Photo by Harmen Jelle van Mourik
Originally Posted On: https://www.wisepelican.com/real-estate-agents-and-the-80-20-rule/
We can all agree that working hard isn’t as useful as working smart. In another post, we highlighted the importance of delegating tasks as your real estate business grows. One of the biggest questions we receive from clients is:
“How do I know which tasks to delegate, and which tasks do I do myself?”
In this post, we are going to provide insights into a principle known as the 80/20 rule, which is also referred to as the Pareto Principle. By following this rule, it will make delegating your daily and weekly tasks much simpler.
What Is the 80/20 Rule?
In the early 1900s, Italian economist Vilfredo Pareto noticed that about 80 percent of his peas were produced by only 20 percent of the pea pods in his garden. Upon further examination, he noticed that this same principle applied to wealth distribution in his native country: 80 percent of the land in Italy was owned/controlled by only 20 percent of the population.
This type of distribution can be found in a wide variety of domains, including investment portfolios, advertising, product sales, and your real estate business.
From an individual standpoint, the trick to utilizing the 80/20 rule in real estate is to figure out which of your tasks produce the most results, and focus your energy exclusively on those tasks.
How Do You Spend Your Day?
Let’s look at the day of a typical real estate agent who does all of their own work. It may look something like this:
8:00-10:00 am Making/returning phone calls
10:00 am-12:00 pm Marketing/Advertising
12:00 pm-12:30 pm Lunch (an hour if it’s with clients)
1:00 pm- 3:00 pm Contacting Expireds and FSBOs
3:00 pm – 6:00 pm Showing and Listing Presentations
6:00 pm – 8:00 pm Follow-up on leads, reply to email
That is a long day, and it may feel like you’re being productive, but let’s look at this from an 80/20 perspective.
Assuming your expected hourly return on investment (which we also covered in the Delegation post) is $100, how could you better allocate your time to maximize your ROI without working 10-12 hours a day?
First, you can hire someone to answer the phones, return phone calls, and follow-up on leads and emails. Even if you pay someone $25 an hour to handle these tasks, that saves you at least four hours a day for the cost of one hypothetical hour.
Marketing and Advertising is important, but a lot of it can be automated to the point where you spend maybe an hour a week instead of two hours every day. The same can be said about social media advertising, which you can also outsource.
That leaves you with Expireds/ FSBOs, and Listing/Buyer showings. Take a look at your previous real estate transactions, and determine which one has generated the most income, and divide that income by how many hours it took to complete them to determine which generates the highest ROI.
If one far outperforms the other, it doesn’t mean you should ignore or delegate one in favor of the other. Instead, you can find other methods to generate leads and business for Listings, Expireds, and FSBOs. And, one of the most time-effective methods you can choose for reaching prospective clients is through direct mail.
The 80/20 Real Estate Agent
Now that we’ve delegated and automated most of our tasks, let’s take a look at our real estate agent’s schedule now:
Listing Presentations and Buyer Showings when applicable.
Weekly meetings with team to ensure everything is running smoothly (1 Hour)
Weekly overview of Marketing and Advertising, using the 80/20 rule to decide which methods are most effective and removing the rest (1 Hour)
By using this method, you have reduced your time spent on the administrative and marketing side of your real estate business from 30 hours a week to about two. You will have more time to focus on closing more real estate transactions, and will have plenty of opportunities to grow and scale your business.
Share With Us!
Have you applied the 80/20 Rule to your real estate business? How much has it improved your overall production? Let us know in the comments below.
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