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Choosing the Right Deals

June 2, 2010
by Scott Levitt ·  

Q&A: Which Deals Are Worth My Time?
Use data to drive decisions

Q: How do I know which sorts of deals are worth my time?

A: In order to make informed decisions, you have to start tracking information.

If you’ve been “going by your gut” on which transactions have been the “best” for you, you’re probably working too hard for too little money. (What is “best”, anyway?) The only way you can objectively begin determining which deals have been your most profitable is to begin tracking data about your transactions in a central location, (such as Excel spreadsheet) where you can evaluate the pros and cons of particular segments.

Many agents have found out that in their market, certain types of buyers or price points have seemed lucrative, but over time have not been worth the effort. By tracking the type and number of deals which have gone through versus ones which have fallen apart, you may begin to notice trends that help you understand which deals are better for your business.

Data you may consider include:

  • Days to close
  • Marketing expenses
  • Cash buyers vs. non-cash
  • Buyer budgets (if you’re working the buyer side)
  • First time vs. repeat buyer
  • Net income on the deal
  • Neighborhoods / zip codes
  • “Perceived difficulty” working the deal

Set up a column for each criteria in an Excel spreadsheet and begin keeping track of what’s going on in your business. If you can, go back and see if you can gather data for past deals you’ve worked. You don’t have to be an MIT statistician to start spotting trends and testing your “gut feeling” against hard numbers.

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Comments

One Response to “Choosing the Right Deals”
  1. Lea Cabeen says:

    I really agree with you on this one. with the room for some “pay it forward” deals. I raised 2 Social Workers but am soo not the type! For me it is about business! I am starting to refer out deals that are good learning deals but not high value for my time. If I feel it will bring future business, then I’m game. I will take a few “pay it forward” deals as well- especially if they have been referred by past clients. I am now walking away from unrealistic Sellers after we have tried once to come together on a mrketing plan. Again, I refer them out. What I love is first timers who really want to learn! I’ll spend the extra time with them because they are sponges, and they will really appreciate the effort and share with their friends. They are referals and future business.

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