Real Estate Agent Performance: 5 Metrics to Determine Success

Running a successful real estate company is no small task. The very nature of growing a business comprised primarily of independent contractors working on their own can quickly feel overwhelming and complicated. 

One of the best ways to make the entire process easier is to keep a steady pulse on the essential health metrics of the business with transaction management software for real estate. However, knowing which metrics to track, and knowing how to decipher the importance of each, can be challenging. 

To determine which real estate performance metrics matter most, it’s essential to understand where you want the business to go. A solid understanding of your company growth goals will help determine which metrics to track closely, how to view each one appropriately, and how to invest in the right areas based on changes in performance. 

Below are 5 critical real estate performance metrics to track:

Monthly Production

Agent productivity is perhaps the most vital metric to track. Why? Because it’s the metric most directly related to your bottom line—company dollar. 

No matter whether your agents pay a flat fee to the brokerage or if they’re on traditional splits, the absolute number of closed transactions that each agent completes contributes to your total revenue. 

Annual production is undoubtedly a critical metric to consider, as well. However, because it’s not a number that can be viewed frequently, it’s often not as useful throughout the year for determining monthly expenditure changes. Instead, track monthly production as both a month-over-month value and year-over-year. 

In other words, if an agent performs better in the same month of each year, it’s a generally good indicator of their skill development. This also helps to normalize production changes due to seasonality or other consumer trends. 

Sometimes, however, it’s not always possible to pull year-over-year data when you have new agents who have been with your company for less than 12 months. In this case, track month-over-month production within the context of the typical seasonal trends. 

How Monthly Production Impacts Your Bottom Line: 

Most brokerages have a variety of agents: full-time, part-time, producing admins, etc. Each type has a cost to the brokerage, and monthly production, or lack thereof, is the clearest way to see which agents cost the most. 

Consider the primary source of revenue: total company dollar. If you only charge a flat fee, you’re not making any money when agents aren’t producing—but you’re losing money when you still pay for them to have access to software and tools, or when they take up your valuable time.  

The same holds true for agents on splits. You may make more from each of their closed transactions, but the cost needs to be evaluated against the expenses associated with supporting them. While some software doesn’t charge per-user fees, many do—and many require long-term annual contracts. 

Days on Market

The second metric to track closely is the time that agents’ listings remain actively listed on the market—or what’s most often referred to as Days on Market (DOM). Days on Market is simply the number of days in which the property is listed for sale on the MLS before it’s under contract.

Often, this can indicate an area of quick improvement. Armed with a clear idea of Days on Market, look deeper into what’s going on with agents who have properties listed on the market longer than your top producers. 

A longer than normal value for average days on market is a metric to watch over time. However, it’s not always a critical sign of an underperforming agent. Seasonality generally plays a role in days on market, as will other changing market conditions. Regardless of those other factors, a longer than average Days on Market metric may still be a sign that something can improve. 

How Days on Market (DOM) Impacts Your Bottom Line:  

Active buyers move quickly when the right property lands on their radar. However, when buyers begin seeing the same listing for sale, they tend to assume something may be wrong with the asking price, the location, or even the condition of the property.

Whether a high number of days on market is due to one or all of the factors (price, location, or condition), it generally requires the asking price to come down—and with it, the total commission. 

Understanding this metric will help inform you about which agents need coaching. Consider additional mentoring or supportive measures to improve their ability to conduct comparative pricing, understand marketing strategies, and develop negotiation skills. 

Sale Price Vs. List Price

Similar to Days on Market, the difference between the list price and the final purchase price is another key metric to consider monthly. A price that needs to come down to sell doesn’t look good and often means that the property became stale. Conversely, pricing a property too low means you’re leaving money on the table—for your company, your agent, and your client. 

Essentially, pricing is as much art as it is science, but the best agents can determine a price that both garners attention and doesn’t leave money on the table. Generating reports that help you track the average sale price vs. the initial list price is a clear way to see which agents need support and additional help.

How Average Sale Price Vs. List Price Impacts Your Bottom Line:  

Determining the right list price can take time and often takes practice to master—both of which don’t come free. Understanding this metric well and on an agent-by-agent basis, will help you coach agents in the most effective way. 

To save time, and help develop agents quickly, focus on the various aspects of the process: pulling comparable listings and recent sales, reviewing withdrawn and expired history, checking out current transactions that are pending, and of course, considering current market trends. 

Sales Volume 

Sales volume is a prevalent metric of success—and one that’s often associated with ability. Real estate agents and brokerages alike use sales volume as a way to demonstrate their influence and performance. 

Essentially, sales volume is simply the total value of all closed transactions by sales price. As a number reported annually, this value is frequently glamorized, but it’s not always a very truthful metric of company or agent performance. 

Consider two agents: The first agent closes 50 deals a year, and another agent closes 25. Depending on a handful of other factors, either agent can be the top contributor to company dollar. The sales price, their commission plan, and your expenses all play a vital role in contextualizing the sales volume number and how it impacts your company.

How Sales Volume Impacts Your Bottom Line:  

Understanding sales volume as a metric for success relies on a clear understanding of how your brokerage makes money. If it’s not fully understood, it becomes a vanity metric that can lead to less than ideal decisions about coaching and investment. 

For example, a flat fee brokerage is more often concerned with the number of closings than with the total sales volume of them, while a traditional split brokerage makes a direct percentage of the sales volume. However, if you allow sales volume to become the metric that agents look to, and improve on, many will ultimately chase fewer deals with more significant payouts. Consider these factors when setting agent goals and negotiating commission plans

Pending Commissions  

Of all the real estate agent performance metrics to track, pending commissions is one of the most important for any brokerage or team. Pending commissions will help you forecast future revenue and make decisions based on what’s in the pipeline. 

Calculating pending commissions is done differently based on the primary way in which your brokerage makes money. For flat-fee brokerages, the pending commission is most often your transaction fee multiplied by the number of pending deals. There may be additional fees collected as well, and considering each in the same calculation is pretty simple. 

Calculating pending commissions for a traditional split-based brokerage can be a little more detailed. The commission percentage, referral fees, franchise fees, client fees, deductions, and other percentage-based fees will all need to be calculated to produce an accurate value of pending commissions. 

How the Total Commission Generated Impacts Your Bottom Line:  

The value of the pending brokerage commission is the most important metric as it relates to your bottom line—because it is the bottom line for a period of time in the near future. Knowing this value can help you determine if you have money to invest in recruiting, building up your company brand, or hiring new admin. 

To stay up-top-date with pending commissions, it’s ideal to run weekly reports that specifically aggregate your pending inventory across locations and teams. You can make this metric even more useful by comparing the figure to the same time period in the previous month or of the prior year. Doing so will help normalize the data and take into account seasonal trends.

grow your company

Ready to simplify your process and delight your agents?

In less than a minute you can start testing the newest features built to help your entire office close more deals. It’s simple, powerful, and 100% free to try without a credit card.

Try it free →