Real Estate Agent

Business Plan
Threats
• Competition
With two classes, and high school diploma, and age limit, anyone can become a real estate
agent. These minimal criteria are what separate Me Realty from the competition. This is a
threat because every newbie that sells two or three homes one year and quits, is taking two or
three sales away from Me Realty. As of January 2005, there were over one million licensed
REALTORS registered with the National Association of Realtors. This national association
promotes real estate as a career, further increasing the likelihood of increased competition.

• Government
Government involvement with interest rates, regulations governing real estate transactions,
and involvement with who can sell real estate effects the entire industry. Interest rate
manipulation can increase or decrease the demand for real estate financing. Regulations
governing real estate transactions will require continuing education and knowledge to
properly ensure compliance. The continued government involvement will increase the time
needed for education, reducing the time devoted to income generating activities. Lastly,
government involvement with control who can sell real estate will have a large impact on
competition. If the government continues to allow financial institutions and banks access to
the real estate market, what will stop insurance companies and retail companies (Wal-Mart,
Target, etc.) from entering real estate sales.

• Lower Commission
Competitive forces may create downward pressure on sales commissions. The competitive
nature of real estate and ease of access to the industry will decrease the commission rate on
homes. This can only be combated with direct inquiry and sales finesse. Customers/clients
will work with an individual who is providing added value and the perceived increased value
that experience, knowledge, and confidence provide. The downward pressure will also
increase the number of sales needed to reach financial goals.

Other potential threats: salaried salespeople become a reality, discounted commissions to 1.5
percent, and acceleration of homebuyers' use of the Internet.

Copyright 2005 SmallBusinessPoint.com, Inc. 5

Company Analysis
Name
Me Realty, LLC is a one-person real estate company based in Metropolitan, State. The name Me
Realty, LLC was chosen because it describes the business and brand. Me Realty is building
brand recognition for long-term client satisfaction.

Mission
The objectives for the first three years of operation include:

To create a real estate company whose primary goal is to exceed customer's expectations.
To increase the number of clients served by at least 30% per year through superior
performance and word-of-mouth referrals.
To satisfy client’s real estate needs and wants profitably.
To develop a sustainable real estate business that generates value for customers.
To uphold the ethical codes set forth by the State Real Estate Commission.

Company History
The principal, Gadda Mooga, has a BS-Marketing from the State University and an MBA from
University of State. Ms. Mooga has over five-years experience in retail sales, ascending to
Department Manager at Retail Store, a small pet store. As Department Manager, Ms. Mooga
was responsible for customer service, inventory orders, and selling pet supplies. This experience
has taught Ms. Mooga how to overcome customer objections, different closing methods, and
how to manage multiple tasks. These skills have built an excellent foundation for a successful
career in real estate.

Current Situation
Market Situation
Real estate has experienced three years of unprecedented growth and success. Fueled by
historically low interest rates, new and existing home sales have exceeded prior year’s sales
records. Various economists predict a real estate bubble, which will effect home values and real
estate sales. The bubble burst theory is highly speculative and one that most real estate
professionals are cognizant of but nothing to be alarmed. Historically, rising interest rates have
adversely effected home sales by reducing the number of individuals buying and selling homes.
Individuals will always need basic shelter and homes satisfy that need.

According to the Multiple Listing Service, the market Me Realty, LLC will be competing had
4,705 sold residential units in the last six months, with 1,776 currently pending. This is a very
active market and one that can sustain Me Realty, LLC’s participation. Currently the market has
over 3,635 active residential listings, or 7.75 months of supply, with an average 96 days on the
market. This is higher than the historical sold days on market of 51.

Copyright 2005 SmallBusinessPoint.com, Inc. 6

made in sales volume, gross commission income, net commission percent earned and total deals.
These last goals will be used to measure and adjust the assumptions already discussed.
Goal #
Sales Volume $3,900,000
Gross Commission Income $75,000
Net Commission Percent Earned 2.8%
Total Deals 26

Legal Form of Ownership

Me Realty, LLC is organized as a limited liability company that offers more protection than a
sole proprietorship. Ms. Mooga’s rental properties are also under the LLC designation, further
insulating the principal from legal issues.

Resources/Technology/Development
When Is a Real Estate Agent a Realtor?

Me Realty, LLC is a REALTOR as Gadda Mooga is a member of the National Association of

Realtors, the world's largest professional association. The term Realtor is a registered collective
membership mark that identifies a real estate professional who is a member of the National
Association of Realtors and subscribes to its strict Code of Ethics.

Founded in 1908, NAR has grown from its original nucleus of 120, to over 1,000,000 members
today. NAR is composed of Realtors who are involved in residential and commercial real estate
as brokers, salespeople, property managers, appraisers, counselors and others who are engaged in
all aspects of the real estate industry.

Members belong to one or more of 1,700 local associations/boards and 54 state and territory
associations of Realtors and can join one of our many institutes, societies and councils.
Additionally, NAR offers members the opportunity to be active in our appraisal and international
real estate specialty sections. Realtors are pledged to a strict Code of Ethics and Standards of
Practice.

Working for America's property owners, the National Association of Realtors provides a facility
for professional development, research and exchange of information among its members.

Professional Development
Me Realty understands that to be a professional requires continual growth and improvement.
Much like corporations and their quality and continuous improvement initiatives, Me Realty has
defined a plan that combines training, real estate course work, and customer feedback.
Training
Real Estate Courses Improve Knowledge Increased Customer Satisfaction
Sales Training Improve Skills Increased Sales
Customer Feedback

Copyright 2005 SmallBusinessPoint.com, Inc. 8

 • Audience. This is the specific target market in a particular segment or geographic area.
o Me Realty will concentrate on the Meadowstream and Elk Scent neighborhoods
o Me Realty will work the For Sale By Owner web sites.
• Differentiation. This is setting the company apart from the competition and offering a
unique value-added service. Me Realty hasn’t determined this, but will answer the
following questions; how will Me Realty approach sales that will set them apart from
others in the market and whom will they appeal to.
• Media. This is the communication method used to reach the target audience.
o Print advertising; brochures, business cards, and real estate magazine
o Company web site and broker web site.
o Community involvement in the Meadowstream and Elk Scent neighborhoods
• Action plan and schedule. This is the schedule of when each step will occur. This is
the to-do list that will make the marketing plan successful and achieve the results. Below
is a list of tactics Me Realty will use to reach the target market.
March -- spring greeting post-card/letter with flower seeds, to family and friends reminding them
that Me Realty sells real estate. This will give them a reminder prior to the busy spring/summer
sales months. The reminder will place Me Realty’s name in their evoke set and instant recall
before they sell, buy or refer an acquaintance.

July -- sponsor a 4th of July neighborhood (Meadowstream & Elk Scent) with flags.

Fall/Autumn - distribute yard waste bags with Me Realty’s logo to former clients, friends and
family.

December -- Holiday cards to former clients, customers, friends, and family

• Budget. Now that the marketing plan is in place, it needs fuel to move, that’s the
budget’s role. The budget must be used efficiently, otherwise the message will be sent
but no one will receive it. Me Realty has set an advertising budget of ten percent of
earned commissions, or $7,500. To get started, the company will purchase business
cards, personal brochures, directional signs, and personalized sold bags, and allocate ten
percent of all commissions to develop other marketing materials.

⇒ Business Cards will be purchased with all appropriate contact information. $100

⇒ Real Estate Magazine Ads will be purchased for all listings. Each ad costs $50 for a
two-week publication and is distributed to all retail outlets in Metropolitan. This is an
effective and efficient mode of advertising. The ad will promote the current listing
and offer a brief tag line about Me Realty. $4,000
Copyright 2005 SmallBusinessPoint.com, Inc. 12
 ⇒ Sales Promotion material such as newsletters, cards, letterhead, flyers, brochures,
pens, and key chains will be purchased throughout the year and passed out during
open houses, meetings, and listing appointments. As discussed above, Me Realty will
send periodic notices to past clients/customers with varying messages. So the
recipient doesn’t grow tired of receiving the mailers, each communication will relay a
different service provided by Me Realty and personalized when possible. $1,000

1. Personal Selling
2. Public Relations
a. Articles
b. Press releases
c. Interview

3. Advertising
a. Most costly
b. Most used

Sales Strategy
Me Realty, LLC sale’s strategy is to emphasize comprehensive research and in-depth product
knowledge. Me Realty’s goal is to know everything about the client’s home, neighborhood, and
community, before the agreement is signed. This approach is likely to turn prospective clients
into long-term customers. Buying and selling real estate is a because people are often cautious
with their property decisions and offering a comprehensive solution will likely allay their
concerns because Me Realty, LLC is willing to work extra hard to research all options.

The time needed to provide the high level of service will be more than the typical agent provides,
but will have great dividends.

Commission Code (Cooperating Commission)

The cooperating commission structure continues to decrease with just over half of all residential
detached homes sold in the last six months, paying less than two percent to cooperating brokers.
This means that sales people are earning less per transaction on a percentage basis than agents
did in years past. This also means that sellers are becoming more cost conscious and squeezing
dollars out of the transaction.

According to the MLS, these are the last six-month cooperating commissions
Rate Frequency Percent Cumulative Percent
1.8 1 0% 0%
2.0 4,003 50.1% 50.1%
2.2 4 0.1% 50.2%
2.4 2,419 30.3% 80.5%
2.6 76 1.0% 81.4%
2.8 1,410 17.7% 99.1%
3.0 75 0.9% 100%

Copyright 2005 SmallBusinessPoint.com, Inc. 13

Below is a top ten list of the competing real estate companies and number of licensed agents.
Company # of Agents
Holding Company Realty 659
Sandy Real Estate 426
Rock Solid Realty 177
Difference Maker Realty 157
Millennium Real Estate 136
Climate Real Estate 57
Weird Al Realty 51
Chutes Realty 38
Smalltown Real Estate 27
Cake Real Estate 15

Below is a top five list of competing agents.

Name Annual Average $ Days on Commission Strategy
Deals Deal Market
Person One 202 $180,132 64 5-7% Team of six
Person Two 170 $187,736 47 5-7% Team of nine
Person Three 154 $186,689 51 1%, 2.7%, One assistant &
4.9% broker’s staff
Person Four 133 $125,603 37 5-7% One assistant &
broker’s staff
Person Five 125 $273,778 51 4-6% Team of four

Each competing agent has a different brokerage contract that ranges from a commission split of
60/40 to 100%. The top five agents each earn 100% commissions and pay a monthly fee to their
company/broker. In addition to the monthly fee, these agents may also pay a marketing fee,
administration fee, and advertising fee to the broker.

The second level of competition is all the For Sale by Owners, or FSBO’s, who believe they can
sell their home without a licensed agent. The number of FSBO’s has increased in recent years,
and as homeowners become more and more knowledgeable, they will become a major force in
the market.

FSBO’s are better organized with several web sites catered to thrifty homeowners. For a flat fee
and monthly subscription, the FSBO business will provide a magazine ad, signs, Internet ad, and
sales training. This market is wide-open for an entrepreneur looking to enter real estate without
the licensing requirements.

The third level of competition is loosely named other. These are attorneys, home builders, and
financial institutions that have capability of selling real estate. The Metropolitan area has seen
an increase in the number of financial institutions who offer lending and real estate services.
They often offer their services for lower than established commission rates or at flat rates.
Because of their low costs and aggressive advertising this area has seen increased activity and
acceptance by sellers. Homebuilders, who sell their own homes, also remove potential inventory
from the market.

Copyright 2005 SmallBusinessPoint.com, Inc. 15

Barriers to Entry
According to the state real estate commission, the only three requirements to become a real estate
agent are; 19-years-old, high school diploma or GED, and two real estate classes. These barriers
are attainable for virtually anyone. In order to increase the barriers to entry, Me Realty, LLC
will pursue additional training and classes. The additional training and real estate classes will
differentiate Me Realty, LLC from the poorly skilled agents. Me Realty, LLC will have more
knowledge to handle customer inquiries, overcome objections, and salesperson negotiations.

In addition to education and training, Me Realty, LLC will ‘get involved’ in civic, social, and
community organizations. Being visible in the community and being recognized as a civic
leader will increase credibility and further create barriers for less astute agents.

Change Mechanisms
This section details the internal and external factors that may effect Me Realty in the short and
long-term. The company must have a contingency plan in place to prepare for change. Me
Realty believes the changing economy and the acceptance of e-commerce will change the real
estate paradigm. The company believes that interest rates will increase slowly over the next
couple of years and the economy will slowly grow. These changes will adversely effect real
estate sales. Consumer acceptance of e-commerce and Internet confidence will increase a
consumer’s reliance on electronic medium. This change is acknowledged and addressed through
the company’s use of their Internet web site and electronic commerce mechanisms. Me Realty
will have a searchable web site that will provide access to all the areas listings and information
on recent sales. The site will be used to generate prospects and leads. The site will also have
cutting edge technology that isn’t currently used by any other real estate professional. This
technology will allow completion of the documentation and submission to Me Realty without
every interacting with the client.

Me Realty is also trying to identify trends in real estate that will completely change the business
cycle in less than a decade. Reading real estate magazines and industry rages is a way the
company can stay current with trends and predictions and design ways to mitigate the changes.

Conclusion
In conclusion, Ms. Mooga is excited about the real estate opportunity that has been presented.
With this business plan as a roadmap and broker support, Me Realty will achieve the short-term
and long-term goals. It will be difficult with may aches and pains along the way.

Copyright 2005 SmallBusinessPoint.com, Inc. 19

 Real Estate Agent Software

Income Goal
Per Year $ 75,000
Estimated Income Goal Per Month $ 6,250
Estimated Income Goal Per Week $ 1,442
Estimated Income Goal Per Day $ 208
How Many Hours Worked Per Week 30
Estimated Income Per Hour $ 48

Average Sale Price $ 150,000

Average Earned Commission 2.8%
Commission Split with Broker 70%
Total Average Net Sales Commission Per Deal $ 2,940
Total Number of Deals Needed Per Year 26
Percentage of Cancellations/Expirations 25%
Total Number of Deals including Cancellations 33

Total Number of Deals to Close Per Month 2

Total Number of Deals to Close Per Week 1

Percentage of Deals - Listings 60%

Total Listing Deals before Cancellations/Expirations 20
Total Listings that will Successfully Close 15
Total Buyer Deals that will Successfully Close 11

Appointments
Appointment Closing Percentage 5%
Appointments Needed Per Year to Reach Listing Goal 39
Appointments Needed Per Month 3
Appointments Needed Per Week 1

Prospects
Prospects Needed to Get One Appointment 10
Prospects Needed Per Year to Reach Appointment Goal 390
Prospects Needed Per Month 33
Prospects Needed Per Week 8

SmallBusinessPoint.com, Inc. Work Estimator

 Plan vs Actual
First Year

Prospects January February March April May June July August September October November December Total
Plan 33 33 33 33 33 33 33 33 33 33 33 33 396
Actual 30 30
Monthly Difference -3 -33 -33 -33 -33 -33 -33 -33 -33 -33 -33 -33 -366
YTD Total -3 -36 -69 -102 -135 -168 -201 -234 -267 -300 -333 -366 -366

Appointments
Plan 3 3 3 3 3 3 3 3 3 3 3 3 36
Actual 0
Monthly Difference -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -36
YTD Total -3 -6 -9 -12 -15 -18 -21 -24 -27 -30 -33 -36 -36

Active Listings
Plan 2 2 2 2 2 2 2 2 2 2 2 2 24
Actual 0
Monthly Difference -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -24
YTD Total -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 -22 -24 -24

Active Buyers
Plan 1 1 1 1 1 1 1 1 1 1 1 1 12
Actual 0
Monthly Difference -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -12
YTD Total -1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 -12

Goals for the Week/Month

I am working on:

SmallBusinessPoint.com, Inc. Real Estate Agent

 Graphs

Five-Year Forecast

$120,000
$100,000 Total Anticipated Annual Revenue
$80,000
Total Expenses
$60,000
$40,000 Net Operating Income Before Debt
$20,000 Service

$-
Base 1st Year 2nd 3rd Year 4th Year 5th Year
Year Year

Debt Service & Cash Flow

$25,000

$20,000 Net Operating Income

Before Debt Service
$15,000
Debt Service
$10,000
Cash Flow
$5,000

$-
Base 1st 2nd 3rd 4th 5th
Year Year Year Year Year Year

SmallBusinessPoint.com, Inc. Real Estate Agent Graphs

 Annual Operating Budget

Income
Gross Scheduled Listing Income $ 45,000
Gross Scheduled Buyer Income $ 30,000
Gross Scheduled Income $ 75,000
Income From Other Sources $ 500
Total Anticipated Annual Revenue $ 75,500

Expenses
Advertising/Promotion/Cards $ 7,500
License Fees/Lock Box/MLS Dues $ 2,500
Automobile -Gas/Maintenance $ 1,100
Cell Phone/Pager $ 1,200
Internet/Computer $ 1,500
Insurance (Car, E&O, Health, Other) $ 1,200
Administrative/Office Rental $ 3,600
Income Taxes & Social Security/FICA $ 43,500
Savings $ 3,600
Other $ -
Total Annual Expenses $ 65,700

Net Operating Income Before Debt Service $ 9,800

Annual Debt Service $5,659

Cash Flow $4,141

SmallBusinessPoint.com, Inc. Real Estate Agent Annual Operating Budget

 Expenses

Description Percent
Income Tax Rate 50.0%
Social Security/FICA 8.0%
Estimated Annual Cost Increase 5.0%
Estimated Annual Sales Increase 5.0%
Estimated Annual Other Income Increase 10.0%

Expenses
Description Annual Amount
Advertising/Promotion/Cards $ 7,500
License Fees/Lock Box/MLS Dues $ 2,500
Automobile -Gas/Maintenance $ 1,100
Cell Phone/Pager $ 1,200
Internet/Computer $ 1,500
Insurance (Car, E&O, Health, Other) $ 1,200
Administrative/Office Rental $ 3,600
Income Taxes & Social Security/FICA $ 43,500
Savings $ 3,600
Other $ -
Total Annual Expenses $ 65,700

Debt Service
Car Loan Amount $ 24,000
Number of Year's Financed 5
Annual Interest Rate 5.8%
Annual Debt Service $5,659

SmallBusinessPoint.com, Inc. Real Estate Agent Expenses