“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.”
Those are the words of Johann Wolfgang von Goethe, a German statesman and writer who was born in the 18th century. And how true those words hold today, particularly in the real estate business, where it is so easy to hemorrhage money and time.
It’s understandable, of course. Real estate is a complicated business with a lot of ins and outs, and a lot of difficult terms to understand. There are endless expenses and fees whether you’re a homebuyer, a real estate owner, or an agent.
But there are also a lot of opportunities to save a buck or two, so we’ve compiled seven ways to save money in this business that you can take advantage of right away, whether you’re a buyer, a seller, or an agent.
1. Sellers and agents: Don’t pay for listings
There is really no reason to open your wallet to pay for a listing. With loads of websites and companies that serve real estate agents (or sellers who want to do it themselves) out there willing to do it for free, you shouldn’t waste your money on something like that when there are so many other expenses you have to manage.
2. Buyers, sellers, and agents: Do your research
Selling a house at the maximum value (or buying at the lowest price possible) requires that you do your homework. The internet is loaded with information on real estate, and you should be a sponge absorbing whatever you can about the market.
How much are similar houses in the neighborhood selling for? What impact do certain amenities have on the home’s value? What kind of mortgage rates are available right now? This information is important to buyers, sellers, and real estate agents alike.
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For real estate agents, experience becomes an important factor, as you’ll begin to see savings the more you understand the industry.
If you’re a realtor looking to get ahead, reach out to someone in real estate who has been successful and pick their brain about how they got where they are at, and what lessons they learned along the way.
3. Buyers, sellers, and agents: Time your listing
The timing of when you list a home does matter—as it does when you’re in the market for a home. Zillow says that the best time to list a home is in the spring as the weather warms up and people try to get a deal on a house before a new school year starts. Homes sell the fastest and at the highest price during this time.
Keep an eye on factors such as weather and the overall housing market as well. For example, Zillow determined that May was the best time of year to list a home in 2016, but that was because of a low supply of homes that resulted in more competition between buyers.
If you’re a buyer, be flexible and don’t rush into buying a home in the spring. Try to buy when the market is a bit less competitive, like in the winter.
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4. Buyers: Check into mortgage tax credit certificates
A mortgage credit certificate (MCC) can save some homebuyers thousands of dollars by slashing the amount of federal income tax you would owe on the property. The program allows you to get a $2,000 credit each year against the borrower’s federal tax liability over the course of the loan, which could amount to a staggering $60,000 in savings on a 30-year loan.
5. Buyers: Dump PMI as soon as possible
If you’re paying a low down payment on a home, you will have to buy private mortgage insurance (PMI) to protect the lender in case you default. PMI has a high price tag, typically around 0.5% to 1% of the entire loan amount, or up to $2,000 per year on a $200,000 loan.
You can get rid of PMI by obtaining an appraisal that shows you have 20% equity in the property. You can accomplish that by saving up to pay that much as a down payment, or if you already own the home by paying up to the point that you have that equity. Or, if you’ve done any remodeling that adds any square footage, you may qualify for PMI elimination.
6. Agents: Take advantage of real estate tax deductions
There are tons of tax deductions you can take as a real estate agent. For example, if you drive between properties and appointments, you can deduct that from your expenses. Marketing and advertising, a home office, office supplies, and even desk fees can also be deducted on your taxes.
Of course, most businesses can deduct those types of expenses. But in the real estate business, you can also get deductions for paying for fees and licenses that are necessary to operate, or even your dues for the National Association of Realtors.
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7. Agents: Use good real estate management software
We have many real estate management software options listed in our directory—a total of 252 as of this writing. Real estate management software can help you manage your business more effectively and efficiently, which will save you money in the long run.
Using our directory, you can compare software products by their features, how many users would need to use it, and even whether you want a web-based or installed option.
What easy ways have you found to save money in real estate?
We’re sure many of you in the real estate business have picked up a few tricks for saving money over the years. Share a few of your tips in the comments below, or let us know what real estate management software you use to run your business efficiently.