You know the old saying: “Time is money.” That’s especially true when it comes to determining how to value your time as a real estate professional on a per-hour basis. At a “normal” job, you trade your time for a paycheck based on a set hourly rate. Though you’re now paid on commission, it is possible to determine your hourly rate by dividing your total income by the number of hours worked.
It’s no secret that you’ll make more money selling more expensive homes, but even some daily business tasks are worth more per hour than others. Getting a sense for which tasks can be tied directly to additional sales allows you to allocate your time better and focus on money-generating activities such as prospecting, following up, and meeting with clients. By knowing you’re worth on an hourly basis now, you can make goals for what you’d like your time to be worth in the future. Then you can make your current income (or more) while working less. Here are some worthwhile lessons to take to heart as you assess your per-hour value.
First, Do the Math
To make a true apples-to-apples comparison, you’ll want to take your annual income (minus business expenses) and divide by the number of hours you’ve worked. Be honest with yourself: Time spent in the office browsing the internet or gossiping with co-workers does not count. If you’ve kept track of your time in your calendar, you can quickly determine the average number of hours you’ve worked each week and multiply that by the number of weeks you’ve worked this year. For example:
$100,000 (annual income) – $15,000 (business expenses) = $85,000
40 hours per week x 50 weeks worked = 2,000 hours
$85,000 / 2,000 hours = $42.50 per hour
Be sure to pay attention to the number of hours spent on each transaction. The average number of hours spent on listing and selling a home is around 16, whereas the average for representing buyers is 32.
Use Your Hourly Rate to Become More Efficient
Once you have a better understanding of your hourly rate, you can begin making business decisions and delegating responsibilities based on what’s most important. Some potential clients may be looking at cheaper homes or ones that are far away from your office. Consider referring those clients out; remember, you can still collect a referral fee. Determine which of your day-to-day duties are the most lucrative and work towards generating income. For instance, you may want to devote your hours to prospecting and meeting with clients, and task an assistant with drafting flyers and doing paperwork.
Learn to Delegate Busy Work
Delegating tasks can add meaningful time to your schedule, freeing up hours to do the things that generate income. Leave the busy work to an assistant or contract worker who you can outsource. Remember that understanding your hourly value helps you figure out where your time is best spent. Photography, website maintenance, and marketing design can easily be farmed out to people who are likely much better at it than you. Paying an outsourced or entry-level assistant a small portion of your hourly rate to manage time-consuming paperwork ultimately frees you up to do more of what really makes your business boom. You should be devoting the majority of your time on the expert-level activities that earn you the big bucks. An hourly rate assessment can quantify the duties that are worth taking on yourself or delegating to others.
Serious professionals never forget that time equals money, so don’t just guesstimate how much your waking hours are worth. Know for sure, and you’ll have the confidence and proven data to make savvier business decisions in the future.