In the post-pandemic world, real estate experienced a noticeable expansion. In fact, 2021 was the best year for home sales in the US since 2006, and the real estate market is still going hot in 2022, offering ample opportunities for agents and brokers to make profits.
But, to thrive, it’s essential to differentiate yourself from the competition. Knowing which insights are most important to track can help you curate a winning strategy for growing your business and getting an extra edge in attracting clients.
To help you out, we detail the top seven KPIs for a successful real estate business.
The lead generation metrics track the number of prospective buyers that the agent contacts to schedule an appointment. Using a CRM system can help you streamline the process. The best tools offer customizable reports that give you insight into the key leading indicators, helping you get the complete picture for better decisions.
Effectively monitoring the number of leads in your pipeline can help you adequately deploy agent resources, ensuring that each lead gets the nurturing and attention it needs to turn into an appointment and, eventually, a listing or representation agreement.
Average Commission per Sale
Selling a home requires a significant amount of time and effort. The average commission per sale is very important as commissions vary significantly depending on the price of the house and the negotiated commission rate. Tracking this metric is crucial to understanding how profitable the average transaction is across the agency.
Sold Homes per Available Inventory
The sold homes per available inventory is a metric that helps you gain insight into the current market conditions for a specific region and determine the neighborhood’s desirability. Essentially, this KPI analyzes how many homes are sold and compares it to the number of properties listed. The lower the inventory, the greater the advantage for the seller as a scarcity of choice motivates prospective buyers.
Year-Over-Year Variance of Average Sold Price
The variance of the average sold price year over year is a key performance metric used to assess the market’s condition in the region. An increasing rate is a telling sign that there’s an increase in demand in the region. By tracking this metric, you can be better at strategic planning and setting attainable sales goals.
Number of Days on Market
The number of days on the market indicates the number of days the property remains in inventory. When a property sits on the market for too long, buyers will assume the seller is desperate to close a deal and will often offer a price significantly lower than the initial one.
Likewise, they might think there’s something wrong with the property since no one has bought it for a certain time period, which would lower the desirability of the estate. Tracking this metric will help you adjust your strategy and boost sales.
Sale Price Versus List Price
Evaluating the gap between the advertised and final purchase prices is another important metric. A price that needs to be reduced to sell looks bad and indicates that the property has become stale. On the other hand, pricing a home too low means you’re losing money.
Creating data that tracks the average sale price compared to the initial list price is a simple method to discover which agents want further support and assistance. Understanding this metric comprehensively and on an agent-by-agent basis will aid you in providing effective coaching to your agents.
Pending commissions will assist you in forecasting future revenue and making decisions based on what’s in the works. The method for calculating pending commissions varies based on how your brokerage makes money. Since this metric represents the bottom line for a longer period, the value of the pending brokerage commission is an essential statistic to improve your bottom line. It can assist you in determining whether you have funds to invest in recruiting, expanding your company’s brand, or hiring new administrative staff.
Real estate insights are crucial for guiding your company to greater heights. The key performance indicators we’ve outlined should help you evaluate the market conditions and your business’s performance. Knowing your strong points will help you enhance your performance, whereas understanding your weak points will help you improve.