Three Ratios That Matter for Commercial Real Estate Brokerage

Solomon Poretsky, Vice President of Organizational Development
Solomon Poretsky, Vice President of Organizational Development

The following are a few words about important ratios from our new Vice President of Organizational Development, Solomon Poretsky.

If you’re looking to grow your commercial real estate brokerage practice, the old adage that it’s better to work smart than work hard holds true. Before simply making more calls, take some time to look at your business and see where you’re strong and where you can improve. Focusing your efforts on improvement lets you win more deals without doing any more work. Here are three of the key ratios to analyze as you plan your strategy:

Contacts to Meetings
To calculate the contact to meeting ratio, add up all of the unique people you talk to on a prospecting call, and divide it by the number of meetings you book. If you talk to 30 people and book 5 meetings, your ratio is 6. Booking 2 meetings out of 40 conversations, on the other hand, works out to a 20 to one ratio. While the ratio can vary, most mid-range agents that are focused on booking meetings with qualified prospects fall between 5 and 7 contacts to book a meeting.

A lower ratio might indicate that you are extremely skilled on the phone. A higher ratio could indicate that your approaches are less effective. It could also show that you’re over-qualifying on the phone. Remember that it’s always better to meet a prospective client than not to meet her.

Proposals to Listings
Whether you’re looking to sell apartment buildings or become a landlord rep for office building owners, presenting the proposal is where the rubber meets the road in commercial real estate. Doing too few proposals means that you’re missing out on opportunities to move a relationship forward with a prospect that could turn into a client down the line. On the other hand, if you’re doing double-digits worth of proposals to get an engagement, something could be wrong. Generally, a mid-range agent will need between three and five proposals to get hired by a client.

Closed Listing Ratio
For some agents in some markets and property types, it’s possible to close 100 percent of listings. However, an occasional expiration is a fact of life, especially if you’re out there fighting to get maximum value for your commercial real estate clients. Taking listings that expire might get your name out there and might give you ammunition to contact more prospects, but they can do more harm than good. Not only do you end up spinning your wheels on deals that don’t sell, but you also build a brand for yourself as an agent that can’t do what he says. Keeping your closed listing ratio between 75 and 85 percent is a good guideline, and higher is better.

Calculating – and tracking – your ratios will let you see how you progress in your commercial real estate business. If you have a method for improving your effectiveness – or a ratio that you find useful – let us know below in the comments section.

Authored by Solomon Poretsky, Vice President of Organizational Development for Sperry Van Ness International Corporation.

*All Sperry Van Ness offices are independently owned and operated.