In real estate, there are a lot of details you have to address. Listings, closings, property management, and other areas can take up a lot of time and energy. Bookkeeping is among the areas where you absolutely have to be careful and focused. That’s because real estate bookkeeping mistakes can be very serious and can even get you into financial and legal trouble. If you’re going to hire a real estate virtual assistant to help you, you’ll need to be sure any bookkeeping they do is handled correctly.
Sometimes, it’s easier to choose a real estate virtual assistant with a bookkeeping background for peace of mind. But you can also train your assistant to handle financial matters the right way. Keeping an eye on what they’re doing for a little while can help you have more peace of mind, so you can feel confident letting them handle things going forward. Here are some of the biggest real estate bookkeeping mistakes that you and your virtual assistant will need to be watching out for.
Not Classifying Data Correctly
Even if the data your real estate virtual assistant is working with isn’t specifically financial, it can still contribute to bookkeeping mistakes if it’s not classified the right way. That’s because debits and credits, buyers and sellers, and other “two sides of the same coin” types of issues are common in real estate. If something doesn’t go on the proper side of the transaction or is not included in the right column, it can be overlooked. That could lead to financial issues, including someone being overcharged.
A real estate virtual assistant needs to make absolutely sure that any data they work with is classified the right way. Because assistants are typically not licensed, there are only certain types of real estate activities they can engage in. Essentially, if it requires a real estate license, a virtual assistant can’t do it for you. As the agent, you’ll have to handle that part of the bookkeeping transaction yourself. If your assistant is working with data, you want to know it’s going to the right place every time.
Commingling Escrow Funds
Escrow funds have to be kept separate, every time, without exception. It can seem much easier just to let your assistant electronically deposit checks into your bank account or otherwise handle funds, so you don’t need to worry about it. But unfortunately, you’re not legally allowed to do things that way. This is one of the real estate bookkeeping mistakes that can really get you into a lot of trouble. You could be audited, fined, penalized, or even lose your real estate license if you commingle funds.
Make sure you don’t give your real estate virtual assistant any access to funds, or instruct them to move funds from one location to another. Real estate escrow funds are a separate classification of financial risk, and you want to be sure you’re not taking any unnecessary chances with your customers’ money. There are also rules about how an escrow account is set up, and how long you have to deposit the funds into the proper account after they’re given to you by a potential buyer in a real estate transaction.
Mismanagement of Financial Records
Financial records should always be accurate and up to date. From any escrow money received in a purchase and sale transaction, to rent coming in from property management, it’s vital that you’re keeping good records. Especially with property management, a real estate virtual assistant can help you with bookkeeping. There aren’t as many activities on that side of the real estate field that require a license, so your assistant can be much more helpful when you’re renting out properties for clients.
You can have your virtual assistant collecting security deposits and monthly rent, along with coordinating payments to maintenance companies, groundskeepers, and others who are doing scheduled work on the properties that are being rented out. Whether your assistant is working on those kinds of transactions, or there are purchase and sale areas you want help with, your financial records have to be managed properly all the time. Any discrepancies that occur need to be solved right away, or they can become worse.
Not Tracking Commissions Properly
Commissions are the lifeblood of real estate agents. Since you’re not getting a salary or hourly wage, you need your commission so you can pay your real estate virtual assistant and cover your bills. If commissions aren’t being tracked properly, you can underestimate or overestimate how much you can expect to receive.
You may also accidentally cause financial issues for other parties to the transaction if you don’t list the commission the right way on all the paperwork that everyone signs for a sale. Once everything is signed and agreed to, going back and trying to change the terms isn’t something that can realistically be done.
Disbursing Funds Too Early
Much like failing to track commissions the right way, disbursing funds too early can be a serious problem with large financial repercussions. The reason this is so significant is that the sale isn’t completed done until it closes through the title company, the deed is recorded by the county, and the buyer gets their keys. If you disburse funds before all of that takes place, there’s a chance the entire deal could fall apart at the closing table and never be completed. Don’t pay out any money until a transaction is done.
There are plenty of real estate bookkeeping mistakes that can be made, but the good news is that a real estate virtual assistant can help you avoid most of them. By working together with an assistant you can trust, you’ll feel confident that every important issue is being handled in a way you can feel good about. Then you’ll not only have peace of mind, but you’ll worry less about financial aspects of your real estate business, so you can just focus on helping that business grow for the future, instead.