Ever wonder how the top agents in real estate handle the peaks and valleys of their budding business to become the mega producers of our industry? The answer is simple, they budget for success. Regardless of the talents and knowledge top real estate agents possess, without a firm grasp on their ability to manage their income and expenses, none would be the successes they are now. In fact, in one of the recent Top Producers’ Panels hosted by RE/MAX Alliance’s Young Alliance Networking Group, we heard right from the source that if you don't budget wisely, you will always be relying on the next sale. Of course, this is not saying you don't want it, it just means that your business has reached a point where your livelihood is not set against every transaction.
In retrospect, reaching this point is also the ideal situation for your clients. They then know that their representation is solely based on your ability to advocate for them and not your commission. So the next question is, how do you budget your real estate business for success? And the answer to that is not quite as simple. It is something that should be discuss with your CPA in detail. Initially there are a few things you should start to consider now:
- Plan for taxes. This means your commission is not as big as you thought it was.
- Pay into your savings every time you receive a commission.
- Prepare a budget forecast for each year and project how many sales are “needed” to reach that goal.
- Get into the habit of paying yourself a small salary, which might mean living a bit below your means.
- Budget everything. If you don't consider things like how much gas you need and additional daycare expenses, you will come up sort somewhere.
- Budget your marketing. If you know each listing will cost you a certain dollar figure make sure you account for that.
- Reward yourself and your family, so that you want to stick with your budget.
- Never stop prospecting even when you reach the state where you don’t need every sale.
- Track your progress throughout the year and see how it aligns with your goals.
- Use a CRM! (Client Relationship Management system)