A very common mistake I have witnessed over and over and over again since the beginning of my real estate career in 2002 is that when a real estate agent starts getting more work than they can handle the first thing they want to do is hire a buyer’s agent. Well, I’m here to tell you, the most profitable and productive thing to do is to hire and admin first when building a real estate team for it is a better course of action than hiring a buyer’s agent first.

Why? Well, there are a few reasons and some unquestionable math.

• You can scale admin help. First you contract, then you hire.
• Admin help is about 20-25% the expense of a licensed, productive buyer’s agent.
• A great admin will free you up to do what you do best…sell real estate.
• A buyer’s agent will actually cause you to be doing more of the admin responsibilities of your team thus robbing you of your most dollar productive activities. (see below)
• An admin is the first step to learning how to hire, keep busy, hold accountable and to buy back some of your life.

50 Hours
I believe that if you chess-clocked the average real estate transaction you would find about 50 hours invested. That time is for the consultations, phone calls, showings, negotiations, paperwork, compliance, etc. We’ll use this as the basis for all that follows.

Gross Commission Income
For the sake of argument I’m going to use a $200,000 transaction paying a 3% commission to the agent. Now, differing companies have differing commissions, splits to the agents and/or desk fees, etc. so I am going to base everything on Gross Commission Income (GCI) only. You can then relate everything to your costs of sales, your splits, in other words.

Therefore, in this example, a $200,000 sale paying a 3% commission would generate GCI in the amount of $6,000. Follow me? Of course.

So if you take the standard 50 hours you find the agent makes $120/hour. Again, this is before the fees you pay to your broker and don’t forget your gas, cell phones, copies, advertising, etc.

So your productive dollars per hour is $120.

Your First Hire: Transaction Coordinator
Your first hire should be a transaction coordinator. Why? Because they are almost always available as independent contractors. So you can scale up, and down, with them. You are not obligated. It’s a perfect way to dip your toes in the water.

Let’s purpose that this transaction coordinator charges $300 per transaction to make sure you have all the signatures correct, all the initials, order the warranty, prepare amendments, file with your office, check compliance, etc. And let’s just say that this all adds up to you gaining about 5 hours of your life back.

“Five hours?” you ask. “What’s the big deal?” Well, multiply that by three deals per month and you have 15 hours back, if not slightly more. Anywho, back to my point.

Since you are now making $300 less on the transaction your new GCI is $5,700. You are also saving 5 hours. So, $5,700 divided by 45 hours puts your new dollars per hour at $126.67.

Congratulations. You just took your first baby-step towards leverage that will allow you to buy your life back and to earn more per productive hour than you did before.

Your Second Step: A Full Time Admin
Now let’s have some real fun, shall we? You look up and you realize you are now using your extra time not doing paperwork and doing what you do best; selling. And you realize that for the last 5 months you have been closing 5 deals per month therefore paying the transaction coordinator $1,500/mo in fees. Then you ask yourself, am I ready for a full time assistant? Yes!

Because now you can hire that full time assistant. He or she can do all your transaction coordinating. In addition, because they’ll have time, they can screen and prioritize your emails and calls. THEY can book your inspections and coordinate those appointments with your clients. THEY can put the sign out or fill up the flier box…if you still have one. THEY can get your marketing materials together for you, etc. Getting the picture.

So let’s add another 5 hours per deal, minimum. Now you are saving 10 hours per deal leaving 40 hours you are throwing at each deal. You hire this admin at something around $20 / hour (in this example) after all the taxes and employment insurance you pay now that you are an actual employer and you find yourself this person about $3,360/mo on average.

More Math
Follow me here. You are now closing 5 deals a month at $6,000 per and that totals $30,000 minus the $3,360 you are paying your admin which leaves $26,640 of income for you. (Again, before taxes, splits, and everything else.) The 5 deals times 40 hours is 200 hours. So $26,640 divided by 200 hours means you are now earning $133.20 per productive hour.

Congratulations. You have now bought back some of your life, your evenings and time with your family. Additionally, you have created a better customer experience for your buyers and sellers because let’s face it, no one can do all things really well and there are a lot of moving parts to a real estate transaction.

If you would like to see the next steps and/or discuss where you are with building your real estate team building, please feel free to reach out to me at your earliest convenience. I am here to help.