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Notes from Gary Keller Masterminds

Austin, Texas


- Even with the pending change in real estate, the fact remains that it is a local business that is done by local agents providing value to the buyers and sellers.

Too many agents have gotten away from the MREA book, models and systems. Now they are listening to the agent next door. This is dangerous because there are many false profits out there are good at creating GCI but don't have a business worth anything as there is no profit.


- As a group we are making less money that we were 5 years ago. Our cost of sales is getting out of control which means we are falling in love with the size of our team and not in love with running a highly profitable business first and foremost. Higher costs of sales is a general brokerage firm model, not a sales team.


- Research is showing that the fundamental models (Economic, lead gen, etc.) as still very valid today. Some of the tactics (12direct) are in question.


- There is a fundamental flaw in the agent's thinking and that is that it's easier to run a business than it is to do sales. When starting my sales career how many hours of time and effort did I put into mastering the sales game? How many hours have I dedicated to becoming a great business person? BECOME a student of business in addition to continuing self mastery in sales.


Gary admits that this means that there are 2 One Things now but the alternative is worse. Slow down the sales and my income goes down. Slow down the business mastery my future slows down CONTROL THE LEAD.


- If my value proposition is Boomtown, lead purchasing, etc. then I am the same as ERA or C-21. This can be copied by anyone and everyone. When my database is producing my business is insulated and a retention tool. That can not be as easily duplicated.


- Its a local business. Your protection of your business is in the relationships you have with people locally. Buying leads is a slow path to the unraveling of your business. What disturbs GK is that there isn't enough behavior around relationship. There is a weird trend where people aren't following the MREA book anymore.


- There are plenty of agents who have Gross income but they don’t make money. They are on podcast and people are taking notes but it isn’t something to emulate.


- We are trying to have exciting businesses instead of making peace with the boredom of the monotony required to get to profit. GK is fearful of the things that we are buying into - the agent industry is turning into the brokerage industry. We are less profitable than 5 years ago.


- Why? Because we spend too much money on your COS. That means you’re running a general brokerage and falling in love with the number of ppl on the team instead of the profitability of it.


- The MREA is about increasing profit, not rising costs. MREA is not outdated - the fundamental models are relevant and remain viable and consistent. (Ideas and tactics may have changed). Go own a brokerage if you want, but there is more money in owning an AGENT business.


- For a good general brokerage you need 200 people. So be careful that you don’t think that you’re smart about this - you need to keep your agent business or you won’t be happy and be applying for jobs because of the lack of profit.


- How long did it take until the sales “game slowed” down and you understand the game so much that you’ve “got it” and you could see it - you get it. How many hours did you apply to get to that level in sales?


- You should run your business with a dollar amount compensation as owner compensation. Run your business to that dollar amount. The MREA says its a million dollars. Run your business to net a million to the owner. You are an entrepreneur more than you are a Manager.


- Manage to the profit number you want. Expansion came because every business has a ceiling of income. Your market may not get you to a million, so you would need to have another business (location) in order to get to the million. IF your area can net you millions, then do NOT expand - there is no need to. Ink blot locally out of your same market center. There cannot be profit first when there is business debt. That must get paid off first and then can be profit. Want to increase margin, then you must increase efficiency. GROWTH is messy and creates inefficiencies.


- Individual creativity locally will always win. Be smart and act locally to disrupt and serve. Be smart and act locally to disrupt and serve.


- GROWTH someone says “if I move to another city, could we do this there” OR someone hears of your success and says “how can I participate in what you’re doing”. You shouldn’t have to convince anyone. They either want to keep doing it elsewhere, OR they want to do it with you in their location. If your business isn’t burning enough, that people don’t come to watch and be a part of it, then focus on the burning. Mo and Gary had everyone come to them in order to grow the business. Be so burning, that they come to you. Be expandable, but don’t go after forcing expansion. Set yourself on FIRE and then it will happen organically.


- Why did Gary become CEO again? He wanted to get rid of the filters around the dialogue on CULTURE and what’s being done/said. The culture was one of the things that suffered coming out of the recession - the growth was enormous and the culture suffered. He didn’t take the JOB back, he just took the TITLE back. He never left the business. He took back the title because he doesn’t have to worry about running anything through/filtering any action with someone else.


- People are only loyal to the extent that they get what they want.

Example: Two Sundays ago, the second most searched term was “cancel HBO” after game of thrones ended. If we don’t get what we want, we bounce to something else. So our technology has to have everything so they stay loyal. iBuyer, insurance, mortgage, house management and more.


- In 2020, you will build your database through the app - go into a market, imagine a wild commission split is offered for “their lead” and the only way they get that is if they get a ton of people added to the database - you don’t make money for a few years but you have a huge database, and at some point you’re handing out leads at a lower split and making money.


- In 2020, you will build your database through the app - go into a market, imagine a wild commission split is offered for “their lead” and the only way they get that is if they get a ton of people added to the database - you don’t make money for a few years but you have a huge database, and at some point you’re handing out leads at a lower split and making money.


- Have a client relationship manager on staff/admin! It isn’t on the agent - that way the business stays with the team, not the agent. Admin should own relationships because Admin stay longer and they don’t take clients with them! The admin communicates and grabs back the relationships! That way the relationship isn’t stolen. The admin team is protective of the brand and the experience and can predict when an agent is trying to build on their own outside the team and wanting to leave. You have them leave sooner then. THIS HIRE is the front line of customer service/relationship management.


- When you get a listing, be sure you use it to get another listing. Do not walk out without the listing. Negotiate the commission and get the listing - and have the seller sign a NDA so that no one knows we drop the commission (neighbors or competitors) - but get the business and use that business to get more business. Do not walk out the door without getting the listing. Do not let another sign go in that yard. What check will you have to write to get another listing? This isn’t a check to write - its a low cost way to then be able to get more listings. If you need to do this deal 2-3 times in order to get that area back, then do it and get the market share.


- PROFIT FIRST - Mike Michalowicz |The goal is to be of service (although you may get stinking rich along the way). Don’t be panicked because then we can truly serve.

There is a heirarchy of needs for businesses like the human needs of oxygen, food/water, shelter, belonging and self-actualization. The business heirarchy is sales, then profit, then organizational order, then impact and then business legacy. Most businesses are starving for profit, but we go sell more. We are starving but we gasp for air. Have you ever been told something to be true, but it was a LIE? Aka the tooth fairy. It is a good mythology but a lie. Our belief of how profit works is also a lie... 500 BC we believed that the world was flat. Back then it was “fact”. But it was a lie. Yet it took thousands of years before the truth was known. Axiom is a dangerous “truth” that isn’t challenged by society (whether it is actually true or not). We think SALES - EXPENSES = PROFIT. Mike says this doesn’t work - it is a failure. 83% of small businesses are in check to check survival. We don’t enough in reserves to cover rent, payroll, or ourselves. We think something is wrong with us, when we can’t make it profitable. Its not just me, it is all of us and the formula! The formula tells us that profit is LAST. “Bottom line”, “year end”, etc. Think about where is else you things last... do you put your family last? your health last? Whatever is last always gets ignored and delayed. The new formula is SALES - PROFIT = EXPENSES. Behaviorally this is radically different than before. You will take a radical approach to taking your pre-determined percentage of profit FIRST. Profit is not an event, it is a HABIT. FINANCIAL TRAUMA - many of us suffer from it. Many have functional depression. When you reach rock bottom, ... Most of us try the gimmicks (like the ab inductor) and they surprisingly don’t work... or try the extremes (like P90X). The normal average person will have success in both.


- GIVE THE BUSINESS LESS. As we restrict how much money is available to the business, we will be forced to INNOVATE. When you can’t pay your bills, then something is fundamentally wrong with your business. Make due with what you GOT.

1. Small Plates 2. Sequence of what is served.


Change the sequence of what is served - serve the vegetables first - then serve the meat afterwards. It brings automatic balance. When money flows into the business, move the money first to PROFIT (that is a reward- dopamine release- reinforcement), then reward into your OWNER compensation account (more reward and dopamine), tax (PROTECT) and then serve. The sequence dictates the use.


- Don’t do all of this overnight - it will be catastrophic if you do it all at once. Take it slowly. Read Decisive, Switch... they challenge the notion of “raising the bar” and suggest lowering the goals in order to gain more success. Lower the bar. The majority of people will fail if they go after the raised bar. Instead, take two steps:

1. go to the bank and set up one new account and call is PROFIT.

2. allocate 1% to the PROFIT account. Start low and then bump to 2%, 3%, 5%,

10% and it may take two years to get to that.










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