How New Realtors Can Profit First and Why It Matters

There are no profitable real estate agents without happy clients – this much is true.

And even though the very best realtors are often praised for their ability to connect with people, many do not do business in a profit-first model. In fact, they often focus on putting their clients so far in front of their own needs that they neglect their financial and overall well-being. In his book, Mike Michalowicz talks about transforming your business model into a profit-first operation that will meet your needs and your clients’. Profit First is a must-read for anyone starting to organize their business model and essential for all realtors.

Now you know how great realtors can get the dollars they deserve without sacrificing the client’s content, right? Right!? Right. It is past time for a shift in the industry. Real estate professionals must focus more on their bottom line to stay afloat. That means setting goals based on profit rather than sales volume or listings taken. It also means being willing to change how to operate to achieve those goals.

Find out why client satisfaction is always number one, but setting realistic goals and marking progress should be in very first place.

Why Set Realistic Goals First?

Make achievable goals for yourself. Don’t aim to become a millionaire overnight, but make sure you have plans to help you grow as a realtor. Start with goals of client satisfaction and turning a profit. The problem is that many realtors DO NOT set realistic goals and instead end up getting trapped in the hype of making money. As a result, they do not take the necessary steps to achieve sustainable success.

What Is A Profit-First Model?

The profit-first business model is a business strategy focusing on making money first and foremost. This model is often seen as more successful than other strategies because it allows businesses to be more aggressive in their growth and expansion. Profit-first companies also tend to be more innovative, constantly exploring new ways to make money.

What Are The Benefits Of Profit First?

The profit-first business model isn’t a new and innovative way to manage your real estate business. It’s old hat, and all the successful realtors have it in place. You can be highly successful if it’s implemented correctly. The main benefit of this model is that it puts money in your pocket faster. You can keep more of your hard-earned money, allowing you to grow your business more quickly. Additionally, the profit-first model teaches you how to make money work for you instead of the other way around. When you are focused on profits, your business will be more successful overall.

How To Implement Profit First In Your Own Business?

Many agents focus on getting their commission checks when making money in the real estate industry. However, the profit first system is simple- you take the money you earn from your real estate transactions and put it into a profit account. That account then pays for your business expenses, including your salary. Once the profit account is empty, you start withdrawing money from the capital account, which is made up of the proceeds from your home sales. This system ensures you always make money, even when not selling homes.

How To Calculate Your Business’ Break-Even Point?

In this model, you calculate how much money you need to stack each month to cover your expenses and still have some money left for profit. Once you know this number, you can work backward to figure out how many sales you need each month to achieve it. This information is essential for setting realistic goals and ensuring your business remains profitable over time. It’s also part of the process to track your break-even point regularly and make adjustments as needed.

How To Set Your Pricing Strategy?

To calculate a realtor’s business’ pricing strategy for profit, one must understand the costs that impact pricing: fixed, variable and opportunity. 

• Fixed costs, such as rent or insurance, do not change with production volumes. 
• Variable expenses are those that do change with production volumes, such as materials or wages. 
• Opportunity costs are what could have been earned but were not because of the decision to produce a particular good or service instead.

How To Set Pricing Strategy Goals?

The goal of pricing is to ensure that the total revenue from sales is greater than the sum of all costs incurred in producing and selling the good or service. A common approach is to set prices so that each service sold covers the fixed and variable production costs and yields an acceptable profit level, AKA profit first.

What Expenses To Include In Your Profit-First Budget?

To be successful in real estate, you need to have a plan and stay within budget. There are many costs that realtors incur when working in for-profit real estate. The most obvious is fluid money. Realtors need to invest in their own tools and education, and they also need to maintain a working office and keep up with marketing expenses. In addition, realtors often work long hours and need to be available on short notice, which can mean extra costs for travel and meals.

How To Cover Yourself and Expenses?

While these costs certainly add up, they are necessary to be successful in for-profit real estate. Realtors who can cover all of their expenses and still turn a profit are the ones who can make a living doing what they love. And that’s all about it – making money while enjoying your work and having time to do what you want outside work. Controlling your time is also one way to manage and budget in a profit-first business. Remember, profit isn’t only money, it’s also time.

Tips For Implementing a Profit-First Model?

Making money should be the top priority for any realtor looking to be successful. Implementing a profit-first model is the best way to ensure your business is always making money, but you can expect some growing pains. There are a few key things you can do to make sure your business is profitable throughout and after the transition: 

1. Charge appropriately for your services
2. Keeping expenses low but service high
3. Reinvest profits back into the business

What Next in the Profit-First Transition?

To increase profits, realtors must be knowledgeable about the local market and be able to identify trends quickly. They also need to negotiate effectively and know how to price properties accurately. Finally, they must be able to stay current with regulation changes to keep up with the ever-changing industry.

Following best practices and implementing the tips for a profit first model will help you create a successful and profitable real estate business. Remember, money is the key to success in this industry, so make it a top priority in your business plan.