How to Start a Real Estate Business: Your Complete Guide
Have you been thinking about entering the real estate profession? The real estate business is lucrative.
Agents can rake in high commissions in a matter of weeks. Did you know the average earnings for a real estate agent in New York is $102K a year?
But these high commissions come with wisdom and expertise. Navigating the real estate industry can be complex and overwhelming. Especially for buyers and sellers.
That’s why both parties need knowledgable real estate professionals to guide them.
In this post, you’ll learn the steps to gaining this knowledge and how to begin building a profitable real estate business.
1. Know Your Neighborhoods
It’s no secret that real estate is a competitive industry. It’s unlikely you’ll be the only real estate agent in your area when you start your company.
To be successful, you need to assess your knowledge, experience, strengths, and weaknesses.
After doing a thorough examination, you can learn more about the area to position yourself better in the marketplace.
Here are some questions to consider:
- How fast are homes selling in each neighborhood?
- What is the mean of selling prices from block to block?
- Are sale prices close to asking prices?
- Are there any conditions in the neighborhood that is affecting the real estate market?
- Are some streets safer than others?
It’s important to familiarize yourself with the market where you intend to set up your real estate business. Having a handle on the market will put you ahead of the competition.
Stand Out Among the Competition
Your expertise will present you as an established professional. Knowing the cities, towns and surrounding neighborhoods where you’ll match buyers to sellers is key.
You must know a market analysis, accurate data for schools, crime rates and the reputation and characteristics of each neighborhood.
Mastering this knowledge will give you a leg up on the competition. And help buyers and sellers refer you to their friends and family.
Another important point for success is knowing your competition. Perform some research about how other real estate businesses approach selling in this market.
You can join online forums, join professional real estate groups, attend industry seminars and workshops or research real estate industry publications and news online.
2. Specialize in a Market Niche
Another way to make your real estate business stand out is to specialize in a niche market. A niche is an area of specialization. For example, would you prefer selling to investors, developers or target the residential market?
Or do you want to focus on a certain geographical area like the upper east side of Manhattan? Maybe you want to specialize in selling coops or condominiums?
Does becoming the expert in short sales and foreclosures pique your interest? If not, maybe you want to narrow your interests to rental properties or retirement communities.
When you narrow your interests to a specific niche, you’ll have a better chance of success.
3. Get a Real Estate License
If you’ve never worked in real estate, you’ll need to obtain a real estate license to begin selling or renting properties as a licensed realtor.
Every state requires agents to be licensed. But before you take the real estate exam required in your state, you’ll need to enroll in a prelicensing real estate program.
The program will teach you the subject areas and the topics you’ll need to know for the exam and for operating a real estate business.
Here are some of the instructional content taught in real estate programs:
- Types of property ownership
- Titles, deeds, and contracts
- Fair housing laws
- Fiduciary responsibilities
- How to work with financial lenders
- Real estate laws
- Federal laws
Keep in mind, rules, and regulation may vary from state to state, depending on the state where you will practice real estate.
After you pass your licensing exam, you’ll need to submit a licensing application. The state where you reside may also require you to submit fingerprints and a background check.
Once your application is approved, you will pay the licensing fees to become a licensed real estate agent. Then you may be hired by a real estate company or broker.
4. Write a Business Plan
Once you’re ready to open up a real estate business, you’ll need a business plan. A business plan is a document that outlines your goals for your entire business and how you will achieve them.
This document will detail how you plan to operate your business and accomplish each objective. In your business plan, be as specific as possible.
While your business plan doesn’t need to be 50 pages long, it does need to present an action plan with dates and milestones on how you’ll reach your goals.
5. Get a Business Insurance Policy
Many new business owners overlook the importance of protecting their real estate business with an insurance policy.
The insurance may cover your business for theft, fire, intellectual property litigation, property damage, and other coverages.
It’s essential to obtain insurance before you incur claims. This will protect your business in the event of a claim or accident.
When you’re advising a real estate client, they can sue you for professional malpractice. When you’re covered, it can be the difference in keeping your business running or having to close your doors.
6. Set Up an Attractive and Functional Website
A website can be a key moneymaker for your real estate business. It can attract people to your website and convert leads into paid customers.
To drive leads to your business and keep them, you’ll need a website that’s attractive, functional, easy to navigate with links that go to the right pages.
Your website should also be created with responsive design so it looks great on any device. You’d be surprised at how many real estate companies drive potential clients ways because of basic real estate website mistakes.
Time to Start a Real Estate Business!
Now you know the steps to building a successful real estate business. Put them to use and before you know it, you’ll be on your way to high commissions!
Need more business tips? Keep reading our blog.