Duties Real Estate Sales Team Leader

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

To understand and develop
 an Action Plan for the
 practical operation of a
 successful real estate
 office
                  Overview
1.   Brokerage basics based on U.S. “best
     practices”
2.   Management responsibilities
3.   The “Company Dollar”: managing firm
     finances
4.   Budgeting
5.   Managing people
6.   Developing your sales people
7.   The jobs of management
8.   Data collection & analysis: managing your
     action plan
              Class Survey
Please complete the survey (show of hands)
                 Survey Results
1. Years in business: ___1-, ___2-5, ___6+
2. Job function: ____ Owners, ____Managers,
   _____ Sales Person, ____ Not in Real Estate
3. Size of Real Estate office: __ 5-, __ 6-15,
   ___ 16-25, ___ 26-50, ___ 50+
4. Number of branch offices:
5. What did you do before real estate?
       BROKERAGE BASICS:
        U.S. Best Practices
1. Brokers & their sales people represent
   clients/principals
2. Clients: buyers, sellers, tenants, landlords
3. Representation = an agency relationship, you
   are the agent of your client
4. Agency means you owe fiduciary duties to
   your clients
5. Sales people represent their brokers
     BROKERAGE BASICS:
       Fiduciary Duties
1.   Loyalty
2.   Disclosure
3.   Confidentiality
4.   Obedience
5.   Reasonable care & diligence
6.   Accounting
   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
      BROKERAGE BASICS:
       Commissions/Fees
• Earned in exchange for duties & responsibilities
  owed to clients
• Earned in exchange for agent’s time
• U.S.: Broker collects commission and “splits”
  with sales people; 50:50 to 0:100!
• U.S.: Seller’s agent negotiates “full” commission
  which is then “split” between seller’s broker &
  buyer’s broker; usually 50:50 to 60:40
     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
             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.
    The Management Decision:
   Should You or Shouldn’t 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
• It’s OK to be a sales person
• Do you really want to manage or do you
  want to do something else?
 MANAGEMENT RESPONSIBILITIES
        #1 Resources
1. Time: allocate between “must”, “should”,
   “could” and “don’t” do jobs (handout)
2. Systems & information: records, forms,
   reports, policies
3. People: seek, select, train & retain the best
   sales & support staff
4. Money: personal assets, investors, bankers,
   lines of credit
5. Equipment: office furniture, machinery, signs
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
MANAGEMENT RESPONSIBILITIES:
#2. What Jobs Does a Manager Do?
    B. Organizing People to Produce
1. Establish an organizational chart
   a. Everyone should know own
   accountability & reporting responsibilities
   b. Everyone should know everyone
   else’s accountability & reporting
   responsibilities
2. Delegate
    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 you’re not MBWA
MANAGEMENT RESPONSIBILITIES:
 #2 What Jobs Does a Manager Do?
                   D. Staffing
1. Selecting the Sales Team
   a. Application
   b. Interview
2. Selecting the support team
3. Your success in achieving your goals
   depends largely on your ability to motivate
   the staff on both a group and individual level
  MANAGEMENT RSPNSIBILITIES:
         Workshop B
     Complete the Office Task Analysis Chart
                       (handout)
1. If nobody is doing a particular job, leave blank
2. If two or more persons are doing/supervising a
   job, note that fact
3. Compare these tasks with your list from
   Workshop A; what are the differences? Why?
MANAGEMENT RESPONSIBILITIES:
        Workshop C
1.   What are my strengths?
2.   What are my weaknesses?
3.   Which jobs am I most skilled at?
4.   Which jobs am I least skilled at?
5.   Which jobs should I delegate?
  MEASURING RESULTS

“Your goals are meaningless
  unless you keep score!”
     Discussion & Review
1. Form small groups: discuss the
   resources you’ll need to plan,
   organize, manage your time & staff
   your company
2. Appoint a leader to report to the
   class
     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
      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
THE COMPANY “DOLLAR”:
  Expense Percentages
                      All Commissions Paid
                             60.4%




                                                      Net Return
   Saleries                                             4.2%
    6.1%
                                                   Sales Managers Salery
                                                            3.9%
       Advertising                            General Business
         6.4%                                    Expense
                     Occupancy      Telephone
                                      5.6%         5.8%
                       7.5%
   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
            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
            BUDGETING:
      Establishing Your Budget
                Complete handout
1.   Gross income
2.   Company “dollar”
3.   Company objectives
4.   Return
5.   Expenses
6.   Net profit
                 BUDGETING:
                 Suggestions
1. Be conservative in forecasting income
2. Be realistic in forecasting expenses
3. Allow flexibility until you have a “track record”
4. Prepare a contingency budget for a worse or better
   year than expected
5. Compare actuals with budget every month
6. Let staff help: get their suggestions
7. Compare your budget with “industry standards”
          BUDGETING:
     Net Profit Determination
1. Calculate income per transaction
2. Calculate expense per transaction
3. Net profit happens when #1 is larger
   than #2!
4. Initially do on a monthly basis; once
   net profit is achieved, do on a
   quarterly basis
       MANAGING PEOPLE:
        Types of Personnel
1. Employee: A person hired to
   perform services for another who is
   subject to the other’s control.

2. U.S. Independent contractor: A
   person who contracts to do
   something for another who is not
   subject to the other’s control.
          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
          MANAAGING PEOPLE:
           Management Styles
1. Control Style:
           * employs rules & procedures that provide
   close control over subordinates
           * reduces sense of freedom, tends to treat
   people as objects, minimizes personal incentives
2. Leadership Style:
           * management by example
           * uses participative decision making
           * results in improved morale, high
   production, increased retention
     DEVELOPING YOUR SALES AGENTS:
                Goal Setting
1. Sales agents base goals on their needs
2. Manager’s goals are based on agents’ goals
3. Manager’s role: guidance & follow-up
4. To be effective, goals must be understood,
   accepted, & performed by all members of firm
5. Goals must be written and be a commitment
6. Goals must be realistic, specific, measurable
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
     The Skills & Desires of
   Good Managers: A Self-Test
         WORKSHOP D (handout)
1. Please complete this self-evaluation
   without discussing answers with others

2. Move into a small group; discuss
   a. What is the easiest thing to do?
   b. What is the hardest thing to do?
THE JOBS OF MANAGEMENT:
Matching Your Skills & Desires
• If your skills & desires don’t
  match, find someone else to
  manage!
• If your skills & desires generally
  match, delegate where you have
  shortcomings
  THE JOBS OF MANAGEMENT:
          Motivating
• Creating an atmosphere in which agents can
  develop to the limits of their capabilities
• Know each agent’s needs & desires
• Motivators: education
               setting a good example
               fear
               opportunities
               recognition & rewards
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
     THE JOBS OF MANAGEMENT:
          Training Subjects
1.   Listing procedures   9. Presenting the offer
2.   Selling procedures   10. Ethics
3.   Forms & systems      11. Disclosure
4.   Financing            12. Agency duties
5.   Showing techniques   13. Market analysis
6.   Open houses          14. Staging
7.   Closing techniques   15. Advertising
8.   Negotiating          16. Government
                              regulations
THE JOBS OF MANAGEMENT:
Knowing Top Complaints (U.S)
1. Failure to disclose     6. Failure to clarify
   property defects            agency relationships
2. Lot size and lot line   7. Failure to explain
   problems                    financing
3. Misrepresentation       8. Poor communication
4. Errors in contract          & follow-up
   language                9. Property management
5. “Deep pockets”!         10. Sewer & septic
                               problems
      THE JOBS OF MANAGEMENT:
     Teach Agents Liability Reduction
1. Document statements & events
2. Watch out for “red flags”
3. Answer specific questions carefully
4. Encourage use of other
   professionals
5. Avoid predicting the future
    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 month’s/year’s actual records become next
    month’s/year’s guide to management action
    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
  DATA COLLECTION & ANALYSIS:
     Listing Control Systems
1. Competitive Market Analysis (CMA)
   (handout)
2. Form for recording information during
   initial property inspection (handout)
3. Complete listing files: all notes, forms,
   documents
4. Listing follow-up procedure
 DATA COLLECTION & ANALYSIS:
   Advertising Control System
1. Record source, time & nature of every inquiry
   that results from advertising
2. Determine media effectiveness based on #1
3. Cost of ad call: cost of advertisement
                    number of consumer calls
4. Conversion rate: # of consumer calls
                     # of appointments made
5. Use data to increase effectiveness of ads
DATA COLLECTION & ANALYSIS:
               Sales Data
1.   Source of buyers
2.   Buyer profiles
3.   Average sales price
4.   Average # buyers per sales agent
5.   Percentage who actually buy
6.   Market share
7.   Determine trends by monthly comparisons
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?
DATA COLLECTION & ANALYSIS:
        Keeping Records
• Who: lowest paid competent staff
• Time reduction: use forms
• Management by “gut” feel may work
  in exceptional markets but it’s
  devastating in sophisticated markets
  in which everyone else is using
  computers!
     Data Collection & Analysis:
      Decisions Based on Data
1.   Planning budgets & goals
2.   Where to spend money
3.   Where to save money
4.   Directing sales agents
5.   Sources of business
6.   Growth patterns & trends
7.   Strengths & weaknesses
  A successful real estate
company is always based on
   good management!
      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
 We hope you’ve enjoyed this class.
We hope it will increase your success.
I’ve certainly enjoyed being with you
     and have learned from you.

              Thank You !

               Gail Lyons &
  International Real Property Foundation