You Closed 12 Homes This Year; Here’s Why You’re Still Broke (And How to Fix It!) 

Closing a dozen homes a year, but still feel like your bank account is playing hide-and-seek? You’re not alone. Plenty of real estate agents close deals but somehow end up cash-poor, wondering where all those hard-earned commissions disappeared. 

While we can’t peek inside your wallet, we have a pretty good guess why you feel strapped for cash. Many agents face tax surprises, budgeting slip-ups, and that dreaded “dry season” that always seems to sneak up on them. 

Here’s the good news: With a smart real estate budget and a few simple tools, you can stop stressing and start building real financial freedom. In this blog, we’ll show you why closing 12 homes doesn’t automatically mean you’re swimming in cash, where your commissions really go, and how to budget and prepare for slow months — all without breaking a sweat. 

Key Takeaways 

• Closing Deals Doesn’t Equal Cash Flow: Selling 12 homes a year doesn’t guarantee financial stability without a smart plan. 
• Commissions Shrink Quickly: Splits, fees, taxes, and business expenses can dramatically reduce what actually hits your account. 
• Budgeting Is Your Secret Weapon: Learn how to budget as a real estate agent. Using the 50/30/20 rule helps you plan realistically and spend intentionally. 
• Slow Seasons Are Predictable: You can prepare for income dips with emergency funds, leaner budgets, and diversified income. 
• Automation Makes It Easier: Apps and templates simplify budgeting, expense tracking, and tax savings. 

Why Closing 12 Homes Does Not Equal Financial Freedom 

Closing a dozen homes a year sounds like a successful real estate business, right? On paper, it should translate into solid income. But many agents who hit this mark find themselves living paycheck to paycheck. Here’s why: 

• High Commission Splits and Fees: Your gross commission is often split with your broker, and then you face transaction fees, marketing costs, and sometimes franchise or association dues. 
• Delayed Payments: Commission checks can sometimes take time to arrive, creating cash flow gaps. 
• Taxes Take a Big Bite: Real estate commissions are subject to income tax, self-employment tax, and possibly state taxes. Many agents underestimate this and set aside too little. Work with an experienced accountant who specializes in self-employment to plan taxes and maximize deductions.  
• Business Expenses Add Up: Between marketing, continuing education, licensing fees, office expenses, and client gifts, your costs can significantly reduce take-home pay. 
• Lack of Budgeting: Without a clear budget, it’s easy to overspend during busy months and struggle in slow ones. 

Where Your Commission Actually Goes (And How To Track It) 

Understanding where your commission checks go is critical to managing your cash flow. Many agents think the check they see is pure profit, but that’s rarely true. Here’s a breakdown of common deductions and expenses: 

• Brokerage Split: Typically, 20-50% of your commission goes to your broker, depending on your agreement. 
• Transaction and Franchise Fees: These can be flat fees or percentages charged per closing. 
• Marketing Costs: These can include advertising listings, social media promotions, and open house expenses. 
• Taxes: Uncle Sam must be paid! Your tax responsibilities include income tax plus self-employment taxes if you’re an independent contractor. 
• Business Overheads: This category includes licensing fees, errors and omissions insurance, office supplies, and client entertainment.  

Questions to ask yourself 

• Do you know your actual commission after splits and fees? 
• Have you tracked your business expenses accurately in the last 6 months? 
• How much of your income do you set aside for taxes? 

Tips on tracking your income 

1. Create a Dedicated Business Bank Account: Keep your income and expenses separate from personal accounts. 
2. Use Accounting Software: Use QuickBooks, FreshBooks, or even spreadsheets to log every income and expense item. 
3. Regularly Review Your Statements: Don’t wait until tax season to see where your money went. 
4. Set Aside a Fixed Percentage for Taxes: Many agents recommend saving 25-30% of each commission check for tax time. 

By tracking your money carefully, you’ll gain insight into spending patterns and avoid surprises. 

For a detailed breakdown of how taxes impact your commissions, listen to a replay of our webinar, “How to Save Thousands in Taxes — Legally,” to learn strategies to minimize what you owe. 

How to budget as a real estate agent: the 50/30/20 rule 

Budgeting is the most powerful tool you have to avoid feeling cash poor. Learn how to develop a real estate budget. The 50/30/20 budgeting rule can be adapted for agents to keep their finances balanced and manageable. 

• 50% Needs: This covers your essentials, such as rent or mortgage, utilities, groceries, and insurance. 
• 30% Wants: This is your lifestyle spending—dining out, entertainment, travel, hobbies, and non-essential shopping. 
• 20% Savings: This includes contributions to your emergency fund and retirement account. 

Questions to ask yourself 

• Do you have a monthly budget broken down into needs, wants, and savings? 
• How do you handle months when income falls below your average? 
• Have you automated your savings to avoid temptation? 

Tips for budgeting 

• Estimate Your Average Monthly Income: Base your budget on a realistic average of your commissions, factoring in payment delays and seasonal dips. 
• Apply the 50/30/20 Rule to Net Income: Use your take-home income after splits and expenses—not your gross commission—to set smart spending limits. 
• Automate Your Savings: Set up automatic transfers to a savings account for taxes, emergencies, and slower months. 
• Trim Non-Essentials During Slow Seasons: Reduce “wants” spending when income is light to avoid dipping into savings unnecessarily. 
• Compare the Budgeted Amount with Your Actual Spending: A budget is only helpful if it alters your spending habits. Analyze your budget each month to stay on track.  

How To Prep For Dry Seasons Without Panicking 

Real estate is seasonal for many agents. Even top producers face periods with fewer closings or slower payments. The key to surviving these times without stress is preparation. 

• Build an Emergency Fund: Ideally, have 3-6 months of living expenses saved to cover slow months. 
• Smooth Out Cash Flow: Consider putting a portion of your commission into a separate “dry season” account. 
• Plan Your Expenses: Keep a lean budget during busy months so you don’t overextend. 
• Diversify Your Income: Some agents supplement with referral fees, part-time jobs, or rental income. 
• Keep Business Expenses Flexible: Negotiate with vendors or reduce discretionary costs during slow periods. 
• Save for Retirement: Besides saving for slow seasons, set aside a portion of your income for retirement. Talk with your financial advisor about the benefits of contributing to a Roth IRA to help you achieve your long-term financial goals.  

Questions to ask yourself 

• Do you have a dedicated fund for lean months? 
• How much do you usually spend monthly during your slow seasons? 
• Are you comfortable adjusting your spending quickly if income drops? 

How to Automate Your Money Management 

Managing money manually is prone to error and stress. Luckily, many digital tools can help automate tracking, budgeting, and tax prep so you focus on selling, not spreadsheets. 

1. Use Budgeting Apps: Tools like Mint or EveryDollar help you create budgets, track spending, and make real-time adjustments with ease. 
2. Download an Agent-Specific Template: Use our Real Estate Agent Budget Spreadsheet to organize commissions, expenses, and tax savings all in one place. 
3. Set Calendar Reminders for Reviews: Schedule monthly or quarterly check-ins to review your finances and stay on top of estimated tax payments. 

Using these tools can save time, reduce mistakes, and provide a clearer picture of your financial health. 

Take Control of Your Finances Today 

If you’re closing 12 homes a year but still feel cash-strapped, it’s time to change your approach. Understand exactly where your money goes, budget proactively with the 50/30/20 rule, and prepare for slow seasons so you’re never caught off guard. Automating your money management will also make the process easier and less overwhelming. 

Don’t wait until tax time or your next dry season to scramble. Download our free Real Estate Agent Budget Spreadsheet now and start gaining control over your finances today. 

Disclaimer: This blog is for informational purposes only and does not constitute financial or tax advice. Please consult a qualified tax professional for your individual circumstances.