Whether you are just starting a career in the real estate industry, or you have 20 years of experience, continuously learning is a must.
While there are plenty of resources you can tap into that may be able to help you garner success, books offer a unique opportunity to learn from the best real estate agents in the industry for the cost of an eBook or paperback.
To that end, “The Million Real Estate Agent” by Gary Keller remains one of the best books for real estate agents who want to improve their skills. While the book was written nearly 20 years ago, it still holds up in a mostly digital world.
“The Millionaire Real Estate Agent” was first published in 2003 and was written to help other real estate professionals take their careers to the next level. In this post, we will take a look at how the methods and real estate marketing tactics illustrated by Gary Keller are still effective today.
The 3 L’s: Listings, Leads, and Leverage
The three key L’s that are necessary for garnering long-term success include Listings, Leads, and Leverage. Gary Keller became a successful real estate agent because he was able to complete numerous contracts in a short period of time.
However, you can’t complete contracts without first obtaining leads who may turn into actual customers.
By accumulating leads, it’s possible to start selecting the most qualified ones. Listings can be created by obtaining a higher number of seller leads in comparison to buyer leads.
The third L involves leverage, which can be centered around people, systems, and tools. Leveraging the tools at your disposal, the people in your network, and the systems that you have access to can help you grow your business.
Understanding Your Motivation as a Real Estate Agent
Within “The Millionaire Real Estate Agent”, Gary Keller explains the importance of understanding your motivation for being an agent. Good planning is essential before you begin any long-term project.
Knowing why you want to be a successful real estate agent and grow your company will allow you to gain long-term determination and focus. The two types of motivators that could drive you include intrinsic motivators and extrinsic motivators.
Proper Financial Planning
Another area of focus in this book involves proper financial planning. To develop an effective financial plan for your future, it’s important to first assess your performance as an agent over the past year. What were your personal and business expenses?
How much income and profit did you bring in? What was your cash flow over the past 12 months? Answering these questions allows you to set realistic revenue and income goals for the coming year.
Finding a Work-Life Balance to Achieve Success
If you want to achieve success, Gary Keller goes into detail about the need to find the right work-life balance, which will facilitate growth and eventual success.
Managing a heavy workload will introduce ample amounts of stress to your life, which invariably hurts productivity. Finding the right work-life balance means doing what you can to reduce stressful situations at home and in the workplace.
Systematizing Lead Generation
Lead generation has become easier than ever thanks to the internet, which helps with systematizing lead generation. Through the internet, it’s easier to build a website and run targeted ads, both of which are essential tools for generating new leads.
Both tools have become streamlined over the past decade. When you want to run targeted ads that appeal to your core audience, doing so is simple with marketing automation and similar systems.
Building a website can be accomplished in a short period of time. Real Geeks, BoomTown, and Lion Desk are just a few content management systems that provide real estate agents with all of the tools and features they require to build a website.
Even if you have no coding skills, most of these systems offer a drag-and-drop builder for simple site development.
Another benefit of being able to generate leads via the internet is that your digital lead generation ties into your real estate farming campaigns. For example, your real estate brochure or postcard can include a QR code or URL to your website and social media pages.
With so many options at your disposal, you’ll find that pricing is typically affordable. If you run standard print ads, you don’t have as many options, which can make pricing high and give you little control over how your ads are run and managed.
The lead-generation model described in “The Millionaire Real Estate Agent” is tied directly into the economic model. Knowing the number of appointments that you need as a real estate agent can help you determine the number of leads that are necessary to get these appointments.
The most important thing to remember is that you’ll never have enough quality leads. The lead-general model requires building strong relationships within your Sphere of Influence and providing your leads with consistent marketing materials and contacts. Once you generate leads, it’s essential that you don’t lose them.
Farming for Real Estate Listings
The best way to generate new listings is by engaging in real estate farming, which is an aspect of a lead-generation strategy that involves performing premium marketing that’s targeted at a specific neighborhood.
If this marketing is performed properly, you could become the first real estate agent that the neighborhood looks to when they want to place their homes on the market.
Real estate farming is typically a four-step process that involves:
- Selecting the right neighborhood – one with solid turnover and no agent representing most of the listings
- Determining when and how you’ll deliver value to the neighborhood
- Making a plan that will allow you to manage and track leads
- Executing your plan with long-term automated and personal communication
By establishing yourself as the premier real estate agent for a certain neighborhood, you’ll be able to improve your reputation and bring in more word-of-mouth leads.
33 Touch and 12 Direct
Two of the core marketing methods that Gary Keller emphasizes include the “33 Touch” method and the “12 Direct” method. The marketing method you decide to employ depends on how well you know the contact in question. When you’re contacting individuals who you haven’t had contact with in the past, consider using the 12 Direct method. On the other hand, the 33 Touch plan is designed to be used when communicating with people you know well.
The 12 Direct plan involves sending 12 real estate mailers out per year to the section of your lead database that you have yet to contact or meet. Since you don’t know these people, dropping by their properties or making telephone calls is not required. Your mailing list will likely consist of thousands of contacts you haven’t met.
When it comes to the 12 Direct plan, Gary Keller found that sending 12 direct mailers to 50 customers generated one sale during a given year. As such, you could generate 50 closed sales in a year by sending direct mailers to 2,500 people. Even though sending mailers to 2,500 people is possible, you’ll likely need to do some work before you begin a direct marketing campaign. Building up a mailing list requires obtaining names and placing their information into your database.
The 33 Touch plan is a comprehensive program designed to ensure year-round communication with the contacts you’ve met and know well. There are six different forms of communication used in the 33 Touch plan, which include:
- 18 touches, which can extend to emails, cards, mailings, letters, and drop-offs
- 8 “thank you” cards
- 3 telephone calls
- 2 birthday cards
- 1 mother’s day card
- 1 father’s day card
The primary touches that consist of emails, cards, and letters can be sent as: real estate news, market reports, personal brochures, holiday cards, and Just Listed postcards. Your main goal is to make sure that you are the foremost real estate agent that these individuals think of when they’re looking to buy a home, invest in a property, or list their home on the market. The market research performed by Gary Keller indicated that agents could net a total of two sales for every 12 individuals who were recipients of the 33 Touch plan.
Building a Team to Convert Your Leads for You
Once you begin to make consistent sales, you should be ready to grow your real estate business. The key to growth in the real estate industry is to build a team who will be able to convert your leads for you. Eventually, you’ll find that you don’t have the time needed to cultivate every lead on your own. To that end, having the right team members by your side can help you manage this process without it becoming overwhelming. You don’t want to be in a position where you generate leads but don’t follow up with them, which only results in lost business and a worse reputation in the industry.
Once leads have been generated, Gary Keller states that these leads “must be followed up on and turned into listing presentations and buyer appointments”. The appointments that you set should lead to a decent number of seller and buyer agreements being signed. If you want to grow your business to the point that you bring in more than $1 million in net income, it’s important that you hire staff members who are able to convert leads at the same rate as you are.
To accomplish your goal, it will take some time for you to identify, recruit, and fully train the talent you bring onboard. Along with hiring the right talent, it’s also essential that you have the right tools in place to track and convert your leads.
The Organizational Model
The organizational model involves knowing which individuals to bring onboard as well as the skills that should be listed on their resumes. Real estate companies require three staffing areas, which include:
- Administrative staff – Listings manager, administrative manager, marketing manager, lead coordinator, transaction coordinator, and assistant
- Buyer staff – Buyer specialists, lead buyer specialist, and showing agents
- Seller staff – Listings specialists and lead listings specialist
Your focus should be on hiring for administrative positions, all of which should be filled before you begin hiring buyer and seller staff. If every member of your team has the drive and talent that you do, your business will invariably grow.
Using Formulas to Keep Expenses in Order
If you want your net income to be as high as possible, it’s essential that you take measures to keep your expenses in order. Let’s say that your real estate company brings in $800,000 in revenue for a single year. If your expenses amount to $750,000, you would only have around $50,000 in net income. You can increase your income by getting rid of as many unnecessary expenses as possible.
The Budget Model
The Budget model has proven to be among the most effective ways to grow a real estate business. In this book, Gary Keller describes the budget model as being centered around real estate expenses. It’s important to identify what happens to the money you bring in. When you first receive money, this is referred to as gross revenue. The gross revenue that you end up keeping is your net income. The difference between gross revenue and net income involves expenses.
The purpose of the budget model is to effectively maximize your net income, which means that your total expenses won’t reduce your gross revenue by too much. Most real estate agents don’t enjoy using the budget model because they view their expenses as a simple cost of doing business. Gary Keller says that expenses are an investment into a real estate agent’s future. The expenses you pay for now are designed to solidify and grow your business, both of which are essential for long-term success.
Breaking Down the Path to $1 Million Dollars in Net Earnings
Once you’ve started to cultivate and convert leads, hire the right staff for your company, and create a budget, you should have all of the necessary tools in place to obtain $1 million in net earnings.
The Economic Model
This is a simple formula that tells you how to input numbers that you’ll need to reach in certain areas if you want to obtain your desired net income. If $1 million in net income is your current goal, the economic model is necessary if you want to reach your goal in a structured manner. A proper economic model should tell you where the money comes from, where the money goes, and how much is left.
While this model may seem simplistic, many agents make the mistake of not knowing where their money is coming from or not understanding how much money will be left by year’s end. Any economic model depends on projected outcomes and results. You must identify the numbers you need to reach, appointments you need to make, and conversion rates. The only way to earn any income is by converting leads into sales.
What’s Changed Since The Millionaire Real Estate Agent was Published?
While “The Millionaire Real Estate Agent” is nearly just as relevant in 2021 as it was when it was first published in 2003, there have been some notable changes in the real estate industry over the past two decades. Real estate agents have had to adapt to these changes to continue their success.
Print Ads are (Almost) Obsolete
In the early 21st century, print ads were among the most effective methods for advertising your business and new listings that you wanted readers to see. Today, however, print ads are nearly obsolete and should no longer take precedent over more modern forms of advertising. While you can still place ads in print media, it’s more affordable and productive to take advantage of digital marketing with social media ads, email ads, and search ads.
Yellow Pages has Gone Digital
The digital age has also caused Yellow Pages to go digital, which can make your job easier. Any ads you create can be displayed on websites that show Yellow Pages, which should have a considerably broader reach in comparison to traditional yellow pages.
Zoom and Signing Documents Digitally
Zoom is a highly popular teleconferencing software that allows prospective buyers to view properties virtually as opposed to attending open houses. Keep in mind that real estate agents can host as many as 100 participants in a single conference, which can be invaluable when you’re trying to obtain offers on a listing.
One aspect of the real estate industry that has changed for every agent is that documents are now signed digitally. When offers are made and contracts are signed, these transactions can be finalized with the use of electronic signatures through a secure portal. As such, these transactions can be completed in a much more efficient manner. Other than these three aspects, everything else that’s stated in “The Millionaire Real Estate Agent” still holds true in 2021.
While “The Millionaire Real Estate Agent” was published nearly two decades ago, the subject matter continues to be relevant well into the 21st century. Lead generation is as important as ever and is the only way that you’ll be able to garner long-term growth and success.
However, it’s also important that you budget well, hire the right people, maintain a good work-life balance, and adhere to the four business models mentioned previously. With the right approach, you can put your real estate company on the path towards $1 million in net earnings.
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