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REAL ESTATE BROKERAGE MANAGEMENT

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Clients: buyers, sellers, tenants, landlords ... This month's/year's actual records become next month's/year's guide to management action ... – PowerPoint PPT presentation

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Title: REAL ESTATE BROKERAGE MANAGEMENT


1
REAL ESTATE BROKERAGE MANAGEMENT
  • by
  • Gail Lyons,
  • ABR, CCIM, C-CREC, CIPS, CRB, CRS, DREI, QSC,
    SRES

2
Goal
  • To understand and develop an Action Plan for the
    practical operation of a successful real estate
    office

3
Overview
  • 1. Brokerage basics based on U.S. best
    practices
  • Management responsibilities
  • The Company Dollar managing firm finances
  • Budgeting
  • Managing people
  • Developing your sales people
  • The jobs of management
  • Data collection analysis managing your action
    plan

4
Class Survey
  • Please complete the survey (show of hands)
  • Survey Results
  • Years in business ___1-, ___2-5, ___6
  • Job function ____ Owners, ____Managers, _____
    Sales Person, ____ Not in Real Estate
  • Size of Real Estate office __ 5-, __ 6-15, ___
    16-25, ___ 26-50, ___ 50
  • Number of branch offices
  • What did you do before real estate?

5
BROKERAGE BASICS U.S. Best Practices
  • Brokers their sales people represent
    clients/principals
  • Clients buyers, sellers, tenants, landlords
  • Representation an agency relationship, you are
    the agent of your client
  • Agency means you owe fiduciary duties to your
    clients
  • Sales people represent their brokers

6
BROKERAGE BASICS Fiduciary Duties
  • Loyalty
  • Disclosure
  • Confidentiality
  • Obedience
  • Reasonable care diligence
  • Accounting

7
BROKERAGE BASICS Reasonable Skill Diligence
  • Competence
  • Agents can be held liable to the client for any
    loss caused by lack of care
  • Agents cannot escape responsibility for
    negligence or lack of ability by pleading
    ignorance
  • Agents are expected to be knowledgeable about the
    market, community and specific properties agents
    give advice clients rely on

8
BROKERAGE BASICS Commissions/Fees
  • Earned in exchange for duties responsibilities
    owed to clients
  • Earned in exchange for agents time
  • U.S. Broker collects commission and splits
    with sales people 5050 to 0100!
  • U.S. Sellers agent negotiates full commission
    which is then split between sellers broker
    buyers broker usually 5050 to 6040

9
BROKERAGE BASICS CUSTOMERS vs. CLIENTS
  • Customers are the 3rd party, the party you do
    NOT represent
  • U.S. brokers their sales people owe duties to
    customers
  • Duties (NOT fiduciary)
  • a. Reasonable skill and care
  • b. Fair honest treatment

10
Workshop A
  • Move into small groups (about 4-6 people).
  • List all the jobs in a real estate office.
  • 1. 7.
  • 2. 8.
  • 3. 9.
  • 4. 10.
  • 5. 11.
  • 6. 12.

11
The Management Decision Should You or Shouldnt
You?
  • Hard work, not as glamorous as it may appear
  • Can be agonizing, lonely, emotionally draining
  • Not everyone is cut out to be a manager
  • Its OK to be a sales person
  • Do you really want to manage or do you want to do
    something else?

12
MANAGEMENT RESPONSIBILITIES 1 Resources
  • Time allocate between must, should, could
    and dont do jobs (handout)
  • Systems information records, forms, reports,
    policies
  • People seek, select, train retain the best
    sales support staff
  • Money personal assets, investors, bankers, lines
    of credit
  • Equipment office furniture, machinery, signs

13
MANAGEMENT RESPONSIBILITIES 2 What jobs does a
manager do?
  • A. Planning/Goal Setting
  • Define your market find the need
  • Establish company goals based on filling the need
  • a. Short term (survival) goals
  • b. Profit goals
  • c. Growth goals when?, where?
  • d. Perpetuation/regeneration/continuity goals

14
MANAGEMENT RESPONSIBILITIES 2. What Jobs Does
a Manager Do?
  • B. Organizing People to Produce
  • Establish an organizational chart
  • a. Everyone should know own accountability
    reporting responsibilities
  • b. Everyone should know everyone elses
    accountability reporting responsibilities
  • 2. Delegate

15
MANAGEMENT RESPNSIBILITIES 2 What Jobs Does a
Manager Do?
  • C. Keys to Managing Your Time
  • Schedule
  • Delegate to lowest paid competent staff
  • Use your procedures manual
  • Pay for good clerical help
  • Help sales people solve their own problems
  • Upgrade sales staff
  • Replace yourself hire assistant manager(s)
  • Close your door when youre not MBWA

16
MANAGEMENT RESPONSIBILITIES 2 What Jobs Does a
Manager Do?
  • Staffing
  • Selecting the Sales Team
  • a. Application
  • b. Interview
  • Selecting the support team
  • Your success in achieving your goals depends
    largely on your ability to motivate the staff on
    both a group and individual level

17
MANAGEMENT RSPNSIBILITIES Workshop B
  • Complete the Office Task Analysis Chart (handout)
  • If nobody is doing a particular job, leave blank
  • If two or more persons are doing/supervising a
    job, note that fact
  • Compare these tasks with your list from Workshop
    A what are the differences? Why?

18
MANAGEMENT RESPONSIBILITIES Workshop C
  • What are my strengths?
  • What are my weaknesses?
  • Which jobs am I most skilled at?
  • Which jobs am I least skilled at?
  • Which jobs should I delegate?

19
MEASURING RESULTS Your goals are meaningless
unless you keep score!
20
Discussion Review
  • Form small groups discuss the resources youll
    need to plan, organize, manage your time staff
    your company
  • Appoint a leader to report to the class

21
THE COMPANY DOLLAR
  • Accounting system a true method of reporting and
    controlling your money
  • The funds remaining from gross income after all
    sales listing commissions, including those to
    co-brokerage firms, have been distributed.
  • Success measured by gross sales is meaningless
  • Number is very useful in mergers acquisitions

22
THE COMPANY DOLLAR Percentages Variables
  • Percentages used are averages of offices surveyed
    by the National Association of REALTORS (NAR)
  • Variables include
  • size of operation
  • high/low periods of business activities
  • proximity to large metropolitan area
  • efficiency of operations
  • expansion of programs
  • local customs

23
THE COMPANY DOLLAR Expense Percentages
24
THE COMPANY DOLLAR Desk Costs
  • Needed to determine minimum production necessary
    from each sales person in order to break even
  • Desk cost annual expense of operation
  • number of available desks
  • exclusive of commissions paid on sales
  • whether occupied or not
  • Homework Calculate your desk cost, bring to
    class tomorrow

25
BUDGETING
  • Considers seasonal variations, business cycles,
    growth plans
  • Includes all expenses that can be anticipated
    which gross income needed to pay expenses as
    well as desired profit
  • Prepare minimum of 1 year in advance
  • Primary responsibility of management is
    controlling expenses income

26
BUDGETING Establishing Your Budget
  • Complete handout
  • Gross income
  • Company dollar
  • Company objectives
  • Return
  • Expenses
  • Net profit

27
BUDGETING Suggestions
  • Be conservative in forecasting income
  • Be realistic in forecasting expenses
  • Allow flexibility until you have a track record
  • Prepare a contingency budget for a worse or
    better year than expected
  • Compare actuals with budget every month
  • Let staff help get their suggestions
  • Compare your budget with industry standards

28
BUDGETING Net Profit Determination
  • Calculate income per transaction
  • Calculate expense per transaction
  • Net profit happens when 1 is larger than 2!
  • Initially do on a monthly basis once net profit
    is achieved, do on a quarterly basis

29
MANAGING PEOPLE Types of Personnel
  • Employee A person hired to perform services for
    another who is subject to the others
    control.
  • U.S. Independent contractor A person who
    contracts to do something for another who is not
    subject to the others control.

30
MANAGAING PEOPLE Nature of Sales Agents
  • Character capable of independent thought
    action, aggressive, competitive, creative,
    enterprising, self-confident, self-motivated
  • Security irregular hours, no salary guaranty
  • Earnings based on individual effort hours
  • Other jobs most have had other jobs
  • Reality in spite of all the rules brokers set
    up, agents do what they want when they want

31
MANAAGING PEOPLE Management Styles
  • Control Style employs rules
    procedures that provide close control over
    subordinates reduces sense of freedom,
    tends to treat people as objects, minimizes
    personal incentives
  • Leadership Style management by
    example uses participative decision
    making results in improved morale, high
    production, increased retention

32
DEVELOPING YOUR SALES AGENTS Goal Setting
  • Sales agents base goals on their needs
  • Managers goals are based on agents goals
  • Managers role guidance follow-up
  • To be effective, goals must be understood,
    accepted, performed by all members of firm
  • Goals must be written and be a commitment
  • 6. Goals must be realistic, specific, measurable

33
DEVELOPNG YOUR SALES AGENTS Goal Setting
Suggestions
  • Quarterly one-on-one performance reviews by
    manager
  • Bulletin board showing individual and company
    progress toward goals
  • Voluntary public commitment by agents to goals
  • Encourage agents to relate money goals to number
    of sales, listings, contract necessary to meet
    goals

34
The Skills Desires of Good Managers A
Self-Test
  • WORKSHOP D (handout)
  • Please complete this self-evaluation without
    discussing answers with others
  • Move into a small group discuss
  • a. What is the easiest thing to do?
  • b. What is the hardest thing to do?

35
THE JOBS OF MANAGEMENT Matching Your Skills
Desires
  • If your skills desires dont match, find
    someone else to manage!
  • If your skills desires generally match,
    delegate where you have shortcomings

36
THE JOBS OF MANAGEMENT Motivating
  • Creating an atmosphere in which agents can
    develop to the limits of their capabilities
  • Know each agents needs desires
  • Motivators education setting a good
    example fear opportunities reco
    gnition rewards

37
THE JOBS OF MANAGEMENT Training
  • Opportunities orientation, regular sales
    meetings, one-on-one
  • Include field training a mentor system
  • Include role-playing, audio-visual aids
  • Include individual counseling at least monthly
  • Budget time money for training

38
THE JOBS OF MANAGEMENT Training Subjects
  • Listing procedures
  • Selling procedures
  • Forms systems
  • Financing
  • Showing techniques
  • Open houses
  • Closing techniques
  • Negotiating
  • Presenting the offer
  • Ethics
  • Disclosure
  • Agency duties
  • Market analysis
  • Staging
  • Advertising
  • Government regulations

39
THE JOBS OF MANAGEMENT Knowing Top Complaints
(U.S)
  • Failure to disclose property defects
  • Lot size and lot line problems
  • Misrepresentation
  • Errors in contract language
  • Deep pockets!
  • Failure to clarify agency relationships
  • Failure to explain financing
  • Poor communication follow-up
  • Property management
  • Sewer septic problems

40
THE JOBS OF MANAGEMENT Teach Agents Liability
Reduction
  • Document statements events
  • Watch out for red flags
  • Answer specific questions carefully
  • Encourage use of other professionals
  • Avoid predicting the future

41
DATA COLLECTION ANALYSIS Why Do You Need It?
  • Determine if how your plans are working
  • Show where business is coming from
  • Basis for setting goals, plans, budget
  • Use for training, guidance, counseling of agents
  • Basis for money planning, cash flow projections
  • Show growth patterns, strengths, weaknesses
  • This months/years actual records become next
    months/years guide to management action

42
DATA COLLECTION ANALYSIS Listing Data
  • Market share
  • Source of business
  • Geographic area of influence/area trends
  • Sales price ratio sale price divided by list
    price
  • Life of listing in days (listing to contract
    date)
  • Number of listings per sales agent
  • Percentage of listings sold, expired, withdrawn
  • Determine trends by monthly comparisons

43
DATA COLLECTION ANALYSIS Listing Control
Systems
  • Competitive Market Analysis (CMA) (handout)
  • Form for recording information during initial
    property inspection (handout)
  • Complete listing files all notes, forms,
    documents
  • Listing follow-up procedure

44
DATA COLLECTION ANALYSIS Advertising Control
System
  • Record source, time nature of every inquiry
    that results from advertising
  • Determine media effectiveness based on 1
  • Cost of ad call cost of advertisement
    number of consumer calls
  • Conversion rate of consumer calls of
    appointments made
  • Use data to increase effectiveness of ads

45
DATA COLLECTION ANALYSIS Sales Data
  • Source of buyers
  • Buyer profiles
  • Average sales price
  • Average buyers per sales agent
  • Percentage who actually buy
  • Market share
  • Determine trends by monthly comparisons

46
DATA COLLECTION ANALYSIS Sales Agent Production
  • Schedule regular goal review sessions with each
    agent
  • Measure results against goals
  • Adjust goals as needed
  • Workshop E
  • What data should be monitored for individual
    sales agents?

47
DATA COLLECTION ANALYSIS Keeping Records
  • Who lowest paid competent staff
  • Time reduction use forms
  • Management by gut feel may work in exceptional
    markets but its devastating in sophisticated
    markets in which everyone else is using computers!

48
Data Collection Analysis Decisions Based on
Data
  • Planning budgets goals
  • Where to spend money
  • Where to save money
  • Directing sales agents
  • Sources of business
  • Growth patterns trends
  • Strengths weaknesses

49
A successful real estate company is always based
on good management!
50
GOOD MANAGEMENT Requires
  • Management leadership skills/competencies
  • Desire to be a good manager
  • Sufficient resources
  • Written, realistic measurable goals
  • Accounting systems ( and data) to manage for
    profit
  • Marketing statistical reports
  • Understanding both sales agents staff

51
We hope youve enjoyed this class. We hope it
will increase your success. Ive certainly
enjoyed being with you and have learned from
you. Thank You ! Gail Lyons International
Real Property Foundation
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