by Caroline Gabsewics
Staff Writer
Between today’s market and the deadline for taxes quickly approaching, Realtors are looking for ways to get the most out of their money.
There are tricks to any trade and financial professionals have plenty of tricks to help. So do professionals associated with the real estate and construction industries.
Realtors — no matter if they are new to the industry or have been a top producer for several years — are all looking for ways they can cut back on expenses. The market has forced everyone to think outside of the box and it is up to them if they go with the flow or sink to the bottom.
“Today’s real estate market is different from any I have seen in the 10 and a half years I have been working in this profession,” said Dan Daniel of Prudential Network Realty. “This changing market actually requires more time and energy and just as much — if not more — expensive than the ones I have experienced in the past.
“The market will turn and when it does the Realtors that have continued to work their plan and plan their work will not only be surviving, but really thriving.”
Some tips on stretching the dollar:
• Carefully plan appointments to ensure the best use of time.
• Purchase gasoline at the best priced stations. Often, the wholesale clubs offer the cheapest gas, but weigh the cost of joining — and the cost of getting to their pumps — before you make that your choice.
• Stay involved in Realtor and builder organizations.
• Be careful when tackling oversized listings because they are not selling and they take a lot of time, money and energy to market.
• Walk your newsletter to homes instead of mailing it, but wear stylish clothing and shoes.
• Use the Multiple Listing Service to check out homes before going to see them. You’ll be surprised how many trips you save.
• Referrals and repeat customers are the best source of income.
• Use your home systems like the computer, fax and copier to cut down on time and gas it takes to go back and forth from the office.
• Maximize your marketing dollars and there are a million ways to do this. It’s a good time to look at your marketing plans and the Internet is full of ideas. So is Realtor.com.
• Limit unnecessary expenses like Starbucks meetings and eating out for lunch. Bring your lunch and limit yourself to eating out for lunch once a week.
Josie Deal of Coldwell Banker Jasinsky and Associates said more agents are using their e-mail for advertising and to stay in touch with customers.
Michelle Floyd of Ponte Vedra Club Realty said they are spending more money, not less, on marketing just to stay competitive with the other listings out there.
“There are so many homes and lots for sale right now that I am spending more money than ever before on marketing and listings,” she said. “I want to give each one of my listings the best chance possible to be the one that sells before other properties.”
Kathy Faryon of Point to Point Realty is using a form of communication that is the easiest and most likely the cheapest to keep in touch with customers.
“Perhaps in this time when we’re wondering whether to spend more money on advertising — which reaches our customers — we can simply pick up the phone and call them,” she said. “This is a good time to touch base with past customers and follow up on all those sticky notes and business cards.
“People will appreciate hearing from you and they need to be reassured that we are working despite the glum media reports.”
The tax season is a great time to look hard at your expenses, too. Your CPA wants all your information and you shpould ask yourself how you can cut back on costs for next year.
John Ranes, a shareholder in the firm of Presser, Lahnen & Edelman CPAs, said there aren’t any changes or new deductions specifically for Realtors this year.
“But organization is your best chance on not missing a deduction,” said Ranes.
Ranes added that the most important thing for a Realtor to do throughout the year is to be organized.
“Organization, organization, organization. I can’t emphasize that enough,” he said. “If you are organized throughout the year, the easier it is come tax time.”
Ranes offered tips for Realtors on how to stay organized:
• Keep a log of all business related expenses each day of the month.
• Add up each day’s expenses at the end of the month.
• Add up the total from each month at the end of the year.
• Keep all documents and receipts in a specific folder.
• On your receipts, write down who the meeting was with and the purpose.
Realtors can run into trouble if the IRS wants to do an audit and the Realtor can’t produce the receipts or logs to prove their expenses.
“Being organized is your best chance at not missing any deductions,” said Ranes. “The IRS is not required to permit a deduction if the person can’t turn around a receipt.
“It saves the Realtor time and money and it saves the CPA’s time.”
Ranes has sat in on some audits that have taken less than 30 minutes because the auditor sees that the person is organized and lets it go.
At a time where the market is down, Mark Edwards, managing director at RSM McGladrey in Orlando, said there are few things Realtors should be aware of.
“Realtors are not making as nearly as much as in other years,” he said. “As CPAs, we can help them figure out their quarterly payments (if they are using a Form1099) and make sure they aren’t paying more than they have to.”
Quarterly payments are made in April, June, September and January.
“Get with your accountant and see what your income is and make sure you are not paying more than is needed,” said Edwards.
Realtors must also realize that even if they have earned very little income this past year or no income at all, and are still licensed, they are entitled to report their deductions.
“I have a couple of Realtors who had no sales this year but they still had their normal business expenses,” he said.
CPAs are also advising Realtors who are independent contractors to consider a retirement plan for themselves.
“They can establish their own 401(k) plan where they contribute as an employee and an employer,” said Ranes. “It is too late to start a 401(k) for 2007.”
A 401(k) must be implemented before the end of this year to receive a return for 2008.
“The earlier the better because it takes a while to activate,” he said.
Most Real Estate companies don’t have a person in house who assists the Realtors with their finances.
“Typically the company doesn’t get involved for liability reasons,” said Ranes.
And one more point: look for outside help.
Bill Watson, chairman of Watson Realty, said there isn’t someone in-house but they bring in speakers throughout the year to specifically talk about finances.
Sherry Davidson, president of Davidson Realty, said she and her husband are both CPAs. Davidson doesn’t help her agents do their taxes, but she will answer their questions if they have any.
“That is good to have speakers come in,” said Ranes. “But it is important to find an advisor outside of their business to help them keep track of their finances.”
Tax deductions
A few of the expenses that are tax deductible for Realtors:
• Advertising
• Car Expenses
OR
• Standard Mileage Rate
• Commissions and Fees
• Insurance
• Home Office Expense
• Supplies
• Licenses
• Travel
• Meals
• Entertainment