With an entrepreneurial mindset, you decide to take a step toward the real-estate industry in 2023.
It is, without a doubt, one of the most promising sectors for establishing a business.
National home sales have increased steadily month-over-month in 2019, starting from 555,000 homes sold in December 2018 to 690,000 homes sold in March 2019
Yes, the market is booming at a great pace, but so is the competition.
There are over two million real estate agents in the United States.
A strong foundation is required to build a skyscraper. If the foundation is weak, the skyscraper might collapse sooner or later. The same is with starting a new real-estate business. The stakes are high, and the competition is fierce in this lucrative industry.
To succeed in this highly competitive and challenging market, you need to build a strong foundation, take the right course of action, and concentrate on growing.
How to start a real estate business?
The National Association of Realtors reported 87% of all new agents fail after five years and only 13% make it.
Woah! That’s scary, isn’t it?
Well, this is the reason I was emphasizing on having a strong foundation.
Starting a real estate business is undoubtedly a big deal. If you miss out on anything, you might jeopardize the future of your business.
So, you need to ensure all the essential steps are taken while starting the real-state business journey.
Here are a few tips for starting a real estate business in 2023:
1. Redefine your ideas and have a strong base
Thinking of commencing on the entrepreneurial journey must not have been an overnight decision.
There might have been several thoughts and ideas flowing in your smart brain for a long time, motivating you to take this big decision.
However, now that you are firm about your decision of starting a real estate business, you need to give attention to many things. Your ideas, as well as thoughts, need to be more concrete and realistic.
Owning a real-estate business is like playing roulette in Las Vegas. You have no clue what will happen in the next few seconds.
The real-estate market experiences major fluctuations; it goes through extreme ups and downs. So, you need to be cautious and prepared.
Keep yourself abreast with the know-how of the real estate market.
Find out your niche.
Determine which area of the real estate sector do you want to target?
Do you want to focus on residential, commercial-zoned properties, rental property, resorts, and vacation homes, or property management?
You’ll have a better chance at success if you focus on a specific target audience and work on fulfilling their needs.
Once you set your niche, get familiar with it. Try to garner information about your market and competition.
- Find out who are the realtors and brokerages operating in your niche
- Try to understand how these real estate businesses are functioning and approaching things
- Find out their strengths and weaknesses
- Understand why people are approaching them for buying or selling their properties
Determine whether the ideas you have can help you in standing out from the players who are already ruling in the real estate field. Being a new player in this field, you need to do something different to capture the attention of your target audience. So, refine your ideas accordingly to make a mark in the real estate field.
“it’s not just about being better. It’s about being different. You need to give people a reason to choose your business – Tom Abbott
2. Create a business plan
Wouldn’t you plan if you’d have to migrate to a different country? Without planning, it’s difficult to enter and survive in a different country. Isn’t it?
The same is the case with starting a real estate business. This is a vast industry and so there are many things that you need to consider. So, planning is crucial for surviving in this challenging industry.
A business plan gives you a direction and keeps you on the right track. Besides, it gives potential partners and investors a clear picture of what you are aiming to achieve. So, create a business plan before proceeding with your business idea.
As per the data collected by Harvard Business Review, the most successful entrepreneurs were the ones who created their business plan between six to 12 months after deciding to establish a business. They stated that this increased the probability of venture success by 8%.
If you have a business plan, you’ll know what resources, skills, or tools you require to get your business off the ground.
Below are things that should go into your business plan:
- The purpose of your business (what are you aiming to do)
- Company description
- Vision and goals
- Summary of objectives
- Market analysis and competitive analysis
- Core strategies
- Operational plan
- Growth potential
Once you create your real-estate business plan, review it. Give a copy to your trusted friends who are in the same field and ask them to provide their feedback. You’ll know what needs to be added or eliminated.
3. Organize your finances
Keeping your finances in order is extremely important when you are starting a real estate business.
You need to establish a budget and make a list of all the possible costs that you’ll incur. Like MLS fees, broker costs as well as desk fees, tools as well as services, marketing materials, and commuting expenses.
Create a report of these potential expenses and have a clear estimate of the money you need for investing in different areas of your business.
If you need a lender or investor to support you financially, this report will help as they would want to see where you are planning to invest their money.
Even once you start your real estate business, ensure you maintain various financial statements to keep track of your finances.
Start-up cost worksheet – Cover all the expenses for starting up and maintaining your business (assets you purchase, fees and licenses, initial expenditure for advisers and cost for creating your business structure)
Month by month cash flow for the first year – A detailed cash flow statement that shows month-by-month sales and collection parallelly with the monthly business expenses.
Pro forma income projections – Prepare a pro forma(projected) income statement(P&L) for the first four years of operations. Show income and expenses along with pre-tax income, tax liability, and after-tax income for each year.
4. Decide the legal form for your business
Some real estate agents operate as self-employed owners affiliated with licensed real estate brokers in their state. Here though they have their own independent business, they work under a licensed broker’s supervision.
Some decide to open their brokerage. In most of the states, you require a special type of real estate license for opening your brokerage.
Every business has a legal form.
So, you need to decide your legal structure while thinking of setting up a real estate business.
Brokerage seeking entrepreneurs often get involved in one of the following legal business structures.
Sole proprietorship – A one-owner business. The proprietor who owns all the assets and is responsible for debts/profits. S/he might solely run various operations or hire employees to do so.
General partnership – Two or more brokers decide to co-own a brokerage firm. The partners hold personal liability for the debts and lawsuits.
Corporations – It is a separate legal entity. The corporation is permitted to own property, have bank accounts, sue or be sued, and may enter contracts.
Limited Liability Company (LLC) – It is a melange of partnership and corporation. You can get the informality, flexibility, and tax attributes of partnership and the limited liability of a corporation. You can incorporate online LLC formation services to save your time on paperwork.
5. Get a real estate license
No matter which state you select for establishing your real estate business, you’ll need to have a proper license for your business.
You’ll have to take a pre-licensing course and pass your state licensing exam for getting a license to work in real estate legally.
The requirements for pre-licensing courses and licensing applications differ from state to state.
So, find out with your real estate commission what’s required to obtain your real estate license.
In most of the states, you are required to take 60-90 hours of education covering real estate principles, real estate practice, and legal aspects of real estate.
Ensure you do the course from an accredited institution approved by your state’s real estate licensing authority.
The course of a pre-licensing course varies per institution and state. However, you can expect to pay between $200 and $1000 for your course.
Once you complete the course, take a licensing exam. It will take around 1.5 to 3.5 hours to complete the exam.
Be prepared to pay an examination fee between $15 and $60.
The minimum score for passing the exam differs for different states. However, you need to obtain something between 60% to 70% for getting your license.
Once you successfully pass the exam, file a real estate license application.
For the license application, you’ll have to pay something between $50 and $250 (again it differs from state to state)
Check with your real estate commission whether you’ll need to have an Error and Omissions(E&O) insurance before you apply. This insurance is beneficial as it protects realtors from financial losses and lawsuits filed as a result of their real estate work.
Once you apply, your license might take somewhere between one week and two months to process.
Getting your real estate license is undoubtedly a tiresome task. However, once you get it, ensure you renew it regularly.
6. Purchase business insurance
Most business owners forget to prevent their real estate business by purchasing insurance and suffer later.
You never know what might happen, burglary, theft, fire, or any natural disaster. Your start-up might not be able to survive in such extreme conditions.
So, you need to stay prepared by taking insurance that covers property damage, intellectual property lawsuit, damage caused due to extreme weather conditions, and other incidents.
Liability insurance is also something you need to consider as a provider of real estate services. Most of the clients look up to you for your expertise and management. However, there is always a possibility of something going wrong, where an unhappy customer can sue you. So, keep your shield ready with liability insurance.
If you’ve hired employees for keeping your business running, then you might also need a worker’s compensation. It would cover medical expenses for the employee and protect you from a lawsuit if the employee sues you for any mishap.
7. Build a web presence
People of all age groups rely on online resources for finding anything whether it’s a car or a home. Not only buyers but even sellers take the digital pathway to sell their products.
So it’s pivotal to build a web presence.
93% of people visit websites when searching for homes.
Take time to create an attractive and engaging real estate website while embarking on the entrepreneurial journey.
A compelling website can help you in attracting more clients. So, ensure your website has a modern design, minimal clutter, and is easy to navigate. Most of the clients visit the website to view listings. So, make it as easy as possible for your website visitors to search MLS listings in their preferred area.
Embrace SEO to attract more visitors to your website. Create content around the topic that matters most to your target audience. Use popular keywords in your content and maintain the right density to get your website ranked on Google.
Make sure your content (which includes both the blogs and website pages) demonstrates your expertise and is interesting. To attract more traffic on your website, develop informative content that educates the buyers. Pay attention to your blog structure. Add images, GIFs, quotes, and statistics to make your blogs more reader-friendly.
Make it easy for your prospects to contact you. Set up a simple contact form on your real estate website so that people who are interested in any property can quickly reach you.
8. Market your real estate business
Marketing is essential to make yourself visible in the competitive real estate industry. Your target audience should know that you exist. So for that, you need a strong marketing plan.
Start by creating a buyer persona.
Whom do you want to reach?
Knowing your target audience will help in developing marketing content that would be relevant to them.
Then find out how you will reach them.
There are various channels that you can use to market your product like social media sites, emails, videos, and text messages (SMS).
Being a real estate start-up, ensure you set up your marketing budget, and stick to it.
Be very creative while promoting your real estate business on social media sites. Even be very active on these sites; do respond immediately when someone comments on your social media posts. There are marketing tools like Buffer and Hootsuite that you can use to manage your social media profiles from one platform.
Add social sharing buttons to your real estate website pages.
Make sure your content is catchy and precise while creating email marketing campaigns.
The subject line of your marketing newsletters should be compelling enough to get a click.
47% of email recipients open an email based on the subject line. Besides, 69% of email recipients report email as spam based solely on the subject line. – Invesp
Pay attention to the content and format of your marketing emails. Your competitors are also trying to reach your prospects. So, you need to be innovative to break through the clutter of emails that loiter in your prospect’s inbox.
You can also exhibit in real estate and property trade shows to increase the visibility of your start-up.
Create videos for spreading awareness and capturing the interest of potential buyers and sellers.
Real estate listing that utilizes video marketing receives 403% more inquiries than those without video
Keep a tab on the marketing activities of your competitors to step ahead of them. Marketing is a continuous process. So, invest a few hours in a week to brainstorm on new marketing ideas. Create new marketing strategies to attract your target audience and generate more leads for your real estate business.
9. Pay attention to your sales
If you wish to see a steady flow of cash in your real estate business, you’ll have to plan your sales.
You might gather enough prospects through effective marketing, but then you need to manage and convert these leads into sales.
A real estate sales cycle is generally long, consisting of many steps and procedural formalities.
You need to be very careful while handling real estate sales.
Commence with qualifying the leads. Through a quick discovery call, try to find out what the buyer or seller is expecting from you. Create a list of common questions that you can ask from qualifying a prospect.
If you aren’t a good fit for the prospect’s needs and expectations, then cut the tie at the right moment. Do not waste yours and the prospect’s time.
The second part of your sales process would be in-person consultation. Here you need to schedule an appointment and take a meeting confirmation. There are chances that the prospect might be busy here, so you might not get a reply.
Therefore, you need to plan your sales follow-up. Some tools allow you to automate your follow-up by allowing you to create email sequences. You can create and store follow-up email templates to avoid redrafting it repeatedly. So, make the most of such tools to follow-up and get a response from your prospect.
Once you meet the prospect, understand what they want, and guide them on how you can help in fulfilling their needs.
If it’s a buyer, then find out if they are interested in viewing the property, and if it’s a seller, give a presentation of how you will help in promoting and selling their property. Provide a plan of action. For instance, you will set an open house or list their property on your websites.
Discuss price. Here the negotiation will begin. Research and find various tactics to deal with the negotiation.
Negotiation is a stage where you need to stay calm and understand the prospect’s concerns. Don’t let your prospect take a lot of time. Most of the prospects use stalling tactics and cause delays. So, make them commit to working with you as soon as possible and close the sales.
In real estate, your job doesn’t end here; you need to keep track of the post-sales experience. Ensure your clients are happy. By delivering utmost customer satisfaction, you can motivate positive word of mouth and reach more prospects.
10. Set up a CRM
There are a lot of things that need your attention when you set up a new business. You need to build business strategies, market your services, establish relationships with potential prospects, etc.
Scattered contacts, mismanaged leads and various administrative tasks like filling details of the prospects’ profiles can add up to your work. A real estate CRM software can be of great help here. CRM like Salesmate helps you in staying organized and saving a lot of time.
With Salesmate CRM you can-
- Create different pipelines for buyers and sellers.
- Track your lead in the sales pipeline and know where the prospect is in the sales process.
- Organize all your contacts in a centralized repository and access it from anywhere.
- Use workflow to send automated greeting emails for strengthening customer relationships.
- Track the emails you send to your buyers and sellers.
- Create sales reports to track your sales performance.
- Access your lead’s information from anywhere through a mobile app.
A new business is like a puzzle. You need to put the pieces in the right places. Stay vigilant with the real estate market trends. Know what’s happening in the industry and what new are your competitors doing. Keep researching new strategies and tactics to survive as well as grow your real estate business. Research about the various tools that you can use for managing different aspects of your real estate business. Most of the tools offer free trials like the Salesmate CRM does. So make the most of it.
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