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Main steps to making a real estate brokerage budget

Sally Perkins
Last updated: 2022/11/19 at 6:08 AM
Sally Perkins
4 Min Read
real estate budget

Creating a real estate budget is not an easy task, as most brokerage owners might think. Failure to follow procedure or put some points into consideration can make you lose a lot.

Do not overlook expenses or overestimate revenue to avoid loss.

This process has been simplified for you. There is a ready worksheet, and your work is to download it and move to the next one.

Download the readily formed budget worksheet

Since the worksheet is ready, analyze it and review each section.

Add assumptions And estimates.real estate budget

This is where you do deep research on real estate and come up with the answer to points like how your market is like, and determine your agent’s production. This information will be used to determine the brokerage’s earnings. To be on the safer side, you can overestimate expenses and underestimate income. This will enable you to avoid having high expectations. This method is called a conservative approach. It allows you to achieve your set goal since money and Resources will be available.

Add the average sales price, the average transactions to be produced by agents each year, and then the average commission percentage to be charged by the agents.

If you will charge your agents a monthly fee or splits, you can add them there. If not, just leave it blank. Calculate the expenses that will be incurred during the process.

In this, you are supposed to calculate any expenditure that will be involved in running and managing the brokerage for the whole year. These expenses include office, supplies, payrolls, staff, software, etc.

After that, add them to the worksheet.

Anticipate your agents’ closing and count.

The number of deals to close per year will depend on the type of agents you have and how big or small your brokerage is.

We all know that new agents will close fewer deals than experienced agents. To match the production, you will be required to hire many new agents to earn a good amount that will take care of all the expenses.

Estimate your agent count monthly and consider that other agents might leave your company and others might not produce. After filling in the agent’s information on the sheet, it will automatically calculate the agent’s closing and their commission depending on the information that you provided in step 2real estate budget

Approximate your brokerage’s revenue.

This is what determines your profit. This revenue is generated from the splits and fees that agents are charged or any other charged service and rented offices to agents and vendors.

Add the data to the worksheet. The split income and monthly payments will automatically be calculated.

Any rented space is added to the agent’s office rent.

Profit calculation

The profit answer can be a loss or can retain being a profit but an amount that you never expected. Research has shown that new businesses lose money when they are just beginning. If you have incurred a loss, you can adjust your budget by cutting some amounts.

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TAGGED: brokerage's revenue, commission percentage, real estate, real estate budget
By Sally Perkins
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