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Given the demand in the sale and rental of apartments, real estate activities can be very profitable. We will show you what criteria you need to be guided by when creating a real estate agent to achieve success.
When deciding to run a real estate agency, one must consider that the first income will come only after a few months of activity. Before the first clients buy real estate through your firm, you will have to get attractive offers to your base.
Before doing business, which is a real estate agency, you should draw up a business plan – at least to be sure that before reaching the first income, you will have enough funds to maintain it, in other words, to analyze the payback of the business in a certain period. That is why banks require potential borrowers to provide an effective business plan, the implementation of which will lead to the fact that the entrepreneur will be able to repay the loan.
It remains to prepare a business plan at the business planning stage to ensure that it is worth investing your money in a particular area. Regardless of the purpose for which a business plan is drawn up, it should be remembered that this is only a forecast, the accuracy of which depends on many factors that are often impossible to predict.
In the case of a real estate business of real value, the business plan will consist of many elements, including experience in the industry, real estate knowledge, and real estate trading procedures. Mistakes are often made by inexperienced market participants accepting real estate for inadequate prices about the rates prevailing on the market. The need for credibility also causes problems. It must be reckoned that clients use all sorts of imperfections in the procedures applied through an intermediary to not pay him a salary for the services rendered.
Before you start putting your thoughts on paper, you should think about the purpose for which a business plan should be drawn up. If a bank or other institution requires this, it is worthwhile to determine if it does not put any additional requirements or needs a business plan to be drawn up in the appropriate forum.
The business plan is a simple model. Therefore, it should be written concisely and realistically. You need to cross out all the information that is not required to assess the project’s payback.
What results a real estate agent will get after the first year of operation will depend on many factors, such as experience, personal abilities, location of the agency, competition in the local market, as well as the availability of mortgage loans. It will probably be more difficult for an entrepreneur who is just learning to mediate to draw up an accurate business plan than for an experienced mediator who has become independent after many years of cooperation with a real estate agency to be present in the local market.
Sample business plan
- General characteristics
- An experienced interior designer founded Amin Estates. Mr. Amin wants to use his industry contacts, including the owners of rented apartments and developers. The company provides the following services:
- Mediation in the circulation of real estate.
- – Advice for clients who want to sell their property on their own.
In addition, Amin, as before, will provide services related to interior design. The designer’s atelier is located in the house. However, due to the expansion of the scope of activities, it is necessary to rent an office in a well-known part of the city. Amin Estates began preparing for the opening of the office a year and a half ago. At this time, he received a license as an intermediary in the circulation of real estate.
- Industry market
- Amin Estates will operate in a small but wealthy and prestigious area near Bangalore. There are several dozen real estate offices in the vicinity. There are also agents of large network firms. So, the competition in the market is extreme, which does not contribute to obtaining exclusive offers on which the entrepreneur is primarily dependent.
- Amin designed interiors for many wealthy clients who were satisfied with his services and recommended him to their friends. Thus, Mr. Amin focused on residential real estate, mainly apartments and prestigious residential premises. The designer intends to use this potential.
- Amin plans to hire an agent based on a contract, who will work in exchange for a salary that represents a commission on turnover.
- Planned initial costs:
- Office furniture 1200 dollars.
- — Computer, camera: $900.
- Adaptation of the premises: $ 1,500.
- Promotional materials: $600.
- Visual advertising: $900.
- Website: $900.
- — Computer program $600.
- Together: $6,600
- The mediator owns the vehicle that will be used for the activity.
- Monthly expenses:
- Internet: $20.
- Phone: $60.
- Bookkeeping: $80.
- Social Security: $200.
- Website promotion: $60.
- Advertising on portals: $180.
- Newspaper advertising: $300.
- Room rent: $1,000.
- Gasoline: $150.
- Other expenses: $60.
- Together: $2,110.
- To earn a little more than two thousand for the maintenance of the office, Amin Estates must be an intermediary with at least one transaction per month. However, before the first apartment is sold through his mediation, it is necessary to receive proposals in the database. In this regard, Amin Estates considers that even half a year will wait for the first income.
- Own license
- Emphasis on the development of a market niche
- Knowledge of the local market of prestigious real estate
- The second occupation of the agent, thanks to which he will be more independent of the economic situation in the real estate market.
- Lack of experience, practical knowledge of customer service procedures in the office, the agent is likely to make many costly mistakes,
- High cost of operation,
- It is necessary to create a real estate database from the very beginning.
- — Strong and more experienced competitors.
- After years of hard work, there can be a snowball effect whereby clients want to entrust the sale of their property to a reputable agency that has more points in their offer. The buyer, in turn, will gladly examine the websites of agencies that have created a database of proposals, which contributes to effective sales.
Thanks to Internet services, even a small agency can indicate its presence on the Internet. However, this does not mean that the agency, making its debut in mediation, has no chance of market success. A potential buyer, looking through a site with offers, pays attention to the properties of the property and not to the agency’s brand.