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