THE 30% FACTOR

How many closings do you want/need this year? That's easy enough to figure out: divide your income goal by your average commission. That's how many closings you need. (BTW, if you're already confused, the rest of this won't help.) So, now what?

Start with the % of your listings that sell and close, and add The 30% Factor to it. Example: If half of your listings sell and close, that's 50% + 30% for a total of 80%.

Now divide the number of closings by 80% and that will tell you how many listings you need to bring in.

Example: I need 40 closings. Half of my listings sell and close. I add 50% and The 30% Factor for a total of 80%, and then divide 40 closings by 80% and the answer is 50. I need to bring in 50 listings to have 40 closings.

Here's another example. I need 28 closings. 40% of my listings sell and close. I add The 30% Factor to 40% for a total of 70%. I then divide 30 closings by 70% and I need 40 listings.

What's the 30% Factor? That's the magic part of being an effective lister. Listing inventory creates inquiries; creates buyers; creates offers and sales.

If I bring in 40 listings, I WILL put 12 sales together from that listing activity. The 30% Factor.

Now, let's apply that to our 28 closings example. Remember, 40% of my listings sell and close, and we add The 30% Factor for a total of 70%. Divide 28 closings by 70% and I need 40 listings. 40% of 40 listings is 16 sold and closed. And 30% of 40 listings is 12 buyer sales created. 16 sold listings and 12 buyer sales and I have 28 closings.

What's the point? Don't worry about where the buyers will come from. We can only control that to the extent that we bring in inventory. Real estate is an inventory business, and when a business is out of inventory, there is no business.

Control your business by controlling your inventory level. And control your inventory level by controlling your listing activity. As Floyd says, "You can't do dollar volume, but you can do a listing appointment." Put The 30% Factor to work for you.

Comments

[Jason Edwards]

Nice post Mike. :-)