The success of your brokerage heavily depends on your real estate agents. If they’re not consistently bringing in and closing deals, it can directly impact your bottom line.
To assess an agent’s success, it’s essential to monitor their performance, whether they’re new to the industry or seasoned professionals. Tracking specific real estate metrics provides a clearer view of each agent’s effectiveness, helping you to meet revenue targets and maintain a strong financial position.
Knowing which metrics to track—and understanding each one—can be challenging. This article will explore five key metrics to evaluate the performance of your agents and your real estate business overall. We’ll also discuss how each metric influences your bottom line and what you can do to help ensure each agent achieves success.
1. Monthly Production
Agent productivity is a critical measure of real estate success, as it’s directly linked to your company’s revenue.
What is Monthly Production?
Monthly production refers to the number of closed transactions an agent completes within a month, contributing to the overall revenue. This metric is valuable whether your agents pay a flat fee to your brokerage or work on traditional commission splits.
Annual production is another useful metric but is typically less helpful for assessing monthly fluctuations in expenses. Instead, tracking month-over-month and year-over-year production helps you understand growth patterns, seasonal trends, and performance consistency.
For new agents with less than 12 months at your company, focusing on month-over-month production with an eye on seasonal trends can still provide valuable insights.
How Monthly Production Impacts Your Bottom Line
Brokerages often employ various types of agents—full-time, part-time, and producing admins—each of whom incurs a cost. Monthly production, or the lack thereof, is a clear indicator of the financial value each agent brings to your brokerage.
When agents aren’t productive, it affects your revenue, especially if you charge only a flat fee. In such cases, non-producing agents become a financial liability because they still require access to your tools and resources. Similarly, for agents on commission splits, you may earn more from their closed deals, but this must be weighed against the costs associated with supporting them.
For example, software expenses, which are typically charged per user and often require long-term contracts, represent an ongoing cost your brokerage must cover to provide agents with necessary tools.
2. Days on Market (DoM)
Another essential metric to monitor is the length of time an agent’s listings remain active on the market, known as Days on Market (DoM).
What is Days on Market?
Days on Market represents the number of days a property is listed for sale on the MLS before going under contract. This metric can often reveal areas where quick improvements can be made. By tracking DoM for each agent, you can identify why certain agents’ properties stay on the market longer than those of top performers.
While a higher-than-average DoM might not immediately signal underperformance—since seasonality and changing market conditions can play a role—it’s still a useful indicator. In cases where an agent consistently has high DoM, it could suggest they would benefit from additional support.
How Days on Market Impacts Your Bottom Line
Active buyers and investors often act quickly on attractive listings. When a property stays on the market too long, potential buyers may suspect issues with the price, location, or condition. Prolonged listing periods often lead to price reductions, which can reduce the final commission amount.
Understanding this metric helps you recognize which agents may need coaching in areas like pricing, marketing strategy, and negotiation skills. Offering mentorship and additional resources can help agents refine these skills, ultimately benefiting your brokerage’s overall performance.
3. Sale Price vs. List Price
In addition to Days on Market, the difference between a property’s list price and its final sale price is a crucial metric for evaluating performance on a monthly basis.
What is Sale Price vs. List Price?
This metric tracks the percentage difference between the initial list price and the final purchase price. Price reductions to close a sale can often make the property appear stale, while underpricing a listing can lead to missed revenue opportunities for the company, agent, and your client.
The top agents excel at setting prices that generate interest without sacrificing potential earnings. By generating regular reports on sale price versus list price, you can pinpoint which agents may need guidance in setting competitive yet profitable prices.
How Sale Price vs. List Price Impacts Your Bottom Line
Establishing the right list price requires skill and practice, but it also consumes resources. Brokers who analyze this metric on an agent-specific basis can better coach agents to improve pricing strategies. To accelerate skill development, focus on these critical aspects of the pricing process:
- Reviewing comparable listings and recent sales
- Analyzing the history of withdrawn and expired listings
- Monitoring current pending transactions
- Assessing market trends
This targeted approach helps agents refine their pricing strategies, boosting both their effectiveness and your brokerage’s profitability.
4. Sales Volume
Sales volume is a commonly used indicator of success, often associated with an agent’s or brokerage’s overall capability. Both agents and brokerages use this metric to showcase their market presence and performance.
What is Sales Volume?
Sales volume is the total value of all closed transactions, measured by the sum of sales prices. Although this figure is frequently reported annually and can be a powerful indicator of influence, it doesn’t always provide a comprehensive picture of performance.
For instance, consider two agents: one closing 50 deals per year and another closing 25. Either could be the leading contributor to your company’s revenue depending on other factors like sales prices, commission plans, and associated expenses. Understanding these variables in the context of sales volume is crucial to evaluating true performance.
How Sales Volume Impacts Your Bottom Line
To effectively use sales volume as a measure of success, it’s important to understand how your brokerage generates revenue. Without this context, sales volume risks becoming a vanity metric, potentially leading to misguided decisions regarding agent development and resource allocation.
For a flat-fee brokerage, the number of transactions generally holds more weight than total sales volume, while a traditional split brokerage relies on a direct percentage of sales volume for revenue. When agents prioritize high-volume, high-value transactions, it may lead them to focus on fewer, larger deals. Keeping these dynamics in mind when setting goals and structuring commission plans will help you balance revenue objectives with overall sales activity.
5. Pending Commissions
Of all the performance metrics for real estate agents, pending commissions are particularly valuable for any brokerage.
What are Pending Commissions?
Pending commissions represent earnings that have been generated but not yet received. Tracking pending commissions helps you project future revenue and make informed decisions based on anticipated income.
Calculating pending commissions varies based on your brokerage model. For flat-fee brokerages, pending commission calculations are often as simple as multiplying the transaction fee by the number of pending deals, though additional fees may also apply.
For traditional split-based brokerages, calculating pending commissions can be more intricate. Factors such as commission splits, referral fees, franchise fees, client fees, and other deductions must all be included to determine the accurate pending amount.
How Total Commission Generated Impacts Your Bottom Line
The value of pending commissions is critical, as it provides a glimpse of expected income over the short term. Understanding this figure enables your brokerage to assess its capacity for investments in areas like recruitment, brand development, or hiring additional administrative support.
To keep your pending commissions data current, consider running weekly reports that consolidate pending commissions across all teams and locations. For added insights, compare this figure to the same period in the previous month or year, which will help account for seasonality and normalize the data for more accurate forecasting.