Goal Setting for Real Estate Agents

Being a real estate agent is no joke. The struggle to get calls, leads, and sales is an everyday
and all-too-common frustration for us, especially for those who are only just starting out.
You may have been attracted to this industry before, only to get disillusioned when you
realized that you may not be making much progress.

Our ultimate goal in this channel is to help real estate agents achieve financial freedom. For
this video, we discussed the importance of having and setting goals. Specifically, I talked
about three things: (1) the importance of goal setting for real estate agents, (2) how to set
and get those goals, (3) and how to break everything down into attainable goals.

Too often, real estate agents are stuck in the rat race of working hard and putting their
100% in all their sales and in all their calls every day, only to look back after all those years
and realize that they have not gotten far from where they started. That tends to happen
because of a lack of goals. Without having a goal, all of us — regardless of our job or where
we work — are like fish floundering aimlessly in the ocean. We are always moving, always
on the go, but there is no destination to speak of; without this destination, we almost
always end up right where we started because there is a huge tendency to keep going in
circles. Goal setting is an elusive concept for many real estate agents; most of them do not
even know where to start. But let me help you with how to get started on it.

First, you have to ask how much money you actually want to make as a real estate agent.
Having this stretch goal is important because it is the foundation on where all your actions
will depend. We get out what we put in, so right from the start, it is extremely important to
know where we want to be and what we want to be. Do you want to shoot for the stars and
make upwards of $500k a year, or do you just want to live a comfortable life with a good
work-life balance? After you answer this question, you have to ask yourself, “Why is that my
goal? How did I come up with that number?” This is the first and most important step
because your goal will be your compass and your anchor at the same time. All your actions
in your career should be cross-checked with your goal; whenever you find yourself torn
between multiple choices that seem valid at first glance, remember your goal and take the
action that will bring you the closest to that.

If you are finding it hard to come up with an attainable figure, first ask yourself what your
perfect, ideal lifestyle looks like. Do you want to have a family and a nice house with a 2-car
garage in a rich residential area? Or do you plan to just stay single and live modestly? There
are different ideals for different people, so you have to find out what you want for yourself.
From there, know all the costs of that lifestyle, from the cost of your residence, your
monthly expenses, everything. Of course, more lavish lifestyle goals will require bigger
financial goals. Add all those up and put in some spread for emergency savings; aim to
have six to twelve months’ worth of business and personal expenses for reserves to get
you out of sticky situations. As a real estate agent, you are also a business owner, and
being a business owner means you are subject to the volatility of the market. If the market
ever flips or crashes, or if a bubble occurs and then bursts, you are going to need your
reserves to get you through economic downtimes. Having a pool of savings effectively
means you are buying yourself time to readjust to changing market conditions without
having to mortgage or sell off any of your properties. History shows us that the market has
corrections every 1.84 years on average, with a bear market occurring every 7.78 years. If
you are a young real estate agent, you will go through times when you will be struggling to
make sales because your potential clients are not prioritizing property purchases. During
those times, you will have to rely on the reserves you have built up.

After you have done all that, you now have your financial goal.

Now we have to ask ourselves how to get there. This is where the strategizing begins. In
your career as a real estate agent, what are the actions that you will be taking in order to
meet that financial goal? What will the journey look like for you? How many homes or
properties do you need to sell? Let me give you a formula for that.

First, find out the average price for each sale you make. For this video, let us say you sold
20 units with an average sales price of $300,000.00 each, bringing you to a grand total of
$6,000,000.00 worth of homes sold. From that total, get your commission percentage; let
us say it’s at 2%. Two percent of $6,000,000.00 is $120,000.00, and that is your gross
commission income (GCI).

From your GCI, deduct your broker’s fee — let us say it is at 20%, bringing your net income
to $96,000.00. That is how much you would bring home if you were able to sell 20 units.
Use this formula to decide how many homes you need to sell at a particular price point in
order to get the amount of money you want to make. If you also have business expenses —
for example, when you are buying leads — you will also have to factor in those expenses. If
we apply the same numbers and formula we did, but with $15,000.00 worth of expenses
incurred in buying leads, then you will not be bringing home $96,000.00 but actually
$81,000.00. If you are happy with this number, you should decide your work schedules and
time blocks.

And just like that, you now have one of the most important things that a real estate agent
should have in order to achieve financial freedom: a goal. Notice how setting a goal
involves working backward — first, we decided what we want, and then we took steps back
to determine how we can get there.

If you really want to be meticulous about tracking your revenue and expenses, you will
have to track them in a bookkeeping tool. I suggest Quickbooks because it also has
features that allow you to document your expenses, track your sales, and send an invoice
right after making an appraisal. But if you do not want to spend on bookkeeping software,
a Google spreadsheet will work just fine, but you’re going to have to manually input all the
data. Regardless of what you choose, the important thing here is to organize all your
accounts, expenses, and sales.

After you figure out the numbers of your financial goals and after you have decided what
you need to do, the next thing to work on is your mindset. This is one of the most
underestimated aspects of financial freedom because most people tend to focus too much
on what they should do, but not how they should think. Your knowledge and mindset will
serve as the foundation for your actions, and they will be the ones that allow you to grow
and make more money.

You can start by reading a couple of books every month, whether it be about personal
development, entrepreneurship, finance, or real estate. Even as you are working on your
business, you will want to keep continually growing as a person.

This advice applies especially to those of you who are way under your income goals. When
your current income is so far below your goals, you always have room to grow. They say
that the best investment is in yourself, and you can do this by improving your current skill
set, learning more skills, and overall just broadening your knowledge base. Your readings
do not always have to be about real estate. As long as you can increase your overall skillset
in a way that you can use for your career and increase your cash flow, that kind of
improvement is always good.

The age we live in right now is an information age where knowledge is accessible at our
fingertips. There is basically no excuse for us to keep ourselves from constantly improving
and constantly learning. There are plenty of materials out there on the Internet, and it is up
to us to grab them and learn from them.

As they say, readers are leaders. The ones who accumulate information and knowledge are
those who eventually become leaders and trailblazers in their careers. If you want to break
free from where you are now, you will have to start looking outwards for things that you
can bring inwards.