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Which is better: high volume or high profitability? How about both?

While awards and honors are geared toward high volume, it's high profitability that offers the rewards you're really looking for.

Is more always better? In real estate, the answer is … it depends. The debate between pursuing high volume vs. high profitability is as old as the industry itself.

Most major companies and brands give awards to and celebrate high volume and high production, but we rarely see awards given to the most profitable agent, team or brokerage.

Let’s take a deep dive into what sets these two strategies apart and how they can directly impact your bottom line.

Volume is king

For some agents, it’s all about the numbers. High volume means more transactions, more signs in yards, and more presence in the market. The philosophy here is that more is better. It’s a fast-paced grind, where quantity trumps all.

But here’s the catch — while you’re closing deal after deal, are you maximizing the value of each? The allure of high volume is undeniable; it’s a visible measure of success and can quickly build your reputation. However, this approach often involves thinner margins and often a focus on speed over service.

Ron Howard, RE/MAX agent and team leader, stated in his book, Profitability & Performance Pitstops, that he lost focus on the most important gauge and used high sales volume to feed his ego. He stated that if he hadn’t taken the critical steps to rebuild his team with profitability as the focus he could have lost everything.

Profitability takes precision

On the flip side, there’s the high profitability approach. This strategy is about being selective, creating compensation that incentivizes the behavior we want from the team leaders, and focusing on low-cost or no-cost lead sources.

We can all purchase leads, with some coming at the cost of as much as 40 percent of the commission, but that business is rarely profitable. It’s about working smarter, not harder.

Agents who prioritize profitability might handle fewer transactions, but they focus intensely on delivering exceptional service, creating a memorable client experience, and working every opportunity with a serve vs. sell mentality. The result is a stellar reputation, massive repeat and referral business, less competition and a more profitable career.

Quality over quantity

Focus on people you know first and serve, regardless of the opportunity it provides for you upfront. This may sound counterintuitive, but when you focus on serving the consumer and putting commissions aside to simply do the right thing, the opportunities will present themselves for plenty of income.

Focus on areas where you have the greatest expertise. Today’s consumer is trained to work with specialists in almost every area of their lives, whether medical, grocery shopping, personal training or even hair coloring. We as consumers are attracted to specialists who are most likely to give us personalized and specialized services. This holds true in real estate, and the world of the generalists may soon be going away.

Examples of this include buyer specialists, listing specialists, showing specialists, commercial specialists, transaction specialists, land and ranch specialists, investment specialists, luxury specialists, and so many more. There’s a reason for the old saying, “The riches are in the niches.”

I would simply suggest that you learn to be excellent at fewer things and focus on what you love, or have sincere interest or experience in, and let the consumer know you are a specialist. I like to find where the transactions are happening and where the business is going and then build specialization in those areas.

This approach not only increases your chances of profitability but also ensures that you’re investing your time wisely.

Efficiency is everything

Streamline your processes. Use technology to automate the mundane, freeing up time to focus on deals that matter. Efficiency tools like CRM systems and automated marketing can help you manage high-volume leads and transactions without sacrificing the personal touch that leads to profitable sales.

Systems first, then assistants second to run those systems. I teach my clients that anything you do three times in your business, you must put a system in place for how you want it done every single time. This allows you to delegate it and ensure the right things are being done to serve your clients and team members without your personal involvement in every detail.

Conoce tu valor

No tenga miedo de abandonar acuerdos de bajo margen. Su tiempo es valioso y, a veces, decir no puede conducir a un sí mayor en el futuro. “Prefiero rechazarte que decepcionarte” es uno de mis guiones favoritos a la hora de negociar comisiones o propiedades con precios excesivos.

Si no hay equilibrio en la relación entre el agente y el consumidor, el agente no puede proporcionar servicios estelares, marketing y el apoyo necesario para una transacción exitosa. Comprender su valor en el mercado es crucial y establecer un estándar para la comisión mínima que está personalmente dispuesto a aceptar puede ayudar a mantener la rentabilidad.

Invest in relationships

Build lasting connections with customers who value your service and are likely to make more profitable transactions. Cultivating relationships leads to repeat business and referrals, which often result in more profitable transactions.

Getting to know clients on a personal level and not hanging around with, as Master Coach Julie Timms calls it, “commission breath,” changes the nature of your relationships. Focus on your needs, your family dynamics, and your investment goals, not how much or how you will be paid.

Educate to elevate

Stay informed about market trends. Read Inman, study data, and invest in education that creates specialization. Knowledge is power, and power leads to influence and increased profitability. By becoming an expert in specific areas of real estate, you can command higher fees for your specialized services.

Share this knowledge with the Top 50 members of your sphere of influence, positioning yourself as a valuable resource and solidifying their trust in your expertise. A generalist trying to do a specialist’s job can lead to disaster for both you and your clients. Remember, the devil is in the details.

Team synergy

If you’re running a team, ensure everyone is on the same page. High volume should never come at the expense of high quality, especially where service is concerned. Each team member should understand the balance you’re striving for and work together to achieve both volume and profitability goals. Encourage your team to develop their own Top 50 lists, thus expanding their network and potential for high-quality leads.

In the end, whether you choose to play the numbers game or focus on the fattest margins, remember that success in real estate is about balance. It’s about making informed decisions, adapting to market conditions, and always, always putting your clients’ needs first.

Final thoughts

High volume or high profitability? Why not both? With the right approach, you can achieve a harmonious blend of quantity and quality, leading to a thriving, sustainable business.

As a father, I have decided that if I am going to spend time away from family, it has to be worth it. In the end, where we choose to spend our time matters, and when we understand the value of our time, it changes how we conduct our lives at work.

By Verl Workman

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