This column goes out to my fellow real estate agents. When my fellow owners at Keller Williams were courting me, they started asking all kinds of uncomfortable questions like, “What is your cost to do business? What is your cost per listing, cost per buyer? What is your marketing budget? How about the ROI from the marketing budget, how many leads are you generating per month, where were they coming from, what was the conversion rate of the lead, and what is the total transacted volume and number of units, average commission after expenses, etc., etc., etc.?”
I am ashamed to say that three years ago, I did not know those answers. Back then, I thought more like a real estate agent and not as a businessman. I didn’t realize that there was a difference. You see, real estate agents get up every day and think, “Oh my God, I have to sell something today.” Their entire focus is to sell, sell, and sell; and that’s good because that’s how they get paid. However, if you are going to make this into a long-term professional career, you’ll have to shift your thinking to run this like a business. If you don’t, it’s the quickest recipe to running a non-profitable operation. After all, I think it’s safe to say that we are all in business to earn a profit.
As soon as I told my fellow owners that I did not know those numbers, the next question that came out of their mouth was, “Well, who in your brokerage firm is helping you build your business?” The answer was ‘no one’. They told me that they would help me not only sell more real estate but also help me run it as a cost-efficient business. That was appealing and one of the main reasons why I came to Keller. Since then, I realized that there are really only three levels of business.
The first level is when you are an employee of a company. Whether you are the CEO or in-charge of the mailroom, your income is dependent on a salary from the company. The second level is the self-employed. Realtors fall into this category and for years; many people have done very well being self-employed. The downside here is you created a job for yourself and the income is still dependent on you doing the work. The third category is the truly wealthy. They have achieved this level of success through passive income. They get “wake up money,” meaning when they wake up, money is deposited into their account whether they decide to work that day or not.
My business partner and I are currently in process of moving to the third level (the wealth management strategy), which can be done in real estate using the principle of leverage. If you are not moving through these three stages of business but want to, I’ll ask you the same question my fellow owners asked me, “Who in your brokerage firm is helping you build your business?” If the answer is no one… maybe we should talk.