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How MLM - MultiLevel Marketing Prepared Me for Real Estate

When I was nineteen my friend Greg’s dad got the two of us signed up in Amway and out into our Georgia neighborhood to sell some soap. Well, that didn’t last long because at nineteen, I had other things on my mind.

It’s 37 years later. I’m in San Ramon, California and selling real estate. Did that Amway experience help me? Not really, but several of the other programs I got into in the 80’s and 90’s sure did.

The thing about network marketing or MLM is that many people look down on it. So if you’re good enough at it to make money, then you must have something going for you.

What I learned through my MLM experience:

How to cold call
How to do presentations
How to prospect
How to overcome objections
How to recruit
How to duplicate
How to prospect
How to put my assumptions aside and help others to do the same
How to plan the work and work the plan
How to listen
How knowing your product is critical to your success
How negatives can be positives when you change your perspective
How greed, arrogance, and pride can take you from the top to the bottom in a San Ramon nano-second.
How to prospect

I learned a lot more than this, but one thing that really stands out is – prospecting in case you missed it. Every now and then, like this past summer before I moved from Utah to California, I pick up a book on network marketing just for grins. I read “How to Build a Multi-Level Money Machine” by Randy Gage.

Randy is an interesting guy – dishwasher turned multi-millionaire. One of the big tips from the book – get your car washed… often. What??? Randy found the car wash to be one of his richest veins of prospects.

I have no fear when it comes to initiating a conversation. This morning we were out of coffee at the office. If there is one thing that will put a crimp in a Monday morning Harper Team team meeting it’s being out of coffee. So, off I went to Peet's to get some of their famous brew and grind.

Of course, it’s now 8:30 and the line is long. So I turn to the lady behind me and say -

While we’re waiting in line can I sell you a house?
Not unless it is in Orange County.
Do you have a Realtor® to help you there?
Yes
So, you’re going to sell your house here?
No, the one in Tahoe.
Do you have an agent to help you there?
Yes

Well – Monday morning – zero for three at 8:30am. The day is young.

It's 1pm and we're at the Back Forty Restaurant in Dublin (just south of San Ramon) having some barbeque. By the time we walk out, we have a listing presentation set for Sunday. Did I mention that MLM can teach you how to prospect?

Which works out well for me because Keller Williams has a profit sharing plan that goes down seven levels. So, I'm unruffled when the uniformed start chanting "pyramid." Let me tell you my version of a pyramid - brokers with about 50 agents underneath. One person at the top, many on the bottom.

In the KW profit sharing plan, the money comes out of the broker side of the transaction and is returned to the agents based upon how their performance effected the market center bottom line.

Feb 11, 2007 - since writing this post, I have written a couple of posts that add some perspective.

Exposed - Keller Williams Profit Sharing

KW - It's the Business Model that Brings Them In

Follow up post - The Cult of Enthusiasm

Posted by HarperMees & Associates on 11/27/2006 10:14 PM

Comments (36)

mlm, multilevel marketing, network marketing, san ramon, dublin, california, keller williams, kw, realtor, amway

36 Comments on How MLM - MultiLevel Marketing Prepared Me for Real Estate

NOV

2006

You'll be interested to know that one of the top KW franchises was started by former Amway people. Ahwatukee Foothills in Phoenix, AZ. And yes, their experiences in Amway DID come in handy as they became top Realtors.

I used many MLM principles in building out a mortgage sales team throughout 5 states.

Thanks for the car wash reminder. My car really needs it and I have always made good contacts while waiting for the guys to finish detailing. Once a week will be a goal for me.

Good post and congratulations on the gold star!

www.HomeRome.com

Baltimore,Md.

I am not sure excatly how the Keller Williams program works, but Exit Realty has really tapped into the idea of unlimited residuals. It has created such a great team environment. I know that my work in MLM has really gotten rid of my inhibitions.

Great post! I think all of us on the West coast are learning what we forgot over the past 3-4 years. I have gotten back to the basic and the amazing thing is I forgot how much fun prospecting can be.

Fantastic post. KW is not MLM, but it does have a fantastic profit share model. Most agents I know are/were part of an MLM, and you are right .... what a way to overcome your inhibitions!

I just signed on, and I love the KW profit-sharing plan concept. It is a plan with great vision to have been created a long time ago (relative to the company's short overall history) and Gary and Jim are truly visionaries in this and many other paradigm-shifting business model things at KW. Every other company has agents that see themselves as each others competitors. I can't say that isn't still true, but it's different when the entire company's progress and profit passes down to the people that are a part of it. I won't spoil what I'm there to do yet, but I hope it will have a fraction of the same effect, Lord willing.

NOV

2006

Not MLM and you get shared profits from down line? What is the difference?

Randy - You can't just walk into KW and start working. Part of the business model is that agents help to build the business by sponsoring others into the business and then sharing in the profits of the market center they work out of. The profit sharing comes out of the broker's side after costs to run the market center have been covered.

The profit sharing is paid down 7 levels and after 3 years with KW becomes vested and can be seen as part of your retirement. You can also will it to your kids.

There's too much to go in a short reply. If you want more details, email me - john@theharperteam.com

MLM or Corporate America, We take MLM. JOB or Building a business, We take building a business. Trading time for dollars or What we work for today pays us forever, We take Forever. Being Owned or Taking Ownership, We take Ownership. Pay for performance or Getting paid like every one else, We take performance. Doing it from scratch or using a proven system, We use a system. Everyone on the same side of the fence working together in unity with each other and sharing in the rewards together or The team that does the work competing in each other and with the team of owners owners on the other side of the fence on vacation with their families to Disneyland getting paid from our hard work and building their own future. We Take The Team All On The Same Side Earning, Winning and Building Something Together. If that is MLM, We are not afraid to call it what it is, We have it, We Take It, and We are going to keep it. Great Post Harper Team

Lance & Elaine
The "Wells Team"

Interesting that you bring up the market of Amway. Last I heard there was some new company that was based from Amway and they were using many of the same motivational books that are recommended for us. KW seems to offer a lot and I know many experienced agents that have joined a KW in this area.

i was also involved in multi level marketing i used to be a director for prepaid legal. I enjoyed it but all those constant meetings got old. I saw the money involced in real estate and stopped doing pre paid legal.

It's easy to focus on MLM or not-MLM but I think the Harpers point was the How Tos or What Tos.

No matter what kind of car you have, you can keep it clean. It's part of your branding.

Prospecting, however we do it, is critical to success. Have any of you had the pleasure of talking to Diane Turton? She's a classy and very successful example of constant constant prospecting.

Listening is critical. You can't get there without it.

Knowing your product sets you apart from the rest of the world. This is something all of us, oldies and newbies, can do when things have slowed down. Go preview the homes, know them well, be able to call them immediately from mind when you're talking to anyone. It's a great leveller.

Hey, Harper Team,

What an entertaining and informative post!

Prospecting is Forever!

Thanks, Lucky

Great Blog ! Thank you for the information

After having spent time both with the "Gold Jacket" and then a couple of years in "The Balloon" we did 6 weeks of serious "due diligence" interviewing 16 brokerages including all the major franchises in the valley and Keller Williams rose to the top. The "profit sharing" was NOT one of the criteria used to evaluate and compare when we decided to make the move in August of this year. We consider that to be "gravy". The training available to our new buyer associates, plus the bench strength of the technology and training organizations in Austin, TX were significant factors in our decision.

Suzanne - That seems to be my observation also. Agents come into KW for the entire business mode: commission split, training, corporate culture, focus on the agent not the broker, etc. The profit sharing piece is usually down toward the bottom of the motivator list.

I decided to blog about the Danville Market Center and the people there - http://sanramon.wordpress.com/

Though I'm not with KM, I can certainly second the experience to draw on part. I worked in insurance sales for a year before becoming an agent. Wow, was that a great bootcamp of sorts. I learned to talk to everyone around me. I believe they call it the "10 foot sphere" and that rejection isn't to be taken to heart.

As a self diagnosed AADD, I have tried several MLM opportunities and did fairly well in each. Once I had them going, I'd get bored and hand it over to my relatives, who killed the business. I confirmed many business principles by working MLM and it too has helped me in my Real Estate Career. I did particularily well with Herbalife and Excel Telecommunication while I was doing Real Estate in the mid 90's.

Being a former MLMer myself, I couldn't agree more

Hi Harper Team,

Great post! Prospects are everywhere from coffee shop to gym. Keep pitching and one will get his/her share

Thanks!

Yasir

This is a great post. It's a nice reminder that this is about Relationships! And they are everywhere.

thanks for introducing this concept to me, haven't really thought about marketing like so. thanks!

cheers,

cindy

i stage & redeisgn to sell, live and work in san francisco bay area!
cindy@staged4more.com
www.staged4more.com
http://stagingtipsandmore.blog.com/

Wow, John, I could learn some lessons from you on initiating conversations, that's great~ I'll have to try Black Forty when I go Pleasanton for our KW Holiday Party:)

Thanks for the reminder buddy!!! Can't wait to meet later this week!! I"m going to "Sponges" (car wash) tomorrow and I only live 1/2 mile away from that Back Forty BBQ too, it's dinner time, and I'm hungry!! Bye Y'all!!

NOV

2006

Thank you for the response back. If it works for you then it is a good thing. The beauty of this business is we can find the situation that works for us and run with it. In the end selling is what decides our success.

JUL

2007

interesting to look back on some of the older posts...good information here!!

JUL

2007

Isn't MLM very bad for the consumer because he is shielded from the free market? It's basically reworked communism that's theoretically supposed to benefit the people. But in the end benefits those at the top. MLM shields a product from direct competition in the open market.

For example, often in the MLM insurance business the bulk of the profits is from dramatic mark ups of the same insurance product had the consumer bought it directly from it's source. With MLM, the consumer is presented with one product at a time. Sometimes only 1 product(or products from 1 company only) and fair competition is gone because selling is now hindered upon the personal relationship between the salesman and the consumer.?

Or to put it simply, would you buy a box of medication from the traveling salesman or would you buy it at the pharmacy that has several competing brands?

Just thinking out loud.

JUL

2007

There is a lot of truth in the previous comment. Never really compared it to Communism. Interesting.

Lucky :)

SEP

2007

Growing up in a family where parents were - and still are - heavly invloved in a MLM business, I have to say that real estate is the best business of direct marketing that there is. And that is a GOOD ting no matter how you look at it. We have the product, we have access to the product and the best way for our clients to receive that product, is through the use of our services.

I am in agreement of the theory of KW being a pyramid - as opposed to the "traditional" brokerage company. Why not share the profits with the agents in you company? It just makes sense. View it like an employee stock purchase program - which we do not have as agents otherwise, since we are all self employeed.

Thanks for sharing.

NOV

2007

Profit sharing makes sense in a salaried company with commissions completely removed. When you are on commissions you are independent contractors. Ask any contractor who build your house if sharing profits with other people who are not on the site cutting lumber, hooking up your wires if it make sense to share their already thin margins with people who are not working. This is what Russia, China and many other communists countries did the last century. It did not work.

Profit sharing makes sense in a salaried company where anyone who is not performing is let go. The core group remaining are fully functional and productive. Profit sharing in commissions based companies is to attract lazy people who is trying to find a way to make money w/o work, where they would have been fired in a real company. imho

NOV

2007

Well Ychzal - i think this is just about the most absurd comment I have ever read on the subject. You obviously have no idea of the KW profit sharing model, and yet feel capable of commenting on it. Before you make such a ridiculous statement, why don't you do some research?

Sorry I don't mean this for KW. KW to my understanding sounds ok. I am being more specific about Exit Realty. Exit Realty is entirely illegitimate. All the profits taken by the company are swallowed by Steve Morris and the top few cronies. Keller Williams to my understanding put back a lot of that money into advertising and other costs that benefits everyone. Exit Realty does no such thing and is merely a pyramid scheme to my understanding.

Ychzal - i am so glad you came back and clarified. I appreciate you taking the time. I am not familiar with the Exit Realty business model, so I can't comment. I assume you are moving on to greener pastures.

wishing you well this holiday season and hope that 2008 finds you in a better situation with lots of business.

DEC

2007

Ychzal - again you need to get some oxygen to that deprived brain of yours. You have no idea what you are talking about. There is no such thing in Exit Realty as a pyramid, not even close to that hierarchial model. To put it simple so you can understand...the first 10% of gross commission is paid to the sponsor of a "recruit" on the "recruits" sales. So if the "recruit" makes $6,000 of commission in one sale, their sponsor gets the first $600. That's pretty simple don't you think.

To address the not putting money back into the company...you should look around at the number of signs that Exit Realty puts out, the TV ads, etc..

And to think I'm not even a Exit agent and I know this much. Their website will give you more information than this and it doesn't even reflect what you have posted Ychzal. Sheesh..

DEC

2007

"Gary"

Was all of that really necessary? Can't we have a civil discussion here without the insults?

This is not what Active Rain is all about.

Thanks for understanding.

Lucky :)

OCT

2008

WOW...Harper-Mees...even though this blog hasn't been posted to since 12-2007 it's one of the BEST blogs I've read on activerain to date and I've read a BUNCH!

You guys have it figured out and about 80% of the post are obviously very intelligent people as well. Unfortunately a small few are way mis-informed.

First of all MLM, Exit and KW is NOT a "Pyramid". In an MLM people in the middle or lower part of the hierarchy can actually make "more" money than people above them. Anyone that does not understand that does not understand how an MLM works. Secondly, Exit and KW are both "Modeled after the MLM concept" which doesn't mean they ARE an MLM...there's a difference. MLM means "Multi Level" which simply means "more than one level". If KW has 7 levels then there is potential at 7 levels and if Exit has 1 level BUT you can have as many 1 level's as you want then you still have a residual income structure.

As for the top 2% making the most money....would someone tell me WHAT corporation in the U.S. that is NOT the same? Does not the top 2% in Microsoft, GM, IBM, WalMart all make "most of the money"?

If someone REALLY wants an education on the "concept" of MLM and how it works...I would highly recommend going to http://www.youtube.com/user/mlmdebate and finding out more information about Tim Sales, or my blog at http://activerain.com/groups/MLMarketing

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