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In theory, every business can be profitable.
“But when we don’t measure it, track it, or think about it, it won’t be,” says Verl Workman, CEO and founder of Workman Success Systems in Salt Lake City. “That which gets measured gets done!”
His company works with people who want to make real estate their primary business. “Most people get into real estate because they love houses. But they don’t run their business like a business,” says Workman, a professional coach and presenter and a licensed real estate agent for more than 25 years. Agents who want to run a serious business, he says, need to create a business plan, forecast their future earnings, manage cash flow, save for taxes, and so much more. (See Verl’s recent Business Planning webinar here).
Put a Dollar Amount to It
Even though it’s a few weeks past the launch of 2025, it’s not too late to commit your financial goals to paper. “It doesn’t matter where you are in the [year],” Workman says. “Just start.”
He consults his clients to first focus on what they want in their life—not just what they want in their business. He asks, “What else do you want to accomplish—such as have your children’s college paid for, go to Greece or feed the homeless?
“Everyone has goals in their life that will intentionally create their ideal lifestyle. Then you put a dollar amount to it. How can you create a business to support your lifestyle instead of making a business that becomes your life?” he says.
To budget in line with yearly goals, professionals need to create a top-down and bottom-up approach, recommends Alex Craig, a real estate agent with Exit Realty Home Partners in Lansing, Mich. He also runs the Dolinski Group, a website offering advice to agents and buyers and sellers within niche markets, such as probate.
“One issue I see with business plans is they are rarely grounded in the agent’s reality,” Craig says. “Most business plans will use a top-down approach that encourages the agent to set their desired income and work backwards to determine the number of sales or leads needed to generate the income.”
But he feels most agents don’t reach those goals because they don’t take the information and translate it into specific actions to improve their business.
“For that, real estate agents need to look at their historical data to ground their goals,” he says.
For example, an agent who knows it costs $40 to generate a lead and needs to generate 200 leads to hit their sales goals can budget $8,000 for marketing to attain that goal.
Some small brokerages may offer better lead opportunities than larger brokerages, so in that case, you may be able to decrease your marketing budget, Craig says.
“The [purpose] of hitting sales goals is making your business more predictable,” Craig says. “The best place to start is your historical data or last year’s profit and loss statement. From there, determine how the various categories are related to your revenue.”
Split Up Your Accounts
“Many [agents] come from a pay-check job. They never had to worry about mileage and home office expenses, or saving for taxes,” says Greg Antipoff, founder of InSource CPA in Waterford, Conn. He’s known as The Real Estate Accountant, working rigorously to help real estate agents keep more of what they earn. Through NAR’s Center for REALTOR® Financial Wellness, he’s offering a four-week Tax Summit this February.
“This is an industry where you are dealing with a product that isn’t yours, and even arguably, the customer base is not yours,” he says. “You are always starting out with new customers. We always have to think of the things we do in our business that get us to the closing table.”
Antipoff believes if agents use the “4, 3, 2, 1” method, life will be a lot simpler and less stressful for them, and more profit will be saved.
At a minimum, agents should establish four bank accounts, he says. Split the money you earn into these accounts:
- Personal checking: 40%. This pays for mortgage or rent, groceries, car loan and other personal expenses. Allocate a portion of this to your six-month emergency fund, “because there’s a lot of uncertainty in this business,” he says. “Instead of buying a new car or going on a vacation, allocate a portion of that to an emergency fund. The emergency fund should come first.”
- Business checking: 30%. This covers marketing, brokerage costs, lead generation, and so on.
- Tax savings account: 20%. “Usually, the first surprise for the self-employed is a tax bill. So, put it aside right away.”
- Investment account: 10%. This is a holding account that can be moved to mutual funds or built up for a down payment on your own home or an investment property.
Not an Immediate Reward
When Brooke Peterson, associate broker at RE/MAX Realty One in Ogunquit, Maine, got into real estate in 2021, she picked the brains of others who’d been in the business awhile. To learn everything she could, she continued taking classes she was interested in even after she’d fulfilled her state’s continuing education requirement.
“I also listen to real estate podcasts a lot in my car,” she says. “You hear from people across the United States in every market. It can prepare you for what is going to happen in your market, and then you plan from that.” (Check out REALTOR® Magazine’s podcast, Drive with NAR.)
Eventually, all that learning must translate into a system and processes. “You see what works for people, and that they stuck with it,” she says. “It isn’t about trying something once or twice and leaving it. You have to stick with it. Real estate is not a business with an immediate reward.”
Your state likely has a business development center that provides guidance and training for small businesses. Eric Sampson is director of the Illinois Small Business Development Center in Peoria. He coaches agents to carefully plan their daily activities to meet their regular monthly costs and potential yearly earnings.
“If we are measuring, we are intentional with the plan and we live up to the targets we’ve set on a routine basis, we are much more likely to be satisfied in achieving our goal and less likely to have sudden gaps in the business,” he says. He adds that every solo businessperson needs a mission statement to begin their work. “They need to know their vision, their values and how they intend to do their business,” he says. “It does take some self-examination.”
Budgeting as a Team
If you’re part of a real estate team, the same budgeting best practices apply as for solo practitioners: Setting goals by examining historical data and market forces that will influence your target.
However, on a team, agents should pay extra attention to how the compensation is structured, how monthly costs are set up, and how the team’s marketing is paid for.
Craig recommends setting sales targets based on gross income rather than production volume or units.
“Agents need to set sales targets based on if they can increase the average home value sold, improve their commission percentage, generate more leads, or convert their leads better,” he says. “Each lever has a different strategy. Increasing sales does not mean agents need to spend more money or do more marketing. They may just need to get better at converting leads or explaining their value.”
