How To Become A Successful Real Estate Agent and Grow Your Profit

Want to know how to become a successful real estate agent and grow your profit?

The key to increasing your income is to look at your current business finances and determine 1. If you’re actually making money, 2. Whether your business is profitable, and most importantly 3. If it’s still profitable after you pay your real estate agent taxes.

And then, after you’ve determined your “True Profit” (more on this later), you can start figuring out how to make more of it.

Surprisingly, most Realtors don’t follow this process.

Over 90% of real estate agents we polled don’t know how profitable they are, and the rest were less profitable than they thought.

You may be one of them.

And if you think you’re making more money, you’re likely spending more money, which is bad for your business.

As an real estate agent, you’re running your own business, meaning you’re responsible for your own business finances.

And unlike employees on a corporation’s payroll, you are also responsible for your own taxes.

So while the larger business community generally defines profit (or EBITDA) as the money a business has left over after expenses but before taxes, you need to be keenly aware of your ongoing real estate agent tax obligations if you’re going to build a successful real estate business.

As real estate agent you need to know your True Profit.


increase real estate agent profit dashboard

True Profit is the cash left in your pocket after everything and everyone relating to your business is paid off – expenses like advertising, additional employees, and taxes. It’s the actual money you have remaining to pay yourself.


The simple formula to calculate True Profit is Commissions – Expenses – Taxes = Take Home Pay. And there are only three ways to increase True Profit:

  • Increase Commissions
  • Decrease Expenses
  • Decrease Taxes

Here are the most effective and straightforward steps to positively impact each of the three variables in the True Profit formula.

1. Increase Your Commissions

Growing your real estate business’ gross (total) commissions is the single most powerful step you can take towards ultimately growing profit.

While your commission percentage remains the same, your total commissions grow by adding more clients and closing more listings.

Easier said than done, right?

Growing your real estate profit isn’t as hard as you may think.

In fact, the two best methods to drive total commissions through the roof are entirely customer-centric.

And if you act on these two steps, your clients will go out of their way to help you grow your business.

The first rule of growing revenue is wow your customers.

Over deliver, regardless of the listing size.

When your clients have a question or problem – answer promptly and be responsive, honest, and thoughtful.

Make sure they have a way to reach you – phone, email, even text or chat; whatever is easiest.

Just because you’re a busy real estate agent doesn’t mean you can’t provide an excellent client experience.

And if you don’t have customers yet?

Don’t worry.

Refine and perfect your value proposition: what makes you better than other agents?

What unique knowledge of the area or perspective do you bring to the table?

Then take that value prop to your friends and family and ask them what they think.

If they’re afraid to give you real feedback, ask your potential clients.

For true validation, ask for their business or what you can improve to get their business.


hurdlr real estate agent referrals
The second rule of growing revenue is understanding the power of referrals.

Word-of-mouth is the strongest form of advertising, so focus your efforts on generating this type of buzz.

Referrals from clients you’ve wowed are the cheapest form of customer acquisition.

Some of the most profitable companies in the world don’t spend much on advertising; their customers do it for them.

If you’re actually wowing people with your service, referrals will come naturally.

But it’s still important to stay top of mind with your clients and make it easy for them to refer you.

If your clients know you are fast to respond (as part of your customer service), they will feel even more confident referring you knowing that you’ll make them look good.

And don’t forget to show gratitude to your clients for their referrals.

Earnestly implementing these two steps maximizes the lifetime value of each customer by building repeat and referral business, which is crucial to growing commissions and profit as a real estate agent.


2. Decrease Your Expenses

hurdlr true profit formula

Now that we’ve covered the most important aspect of increasing profit, let’s talk about the second-most important factor: shrinking your expenses.

Set up a dedicated checking and credit card account for your business that’s separate from any of your personal accounts.

Having separate business accounts makes it much easier to see your total business expenses quickly and to identify categories where you can trim your costs, especially if they don’t add real value to your business.

For example, Lily, an independent Realtor in Miami, pays $1,100 a month advertising her business around town on billboards and park benches.

She calculates advertising is 70% of her monthly overhead costs.

Lily’s friend suggests advertising on Zillow might offer a higher return on investment than traditional methods.

After doing some research, Lily decided to sign up as a Premier Agent on Zillow, which costs her $600 a month.

Lily is able to add $700 of profit before taxes each month through this cost-cutting method, plus she’s getting contacted by more qualified leads – she even has a pending sale in her first month advertising on Zillow.


3. Decrease Your Taxes

Did you know it’s possible to increase profit while keeping your taxes the same or lower by taking all business deductions you’re eligible for?

If you follow the steps I’ve outlined to increase commissions and decrease expenses, your profit is going to grow (which is awesome). But since taxes are calculated on profit, more profit means more taxes.

But don’t worry. There’s a simple task you can do which is often overlooked or not fully taken advantage of by many real estate agents: increasing tax deductions.

If you can believe it, the average agent leaves over $3,000 on the table every year by not taking all available deductions and paying too much in taxes!

Any money spent advertising your listings – either online or in print – is a deductible expense, along with mileage driving clients to listings, professional subscriptions, the business portion of mobile phone and internet bills, and a host of other expenses.

Check out the full list of top tax deductions for independent real estate agents here, which goes into detail on topics like what your home office deduction might be worth.

Since real estate agents are business owners, you list your business revenue and expenses on “Schedule C” of IRS Form 1040, which helps calculate your taxable profit. Make sure to read the instructions for these forms as well as consult your tax preparer, if you have one, for deductions specific to your situation.

BONUS: Set Finances on Autopilot

You’re a business owner and real estate entrepreneur. You’re not an accountant or tax scholar. Your time is best spent where you provide value as a real estate agent: putting your clients in the home of their dreams.

At Hurdlr, our passion is automating steps #2 and #3 so you can focus on #1: creating and delivering real value to your clients. Download ProfitDash now so you can set your finances on autopilot and start growing your True Profit.

Make more money with Hurdlr by minimizing your taxes and increasing your pay. Hurdlr seamlessly tracks your true expenses, mileage, and deductions in real-time, on the go.

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