Article Courtesy of: Inman News
By: Darryl Davis

Overspending is a challenge that almost every real estate agent has to face. However, with the right strategies in place, you can rein in your spending and significantly grow your profits

Real estate agents have a lot of expenses to account for: Client dinners, marketing materials, office equipment, software, cell phone, training and even gas. It can be easy to overspend and break the bank, but thankfully, there are ways to rein it in without sacrificing quality or professionalism. Here are some tips and tricks for real estate agents to cut back on expenses and increase profitability.

Track expenses

The first step to reining in overspending is keeping track of your expenses and income. You can’t plug the leak if you don’t know where the hole is.

Separate your personal and business finances, and make sure to keep receipts and invoices for tax purposes. Once you have a clear picture of where your money is going, set a budget for each category of expenses, such as marketing, travel and office supplies. Taking time to do this every year will help you keep a clear picture of your finances and plan your spending accordingly. 

Set a budget 

We get it: You’re busy. From listing appointments to driving buyers around to ensuring closing tasks are on track, it can be easy to spend first and think later. When running a busy real estate business, it’s important to create a budget and stick to it. This will help you cut back on impulse buying and identify areas where you aren’t spending what you should.

Make a list of all your necessary expenses, like office rent, advertising expenses and administrative costs. Once you have established a budget, stick to it diligently. To ensure that you’re not overspending, compare your budget to your actual expenses on a monthly basis.

Work with a financial advisor

Working with a financial advisor is a great way to gain insights into money management. They can provide valuable advice on financial planning and how to spend wisely, tailored specifically to your needs.

A financial advisor can guide you toward investment opportunities that yield high returns, provide strategies to deal with debt and also help you save money on filing taxes. After all, you help your buyers and sellers connect with financial advisors to build their wealth; why wouldn’t you do the same for yourself?

Use free or low-cost marketing strategies

Marketing is essential for real estate agents, but it doesn’t have to be expensive. There are many free or low-cost marketing strategies that can be just as effective as traditional advertising.

For example, social media platforms like Facebook and Instagram can be used to showcase properties and connect with potential clients. Email marketing, blogging and search engine optimization (SEO) are also cost-effective ways to reach a wider audience. 

Before you spend money on advertising and marketing, always do a cost versus benefit analysis of your marketing expenses. Some marketing techniques are not worth your money, so it’s best to cut back on them. Another cost-saving strategy is to share office space with other agents or brokers. This way, you can split the rent and utilities and save money on amenities like printers and copiers.

Negotiate with vendors and service providers

Whether it’s office supplies, advertising, or software, there’s often room for negotiation when it comes to pricing. Don’t be afraid to ask vendors and service providers for discounts or deals. Research the market and compare prices to get a better idea of what’s reasonable, and be prepared to walk away if a vendor or service provider isn’t willing to negotiate. 

Before signing any contracts, make sure to review the terms and conditions carefully. You may be able to negotiate better rates or services based on your needs and budget constraints. As with electricity and the internet, take the time to regularly review your bills and negotiate for better rates with your service providers. You might be surprised at how many of them are willing to negotiate a good deal!

Use technology to increase efficiency

Real estate agents can save time and money by using technology to streamline their work processes. For example, customer relationship management (CRM) software can help organize client information, automate emails and track leads.

Online document signing platforms like DocuSign can eliminate printing and mailing costs for contracts and other documents. Point-of-sale (POS) systems can help efficiently manage transactions, inventory and sales data.

You can use free or low-cost tools like Google Docs, Trello or Asana for project management, communication and collaboration. Additionally, you can monitor your expenses with financial management tools that will provide insights into what areas to work on and which ones to prioritize.

Invest in professional development

Investing in professional development can often lead to long-term financial benefits. Attend real estate workshops, seminars and conferences to stay up-to-date on industry trends and best practices. Networking with other industry professionals can also lead to potential leads and referrals. Also, seek out certification courses to enhance skills and knowledge, which can increase credibility and income potential. 

Avoid unnecessary expenses

Real estate agents often purchase expensive cars, clothing and travel business class for work, believing that appearing affluent will bring more money in. What buyers and sellers really care about, however, is competence and integrity, and they want to find an agent they can connect with and relate to. So, instead of spending money on these unnecessary things, focus on the long-term ROI rather than fleeting pleasures. 

Open a separate account for your operating expenses

If you haven’t already done so, separating your personal and business finances is essential to remaining financially stable. Open a separate account specifically for your work-related expenses. This account can hold funds for all office-related costs and taxes.

You can transfer your “paycheck” wirelessly so that you can keep your personal money and your business money separate, making it easier to stay within the spending limits you set for yourself. This not only helps to identify where the money is being spent in the business, but it also helps with tax filing. 

Stay disciplined and accountable

Finally, to curb overspending, you must stay disciplined and accountable. This means that you should stick to your budget, resist the temptation to make impulse purchases and log every expense for easy tracking later on.

You can also get an accountability partner or join mastermind groups where everyone commits to creating and sticking to their budget. When you know that someone is going to ask, it becomes easier to stay on the mark.

The takeaway

Overspending is a significant challenge that almost every real estate agent has to face. However, with the right strategies and practices in place, you can rein in your spending and significantly grow your profits. By creating a budget, adopting cost-saving measures, utilizing technology, reviewing your contracts, and staying disciplined and accountable, you’re guaranteed to decrease expenses and increase revenue, which will benefit your personal and professional lives. Keep these tips in mind as you continue on your journey to success as a real estate agent. 

Remember, every little bit counts, and small changes can lead to big results. 

Darryl Davis is the CEO of Darryl Davis Seminars.

Article Courtesy of: Inman News
By: Andrea Brambila

At the Realtors Legislative Meetings' Residential Economic Issues and Trends Forum, Lawrence Yun predicted total home sales would bottom out this year before ticking up in 2024

National Association of Realtors Chief Economist Lawrence Yun started off his much-anticipated presentation on housing market trends Tuesday morning with a dig at the Federal Reserve for its latest interest rate increase aiming to curb inflation.

“They should not have done that,” Yun told attendees of the Residential Economic Issues and Trends Forum at the Realtors Legislative Meetings, NAR’s midyear conference in Washington, D.C.

“The latest figure is that inflation is at 5 percent — not yet 2 percent, but moving in the right direction,” especially compared to a 9 percent peak last summer, he added.

Rent is one of the biggest drivers of inflation and that 5 percent inflation is coming at a time when rental rates are still accelerating — but not for much longer, according to Yun. Rents will come down because of “very, very robust” apartment construction, which is at a 40-year high.

“Therefore in my view the Fed made a mistake,” Yun said.

Yun noted that existing-home sales are currently below their pre-COVID rates, but may be stabilizing.

“We have to stop the bleeding before the improvement can take place,” Yun said.

On the other hand, new-home sales are back to their pre-COVID levels, according to Yun.

He attributed the difference to inventory: While existing homes on the market are about 40 percent below what they were in 2019, new-home inventory is higher than it has been for years.

The lack of existing-home inventory means that there’s no home-price collapse coming, according to Yun. Sixty percent of listings currently sell within a month and 28 percent are attracting multiple offers, he said.

“Seventy percent of the country is seeing positive gains [in home prices], 30 percent negative,” Yun added.

Demographics will continue to drive housing demand as the population grows and life events trigger home sales, according to Yun.

While he made jokes throughout his presentation, his loudest laugh line came when he predicted that when divorce data came out for 2022, it would be lower than in 2021.

“Why? You hate your spouse, but you realize you love your 3 percent mortgage rate,” he said, prompting guffaws from the audience.

He predicted that total home sales would bottom this year before ticking up next year as mortgage rates decline and job growth continues.

Robert Dietz, chief economist for the National Association of Home Builders (NAHB), also spoke at the forum and, not surprisingly, stressed the need to build more housing units to both boost inventory and reduce inflation, the latter of which he said could only be addressed by building “attainable affordable housing.”

According to Dietz, the primary obstacles to homebuilding include the cost of building materials, which are still hindered by supply chain issues, such as tariffs on Canadian lumber, regulations that can add up to $200,000 to the cost of a home in a high-cost market like California and a labor shortage of about 100,000 workers.

“The long-term labor shortage in the industry is going to remain with us,” Dietz said.

He said the country would need to build more than 1.1 million single-family homes a year to meaningfully reduce the inventory shortage, and the NAHB doesn’t expect that figure to rise above 1 million until 2025.

Article Courtesy of: RealTrends
By: Scott Wright

A major element of owning a business is creating and growing value. It doesn’t always need to be the driving force of every tactical decision, but it should be considered as part of every real estate brokerage owner’s long-term strategy.  There are numerous factors that can drive value, but from a purely financial standpoint, increasing profitability is typically the most direct path to boosting value. The numbers don’t lie, so whether it’s padding the bank account or positioning for an acquisition, there are certain things owners can do to boost profits and enhance their value.

General ledger scrub

Get together with your CFO and run through your general ledger to see if there are areas where you can cut spending with minimal impact. Pay close attention to non-recurring and one-time expenses. Identifying those expenses during the valuation process is critical. As part of this scrub, also examine your vendor contracts.

Whether it’s technology, marketing, training, coaching, etc., are you getting the value from this vendor that you originally hoped? If not, look into concluding the contract or renegotiating it to a level that seems more economically feasible. Overall the general ledger scrub should be an annual event regardless of your posture on value creation. There’s no reason to spend money where you don’t have to!

Fee increase

Are you in a position to increase your fees? Interestingly, we find that most firms don’t adjust their fees for the increased cost of running their business. Restaurants, car manufacturers and even the Girl Scouts all pass on their rising input costs, so why can’t real estate brokerage firms?

This fee increase doesn’t need to be big, just incremental. If you don’t have a transaction fee, add one, and also consider writing into your ICAs and corporate manuals the right to adjust fees periodically to keep up with inflation. For example, tie the increase to the Bureau of Labor Statistics’ Consumer Price Index.

In general, fee increases drop right to the bottom line, so every dollar you add here has the potential to increase your value by a factor of two to four times that dollar.

Footprint examination

While there’s still a place for brick-and-mortar offices, our increasingly high tech virtual world has alleviated the need for robust physical footprints. As such, it’s important to periodically examine your footprint. Are you in a position to consolidate offices or reduce square footage? While timing is slave to your lease commitments, plan accordingly when renewal is nigh.

Additional revenue streams

Brokerage is often a great feeder for affiliated services like title, mortgage, escrow, home warranty, insurance and even property management. Some of these may require certain scale and there may be jurisdictional restrictions, but if you can tap revenue stream diversification jump on it.

Roll-ins

Full blown acquisitions can be costly and are not always accretive right away, but it’s a different story for roll-ins. A roll-in, also commonly referred to as a tuck-in or walkover, is a simple absorption of agents.  Occasionally, you’ll come across smaller brokerages or teams that are looking for a greener pasture, or a place to land if they’ve had struggles. In a roll-in you aren’t taking on any liabilities and there’s very little, if any, upfront payment. The owner/leader that rolls in is typically paid solely on an earn- out/override. Since you typically aren’t taking on leases, equipment contracts and employees the production of your newfound agents drops right to the bottom line. Keep your eyes peeled for these opportunities!  These factors and more can really drive profitability and ultimately value.

Scott Wright is a partner with RTC Consulting, a firm that specializes in real estate brokerage consulting, valuation and mergers and acquisitions.

Article Courtesy of: Inman News
by: Mark Johnson

Agents who are looking for greener pastures may be blaming you for their lack of listings in this tough market. Here's how to keep them onboard

  
Is it the market? 

Is it me?

Is it my broker? 

How often has one of your agents said, “I’m leaving because I can do better over at Brand X”?  Maybe that’s true; perhaps it’s not. Yet from my experience, it’s not you, it’s the market.

How can you ensure agents feel confident in what you’re offering?

I assume you have a defined niche, a clear idea of your ideal agent and a compelling value proposition. If not, you have work to do. Yet in my years of
experience, I’ve yet to meet a broker-owner or team leader who did not honestly care about the growth and well-being of their associates.

So, with that foundation, what’s the deal? You and I know it’s in the daily habits of our associates, in consistent and creative marketing, and delivering a solid experience from start to finish. 

My business partner, Ben Hess from Recruiting Insight, wrote an ebook on the “psychology of recruiting,” where he covers some of the basic science of human motivation. One of those concepts is that our brains are wired to jump to quick conclusions. This is useful in reacting quickly to the environment around us, yet sometimes fast conclusions lead to flawed conclusions.

What if there was a better way? What if you mastered the science behind what motivates your associates? If you understood the science and knew how to apply it, you wouldn’t have to guess at what strategy to use. You would know and could retain more agents in your team, office and firm. 

Build your mastery with this book list

There are several books that I’d recommend for building your mastery, like Atomic Habits, The Miracle Morning, The Power of Habit, Do Hard Things and more. If you took each of these books and had to summarize them into the basic drivers of what motivates us, it might look like this: 
• Developing daily habits 
• Cultivating a sense of belonging 
• Honoring your instincts 

In The Power of Habit and Atomic Habits, we learn how much of everything we do in a typical day is out of habit, without even thinking about it. Many times we don’t even remember how those habits got formed.

An important part of getting someone to create a new habit is breaking things into small steps. For example, in my work with Tom Ferry over several years and studies, we found that most agents have similar common habit challenges: 
• Relevant and consistent marketing 
• Prospecting consistently 
• Maintaining and working a database 
• Organization and time management 
• Maintaining a winning mindset 

So, what if you got really good at helping your associates solve those problems? For example: where are the listings? We know in this market where the listings are. The listings are in David Knox’s 7 D’s:

• Death
• Divorce
• Diplomas
• Diamonds (engagements)
• Downsizing (10,000 people in the U.S. turn 65 every day)
• Daily grind (job changes)
• Discretionary income changes.

An essential part of getting your associates to create new prospecting habits is to break things into small steps.  So, can you break things down into a system “For success: Here’s how we do it here.” One example of the leading indicators to break down and make simple? New appointments created each day or week. What if you had a 90-new-appointment hustle in your team, office or firm? 

Create a belonging culture where everyone contributes

Besides habits, a fundamental need — even more so now than ever — is the need to belong. As a broker, how do you rate yourself on creating a belonging culture? What if your associates felt like they belong at your firm by having a voice, and the ability to contribute so they feel important enough to stay? Is there a way in your firm to: 

• Give the work a deeper meaning (every home sold creates two jobs) 
• Make more people feel more valued more often
• Find a balance between collaboration and competition 
• Offer a venue to share wins, breakdowns and breakthroughs
• Connect the organization and community to the brighter future you envision 
• Be the collective voice of reason in all market conditions 
• Create a strategy to connect the languishing with the thriving 

Instinct, according to Gary Klein, Ph.D., is the way we translate our experience into judgment and actions. I suspect as you read parts of his article, you had some thoughts like: 
• I had a feeling about it.
• That was my hunch.
• I feel that in my gut.

So now it’s time to act. Just like your agents, break down one of these leading indicators and make it simple to execute. The ideas you just had reading this article are worthless without execution.

One of our clients is conducting a 14-day sprint at 8 a.m. every day on “How To Earn Listings In This Market.” Another is starting a book club. Yet another is hosting a weekly pizza, prospecting, and profit session.  

To win the day? Leave nothing to chance and do all you can to eliminate the “It’s my broker’s fault” mindset. 

Mark Johnson is an author, speaker and business partner in Recruiting Insight.

Article Courtesy of: Inman News
by: Rainy Hake Austin

As agents adjust to changing realities, brokers and team leaders should make it clear that opportunities for growth don’t go away just because the market is in a transition

As leaders in the real estate industry, it’s our job to keep agents motivated. When the market slows, our ability to inspire and encourage team members becomes even more of an asset. Your team will look to you for guidance during these periods, and you have the power to keep them progressing forward.

As markets fluctuate, a slower season provides some breathing room to prepare for busier times ahead. Agents can use the time to strengthen client relationships, explore new niches, and reevaluate marketing strategies. Team leaders should make it clear that opportunities for growth don’t go away just because the market is in a transition.

Here are some ways you can motivate your agents to maintain forward momentum during a slower market:

1. Encourage networking

It can be challenging to expand your network when you’re preoccupied with showing and selling properties. Slow times are perfect for making new connections and getting prospective clients into your pipeline.

Encourage agents to take advantage of this moment by attending networking events, following up with contacts and engaging with the local community. I always encourage agents to visit the office to connect with colleagues and meet additional members of the brokerage in person. Nothing is more powerful than making connections in person. Connecting with fellow real estate professionals will keep your team and entire organization feeling inspired.

2. Work on your office atmosphere

The office environment can affect mood and overall performance. Consider reinventing your space to include an area with couches and small tables where agents can meet with clients in an informal, cheerful setting that feels welcoming. At The Agency, we were founded with the mission of collaboration. From our very first office in Beverly Hills where our CEO Mauricio Umansky and all agents have walls of glass and a completely open design to our over 75+ offices today, we have envisioned our offices to be a place to foster connection, collaboration and inspiration.

An inviting atmosphere — think open spaces and natural light — will boost morale and encourage connections among agents and staff. 

3. Acknowledge high performers

One of the best ways to motivate your agents is to publicly acknowledge when they do well.

Create a chart or leaderboard to visually remind your team of their accomplishments. You can also give individuals shoutouts during meetings or via email. Everyone wants to feel valued and appreciated. Spotlighting agents’ success stories will encourage them to keep moving and inspire other team members to follow their example.

4. Have one-on-one check-ins

During slower periods, check in with each of your agents to get a sense of their goals. Asking what you can do to support them will show that you care about their personal growth. Identify areas where team members have done well and let them know you’re taking notice.
You should also discuss how they can improve and suggest potential learning opportunities, such as training programs.

5. Share resources

When business slows down, you can reinvigorate your team by encouraging them to expand their knowledge base. Share book recommendations, podcasts and articles with your agents, or have them attend conferences and lectures. For example, we host educational content on The Agency’s University platform regularly, with sessions on everything from social media, the economy, to other tips for business. Your team will appreciate your commitment to providing the resources they need for success.

6. Create incentives

Another surefire way to stoke team motivation is to introduce reward incentives such as financial bonuses, complimentary dinners or trips, and other perks. It never hurts to give agents a reason to keep their eye on the prize and amp up their efforts when others might be slowing down.

7. Foster an encouraging environment

Having a strong, supportive company culture allows firms to weather slow seasons with ease. When you show your agents that you care about their growth, provide them with tools to succeed, and reward their accomplishments, you’ll find that your team is motivated and energized no matter what’s happening in the market.

Effective leaders know how to inspire. By employing the strategies mentioned above, you’ll ensure that your agents continue to thrive amid a slow market.

Rainy Hake Austin is President of The Agency in Los Angeles. 

The Federal Housing Finance Agency (FHFA) has ordered new loan level pricing adjustments (LLPAs) at the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, which mortgage lenders must be in compliance with as of May 1.  As a result, many homebuyers with mortgages insured by Fannie and Freddie are now paying higher upfront fees.  Importantly, the fees do not apply to Fannie and Freddie’s affordable mortgage programs, HomeReady and Home Possible, which let buyers put as little as 3 percent down, or to non-conventional government-backed loans, including FHA, VA and USDA loans and HUD Section 184 loans

Since 2008, Fannie Mae & Freddie Mac have charged LLPAs to individual borrowers based on their credit score, down payment, and other risk factors.  With this latest change, many buyers who put 5% to 25% down and have credit scores above 680 are seeing fee increases, and the same can be expected for those with high-balance adjustable rate loans.  Notably, it was just last year the FHFA raised guarantee fees on second homes, conforming jumbo mortgages, and high-balance cash out refinancing loans.  Meanwhile, higher-risk borrowers with lower credit scores and large down payments are seeing reduced fees, though they can still expect to pay more than those with good credit.  In addition, changes made in 2022 that reduced or eliminated the LLPA fee for first-time buyers and those with low or moderate incomes are now being made permanent. 

While reduced fees for entry-level borrowers is welcomed news within the industry, the National Association of Realtors® has urged the FHFA to rescind the higher fees imposed on middle-wealth borrowers, noting that the fee increases exacerbate the 3 percentage point jump in mortgage rates over the past year and are completely unnecessary given the current financial strength of the GSEs.  Additionally, NAR is working alongside industry partners to oppose a new fee on borrowers with debt-to-income ratios (DTIs) greater than 40 percent that the FHFA has announced plans to impose beginning August 1.  For more background and explanation on the recent change in LLPAs, read more from Inman News.