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Now, more than ever, it’s important to watch how we spend our money.  With income levels down and completely unpredictable, every dollar becomes precious. It’s all about getting good “ROI” – “return on investment” – for the hard-earned dollars that we spend on, and often times more importantly, the time we invest in, the servicing of our clients.

Here are some ideas for increasing the ROI of your real estate activities (and I DO recognize that some of these ideas conflict with one another; I offer the suggestions nonetheless because we’re all different and we all prefer some ideas and approaches more than others):

Reduce your expenses…

• Leverage technology to limit the homes you show to your buyers | If you aren’t using Google Earth and Google StreetView to preview home locations and screen out the properties that are in lesser locations, START NOW!  This will impress your clients, save you time and money and increase your efficiency. Working with buyers is USUALLY a “process of elimination” exercise, and this can dramatically accelerate that process.

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  Stop advertising in print media | A long time ago, I came to the realization that print media is no longer an effective method of selling homes.  Finally, I think the masses in real estate have seen this same light. Be candid with your sellers and tell them the truth about print media, and then show them how much you’re doing to promote their listing on the web.  They’ll respect you for being honest and savvy, and you’ll save money.

• Leverage every available free technology | See this post for additional ideas on how to provide cutting-edge technological services to your clients at low or no cost.

Increase your efficiency…

• Offer discounts to “realistic” clients | Time IS money.  To help focus your clients on efficiency and using your time effectively, consider offering “quick discounts” that reduce your commission (1) if your selling clients accept an offer within the first X days (which encourages them to GET REAL about pricing right out of the gate, which is of course the biggest challenge in listing homes these days), or (2) if your buyers buy one of the first X homes they visit. For better or worse, MOST people are motivated by money. (NOTE: The goal here is NOT to shirk our fiduciary responsibilities in ANY way, as the honoring of those responsibilities will always be our highest priority…These are simply practical, common-sense methods to encourage our clients to value our time appropriately and get from A to Z as efficiently as possible.)

• Go “Hyper-Local” |  Many of us have very wide geographic territories in which we work.  In an attempt to appease our clients, we try to be all things to all people and cover a wide geographic territory. The wider the range that you cover, the more inefficient you are in terms of maximizing what you get out of every hour you work. Stick to your home base and concentrate on building up your local business more and more. (For ideas on how you can ramp up your local business, check out our blog post “Chris Brogan, You are a Genius.”)

• Offer the other agent more | Similar to the prior point, one technique I’ve used for years is to offer a “greater than normal” commission to the buyer’s agent when I am the listing agent. If, for example, I have a total 6% commission (and we ALL know that all commissions are by law negotiable; this is simply an illustration!), I’ll offer 3.25% to the buyer’s agent and keep 2.75 % for myself. Knowing how the typical Realtor thinks, I KNOW that this will attract more attention for the listing and probably bring about a quicker sale. I’ll save time, my client might even get a better price, and I’m moving on to “next.” I have used this method for years, and it works!

Increase your profit margin…

• Renegotiate your split | In our market, there are still brokerages out there charging commission splits “worse” (for you, the agent) than 70/30, and many of these brokerages/franchises also charge monthly fees, franchise fees, transaction fees, etc. Let me just say this: even for a full-service brokerage providing excellent admin support to its agents, in our opinion every agent should have a deal at least as good as 70/30 with no fees. No matter what the market. Period. If you don’t have a split at least as good at that, demand it…or find another broker who will provide you that reasonably opportunity to earn a living.

• Create a legitimate residual income stream | There are a few real estate companies that offer a LEGITIMATE opportunity to earn passive income. And there are others that are pure smoke and mirrors. I would implore you to do some real investigation on this point, because so many agents have overlooked this serious income alternative. Per financial genius Robert Kiyosaki, wealthy people earn 70% or more of their income from passive sources. How much do YOU earn from passive sources? Below is an example of what one of our agents earned in ONE QUARTER with ONE PRODUCING AGENT in her downline. Not bad, especially when you compare this against what one of the big national franchises pays out on average to its agent via its profit sharing concept. It’s not even close to this example.
  
  

• Provide real “Value Added” Service | Do something that no one else in your market is doing, and then ask your clients to compensate you fairly for that value added service. As an example, at Professional One, we’re doing this via our Listing Syndication System, which creates 50 to 100 times more web exposure for our listings than our competitors can create. As a result, this has allowed us to take on a number of listings at “above market” commission rates. In terms of return-on-investment, a 3.5% or a 4.0% commission is dramatically higher than 3.0% (or less, which many are earning today). Don’t take less for the same basic service option everyone else offers…earn MORE by providing a level of service no one else can match!

I hope you learned something of value in this post. Keep raising the bar!