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.
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.
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.