Whether it’s the time it takes to generate a lead, convert a lead, take a listing, show buyers property or close a sale, every aspect of the real estate business has differing cycle times. Shortening your cycle time can dramatically improve both your income and the amount of time you can take off.
If you already track your numbers, you’re only working out half of the equation. The other half involves tracking the time it takes to turn your lead generation and lead conversion activities into closed transactions.
How to shorten listing and buyer cycle time
A great place to start reducing cycle time is with your listings. Assuming your average cycle time per listing is 90 days, persuading your sellers to correctly price their property when you take the listing could reduce your cycle time by 60 days. You can use that time to develop more business or to take time off.
The same approach works for buyers. If it normally takes 15 showings for your buyers to transact, you can shorten that cycle time by doing an in-depth buyer interview. Be sure to ask the buyers what’s motivating them to move, what they like to do when they’re at home and which rooms they use the most. Also, ask them to show you any online photos of homes they like.
Again, reducing your buyer cycle time by 33 percent (down to ten showings rather than 15), allows you to sell more and/or take more time off.
Decrease cycle time by speeding up your lead conversion cycle
Are you spending 12-18 months converting internet leads or spending huge sums marketing by mail and not getting much of a return? Shifting your approach to focus on “right now” business will greatly reduce your cycle time.
The right-now business includes prospecting expired listings, FSBO’s and referrals. In fact, one of the best ways to reduce cycle time is to create a strong base of people who refer business to you. Referrals are almost always right-now business.
The cycle time it takes to create a lead from your sphere of influence is substantially less than creating it from cold expireds and FSBOs.
Reduce cycle time by raising the bar on customer service
It’s important to note, however, that reducing cycle time alone is not enough. A different way to decrease cycle time throughout the transaction is to raise the bar on the level of service you provide.
When you form strong connections with your clients, trust is high. This translates into fewer transaction problems, which also shortens cycle time.
Work on your business, not in it
Michael Gerber’s book, The E-Myth Revisited, draws the distinction between “working on” your business vs. “working in” your business. Most agents are so busy that they only work in their business.
Sadly, they never take the time to work on their business by analyzing where their business comes from, which parts of their business are the most profitable, how much they’re spending in marketing dollars and their rate of return from various prospecting activities.
If you would like to be proactive about working in your business, use these four simple steps:
- List all of your closed transactions and identify where each of those transactions originated (open house, internet lead, referral, etc.)
- For each closed transaction, determine how long it took from the time you received the lead until you placed the property under contract and closed it.
- Once you complete the list, identify the top 20 percent of your lead generation strategies that were the most profitable. Focus at least 50-75 percent of your time on these areas.
- Now, look at the bottom 20 percent of your activities. Are you wasting time with buyers who never buy? Are you mailing to an area where you have received no leads in the last six months? If so, get rid of these activities and focus on those areas with the shortest cycle time and the greatest return on your investment.
Make friends with airplane mode
If you haven’t done so already, turn off all notifications on your cell phone or switch into airplane mode for at least 50 minutes of every hour. While it only takes a minute to read a text or notification and to decide how to respond, that interruption can result in a serious increase in cycle time.
For example, if you receive 50 text messages a day, that translates into 50 minutes a day or 1500 minutes per month where you were distracted from whatever you were supposed to be doing. By checking all your messages at once every hour, you can quickly respond to what needs to be handled and then get back to higher priority activities.
This slight change can reduce your 50 minutes per day of interruptions to just 10 minutes a day, or over four hours per week.
Reducing cycle time is a powerful way to create more time off and more income as well — try it out for yourself!