Close Up This Year Right

As you wrap up 2010, you should consider how your associates performed this year and what they should work on in the coming year. Here are two easy ways to figure out both.

December 1, 2010

Before you close out 2010, take a look at how your associates performed for the year. These numbers will also serve as a benchmark as you finalize and monitor your business plan for the coming year.

1. Per-Agent Productivity: What is the average production on a per-agent basis in terms of listings sold and buyer sales? You must look at the number of agents you have and then divide that number into the units of production (listings and buyers closed).

For example: Say you have 30 agents in your office and your office closed 487 properties this year. The calculation would be 487 units divided by 30 agents, which works out to 16.24 per-agent productivity. (Incidentally, most brokers would be very pleased with that number.)

You would further want to assess the mix of the productivity of the business. This means evaluating whether the production was weighted more toward the buyer side or the listing side by your agents.

The per-agent productivity will help you build your business plan and strategy for the next year. It will also be instrumental in constructing your training focus as well. Practitioners with a lower per-agent productivity number need to learn more about the fundamentals in their training regimen. They need to be held accountable toward the basic targets of prospecting and lead follow-up.

You also can use the number to prove your training programs work — that they help your associates perform better, earn more money, and advance their career. In the end, that gives you an advantage over the competition in the marketplace. You might calculate your top competitors’ per-agent productivity numbers as well so you have a comparison to where you stand.

Unfortunately, many brokers, owners, and managers miss the connection per-agent productivity has to recruiting. If you have a good per-agent productivity numbers, it should be the centerpiece of your recruiting efforts and recruiting presentation.

2. Per-Agent Cost: In the past, the method for determining cost per agent was to add up all your desks and then divide your expenses by that number. Because of the virtual offices and mobile associates of today, that formula doesn’t always offer the best analysis. While we still have fixed, brick-and-mortar costs in today’s real estate office, most offices have downsized space or are in the process of doing so.

I recommend going to a per-agent evaluation, where you divide the expenses based on the agents you have in the company currently. If you are well below your recruiting targets, this will certainly increase your per-agent costs.

Let’s return to the example with 30 agents in your office. Say your company expenses are $480,000 for your business. That means your cost per agent is $16,000. You should structure your associates’ compensation in a way that allows you to cover your $16,000 plus achieve your desired profit margin within the 16.24 per-agent productivity framework.

Going into the new year, you should have a strong plan and a clear set of numbers in per-agent productivity and per-agent costs. This will allow you to make projections and monitor them as your year unfolds.

 Dirk Zeller is a speaker, author and CEO of Real Estate Champions. His company trains more than 350,000 real estate professionals each year through live events, online training, self-study programs and newsletters. He's written several articles and books, including Your First Year in Real Estate, Success as a Real Estate Agent for Dummies and Telephone Sales for Dummies. To learn more, visit