Engineering Your Habits Using Systems

“Successful prospecting requires repeated and frequent time on task. Time on task makes you much more efficient and gets you much better results. You cannot increase your skill level if you don’t spend a substantial amount of time practicing and performing prospecting activities. Real estate is a numbers game. You must develop consistent habits and you must begin prospecting with high frequency to develop your skills and see steady and recurring results.”

— Brian Icenhower, PROSPECT: The Real Estate Lead Generation Manual

What is the most precious resource in the world? Is it oil? Gold? Real estate? I would argue that time is the most precious resource in the world. No matter how rich you are, you can’t buy another hour in a 24-hour day. Instead of trying to find more time, focus on making the most effective use of the limited time you do have. Your real estate CRM can help you systematize and organize your day. It can also help you understand which activities produce results and which do not. Take advantage of the planning and time management tools in your CRM to master time and maximize your results. Without a CRM, it is all too easy for your real estate career to consume your personal time and create unnecessary stress.

Habits for Results

A habit is something you do regularly, like brushing your teeth every morning. We all need repetition to make a habit stick. If you do the same thing at the same time every day, it becomes part of your routine and is easier to repeat day after day. By scheduling blocks of time on your calendar for follow-up calls, you remove the ability to procrastinate. You can’t build habits for long-term goals, like closing a deal, but you can create habits that help you complete the individual tasks you need to close that deal.

One way to build habits you will stick with is to connect them to your existing routine. This strategy, known as “habit stacking,” involves pairing a new action with an established one¹.

For example, you likely already have a morning habit of checking your email. Stack onto that habit another habit of signing in and reviewing the tasks and appointments in your CRM. By pairing an incremental habit (checking your CRM) with an existing habit (checking your email), you make it easier to adopt the new habit as part of your daily routine.

Your calendar will be the fixed points for your day. These are the appointments you must attend on a specific date and time. Your tasks are things you need to get done in any order, which means you have more flexibility with them than with your calendar.

I recommend using time-blocking to set aside specific times in your day for specific activities—like door-knocking, making follow-up phone calls, printing, and mailing letters. The best way to do that is to schedule appointments with yourself in your calendar, preferably repeating appointments. This builds a structured environment where you spend less time planning and more time doing the activities that need to be done.

Creating structure in your day boosts your productivity. Have you ever noticed that when you procrastinate, you spend more time thinking about delaying than actually doing the task? Blocking time for activities prevents procrastination. This is especially important for tasks you might not enjoy.

Think of time-blocking as commitments you make to yourself to accomplish something within a specific period. A common myth is that real estate agents have no boss and can work whenever they want. However, a successful agent plans their time to increase their chances of earning money. They develop habits of performing the same tasks at the same time each day, such as making outbound calls for two hours every morning between 9 and 11 a.m. An agent who follows a schedule feels less stressed and earns more income than one who doesn’t block their time. The consistency and routine of these time blocks build muscle memory, improving job performance.

Your time-blocking should include personal time as well. If you have a family, block out time for them. Work-life balance is challenging for real estate agents because time demands often make it hard to spend quality time with family. So, you will need to compensate. The best times to reach clients are typically around dinner hour, so you may miss a few family dinners. You will likely be working weekends as well. However, you do have time that a 9-5 job does not. Get up early and make breakfast for everyone. If you have grade school-age kids, volunteer at the school. Meet your kids for lunch. Volunteer to coach sports and take on other activities opportunistically. Take your spouse out to lunch instead of dinner.

You need time to prepare for your listing presentations, so make sure you allocate a block of time before each one to put together your Comparative Market Analysis (CMA), review your presentation and potential objections, and plan how you will handle them.

Morning Map, Evening Wrap Secret: Sign into your CRM each morning before you start work and each evening before you go to bed. Check your calendar for your hard commitments, as well as your tasks list, which contains activities you can handle between appointments. This is your way of holding yourself accountable for making the most of every day. Without a plan, it is too easy to get distracted.

Your time will be in heavy demand at certain times of day and during certain seasons of the year. For example, you are likely to be busier during the summer, but you will not be nearly as busy between Christmas and New Year’s.

One specific block of time you must always prioritize is the time you spend making outgoing phone calls, which I like to call office hours. It is not enough to just answer the phone when people call you. You should use your office hours to reach out to people who might not otherwise contact you. I recommend reserving your office hours for interactive activities where you expect to reach someone and interact with them live. Sending an email, updating your website, or posting on Facebook can be done at other times of the day, such as late evening or early morning, in between your other activities.

Ideally, you should be in your office during your office hours. Sign in to your real estate CRM, open your daily call list, and start making your follow-up calls. Being in the same place at the same time puts you in the same frame of mind. When you make outgoing calls, you are in control. You are prepared for the conversation and know what you are going to say. You are being proactive. It is not the same when someone calls you with a question about one of your listings while you are driving. At other times of the day, you can be reactive. You must set aside time in your day for these proactive calls.

Each agent will determine the best time of day for these outgoing calls. Typically, these times are in the morning, early afternoon, right after the kids are back from school, and during the dinner hour. Since your main goal is to interact with someone in person, you need to find the best time of day to maximize your chances.

You also need to consider the best way to reach the person you are trying to contact. Each person is different, and you should take that into account when deciding how to reach them. Many younger prospects don’t answer their phones. However, if you send a text message, you might get a response from the same people within 5 minutes. Retirees are more likely to be available during the day and to answer their phones. They are also more likely to still have a landline.

Before making an outgoing call, spend a minute reviewing your notes. When was the last time you spoke with this person, and what did you discuss? If you left a voicemail last time, try a text message this time. If you called in the afternoon and they weren’t available, try calling in the evening or morning next time. Each prospect is different, so adapt your approach to each person’s lifestyle.

Many agents rely too heavily on email for prospecting. Email has many limitations, especially when prospecting people you do not know well. You can use your real estate CRM to track who is reading your emails. However, getting someone to read your emails is not enough. They also need to respond by calling you or replying by email. While email is easy to send, it is not nearly as impactful as other forms of communication when it comes to getting a response. For this reason, I recommend using email as a complement to other forms of communication. Don’t rely on email as your primary form of communication with a new prospect.

For example, suppose you spoke with someone on the phone who expressed interest in learning about the tax benefits of owning a home. In that case, this is an ideal opportunity to send your prospect a time-release drip sequence of emails about the tax benefits of homeownership. Emails work exceptionally well when the recipient is expecting them and the content is something they are interested in.

You should also prioritize interactive forms of communication, such as phone calls, text messages, and door-knocking, over less interactive forms like postcards and email. While email has its place, it is less interactive than these other forms and, therefore, is less likely to generate the results you are looking for. Your ideal prospecting call lets you respond to the conversation and pivot quickly based on what is said. The likelihood of convincing someone to use you as their agent is far higher when you can use your powers of persuasion.

Gary Keller of Keller Williams recommends a practice he calls the 3-hour habit. This means spending 3 hours a day on lead generation. Your 3 hours of lead generation might be organized differently from Monday to Friday, depending on the specific tasks you intend to accomplish and the time you have available each day.

You should reward yourself after completing challenging tasks. Ideally, the reward should be immediate, so you associate it with the activity. For example, a reward for calling 10 people might be a 10-minute walk around the block. I recommend avoiding food rewards, such as an ice cream cone, because they can conflict with any weight-loss goals you might have.

You should set long-term goals and long-term rewards. For example, you could set a specific annual income goal with a Hawaiian vacation at the end of the year as the reward. The value of these goals rests on your absolute belief that you can achieve them. For a goal like this to work, you need to visualize that Hawaiian sand between your toes. When it is late, and you are tired, you will think of your goal and know in your heart that all the hard work is worth it. If you lack confidence that you can achieve your goal, it won’t work. So, start with smaller goals. Meet your small goal and earn your small reward. Then, as you gain confidence, you can extend your goals and increase the size of your rewards.

Protecting Your Time

As a real estate professional, you will need to handle many tasks, but since your time is limited, every hour spent on one activity means less time for another. I recommend taking stock of your core skills and the main ways you generate income. If you’re extroverted, your key skills are meeting people and building relationships. If you’re introverted, your skills might include direct mail, website design, social media, and Search Engine Optimization (SEO), which involves creating content for your website to attract visitors from search engines like Google. It’s rare for someone to be equally skilled at everything. Be honest with yourself about your strengths and weaknesses. Delegate any activity that someone else can do better or more affordably. This way, you can focus on the activities you are uniquely qualified for, such as converting prospects into clients.

The Time Machine Tune-Up Secret: Log your work in 15-minute intervals for a full week to see how you are spending your time. This is an easy way to reveal inefficiencies which you might be able to eliminate.

A real estate CRM allows you to store your forms, paperwork, and contracts in the cloud, so you can access them from anywhere, eliminating unnecessary trips to the office. I recommend setting up a home office and being mindful of what you can accomplish in each location, as well as how to minimize driving time. Most agents spend a lot of time in the car, so one way to be more efficient is to combine out-of-office activities—like dropping off a yard sign, key, lockbox, and flyer, and taking pictures—into a single trip. Use categories in your real estate CRM to group tasks that can be done together, such as office and field tasks. The most significant time savings will come from scheduling a regular time on your calendar for back-office activities like follow-up calls and leveraging your CRM’s automation features to complete those tasks quickly, one after the other.

I also recommend setting aside a few hours on Fridays to send birthday cards and thank-you notes.

By front-loading the tasks you dread as the first thing in the morning, you can get them done sooner. This concept, popularized by author Brian Tracy in his book Eat That Frog!, holds that completing the most challenging task first lets you go through the rest of the day feeling accomplished and knowing the worst is behind you. With your chores out of the way, you will feel lighter and happier for the rest of the day. When you procrastinate on tasks you dislike, you sabotage your efficiency. Schedule activities you enjoy for later in the day. That way, when your energy is lower, you can do the things you enjoy. Ideally, each task on your task list is small enough to accomplish in under an hour.

If you are feeling overwhelmed, focus on completing several small, quick tasks one after another. This strategy leverages the psychological boost of immediate progress, creating a positive feedback loop that makes it easier to start larger projects².

Be careful about distractions. If you are working on your task list and get distracted by something that comes along, do not switch to that new activity. Instead, add a new item to your task list and prioritize it. If you are easily distracted, you might have difficulty completing tasks. Too many uncompleted tasks create inefficiency. It is to your advantage to complete one task before switching to the next.

Avoid the trap of perfectionism in everything you do. There will undoubtedly be important areas of your life where you should be as perfect as possible. However, there are other aspects of your life where the extra time spent making something perfect will not generate additional income and is not worth the added aggravation. Some agents think they need the perfect letterhead, the perfect website, and so on before they can even start selling real estate. Don’t overthink it. You can start with imperfect business cards. Then, in 6 months, when it is time to reorder cards, you can improve them. The same goes for your letterhead and your website. Don’t let the pursuit of perfection prevent you from getting things done.

Not everyone you speak with will want to buy or sell immediately. Instead, assume your actions may take several months, or even a year or more, to fully take effect. That is why it is so important to use your CRM to record your progress. The long-term, durable notes and information you collect, especially notes from conversations, provide valuable material for follow-up conversations. For each new person you meet, make sure you enter how you met them in the referral source field. That way, when you close a deal with them, you can account for which of your marketing and sales strategies is responsible for that win.

Gratitude Gift Secret: Track referrals in your CRM and send your top referral sources a holiday gift each year. Proactive gratitude keeps you top-of-mind.

When you start using your CRM, you might be overwhelmed by all the new capabilities and tempted to spend weeks learning how everything works. Resist that temptation. I recommend finding a single key feature in your CRM you can use immediately. You need to deliver tangible results on the first day. For example, how about calling someone with a birthday this week to wish them a happy birthday? It seems like a small goal, but you must start somewhere.

The ideal real estate CRM for a new agent is easy to use yet fully featured, so you can get started quickly without being overwhelmed. Use your CRM’s task management features to track what you need to do and mark tasks complete. You should also take notes during conversations so you have a long-term record of your conversations. When you talk with a prospect, be sure to schedule your follow-up call before hanging up.

If you feel overwhelmed trying to accomplish a goal, try breaking it into several smaller goals. Then, give yourself a fixed amount of time to complete each smaller goal. Ideally, each small goal should be something you can accomplish in one hour or less. That will give you a sense of accomplishment and prevent unfinished tasks from hanging over you.

For example, if you need to create an open house flyer, budget a fixed amount of time to complete it. Choose a flyer design from your real estate CRM’s template library. Copy the text from your MLS listing and add pictures. You can improve the flyer over time, but there’s a lot of value in creating something quickly using the pre-built templates that come with your CRM. While you might have been able to create a marginally better flyer by spending another 5 hours, that one-hour flyer is probably good enough.

The more experience you gain, the faster you will complete tasks and the higher the quality of your results will be. This means the best thing you can do right now is to gain as much experience as possible. Work with as many listings and buyers as you can. The more hours you spend doing your job, the better you will be at it.

Flyer in a Flash Secret: You do not need to be a graphic designer to create professional materials. Use your CRM’s built-in flyer templates to save time and money. A good system includes dozens of designs for common situations. Plug in your photos, property details, and your brand elements. The system generates a polished, print-ready PDF in seconds. This keeps your brand consistent across all listings without opening a design program.

Don’t spend time planning future work you can start immediately. A good example is making follow-up calls. A common pitfall is scheduling future calls but never making them. That is a form of procrastination because you use the time spent planning to delay the actual work of making those calls.

New agents are often overwhelmed by all the things they need to do to start as a real estate agent. I recommend taking a step-by-step approach and building incrementally. For example, one of the first things you will need is business cards. You talk with a few successful agents at your office, and they tell you that you should really get a professional photo taken first. They also suggest updating your wardrobe to look more professional. So, this simple task of ordering business cards has turned into a much more complicated chore. Instead of focusing on creating the perfect business card, I recommend ordering a small batch of cards without a photo. You can reorder cards once you have had a chance to get that professional photo taken. Perhaps you could delay that wardrobe upgrade as a reward for your first closing? Don’t let the perfect get in the way of making progress now.

Tasks vs. Appointments

Your real estate CRM includes a calendar to track your appointments and important deadlines, such as listing expiration dates. It is tempting to add tasks to your calendar, like picking up dry cleaning or dropping off a yard sign. But I do not recommend using your calendar for such activities. I recommend using your task list instead. What is the difference between the two? Appointments have a date and time, usually a location, and someone you are meeting with. You never want to miss an appointment, so there is no way to mark it done like you can with a task. Tasks are different; they do not have a time associated with them. They can be marked done. If you forget to complete a task, it stays around until you mark it done.

You should color-code your appointments to indicate the types of activities you will be doing, such as client appointments, office hours, showings, and more. When you are working in a team, you will want to share a single calendar and use color-coding to assign appointments to team members.

Task vs. Appointment Secret: Keep your task list separated from your calendar. Tasks go in your task list and appointments go in your calendar.

You should sync your real estate CRM calendar with your smartphone. That way, you will always have your calendar at hand. You should also set up alarms so you receive timely notifications on your smartphone. That way, you are never late or miss a meeting. Some smartphones will even notify you based on the meeting location and your GPS location at the time of the appointment. So, if the appointment is 20 minutes away, your phone can notify you 25 minutes beforehand, giving you enough time to get there. One additional advantage of syncing your real estate CRM’s calendar with your smartphone is that you can use its GPS navigation to get live turn-by-turn directions as you drive to the appointment.

Your real estate CRM can automatically add contact information, such as names and phone numbers to the notes field of your appointments. That way, details about who you are meeting, when, and where are always available on your smartphone.

Task Plans

Ideally, you will have just a handful of appointments each day, but you might have several dozen tasks. You can create a task plan, sometimes called an activity plan, to assign a series of tasks to a prospect or deal. These tasks can be spaced out over time. For example, you might schedule sending a series of postcards over time, with postcard 1 on day 1, postcard 2 on day 7, and so on. You could easily assign that task plan, and the task timing would be automatically calculated.

The Tasks Together Secret: Add the same category to tasks that are done together, so you can batch errands and site visits efficiently, cutting wasted travel time.

One important thing about tasks is that they remain until you complete them. Appointments are visible only on the date they are assigned. For this reason, tasks are usually preferred for scheduling follow-up phone calls. That way, if you are running late and can’t make the follow-up call today, you will be reminded to make it tomorrow.

You should think of tasks as promises you make to yourself to do something. A common pitfall is assigning a series of tasks one day, then procrastinating when it comes time to do them. These unfinished tasks accumulate, creating an impossible situation for you later. This can happen with follow-up phone calls, which is why I always recommend making your first phone call with a lead or client before scheduling any follow-up tasks.

Most agents use a checklist to prepare a listing, including picking up the key, taking photos, listing the property in the MLS, and more. A task plan can be applied to a listing record to ensure a consistent workflow. Your real estate CRM has these items pre-created and ready for your use, allowing you to instantly apply a sequence of tasks to any new listing or closing. There is no need to reinvent the wheel. By leveraging the pre-built task plans in your CRM, you can ensure no critical step is missed and deliver a consistent, professional level of service to every client.

One-and-Done Task Secret: Whenever possible, handle each task only once. Avoid re-reading the same emails, notes, or to-dos multiple times without action.

You can also tweak these automated task plans to match your operating style. If you hang door knockers on neighbors’ doors before a home comes up for sale, you can add that to the standardized list of promotions for all your listings. That way, each of your listings has a consistent set of tasks to complete.

Most people will have one task plan for their listings, another for the buy-side closings, and another for their sell-side closings. Each agent’s responsibilities differ depending on which side they are on. So, the checklist will be different depending on which side of the deal you represent. The last thing you want to do is show up at closing and realize the Homeowners Association (HOA) documents weren’t sent 7 days earlier, which would delay the closing!

You can also schedule tasks to be due relative to specific dates, such as a contract’s closing or ratification date. That way, you can schedule a series of activities that sequence based on these special dates, such as putting up the yard sign 1 day after the listing agreement is signed or providing closing documents 7 days before closing. If the closing is delayed, these tasks will automatically have their due dates adjusted.

Touch Cycle

The single most helpful feature of a real estate CRM is the ability to schedule follow-ups. These tasks are so important that your CRM lets you easily schedule one-time or recurring follow-ups. This is called the touch cycle, and it is the best way to maintain regular contact with the people in your database.

A typical situation is to schedule a touch cycle task to contact someone every 2 weeks. When you mark that task complete, it automatically updates the last contact date to today and sets the next due date to 2 weeks from today. Because tasks can be completed on the due date, a little early, or even a little late, using a repeating task ensures that the next due date is always 2 weeks from the last contact date, which is when you made your previous call. If you had instead used a series of non-repeating tasks, you would not have the same level of automatic adjustment.

While many people think of touch as making a phone call, I recommend you broaden your thinking to include any form of contact. You might call, send an email, send a postcard, a Christmas or birthday card, drop by, or even send a text message. By giving yourself the flexibility to decide how you will contact that person, you make it easier to reach them. Most people can only answer the phone at certain times of day. For example, it would not be appropriate to call someone at 6 a.m., but you could easily schedule an email or mail a postcard if you were working at 6 a.m. and wanted to touch base.

The Click, Call, Close Secret: Each day you should schedule time in your calendar to make follow-up calls. To speed up this process build a daily call list and use the click-to-dial feature in your CRM to quickly call one person after the other. Add notes as you talk and schedule a follow-up call before you hang up.

Your CRM can generate a daily call list of people you need to contact today. This list includes all tasks due today, including repeating touch-cycle and follow-up tasks. It also includes any uncompleted tasks that are overdue. You can then make one call after another by clicking each task in turn. You can easily pull up each contact record, review your notes, make your call, add notes, and then call the next person with minimal effort.

Systems to Simplify Work

When you first start, you will handle every activity yourself, including putting up yard signs, taking photographs, and creating flyers. As your business grows, you may find there are not enough hours in the day to get everything done. I recommend using your real estate CRM to stay organized and systematize your activities.

As you gain experience, you can create checklists for new listings and closings that you would assign when a listing or closing is created. That way, you provide a uniform level of service to each client. This system also simplifies bringing on an assistant or partner, as you can assign tasks and track progress without spending all your time supervising them. As your business grows, you can systematize marketing activities, such as sending postcards, by using your CRM to build, organize, and track your mailing lists.

You should not feel forced to work with everyone, such as a seller with unrealistic price expectations or someone unwilling to put their home in show-ready condition. Likewise, consider the sales price of the homes you target. Helping a buyer find a double-wide trailer will yield less commission than helping a client purchase a high-end colonial-style home, but both may require the same amount of time and cost the same in gas money. Before taking on a client, use your CRM to model different commission scenarios and decide whether taking on a new client makes financial sense for you.

Your real estate CRM also enables you to pursue different work arrangements that might otherwise be difficult. You may be a part-time agent and would like to partner with another agent to maintain a work-life balance. The multi-user capability of your CRM allows you to co-work with another part-time agent so that each of you can tag-team your work. You could also work as a junior partner for a full-time agent.

Ultimately, a systemized business is one you can step away from. Real estate agents often struggle to take time off due to illness. With a CRM, you can grant another agent read-only access to manage your affairs while you are unavailable. This is one reason many agents team up: working together can reduce stress.

Real Estate Calculators

Your real estate CRM includes several calculators to help qualify prospects. Ideally, your buyer would first meet with a mortgage professional and get pre-approved before meeting with you. However, some buyers will not do that and will instead meet with you first. Using the maximum loan calculator, you can quickly determine the price range your prospect should qualify for based on income, debt, and loan terms. That estimate helps you align expectations and set a ballpark maximum home price. That way, you can start showing homes immediately without waiting for your prospect to consult with a mortgage professional.

While there are many reasons for the high rate of deal failure, a significant one is that the buyer could not afford the home they thought they could³. Rather than spending hundreds of hours on a deal that falls apart at the last minute, you can educate your client beforehand and save yourself wasted effort.

Budget Before Browse Secret: For buyers who have not yet met a loan officer, use your CRM’s ‘maximum loan calculator’ in your very first meeting with a new buyer to set a realistic price range before showing homes. This prevents wasted time on unaffordable properties and establishes you as a knowledgeable, financially savvy advisor from the start.

The seller’s net calculator helps you quickly determine how much cash back a seller can expect from the sale of their home after deducting commission and other expenses. The last thing you want is for the seller to be surprised at closing and realize that, after fees and commissions, they will be taking home far less than they thought. Many people use the proceeds from the sale of their current home as a down payment for a new home. The seller’s net calculator helps you determine how much of a down payment your client might have available for the purchase of their next home.

For your buyers, the buyer’s net calculator is a helpful way to explain down payment and closing cost requirements, including the buy-side commission. Most buyers understand the down payment requirements but are often unaware of the precise amount of funds they might need, and this calculator can help set expectations.

The commission calculator computes your gross commission and final net commission after deductions for split, franchise, and referral fees. Use this calculator before taking on a client to clarify the financial stakes and ensure your marketing budget aligns with the potential return. While your broker will provide a final calculation, compute it yourself to project cash flow and double-check your broker’s figures for accuracy. This also helps you precisely calculate and document any referral fees you give or receive.

Another handy calculator is rent-vs-own. We all know there are numerous benefits to owning a home compared with renting. Some of these benefits are psychological, but there are financial benefits as well. A rent-vs-own calculator computes these specific benefits, including home appreciation, as well as the tax benefits of owning a home. There are also circumstances when renting makes the most sense, for example, if the buyer is uncertain how long they will remain in the house. The rent-vs-own calculator takes the guesswork out of these calculations and allows the buyer to explore different holding periods, appreciation scenarios, and even alternative uses for the down payment, such as investing in the stock market.

Less sophisticated clients may focus solely on monthly payments. By explicitly highlighting appreciation, you can explain the benefits of choosing a home in an area with appreciation potential, as well as the value of paying a little more for a home with features others might find desirable when it is time to sell.

The rent-vs-own calculator also offers property investors insights into the optimal time to sell assets from their real estate portfolio. For example, when the calculator shows a financial benefit to renting over owning, this can signal a market imbalance. This imbalance could be caused by artificially high interest rates or unusually low rents. Whatever the reason for the imbalance, it can make holding a rental property less profitable for a landlord. This might mean it’s a good time to sell the investment property.

The mortgage payments calculator is helpful when a buyer needs to compare different loan programs or interest rates. For example, what would the payment difference be with a 20% down payment to avoid Private Mortgage Insurance (PMI)? What would the payment difference be between a 15-year and a 30-year loan? What about two loans compared with a single jumbo loan? The loan payments calculator allows a buyer to strategize and become comfortable with a specific home price and different loan types, including paying points. It also allows a candid conversation about the home price range the buyer can comfortably afford and qualify for.

The real estate calculators built into your real estate CRM are excellent sales tools. They help you approach your prospect and gather information they might otherwise be uncomfortable sharing, such as salary and debt. Entering this information into a calculator takes the stress out of the process, as it is a scientific, non-judgmental way to explore different options. Finally, these calculators allow you to provide hard-copy results to your client so they can better study the underlying analysis.

Budgeting Tips

Like farming crops, real estate is typically seasonal, with summer months being a “feast” and winter months a “famine.” Through careful planning, you can stockpile funds during the busy months to last through the slower months. The first step toward financial stability is gaining clarity on your revenue. Your CRM lets you project future income by tracking your pipeline of listings and active buyers, using their price ranges and estimated close dates. You can make income projections using the built-in commission calculator to determine your expected net commission after accounting for deductions such as splits, franchise fees, and referral fees. Understanding your true net pay is crucial for making smart decisions about your marketing budget and expected income in future months.

Beyond commissions, your CRM can also track other sources of income. These include Broker Price Opinions (BPOs), which estimate a property’s probable selling price. Lenders often request BPOs in situations like foreclosures, where a full appraisal is not required. Providing BPOs is one additional source of income for real estate agents. Other income streams include finder’s fees for rental properties, referral fees from other agents, and income from services such as yard sign installation, open house hosting, and photography for other agents.

Know your Net Secret: Use your CRM to calculate net commission after splits, franchise fees, and referral fees. You can use these figures alongside your expenses to work out cash flow and take-home pay.

Equally important is managing your expenses, which are of two kinds. Fixed expenses include licensing fees, membership dues, and insurance, which you will have regardless of how much (or little) you sell. Your CRM can track when these payments are due, so you can ensure your bank account balance is sufficient to cover them. For some annual payments, such as licensing fees, insurance, and membership fees, you may be able to adjust the due dates or prepay these costs at times of year when your bank balance is at its highest.

You must also consider the time between when you incur these expenses and when you are paid. These delays are typically several months. It is also possible that you will incur expenses but never earn a commission if a deal is never completed. By tracking your expenses for each listing, you can build an understanding of the expenses for each new listing and compare them against your projected commission for that listing.

Variable expenses include gas, professional photography, advertising, and other promotional activities.

The IRS considers real estate agents self-employed, so you are required to pay quarterly estimated taxes. Self-employed individuals also face the highest audit rate, so you will need to document your deductions carefully. The IRS is particularly focused on distinguishing between personal and business expenses, especially restaurant and automobile costs, where the lines can be blurry. Your real estate CRM allows you to upload receipts, which can be a convenient way to document these expenses.

Automobile expenses will likely be your most significant variable expense. You must meticulously document your business mileage, as the IRS scrutinizes these expenses. A GPS-tracking smartphone app is the easiest way to maintain the necessary log. For your taxes, you can deduct these costs using one of two methods. The simplest is the mileage method, where you multiply your business miles by a set reimbursement rate. With this approach, you do not track gas or maintenance costs, as they are included in the reimbursement rate. The other method is the actual expense method, where you track every cost, including gas, car payments, and maintenance, and deduct the portion corresponding to your business use percentage. For simplicity, I recommend the mileage method. There are rules about switching methods once you have chosen one. For this reason, I suggest you decide which method you will use and stick to it for the life of your vehicle. Consult with a tax professional for more detailed advice tailored to your individual situation.

To maximize your car deduction, you should establish a home office. A real estate agent’s home office is a dedicated workspace within their residence for professional real estate activities, including client communication, marketing, transaction coordination, and administrative tasks. It typically includes essential office equipment and a secure internet connection.

If you have a home office, you can treat miles driven from your home to any business appointment as deductible business mileage rather than non-deductible commuting. A home office also allows you to deduct a portion of your utilities, internet, and phone bills. Be aware that there are tax implications when you sell your home. Capital gains are the profits you make when you sell an asset for more than you originally paid for it. While the tax code allows most homeowners to exclude a large amount of this profit from taxes on their primary residence, this exclusion does not apply to any part of the home used for business purposes, such as your home office. This means the profit attributable to that portion of your home becomes taxable. Regardless of the method you choose for car expenses, you can still deduct tolls, parking costs, interest on a car loan, and insurance.

There are two ways to calculate your home office deduction. The simplest method is the “simplified method,” which multiplies your home office’s square footage by a fixed reimbursement rate. The advantage of the simplified method is that it reduces your record-keeping and makes it much easier to track. The other method, called the “regular method,” is considerably more complicated.

Some agents delegate their tax preparation to an accountant. I recommend a more hands-on approach. You can use your CRM to calculate your own subtotals before meeting with a tax professional. By reviewing your receipts, you are more likely to spot missing deductions, which you can add later. Providing your accountant with organized subtotals leads to a more accurate tax return and a lower preparation fee. This data also helps you budget for next year, analyze your return on investment across your lead sources, and strategically allocate your time and money for the greatest impact. Real estate coaches have identified cash flow and running out of money as the single biggest reason real estate agents quit the field. While features like lead incubation, drip emails, and flyers are helpful, tracking your income and expenses provides key insights that help you survive your first full season.

The Tax Tag Tally Secret: When entering business expenses into your CRM, make sure to assign each expense one specific tax category. By using the categories that match the categories the IRS uses, you save yourself time when you do your taxes. You can then easily export sub-totals for each category, which can be used to fill out your taxes.

Some services operate like payday loans, offering agents cash advances against future commissions. While these services provide quick access to funds, I do not recommend using them. The Annual Percentage Rate (APR) can be as high as 60% for these loans. But the high cost is not the only risk. If a deal falls through, you would be immediately responsible for repaying the advance. With a real estate closing failure rate of 20% or higher, this is a significant financial gamble. Some providers may also lack full transparency about their fee structures, leading to unexpected charges for wire transfers, administration, or applications.

I recommend that you instead maintain a cash cushion in your bank account sufficient to cover several months without income. Being a real estate agent means your income is irregular and less predictable than in other lines of work. You will often be paid a large sum of money all at once. While it is tempting to splurge during prosperous times, you must remember that lean months will follow. Keeping an adequate cash balance in your bank account is essential. If you do need a loan, a home equity loan or a personal loan from a bank is a much better financial option than a commission advance service.

Another cash flow strategy is to use lead-generation services that charge only after a deal closes. This model has a few advantages. If you do not close, you do not pay, and you do not have to pay for leads up front. This can be a useful option for agents without a large advertising budget. However, there are also several disadvantages to using these services. The quality of the leads is typically lower, so you will spend more time on unproductive leads. You will also have less control over your leads, making it harder to manage the quality and quantity of your prospects. The fees are substantial and can range from 25% to 40% of your commission.

For these reasons, pay-on-closing leads are not well-suited for new agents. New agents have less experience closing deals, and the low quality of these leads means you will spend a great deal of time on hard-to-convert prospects. As a result, you could spend months pursuing these leads before securing a single sale. I recommend first focusing on leads who already know you. Your first clients should come from your sphere of influence, such as friends, family, and community connections from church or school, where you have an established reputation. Your ability to convert complete strangers will be limited when you are just starting. You should first perfect your craft with people who already know and trust you. Once your skills are more polished, you can then refocus on more challenging prospects with lower conversion rates.

Storing Files

Agents have a lot of paperwork to keep track of, including listing, sales, and disclosure contracts. In the past, this information was stored in paper form in your office. Today, most of this documentation is in electronic form, such as PDFs. So, instead of a filing cabinet to store your documents, you need an electronic filing cabinet.

One of the best electronic filing cabinets you can use is Google Drive. It is an online service provided by Google for free with any Gmail account. The free version offers significant storage, and if you need more, you can purchase additional storage for a nominal fee. I recommend Google Drive because the cost is reasonable and it is available on your computer and mobile phone. It also integrates seamlessly with your Gmail account, so you can easily add file attachments to Google Drive without downloading and re-uploading. Google Drive’s security is excellent, including two-factor authentication.

Trip Trimmer Secret: By storing your files in the cloud, you reduce your need to drive somewhere to access important documents. This saves you on trips to pick up and drop off paperwork.

You can also share individual documents or entire folders with others, such as other agents, your client, the closing company, loan officers, and attorneys. Your real estate CRM can integrate with your Google Drive folder, so you can quickly access the documentation for each of your listings. Other online file storage platforms offer similar functionality. Dropbox and OneDrive are two examples of competing systems.

Endnotes

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