The real estate market is in unprecedented waters at the moment. The housing market is hot with people looking to relocate from city centers, interest rates are historically low, and inventory in some areas is scarce. With real estate markets fluctuating and economic conditions varying, people will hesitate to open a real estate office for fear that the timing isn’t right for them.
Arguably, nearly every situation can be advantageous for opening a real estate office; the key is to know how to take advantage of each market.
In any market condition, bringing on agents is key. Often, people don’t realize that agents aren’t interested in switching companies in the middle of a booming market. Profits are soaring, so why would agents want to make a change? Plus, agents will be busier than ever, so they won’t want to take the time to meet with you and discuss a company change.
Conversely, when conditions are difficult, agents become frustrated and begin searching for solutions—but brokers are too frustrated by the market to focus on recruiting! By focusing on supporting their agents and keeping their office open, they miss the tremendous opportunity to recruit currently dissatisfied agents. Agents at competing real estate companies are increasingly willing to switch and relocate if it means solving their problems at hand.
Limit Your Expenses
Usually, traditional real estate models involve leasing massive square footage and providing personal equipment to every agent in the office. This model is extremely flawed, and it causes offices to struggle during rough economic turns. To open a real estate office today, consider a lean business model. A leaner model will help control your overhead costs, and you’ll be able to break even with smaller revenues.
Through this method, the pressure of expensive leases and equipment costs are relieved. During economic downturns, brokers with high expenses will remove services and equipment in response, and this will push agents to look for a better competitor. In contrast, brokers with smaller overhead operations can keep a clear mind and as they continue to find new ways to provide services and support.
You may be tempted to roll your eyes now, but your decisions are heavily affected by your attitude, whether you realize it or not. During difficult times, teams will follow their broker more closely to improve their own results. As their leader, you can’t allow yourself to become frustrated or panic when revenues turn to losses. Your mood controls the office’s mood, which will show through company culture and success.
By keeping a positive attitude, you become a motivational force for your agents. If your office isn’t an environment where agents feel they can thrive, it will affect their business outside of the office. Not only will agents start performing higher, but your office’s energy as a whole will improve. Your office’s culture is a major recruiting tool, so a positive attitude will ultimately help attract new agents from other companies.
Focus on Revenue Generating Activities
When the real estate market is booming, brokers and managers tend to spend large portions of time trying out new ideas or working on side projects. However, when times are tough these side projects become a liability. To avoid this, be sure to focus your efforts on activities that will add to your business’s income. Long-term goals are important to improve your company, but don’t let them become a main goal if they don’t directly raise revenue.
Frequently, offices struggle and ultimately close due to management spending too much time on unprofitable projects. Instead, work on creating additional revenue streams, because they will become extremely valuable when business is slow.
Depending on how you approach the situation, it could always be either an opportune or inopportune time to open a real estate office. While others would argue that the best time to open is during a real estate boom, others would argue that the greatest opportunity for profit has already been missed.
There are plenty of opportunities that won’t wait for booming markets. In order to earn a profit from opening your own real estate office, you must be prepared with the right attitude, focused on revenue generating tasks, and inclined to aggressively recruit. Simultaneously, you need to control your expenses. Unfortunately, risk will always be present when starting your own business, but the reward can far outweigh it.