The business model, or economic model, of a real estate agency, is to organize real estate transactions, bringing buyers and sellers into contact and representing them in negotiations.
A real estate agency deals with the search for real estate according to the needs of its customers in the context of a purchase or a rental. For sale, the real estate agent is responsible for putting the property on the market and arranging the visits.
In general, real estate agencies are remunerated by a commission (a percentage of the property’s purchase price), and their income depends on their ability to close deals.
As a general rule, in a business plan, you model the economic model of your project using a Business Model Canvas.
This tool allows you to quickly enter the details of your project, including the pricing model, cost structure, communication strategy, etc.
The business plan adapted to a real estate agency contains a completed Business Model Canvas for this type of activity.
HOW TO SET THE PRICES, RATES, AND FEES OF YOUR REAL ESTATE AGENCY?
Flat fees, free costs, or rental management: how will you establish your price positioning?
If you choose to be paid by commission, you will receive between 5 and 8% of the sale amount. Of course, this percentage varies depending on the property, condition, location, etc.
The fixed fee option is attractive in that you receive a set fee for each sale/acquisition. In addition, if you have chosen to install your real estate agency in large cities, this model is advantageous insofar as the frequency of transactions is more intense.
AN INDEPENDENT OR FRANCHISED AGENCY?
Opening and managing your real estate agency independently is an alternative that has many advantages. First, you receive all the profits (commissions, miscellaneous costs, etc.), and you have total freedom as to the concept of a real estate agency you are going to set up.
However, you will have to take care of your real estate agency’s communication and promotion. You will have to build your brand and your reputation from scratch. You are also responsible for recruiting your team.
By choosing to become a franchisee, you begin the adventure by being affiliated with a network that is already known and reputable in the sector. In addition, you benefit from training and support of choice throughout the project. However, on the downside, you must be accountable to the network and comply with its concept, ideas, initiatives, and economic model.
HOW TO PRESENT THE CUSTOMER SEGMENTS OF A REAL ESTATE AGENCY?
Ask yourself if you want to target individuals (second homes, apartments, lofts, houses, etc.) or professionals (commercial real estate, offices, warehouses, etc.).
You can diversify your services and position yourself in the most promising segments in your region (new or old). Be aware, however, that, for example, positioning on the luxury market goes hand in hand with a high value-added service and exceptional goods. Could you answer it?
Segmenting your market means dividing a set of customers into segments of individuals who look alike.
For you, it will be necessary to separate the people who can buy or rent a property thanks to your agency.
What is the interest of the segments? This allows you to structure the presentation of your customers in your business plan. Also, this approach will enable you to communicate more effectively (by segmenting the offers and different messages from your real estate agency according to the other groups, for example).
Possible market segments that your real estate agent can address are buyers looking for a property, investors, or even owners looking to sell their property.
Inside the business plan adapted for a real estate agency, you can find a detailed study of the market segments written for this type of activity.
HOW TO SET UP THE COMPETITIVE ANALYSIS OF A REAL ESTATE AGENCY?
You will not be alone in the real estate sector. There are also competing real estate agencies from which it will be necessary to take market share.
Your business plan should include an analysis of these real estate agencies. It will be necessary to identify their main characteristics, as well as their strengths and also their weaknesses.
Identify their weaknesses in particular (for example, commissions perceived as being too expensive, services that are too limited, a poor quality website, or even not offering rental management).
Why? Because these elements lead to frustration among the clients of these real estate agencies. Take advantage of these loopholes by building competitive advantages for your real estate agency.
Competitive advantage means anything that allows your real estate agency to beat its competitors.
Here are examples of possible competitive advantages for a real estate agency:
– employs real estate agents from the region (who therefore have a good knowledge of the local market)
– intervenes and supports in the negotiation process (in favor of its clients)
– offers competitive fees for quality service
– holds exclusivity on certain luxury properties
– constantly and effectively prospect new clients,
– has a good online presence (which allows it to attract new buyers and sellers)
– etc.
HOW TO WRITE THE SWOT ANALYSIS OF YOUR REAL ESTATE AGENCY?
The SWOT matrix (Strengths, Weaknesses, Opportunities, Threats) is a tool that is of great help in analyzing the strengths and weaknesses of a given company, like your real estate agency.
Also, the SWOT is a significant help to fully understand the opportunities and threats that can impact its development.
A well-made SWOT matrix of your real estate agent must be concise and relevant. It represents a difficult exercise for young business creators who sometimes make scattered SWOTs, which lack conviction and are difficult to understand.
However, like the Business Model Canvas, the SWOT has the quality of being a synthetic tool giving a lot of essential information on your real estate agency instantly.
To obtain a complete, written, and editable SWOT analysis, download our business plan adapted to a real estate agency.
HOW DO YOU SET UP THE MARKETING STRATEGY OF A REAL ESTATE AGENCY?
In the business plan of your real estate agency, it will be necessary to present a program over three years to allow the growth of your project.
The marketing strategy includes all the actions you will put in place so that more and more customers are likely to buy or rent a property through your agency.
For example, there is the development of a website for your real estate agency. This will help your target customers find you on the internet. Include all the information that customers may need to make contact with.
It will also be necessary to work on referencing the latter (what is called SEO) and, in particular, on certain keywords so that your real estate agency is at the top of the Google results.
To be certain of arriving at the top of the results on Google, you can also invest a budget in “campaigns.”
Your real estate agent will also have to maintain some activity on social networks. For example, Facebook Ads help promote your real estate agency and its offering to pre-established audiences. This is an effective trick to attract more customers.
Marketing your real estate agent doesn’t just happen online. There are also physical media.
In particular, you can have communication media produced to give visibility to your real estate agency.
Finally, you have the possibility of building various partnerships with other actors who will help you to make yourself known.
THE FINANCIAL INDICATORS OF THE BUSINESS PLAN FOR A REAL ESTATE AGENCY
A complete business plan will include a full financial demonstration.
In particular, it is necessary to make income estimates for your real estate agency.
Of course, these projections need to be close to what will happen to your agency. Therefore, our financial model, suitable for a real estate agency, contains a guided system to help you correct yourself. In this economic model, the amount of the commissions of his real estate agency is, among other things, variable (to be able to test several scenarios).
Also, you will need to establish an initial budget for your real estate agency. This part of the business plan will include all the initial costs and costs.
Profitability analysis is also a major dimension of your real estate agent’s business plan. Such an approach allows us to anticipate the level of income your project must have to reach the break-even point. In addition, this approach provides data on the future benefits that you can expect with your real estate agency.
Studying the different charges of your real estate agent will also be necessary.
For example, we find the cost of real estate prospecting, expenses related to management and transaction software for real estate agencies, the fees of collaborators such as notaries, real estate diagnosticians, and lawyers, or the payment of commissions mandate or franchise fees (if you are not self-employed).
The numerous intermediate management balances, the specifics of the BFR calculation, and financial ratios and graphs can all be used to evaluate the performance of your company’s financial plan.
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