You Better Know Math as a REALTOR®

February 21st, 2020
Written By: Coach Jeremy Williams

It amazes me in conversations when real estate business owners don't know their numbers. Every issue as a real estate business owner can be solved as a real estate problem. The challenge is if you don't know your numbers, you can't solve the equations.

Here are key numbers I would know as a REALTOR®.

  1. Number of Daily Dials/Conversation Attempts
  2. Actual Contacts/Conversations
  3. Number of Leads
  4. Number of Agreements (Buyer Representation Agreements and Listing Agreements)
  5. Number of Contracts
  6. Number of Closing

Now that you know and track the above numbers, they can now paint a story, and they direct you to the activities that must happen to hit your goals.

Math Equation 1

Step 1: The assumption that for every 100 people you ask the real estate question throughout the year (Who do you know that is thinking about buying a home, selling a home, or investing in real estate I can call today?), you should develop 2 leads on average. How many contacts will you need to develop 50 leads in a year? Equation: 100/2 = x/50 Cross Multiply (50 x 100)/2 = 2,500  Contacts/Conversations = 50 Contacts/Conversations per Week (2 weeks of vacation) = 10 Contacts/Conversations per Day (assuming you're working a 5 day work week).

You need to have 10 Contacts/Conversations per day working 5 days a week for 50 weeks a year to generate 50 leads.

Step 2: If my leads to agreements conversion rate is 80%, and I generate 50 leads, how many agreements will I write in the next year?

50 Leads * 80% Conversion Rate to Agreement = 40 Agreements

Step 3: If I generate 40 agreements, and my conversion rate is 80% to contract, how many contracts do I write in a year? 

40 Agreements * 80% Conversion Rate to Contract = 32 Contracts

Step 4: If I generate 32 Contracts, and I know my conversion rate is 80% go to closing, how many closings will I have in a year?

32 Contracts * 80% Conversion Rate to Closing = 26 Closings

Summary: I will need to make 10 contacts a day for 50 weeks a year to generate 50 leads. From the 50 leads, I will convert 40 agreements, 32 contracts, and finish the year with 26 closings. Bonus Question: How many attempts do you need to make to get the 10 contacts in a day? (If you're not tracking this number, I would start at doubling the number of contacts to get the number of attempts required. So in this case, you would need to make 20 attempts/dials a day to get 10 contacts.)

Math Equation 2

You can also start with the end in mind, and work through the equation backwards. For this example, I will use the same conversions above (80%).

If you want to have 50 closings...

Step 1: 50 Closings / 80% = 63 Contracts
Step 2: 63 Contacts / 80% = 79 Agreements
Step 3: 79 Agreements / 80% = 99 Leads
Step 4: 100 Contacts/2 Leads = "X" Contacts/99 Leads (Cross Multiply) = 4,950 Contacts in a Year
Step 5: 4,950 / 50 Weeks of Work = 99 Contacts a Week or 20 Contacts a Day
Step 6: Estimated Attempt to Contact 20 Contacts / 50% = 40 Conversation Attempts/Dials per Day

Again, everything in real estate can be solved as a math problem. You will need to know your numbers, and you will need to know your conversion rates to solve the equations. The answers to the equations will guide you to the amount of time you need to allocate to the activity of lead generation every single day. Schedule this sacred time on your calendar, and more importantly, do the activity. 

If you need help building accountability around your business numbers as a REALTOR®, connect with me today.


Posted by: Jeremy Williams, CEO/Owner and Business Coach at Red Hawk Coaching.

Red Hawk Coaching provides one-on-one coaching services for real estate agents and small businesses, and Coach Jeremy Williams also provides group coaching for real estate agents with the desire to close 12 - 24 transactions in the next 12 months. Red Hawk Coaching also provides BROKER/Office Manager coaching for individuals in leadership roles responsible for growing a brokerage/office. With over 10,000 hours of booked coaching sessions and training, let Jeremy help you build a great business while living out a great life. Learn more about Jeremy by visiting Red Hawk Coaching, or call Jeremy today at 281-387-7689 or [email protected].

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