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A Few Critical Money Tips for Real Estate Agents

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When you’re self employed, YOU are responsible for more than you think.  As an employee, which you may have been familiar with up until the point you decided to become self employed, your employer handled your taxes and social security for you.

Now that you’re self employed, you MUST have a simple roadmap to account for what you’ll owe the government simply for doing business.

Tip #1: Taxes and Crap Like That

When you get your first commission check, or your next commission check, for those of you who have not planned well, you will apply the following formula to the check.  As an example, I’ll use a $100,000 sale with a co-broke of 3%, you being the buyer’s representative, without the broker’s cut considered in the calculations to make round numbers and .

On that $100,000 home, you earn a 3% co-broke, which is $3000.00.  You dance your way to the bank, deposit the $3000.00 and have a jolly old time at happy hour with your clients and friends.

Did you really make $3000.00?  No.  You didn’t, because you MUST set aside a portion of that money for self employment tax and income mcc4tax.  So, a basic rule of thumb for a new agent who isn’t sure what their tax bracket will be would be to put 30% of the gross income in a separate basic, plain jane savings account.  So, on your $3000.00 check, you put $900.00 away for the piper…whom you’ll pay…quarterly.  Isn’t that fun?  Look, self employment tax is 15.3% as it is, and that’s on TOP of your tax bracket.  So do yourself a favor.  Plan according to what you think you’ll make.  It’s nearly impossible to calculate exactly what you will owe, but you can get good at estimating, over time.

Tip #2:  Plan for your annual dues on a monthly basis.

You have annual fees that you pay.  You need to determine how much that annual fee costs you monthly.  Add the sum of the monthly calculation of all of your annual dues together to determine what it costs you per month to have all of the compare motor trade insurace business privileges you have.  If you can be billed monthly on anything, it’s easier to manage your monthly cash flow if you switch.  If you cannot, you need to know what an annual fee looks like monthly.  For example, Scottsdale Association of Realtors bills annually, but it can be expressed monthly.  Figure out that number.

Then, using your business checking account, set up an online transfer that happens monthly for the amount you need.  In the case of a single annual expense of $440.00, you would need to transfer roughly $37.00 per month from your business checking account (account used for business purchases) into a plain jane, separate account designated solely for annual dues expenses.  When the bill comes for the annual expense, you will no longer feel like you’re being raped by the system because you will already have grown accustomed to 1/12th of the amount every month being moved into a designated account just for this purpose…and nothing more.  You cannot borrow from your own account to pay for other crap.  This money is considered spent already.

Every year when I get an annual bill, the money is already there because I move it there in little chunks so it doesn’t seem so bad (that includes things like my annual accountant fee for doing taxes.)  And, every quarter, when I estimate that nasty tax bill, I have the money to cover it and if I’m short, it’s not by very much.

Be smart as an agent and a self-employed person and put money that you earn away or they’ll come get it from you, and that will suck.

Five Reasons to Avoid Foreclosure

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Experiencing foreclosure is an extremely emotional event in one’s life. It ranks in the top 5 most-traumatic things that can happen to an individual. The ramifications of foreclosure reach much further than most people understand. Here are the top five reasons why avoiding foreclosure is the best choice you can make:

Disclosure

For the rest of your life, you will always have to disclose that you have been through a foreclosure.  When you fill out any application that asks whether or not you’ve been through a foreclosure, you’ll find that the only options are YES, or NO.  You will be required to answer truthfully in order to avoid being involved in mortgage fraud.

Credit Score

When your bank repossesses your home, your credit score can drop by 300 points or more.  It takes a long time to repair your credit history, and this will surely knock you into a no-qualify position financially.  Not only that, but it will affect other service providers that you may have, and could affect your future employment.  Some insurance companies check your credit score and use that as a measurement of risk.  Your rates could sky-rocket as a result.  You can be assured that your credit card rates will also be raised the next time your creditors check your credit status.  All of that can be extremely costly down the road.

Permanent

Foreclosure is a permanent event.  You cannot have a foreclosure removed from a credit history report.  In fact, the only information you have have modified on your credit history is data that is considered an error.  All other events will remain on your report for a long time.  A foreclosure will stick with YOU forever, even if it disappears from your report.  You will always be obligated to report it if asked on a legal document.

Security Clearance

If you work in an industry that requires security clearance to do your job, such as the military, or other high level security jobs, you will be at risk of losing that clearance.  In most cases, when people lose their clearance, they lose their job.  Foreclosure can lead you to unemployment.

Job Hunting

There are plenty of companies who run your credit history report when you apply for a job.  If your record is tarnished by a foreclosure, your future employer may consider this when they compare you to another candidate with a clean record.  You want to remain as marketable as you can, so having a foreclosure will impact your ability to find new work.

There is a clear difference between living with foreclosure and moving forward without it.  I can help you prevent it through the process of a short sale.  Contact me today for more information.

  1. For the REST OF YOUR LIFE, you will ALWAYS have to disclose that you have been through a foreclosure when you apply for a mortgage.
  2. Your credit score will drop by up to, and perhaps more than 300 points.  Credit scores are being reviewed by insurance companies and other service providers to assess risk and determine what they’re going to charge you.  In EVERY CASE, a low credit score costs more than NO credit score or a high credit score.
  3. It is virtually impossible to reverse or repair your credit report and the foreclosure will remain on your record for up to 10 years.  Regardless of the length that it remains on your credit report,

Blogging by iPhone

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While impresive in it’s concept it is certainly the most cumbersome way to post articles to the masses. I recently installed the wordpress application on my iPhone and am very impressed with how easy it is to connect to my self-hosted wordpress-based blog.

I’m not so impressed with the speed at which the mobile device allows me to write. Although superior in speed to most mobile phones and smart phones, for someone who is used to typing 80 words per minute, I’m liable to go out of my mind touch-typing.

One of the more impressive features of the iPhone which makes writing this article much faster than expected is the accuracy of the spell check dictionary and speed at which the typos are corrected. It’s as though the phone can sense context.

With a Bluetooth portable keyboard, I can see the day coming where I won’t need my laptop to write compelling content for my blog. Rather, the laptop will become a tool solely for touching up posts and embedding context-sensitive media and a way to modify underlying code to massage and grow the functionality and design of the site. Until then, the wordpress mobile app for yw iPhone will be a fantastic way to start drafts.

Realty Executives Referral Network

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Many real estate licensees have chosen not to be active in the marketplace. The costs associated with running your own business can be more than many wish to handle. What if, even though you aren’t actively selling real estate, you were able to collect a referral fee just for bringing business to the table?

Realty Executives has a referral program for the licensee who doesn’t actively sell real estate but wishes to keep their license. If you’re one of these people, and you still want to make a great income without actually working in real estate, give me a call and I can discuss how it works with Realty Executives.

The basic premise is this. When you come across a potential client, you pass them on to me and I’ll take care of them. As long as you’re part of the Realty Executives referral program, you will receive a referral check. Their program allows you to hang your license in such a way that allows you only to participate in referrals, and it’s very inexpensive.

Interested? Give me a call today and I’ll point you in the right direction.

Typing a million words a minute…

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I’ve recently taken on the tedious task of typing up my entire journal from 1994/95 so it is permanently stored online instead of in a volatile paper format which I have been lugging around for years…10 years to be exact…actually, 11 years. Anyway, if you’re interested in seeing what it was like to tour with Camfel Productions from my perspective, check out the Camfel category on the right. Thanks.