# of Agents 659 426 177 157 136 57 51 38 27 15
Below is a top five list of competing agents . Name Annual Average $ Deals Deal Person One 202 $180,132 Person Two 170 $187,736 Person Three 154 $186,689
Days on Market 64 47 51
Commission
Strategy Team of six Team of nine One assistant & broker’s staff One assistant & broker’s staff Team of four
Person Four
133
$125,603
37
5-7% 5-7% 1%, 2.7%, 4.9% 5-7%
Person Five
125
$273,778
51
4-6%
Each competing agent has a different brokerage contract that ranges from a commission split of 60/40 to 100%. The top five agents each earn 100% commissions commissions and pay a monthly fee to their company/broker. In addition to the monthly fee, these agents may also pay a marketing fee, administration fee, and advertising fee to the broker.
Barriers to Entry According to the state real estate commission, the only three requirements to become a real estate agent are; 19-years-old, high school diploma or GED, GED, and two real estate classes. These barriers are attainable for virtually anyone. In order to increase the barriers to entry, Me Realty, LLC will pursue additional training and classes. The additional training and real estate classes will will differentiate Me Realty, LLC from the poorly skilled agents. Me Realty, LLC will have more knowledge to handle customer inquiries, overcome objections, and salesperson negotiations. In addition to education and training, Me Realty, LLC will ‘get involved’ in civic, social, and community organizations. Being visible in the community and being recognized as a civic leader will increase credibility and further create barriers for less astute agents.
Change Mechanisms This section details the internal and external factors that may effect Me Realty in the short and long-term. The company must must have a contingency plan in place to prepare prepare for change. Me Realty believes the changing economy and the acceptance of e-commerce will change the real estate paradigm. The company believes that interest rates will increase slowly over the next couple of years and the economy will slowly slowly grow. These changes will adversely effect real estate sales. Consumer acceptance of e-commerce and Internet confidence will increase a consumer’s reliance on electronic medium. This change is acknowledged and addressed addressed through the company’s use of their Internet web site and electronic commerce mechanisms. mechanisms. Me Realty will have a searchable web site that will provide access to all the areas listings and information on recent sales. The site will be used to generate prospects and leads. The site will also have cutting edge technology that isn’t isn’t currently used by any other real estate professional. This technology will allow completion of the documentation and submission to Me Realty without every interacting with the client.
Real Estate Agent Software
Income Goal Per Year Estimated Income Goal Per Month Estimated Income Goal Per Week Estimated Income Goal Per Day How Many Hours Worked Per Week Estimated Income Per Hour
Average Sale Price Average Earned Commission Commission Split with Broker Total Average Net Sales Commission Per Deal Total Number of Deals Needed Per Year Percentage of Cancellations/Expirations Total Number of Deals including Cancellations Total Number of Deals to Close Per Month Total Number of Deals to Close Per Week Percentage of Deals - Listings Total Listing Deals before Cancellations/Expirations Total Listings that will Successfully Close Total Buyer Deals that will Successfully Close
$ $ $ $ $ $
$
75,000 6,250 1,442 208 30 48 150,000 2.8% 70% 2,940 26 25% 33 2 1 60% 20 15 11
Appointments Appointment Closing Percentage Appointments Needed Per Year to Reach Listing Goal Appointments Needed Per Month Appointments Needed Per Week
5% 39 3 1
Prospects Prospects Needed to Get One Appointment Prospects Needed Per Year to Reach Appointment Goal Prospects Needed Per Month Prospects Needed Per Week
10 390 33 8
SmallBusinessPoint.com, Inc.
Work Estimator
Plan vs Actual First Year Prospects Plan Actual Monthly Difference YTD Total
January 33 30 -3 -3
February 33
March 33
April 33
M ay 33
June 33
July 33
August 33
-3 3 -3 6
-33 -69
-3 3 -102
-3 3 -135
- 33 -16 8
-3 3 - 201
- 33 -2 34
-33 - 267
-33 -30 0
- 33 -3 33
- 33 -366
3
3
3
3
3
3
3
3
3
3
3
3
-3 -3 -3
-3 -6
-3 -9
-3 -12
-3 -1 5
-3 -18
-3 -2 1
-3 -2 4
-3 - 27
-3 - 30
-3 -33
-3 -3 6
2
2
2
2
2
2
2
2
2
2
2
2
-2 -2 -2
-2 -4
-2 -6
-2 -8
-2 - 10
-2 -12
-2 - 14
-2 - 16
-2 -1 8
-2 -2 0
-2 -2 2
-2 -2 4
1
1
1
1
1
1
1
1
1
1
1
1
-1 -1
-1 -2
-1 -3
-1 -4
-1 -5
-1 -6
-1 -7
-1 -8
-1 -9
-1 -1 0
-1 - 11
-1 - 12
Appointments Plan Actual Monthly Difference YTD Total Active Listings Plan Actual Monthly Difference YTD Total Active Buyers Plan Actual Monthly Difference YTD Total
September October November December 33 33 33 33
Goals for the Week/Month
I am working on:
SmallBusinessPoint.com, Inc.
Real Estate Agent
To T otal 396 30 -3 66 -3 66
36 0 -36 -36
24 0 -24 -2 4
12 0 -12 - 12
Graphs Five-Year Forecast
$120,000 $100,000
Total Anticipated Annual Revenue
$80,000 Total Expenses
$60,000 $40,000
Net Operating Income Before Debt Service
$20,000 $Base Year
1st Year
2nd Year
3rd 3rd Year Year 4th 4th Year Year 5th 5th Year Year
Debt Service & Cash Flow
$25,000 $20,000
Net Operating Income Before Debt Service Debt Service
$15,000 $10,000
Cash Flow
$5,000 $Base Year
1st Year
2nd Year
3rd Year
4th Year
SmallBusinessPoint.com, Inc.
5th Year
Real Estate Agent Graphs
Annual Operating Budget
Income
Gross Scheduled Listing Income Gross Scheduled Buyer Income Gross Scheduled Income Income From Other Sources Total Anticipated Annual Revenue
$ $ $ $
Advertising/Promotion/Cards License Fees/Lock Box/MLS Dues Automobile -Gas/Maintenance Cell Phone/Pager Internet/Computer Insurance (Car, E&O, Health, Other) Administrative/Office Rental Income Taxes & Social Security/FICA Savings Other Total Annual Expenses
$ $ $ $ $ $ $ $ $ $
45,000 30,000 75,000 500 $
75,500
$
65,700
$
9,800
Expenses
Net Operating Income Before Debt Service
7,500 2,500 1,100 1,200 1,500 1,200 3,600 43,500 3,600 -
Annual Debt Service
$5,659
Cash Flow
$4,141
SmallBusinessPoint.com, Inc.
Real Estate Agent A nn nnual Operating Budget
Expenses
Description Income Tax Rate Social Security/FICA Estimated Annual Cost Increase Estimated Annual Sales Increase Estimated Annual Other Income Increase Expenses Description Advertising/Promotion/Cards License Fees/Lock Box/MLS Dues Automobile -Gas/Maintenance Cell Phone/Pager Internet/Computer Insurance (Car, E&O, Health, Other) Administrative/Office Rental Income Taxes & Social Security/FICA Savings Other Total Annual Expenses Debt Service Car Loan Amount Number of Year's Financed Annual Interest Rate Annual Debt Service
Percent
50.0% 8.0% 5.0% 5.0% 10.0%
Annual Amount $ 7,500 $ 2,500 $ 1,100 $ 1,200 $ 1,500 $ 1,200 $ 3,600 $ 43,500 $ 3,600 $ $ 65,700
$
SmallBusinessPoint.com, Inc.
24,000 5 5.8% $5,659
Real Estate Agent Expenses
