The 80/20 Rule – Agents vs Business Percentage in Chicagoland

Are you familiar with the Pareto principle?

Before you say ‘no’, allow us to explain. In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. More commonly this is known as the 80/20 rule and is summarized that 20% of actions/causes /inputs, etc. will lead to 80% of consequences/effects/outputs. Sound familiar now? We thought so.

Recently, we had heard many theories circulating that this was the case in the Chicago agent community. Whether it was a 5/95, 40/60, or 80/20 we weren’t sure, but we decided to take a look.

For this pull we took total transaction volume per active agent (one with a transaction in the period)- both buyer and seller side – and compared that to overall transaction volume in market. We also compared their percentage as one agent out of the total in Chicagoland, and ran those numbers comparatively. What we found ran directly inline with the Pareto Principle – a substantial amount of business is being done by a relatively small number of agents.

Take market leader Mario Greco, for instance. While Mr. Greco makes up just .005 percent of the total active agents out there, he accounts for a .35 percent of business transactions. Continuing down the list until we get to the 1000th agent, we see that Michael Zapart and the 999 agents before him make up only 5.02 percent of all agents, yet a staggering 39.6 percent of business volume. Keying in on original principle more accurately, we have to look at the 80 percentile of business volume. Sure enough, we find that 80 percent of business transactions are completed by just 27.74 percent of total agent.

While the disparity can feel a bit frustrating, the principle does not mean that agents do not move into smaller percentiles/greater transaction volumes. Instead, it reiterates the fact that many agents that are doing the “same old thing” and failing to use new marketing techniques and technologies will likely stay in the same 80% percent group with their peers. Those who use progressive tactics are likely to stand out from the pack, and therefore increase transactions and their percentage of the market.

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Leap Software Going Mobile

Leap Real Estate Systems is proud to announce the debut of a new version of Leap Software- completely optimized for your mobile phone. Leap Software is already the advanced solution for streamlining your appointment scheduling and organizing your busy real estate business. Agents can benefit from decreased back-end processes and spend less time writing down appointments or notifying appropriate parties. While the Scheduling site worked very well on smartphones before, the development team went extra steps to make our mobile version easier than ever, and perfect for scheduling showings on-the-go.

The log in page, pictured above, is available at http://m.leapre.com. After logging in you have a scheduling screen which allows you quick access to the popular functions of the Scheduling system. The mobile site is straight forward and ready to use right now, so if you’re a current user go ahead and give it a try. If you still have yet to join the hundreds of agents using Leap solutions, learn more here.

After the click there are instructions on bookmarking the mobile site as an icon for your iPhone.

Continue reading

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Free Webinar: Learn to Leverage Market Data

Due to the great response from last month’s webinar, we’ll be holding another this Wednesday, August 24th from 1pm – 2pm. Click the link above to register and we hope to see you there!

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Average Showings per week – July 2011

Chicagoland Showing Volume July 2011

Showing Volume for Chicagoland during the month of July: Market showing activity is following in line with historical averages, but still outperforming those correlations. This activity from July’s spike jumped higher than even June’s. Did you find this to be true with your own listings?

Remember that this information is available daily in the Leap Scheduling System but is posted to the blog monthly.

 

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Square Footage: Frequently Asked Questions, Pt. 2

After we complete a floor plan for our agents, we often find our inbox gets filled with questions about square footage… how we calculate it, how we measure, and what it all means.  Below is part 2 of a list of some of the most frequently asked questions which will hopefully help you navigate the square footage terrain of your business. See part 1.

If you have any further questions about square footage, or would like to learn more about what you’ve read here, please feel free to email bfp@bestfloorplans.com and ask away

Does the deck or patio count as square footage?  What about the garage?

  • Neither attached nor unattached garages are counted in the calculation of either the EGA or CGA. However, BOMA’s square footage reports require the garage area be noted. The EGA is the BOMA equivalent to what has been commonly referred to by real estate agents as the livable square footage. The EGA is the number we recommend using when reporting your listing’s square footage in the MLS. Traditionally in the Chicago market, the attached outdoor spaces included in the CGA are not reported as part of the square footage in the MLS.

Do unfinished basements count as square footage?

  • According to BOMA, any area below grade is still considered part of the EGA. BOMA makes no attempt at qualifying unfinished vs. finished space. Those are not relevant to the gross area of the building as they require certain subjective properties of what is considered to be “finished” or “livable.”

When the MLS asks about “square feet source,” what do I choose for Best Floorplans?

  • Since our service is not quantified by the MLS, we recommend: Option G – Plans
  • We create the most accurate as-is floor plans in residential, commercial and industrial Chicago real estate, measured with the top of the line laser technology accurate up to 1/16th of an inch. Since we provide you with the plans as a reference, as well as our calculations of square footage, we feel this is the best way to represent your method of acquiring the square footage in the MLS.

Why is there a difference between the previous reported square footage and the Best Floorplans square footage results?

  • We get this one all the time. It’s natural that different numbers will come from different sources. Many appraisers, general contractors, architects and other services that provide agents with square footage calculations use a number of different techniques for both measuring and calculating the square footage of their listings. It’s well known that most appraisers give VERY general square footage estimations and generally only use a tape measure or wheel when estimating. General contractors and architects usually operate from drawings created BEFORE the building was built, which may differ from the final build out. Other services might use a laser distance meter to take measurements, but few focus on the details needed for accurate square footage calculations. BOMA / ANSI have created the only accredited set of standards in any industry for calculating the square footage for your listings, and not every service complies with their standards. Best Floorplans takes the best measurements, employs quality assurance processes to ensure it’s done right the first time, and complies with the national and international standards set for square footage calculation to ensure all of our agents can put their best foot forward in representing their listings.
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Square Footage: Frequently Asked Questions, Pt. 1

After we complete a floor plan for our agents, we often find our inbox gets filled with questions about square footage…how we calculate it, how we measure, and what it all means.  Below is a list of some of the most frequently asked questions which will hopefully help you navigate the square footage terrain of your business. We’ll be doing this in two parts. Part one is all about acronyms, below. Check back next week for a more extensive FAQ.

If you have any further questions about square footage, or would like to learn more about what you’ve read here, please feel free to email bfp@bestfloorplans.com and ask away.

·         When talking about square footage, why are there always so many acronyms?  What do they all mean?

o   ASF – Approximate Square Footage

  This is what you’re required to enter into the MLS when you set up a new listing.  You can calculate this data a number of ways and through a number of resources available to real estate agents.

o   EGA – Exterior Gross Area

  This is the standard for interior residential space, which has been set by the dominant organizations in standards conformity (BOMA / ANSI).  This is the most widely accepted measure for calculating the ASF required by our MLS.  It is calculated by drawing a line around the exterior perimeter of each floor, and then subtracting any spaces within that line which are not considered valid in the EGA.  Though there is a set of very specific exclusions, the most important to mention are vertical penetrations (ie. open to below areas), attic space below a specific height, garages, attached and unattached outdoor spaces.  All floors are totaled for the final EGA of the home.

o   CGA – Construction Gross Area

  The CGA is the same as the EGA, except that it includes any attached outdoor spaces.  If you have a deck that off the master bedroom, that’s included in the CGA.  If you have a walk-out patio off the basement, that’s included in the CGA.  As long as it has an enclosure around it AND is attached to the home, it is included in the CGA.

o   ANSI – American National Standards Institute

  Since 1916, engineers, manufacturers, and scientists in the United States have sought after creating standards that would strengthen and protect our country.  The outcome was ANSI and they set standards in every field of business, including real estate.

o   BOMA – Building Owners and Managers Association

  Aside from doing great work in Chicago aligning building owners and managers with the best services for their buildings, their international wing has paired with ANSI to create standards for calculating the gross area of EVERY type of building and breaking it down into components useful for doing business.  They have huge regulatory board to make sure that these standards make the most sense based on the usage of the space.

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On Going Green, and Meaning It

Our most recent data pull was for Chicago Agent Magazine’s recent issue on everything green real estate. The cover story includes a good overview on the opinions and sentiments concerning the state of Chicagoland buyers and sellers and living sustainability. The write up seems to put forth that while there are a dedicated few agents who stress the cost-cutting benefits  of a green home, moreover buyers are not in the market for those same environment friendly features. The “trend” that has picked up so steadily in the food production or automotive industries seems to have little traction in the housing sector. This is reflected in the marketing choices made by agents, as our data purports.

Out of the entire MRED MLS system, we found only 2.15% of listings included descriptions of “green” attached to them. This is certainly a discouraging figure for those who want to believe that the green trend is really taking hold across the country. While a bit of this might be attributed to agents not being concerned with sustainability, more likely the case is that most buyers are still not weighing green factors high on their list of priorities, much like the CAMag cover story iterates. A full list of the search terms we gathered info on is below.

Despite these numbers, we would be remiss to claim that agents are insensitive to eco-friendly concerns. If they are reacting instead to their interpretation of market interest and need, then the finger gets pointed on buyers. In our opinion, the housing market and home construction is a much less apparent or obvious area for green enhancement. While most are aware of energy efficient light bulbs or Energy-star rated appliances, they are often considered mere additions or features to a home rather than actual inherent values of a property. A car is a machine, a vehicle that is understood to produce emissions and burn gas in a fashion that is painfully visible on gas station signs and in bank accounts across the country. It is a more intrinsic attribute to a car- and therefore a point of concern in purchasing. Homes on the other hand aren’t seen in this same light. We would suspect that as green considerations and innovations hit a critical need in the market (and planet, truthfully), the housing sector will fall in line. As home construction and materials start to become more of a critical factor in our lives, only then will it be placed in the echelon of importance next to things like location. Hopefully at that time, agents will fully realize this trend and understand the advantage that marketing and discussing these factors will have on their business, as well as the overall environment.

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