“Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital” American Professor Aaron Levenstien.
Months ago, at one of my Monday morning meetings, I wanted to drive home a point about the top 1% of agents (by ends) currently in The Toronto Real Estate Board. I took out my trusty tape measure that used to accompany me on every appointment and told everyone to imagine that each centimetre represented 10 agents in TREB. I fixed one end to the edge of our front desk and asked the agents to shout stop when they figured I had reached the number of centimetres that represented the top 1%. Off I walked. I got about 3 metres before I heard the first ‘stop’. Guess what? That 3 metre distance, representing over 3000 agents, was ten times higher than the actual number. Strange but true. The top 1% of TREB, in terms of number of ends, is represented by fewer than 360 agents. Wow! This was fascinating to me so I worked with our General Manager, Ann Bosley, to break down the numbers even further. What came to light was a very interesting story. Check out this first graph;
This first graph is very interesting. In a very unscientific manner, I determined that agents become full-time when they sell over 6 properties in a year. It is fascinating to see that this graph represents a full 71.2% of the nearly 34,000 agents who fit into the category of “Part-timers”. Even more amazing was that a whopping 6136 agents, a full 18.6% of the Toronto Real Estate Board did not sell a property last year. Note how the percentage of agents in each category diminishes as the number of deals an agent does increases. TREB membership has grown by over 1/3 in the last ten years and it seems clear to me that this segment of the membership will be particularly vulnerable to a downturn in our economy and if we were faced with as deep a recession as we saw in 1989, we could lose a significant number of agents.
This next graph deals with full-time agents. What’s particularly interesting about this graph is the number of deals the top 1% do per year. At the very top of TREB are the group I have categorized as the “Super Ultra Agents”. This elite group consisting of only 7 agents represent a mere .02% of TREB. They almost exclusively work as team leaders and they sell over 200 units per year. The next group, the “Ultra Agents”, consists of just 39 agents or .12% of the total TREB membership. They also work as team leaders and sell between 100 and 200 properties a year. The next category is reserved for the “Super Agents” who sell between 50 and 100 properties per year. While there are nearly 150 agents in this category they represent only .45% of the membership. Finally, rounding up the top 1% are the 164 agents that are selling between 40 and 50 deals a year.
The middle group, particularly the agents that are selling 7 to 12 units per year represent the most significant category. They are the biggest group of full-time agents, nearly 5300 agents or 16% of TREB membership. They are working hard enough to get nearly a sale a month, but with an average sale of $500k, this group is making a yearly income of between $87,000 and $150,000 before office split and expenses.
Several months ago I produced an interesting Infographic on the Canadian Realtor, check it out here;http://bit.ly/w9UfpV . The research clearly illustrated that not only is the Toronto Real Estate Board the biggest board in Canada, it is over three times the size of the next biggest board, Vancouver. So why did we spend so much time doing the math? Simple, having an insight into the demographics of our board helps us to be better managers. These graphs are an amazing visual explanation on agent performance. I can see what the agents in our company are doing compared to the industry as a whole and I can work with agents to help them jump to the next category. What is clear is that at the very least, agents should be striving to hit the 7-12 transaction target as quickly as possible and as a dedicated manager it is my job to get them there.
A few notes on the information gathered here. The statistics on agent performance are collected by a third-party, independently audited company called IMS Incorporated. When you see an agent claiming to be in the top 1%, it is almost always supported by IMS numbers. For the purposes of this post, the numbers provided only deal with units sold, not dollar volume, over the last calendar year. There is a small margin of error in some of my math. Don’t forget that there are a number of new agents that are working full-time but have yet to record a transaction. Also, the numbers do not report new construction sales.
Last week I was sideswiped with the flu just days before I planned to run the Scotia Bank 1/2 Marathon. To say I was disappointed would be an understatement. I trained all summer for this one race and to be knocked out at the last moment was heartbreaking. Well, what can I say, you make do and you move on. I plan to be on the start line in a few weeks in Hamilton.
A few days in bed gave me the opportunity to catch up on some reading. I have been a fan of Michael Lewis’ work for some time after his breezy explanation of sub-prime mortgages and the ensuing market meltdown in The Big Short, so I was looking forward to his new book Moneyball. I won’t get into an in-depth book report here so I will just say that the subject matter revolves around a simple discovery of the use of statistics to rewrite how baseball players are drafted. Throughout the book, Lewis explains how a few men looked past conventional ideas on how success is measured in an effort to predict with certainty how players would perform. I’m not a huge baseball fan but the story is hard to put down. I started thinking about how I, as a manager, could use similar metrics, during the interview process, to determine who would be a real estate star.
The reality is that if you asked an agent how they judged success, they would say it was by how much money they made. But if a new agent is just starting out, how would you know if they were on the right track? Surely there was a better way, besides looking at a bank balance, to gauge how they were performing early in their career. Like any business, (real estate included) there is the start-up phase where little or no money is coming in, but eventually the foundations that one lays or the groundwork that one establishes, starts to pay off and the sales start to happen. I wondered what other metrics could be measured. I decided to put my experiment to the test. At my Monday Morning meeting I asked the group the simple question; how do you judge your success? The first response naturally was by the amount of money we make. Another was by how many deals they made. Interesting. I asked further about this and the comment back was simple; “Some deals are sales and some are rentals. I don’t do a lot off the rentals, but they are important to me because it keeps me busy and, who knows, maybe those renters will turn into buyers, or maybe, the landlord will use me to buy and sell in the future”. I like the way you think! Here are some other interesting answers;
- How often the phone rings
- How many houses I look at in a day
- How many showings I booked
- How many (real estate related) emails I get a day
- How many people visit my website or blog
- How many people respond to my newsletters/flyers
- How many people call off my open house signs
- How many open houses am I doing
- How many people are liking my Facebook page
- How many times I show up on Google Alerts
- How my Klout Score is improving
- How many contacts I have on Twitter and LinkedIn
When I look at this list, the common denominator seems to be the word “people”. It is not surprising really since real estate is a people business. The more people you know the more your business grows. If the three rules of buying real estate are location location location, then perhaps the three rules of a successful agent are networking networking networking.
Have a wonderful day.Now, get out there and network!
What did you miss this morning? A lot! Let me hone in on one topic that got the most attention; door knocking. We all know it can work yet many agents just will not do it. Call it fear of rejection, but done right, with enthusiasm and a good script, door knocking can reap huge rewards. So how can you overcome the fear of rejection? Four easy steps. 1. Have a reason to ring the door bell, that could include, telling people about new listings, recently solds, searching for a client, or simply letting people know about an upcoming event in the hood. 2. Be prepared. Before you head out, do your research. Know what has sold in the area (but don’t devulge prices), have recent real estate board stats ready, bring business cards, and a notebook to jot down notes. 3. Make sure you have a great “elevator speech” ready and practice it over and over. You only have a few seconds to make a good impression, so be presentable, freindly and factual. 4. Finally, make sure you have something to drop off. A one page newsletter is ideal. It should be on good card stock and professional looking. Remember, people want to know what their house is worth so statistics and a chart or two will go along way. Include details on the house you sold or listed and if you are trying to find a home for a client, give some details like; “I need a home for a family with two small children and a dog, so a nice backyard is a priority”. Maybe a picture of the dog might help. Obviously provide your contact details and your website information. Here is another small tip, leave a little space to write a personal message just incase there is no one home.