Did You Know?
Many Best Practice agency owners teach these five rules to their children and to those who rely on them for wise advice.
1. Save a deposit and purchase your first (modest) house as soon as possible.
2. Make the re-payment of the home loan your number one goal.
3. When 50% of the home loan is re-paid purchase your first investment property.
4. Continue to live modestly and when possible purchase your second and third investment property.
5. Continue to obtain sound professional advice to increase you net wealth.
Top 10% sales agents focus on those prospective clients who are most likely to sell or buy. To do this effectively they define both "A" class vendors and purchasers.
An "A" class vendor is most commonly defined as a seller who has listed their home for sale within 10% of the agent's opinion of market value.
An "A" class purchaser is most commonly defined as a buyer who is ready and able to pay a deposit and sign a contract without delay.
Top 10% agency owners include five activities in their definition of "sound business financial management".
1. Annual budgeting with six monthly reviews.
2. Split profit centres (shared expenses split in line with revenue).
3. Delivery of a trading statement for each profit centre (for last month, year to date and performance to budget) by the tenth day of every month.
4. Calculation of each sales agents profit point.
5. Meeting with external accountant (business adviser) four times per year to discuss
(a) Performance to budget.
(b) Operating surplus and capital value.
(c) Effective taxation strategies.
(d) Principal and employee remuneration packages.
(e) Financing and investment strategies including superannuation and wealth creation.
(f) Human relations and industrial relations.
Some agency owners are concerned that if they continue to grow the business and buy more rent rolls that it will be almost impossible to sell when they want to retire.
The business will become the acknowledged dominant local real estate agency. Whenever any of the directors/partners wish to retire/exit the business they will simply sell their equity in the business in accordance with steps laid out in the partnership agreement.
The business does not have to be sold. Principals will enter and exit the business in the same manner as principals in the accountancy, legal and medical professions have done for decades.
The typical Australasian residential agency business has nine competitor agencies within its local market place.
The business services a population of 30,000 people residing in 10,000 dwellings.