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Real Estate Fight Club

2
Nov 2020

Episode 58: The Top 3 Financial Mistakes That Agents Make

November 2, 2020

In Episode 58 of the Toe-2-Toe Podcast, hosts Jenn Murtland and Monica Weakley hit you, the listener, between the eyes about the top three financial mistakes that agents make. Here’s the twist: they’re not fighting with each other, they’re coming after you!

Episode Highlights: 

  • Real estate agents tend to be bad with their numbers and don’t even know their PNL.
  • A PNL, Profit and Loss Statement, is the only way a business owner can know if they are making money.
  • Agents need to look at their PNL every week, especially if they are trying a new tactic.
  • You can either use software like Quickbooks or YNAB, or you can hire an accountant to track your money.
  • It’s fine to be an LLC while you are just learning the business for the first few years, but taxes will come to get you when you start to grow.
  • Save roughly 30% of each check to put toward your taxes or when the bill comes, it’s going to hurt.
  • The state wants its money and will follow-up on that collection 100% of the time.
  • Think of yourself as your company’s manager of its assets and money; would you fire yourself?
  • Stay focused on what’s real rather than spending your commission before you even have it.
  • Re-examine the relationship that you have with your broker from a financial standpoint.
  • Determine what the ROI, return-on-investment, should be whenever purchasing anything.
  • Jenn believes that earning 8x on any deal is ideal, though she will settle for 5x.
  • Agents need to look at the whole picture and factor in the hours spent chasing leads.
  • Agents are far too quick to give up their commission to make a deal work when they should just find another buyer.
  • When you give up commission, you are taking money away from those that are financially dependent on you.
  • What is the first step that an agent should be taking to fix their financials?
  • Jenn thinks the most important thing for agents to do is track their numbers and hold themselves accountable.
  • Tiebreaker Eric Steinhoff, from Steinhoff Properties Group, serves Maryland and does 85% of his business in one neighborhood.
  • Both Eric and Jenn got hit with a massive tax bill when their businesses started to take off.
  • Eric believes that most agents make the mistake of not taking their accounting seriously.
  • Over-saving into a tax account can lead to overspending from that account, therefore, it should be kept realistic.
  • Whether you are good at what you do or bad at what you do, you get paid what you’re worth.
  • Stop spending money on services that you do not need; cut out unnecessary expenses.
  • Many agents make the mistake of not learning and adjusting to the changing times.
  • Agents get too caught up with their ego and the perception that others have of them.

3 Key Points:

  1. A PNL, Profit and Loss Statement, allows agents and business owners everywhere to track their expenses and make more money.
  2. Agents make the mistake of not paying their taxes correctly, whether it be per deal, month, or quarter.
  3. Stop reducing your commission. If the buyer and seller are too far apart, find another buyer.

Resources Mentioned: