The final article in Matt’s Max-Bang series last week (the one on cutting your overhead) really hit the nail on the head. We did exactly what that article says, and it saved our business. I told my story to Matt and he suggested that I share it with his readers in a guest post, so here goes.
Early last year, our real estate practice was on the verge of bankruptcy. My wife and I have been in real estate for ten years, but as with a lot of agents, the past two years were very bad for us. I had even visited a bankruptcy attorney to discuss our plight. I felt like we were doomed. At the time, we hung our license with a major real estate franchise, and while we were closing some sales, virtually all of our commissions were going to our operating expenses (FavoriteAgent, HomeGain, advertising, MLS fees, gas, insurance, office supplies, computer programs, website, and our franchise fee of 36%). There was very little left over to take home.
We were desperately trying to find a solution to our financial troubles and had even considered getting out of real estate. About that time, I happened to be reading a certain top selling real estate book by the owner of a major real estate franchise. He too recommended that when you are having financial difficulties, the first thing to do is lay out all of your outgoing dollars and try to eliminate or reduce your biggest costs first, wherever possible. Well, I’m pretty sure he didn’t mean for us to do what we did next, but it just so happened that our biggest expense of all was the 36% commission we were paying to his franchise on every sale.
So we moved our license over to another company in our home state of Florida, a 100% commission company. It is by far the best thing we have ever done for our real estate business (besides using the FavoriteAgent lead capture technology, of course!).
I certainly don’t intend to brag. I truly believe our success has come from not only from our success with FavoriteAgent, but also as an answer to some serious prayers from a source higher than Matt Jones. But this will make my point. In our first two-month period after moving our license to Xcellence Realty, we made over $10,000 extra just by keeping the 36% we used to pay out to a national franchise. In only two months!
In June-July this year (our best two months ever), we will earn about $62,000 in commissions, in spite of the oil slick off our beautiful Pensacola Beach. If we had stayed with our former broker, we would be taking home less than $39,000 of our commissions. That’s $23,000, just as a bonus for switching companies and cutting the expense. Wow! That bonus alone helps pay off a lot of bills.
How’s that for illustrating your “lose the overhead” concept?