People get into real estate for many reasons, one of which being that there’s no ceiling to how much you can earn. What many people don’t realize, however, is that there’s also no floor.
Sure, you can make an unlimited amount of money, but if you don’t know how to effectively manage your finances, it’s difficult to turn a profit.
There are many ways to maximize your profits. In addition to increasing the number of transactions you close and/or increasing the average sales price of the homes you sell, there are other time-proven tactics that involve working smarter, not harder.
Think net. Many agents focus on their gross income, or how much they make before taxes and expenses, but true real estate professionals strive for a high net income. When you focus on gross income, you end up working harder for the same amount of money as a more effective agent who approaches their income in net terms.
Create a budget. A budget does more than map out where your money goes; it also helps determine your path to success, including the growth you intend to achieve and the costs it’ll take to get there. Follow a budget and you’ll have the awareness you need to really invest in your business.
Focus your marketing where you’re seeing results. The average real estate professional spends $1,100 on marketing, 10 percent of which is spent on online marketing and promotion.* Take the time to analyze your current marketing and advertising campaigns, and cut the ones that aren’t generating results. If you’re not sure where to make cuts, ask your clients how they found you.
Know the costs of running your business. Create a profit and loss statement every month. Without this information, you won’t know where your business is heading, and without knowing where your business is heading, how can you get where you want to go? When you have the numbers in front of you, you can direct your efforts and improve your performance.
Look for joint business opportunities. Look within your business network for opportunities to cross-promote. This allows you to share marketing and advertising costs while building relationships with people outside your client base.
Think twice about discounting your commission. While it may be tempting to reduce your commission for a client, doing so may result in their referrals expecting you to reduce your commission. Explain to your clients the value you bring to the transaction based on your knowledge, experience and marketing resources.
By incorporating these strategies into your routine, you’ll be able to take control of your finances, keep more of what you earn, and invest in the continued growth of your business.
*Source: National Association of REALTORS® 2016 Member Profile
Brian Buffini was born and raised in Dublin, Ireland, and immigrated to San Diego in 1986, where he became the classic American rags to riches story. After becoming one of the nation’s top REALTORS®, he founded Buffini & Company, an organization dedicated to sharing his powerful lead-generation systems with others. Based in Carlsbad, Calif., Buffini & Company has trained over 3 million business professionals in 37 countries and currently coaches and trains more than 25,000 business people across North America. Today, Brian reaches over 1 million listeners a year through his popular “Brian Buffini Show” podcast. For more information, please visit www.buffiniandcompany.com.
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