If you are like most real estate agents, your income is commission-based. Therefore, budgeting is a crucial skill to develop if you want to stay afloat. We asked real estate agents across the country for their tried and true budgeting tips and tricks. Here are the top tips they provided.
1. Stick to the budget.
Creating a budget is the first step, but it is not enough. You have to stick to it. Abiding by a strict budget will not only help you get through the slower months but also allow you to begin investing in your future retirement.
“There are a lot of different ways to keep track of your budget, but my advice to all new agents is to budget well so that you can avoid some of the stress if a month goes by without any commissions. Like most agents, I have had months in which my commissions were high and other months in which my commissions were low or non-existent and I have been able to survive. I think a lot of agents spend massive amounts of time trying to increase their income (which of course is not bad), but many fail to spend a considerable amount of time controlling the income they already have.” – Seth W.
2. Save money for marketing costs.
Marketing is an essential part of any real estate business. Make sure you set aside enough money to effectively advertise your services so that you can continue to bring in new clients, land new listings, and generate a steady stream of income.
“A trick I learned is having a budget for everything, especially marketing. The reason for this is when you have money saved for marketing and the market goes south, you will not have to compromise your marketing.” – Eric L.
3. Set aside money for taxes.
It is a common mistake for agents to underestimate the amount of annual income taxes they’ll be required to pay. Be sure to set aside a portion of your earnings for taxes, and remember to pay your estimated taxes each quarter. Otherwise, you may owe a huge amount of taxes at the end of the year.
“I always set aside 35 percent of my earnings from each transaction to pay for taxes. My last transactions of the year go to license and desk fees for the upcoming year to reduce the stress of where to get fees when they are due. I also donate a small portion of each sale. I truly believe what goes around comes around and sharing truly makes you feel grateful.” – Kerstin B.
Having a budget is critical, especially for real estate professionals. But it doesn’t have to be painful. Like anything, if you make it into a game and set realistic goals for yourself, it can actually be as fun as it is effective.
Real Estate Express is the nation’s premier online real estate school, providing pre- and post-licensing courses, continuing education courses, and professional development to hundreds of thousands of real estate agents across the country. RealEstateExpress along with its sister schools McKissock Learning, Superior School of Real Estate, Allied Schools, The Institute for Luxury Home Marketing and Hondros Education Group, helps real estate professionals achieve sustainable success throughout each stage of their real estate career.