Mastering Income Estimation: Tips for Real Estate Agents

By: Anna Kinney, Chief Product Officer

Understanding and predicting your cash flow effectively is fundamental for real estate agents. Given that income can be irregular and closely tied to the fluctuating property market, having a clear understanding of your income is vital for financial stability. Here are some key strategies to help you estimate your cash flow more effectively.

Deal Flow

Start by estimating your deal pipeline for the next year and predicting your cash flow. While this isn't always easy, having an estimate is better than relying on hope month-to-month. Also, ensure that you’re only “single dipping” into commissions. Spending a commission more than once is a common mistake. Documenting how you plan to spend your well-earned windfall just once can prevent unnecessary debt and financial stress.

Business Goals

Establish your business revenue goals, which will be unique to your situation. Whether your goal is to maintain your current level, increase, or even decrease based on your deal flow estimates, it’s important to align these goals with your personal financial objectives. Ask yourself if you have enough income to pay yourself adequately and meet your financial needs.

Business Investment

Assess whether you need to allocate additional funds to achieve your business goals. This might mean increasing your expenses for business development and marketing efforts. Investing in your business can lead to growth and higher income in the long run, but it’s crucial to balance these expenses with your overall financial strategy.

Supplemental Income

Incorporate any additional income into your financial planning. More than 40% of workers in the United States have a “side hustle.” If you have one, include that income in your data, along with any other sources of income. This comprehensive view of your earnings can help you better manage your cash flow.

Financial Advisor

Consider adding a financial advisor to your team. According to a 2023 Harris Poll, 71% of Americans have bought a lottery ticket, 24% of millennials have spoken to a fortune teller, but only 33% of Americans have consulted a financial planner. A financial advisor can help set realistic goals and align your income with your expenses, especially with a long-term perspective. Many advisors offer commission-based products, which can be a cost-effective way to get professional financial advice.

By taking these proactive steps to estimate and thoughtfully manage your income, you can mitigate financial stress and ensure a more predictable and secure financial future. Although consistently estimating your income is only one component of a strong financial foundation — check out other blog posts in our financial health series: 

Secure Your Future: Top Tips for Agents to Save and Invest Wisely

A Real Estate Agent’s Guide to Tracking and Managing Expenses

Top 6 Ways to Improve Your Credit Score