There are more than 106,000 real estate brokerage companies in the United States. These firms manage different areas of real estate, from commercial to residential.
It’s a pretty crowded space, which makes it hard to start a business and become the best real estate brokerage in your area.
You’re also fighting against small business statistics. The odds are close to 50-50 that your business will make it to its fifth year.
What can you do to beat the odds and build the best real estate agency in your area? It’s not easy, but it is possible. This article has you covered. But before we move ahead, we would suggest you to check williampitt.com to find the best real estate companies in the USA.
Read on to learn the steps to start your real estate business on the right foot.
1. Why Do You Want a Real Estate Brokerage?
You’ve probably heard a million times in sales and leadership courses that you have to start with your why.
If you come from a successful real estate career, why do you want to make the leap to own a brokerage? If you lack real estate experience, why jump into the real estate market now?
Approaching the new business with the mindset of this is a great market and a chance to make money, you’re likely to fail. That won’t be enough to survive a recession or tough market conditions.
Get ready to put in a lot of hours each day. That’s the reality of a small business owner. You need to have internal motivating factors to get yourself through the grind of long days.
Establish your why, along with the mission and vision of the real estate brokerage. The mission and vision help you create your company’s culture.
They also drive the major decisions as you move forward with the brokerage.
2. Have Savings for at Least a Year
Every small business takes a while to ramp up and gain momentum. Starting a business with the need to make money immediately puts you and your brokerage in a horrible position.
You’ll take on any client for the wrong reasons. No one ends up happy and you’ll burn out over time.
It’s best to avoid that position to begin with. Set aside enough money to last for a year with no income.
3. Determine the Broker of Record
Your insurance company requires that you have a Broker of Record. This is the person who is legally responsible for the business.
In most states, you either need to have a broker’s license or have a broker sponsorship. Sponsorship lets you go through a broker breakup without getting the additional education to get a broker’s license.
What if you come to the real estate industry without a real estate license? You’ll need to get a partner who is licensed to work in that state.
4. Franchise vs. Independent Brokerage
There are a number of well-known franchises in the real estate industry. RE/MAX, Century 21, Windemere, and Keller Williams are just a few of them. You can start your own independent brokerage.
A franchise gives you the power of a strong brand. You get marketing support, agent training systems, and a huge network of contacts.
Franchises have the budget to invest in technology, which gives your clients more tools to buy or sell their homes. As a franchisee, you pay a franchising fee and a monthly fee for marketing support.
Franchises also dictate how you run your business. Everything has to be the same across the country because that delivers a consistent brand experience.
As an independent broker, you have total control over your business. Keep in mind that it takes a lot of time and money to build brand recognition.
5. Finance the Brokerage
There are a lot of costs involved in starting a new business. You need office space, furniture, software, marketing collateral, insurance, and a phone system. Your startup costs could be anywhere from $10,000 to $100,000.
You could use your money, but why do that when you can get a low-interest loan. Leverage the bank’s money and hang onto your savings for your personal expenses.
6. Write the Real Estate Business Plan
You’ll need to write up a business plan. Most lenders and investors ask for this before they consider a loan application.
Conduct market research about your competition and your target market. Make sure that there is enough business to support your brokerage.
Analyze the risks to your business, such as a decline in the real estate market. Go over your financials to determine your real estate profits.
7. Build Your Online Presence
An online presence is essential. You’ll need to have a website and online directory listings. The other online needs depend on your target market.
For instance, if you target first-time residential homebuyers, you’ll want to go where they are. They’re looking for information in search engines and they’re on social media.
Write a blog that addresses the common first-time homebuyer questions to appear in search results. Show off your listings on Instagram to connect with those buyers.
8. Set Up the Legal Stuff
You need to create a business entity for your brokerage. At this stage, it makes sense to work with a business attorney to choose which one is right for your brokerage.
Register the brokerage with the corporate division of your state. If you have a business location, you’ll need permits and a certificate of occupancy.
Start the Best Real Estate Brokerage in Your Area
Are you ready to become a small business owner? It’s an exciting and challenging time. Starting a real estate business requires a lot of big decisions before you open your doors.
If you want to have the best real estate brokerage, start with your purpose, mission, and vision. They’ll drive all of your decisions and help you create a strong company.
Check out the Business section of this site for more ideas to grow your business.