# Real Estate Professionals – Estimating Expenses

Awhile back, Kathleen Allardyce, a member of our RealTalk Community asked:

“I’m wondering if anyone has a formula they use for estimating expenses or overhead to calculate:

Gross Annual Commissions – Expenses = Net Annual Commission. Is there a percent of commissions you can use for estimating?

A dollar figure per side? Can you use an estimating figure, or do you need to use hard dollars for desk fees, etc, then add a dollar figure for selling a listing and working with a buyer?”

Ardell DellaLoggia, a successful real estate veteran from the Northwest responded:

“I use an estimate based on my own reality. I take all of last year’s “Buyer Agent” fees actually received, deducting expenses directly related to that sale. An example would be if you paid for a home warranty or gave them a closing gift. Add up the total “net” commission and divide by the number of
Buyer Agent Transactions. Do the same on the listing side deducting that house’s specific expenses. Example would be sign up/sign down fees, advertising costs, not the lockox as that is an overhead/inventory item.

Only deduct the specific cost of advertising this house, not personal promotion advertising or other houses grouped into the ad. Take the total net commission and divide by the number of listings.

I do my plan based on half of my transactions/sides being Buyer Agent and the other half being Listings Sold. YMMV I round down the final number to account for buyers who don’t buy and listings that don’t sell. If my buyer agent \$ is \$4,450 I count that as \$4,000 for planning. If the listing side is \$3,450, I count that as \$3,000 for planning.

Then I take the total number of sides from last year and up it to wherever I want it to be next year. Say that is 40 total transactions. 20 X \$3,000 plus 20 X \$4,000 equals my annual goal.

Then I do the plan, strategy, action list to meet the goals, etc into two separate plans. One, for achieving the listing goals; and then a second for achieving the buyer agent goals. They overlap a bit where I count on meeting buyers from my listings.

General overhead like buying enough lockboxes to keep a stocked inventory, I do not count at all when doing my business plan as eventually that becomes a constant. If you are a newer agent, these things are one time “start up”
costs.

I have taken some classes lately on planning, but the “new ideas” didn’t fit my business model. This one still works for me.”

# Is A Bot In Your Future?

Is a Bot in Your Future?

For sure in 2017, real estate professionals will be hearing  more about the use of Bots, Artificial Intelligence (AI), and machine learning as productivity tools in their practice. Already we are seeing more and more articles and online discussions about Bots.

To give you an idea of what’s to come in this exciting space, here are some highlights from several articles about a San Diego company led by real estate veteran Grant Gould that is making news with the anticipated January 2017 launch of its Automabots service – www.Automabots.com

Real estate professionals, REALTOR® Associations and MLSs will want to take note that initial use of Automabots will be directed at the real estate industry. As mentioned below, AI manifestations can be powerful tools for business efficiency, so  now is the time to get informed and use them to your advantage.

1. Inman’s Real Estate Technology Expert, Craig Rowe, recently reviewed Automabots, –

Craig noted that Grant Gould is developing several bots with different purposes in the agent realm one at a time, including BuyerAgentBot, SellerAgentBot (in beta) along with a CRMBot, DigitalMarketingBot and TransactionBot that will eventually form a real estate suite.

During the initial interaction, users indicate their preferred ZIP codes, price, number of beds and baths, and communities they’re interested in to populate a relevant list of homes, which are pulled directly from the MLS, current to the last hour.

After users finish looking at the homes provided, the Automabot asks how often they would like to receive updates on available listings. Gould notes that users’ response to this question serves as a lead qualifier — someone who wants an update every two hours (or daily) is probably more motivated than the casual monthly browser. Today, that entire lead cultivation process is being replaced by text apps and bots. But agents shouldn’t see bots as a threat — the element of data control has been slipping for some time from the industry’s hands, and Kubrick’s eerie vision (of  HAL-2000) isn’t quite so dark in real life. Rather, these AI manifestations can be powerful tools for business efficiency, so get informed and use them to your advantage.

1. Adrian Bishop, Editor for OPP.Today authored a Business Technology Editorial entitled “How Bots Can Turn Leads Into Clients And Boost Sales”
http://www.opp.today/how-bots-can-turn-leads-into-clients-and-boost-sales/ – In his editorial, based on an interview with Automabots founder Grant Gould, Mr. Bishop wrote:

Essentially, bots are a small application that live in the cloud and utilize the machine learning technology recently made available by the tech giants. These little programs, now referred to as bots, can be taught to perform nearly any digital task that normally would be done by a human being. People can communicate with bots via chat platforms, like; Facebook Messenger, Alexa and the dozens of others.

“We teach real estate bots to do the work, so you can get more done in less time at a lower cost, “says Automabots.

Using natural language technology, your personal bot interacts with prospects to determine their exact real estate needs and delivers the information they desire without having to log in or download an app.

When Grant Gould was asked how does his service work, he responded: “Similar to Siri, Amazon Alexa, and IMB’s Watson, Automabots uses machine learning that is a combination of rule-based and natural language parsing.

“We are teaching the Bot real estate lingo, terminology and the nuances of buying and selling properties.  The Lead Capture Bot can engage online users through chat applications, like Facebook Messenger, to assess the consumer needs and then search and display the information right in the chat session. MLS properties, market stats, and home values are just some of the info it can deliver.

“It then asks the user if they would like to get alerts and updates on this information, which results in capturing a lead.  As it continues to learn what the user likes and dislikes, it gets smart in finding matching homes.”

Bots save both time and money and boost sales, says the company. “Get a highly skilled Lead Qualifier Bot for just 14 cents an hour.  No benefits, sick days, or employer cost.  You get a ready-to-work real estate Bot that is specially trained to do a specific job and do it great.  And these workers get smarter and more efficient over time.

“Real estate bots can be taught to perform many tasks currently done by humans.  We have trained our Bots to greet every person immediately, qualify their buyer and seller needs, and deliver the information they want without using any human resources.

1. In an article in VisionAR entitled “Productivity AI Bots for Real Estate Agents” –
http://visionar.today/index.php/2016/11/22/automabots-makes-productivity-bots-real-estate-agents/ – the author Lauren Twardy interviewed Grant Gould and stated:

“Though Gould expects the Bots’ utility will extend into other industries before long, Automabots is currently focused solely on real estate. Gould is a real estate veteran and understands the kind of help agents need to be productive. Gould likes to call his line of product “Productivity Bots,” which are designed to enhance rather than take over business. He explains, “consumers today want instant gratification,” and his Bots help Realtors provide that gratification by remaining on active duty 24/7. While Realtors can get thousands of visitors to their websites, social media profiles, and other lead sources, the Bots are trained to convert visitors into leads.

Gould’s “Productivity Bots” are productive. The Lead Qualifier Bot is designed to save real estate agents time and money; for just 14 cents an hour, “you get a ready-to-work real estate Bot that is trained to do a specific job and do it great.” The Automabots website explains the basic functions of the Bot:

“Greets Every Prospect.” It is designed to engage potential customers 24/7 on real estate websites, social media, and other listing sites. This provides instant gratification for consumers, which they don’t receive with website contact forms or email.
“Qualifies Buyer and Seller Needs.” The Bot can interact with customers to determine what they’re looking for and can dole out information from the massive amount of stored data.
“Captures Leads and Intel.” Not only can it record information about prospects, but the Bot can also transfer information directly to the Realtor or to an automatic lead nurturing program.
Of course, the functions of this AI are meant to grow beyond these basics. Automabots “build intelligent Bots that [they] teach to perform important tasks and that gets smarter as it does its job.”

2017 could very well be the year of the Bot in real estate. Stay tuned and explore ways the services of a Bot can help you be more efficient and productive.

Sales and Selling

A few years back we asked our Realtalkers to help create a checklist that could be presented to the seller to help them remember some of the things that the buyer is always interested

Thanks to Dan Walker from Salt Lake City for kicking it off with his checklist:

Garbage collection day – what restrictions if any?
Recycle day – is there a fee or is it free?
Instructions for:
Sprinklers system
Furnace
Humidifier
Water softener
Central air
Air cleaners
Fridge
Stove/Range
Ovens
Dishwasher
Garbage Compactor
Mail Box keys
Security Systems & Keys

Warranties for:
Appliances
Roof
Carpets
Other flooring

Garage Door openers
Entry Keys
Storage Shed keys & locks
Utility panel Keys or locks

And Paula Bean from Orlando added these:

Phone company number and how to apply for new service
Power company (along with most recent bills to estimate usage) and how to
apply for new service
City recreation info ( we have a rec dept here with lots of useful info)
Phone numbers and url of schools, principals, private schools, day care
centers, list of teenage babysitters
Closest Mall, Hospital, churches
List of vendors to provide plumbing, electrical, A/C help or warranty info
Post office location
List of takeout restaurants for pizza, chinese, etc, list of restaurants by
fast food/quality/map directions
Closest Blockbuster or other video store (pre –Netflix 😉
The name and number of their next door neighbors, one on each side and
across the street, along with an introduction and a coupon for a free pizza
(or chinese, or ???) , so they can have a housewarming party and let the
kids (if any) get to know each other. I usually throw a housewarming party
for my new buyers or sellers, get a mailing list, cater it and it is great
PR!! .
The number to the HOA person so they can get newsletter and learn about
their neighborhood.
Put them on a drip list to receive info about real estate values in their
neighborhood (and get referrals)

What can you add to the list so far?

# New PayPal User Agreement – July 1, 2015

Do you use PayPal either as a consumer or a merchant? If so, PayPal has announced modifications to the PayPal User Agreement effective July 1, 2015 that all users must agree to as a condition to using PayPal’s services. If you don’t agree, you cannot use PayPal.

Advance word on the planned modifications has created quite a stir among not only account holders but also the Federal Communications Commission (FCC) who in a June 11, 2015 letter to PayPal expressed serious concerns that “these amendments may violate federal laws governing the use of autodialed, prerecorded, and artificial voice calls, including text messages.” For details: https://s3.amazonaws.com/ftc-materials/FCC+Ltr+To+PayPal+6-11-15.pdf

There are two controversial provisions in the proposed PayPal amendments found at  https://www.paypalobjects.com/webstatic/ua/pdf/US/ints/ua.pdf

The first is a very aggressive policy with respect to users consenting to ROBO calls and text messaging – “You consent to receive autodialed or prerecorded calls and text messages from PayPal at any telephone number that you have provided us or that we have otherwise obtained…(and allow us to) contact you with offers and promotions.” Currently there is no opt-out mechanism.

The FCC noted that: “If PayPal plans to make autodialed, prerecorded, or artificial voice calls or text messages to its customers, please be aware that federal law places strict limits on such communications. For more than two decades, federal lawmakers have sought to protect consumers from harassing, intrusive, and unwanted calls and text messages. The FCC recognizes that “automated or prerecorded telephone calls [are] a greater nuisance and invasion of privacy than live solicitation calls,” and that “such calls can be costly and inconvenient” for consumers. FCC regulations therefore require that before a company may make any prerecorded or artificial voice telemarketing calls to residential phones or autodialed, prerecorded or artificial voice calls or texts to wireless phones, the company must obtain the prior express written consent of the recipients.”

The FCC concluded that “PayPal ‘s amended User Agreement does not give consumers notice of their right to refuse consent to calls that require consumer consent from PayPal, its affiliates, and its service providers. If PayPal fails to include this required notice and/or fails to allow its users to refuse such consent, we are concerned that consent is in fact a condition of purchase of PayPal’s service and thus violates the Telephone Consumer Protection Act and could subject PayPal, its affiliates, and its service providers to penalties of up to \$16,000 per call or text message.”

In light of these serious concerns of the FCC, it is possible that the proposed amendments to the User Agreement will be modified with respect to the ROBO call provisions. Users will want to carefully read the July 1 amendments to see if the FCC concerns have been addressed.

Another controversial provision in the proposed amendment covers Intellectual Property rights. Although the essence of this provision has been in existence for a long time, most users will be reading it for the first time and may be surprised with the over-broad language. For example: “When providing us with content or posting content in each case for publication, whether on-or off-line using the Services, you grant the PayPal Group a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, sublicensable (through multiple tiers) right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights and intellectual property rights you have in the content…in any media known now or in the future.”

Although broad in scope, the provision is not much different from what is found in many social media forums. At the present time, it is hard to envision what type of content that users provide that can be monetized (such as in the form of derivative products). However, in the age of big data, and the fact that PayPal may be in a growth mode now that it has transitioned into a separate company from its original parent eBay, Inc, PayPal could be laying the groundwork for future uses.

Time will tell what the long term effect will be with the new mandatory amendments to the PayPal User Agreement. One thing for sure, PayPal has taken a big hit in the Public Relations arena.

Sales and Selling

# How Many REALTORS Actually Sell Real Estate?

In doing some research on the increased number of students taking the real estate exam, John  ran across an interesting statistic offered by Keith Byrd, a San Luis Obispo CA broker. Keith is well-known to longtime RealTalk members for his insight concerning real estate internet sales and marketing trends.

From Keith: “I did an analysis of 2014 Sales for almost 60,000 members in the Calif Regional MLS. 61.3% of members had 2 or fewer transactions. 28.3% had zero transactions in 2014. People going for their license should be aware of how competitive this industry is. More Agents means more competition for the 2015 transactions.”

How do those numbers compare to the percentage of transactions (buy or sell sides) for licensees with active licenses in your area? What do you think the percentage is for MLS members with zero transactions?