As an agent, it’s critical that you take a deep dive into your finances and look at every little thing you’re spending money on. This includes your single biggest expense — your broker split.


In challenging times, it’s a smart idea to revisit the fundamentals of good business. This April, go Back to Basics with Inman.

Now more than ever, it’s really critical that we all look at every item we spend money on in our real estate businesses. I mean — every single line item and every expense, now and for months to come.

I think we’re all on the same wave length about what Gary Keller talked about in regards to tightening our belts in a market shift. It’s good advice, no matter what’s going on. Now more than ever, we need to look at everything we’re spending money on.

I know an old World War II veteran who grew up during the Great Depression and remembers when they didn’t have toilet paper. They looked at every single thing they spent. This is good practice.

So, in a market shift, the No. 1 rule is to track everything and cut costs where you can. There’s no expense that’s above the law of close scrutiny.

But are you really tracking everything? Probably not. If you’re just reviewing your profit and loss statement (P&L), then I suspect you’re missing a few things — and one of them is really big.

I bet most agents do what I do with their bookkeeping. As Realtors, we are cash-basis tax payers (I checked with my CPA to make sure I was using the right terminology), and we’re not necessarily analyzing our gross receipts (as might be required for other businesses from a tax basis).

So, when we have a commission check that gets deposited into our business account, it gets coded in as commission income.

Let’s say I get paid $10,000 closing the bungalow down the street, deposited into my business account, it shows up as $10,000 income. But what about all the things that were subtracted from that check before it was cut?

The things that show up on my broker dashboard that produced the disbursement authorization (DA) that went to the title company? Am I really tracking those things in my business? Maybe I’m on a spreadsheet, but it’s not showing up on my monthly P&L.

Those things include:

  • Broker split, which arguably the single largest Realtor expense (and it’s not on your P&L!)
  • Referral fee to another agent
  • Errors and omissions (E&O) fee
  • Maybe a misc broker fee

I’m not suggesting you code things differently (you should probably check with your CPA before you start doing that). What I’m saying is that if you’re only using your P&L, your bank statements and your credit card statements to really analyze your expenses and trimming where you can, then you might be missing your single biggest expense — your broker split.

With a thorough review, most agents could trim $200 here and $200 there. We could renegotiate with the stager, sign service, photographer, lower online ads, cancel an event, trim some admin hours and eliminate some repetitive charges on our credit cards. But have you thought about renegotiating with your broker on the biggest expense in your business?

Julie Nelson is the chief success officer at The Nelson Project, eXp Realty in Austin, Texas, and the author of Success Faster: Quickly Launch or Relaunch Your Real Estate Career. You can follow her on YouTube or LinkedIn

recession
Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×