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What’s Your Bottom Line? Return on Investment Measurements Provide Financial Roadmaps for Agents

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By Monte Helme

RISMEDIA, June 14, 2007-Tracking your return on investment in real estate sales is somewhat like? dancing with a gorilla-hard to control and impossible to ignore. Sometimes the results can be downright ugly if proper attention isn’t given.

The bottom line is all about managing your time, your energy and your resources effectively to maximize positive results, top producers say. It’s also about minimizing expenses, avoiding missed opportunities and reinvesting in yourself.

For example, every legitimate lead that is lost or ignored can cost tens of thousands of commission dollars in potential business, repeat business and referrals.

“Our average sales price of a house typically purchased by an Internet buyer is between $600,000 and $700,000,” says Duke Parmelly, of Keller Williams in Santa Maria, California. “Take three percent of that and you have a potential dollar value of $19,500 in commissions that got away.”

On a broader scale, industry studies show that the failure to respond immediately to Web-based leads can also be costly. Failure to respond to inquiries within 15 minutes of arrival could cost 25% of all incoming contacts. Failure to respond within two hours could cost another 25%. Another 25% could be lost for failure to respond within four hours. And, if a response is not made within 24 hours, 100% of all incoming leads could be lost.

“Response time has to be as immediate as possible,” says John Jaskolka, of Coldwell Banker in North Myrtle Beach, South Carolina. “I try to gather as much information as possible, do the research and get back to the contact within a half-hour. You have to do that. If you don’t, those leads are going somewhere else.”

Barry Newman, of Century 21 Premier Properties in the Chicago Metro area, agrees: “Our initial response by e-mail is almost immediate. We know if we don’t contact them immediately, there is a chance they will have gone to another site.”

Kathy Sehler, of RE/MAX Real Estate Specialists in Greeneville, Tennessee, a relative newcomer to real estate sales, says she learned the value of immediate responses very quickly: “It totally shocks them when I call them, sometimes while they are still viewing my Web site. They tell me what they are looking for and their time frame. I immediately put them into my TIM (Total Internet Marketing) drip system to establish automated repetitive contact. I also put them on our local Parade of Homes mailing list. It’s all done within 24 hours. You have to stay on top of your prospects or you will lose them.”

All four of these real estate professionals are exclusive member agents of HouseHunt, Inc., a consumer-oriented Internet firm that supplies free information and services to homeowners, home buyers and home sellers in 47 states through its primary Web sites, HouseHunt.com and moveUp.com.

Newman, who owns 18 exclusive HouseHunt territories in suburban Chicago, says he personally works leads from eight of those territories as an agent/owner and last year closed $10 million in gross sales volume from HouseHunt leads. He says he shares leads from the remaining 10 territories with his agents. “We work every lead and work it to the fullest,” he says. “Leads converted into prospects then go into my database. Once they become clients they are contacted every month in a variety of ways, including a handwritten note from me and follow-up phone calls.

“I started as an independent five years ago with two territories,” he adds. “HouseHunt enabled me to build my business, recruit agents and have a large franchise organization like Century 21 knock on my door and ask me to affiliate with them.”

Jaskolka says he measures his ROI by taking the number of leads he receives and divides them by the number of leads he is able to convert. Then he factors in the number of closings, the volume of sales generated and closed commissions generated.

“I average 100 to 120 leads a month from two HouseHunt territories,” Jaskolka says. “They come from all over-mostly the Northeast and Upper Midwest. We also get a lot of people from Charlotte and the Raleigh-Durham area.”

According to Jaskolka, 35-40% of his total closings last year came from HouseHunt leads: “I expect that percentage will be higher this year. I’m off to my best start I’ve had in my four years in the business.”

Parmelly, who owns three exclusive HouseHunt territories in the Santa Maria area, says that he and his Keller Williams team of specialists track every lead they receive and try to respond by e-mail or by phone within two to three hours. “We determine the validity and the source of the lead, what the customer wants, and their timetable to relocate.”

He says the 15 quality Internet leads he receives a week from HouseHunt are more productive than print advertising.

“It’s a scary thing when you look at your print advertisement as a return on investment,” adds Parmelly, a charter member of the HouseHunt national Hall of Fame. “It tells you something when you are making a $700-a-month payment per month for 12 months and you realize that it brought you zero sales.”

Utilizing HouseHunt’s TIM drip system to capture and convert leads into customers through meaningful repetitive contact is recommended strongly by Jim Droz, a nationally recognized real estate trainer, former top sales agent, and special HouseHunt consultant.

“Top agents are good at getting the product in front of the customer,” Droz says. “There are two ways to do this: The first is to be proactive by knocking on doors, making phone calls or communicating directly in some time-consuming way. The second, more passive method is to find a way for the customer to come to you. That’s the advantage of the HouseHunt system and its unique leads procurement and management system.”

“Every time an agent has to actively introduce the product to the consumer, it’s costing him or her $200 to $1,000 an hour because it is taking time away from servicing his or her customer,” he explains. “The agent is paid for servicing, not chasing prospects.”

“If you are only replacing clients, you are not going to increase your production. You are simply working hard to stay where you are,” he continues. “The more people you have coming to you versus having to go to find them, the easier and more profitable it’s going to be for you.”

Droz was the first agent in the Century 21 worldwide system to earn a million dollars in closed gross commissions and was its number-one producing agent for three straight years. He financed his purchase of a cattle ranch and other properties through a series of Section 1031 exchanges to maximize his buying power and to postpone capital gain taxes indefinitely. He recommends that sales agents invest their earnings in themselves to increase their return on investment.

“It’s not the commission dollars that make you wealthy,” says Droz, “it’s what you do with those dollars. It’s all about the bottom line. I urge agents to invest their profits wisely in real estate-everything from raw land and small rentals to commercial properties as they build their portfolios. Otherwise, they will find they may have to work forever.”

For more information, visit www.HouseHunt.com.

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