The Commercial Classroom: Planning - It’s all about the numbers - by Edward Smith Jr.

This column is offered to help educate agents new to commercial and investment brokerage and serve as a review of basics for existing practitioners.

As you head towards the end of the year it’s time to reflect on how you did with our business goals for 2025. Did you fulfill your business plan and accomplish your goals? If your answer is yes, you had a great year. Or if no, a new question, why not? Self-assessment is not easy but is necessary to success. Analyze your strengths and weaknesses and what you need to do to improve.

Where do you see yourself on December 31, 2026? How many commissions will you have earned? How will you accomplish that?

Some say real estate is a numbers game. Let’s look at the fundamentals; we need to close deals to get paid. Generally, a significant amount of our commission goes to our brokerage firm, and we probably do 60%-70% of our business co-broking, splitting our fee with another firm. Bear in mind the NAR rules that all commission and splits, if any, are negotiable, some of your income may be coming directly from your buyers or tenants.

Based upon how much money you want to earn next year; calculate how many sales and leases transactions you need to do. Realistically examine your market, what are the average sales prices, average rents and length of leases, then project the gross commissions for each. Now figure out the splits with your office and possibly other firms and project your net average commission on a typical sale or lease

Now let’s look at statistics. If you want to close 12 transactions next year how many exclusive listings do you need to get? This depends on your closing ratio; do half of your listings sell or lease? If so, you need 24 listings, plan on obtaining two a month. How many listing presentations do you need to go on to get an exclusive listing; one out of two a 50% listing ratio? So, to get our 24 listings we need to go on 48 listing presentations, four a month, one a week.

How many people do we need to meet each year? Statistics also tell us that 1 out of 10 people who tell us they want to sell, buy or lease real estate actually do so. If we want to do 12 transactions that means we need to find 120 qualified clients. Average numbers tell us that if we meet 15 new people, only one of them will be interested in doing a real estate transaction this year. Consequently, to find 120 qualified clients we need to contact 1,800 people. Wow! This sounds staggering; but if we break this number down it’s 150 a month, 37.5 a week, 7or 8 people a day.

Our business plan is starting to take shape (based on closing 12 deals) each week we need to do at least one presentation and meet 37 people. We now know our financial goal for the year, the number of required transactions, and what needs to be done to accomplish that each month. Write out your plan so you can follow your weekly progress.

Let’s look at some ways to meet people. Send out five letters a day, reminding folks from your sphere of influence list, current customer and prior customer lists that you are in the commercial and investment real estate business.  Ask them if they know anyone else that you could help.

Follow this up with a phone call a week later, asking for referrals. Also advise them you will be sending out an email “newsletter” with community news and obtain their email address. Hand sign the letter and add a P.S. as to how you know them. That’s 1,200 people contacted a year (5 letters with 5 follow up calls each day, 25 a week, 100 a month). Plus, the redundancy of contacting them each month thereafter with your e-mail newsletter; which will end with: “Did you think of anyone I can be of service to?” Your cost is only five stamps a day, then monthly communication becomes electronic.

Systematically visit two businesses a day in “your” town, speak with the owner or tenant. Thats 10 a week, 40 a month, 480 contacts a year. Call two FSBO’s a day, that’s also 10 a week, 40 a month, 480 a year. With just these three techniques you are already contacting over 2,000 people a year.

You need to prospect at least an hour a day to build your commercial business and to accomplish your business plan and your goals.

Consider getting active in your community. Where will you find potential clients? Join local service clubs, Lions, Rotary, Kiwanis, there are all good and chambers of commerce. Be active in some committees and sit with a different group of business owners at each meeting.

As you can see building your business is all about the numbers.

Edward Smith, Jr. CREI, ITI, CIC, GREEN. MICP, CNE, e-PRO and CIREC program developer, is a commercial and investment real estate instructor, author, licensed real estate broker, speaker, a consultant to the trade and is a real estate broker with Smith Commercial Real Estate, Sandy Hook, Conn.