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Our Top 4 Commercial Real Estate KPIs

Posted on 27th April 2017 in KPIs

Written by Freya Hughes

Commercial Real Estate has a myriad of different control factors which impact the daily operations of a given office. While staff are out on viewings, or plugged into the phone system all day, tracking the below metrics will keep you on top of your figures.

Real estate is a huge industry with many regular actions and routines. With so much going on, it’s so important to be tracking individual metrics in your business. When you’re dealing with such substantial amounts of cash per transaction, it’s crucial to get it right. Looking at these KPIs will help you focus on the metrics that are really important in your real estate business.


Here at FUTRLI we love metrics, so be sure to visit our KPI Library, which will give you a little inspiration for running your business to its optimum.


Commission

When measuring commission as a KPI, you need to monitor both the percentage you get from the sale of a property and what the agent makes from that sale. This is an important one to track as you’re able to add the predicted commission over a period to your forecast, giving you a great idea of where you stand against your competitors.

Measure the commission coming in per sale so you’re aware of how much cash is entering the business each week (or period you measure). This will ensure you’re not under or overcharging for the properties on your books. It’ll give you a great idea of how much should come in per sale, therefore allowing you to forecast the figures coming into your business.

Per agent, the commission can vary a lot depending on the price of the property. You need to understand how profitable the average transaction is across the business. This is a great metric to make sure your staff are performing, are they consistent, improving or, if this KPI is decreasing, do you need to reinvestigate training and development plans? Likewise, it relates to how well the property was priced, and should give an indication of the selling climate in the area.

Number of properties advertised by agent

Before we start, don’t just look at your number. How are your competitors doing? This is an important benchmark when you review your figures. The number of listings you have is nearly always a direct result of marketing efforts. This is important as you’ll be able to measure if you need to spend more or less on promoting each property. If this is a low number, you need to look at securing more properties and the most efficient way of promoting them. Look to digital marketing if cash is low – it’s often the cheapest option and has a better reach with a younger audience, who are likely to be your key customers either now or in the near future.

Knowing the market is crucial – if you’re set up in an up-and-coming area, you can price your properties at a higher rate. On the flip side, you can lower prices to match any dips in the market. Noticing this will mean you’re prepared to be flexible with prices if the economy gets any worse.

Number of days property is on the market

From listing the property to closing the deal, you need to be aware of how long it takes to shift each property. If there’s a sale that doesn’t conform to the trend, is it because you’ve overpriced the property? Or it might work to identify the market taking a downturn. As we’ve said before, looking at KPIs as Key Predictive Indicators can work to keep you ahead of your immediate competition. We spoke to financial expert Paul Shrimpling who explains why you should focus on the future and metrics that will affect your P&L and balance sheet.

% difference between asking and selling price

Of course, the selling price of a property isn’t always going to match the asking price. If you have a mean average % to follow for this, you’ll know straight away if your sales dip. Such a volatile industry does dictate that this % will peak and trough, but that’s not necessarily a bad thing. A key factor to remember is the lower this % comes in at, the higher the ROI for real estate agents. Another idea is to track this seasonally and over time so you can view year v year comparison. All of these figures will help you confidently know the real financial health of your business. 


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