RISMEDIA, September 30, 2009—Too many real estate agents work 50 to 60 hours a week, week-after-week, without anything to show for it. People can say what they want about us and our profession, but one thing is for sure- we work our tales off.
Let’s face it, most of us work seven days a week. We work evenings, weekends, holidays and skip vacations – all to make a sale. Why?
Because we operate on commission. If we don’t work, we starve. Plain and simple. We’ve got to “git ‘r done,” as Larry the Cable Guy would say. The problem is, for many agents, we have nothing to show for all of our hard work. Our commissions are quickly eaten up by business expenses or to put food on the table for our families.
There are two primary ways for real estate agents to get rich. The first way is to build a business with value that can be sold for an attractive price. The second way is to focus on converting commission income into wealth. I believe it’s important to do both at the same time. Commission income does not turn into wealth. Commission income is usually spent. To get rich, you must consistently and proactively turn commission income into wealth. How you might ask?
Save and invest a portion of every commission check you receive. Think about all of your home sales over the years. How much wealth would you have today if you automatically saved 10% of every commission check you received? Did you shudder at your answer? If so, now is the time to do something different. Every single home sale should make you richer.
Our big challenge is we don’t have any special automatic savings plans like a 401k. My suggestion would be for you to do the following:
1. Estimate how many homes you typically sell each month.
2. Estimate your average net commission.
3. Multiply your average commission by the average number of homes you sell to get your estimated average monthly income.
4. Multiply your average monthly income by 10%.
5. Set up an automatic withdrawal from your bank account to take the amount determined in number 4 above out of your bank account each month.
This little five-step process, if followed and implemented, will make you wealthy. As an example, let’s assume you sell an average of two homes a month and your average commission is $5,000 per sale. This would mean your average monthly income is $10,000. You would set up an automatic monthly withdrawal so that $1,000 a month was taken out of your bank account. At the end of the next 12 months, you would have turned your 24 home sales into $12,000 of wealth-automatically.
You can set up this “Get Rich” account just about anywhere. Consider E Trade, Vanguard, Fidelity, a money market account or a self-directed IRA. It really doesn’t matter. What matters is that you turn your commission income into wealth.
Now, the final trick is to not touch this money once it leaves your bank account. Don’t go withdraw the money and use it to pay for your expenses. Fight to keep the money tucked away. Instead, do something to create additional income for your business. Go sell another home and protect your “Get Rich” account.
I realize most of you who read this won’t follow this advice. This simply means that you won’t be any wealthier 12 months from today. That’s a shame because you work extremely hard every single day and you should have something to show for it. You can change this by setting up your “Get Rich” account and having money automatically transferred into it.
Rob Minton, who reinvented his real estate sales business to sell 269 homes to a limited number of clients in one year, has written a very practical book on how real estate agents can sell more homes.