What financial mistakes have you been making with your real estate business? Are you worried about the slowing cash flow during a down market? How do you re-invest in the company, even with declining home prices and therefore commission checks?
According to Ryan Serhant, diversification and basic budgeting are the keys to unlocking financial freedom and success as an agent.
Serhant is an accomplished agent, founder of SERHANT. and works with Briggs Elwell and Daniel Kennedy on their new commission purchase company, RLTY. He lives his own advice as he puts on multiple hats for each of these different roles. A tactic that will bolster Serhant’s business in the turbulent year to come.
RealTrends: In your opinion what should be the number one priority for housing industry professionals looking to improve their financial situation?
Ryan Serhant: Diversification of income streams. I make money in a lot of different ways. For example, I sell books, host podcasts, am active on social media and sell educational courses. And, that is on top of everything else that my company does. Every agent has what I would call an, “And.” You are a real estate agent and… and what? If you are super knowledgeable about the market, your ‘and’ could be writing and selling market reports. If you are really into kayaking, then how can you turn that interest into an additional revenue stream? Even if your ‘and’ is simply being a content creator on social media, that can earn you substantial extra income each year. Always be posting!
RT: In a down market, like this one, how do you build the 2023 business strategy?
RS: I think 2022 was one of the top 10 worst equity markets ever. And, historically, what follows that kind of year isn’t another top 10 worst year, right? Will it be an amazing year? No, but where there’s a will there’s a way. We started RLTY in 2020. In 2021 and 2022, we learned to walk. Now, we’re going to start running. Now is a great time to do that, because a lot of people are making the mistake of pulling back. I think there’s still a lot of fear in the marketplace, so in 2023 that is the time to grow.
RT: You just mentioned RLTY, a new company you’re involved with. What do you think the biggest/best opportunities are for agents that seek out RLTY services?
RS: The market is really difficult for agents who aren’t salaried. There are no benefits and these agents live commission check to commission check. But, commissions aren’t paid until closing. That is the deal. I believe every salesperson is an entrepreneur. They are their own businesses, individually, so I saw RLTY as a way to contract with a company for commission advances. Now, agents don’t have to wait to re-invest that money into their business and pay themselves. Now, when you do the work, you get paid and RLTY takes on the risk of waiting until closing for that return. It puts the power back into the agent’s hands. They have more cash flow to save, re-invest or even do something as simple as buying themselves a new suit.
RT: What is the biggest mistake agents make when it comes to managing cash flow, in a down market or in any market?
RS: The first mistake is that agents don’t put money away for taxes. The key is to start looking at a commission check as revenue rather than simply a commission check. A commission check is a gross deposit of revenue for your business. I like the rule of thirds. One-third of the commission check goes into a savings account for tax season, one-third pays yourself and one-third gets re-invested into the business. If agents had a better financial understanding, then they would look at their business in a whole new way.
RT: Do you have any projections for 2023?
RS: The first six months of the year are going to look a lot like the last six months of 2022. The market is frozen in interest rate decisions. The first six months of the year are for the sellers and the latter six months of the year are for the buyers. A lot of the inventory that has not come into the market in the last two years, will start to come to market in the second half of the year.
HW+ members can hear more from Ryan Serhant in his keynote address from HousingWire Annual 2022, here. Learn about his habits for success beyond the basic finances of working in real estate as he shares his tips for connecting with clients and focusing on professional growth. These insights that propelled housing industry leaders through the end of the year may continue to be insightful throughout 2023 and the changing market.