Business Plan: Everything a real estate agency needs to grow

First, a business plan, is a management document that provides an overall future picture of the business from different angles such as marketing, operational and financial. In real estate brokerage it is customary to make a future income plan based on the following parameters:

  • Annual revenue target
  • Average property price in the area of ​​specialization
  • Average commission in NIS per transaction (total brokerage fees from seller and buyer together)
  • The amount of transactions required to reach the annual income target
  • Amount of assets to be raised exclusively
  • Number of initiated presentations with sellers
  • Number of initiated calls to sellers

There is a direct and strong connection between some of the parameters .

For example, there is a relationship between the amount of assets that need to be raised and the amount of transactions that you close. If your average conversion factor is 70%, it means that out of 10 assets you have raised you will close 7 transactions.

There is also a strong connection between the number of presentations and the number of assets you will raise. For example, if your average conversion factor is 10%, that means you will raise one asset out of 10 presentations.

The amount of calls to sellers may affect the number of appointments. For example, if your average conversion rate is 25%, this means that out of 4 phone calls you will schedule one presentation meeting.

And to better understand what I wrote I will give a simple example (all numbers are before VAT).

Suppose an average property in your area of ​​expertise costs NIS 1,500,000, and your average income from a transaction is 3% of the value of the property (buying and selling together), ie you bring in NIS 45,000 from one transaction, from the sale of one property.

If you are a broker at the beginning and you have determined that you want an annual income of NIS 300,000, this means that you have to make 7 transactions a year (in an upward circle).

To reach 7 transactions you will need to raise 10 properties exclusively at a conversion rate of 70%, and to reach 10 properties exclusively you will need to make 100 presentation sessions at a conversion rate of 10%. And finally to get to 100 presentations you will need to make 400 initiated calls at a conversion rate of 25%.

As a real estate broker and also helps realtors close more deals, I can say that it is not ideal to call sellers, so advanced marketing actions are required to turn you into a local and regional brand to get property owners to call you! This is of course a better starting point for you.

Whether you have used creative ways to increase the amount of your customers, or worked according to the book, your business plan / revenue plan does not take into account the "risks" and surprises on the way to achieving the goal. The program does not know what your personal abilities are, your skills and what your motivation is for success.

That's why it's important to remember - it does not matter what business plan you write and how beautiful, detailed and reasoned it will be. If you do not have a strong mentality, an open mind and adaptability to change, the number you wrote in Excel in the annual income will only remain a number, and the reality will be very far from what you planned, because you are the most important parameter in your business plan.

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