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Earn a Million—Stage 2
EARN A EARN A MILLION MILLION
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Seneca
LISTINGS
Receive
Net
Earn
LEVERAGE
THE SCIENCEOF SUCCESS
Think
LEADS
There is both an art and a science to achieving your highest potential in
Figure 1
your real estate sales career. The art is the motivation and inspiration that comes from reexamining your MythUnderstandings and the way a Millionaire Real Estate Agent thinks. However, motivation to go down a path with no map to follow—no clear way to turn your dreams into reality—is like a mystery door with nothing behind it. It can feel like a false promise.
Our focus in this book up to now has been mostly on insight and perspective, facing your fears, and thinking big. We’ve been studying the art of real estate sales success. It is now time to turn our attention to another focus. It is time to be instructional. We’ve seen the art, now it is time to discover the science.
MODELS MATTER
As we’ve discussed, models are very important tools to help us achieve our goals. To put it plainly—models matter, and the right models matter most. If you don’t know where you’re going, I guess any model will do. But if you’re trying to become your very best and achieve the most you possibly can, you’ll need Big Models to match your Big Goals. Now that you’ve set aside your myths and learned how to think like a high achiever, it is time to get down to the work of becoming one. In the sales business, everyone, whether they realize it or not, is following a model. The difference between everyone else and top achievers is that top achievers purposefully choose Big Models in the key areas that matter so they can achieve their highest potential. They understand that you must be a “20 percenter” and find models that help focus your efforts on the 20 percent of activities that lead to 80 percent of the results. One of our discoveries in working with and interviewing Millionaire Real Estate Agents is that they all seem to follow four key models: an Economic Model, a Lead-Generation Model, a Budget Model, and an Organizational Model.
The Four Fundamental Business Models of the Millionaire Real Estate Agent
1. The Economic Model
2. The Lead-Generation Model 3. The Budget Model
4. The Organizational Model
Figure 2
It turns out these four models are foundational. They represent the four areas everyone must ultimately tackle on the way to high real estate sales achievement. In a nutshell, here is what they teach:
1. The Economic Model—A formula that shows you how to plug in specific numbers you’ll have to achieve in specific areas to receive a specific net income. 2. The Lead-Generation Model—The specific approach you must take to systematically generate a specific number of leads. 3. The Budget Model—An outline of the specific budget categories you should track and the percentage of your gross revenue you should spend in each of them. 4. The Organizational Model—The specific staff positions you will need to fill and the job responsibilities they will be given as your business grows.
Simply think of the four models as adding up to a formula that says: Toachieve the amount of net income you desire, you will need to generate X number of leads, spend X amount of money in specific areas to support those efforts, and hire X number of people to service it all.
On the following two pages are two key diagrams. They provide an overview of the four models, but show two distinct perspectives. The first perspective is a high-level look at the key areas in each model and the second drills down to the specific issues and numbers you’ll need to focus on to pursue the path of the Millionaire Real Estate Agent.
Please take a few moments to review Figure 3 and Figure 4 on the following pages and get your bearings before we dive into the science of success at the Millionaire Real Estate Agent level. Try not to get too caught up in the numbers shown in Figure 4. They will be explained in detail in the second half of this chapter. For now, we just want you to get a sense of where we are headed.
The Four Models The Key Areas
1. Know What Numbers You Must Hit 2. Focus on Appointments 3. Focus on Conversions
4
Organizational Model Economic Model
1
2
LeadGeneration Model
1. When Doing All You Can
Do, Hire Administrative Help 2. Hire Talent 3. Train and Consult
Budget Model
3
1. Prospect and Market 2. Set Up a Database and
Systematically Market to It 3. Focus on Seller Listings
Taken
1. Lead with Revenue 2. Play Red Light, Green Light 3. Stick to the Budget
“Don’t Just Think Like a Business — Become One!”
Figure 3
The Four Models The Issues and Numbers of the Millionaire Real Estate Agent
1. 320 Closed Sales – $250K Average Price 2. $2.4 Million GCI 3. $700K Cost of Sales $700K Operating Expenses 4. 27.73 Seller Listing Appts./mo. 25.53 Buyer Listing Appts./mo. 5. 20.53 Seller Listings Taken/mo. 16.63 Buyer Listings Taken/mo. 6. 13.33 Sellers Sold/mo. 13.33 Buyers Sold/mo.
Economic Model
1
4
Organizational Model
2
LeadGeneration Model
1. Three Key Hires: • Administrative Manager • Lead Seller Specialist • Lead Buyer Specialist 2. Seven Recruiting Sources 3. Nine Compensation Options
Budget Model
3
• Total Cost of Sales – 29.2% • Expenses – 29.2% 1. Salaries – 12.0% 2. Lead Generation – 9.2% 3. Occupancy – 2.0% 4. Technology – 1.5% 5. Phones – 1.0% 6. Supplies – 1.0% 7. Education – 1.0% 8. Equipment – 1.0% 9. Auto/Insurance – 1.0% 1. Database • 960 Met • 8,000 Haven’t Met 2. Cost • $31,680 – $63,360/yr. • $96,000 – $192,000/yr. 3. Focus on Listings
“Don’t Just Become a Business— Become a Big One!”
Figure 4
HOBO SHACKSOR HOUSES
In the following pages, I’ll walk you through the fundamentals of these four sound and proven models. Then, once we have the basic concepts down, I’ll show you how Millionaire Real Estate Agents apply them in their efforts to earn and net a million in annual income. However, before you start absorbing them and are tempted to personalize them, it is a good and appropriate time to remind you of our earlier discussion on modeling and creativity. I believe that until you have implemented and worked with a model, you have little business trying to change or improve it. Remember, trust those who have lived before you. And if you’ve done your research properly, then there are compelling reasons for selecting the models you’ve chosen. You need to have faith in your research. The time to question was then, now it is time to give the models your full faith and effort. Personal hands-on experience is the only true route to obtaining a clear understanding of if, when, or how you should ever deviate from a foundational model.
Strangely enough, against all advice to the contrary, most agents begin by implementing their own ideas and models. It seems they have always wanted to do things their own way and be creative, so they start off their business lives with creativity. Then, as a result of success or failure, they start adding more and more creativity to the mix. Before long, they have no solid foundation upon which to build and no framework upon which to hang their thinking and actions. The structure of their business begins to look like a “hobo shack” of ideas and creativity, with no plan or vision driving it. Creativity is the theme of their business. We believe that the best houses and the best businesses get built from clear blueprints, solid foundations, and proven frameworks.
If you’ve ever tried to find a shortcut in a neighborhood you weren’t familiar with, you probably already understand this phenomenon. The
vs
Hobo Shack Built on a Patchwork of Creativity and Ideas
Figure 5
House Built on a Solid Foundation of Proven Models
all-too-common story goes something like this. You’re driving your clients down a busy thoroughfare and figure you could save five or ten minutes if you cut over a couple of blocks to a street that might have less traffic. So you take a quick right, drive down a few blocks, and pick a side street that appears to run parallel to the main street you were on. Everything looks great until, a few blocks from where you started being creative, the unexpected happens and the new street angles off in the wrong direction, away from your intended destination. So you compensate by being creative again and start angling through the neighborhood trying to get back on track. Well, you probably know how this story ends. At some point you apologize to your clients, pull over, and break out the map (which you had with you all along). Instead of gaining five minutes, you’ve lost fifteen, and you have to retrace your steps back to the beginning and start over. Not to mention the embarrassment you feel and the loss of confidence your bewildered clients likely feel.
There are multiple avenues to the highest levels of success in the real estate sales business; however, these paths are not laid out on a physical grid like some city streets, so they may not be quite as obvious as you wish them to be. Intuition and a good sense of direction are probably not
enough to get you there if you venture off to explore new, unpaved avenues to success.
Look at it visually this way. In the diagram below (Figure 6), the straight line represents models and the dotted line represents creativity. When you start with models, you always have a sound, proven basis from which to work. The model serves as a reference point that allows you always to know why you made the creative decision you made and where to return if your creativity proves unsuccessful. When you don’t have a model to provide direction and focus, your last creative effort becomes your reference point, and you can easily become lost.
The good news is that the models presented in the coming pages represent one proven and well-traveled path to your ultimate destination. They can be your map, your primary route, if you’re faithful to them and consult them often. Even in Venice, Italy—the most labyrinthine of cities—first-time visitors regularly find their way from the famous opera house to obscure, off-the-beaten path cafés because they faithfully take the time to consult their map at each fork in the road.
Beginning with Models vs Beginning with Creativity
vs
Creativity off a Model Creativity Without a Model
Figure 6
Start with the proven model and—only when you’re confident you have your bearings and know your reference points—dare to strike down a new path of creativity.
When agents don’t follow models, they tend to say things like, “I’m reinventing my business this year.” That’s often just another way of saying, “I’m lost and starting over.” When you are models-based, you occasionally need to tweak or readjust, and when you’re creativity-based, you get to start over.There’s a big difference between the two.
A LESSONFROM WARREN BUFFETT
Warren Buffett, arguably the greatest investor of all time, understood how to be faithful to models. In graduate school, Buffett studied the teaching and models of economist Benjamin Graham, the author of Security Analysis, a classic guide to investing. The book is a thorough examination of investment strategies and models, and Graham published four editions from 1934 to 1962. In Buffettology, the authors write that Buffett believed that “one learns through experience, and if not from experience, from those with experience.” In other words, the greatest investor of our time, possibly of all time, understood the power of learning from others and following models. Later, after getting some professional investing experience, Buffett vowed not to make another investment until he had read Security Analysis twelve more times. You see, he was not content simply to be familiar with the leading models in his field, Buffett wanted to be a true student of them. Purportedly, he still keeps all four editions of the book on his desk and regularly consults them, picking up on subtle nuances each year based on his continued working experience applying the models. For Warren Buffett, the right models really do matter. And, his tremendous success proves that following the right models can have really big rewards.
