Real estate
Real estate income arrives in lumps. A team or a brokerage can be busy for three months and see no cash until the deals close, then carry a quiet quarter on what came in. Agent splits, marketing spend, referral fees and desk costs are easy to lose track of between closings. We bring steady numbers to realtors, teams and brokerages across British Columbia, working alongside their CPA and within the rules set by their regulator.
How the money works
- Revenue is recognised at closing, weeks or months after the work was done, so the pipeline and the cash position tell different stories
- Agent splits, referral fees and team compensation take a large share of every commission before the business sees it
- Marketing spend per listing and per buyer is the biggest controllable cost and the least measured
- Market cycles swing volume sharply, so fixed costs that fit a strong year become a problem in a slow one
The moves we make
- A pipeline-to-cash forecast that turns signed deals into expected commission by closing month
- Marketing cost per closing by channel, so spend goes where the closings come from
- A compensation model for agents and staff that pays from commission received and protects the margin
- A cash buffer and a fixed-cost review built for the slow season and the down cycle
Where cash and margin leak
Margin leaks in marketing that is spent on every listing regardless of price point, in referral fees and splits that were agreed deal by deal, in desk and software costs that grew with the team and never shrank, and in staff paid on salary through a quarter with no closings.
Cash leaks in the timing. Commissions are earned at closing and paid after, so a team that spends to market a listing in March is paid in June, and a deal that collapses on subjects was already spent against. The fix is a forecast built from the pipeline, deal by deal, with a probability on each.
The numbers to watch every week
Signed deals and their expected closing months. Commission expected per closing month after splits and fees. Marketing spend per listing and per closing, by channel. Listings taken and buyers under contract. Fixed costs per month against expected net commission. Cash buffer in months of fixed cost.
These give a team leader or a managing broker a forward view that the brokerage statement does not, and they make the decision to add an agent, an assistant or a marketing channel a numbers decision.
How pricing and compensation work
Commission rates are set by negotiation and by market practice, and the regulator sets rules on how they are disclosed and handled. Within those rules, the levers a team controls are the split with its agents, the marketing commitment per listing and the services included. Each of those is a margin decision and should be modelled before it is offered.
Agent compensation is the largest decision. A split that attracts agents and leaves nothing for the team is common. We model splits against the real cost to support an agent, including leads, admin and marketing, so the team keeps a margin on every closing.
Questions from real estate owners
Do you work with individual realtors or only teams and brokerages?
Both, through different engagements. An individual realtor usually needs a Strategy Session and a simple cash and marketing model. Teams and brokerages need the pipeline forecast, the compensation model and the monthly reporting. Ali also runs Realty.Agency and vancouver.estate on the marketing side.
How do we plan for a slow market?
Know your fixed costs per month, keep a cash buffer measured in months of those costs, review every fixed cost annually, and keep marketing spend tied to closings rather than to listings. A team built this way survives a down cycle and buys market share in it.
Can you help us decide what to pay a new agent or assistant?
Yes. We model the cost to support the role, the closings needed to cover it and the split or salary that works at your volume. The decision is made from the model rather than from what a competitor offered.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.