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Is more always better? In real estate, the answer is…it depends. The debate between high volume and high profits is as old as the industry itself.
Most major companies and brands reward and celebrate high volume and production, but rarely do we see awards given to the most profitable agents, teams or agencies.
Let’s dive into the differences between these two strategies and how they can directly impact your bottom line.
Volume is king
For some agencies, it’s all about the numbers. High trading volume means more transactions, more yard signs, and more market presence. The philosophy here is more yes better one. It’s a fast-paced grind where quantity trumps all else.
But the question is – as you complete deal after deal, are you maximizing the value of each deal? The allure of high capacity is undeniable. This is an obvious measure of success and can quickly build your reputation. However, this approach typically involves thinner margins and often focuses more on speed than service.
RE/MAX agent and team leader Ron Howard states in his book, Profitability and Performance Pit Stop, He lost focus on the most important metrics and used high sales to feed his ego. He said he could lose everything if he didn’t take key steps to rebuild the team with a focus on profitability.
Profits require precision
On the other hand, there are highly profitable methods. The strategy is to be selective, create compensation to incentivize the behavior we want from team leaders, and focus on low- or no-cost lead sources.
We can all buy leads, some paying commissions as high as 40%, but this business is rarely profitable. It’s about working smarter, not harder.
Agents who prioritize profitability may handle fewer transactions, but they focus on delivering exceptional service, creating memorable customer experiences, and capitalizing on every opportunity with a service-versus-sales mentality. The result is a good reputation, lots of repeat and referral business, less competition, and a more profitable career.
quality not quantity
Focus on the people you get to know and serve first, no matter how many opportunities it opens up for you up front. It may sound counterintuitive, but when you focus on serving consumers and put commissions aside and just do the right thing, the opportunity to make a lot of money presents itself.
Focus on what you do best. Today’s consumers are trained to work with experts in nearly every area of life, whether it’s medical treatment, grocery shopping, personal training, or even hair coloring. As consumers, we are attracted to the experts who are most likely to provide us with personal and professional service. This is true in real estate as well, where the world of generalists may soon disappear.
Examples include Buyer Specialists, Listing Specialists, Showing Specialists, Business Specialists, Transaction Specialists, Land and Ranch Specialists, Investment Specialists, Luxury Goods Specialists, and many more. As the saying goes: “Wealth is in niches,” and there’s truth to it.
I would simply suggest that you learn to be great at fewer things and focus on the things you enjoy, or have a genuine interest in or experience in, to let consumers know you are an expert. I like to find where deals are happening and where the business is going, and then build specialization in those areas.
Not only does this approach increase your chances of making a profit, it also ensures that you invest your time wisely.
Efficiency is everything
Simplify your process. Use technology to automate routine tasks, freeing up time to focus on important transactions. Effective tools like CRM systems and automated marketing can help you manage large volumes of leads and deals without sacrificing the personal touch that leads to profitable sales.
First the systems, then the assistants that run those systems. I tell my clients that anything you do three times in your business, you have to have a system in place for how you want it done every time. This allows you to delegate it and ensure the right things are done to serve your customers and team members without you having to be personally involved in every detail.
know your worth
Don’t be afraid to walk away from low-profit trades. Your time is valuable, and sometimes saying “no” can lead to a bigger “yes.” “I’d rather turn you down than let you down” is one of my favorite scripts when negotiating a commission or an overpriced property.
If the relationship between agents and consumers is imbalanced, agents cannot provide the best-in-class service, marketing and support needed for a successful transaction. Understanding your value in the market is crucial, and setting standards for the minimum commission you’re personally willing to accept can help maintain profitability.
Invest in relationships
Build lasting connections with customers who value your services and are likely to make more profitable transactions. Cultivating relationships leads to repeat business and referrals, which often lead to more profitable deals.
Getting to know your clients on a personal level, rather than running around “commission-breathing” as master coach Julie Timms puts it, will change the nature of your relationships. Focus on their needs, family dynamics, and investment goals rather than focusing on how much or how you will get paid.
education improvement
Stay informed about market trends. Read Inman, study the data, and invest in an education that creates professionalism. Knowledge is power, and power leads to influence and increased profitability. By becoming an expert in a specific area of real estate, you can charge more for your professional services.
Share this knowledge with the top 50 members of your sphere of influence, positioning yourself as a valuable resource and solidifying their trust in your expertise. A generalist trying to do a specialist’s job can spell disaster for you and your clients. Remember, the devil is in the details.
Teamwork
If you’re managing a team, make sure everyone is on the same page. High production should never come at the expense of high quality, especially when it comes to service. Every team member should understand the balance you’re trying to achieve and work together to achieve sales and profitability goals. Encourage your team to develop their own Top 50 lists, thereby expanding their network and potential for high-quality leads.
In the end, whether you choose to play the numbers game or focus on maximizing profits, remember that success in real estate is all about balance. It’s about making smart decisions, adapting to market conditions, and always putting your customers’ needs first.
final thoughts
High production or high profits? Why not have it both ways? With the right approach, you can achieve a harmonious combination of quantity and quality, resulting in a thriving, sustainable business.
As a father, I decided that if I was going to be away from my family for a while, it would be worth it. Ultimately, where we choose to spend our time matters, and when we understand the value of time, it changes the way we live our work.
Verl Workman is the founder and CEO of Workman Success Systems. Connect with him on LinkedIn or Instagram.
