Leadership Development Program Yields Focus

Leadership Development Program Yields Focus

Coldwell Banker University Office Management

CLICK HERE TO APPLY FOR FOCUS ON COLDWELL BANKER WORKS NOW!

Since last March, I’ve been overseeing the Coldwell Banker Leadership Development Program, a learning program designed to elevate the ability of Coldwell Banker office managers to run increasingly successful offices.

To date, we’ve enrolled over 120 managers in the program, and we’ve already graduated two cohorts. The program is rigorous, but participants who have thrown themselves into the effort have seen some outstanding business results. One specific example that comes to mind is an office that increased their GCI by 67% during the program, but we also have seen participants grow their agent base by 30-50% and who have effected significant, positive swings in profitability.

Along the way, I’ve worked to distill an elevator pitch for this program. If you remember my post on the topic of elevator pitches and leadership, you know I’m talking about a simple, succinct, and effective way to convey a complex message in an effort to move others. The word cloud at the top of this post represents the words I was using to describe Leadership Development. I gradually scrubbed away words, and in the process I realized at the core of the program was focus.

Focus on measuring what matters, and focus on doing first what is wildly important to achieving your vision for success. This term not only represents the intent of the program to help develop clarity regarding the things that have the greatest impact on the profitable growth of an office, but also is the office leader’s superpower- the ability to maintain focus despite multiple demands on your attention.

It’s my pleasure to announce that the program will now be known as Focus: Exceptional Office Leadership.

Focus: Exceptional Office Leadership

Applications are now being accepted for the next cohort, which will begin in April.

CLICK HERE TO APPLY FOR FOCUS ON COLDWELL BANKER WORKS NOW!

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.

Martin Luther King Jr. and Leadership

Uncategorized

A leader, in the most basic sense, is someone who inspires others to take action.

A leader becomes great when they inspire action despite adversity or when the actions they inspire cause changes that move a society as a whole.

I believe that Martin Luther King Jr. was a great leader. I am no scholar, but from what I do know of Dr. King, I believe his passion and vision is part of what made him so compelling.

Not every great leader exhibits outstanding passion- many do, but not all. Some have incredible persistence, an iron will, exceptional intellect or keen insight.

I really believe, though, that all great leaders have vision, and when that is coupled with other elements of their persona, the potential for greatness is unleashed.

Dr. King by all accounts had passion, and his vision is legendary- his “I Have A Dream” speech made that vision clear and compelling.

But I have been enthralled by the story behind that speech since I first learned about Mahalia Jackson, a gospel singer who had heard Dr. King talk with great passion about his dream for America. We’ve all heard the standard excerpts from the “I Have A Dream” speech Dr. King gave on . What you typically don’t hear in the standard excerpt, is what led up to it. You don’t hear him struggling, falling somewhat flat in his prepared comments. And you don’t hear Mahalia Jackson say, from behind him on stage:
“Tell them about the dream, Martin. Tell them about the dream!”

Please, take a moment and read this article. I first learned about Mahalia Jackson several years ago, and the reminder to speak from the heart resonated with me then, and still does.

Remember this: even if you don’t aspire to be a leader, even if there are others around you who are looked to first, you can still make a profound impact on the world.

Recognize, support, and encourage the vision and passion of those around you. Even when you can’t be great yourself, you can help lift others in their path to greatness.

 

What I’m Doing at CES

What I’m Doing at CES

Smart Home

When I took on my role of Director of Leadership Development for Coldwell Banker, I couldn’t possibly have foreseen the tangents that the role would take me down, or the opportunities it would open for me to share experiences with others.

Right now, I’m sitting on the show floor at the CES (formerly known as the Consumer Electronics Show) in Las Vegas, a tiny blip in the mass of humanity that is descending on the city over the next four days – 160,000 people visiting two million square feet of show space. What, you might ask, is a real estate company doing at CES? For starters, we’re sponsoring the Smart Home Marketplace. We see the integration of technology into homes has the opportunity to dramatically impact and enhance the home ownership experience, and as a leader and innovator in the industry, we are committed to being at the forefront. You can keep track of what we’re seeing and doing at the event by visiting ces.coldwellbanker.com or by following #CESCB on Twitter, Facebook and Instagram.

Personally, my time here at CES will be spent in two ways: First, I’ll be subjecting myself to total sensory overload, as I try to absorb as much information as I can about new technologies that can impact the home-ownership experience, and then work to translate these into values that our agents can communicate to their clients, deepening the value they bring to their current, past and future clients.

Some of these technologies will allow existing owners to stay in their homes longer, by allowing one to age in place while remaining connected with their families and their communities. Some will make a home more desirable to a prospective buyer.  Having the ability to make recommendations to our sellers can help them to sell more quickly, and at an even higher premium over market average than we already achieve. Others are just plain fun!

As a bonus, I also am able to share the rare opportunity to experience CES with a few others who normally would not be able to attend. You see, CES isn’t open to the public – you have to be engaged in the tech industry or the press to get in. Thankfully, when we were planning our involvement, David Siroty reached out to me, offering a few passes up to leaders within the ranks of the National Association of Realtors Young Professionals Network.

So I reached out to current YPN Chair Philip Becker and Vice Chair Krista Clark, who will be joining me here in Vegas today and tomorrow, coming in from San Antonio and Des Moines. I also reached out to two local leaders that I know through YPN, Shyla Magee and Scott Beaudry, who will be joining me on the show floor tomorrow. Shyla currently serves on the YPN Advisory Board, and Scott was just recently sworn in as President of the Las Vegas Association of Realtors. Both have been integral in the success of one of the best YPN Networks in the country, right here in Vegas.

I look forward to experiencing smart home technology with these outstanding young leaders, who are also friends, and hearing their interpretations of the impact some of what we discover could have.

What’s more, I’m completely thrilled that I was able to offer this opportunity to these young leaders, who give of themselves with no expectation other than personal growth and the chance to impact the industry.

That’s it for me now, but I’m already formulating ideas and making notes of cool technology integration that agents, brokers and homeowners will want to know about – more soon!

Finish Like You Were Starting

Finish Like You Were Starting

Coldwell Banker University Tip of the day

We’re midway through the fourth quarter, and despite the fact that most of the year is now out of your control, we’re at a critical juncture for your success. Your focus for the balance of this year has an immense impact on your chances for growth and success in the year ahead.

Lots of real estate agents tend to coast as the Thanksgiving holiday approaches. Be honest- you’ve fallen into this trap yourself, right? It’s completely natural, maybe even biological. Our bodies are adjusting to the seasons, telling us to conserve energy, while at the same time markets tend to lull, and distractions abound.

But this gap between Thanksgiving and the New Year also provides a great opportunity, for the same reasons. There are less pressing demands on your time, so you can focus on strategic thinking and prospecting. Other agents are less active, so it’s easier to stand out, to convert on opportunities. And those distractions? The holiday parties, family gatherings, shopping trips? Those all sound an awful lot like reconnecting with people who know and care about you and your success.

We convince ourselves that this complacency is logical, because in many markets conventional wisdom says homes don’t sell in the winter. That’ s just plain wrong- you can start with any of the reasons that are listed in this post. And what’s wrong with getting ahead of the “spring market”, of having great inventory prepped and ready to sell before the competition?

I managed real estate offices for many years, and sometime in November my agents would walk into an office business meeting to streamers, noisemakers, champagne, and me shouting “Happy New Year!” I did this to remind them that their new year started RIGHT THEN. You see, any business written from late November is really next years business. Which means if we wait until January to begin executing on our 2016 business plan, we’ve just limited ourselves to an 11 month year.

Why would any reasonable person do that?

It’s time to finish like you were starting. That means taking time, right now, to reflect on what you’re thankful for, then set your goals for the future. Reach out and set a big, hairy, audiacious goal (BHAG) that takes you out 5-10 years…or longer. Make it something you’ll really have to stretch to reach. Make it juicy. Make it bold. Describe it as if it were real.

Now… you’re going to achieve that BHAG, right? So you need to set goals for this year, and have a plan to achieve those. Perhaps most importantly, you need a system to keep you on path to those goals, to help you recommit to them, time and time again. That’s exactly the purpose of Business Planning and Execution Series. It’s designed to help you build a plan, and stay on it.

It’s time to set and execute next years plan, right now. Because you’re on next years business, and carrying momentum through the end of this year gives you a running start on creating your best year ever.

Here’s to finishing starting this year strong!

– Read more more about business planning –

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.

 

 

Painting By Numbers: So you think you’re busy?

Painting By Numbers: So you think you’re busy?

Office Management

This is the third post in a series designed to help office managers and brokers understand and use key performance indicators (KPIs) to improve the bottom line. Read the first and the second.

In my last Painting By Numbers post, I walked you through the calculation of Per Person Productivity (PPP), and by now hopefully you’ve taken a shot at calculating this figure. If that number is around 1 or above, you’re probably feeling good, thinking “Heck yeah, I’ve got a productive office here.”

Don’t strain your arm as you pat your own back. Your productivity may be only skin deep.

You see PPP gives us a finite, measurable average productivity metric. It’s particularly useful because it is applicable across offices of varying sizes – this has nothing to do with gross revenue or total production – it’s the average spread across the total agent count for an office. So my 15 agent office taking 16 listings is definitely outperforming your 40 agent office doing 38 listings. Right?

Wrong. The inherent flaw in averages is….they are averages. PPP can be skewed by one agent contributing a massive number of transactions, and you’d never know it, because PPP doesn’t tell you how many of the agents in the office are actually producing.

So far we’ve filled in background. Now we need to start to get a bit more definition to our picture of our office.  That’s where our next metric comes in. Positive Base measures what percentage of the associates in the office actually contributed to your total business for the month. The calculation here is straightforward:
Pos base calc

In my early years as a manager I created a grid with each agents name at the left side, and certain categories of activities across the top.  This chart was posted right next to my door, where I could see it from my desk and would glance at it every time I walked out of my office. As each month progressed, my staff would fill in a box each time one of the agents completed one of the activities.

This visual representation told me, at a glance, WHO in the office was contributing to the business being done. I could quickly see when an individual disengaged, which allowed me to head off possible future issues. I could see opportunities for improvement, and for recognition. It would be years before I learned about “Positive Base” but I already was tracking it in my own way!

So what’s a good Positive Base figure? I think successful agents would expect to at least write a deal a month and take at least one listing a month. That means a Positive Base of 100% should be our target. In reality, offices fall short of that on a monthly basis, because of inconsistency in agent business. But know this: a Positive Base that is consistently under 50% says half your office isn’t coming to work, and you need to change that…right away.

There’s direct correlation here with agent business planning. Building a culture where agents have their own plan and hold themselves accountable to achieving monthly goals that they set forth in that plan is one of the surest ways to develop a culture of consistent productivity.

Set a goal for your Positive Base, and coach to that goal. You’ll find it keeps you focused on conversations that matter, yielding agent productivity gains, stronger retention, and it likely also will impact how you’re perceived as a leader. If you need a reminder, just imagine Meghan Trainor is singing to you, every time you hear that song.

 

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.

Elevator Pitches and Leadership

Elevator Pitches and Leadership

Office Management

When I make time to read, I always find inspiration, new ideas, or clarity around existing ideas.

Right now I’m reading Daniel Pink’s To Sell Is Human” (thanks for the recommendation Tim Tyler and Jason Pantana) and finding it to be exceptional. Some of what I read last night was compelling enough that I’ve already begun integrating it into a session at Gen Blue.

One item Pink speaks to in the book is elevator pitches. The concept is tired, but when he puts it into context of the original elevator pitch, it actually is highly relevant to establishing and conveying your vision for your office.  In his book, Pink shares the story of Elisha Otis, who in 1853 had “found a solution to one of the era’s toughest engineering problems, went looking for a grand stage to demonstrate his invention.”

So Otis built an open air elevator in an exhibition hall. Like all elevators of the time, it was operated with cables and pulleys, and if the cable snapped, the platform would fall. For this reason, elevators were reserved for moving cargo- not people.

“…One afternoon, he gathered convention- goers for a demonstration. He climbed onto the platform and directed an assistant to hoist the elevator to its top height, about three stories off the ground. Then, as he stood and gazed down at the crowd, Otis took an ax and slashed the rope that was suspending the elevator in midair.

The audience gasped. The platform fell. But in seconds, the safety brake engaged and halted the elevator’s descent. Still alive and standing, Otis looked out at the shaken crowd and said,
“All safe, gentlemen. All safe.”

Pink then notes that “It was the first demonstration of an elevator safe enough to carry people”…”And more important for our purposes, it was a simple, succinct, and effective way to convey a complex message in an effort to move others— the world’s first elevator pitch.”

One connection that Pink did not note was that the advent of passenger elevators literally took construction to new heights. Before this time, building heights were typically limited to five or six stories. In a very real way, the skylines of our cities owe their grand stature to this first elevator pitch.

I ask you then, as leaders:

  1. Can you simply and succinctly express your vision?
  2. Do you have confidence in your plan to make that vision real?
  3. Are you bold and persistent in your actions to implement that plan?
  4. Do you regularly measure the effects of your actions?

If you answered yes to all these things, you are on the path to moving others to new heights while moving yourself toward the pinnacle of your true leadership ability.

Painting By Numbers: What does “Busy” look like?

Painting By Numbers: What does “Busy” look like?

Office Management

This is the second post in a series designed to help office managers and brokers understand and use key performance indicators (KPIs) to improve the bottom line. Read the first.

I’d like to offer a quick recap before I move to the next “color” in my palette. If you paid attention to the first post in this series, the reference above makes sense. The concept here is that numbers can help to tell stories about what’s happening in your business, and when you combine lots of different numbers together, those stories complement each other. That’s painting by numbers- getting the stories together to create a vivid depiction of a scene – the whole story, in living color.

I started out with Desk Occupancy, which is the very first metric or Key Performance Indicator (KPI) that we calculate in the Coldwell Banker Leadership Development Program. This is also the very fist metric that one assesses on a gut level when they walk into an office: Is it full?

The second instinct of a manager – or anyone for that matter – as they’re checking out an office typically is “is it busy?” From a visual and auditory sense this translates to the hustle and flow of work going on in the office. Are agents in and out, meeting customers and writing deals? Are the phones ringing? Is anyone using the closing table? This matters on a visceral level, as customers and prospective recruits who enter your office begin to form opinions the moment they walk through the door.

When we begin to measure “busy” for analysis, we start by looking at Per Person Productivity (PPP), which is the average productivity of agents in the office. It’s a simple calculation, though there are two sides to this metric. First you’ll need the total number of agents affiliated with the office. Next, on a monthly basis, count the number of sales that were opened for the month. You might know this as “written business”, as it’s the count of how many deals were written. Divide this number by your agent count, and you have your PPP for Sales. Next take the total number of new listings that were generated and once again divide by number of agents to get your Listing PPP. So:

Sales PPP = Monthly Sales Opened 
.                  Agent Count

Listing PPP = Monthly Listings Taken
.                    Agent Count

So what detail does this add to the picture we’re painting of our office? Well, for starters, it’s a measurable quantification of whether we are actually busy or not. It’s also one that can be used to compare offices, no matter their size, because it breaks down productivity per agent. So a 5 agent office can (and often does!) outperform a 50 agent office in terms of Per Person Productivity.

When you calculate your PPP, what do you see? A PPP that’s consistently in the .5 to .75 or lower range is a sign of an office at risk. Think about it- an average of one deal written per agent per month, and the same for listings isn’t a very lofty a goal, is it? Your benchmark is a minimum of 1.00, and I encourage stretch goals in the 2.00 to 2.5 range. You may not hit that goal every month, but it aligns with the expectation of a highly productive office where agents prospect regularly for new business.

Set a goal for PPP and track this figure monthly. You’ll have a clearer picture of what’s going on in your office, and at the same time, you’re modeling the behavior you expect from your agents: Set goals, make a plan to achieve them, measure results, and adjust your plan.

Got a great achievement in your office PPP? Feel free to share it in the comments!

Ready for the next post in this series? Here it is!

 

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.

Whoa Whoa Whoa Whoa!

Whoa Whoa Whoa Whoa!

Innovation Tip of the day

While the title to this post is a call back to a memorable moment (you had to be there) from the NAR Young Professionals Network Leadership Retreat which was held earlier this month in Chicago, it accurately sums up my experience.

I’ve been active in YPN since its inception, and am a past member of the YPN Advisory board, but this year was a first for me, as I led a team from Coldwell Banker headquarters and field staff in our role as a facilitating sponsor of the event. While I tasked our team with bringing value to those young leaders who were attending, I harbored expectations that we would actually learn as much as we delivered. Whoa, did we.

Each and every one of us who participated on behalf of the brand had takeaways of our own, not the least of which was a immense appreciation for the caliber and commitment of these current and future leaders in the real estate industry. This is a group of true professionals who are running dynamic, smart businesses, are making incredible decisions regarding their future (two participants own over 40 investment properties already…they are 30 and 34 years old- Whoa!) and are impacting the direction of the Realtor association and the industry.

Among the most memorable contributions by our team were David Marine explaining why storytellers will rule the world, and the inimitable Lindsay Listanski blowing minds with her incredible insight into effectively targeting and marketing with social media, which left me thinking “Whoa, I can do that?” While Budge Huskey was invited to share perspectives gained in his path to leadership – which he did in extraordinary fashion – I think he took as much away from the day and a half event as any of us, including witnessing first hand the power and purpose of YPN.

I’d be remiss if I didn’t give a major shoutout to Kate Conquest, Chadney Barcus and Jason Pantana, all of whom shared their insight, experience and skills to launch and enhance round table discussions.

The beauty of running with a young crowd is that the fun, networking and learning doesn’t end at normal hours. Thanks to Coldwell Banker’s relationship with Major League Baseball we were able to take a group of young leaders who were participating on behalf of their local Realtor Young Professionals Networks to a Cubs game at Wrigley Field. There were 9 sales associates and brokers representing our brand, and we couldn’t be more proud that this group is Coldwell Banker blue. I’ll stick with my theme and say WHOA! these are some smart, professional and driven young leaders, and are people to watch in our network:

Anthony Andaya – Coldwell Banker West

Diana Englehart – Coldwell Banker Residential

Kyle Kelly – Coldwell Banker M&D Good Life

Randall Blankenship – Coldwell Banker King

Drew Fristoe – Coldwell Banker Elite

Miriam Morales – Coldwell Banker West

Jennifer Piglowski-Sahrmann – Coldwell Banker Gundaker

Stephanie Scott – Coldwell Banker Residential

Scott Stewart –  Coldwell Banker Ramsey

Thanks so much to all that participated, and especially to Rob Reuter, Bobbi Howe, Philip Becker and the entire YPN Advisory board for allowing us to take part in making this event such a spectacular success. Things we learned in our time together are already being implemented to impact our brand.

Whoa-whoa-whoa-whoa indeed.

 

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.

Painting by Numbers: Turning KPIs into Stories to Improve Your Business

Painting by Numbers: Turning KPIs into Stories to Improve Your Business

Office Management Tip of the day

This is the first post in a series designed to help office managers and brokers understand and use key performance indicators (KPIs) to improve the bottom line. 

I paint by numbers. Which is to say I’m no artist with a paint brush. If you want a picture that’s recognizable, find someone with some skill, or give me some numbers. I can’t even pull off a happy little tree freehand.

I’m not suggesting I spend my spare time matching colors to little numbered shapes on a piece of paper, because I don’t color inside the lines very well either. I can usually stay on one wall with a roller. Usually. But beyond that, I like to do things my own way, make my own discoveries.

For the purpose of this post when I say I paint by numbers, I’m talking about telling stories based on numbers. A lot of years ago I found my calling in the real estate business and I’ve been immersing myself in real estate operations ever since. And while math was not my most favorite subject in school, I’ve come to love diving into numbers now. That’s because if I can interpret those figures, I can learn so much of the real story of what’s going on in an office or operation.

If you’re leading an office or a company and still cringe at the mention of math, the good news is that you’re already following some of the stories that your numbers will tell you. You’re just following them with your gut, and if you train your eyes and mind to interpret the numbers that relate to your gut feeling, you can harness their power to improve your business.

This is the first in the “Paint by Numbers” series. The series will, one by one, walk you through some of the Key Performance Indicators (KPI’s) that I look at when working with our Leadership Development Program participants. These are the same measurements that I was watching- with my gut or my numbers- when operating an office.

Starting at the Beginning: Desk Occupancy

We’ll start with the basics: Think about the last time you walked through a real estate office other than your own. If you haven’t done this recently, make it a point to do so. You can always drop in to a Coldwell Banker office when you’re travelling, or jump into the world of espionage by finding a reason to drop in to a competitor’s offices and see what you can learn, just by observing.

If you think about the first snap observation you make when you walk through an office, I’m betting your mind will settle on “full”or “empty.” The quickest tour of an office will give you a gut level impression on whether the desks are full or empty- even after hours! Of course, this is almost universally tracked, and is a fast basis for comparison. This is Desk Occupancy, and is the simplest KPI to calculate:

DO = D/A

Desk Occupancy (DO) equals number of available associate desks (D) divided by number of sales associates (A). The gut instinct here is “are there butts in the seats?” Profitable operations will have a Desk Occupancy greater than 100%- Typically in the 120%+ range, as not every independent sales associate occupies a desk.

By translating that gut instinct into a number, you’re able to harness its power. You can:

  • Establish a basis of comparison between offices or operations -“Is this a good number?”
  • Identify risks to future profitability and opportunities for growth- “Is there room for improvement? How will that affect revenue?”
  • Set realistic and measurable goals that you can work to achieve- “What do I want this number to be?”
  • Take action to achieve those goals- “How will I get there?”
  • Track progress toward the goal on a monthly basis- “Is what I’m doing to achieve my goal working?”

If a picture is worth 1000 words, numbers are worth a fortune. Tracking your KPI’s, setting goals, and executing on plans to achieve them holds the potential to take an office or brokerage from good to great.

In my next post, I’ll start examining some measurements of agent productivity. Until then, I’ll leave you with another great form of storytelling: music. For those of you who aren’t yet sold on numeric love, I recommend this song by Jimmy Buffett:

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.
Changing Profit Centers: Find Your New Bottom Line

Changing Profit Centers: Find Your New Bottom Line

Tip of the day

In the past week, there have been several articles regarding large lenders such as Wells Fargo making the decision to exit Marketing Services Agreements with real estate brokers. These decisions come about as a result of interpretation and enforcement of RESPA by the CFPB.

While there is plenty to be said about the impact of the CFPB on lending and real estate settlement, my numbers and brokerage operation mindset takes me down a different path.

If you take real estate brokerages in aggregate across the US, what would you guess was the average profit margin generated? While I’ve heard many guesses- agents tend to guess in the double digits, managers a bit more conservative, owners thinner still – the numbers I’ve heard from reputable sources would peg the margin at around 1%.

What’s interesting is that for many years, the “excess” revenue generated by affiliated business relationships, such as mortgage and title, aligns very closely with the profit figure. Which is to say – a brokers profit has relied on these relationships. This isn’t unique to the real estate industry. In the world of automobile dealerships, we think that selling new cars is how a dealer makes money. In reality, the biggest driver of profit is the back end – in the service department.

CFPB is just the latest player in the pressure game on broker profits. But it can serve as a wake-up call to brokers to get their financial house in order. If you’re not tracking numbers regularly, you’re putting profit at risk.

For an office manager, this means tracking Key Performance Indicators relative to agent productivity, agent growth, and revenue growth. An owner must keep a grasp on these figures, but also understand the expense side of the equation.

That’s where the Coldwell Banker Financial Benchmarking Program can be invaluable. By participating in this study, you help to drive a broad and increasingly accurate picture of how brokers generate and spend their dollars. Breaking down expenses into categories, and expressing the spend as a percent of income allows comparison between offices of varying sizes.

The first question any of us should ask when analyzing expenses should be some variant of “Will this expenditure drive additional business opportunity and revenue?” But that answer isn’t always clear and simple. When you participate in the Benchmarking Program, you get the outputs from all the submissions and can see where your spending compares with your peer group. Is it appropriate to be spending 15% on advertising? (Answer: Almost certainly not.)

In my former company, we knew what percentage of an office’s income SHOULD be spent on things like occupancy, payroll, and advertising. If an office was not meeting profitability expectations, we could quickly see what expenses were dragging those figures down. It also impacted decisions on facilities, as we could analyze decisions to remodel, reconfigure, or lease more space based on our target expenditures, which were based on – you guessed it – financial benchmarks.

If you haven’t already completed the 2015 Financial Benchmark Program, you have until August 31, 2015 to do so. Company broker/owners can access the program here.

You can make more confident decisions, and we want to help.

Photo courtesy of Flickr user GotCredit

Matt Case
Director of Leadership Development at Coldwell Banker University | Coldwell Banker Real Estate
I'm a dad, a husband, a guy who found his calling in real estate and is passionate about learning and leadership. I get fired up about business planning, personal effectiveness and growth (weird, I know.)
Some things I think are particularly awesome include my kids, being outdoors, especially after dark, and music. Lots and lots of music.

I love life, have fun, and I'm taller in real life. Sometimes, I write stuff.