By Lorne Wallace
RISMEDIA, July 25, 2007–Making profits in a real estate brokerage is challenging at the best of times. In today’s business climate, we need to make sure that we are operating as efficiently as possible. Here are some ways to do so.
First off, let’s realize that 65% to 70% of expenses in operating your brokerage consist of rent and salaries. This is true across the industry. So just two numbers account for over one-third of your expenses. And the rent, once you have decided on location and signed a lease, is pretty much fixed. Unless you have a landlord who likes a good sob story, don’t waste your time agonizing over it.
But salaries are another question. There are lots of things to consider when you look at what you are spending in salaries.
First off, hire the right people. A staff member at $30K who does half the work of the $40K staff member is NOT a better deal. I see brokers shortchange themselves all the time by trying to skimp on salaries. And consider that the staff member probably interacts with your agents more than you do. For anyone who hasn’t already, I highly recommend reading the book Good to Great by Jim Collins, which perfectly describes the importance of “having the right people on the bus.” A 50% more efficient employee at 33% more cost is a great deal!
Now take those people—who represent the largest expense in running your office—and make them more efficient. Start asking questions about what your staff does, when they do it, where they do it and why they are doing it. If the answer is, “We have always done it this way,” a cold sweat should break out on your forehead.
There is a huge danger in many firms, especially the ones that have grown a lot, of getting stuck in ruts. What worked well when you had 40 agents and one office probably isn’t working with 240 agents and five offices. For example, I had a client, with over 400 agents, who filed their pending transactions by closing date. When we went to find a deal, the staff asked for the address, which they looked up on the computer, found out the closing date and then pulled the file. I asked them why they filed like that. The answer was, “We have always done it that way.” When I suggested that since they typically found files in the computer by address that perhaps the filing should be done that way, their answer was what I consider the second scariest answer to a question in a real estate office: “We are too busy.” Of course they were too busy—they were taking way too long to do simple tasks.
Tasks like sending monthly statements to your agents can be highly inefficient. Staffers print off monthly statements, fold them up and then stuff them into agent mail slots. If you are multi-office, somehow those statements have to be moved to that office. Wow, lots of time and work on a system that probably hasn’t changed in years.
Now imagine having a system where the agent statements are e-mailed to them. The work in producing and distributing them is drastically slashed. The paper and printing costs are eliminated. Your company extranet can have the statements accessible to the agents whenever they need, cutting down on calls to your administrative staff and wasting their time.
How about other things that take staff time? How many systems are you using where you need to maintain an agent roster? You’ve heard of double entering data. Typically in a real estate office it’s more like quintuply entering data. From the accounting system to Word documents (birthday lists) to Excel spreadsheets (commission level tracking) to Web sites and onward. Wouldn’t it be nice to have one system that can manage all of this data for whatever purposes you need it for—one system to share data among your back office and front office operations? Your system should have the ability to manage the agent hiring and termination processes and make sure that all items are accomplished. Nothing is more embarrassing then terminating an agent and finding that he is still on your Web site a month later.
Here’s another classic example of where time is wasted. Say you do 3,000 deals a year and each one goes into a labeled file folder. After you put it into whatever system you are using, the staff goes to Word, re-types the address and prints it on a sheet of labels, which are getting grey after the first dozen are used. Do you know there are products, like a Dymo label printer that can print directly from your accounting program to a label? Doesn’t sound like a big deal? Let’s figure it takes 40 extra seconds to produce that label. Times 3,000 deals is 2,000 minutes—this is over four days of work. Four days to just stick labels on folders!
So look around your office, question your staff and take a moment to step back and think outside of the box. Utilizing your staff time efficiently can have not only an impact on your bottom line, but also free up time for more productive pursuits in the operation of your brokerage.
Lorne C. Wallace C.A. is president/founder of Lone Wolf Real Estate Technologies, providing fully integrated management systems to over 3,000 real estate offices across North America. For more information, please visit www.lwolf.com or e-mail firstname.lastname@example.org.