To open your real estate agency, you must have experience of realtor work. It’s necessary. If there is no such experience, it will be extremely difficult to understand the intricacies of the matter.
The only exception is if you start working on a franchise or have extremely bright entrepreneurial abilities. But still, the overwhelming majority of directors of successful agencies are people who have had a lot of experience as a realtor.
Real estate business attracts newcomers to the low threshold of entering the market. But do not rush, because the probability to fly into the pipe in this case as high, that’s why every year is closed about the same number of agencies, and offer much. So the main thing, on what you need to emphasize, it is not the volume of investment, or a beautiful office and customer base and reliable reputation at least in private.
Where to start?
My agency was opened in 2006. By that time I already had a client base. I was a professional in his field, he has gone from a realtor, a leading specialist agency to department head, had the experience of mentoring.
Then you need to determine the segment of the market in which you will work: you will engage in renting or selling apartments (primary, secondary markets), selling and leasing commercial real estate, buying and selling land. You can, of course, choose all directions at once.
Independently assess the state of the market and understand what is currently the best way to make the accent difficult. But you definitely need to have some kind of analytical picture of the market before you open a business. It is possible to gather expert opinions, but, unfortunately, even in cities with over a million people, such as Kazan, experts who understand the subtle nuances of the market, are single. You can order an expensive study for analysts from Moscow or St. Petersburg, but experienced market participants are skeptical of experts who have never worked in your city, but are going to evaluate it. In addition, the cost of such research will be prohibitive for a budding agency, unless, of course, you want to immediately open a giant agency with a staff of 300 employees. But this will be an exceptional case that will require a lot of investment
Andrey Saveliev, director of real estate agency «Your reliable realtor and NLB» (Kazan), president of the Guild of Realtors of the Republic of Tatarstan
If you work for a long time in the real estate industry, then you will most likely have an idea about the state of the market, what is in demand, which segments are most successfully developed. And you probably will understand that the real estate market is affected by two variables – it is supply and demand. When the market is stagnant, there are many unclaimed offers, and you can work with them. When the situation is reversed, we work with demand and look for options for buying or renting. That is, access to the market is always possible. For example, in 2006 the market in Kazan grew at a wild pace, prices increased by 100%, apartments were sold quickly, and a good realtor could make six transactions a month. It was easy to enter the market. Now the time is heavier, the market has subsided, demand has fallen, but there is still a possibility to develop today.
The real estate market always has a place for a new agency. But you can not come up with a new niche, because all the segments have long been clearly marked. Denote them as the popularity decreases. The most important thing is the purchase and sale of apartments. Then – commercial real estate (office, industrial, warehouse, commercial, HORECA). Third – suburban real estate. Fourth – rent of apartments. Rent of country real estate is not in high demand. It is extremely difficult to come up with something new. True, lofts and apartments have recently appeared, but this is so small a segment that it is not advisable to target the agency. Of course, you can think about your highlight, feature, but the main thing on which it is recommended to make an accent is the quality of service and reputation.
This is a pledge of long-term work in the market. For example, in Kazan, 50-60 agencies are opened each year and about the same number is being closed. Today, about 350 real estate agencies are registered in the city, but they are truly professional, with more than five years of experience among them – about a hundred. The rest – today there is, tomorrow not.
The target audience of the agency is very blurred. From students that parents buy apartments to pensioners who decided to exchange an apartment for a house in their old age. Modern tools like a mortgage or a housing cooperative allow even with people with low incomes to acquire real estate. Appeal to the agency including on the sale and purchase of villas, garden plots that cost 100-150 thousand rubles, which can afford, and representatives of low-budget levels of the population. The average age of clients of the realtor agency is from 25-28 to 45-50 years.
Investment size
The figure will depend on the level at which you want to climb. If this is a small agency with three or four realtors, then put into the business plan the costs of renting an office for the next three to four months, salary and advertising funds, spending on furniture and computers.
What are the main costs of an already operating agency? The medium-sized agency has three items of expenditure. The first is renting an office (in Kazan it costs 600-700 rubles per square meter per month), the salary of office employees (on average – 20 thousand rubles per person per month), payment for telephone and Internet communication. Second – the advertising budget. To reach the average level, not having a reputation, in a month it will be necessary to invest at least 100 thousand rubles in advertising. The third item of expenditure is staff training. Of course, you can hire experienced employees, but in this case you will have to raise the advertising budget, because experienced realtors are not interested in sitting without objects, in addition experienced employees and salary are asked above. Either you still have to invest in training new employees.
But with any investment, the probability that you fly out into the pipe is still above average. Therefore, the main thing is to have your own formed client base. Success depends only on this. And in the realtor business client base can not be stolen, as relations between clients and realtors are built on trust, a good realtor is handed over from hand to hand, because people trust him with their most valuable property – apartments, houses. Often people do not go to a professional, but to «a familiar realtor.» Therefore, a formed reputation is needed, at least in its narrow circle.
If there is no such reputation, then you will have to increase the advertising budget once in 30-40, in contrast to the budget of the Academy of Sciences with already established reputation and customer base. In our city there was an example of entering the real estate agency market without a reputation. They did not attract at the opening of powerful realtors and were forced to spend a huge budget for advertising. And this agency survived, survived the crisis and exists until now. But there are only one such examples. There are many examples when an agency opens on a franchise, but nine out of ten such businesses failed, failing to step over reputation.
Where can I find funds for launching? There are no special state funds or programs that would support the work of realtors. The fact is that this business is not regulated by the state today – the Law on realtor activity has not yet been adopted, although it is already considered in the first reading by the State Duma of the Russian Federation. Credits, according to market participants, are a dead end. First, it will be extremely difficult to take out a loan to open such a business, because banks understand that real estate business, at least at the initial stage, is very unstable: today you can earn well, and tomorrow it’s bad. It all depends on your abilities, personal qualities, perseverance, energy. The biggest scourge of realtor is laziness. Therefore, if you want to succeed, be ready to work from 7 am to 9-10 pm, without days off and holidays. However, instability in the work of a realtor is also connected with the state of the market, which sometimes behaves unpredictably. For example, in 2006 and 2009, the income of the same realtor varied greatly due to the economic situation in the country. Therefore, counting on a loan is risky.
You can find an investor. Or you can earn the funds necessary for running yourself, working as a hired employee. For example, a successful American entrepreneur, Robert Kiyosaki, for many years worked as a manager in a company and simultaneously developed and thought through his projects.
Step-by-step instruction
In your work you will have to interact not only with customers, but also with authorities and so-called counterparties.
Firstly, the state bodies are the Registration Chamber, the Cadastral Chamber, various departments of the executive committee of the Ministry of Defense. Here the relations are formal.
Secondly, with banks and developers, cadastral engineers and appraisers. You can become partners and brokers, although in order for a bank or a developer to cooperate with you, you need to work hard. You need to contact them yourself. Ways how to do it, mass. The simplest way is to call, invite to cooperation, say that you will bring your clients to them if they give you and your customers some preferences in the form of discounts, commissions, advertising opportunities. Your goal – to the landlord who wants to buy an apartment, it was more profitable to contact you than to the sales office of the builder. Typically, experienced realtors can offer a person more interesting conditions for buying an apartment. The same with banks – the agency can offer a unique discount on a mortgage, escort, advice.
Thirdly, you need to establish relationships with people who serve your business. These are Internet providers, advertising carriers, suppliers of office supplies. It is desirable to build friendly relations with all media.
How did I start cooperating with banks? I went a long way. I have proven myself as an expert through a large number of transactions, statements in the media, laying out the market analytics, building up my reputation. To my opinion other realtors began to listen. And it turned out that the banks themselves came to me. I attracted them by the fact that I can well present their services to clients, and many realtors of the city listen to my opinion.
Relations with developers from realtors in our city are more complicated. Market leaders are open and want to cooperate. But the average and point developers are less likely to contact, preferring to work independently. But in every city a different situation. In Siberian cities, almost all developers work with realtors and actively pay them a commission, and it is even higher than the commission that we in Kazan realtors receive from the sale of apartments in the secondary market.
For promotion, all advertising channels are used – this includes the media, banner advertising, social networks, and even the simplest posting of ads on the entrances. But word of mouth is the most effective source of attracting customers. Therefore, the most important channel for promoting the agency is again work on your reputation. Important is the fame and reliability of your brand, your conscientiousness in dealing with the client. Some agencies work in the market for 8-10 years, but few people know about them. Someone in two years of work became famous. Everything depends on activity and scale. A large agency with a staff of 60 people will be known in a year. But on the average, in order to have a good reputation, it must take at least three years.
Realtors say: if the agency has been in the market for five years, it will continue to exist. In the first five years 90% of agencies are closed, and only 10% cross the 5-year line and do not leave the market.
What qualities should your employees have? Communicative, active life position, vigor, high moral principles (if you want this realtor to work for a long time), artistry. And also – stress resistance, because the work is not easy, situations and negotiations are hard. And one more quality is the ability to learn. The specialist must constantly learn, improve in technology and sales techniques. Have legal knowledge, which relates to housing, civil, family, town-planning, land codes. Know and track the amendments in a huge number of federal laws.
The law on realtor activity, which is currently under consideration in the State Duma, provides for at least two employees in the agency. But experts believe that you need 5-6 people minimum (especially if it’s not the market’s stars), otherwise you will go into the cost price. Typically, in a real estate agency with a staff of less than 15 people, the head himself also works as a realtor.
I have no specific requirements for employees. But there is a stop list. First, we definitely do not take people who do not know the computer and Internet technologies, because otherwise they can not even make an elementary request to the Registration Chamber. Secondly, we certainly do not take people with low mental and intellectual abilities. Thirdly, we do not hire people with a criminal record, because we deal with expensive objects, and the work is built on trust. Of course, we look at the character of the conviction. If cheating – definitely not. If, for example, the excess of necessary self-defense – I in this article do not see anything terrible.
Each agency has its own ways of selecting employees. Some just take everyone in a row, others conduct interviews. Serious agencies conduct candidates in several stages. First, there is a screening at the interview, about 50% of the candidates leave, and then the training begins and the probation period begins. For example, the hero of our article five years ago conducted statistics in his agency: for the year 228 people came to work for him, one of them remained to work. Therefore, the competition for a professional realtor is serious.
In the realtors’ environment, watchful eyes are on employees who leave the agency and go to another agency. The most common cause of this is theft. Although it happens that a person does not get along with the character with the team. Or the company does not give it an opportunity for growth.
Standard agency works from 9 am to 6 pm. This is a common working day in the country. But the realtor really works 7 am to 10 pm, including weekends and holidays. After working for at least five years, you can allow yourself to celebrate the holidays.
By the way, such a long entry into the profession is another reason why it is difficult to find a good employee. To become a successful realtor, you need to work long and hard.
A place
Where is the best place to place an agency? To this experts do not have a single point of view: someone says that it is best to be in a sleeping area, someone prefers the center of the city. And in that, and in another case there are pluses and minuses. As in any business related to services, it is important that the place be through, have transport accessibility. There are examples where companies located in a not very accessible place have good sales. There are companies located in business centers, but their business goes badly. Therefore, the place on the real estate business affects little. This is not a shop or a cafe, where the main profit is brought by people coming in from the street. Here the reputation of the agency is more important, and if it is good, then the client will come to you at any place.
There are no special requirements for the premises. Simple rules of ergonomics and marketing work here.
Documentation
To date, the legislation does not regulate the compulsory participation of the agency in SROs or associations. However, if you are a member of the Realtors’ Guild, this voluntary membership will have a positive effect on your reputation. Townspeople increasingly pay attention to this.
OKVED – intermediary services with real estate and rendering services. Type of taxation – simplified. According to experts, if you want to develop and become the medium-sized agency, it is better to register as an LLC. If you plan to remain a small agency with a staff of up to ten people, it is more convenient for an IP.
Check-list of opening
- Analysis of the market and competitors (range of services, prices, programs, personnel, etc.),
- Search for a room,
- Evaluation of the rental location, the choice of the best option,
- Conclusion of the lease agreement,
- Registration of IP or LLC, registration with the tax inspection,
- Search for colleagues,
- Interviewing, selection of candidates,
- Making a loan (if necessary),
- Ordering furniture and interior items,
- Repair work (if necessary),
- Development of an advertising campaign for the opening,
- Development and coordination of the signboard, its installation,
- Development of shares, discounts and other marketing activities, pricing,
- Search for an accountant on outsourcing,
- Festive opening.
If you intend to work on a franchise, you need to make a discovery. This is self-promotion. A festive opening is also necessary if you are a network agency and open a branch in the city. In other cases, a grand opening is not required, you just start working.
Is it profitable to open
What is the amount of agency fees? For example, the minimum commission of a realtor in Kazan – 60 thousand rubles. On average, from 3 to 5% of the value of the object. But in different cities in different ways. In Moscow – 5-6%. In each region, city, its factors affect the state of the market. In Kazan, for example, the real estate market has been slowed down for a long time because of the state program to eliminate dilapidated housing, when many people received new housing for free, and the market did not develop. When the program was completed, the market grew rapidly.
Exit to the point of «zero» depends on two factors: on the professionalism of your employees and on the correct marketing and advertising policies. The average period is from one month to one year. Sometimes one transaction covers three to four months of expenses for the whole company, although this is still characteristic of an experienced realtor who has worked on the market for more than 5-6 years.
What are the options for increasing the agency’s profits? Increasing the professional level of employees is the most important thing. We need to invest in their training, motivate them, send them to courses in studying the psychology of clients, technology and sales techniques, and legal preparation is important.
The biggest risk in this business is reputational. Do not cope with the task, the object and lose yourself at least in the eyes of one client. Fortunately, over the years of work I have had almost no such cases. And so, do not forget about the risk of bankruptcy, when your expenses exceed your income. This happens in the case of an incorrect strategy, a policy where little attention is paid to the work of personnel, especially the moral principles of employees. According to statistics, 80% of real estate agencies for this reason fly into the pipe in the first two or three years.
On the real estate business is also influenced by the seasonality factor. Simple occurs in the first half of January and in the summer. In the spring, suburban real estate enjoys great demand, in the fall – secondary, in the summer – the primary one, since the developers most often announce various promotions and discounts at this time, since the practice of raising prices since September 1 has developed in our city. By the way, knowing this information, it is possible in August, the dead month of the year, to work on this and get customers. You can play and the fact that traditionally prices are rising in December.
