By Christopher M. Leporini, REALTOR® Magazine
The Millionaire Real Estate Agent By Gary Keller (Rellek Publishing Partners, 2003)
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Dreaming small limits your success. When you set your sights on the seemingly unattainable, you might surprise yourself by how much you can achieve, says Gary Keller, who co-founded Keller Williams Realty International in 1983. His book, The Millionaire Real Estate Agent, written with Dave Jenks and Jay Papasan, provides readers with step-by-step advice–including models, budgets, and charts–on how to receive $1 million dollars in real estate sales and beyond. It draws from several sources, including Keller’s own twenty-plus years of experience building his real estate company, input from mastermind programs, and interviews with the nation’s top 50 real estate salespeople (as ranked by REAL Trends). Keller is quick to point out, however, that seeking to become a millionaire real estate professional isn’t about the money, it’s about achieving your highest potential. He presents the million-dollar benchmark as a symbol of excellence, rather than a monument to materialism.
The Millionaire Real Estate Agent provides a step-by-step, best practices approach to scaling the progressive stages necessary to complete this goal: think a million, earn a million, net a million, and receive a million. Its systematic approach allows readers to keep their overall goal in mind, while setting smaller goals along the way. Keller identifies three core issues that he says lead to success in real estate sales—leads, listing, and leverage. These “Three L’s of the Millionaire Real Estate Agent” form the cornerstones of your business, he believes.
Lead generation should come “first, last, and always,” Keller says. Even experienced real estate salespeople often drop the ball on this key aspect of their business. Pursuing seller listings give you a better return on your time investment than focusing on buyers. Plus, having a listing in hand can often lead to representing a buyer. Finally, leverage means using people, systems, and tools to make the most efficient use of time.
Keller also emphasizes the importance of business models—tools that provide you with a solid foundation, such as specific target goals, for different stages in salespeople’s development. The basic categories of business models remains constant, however, their makeup evolves as readers progress toward their ultimate goal. The book describes four fundamental business model for keeping your real estate activities on track.
- The economic model gives you a formula to calculate what numbers you’ll need to achieve in specific areas, such as appointments, listings, and sales, to reach your desired net income. It shows you your gross revenue, expenses, and net income. Your conversion rates—from listing presentations to listing agreements and from listing agreements to sales–drive your ability to meet these goals.
- The lead generation model maps out the strategies that you will employ to reach your desired lead volume, such as setting up a contact database; using seller listings to develop buyer leads; and combing e-mails, mailings, cards and other promotional items to “touch” prospects several times throughout the year.
- The budget model provides the expense budget categories that you should track, as well as how much of your gross revenue you should devote to each one.
- The organizational model sorts out which support staff you’ll need to hire as your business expands. For instance, the book advises hiring administrative help first to systemize your business and allow you to concentrate on selling.
These four fundamental business models apply to every real estate salesperson, from the greenest newcomer to the top producer with the golden touch. Once you have reached the millionaire level, the book says, you simply face different issues and require different numbers to carry them out. “The Millionaire Real Estate Agent Models” provide concrete numbers and steps for moving from earning a million to netting a million. For example, “The Millionaire Real Estate Agent Economic Model” suggests that if you want to net $1 million in income you need to have goals of $2.4 million in sales revenue and $700,000 in cost of sales.
The book closes on an inspirational note with profiles of 16 real estate professionals who have become millionaires through listing and selling existing single-family homes. This chapter personalizes the advice presented throughout the book, allowing you to absorb these top producers’ methods and motivations in their own words. Putting a human face on the millionaire real estate salesperson underscores the book’s lesson: these are real people who dared to dream big and defined the steps that they needed to take to achieve their goals. If you are determined enough and ground your ambitions in a well-defined plan, the next real estate millionaire could be you.
By Christopher M. Leporini, REALTOR® Magazine
If you find yourself working harder without seeing results, you might be focusing on the wrong areas. In Focal Point: A Proven System to Simplify Your Life, Double Your Productivity, and Achieve All Your Goals, (AMACOM, 2002; $21.95) speaker and consultant Brian Tracy demonstrates how to clarify your goals and direct your efforts to where they will matter most. The book uses numerous anecdotes and easy-to-remember formulas to eliminate the extraneous from your personal and professional life and concentrate on what you really care about.
Your focal point is the point that you should focus on at any given time to achieve the best possible results. Tracey cites the 80/20 rule, which states that the most important 20 percent of your workload contributes 80 percent of your results. If you can’t identify and then focus on your most vital tasks, then you’re wasting valuable energy. This idea applies to all aspects of your life, whether you are attempting to become your company’s top producer or striving to spend more time with your family.
Many people think that the only way to maximize their earnings is to exhaust themselves putting in longer hours. But where you apply your efforts is as important as how many hours you put in, says Tracy. “Chapter 1: Unlocking Your Full Potential” offers guidelines to increase your income, while cutting back on your workload. This goal may seem improbable, but Tracy argues that it’s simpler than you may think. He advises the following steps to double both your income and your vacation time:
- Identify which tasks contribute the greatest value to your work, from your personal observations and discussions with your broker and fellow salespeople. For instance, prospecting and follow-up are two areas that provide a valuable return on your time investment.
- Single out the tasks that sap your time and energy but contribute little to achieving your goals then delegate, eliminate, or outsource them. For instance, if you spend so much time on clerical tasks that you’re selling less, you might investigate hiring a personal assistant.
- Apply the Grand Slam formula, a system designed to increase your competence and efficiency through simplifying your processes; leveraging knowledge and people; accelerating your activities; and multiplying your efforts by organizing and working with people who complement your skills.
- Reserve a minimum of one full day off each week. No matter how much you love the real estate game, resting your mental muscles will keep you at peak performance. Gradually, increase your vacation time even more, taking two days off a week and scheduling occasional vacations.
- Pay more attention during your workday to see how planning ahead can reduce wasted effort. Of course, the real estate industry sometimes prevents you from slavishly following a schedule. But you can improve your business through strategies such as setting aside a certain time every day to cold call.
But how do you prioritize your tasks? “Chapter 2: Double Your Productivity” offers advice on how to make more efficient use of your workday. For instance, use the ABCDE First techniques to list all tasks that you need to accomplish, then rate each according to importance. “A Tasks” are things that cannot be postponed without significant consequences, such as a listing presentation or an open house. If you have more than one rank them A1, A2, A3. Meanwhile, “B Tasks,” although still important, can be temporarily delayed. For instance, you need to prospect to keep business flowing, but if something more urgent comes up, you can put it off for a day. Enjoyable, but nonessential tasks, such as social activities, are categorized as “C Tasks.” Finally, “D Tasks” are tasks that you can delegate, and “E Tasks” should be eliminated entirely.
These chapters teach you how to incorporate better time management into your day-to-day life. However, the book also demonstrates the importance of stepping back and establishing long-range goals. “Chapter 7: Supercharge Your Business and Career” shows you how set a long-range mission for your professional life. One valuable technique is to put your goals down in writing in the form of a mission statement. Your mission must be both achievable and tangible, and it can be as long or as short as you need to lay out you objective, Tracy says. He cites the orders that General George C. Marshall sent to General Dwight D. Eisenhower as the ultimate mission statement: “Proceed to London. Invade Europe. Defeat the Germans.” Keep it that straightforward, and you’ll get to top performer in no time.
When you can’t find your focus, your direction is uncertain, your concentration is blurry, and your energy is diffused. But when you can zero in on where your efforts will yield their greatest returns for your personal and professional life, everything quickly becomes clear.
By Christopher M. Leporini, REALTOR® Magazine
As stocks tumble, good investments are hard to find. But if you that investing in real estate is the easy solution, don’t be fooled. In many areas, market conditions, combined with a flood of stock market refugees, are making the search for undervalued investments more difficult.
The good news is that you hold several advantages over the average Joe Investor: you are already well-versed in the real estate process, you view properties on a daily basis, and you have the experience to evaluate how a potential investment will appreciate over time.
The bad news is that becoming a landlord involves more than market savvy to be successful. You’ll also need to understand tenant screening, lease terms, and maintenance schedules. Streetwise Landlording and Property Management: Insider’s Advice on How to Own Real Estate and Manage It Profitably (Streetwise, 2003; $19.95) by Mark B. Weiss and Dan Baldwin offers nuts and bolts advice on managing investment properties. It can get you up to speed on the new skills sets that you will need to become a successful rental property owner. Although it focuses mainly on residential, it provides some information on land development and commercial investment as well.
Before you start investing, you need to seriously ask yourself whether it’s right for you. “Chapter 2: The Pros and Cons of Being a Landlord” candidly lays out property managements’ rewards, responsibilities, and frustrations. The authors advise considering whether or not you have the thick skin and the ability to emotionally detach yourself you’ll need when dealing with demanding tenants or evicting a resident. Also, you’ll need to consider the time commitment that managing property will entail. You have to be on call 24/7; which may conflict with your real estate schedule. It does boast a positive similarity to real estate sales—your potential for success is unlimited.
The book also provides advice on the day-to-day aspects of landlording. “Chapter 14: Working With Tenants” helps you learn to manage the frustrations of working with tenants. The authors describe five basic types of tenants and how to handle them.
- Watchdogs—call the property manager to fix a problem; they are the proverbial squeaky wheel. They may be aggravating, but these tenants will often alert you about problems early, when it’s still inexpensive to fix them.
- Complainers—find fault in everything. Unlike watchdogs, who can help you spot problems, they simply like to complain. Establish rules early on about what times they can call to avoid being called day and night about mostly imaginary problems.
- Helpless—need someone to take care of them. They will tell you with a straight face that they don’t know how to plunge a toilet. Again, setting the rules early on, and in writing, regarding you responsibilities will keep them from monopolizing your time.
- Slow Payers—don’t seem to feel that you really need their money urgently. Getting the rent from these tenants on time is a hassle, month in and month out, but they always pay eventually. Charge a late penalty to deter this behavior, otherwise, grit your teeth and accept it.
- Non Payers—don’t seem to feel you really need their money at all. Serve them notice according to the timetable prescribed by local law, and evict them.
Of course, not every tenant is going to be a pain. The books also provides advice on steps to take to keep good rapport with tenants. For example, the authors suggest using a maintenance request form to avoid misunderstandings on repairs and to provide a record of when work was requested and completed. Another goodwill gesture is to give tenants information that they can use, such as emergency phone numbers, the number of your maintenance person, and tips on apartment living.
Later chapters address vital information on insurance, taxation, and finance issues that you’ll need to as a rental property owner. You might already know some of this from your real estate dealings, however, a refresher course certainly couldn’t hurt. For instance, “Chapter 19: Insurance Matters” teaches you about how to shop for the best deal on insurance, as well as various insurance options such as liability insurance (a must), umbrella coverage, extended coverage, and loss of rent protection, among others. “Chapter 20: Worrying About Taxes” covers state and local taxes, including topics such as building registration fees, signage fees, building permits, and transfer taxes that you may have to pay in your area. “Chapter 21: Legal Concerns” gives you a grounding in the numerous legal issues that investing in real estate properties entails. Among other subjects, it explains tenant responsibilities, entry rights, and eviction.
Leveraging your real estate knowledge can give you an edge in even the most-picked-over property market. And basic framework of knowledge provided by Streetwise Landlording and Property Management should keep you from regretting your move into real estate investing.
By Christopher M. Leporini, REALTOR® Magazine
Salespeople become managers for a variety of reasons: to seek out a personal challenge, to own their own real estate office, or simply to call the shots. No matter what their motivation, fledgling managers will need to adapt to a variety of new situations. Real Estate Office Management: A Guide to Success (South-Western, 2003; $19.95) by Robert L. Herd, a branch manger with Long Realty Company in Tucson, Ariz., explores what new managers can expect and provides practical advice choosing a company and on recruiting a sales force.
Of course, the real estate industry offers several options for would-be managers. “Chapter One: Conversion From Sales to Management” describes these alternatives. For some practitioners, entering management effectively marks the end of their sales career. The author reminds you that giving up sales doesn’t have to mean giving up incentives; make sure you negotiate a minimum monthly salary, plus an incentive bonuses. You can also move into management without entirely sacrificing your sales career. Broker/owners or managers at newly formed companies, often embrace this option, the book says; these companies might lack a sufficient budget for a manager who doesn’t sell. Instead, the company might hire a salesperson to double as an administrator, rewarding the manager with a higher commission split (and possibly a percentage of net operating profits).
Salespeople who decide to seek a management position at an established company shouldn’t expect to inherit a stable, thriving office, states “Chapter Two: Managing for Another Company.” These plumb assignments are usually reserved for employees who have already proven themselves. Instead, you will probably be assigned to a troubled office or a new branch location. In evaluating potential employers, you should consider such factors as the physical condition of the office and the equipment, the company’s reputation, the office’s location and whether the company will consider relocating it, and the makeup of the present sales and administrative staff.
New managers will also want to consider intangibles such as whether their personal styles will gel with the company’s philosophy and policies. Specifically, you should ask questions regarding how much latitude you will have to hire and fire workers, establish what benchmarks the company will use to evaluate your success and award bonuses, and determine how long you have to make the office profitable.
The book also offers advice for salespeople who want to open their own office. “Chapter Three: Opening Your Own Firm” contains guidelines for evaluating a potential office’s chances of success. First, the book advises, you should thoroughly examine your area’s demographics and study the MLS listings for the previous three years. At a minimum, you should be able to answer the following questions.
- What are the total units of annual sales?
- What is the average company dollar per sale?
- What are your projected monthly operating expenses (plus a reasonable profit)?
- How many units must your office sell every month to achieve these results?
- Is there enough excess business available to feed your business?
- Who are the dominant agencies?
- Who are the dominant salespeople and what are the chances of recruiting them to your office?
- How seasonal is sales activity?
- How much business is lost to out-of-town brokers?
- Can you save money by buying out a local office rather than opening a new one?
- Is the area prospering, static, or declining?
Later chapters give practical advice on basic knowledge that you’ll need in preparing your office. For instance, “Chapter Four: Getting Started” provides advice on everything from what furniture, equipment, and supplies you will need to information on error and omissions insurance. Meanwhile, “Chapter Five: Recruiting” covers the pros and cons of newbies versus experienced hands. Newbie salespeople operate on a lower commission split, which can (temporarily) boost your company’s income. Plus, you can more successful mold beginners to your way of doing things. However, they require more supervision, and their inexperience can cause them to inadvertently land them and you into trouble.
On the other hand, established salespeople bring knowledge and experience to the table. They may have an established client base and generally work more effectively with less supervision. A respected top producer’s reputation might also be a magnet to attract other salespeople to your office. However, established salespeople also carry drawbacks. They may want more money than you’re willing spend and may have developed a bad work ethic.
Making a change from salesperson to manager is a big leap, but it helps if you are prepared. Real Estate Office Management: A Guide to Success prepares you step-by-step through the operational issues that you will face. You already know that you can succeed in real estate sales, but the book will help you figure out whether you can manage it.