The Millionaire Real Estate Agent by Gary Keller

Author:Gary Keller
Language: eng
Format: epub
Publisher: McGraw-Hill Education
Published: 2004-04-06T04:00:00+00:00

DOING THE MATH

Working backward, after adding back in COS and operating expenses, you will need approximately $2.4 million in GCI to net a million dollars in personal income. Here is a snapshot of the simplified version of the Economic Model:

Figure 29

There are two primary sources of income driving your GCI: seller listing sales and buyer sales. Of these two, seller listing income is the most important. Seller listings provide the greatest opportunity for net income; they are a marketing platform and a key source of leads. As detailed earlier, each seller listing properly marketed should generate one buyer sold if the leads are properly captured, followed up, and converted. The top agents we’ve worked with also confirm this. A seller listing-based agent who captures and converts buyer leads properly can reasonably expect her revenue to be divided equally between listings sold and buyer sales. In truth, this should be your strategy.

So, if your revenue is evenly divided between buyers and sellers, your $2.4 million in GCI will be divided equally between buyers and sellers, with $1.2 million coming from each side. To do that kind of business, you’ll more than likely need leverage, which is where your cost of sales (COS) comes in. On the buyer side, due to the 50/50 split as compensation for buyer specialists, $1.2 million in GCI has a COS of $600,000. Seller listings are the better leverage opportunity for your business in the long run because you can expect your COS to be substantially lower. Your seller listing specialist will more than likely need to be ultimately compensated at a rate of around $100,000 per year.

With all those numbers in place, we can begin fleshing out the Economic Model in greater detail. Below is a quick overview of the basic cash flow of our model.

Now, we must determine the number of sales it will take to reach $2.4 million in GCI. Given our assumptions that the average sales price for the Millionaire Real Estate Agent will be $250,000 and that she will earn an average of 3 percent commission on each sale, we can conclude that it will take 320 closed sales each year to reach $2.4 million in GCI. Since we are also advocating a seller listing-based perspective, where each properly marketed and worked seller listing generates one buyer sold, this divides clearly into 160 listing sales and 160 buyer sales each year. The charts below (Figure 31 and Figure 32) show the relationship between average sales price and the number of closed units necessary to reach $2.4 million in GCI.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.