Real Estate Agents: How to Make 4x as Much Commission

Here's another of my little charts. This one applies to real estate agents and mortgage brokers in particular - but the general idea applies to any business.

It makes a compelling economic case for keeping in touch with clients over the long term.

 

The chart shows the difference in commission earned by a real estate agent (or mortgage broker) who keeps clients for life compared to one who just does a single transaction with a client.

The difference results in four times as much earned in commissions.

How is it worked out?

Consider that a real estate career lasts 30 years.

The average time a family spends in one house is said to be 7 years.

So, over that 30 years, the family will move 4 times (4x7=28).

Instead of earning one commission over your career from one client, you earn four commissions.

Let's put some numbers on those bones.

If the median home price in the US is $180,000 and commission is 5%, the commission earned would be $9,000. 

So four times that sum is $36,000 - a difference of $27,000.

Of course, this doesn't account for commissions shared, and portions paid to the broker and your costs...but the result is the same. You earn a lot more money by keeping a client for your career.

Of course, keeping in touch with clients through newsletters is the best way to be top of mind so that they call you when they're ready to move.

So how much will it cost to keep in touch with them?

If you do it by email, the cost is practically zero, as emails cost nothing to send.

If you do it by mail, and you send newsletters every month, you are looking at an approximate lifetime spend of $576 per client. (That's made up of $1 per month to print the newsletter for 360 issues, plus 60 cents per month for postage.)

Of course, that doesn't include membership to a newsletter program, running at around $49 per month - but that program can be used for multiple clients. And - of course - results will vary, postage and printing costs will go up, and not everyone will get every client to come back every time.

But still...the economics are pretty compelling:

Commissions earned over lifetime per client: $36,000

Cost to keep in touch with client over lifetime: $576

Total commissions minus cost: $35,424

versus..

Commission earned with one transaction: $9,000

Cost to keep in touch with client over lifetime: $0

Total commission minus cost: $9,000

Difference: $26,424

Now, multiply that by the number of clients you might have, and the math is truly astonishing.

As I say, not everyone will get the same results - you could not do as well. Or, with rising house prices, you could do better.

But when you look at it, the investment in keeping in touch is so low and the benefits are so high that it's something you must consider.

Find out more about newsletters for real estate agents and mortgage brokers.

Comments

[Devon Homes]

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