“The Economic Model is a formula that shows you how to plug in specific numbers you’ll have to achieve in specific areas to receive a specific net income.”
                                                  –The Millionaire Real Estate Agent

All real estate agents have an Economic Model.  For most agents, thier model is based on activities with no projected outcomes.  They simply believe that if they work hard and spend a little money in the business, they will earn all the money they want.  Typically, these agents feel a sense of relief and luck after each sale and each closing.  These agents are usually unsure where they will find the next month’s sales and closings.

A Millionaire Real Estate Agent’s Economic Model will show where the money is coming from (your gross revenue), where the money is going (your expenses), and how much is left over (your net income).  This type of business becomes predictable.  You know where your income is derived and are able to plan your budget accordingly.  If you had a choice of having a business with predictable outcomes versus one that does not, which would you rather have?  Well, guess what?  You have a choice!

When implementing the economic model into your business, you will need to focus on three key areas.  

1.  FOCUS ON THE NUMBERS YOU MUST HIT
One of the most beautiful things about your Economic Model is that it will tell you the numbers you need to hit in order to get the net income you deserve.

2.  FOCUS ON APPOINTMENTS
Appointments are the driving force behind your business.  With every activity in which you engage, you should be focused on getting the appointment.  Think about all of your lead generation activities (open houses, network meetings, FSBOs, expireds, sign calls, etc.) and think about how you may be able to better focus on getting the appointment.

3.  FOCUS ON CONVERSION
Know how well you are converting your appointments to agreements.  Tracking your appointments is one of the best ways to understand how effective your presentation and scripts are.  This is where your Economic Model will help you understand the areas you most need to improve.

Below is a sample of a Millionaire Real Estate Agent’s Economic Model.  All of the percentages are averages for most real estate agents.  If you do not yet know your conversion rates, use the ones in this model.  If you do not know your expenses or cost of goods sold, use 29.1% for each, until you are able to track your own percentages.  Determine your Net Income Goal and work the model backwards to determine how many appointments you need for the year.

The MREA Economic Model 

To best understand how to use the 4 Millionaire Real Estate Models in your business, please read The Millionaire Real Estate Agent written by Gary Keller.  The chapter that explains these 4 models begins on page 119.   

The link below will give you a couple of exercises that will help you determine your own Economic Model and monthly appointment and sales goals.

Click Here ——> Economic Model Exercises