- Real estate agents waste a lot of time managing their own real estate transaction paperwork.
- Outsourcing their real estate transaction paperwork to a transaction coordination service will ultimately save them time and earn them more money.
In a typical work day, the responsibilities of a realtor may include marketing themselves on social media, cold calling potential clients, responding to emails, following up with current clients, meeting with inspectors, doing listing presentations, creating CMA’s, negotiating contract terms, etc. The list goes on and the role of the realtor is confined by blurred lines and expectations. So, what are the most important aspects of being a realtor, and how should your time be allocated to each with regard to your bottom line? While we don’t have an answer concerning how much you should be marketing where, how many hours a week should be dedicated to talking on the phone, or where your money is most effectively spent to generate leads, we have a solution to how many hours you should spend managing the transaction coordination side of your business. The short answer: 0. At first glance it may seem that you would be saving money by doing your own transaction coordination since this technically costs you nothing, but when making business decisions, you have to take opportunity cost into account. What this means is if you spent the time you currently spend on transaction coordination on your business instead, would the net gain from spending more time on your business be greater than the cost of hiring an outsourced transaction coordinator like REBO?
Take Dave for example. Dave is a high producing Realtor who handles all his own transaction coordination. He sold 12 houses last year at an average price of $250,000, working a typical 40-hour work week. With the 3% commission he earned, minus a 20% split for his brokerage, He earned $72,000. Not bad, right? And since Dave spent 15 hours each transaction doing all his own paperwork, he had no transaction coordination expenses. But would he have had the time to produce more if an outsourced transaction coordinator handled his paper work instead? He worked approximately 1920 hours (based on 40-hour work week) and sold 12 homes, meaning each home was the equivalent of 160 hours of work. He spent 15 hours on each transaction, adding up to 180 hours total. So, if he had hired an outsourced transaction coordinator instead, it stands to reason he would have sold 13 homes instead of 12 and had 20 hours more free time to spare. Based on these numbers, if he had chosen to hire REBO, he would have had an income of $78,000 minus REBO’s $250/transaction charge, coming to $74,750. So, he would have worked 20 hours less and earned an additional $2,750 by switching to REBO. Use our formula to determine how much you would save by switching to REBO:
C = current income/year
D = total work hours/year (1920 based on 40-hour work week)
X = number of transactions/year
Y = average hours spent on transaction coordination/transaction
Income with REBO
C/(1-((X*Y)/D)) – 250*X
California Licensed Realtor
DRE # 02044169