It goes without saying, and is even something of a cliche, that gas prices hurt right now. Last month, the average national price per gallon for all grades and formulations of gasoline surpassed five dollars for the first time — up nearly 40% from June 2021. And while home prices along with commissions have also risen during that time period, that growth has not been proportional to increasing gas costs, meaning agents around the country are feeling the pinch as their fuel expenses cut into their profitability.
Another cliche is that real estate agents spend their careers on the road, ferrying clients across town to showing after showing. Hard data to confirm or refute this notion is hard to come by, particularly since one day you might only have to drive a few blocks to a listing while the next you need to trek across county lines. But based on anecdotal evidence, a figure of 20,000 miles a year — about 75 miles a day excluding most weekends — seems like a reasonable estimate for a lot of markets. Based on an average vehicle fuel economy of 25.7 mpg, driving 20,000 miles requires about 800 gallons of fuel — which at five dollars a pop equals roughly $4,000 in annual fuel costs.
Of course, these figures are based on national averages and shaky second-hand Reddit evidence. Maybe you drive a hybrid with far better mileage or work in a small market. Maybe you live in Arkansas where gas is only $4.35 a gallon (and therefore your fuel bill will only come to $3,500.) But maybe these figures are a little too close for comfort, and you’re worried your budget isn’t going to cover such a business expense.
While there’s probably nothing you can do about gas prices, the good news is that there are plenty of things real estate agents can do to mitigate their fuel expenses and give their bottom lines a break. Here are five ideas you can start implementing today.
Did you know that last year, a NAR study found that nearly one in five homes for sale incorporated virtual tours in their marketing? Since the pandemic, more and more agents and homebuyers have discovered the benefits of virtual showings. Not only does a virtual tour mean no driving, but it also allows for far greater convenience for buyers, who can now access the home whenever they like. It is true that sometimes there’s nothing like actually being in the home space, but in many cases, a virtual tour will adequately show off a home’s winning features to eager buyers, at least enough to narrow down their selection of home to visits in person.
Of course, sometimes virtual tours just aren’t the best option, and physical showings are needed. If you work on a team, it might be beneficial to share showings based on other agents’ locations. For example, say you have a scheduled showing with a client 30 miles away. If someone on your team lives in that area or will already be nearby for their own showing, consider asking them to show the home for you. In return, you can show a home that might be inconvenient for them later. Remember, the important part of a showing is not that you do it, but that somebody does and the client is served. Lean into teamwork!
If possible, try to group your showings geographically when scheduling them. If you’re showing a client multiple properties in one session, limit the area to a couple of neighborhoods rather than spanning the whole city. Or, set your schedule so that you focus on different areas on different days. For example: On Mondays, you could try to stay downtown, while Wednesdays are reserved for the Heights. Grouping showings like this pairs well with sharing them between team members, so you don’t necessarily have to tell a client they can’t see the property they’re interested in until it’s your day to go out to the suburbs.
No matter how much you drive, keeping your car well-maintained can help boost your fuel mileage. Make sure your tire pressure is at recommended levels and that your engine is working at peak efficiency. Use a fuel line cleaner regularly. It can feel like a major inconvenience to take time out of your day to visit the quick lube, but even small improvements in mileage can lead to hundreds of dollars in savings over the course of a year.
Deducting Car Expenses
If you use your own vehicle for work and own your business or are self-employed, you can deduct many vehicle-related expenses on your taxes. There are two ways of figuring these expenses:
- Using actual vehicle expenses, including depreciation, lease payments, and fuel costs
- Using a standard mileage rate
The standard mileage rate for the first half of 2022 is 58.5 cents a mile and 62.5 cents a mile for the last half — meaning you could potentially deduct thousands of dollars in fuel expenses for the year.
Both methods have certain requirements and restrictions, so seek the advice of your accountant for your particular situation. But it never hurts to carefully keep track of your miles and other vehicle expenses.
Fuel prices hurt, but with careful planning and a little ingenuity, real estate agents can take the sting off. Plus by optimizing your driving efficiency, you’ll be boosting the efficiency of your business and making yourself more profitable. Who says this summer’s going to be a wash?
Workman Success Systems is the real estate industry leader in team development. Schedule a free business consultation to learn how you can better lead and grow your team.