Real estate remains one of the most respected industries the world over. This is so because investment in property is believed to be one of the most viable and clever. Property prices are always going up, and as they do, commissions to real estate agents do too. Because of this, there is good money to be made in opening a real estate agency. Let us look at how this can be done.
Most of your initial capital for this business will go into office setup, company registration and marketing. You can start small, with one or two estate agents, and employ more as you go along.
Apart from normal company registration, you need to register with the Estate Agency Council (EAC) for you to legally operate a real estate agency. If you are not a registered real estate agent, you have to employ one since it is a requirement that a registered estate agent should be a director of such a business. This person will act as the Principal Agent in charge of the company.
You will need to employ estate agents. These have to be qualified and registered with the EAC. The number of estate agents will depend on the size of your company. The good thing is you do not have to budget for estate agents salaries. Estate agents are normally paid a commission when they conclude a deal. This means, if an estate agent sells a property, you pay them a percentage of the commission from the proceeds of that deal. You may need to employ an office administrator to take care of office work though. This is because estate agents are normally out in the field prospecting for clients most of the time and you need someone to pick up calls and receive walk-in clients.
For this kind of business, you do not need big premises. If possible, you can create several workspaces in one room for your agents. However, the premises should be neat and presentable. This will give a good impression on your clients when they come to meetings. Normally, estate agents use their own laptops and vehicles so you do not have to worry about buying these for your offices. If you can afford, one or two branded cars are not a bad idea though. The location of your premises is important. Find a central location where there is a lot of traffic. You can get a lot of walk-in clients if you do this.
Rentals or sales
Your company may choose to specialise in property sales only, rentals only, or both. While rentals will allow you to make quick money and keep your business liquid, sales have better returns. Doing both is more advisable but you need to hire the right agents to keep both sides of the business going. Currently, estate agencies take between 3% and 5% of the purchase price as commission. This means that if you sell a $100 000 property at 5% commission, you will get $5 000. For rentals, you earn your commission when you place a tenant or whenever the tenant pays rent. These are normally smaller figures than what you would get for sales.
A lot of research is necessary for this line of business. Apart from checking out what your competitors are up to, you should really be an expert in the area in which you operate. Know every property in the area, when it was sold and for how much. In certain countries like South Africa, this information is available online but you may have to look for it manually in Zimbabwe. This information will help you provide better service. You can make accurate estimates and help buyers and sellers make informed decisions as well.
The market for real estate is always there although economic issues may affect demand at certain times. As a result, you need to go into an area where you have a better chance of finding a good market for your business. An example would be residential areas close to universities and colleges. These offer many rental opportunities and your company can come in and assist landlords to find tenants. Cities like Harare and Bulawayo will give you stiffer competition than smaller towns. Be aware of that. If you are still new in the business, you may want to start in smaller towns to gain market share and make a name for yourself there. Continuous market analyses are also needed regularly because the market evolves.
It is a pity that many estate agencies still do not have a strong online presence in the country. Your company should not be one of them. You need to make use of technology to market your business. Social media is a cheap marketing tool which can reach many customers in no time. An interactive website can also help if you can afford it. Be sure to respond to all enquiries. Take good photos of the properties you are advertising. It is also important to keep track of where your customers are coming from so that you can ascertain where to deploy most of your marketing resources.
Because the process of selling a property can take time, you need to ensure that you give both the buyer and the seller constant feedback. In addition, you should work with reputable conveyancers who will complement your good service by maintaining high levels of professionalism. Do not keep your clients in the dark as soon as a deal is signed. Keep updating them on what is taking place and they are likely to refer their contacts to you.
Continuous Professional Development (CPD) is also critical in this industry. Ensure your agents join professional groups like the Real Estate Institute of Zimbabwe (REIZ). These have helpful CPD programmes to keep agents skills fresh and up to date. You and your agents will also benefit from networking events that are regularly organised by REIZ.
A real estate agency is good business with the potential for huge returns. You need to possess good sales, communication, negotiation and prospecting skills to differentiate your business from the rest and you are good to go.