Real estate metrics offer a way to compare performance and identify trends. Understanding how to measure real estate metrics and the different opportunities to utilize them can help you make better-informed decisions, manage employee performance and ultimately improve your bottom line.
Use the following metrics as a guideline when tracking overall sales and marketing performance, identifying areas for improvement, or finding solutions to specific problems.
While there are many metrics to consider when evaluating real estate performance, the following seven are vital for every agent and broker to track:
Closed sales. This is the most important performance metric for any real estate agent, and the number of closed sales offers insight into how well an agent has been able to serve clients and close deals.
Average sale price. Comparing this metric from one period of time to another can provide a general idea of how the market performs.
Days on the market. This measurement refers to the average number of days between listing a property and signing a contract. The fewer days on the market, the faster agents can sell a property and turn over their inventory, resulting in more commissions.
List-price-to-sales-price ratio. Indicated by the percentage difference between list price and final sales price, this metric tells you how well an agent priced property for its market value. The greater the difference between list price and sales price, the less accurate that agent pricing properties for their clients.
Sales per month/year. This measures an agent’s productivity—how many transactions they completed in a given time frame (usually a month or year).
Properties under contract. This is a good leading indicator of future closings, and it gives you insight into the strength of demand in your market.
Without proper analysis, it’s hard to know what your numbers mean. Sure, you can look at sales numbers every month and conclude there, but why not have your numbers tell a story instead? This way, you’ll know exactly what’s happening with your business, and you’ll be able to make the right decisions based on that.