Prioritizing Your Prospects
There is a high percentage of agents that are working very diligently putting in lots of hours working in real estate yet aren’t making very much money. To determine if you are one of these agents, calculate your hourly pay as follows:
- Approximate the average number of hours you’re involved in real estate activities each week.
- Multiply that number by 52 weeks in the year. This will give you the total number of hours worked.
- Finally, approximate the amount of money you expect to get paid in commissions and divide this amount by the total number of hours you work during the entire year. This will give you your hourly wage.
If you’re working 40 hours every week x 52 weeks, you’ll have worked a total of 2,100 hours by the end of the year. If you expect your 1099 to be around $42,000, then divide $42,000 by 2,100 hours. You’re average hourly income is $20.00. But, if you spent $21,000.00 on business expenses like your car, listing advertising, board dues, signage, open houses, etc., you’re really only making $10.00 per hour! ($42,000.00-$21,000.00=$21,000.00 net divided by 2,100 hours = $10.00!)
One of the best ways to increase your earnings is to make better choices with your prospects by prioritizing them into 4 categories. Even if you don’t do the best job determining who the best clients are, by practicing you will develop an intuition and make the best choices. Apply the following formula as much as possible:
- “A” Clients -(could go to contract within 30-60 days) – The best, or “A” clients, whenever possible should receive the best form of communication, which is face-to-face contact. This would include appointments, power-lunches, social gatherings, and even drop-by conversations. When this isn’t possible they should be contacted on a regular basis by phone.
- “B” Clients -(likely to buy or sell, but not for a while) – You want to stay in contact with this group on at least a weekly basis but may not have time to see them. Plan on staying in contact with this group by phone as much as possible. Worst case, be sure to e-mail or mail more personalized communications with them.
- “C” Clients – (hard to know if/when they will buy, where they will buy, or who they may buy from) – This is the group that you have to be careful with. Agents must determine how good a prospect is before they begin spending time or money working with them. Too many agents will spend a day preparing for someone that never shows up. Worse yet, agents will show homes to a buyer over a period of several days only to find the buyer must sell a home before they buy something else. It’s good to communicate with this group twice a month via e-mail and direct mail. It is not good to spend a lot of time customizing a letter or meeting with this client face-to-face or for a long period over the phone.
- “D” Clients – (not likely to buy, just a warm body)- This is the group that is a long-shot. It may not make sense to spend time or money on this group. By communicating twice a month via a systematized e-mail campaign, you can stay in the game without wasting valuable time.
Don’t get caught in the trap of using “C” and “D” clients as a crutch to make you feel good that you have at least something going. Remember, the face-to-face or phone time you spend with this group steals valuable, quality time prospecting for and with better qualified prospects. The end result? A much higher hourly income and return on time invested in your business!