4 Processes Your Real Estate Business Should Be Digitizing

4 Processes Your Real Estate Business Should Be Digitizing

Is your brokerage still using outdated, analogous, legacy processes?

If yes, it might be time to consider upgrading, modernizing and digitizing your key processes.

You see, brokerages that embrace digitization can anticipate average revenue gains of up to 26%. That’s a big margin that can make a difference in any real estate business

In addition, digitization improves operational efficiency, cuts back on manual data entry, and promotes process improvement while empowering your agents.

If you plan on beginning the digitization journey, but don’t know which processes to digitalize first, you’re in the right place.

We’ve compiled a list of the top 4 processes you should be digitizing within your real estate business.

Process #1 Agent hiring

Do you have real estate recruiting targets but are currently limited in terms of budget? Don’t have the time to manually create job ads to post?

Well, good news.

Do you know that there is dedicated agent recruitment software that you can take advantage of to improve the real estate hiring process?

Example software includes Brokerkit, IXACT RecruiterTM, OnTask Recruiter, and ThirdPool Recruiting.

The hiring process is undoubtedly one of the most time-consuming processes. By digitizing it and relying on industry-specific resources you can scale without going through recruiting agencies or using crowdsourcing platforms.

Process #2 Property listings

Creating property listings to be posted in the Multiple Listing Service is no small feat. It’s a laborious task as the listing agent has to write detailed ads for the property being advertised.

What if we told you there was a way to digitize this entire process? You can use automated marketing resources such as Point2Agent and Z57 Solutions PropertyPulse.

In addition, you can also boost your listings with high-quality pictures shot and edited using apps such as iMovie.

Process #3 Closing procedures

How are you currently signing contracts and other documents? Are you still signing manually and in person?

Embrace technologies such as DocuSign and say goodbye to legacy contract management processes. In a COVID-world, take advantage of these convenient solutions.

When it comes to real estate transaction management solutions, DotLoop is one of the leading software on the market. It allows you to edit forms, eSign, and monitor compliance all on a single platform.

Process #4 Lead generation

In our digital-centric world, lead generation is such a pivotal aspect for any brokerage. Finding and qualifying leads can be exceedingly difficult if you opt to do things manually.

Fortunately, you don’t have to.

Using lead generation software the likes of BoomTown, FollowUpBoss, FreshWorks, and BoldLeads you can capture and qualify leads faster. 

Keen to discuss digitizing with a consultant?

Real Estate Back Ops (REBO) is one of the country’s most reliable brokerage service providers. We assist with commission structure design, transaction management, valuations, growth through M&As, and ancillary revenue plans. Contact us for more information.

 

5 Tips for Managing Your Real Estate Brokerage Cash Flow

5 Tips for Managing Your Real Estate Brokerage Cash Flow

Are you actively looking for ways to improve cash flow in your real estate brokerage business?

There is no denying that cash flow is the lifeblood of any business and it is always important to pay close attention to how the business manages its cash flow.

Before taking a look at how to improve you cash flow, let’s review what exactly cash flow is and the different types you need to be cognizant of.

What is cash flow?

The Corporate Finance Institute (CFI) defines cash flow as “the increase or decrease in the amount of money a business has.”

Before you can increase your cash flow, it’s imperative to understand which type of cash flow you need to improve from the four kinds of cash flow that exist.

  •         Cash From Operating Activities
  •         Free Cash Flow to Equity (FCFE)
  •         Free Cash Flow to the Firm (FCFF)
  •         Net Change in Cash

Cash From Operating Activities

This is money that comes from the brokerage’s core business activities.

Free Cash Flow to Equity (FCFE)

FCFE is the money that’s readily available after fixed assets have been bought, maintained, or improved.

Free Cash Flow to the Firm (FCFF)

FCFF refers to the state a brokerage finds itself in when it has no debt.

Net Change in Cash

This type of cash flow pertains to the change experienced between one accounting period and the next.

Armed with this information, here are our five tips to improve cash flow in your real estate brokerage business today.

Tip #1 Audit your cash flow

How often do you study your cash flow statement – the report that analyzes your cash flow? Without a proper audit, you don’t know where your money is going and how it’s being used. A cash flow analysis is simply vital.

By studying your income statements, balance sheets, and other financial metrics you get a clear overview of the state of your finances.

Benjamin Franklin is accredited with the maxim, “Small leaks can sink great ships.” This  idea should be applied to operations within a brokerage. Seemingly small expenses can compound leading to financial distress hence the need for proper tracking systems and regular investigations.

If you are interested in have a complete Cash-Flow Analysis performed on your brokerage reach out to Real Estate Back Ops today and we can get you set up for an initial consultation! Contact us here.

Tip #2 Reduce your operating costs

Following on the heels of carrying out a cash flow analysis is the idea of mitigating your operating expenses. By ensuring your back-end is lean, you can maximize cash flow.

Take a look around the brokerage. What can you downsize or purchase pre-owned or lease? Things that may be swapped out to save on expenses include cars and equipment.

Pre-owned cars mean less insurance, vehicle taxes, and interest payments.

Consider a home office too in lieu of leasing an actual commercial space. Outsourcing your administration requirements can also keep costs lower.

Tip #3 Charge a premium for your services

Many brokerage owners are hesitant to increase their fees. However, this could be setting you back considerably. 

Carry out a survey to establish what the current market rates are and adjust your pricing accordingly. 

Ideally, your prices should be competitive enough to keep your operations running, but not too low such that you struggle to stay afloat.

Not sure if your fees are competitive or worried that your agents will want to leave? Let Real Estate Back Ops review your current Fee Structure and show you what changes you can make that will keep your agents happy and improve your bottom line! Contact us here.

Tip #4 Become a title agent

Instead of having a third-party title insurer handle the title insurance of all the transactions you close, how about adding an ancillary business to your existing brokerage by offering title insurance to your clients?

Setting up a title services business is not as complex as most brokers think. 

In fact, with over 5, 432 firms across the country and a market size worth $16 billion, there is no reason why you should not be tapping into this lucrative cash flow avenue.

Earn hundreds of extra dollars on each transaction you’re already doing. 

Tip #5 Apply for real estate broker loans

Competition among real estate agencies in the U.S. can be tough as there are currently more than 100,000 real estate brokerages.

Securing a loan to inject much-needed cash into your business just when you need it can be the difference between closing shop and keeping your doors open until you get your commissions.

Fortunately, you can obtain real estate business loans from reputable institutions such as National Funding, Become. co, and SBA Loans

These loans can also be used and leveraged for acqusition of other brokerages as a growth strategy. We have helped hundreds of brokerages through mergers and acquisitions.

Do you need help improving cash flow?

Real Estate Back Ops (REBO) is one of country’s most reliable brokerage services providers. We assist with cash flow analysis, valuations, growth through M&As, commission structure design, and ancillary revenue plans. Contact us for more information.

How Administrative Mistakes Can Cost You as a Broker

How Administrative Mistakes Can Cost You as a Broker

What is the real cost of administrative mistakes? As a broker, your clients depend on you to handle things professionally. Administrative mistakes by a broker can have a domino effect and affect everyone involved in the deal. Let’s take a look at some administrative mistakes to avoid and how they can cost you as a broker.

1. Grammatical and typographical errors

Part of a broker’s responsibility is handling paperwork between clients. The correct use of grammar and punctuation is imperative. One misplaced character and failure to carefully proofread documents can cause untold damage. The following incidents are examples of the catastrophic consequences that may arise from such errors.

In 2006, a typo by Alitalia Airlines resulted in business-class flight tickets being sold for $39 instead of $3,900. The result? More than 2,000 people purchased the $39 tickets leading to a $7.2 million loss by the airline. Another incident, albeit more costly occurred in Tokyo when a typing error saw the shares of a renowned company go on sale leading to a $340 million loss. Moral of the lesson? Grammatical and typographical errors are administrative mistakes to avoid.

2. Poor advice and or unethical behavior

When a client hires you or chooses to work with you as a broker, they expect you to act professionally and do your job in terms of giving them good advice. They are paying for your expertise and experience. Doing a half-hearted job and failing to provide clients with honest, accurate, and fair assessments of their situation can result in you being sued if the client loses money in any way.

You may be surprised to learn that as many as 25% of homebuyers said they would never work with their broker or recommend them to anyone. Brokers do get sued for a variety of reasons – fraud, breach of duty, giving advice that’s not within their scopes (e.g. offering legal advice) negligence and breach of contract. These are all administrative mistakes to avoid.

3. Poor data management and failure to document

If there are two administrative aspects of being a broker that should never be overlooked, its documentation and filing papers properly. Poor data management can result in you not being able to find a critical document when it’s needed. There is no excuse for not having a defined records system. This is certainly high up in the list of administrative mistakes to avoid.

4. Hiring the wrong brokers for the brokerage

Do you have a strategy for hiring people? Not having a time-tested solution can result in you hiring the wrong person. This can be extremely inconveniencing not to mention expensive. You’ll want to avoid having to repeatedly post job openings and screen candidates. By following our advice on hiring better agents, you can improve your retention rate.

When you cannot afford administrative mistakes look no further than Real Estate Back Ops (REBO). We’re one of the leading real estate technology and consulting companies in the US. For the best brokerage services don’t hesitate to contact us.

5 Property Staging Trends for the Fall & Winter Months

5 Property Staging Trends for the Fall & Winter Months

Are there people interested in viewing homes during the colder months?

Should you attempt to sell your house during fall or winter?

Do people really buy homes in winter?

Yes, yes, and yes!

If stats are anything to go buy, nearly one million homes are sold each winter between December and February. If you’re looking for serious buyers, the fall and winter months may be the ideal time to stage your property. So, how do you go about property staging during winter? Let’s find out!

1.    First impressions matter – a lot

How important is curb appeal? Extremely important. For buyers, first impressions matter greatly. Do you know that most buyers make up their minds about your house within the first 15 seconds? That’s a lot of pressure. Fortunately, you can do something about it. To help win buyers over, ensure that your yard is well-maintained. Leaves should be racked, hedges trimmed, and the lawn perfectly manicured.

2.    Turn on the interior and exterior lights

You want the house to feel warm and welcoming. So, don’t hesitate to light the driveway and walkway to your front door. Turn the lights on indoors as well. Light is an excellent medium and will help to highlight and draw attention to both the interior and exterior. Lamps and strategic lighting solutions can make rooms appear bigger and make the house feel more inviting.

3.    Keep décor simple and neutral

Are you big on decorating the house during Thanksgiving, Halloween, and Christmas? If yes, you may want to tone it down a notch when you are property staging. Avoid over-the-top decorations such as blown up lawn elements, streamers, and religious symbols. Opt instead for more subtle pieces of décor such as a simple wreath on the front door and electric candles strategically placed around the home.

4.    Evoke the senses with seasonal scents

Human beings are sensory by nature. If you can appeal to people’s emotional side you can influence their decision on a deeper level. Harvard Professor Gerald Zaltman in his book, “How Consumers Think: Essential Insights into the Mind of the Market”, demystifies the buying experience by claiming that at the core, we are emotional buyers. Zaltman attests that 95% of purchasing decisions are subconscious.  So how do you incorporate this into your property staging? Through the use of pleasant seasonal scents; think cinnamon, freshly baked goods, and oranges.

5.    Use clean lines when arranging furniture

How furniture is arranged in a home can make or break the buyer’s experience as they walk through the house. Clean lines are important. Furniture that’s helter-skelter and follows no pattern or symmetry can feel disorderly. If you have a central feature in a room such as a fireplace, organize your furniture around it. Adding well-placed throw pillows and fur rugs can also accentuate the orderliness and comfort of a room.

Selling Your Real Estate Brokerage? Either Way, Get a Valuation

Selling Your Real Estate Brokerage? Either Way, Get a Valuation

If you’re planning on selling your residential real estate brokerage, a valuation is an obvious necessity, since no serious buyer would consider purchasing based solely on the word of the seller. A comprehensive valuation can help the broker to discern what actions can be taken prior to shopping their brokerage to increase its fair-market value. But what if you’re not selling? Is there any reason to get a valuation in that case? An annual physical with a doctor is recommended for your measuring and maintaining your health, and the same is similarly true of a residential real estate brokerage. It turns out, valuations offer several benefits to your brokerage even if you have no intention of selling anytime soon. As the old adage goes, if you can’t measure it, you can’t manage it. Valuations can allow brokers to analyze their brokerage from a different perspective and make changes accordingly to optimize their business.

DETERMINE EXACT RECRUITMENT EFFORTS NECESSARY

Valuations will show a broker somewhat of an ‘X-Ray’ of their business. It will outline each agent’s transaction count, average GCI per transaction, and compare this to business expenses allowing brokers to effectively determine exactly how many agents are required, (by applying average GCI/agent), in order to break even, or how much recruitment efforts would increase the cash flow and profit of the brokerage given measurable recruitment expenses and expected outcome.

SPLIT EXPENSES INTO OPERATING AND NON-OPERATING COSTS

Valuations will additionally provide an actionable guideline with regard to where exactly brokers can cut unnecessary expenses. Any expenses deemed ‘non-operating,’ (not contributive to the bottom line), likewise don’t contribute to the value of the brokerage, and cutting or reducing these costs will increase the value of a brokerage. Any broker thinking about selling their brokerage will definitely want to identify these costs and make cuts where necessary to get the highest possible fair-market value for their company.

IDENTIFY POSSIBLE CUTS IN FULL-TIME EMPLOYEE SALARIES

Valuations can bring to light the agent to employee ratio as it’s applied to profit generation, and spell out how this margin is directly affected by each full-time employee. This allows brokers to first, recognize which employee duties are considered either non-operating costs or extraneous to the brokerage operations, and second, exactly how much this margin will increase by making according cuts and how much that will increase the value of the brokerage.

ANCILLARY BUSINESS OPTIMIZATION

Brokers may elect to include other business models to the operations of their brokerage such as mortgage lending, home warranty services, property management, etc. Often times additional income from these businesses will convince brokers that the functionality of their brokerage is above average by industry standards if the profit analysis of these other businesses is muddled with that of their brokerage. Valuations can help to not only identify where immaterial expenses have crept into their brokerage as a result of these misleading values, but determine how the expenses can be cut, and how to better optimize those ancillary businesses.

IDENTIFY WHAT TRANSACTION COORDINATION EXPENSES ARE NECESSARY

If a brokerage has transaction coordinators employed full-time, (they will soon no longer be allowed to hire them as independent contractors), they are likely lowering their EBITDA during down months when transaction coordinators are processing fewer files due to this excessive expenditure, and thus, lowering the value of their brokerage. Valuations can help brokers to determine if this is the case for their brokerage, and whether or not it would be prescient to consider an outsourced transaction coordination service instead.

Valuations not only provide an accurate assessment of the current value of a brokerage, but can help to point out practical ways to increase that value, and therefore, the profitability, which is a good business practice regardless of a broker’s interest in selling or not. To learn more about valuations and how one could benefit you and your brokerage, contact payton@realestatebackops.com for more information.