Starting a real estate business ain't for the faint of heart. What other industry requires you to cold call dozens of leads every day — only to close approximately five deals in your first year (if you're lucky)?
It’s a common adage that 3 out of 4 real estate agents fail within the first five years. But for those who have what it takes, starting your own real estate business can absolutely give you the seven-figure job of your dreams.
Here's a candid look at how to start a real estate business, plus our best advice for avoiding mistakes that hijack momentum as you grow.
For many new agents, real estate is their second, third, or even fourth career. You loved the idea of "being your own boss" while making more than you did at your last job, but freedom has a very different meaning for an employee versus a business owner.
The question is... which are you?
The first thing you need to know about starting a real estate business is that, yes, this is a business. Whether you're a solo agent or new to a team, if you have dreams of outperforming the average real estate agent salary ($41,289 per year), you need to start thinking like a business owner — and that means planning.
How to Start a Real Estate Business
- Get a CRM.
- Craft your ideal personal plan.
- Align your business plan.
- Build a consistent marketing plan.
- Get a website.
- Prospect consistently.
- Nurture leads.
- Have good time management.
1. Get a CRM.
At the end of the day, a business is a system.
Barry Jenkins is the broker-owner of the #2 Better Homes and Gardens Real Estate Team in the United States. He's also a guy who hates inefficiency. "I, to a fault, like to make things easy. The reason my business is so successful is that it was built on the core principle of leverage."
In order to bring that principle to life, Barry uses his CRM as a true lead conversion machine. A CRM is a Customer Relationship Management system that helps you organize your contacts and come up with actionable insights. With it, you can walk leads through relevant nurture campaigns based on lead source or automate the entire transaction process.
This is incredibly useful in real estate because the home buying process is so long with many different steps... multiplied across many agents and even more leads and customers.
Using a CRM to achieve boss-level organization is how Barry and his team sold 240 homes in 2017. And it's not all about the front end, either. Barry also uses his CRM to send automated onboarding drips to new team members and keep the business admin completely streamlined so that nothing important ever falls through cracks.
2. Craft your ideal personal plan.
Before you set the right financial goals for your business, you need clear financial goals for your life.
Commissions are great but — let's face it — we all came into this business wanting something bigger and better than what we have right now. Whether that's the 187-foot yacht of your dreams or the ability to leave the office at 2:00 p.m. so you can pick up your kids from school, take time to think through what your ideal life would look like.
Questions to consider:
- What time do you want to start work?
- What time do you want to finish?
- How do you want to feel each day?
- How much money do you want to make?
Want to retire at 65? Pay your kids' college in full? Figure out how much you need to put aside every month in order to make that happen. It's so much easier to keep picking up that phone when you know exactly where your profits and commissions are going.
3. Align your business plan.
Now that you've put pen to paper to figure out exactly what your biggest, most anti-paycheck-to-paycheck life looks like, it's time to talk business.
Start writing your business plan, paying special attention to the things that set you apart from the other real estate businesses in your area. Give it some real thought. This is where your personal and business identities can really come together to make profit-driving magic.
Questions to consider:
- How does selling real estate make a meaningful difference for you, your prospects, and even the world?
- What are the values and principles that drive your real estate business?
- How are those different from the real estate business next door?
- What are the three to five things you are going to own completely in the business?
- Who will take care of the rest?
Even if you're just looking to take administrative work off your plate by hiring your first virtual assistant, it's critical to create that big picture vision to keep your team inspired and avoid repeating unproductive patterns.
4. Build a consistent marketing plan.
In the beginning, it was all about passing your licensing exam, selecting your best-fit brokerage, and building up your database without coming across as "salesy" to the friends and family in your Sphere of Influence (SOI).
But kicking back and coasting as soon as the referrals start rolling in is one of the biggest mistakes growing agents make. Whether your dream is to become the next Facebook ads guru or a master of Zillow conversions, the only thing you really need to know about marketing is that it's the one part of your business that never sleeps.
Train your brain how to think strategically about what's happening in your market and be ready to offer something of value to your leads, no matter where they come from.
Questions to consider:
- What does your unique approach and personality bring to the table for your prospects?
- What can you offer that no one else can?
- What are the latest buying, selling, and pricing trends in your market?
- What are some creative ways to discuss these trends (including the numbers) with prospects?
First, nail down your unique value proposition. This will drive all your future marketing.
5. Get a website.
For 44% of all buyers, the very first step they take in their home search is to look online.
No matter how much local marketing you do, you need a web presence to attract and engage online leads. It may cost a little money upfront, but a solid, SEO-focused website that lets you integrate IDX listings and usher those leads right into your CRM is a crucial foundation of every successful real estate business.
Once you have this asset in place, you can start moving toward a consistent blogging and social media strategy to generate more leads.
6. Prospect consistently.
Shiny object syndrome is a big problem in real estate. But the most consistent agent always wins, so choose your prospecting system and stick to it.
In the early days, it's never a bad idea to optimize your SOI. In fact, the Atlanta-based Graham Seeby Group transformed a list of just 279 contacts into $90 million in home sales in just four years by consistently marketing to their past clients and sphere.
Here's how co-founder Justin Seeby tells it:
"We focused on the ‘mets’ in our database and it was amazing the volume of transactions we started doing right out of the gate! For example, we did $2 million worth of sales from one couple I hadn’t talked to in 13 years. I mailed them a postcard, because I was afraid to pick up the phone and call them. I didn’t know if they’d know who I was. When they got the postcard, they called me. They ended up spending $1.2 million on a new house and selling an $800,000 house."
Justin's prospecting strategy was based on a simple schedule of mailers, emails, and phone calls. A winning system doesn't have to be complicated, but it absolutely must be consistent.
7. Nurture leads.
If a lead contacts you, they expect to hear from you.
Mike Pannell is a master lead generator and the leader behind Nu Home Source Realty. According to Mike, a follow-up system is crucial to long-term lead conversion. "I tell my agents that 70% of people are not going to buy for 180.5 days. If you’re waiting on those new leads to buy, you’re only going to close three percent. That will make you enough money to survive, but your goal is six months and beyond. You’ve got to follow up to get to those; you’ve got to build that pipeline to get to those people."
In addition to avid blogging and website optimization, Mike also checks up on the competition to see what's happening on the ground in terms of follow up. "I sign up on a lot of different websites out there. I don’t give them a real name, but I give them a real phone number. And I can tell you what, I don’t get a lot of calls."
Be the agent who's always there, and you'll automatically beat the herd.
8. Have good time management.
If you're like most of us, a big part of the dream is to have more time and energy for the things that really light you up.
But most agents who set out to build a real estate business haven't built that into the plan. They end up with a revolving door of team members and have to roll up their sleeves and try to outwork the business problem du jour. But it doesn't have to be that way.
For experts in automation, a motivating factor is saving time. By eliminating manual work through automation, you can free up time to focus on the activities that actually drive revenue. The ability to do marketing automation further underscores your need for a CRM, which ends up acting as the engine that supports your efforts.
How to Start in Real Estate
- Get a real estate license.
- Find a brokerage.
- Join the National Association of Realtors (NAR).
- Pay your dues.
- Find a mentor.
- Get crystal clear on who your ideal customer is.
- Build your personal brand.
Once you've created your personal vision, business plan, and unique value prop, it's time to get down to brass tacks.
How do you enter the real estate field and develop as a real estate professional? Here's what you’ll need to do.
1. Get a real estate license.
Obtaining a real estate license is an important first step in your real estate career. The timeline, qualifications, and costs of getting your real estate license are different from state to state, so consult your local real estate bureau to understand what's required.
Many states require pre-licensing and renewal courses as well. Once you have your license, however, you can legally sell, broker, or rent real estate in the state in which you've obtained your license. There's one caveat here: Most states require you to work with a brokerage for the first two to three years as an agent. So let's dive into what that means.
2. Find a brokerage.
A real estate brokerage is an agency where real estate agents work. You might choose to work for a national franchise like Keller Williams Realty or a local boutique brokerage in your area. There are also virtual brokerages popping up around the internet, so do a little digging and find out which option best aligns with your goals.
Consider company culture, commission structure, and possible mentorships when you're selecting a brokerage. Choose where you’d feel you’d thrive, be fairly compensated, and be able to learn from skilled people.
3. Join the National Association of Realtors (NAR).
Want to call yourself a REALTOR®? Until you join the National Association of Realtors, you can't. A NAR membership will also earn you access to the Multiple Listing Services (MLS) where you'll be able to search through all of the listings in the network.
4. Pay your dues.
Don't expect to get your license, join a brokerage, and start selling million-dollar homes. Digital marketing strategist Hillary Robert says, "New real estate agents need to know that building a business takes time, hard work, and effort. To build a sustainable career in real estate, they need to be willing to put in the elbow grease to build an audience and database of contacts. Then they need to learn how to work it, provide value, and be consistent."
Prepare to up your sleeves, do the hard work networking and supporting more seasoned realtors for a few years, and don't expect to be bringing in the big bucks right away.
5. Find a mentor.
Learn from those around you. Is there someone in your brokerage who specializes in FSBOs or has a knack for running Facebook ads? Schedule time to grab coffee with them once a month, see if you can shadow them for a day, or offer to help with a project they're spearheading.
Spend time and build relationships with people who are good at the things you'd like to be good at. It will pay dividends in the years to come.
6. Get crystal clear on who your ideal customer is.
Working with first-time home buyers is vastly different than working with retirees who are downsizing into an active-adult community. Both of those groups are different from second-chance home buyers who are entering the market again after recovering from foreclosure.
Not only does each of these subsets require different considerations and industry knowledge, but they’re also different audiences. This means they do not share the same needs, concerns, or goals.
If you want to resonate with prospects, you must understand their pains, problems, desires, and triumphs. The first step toward doing that is to create a buyer persona.
This exercise can lead to information and perspective that will inform your marketing efforts, your messaging, and even how you present your personal brand.
7. Build your personal brand.
One thing that seasoned real estate agents know to be true is that real estate is a lead generation business. You should always be building your personal brand and expanding your network.
You can do this by building a personal real estate website outside of the one you have on your brokerage's site. Create a social media presence for your professional brand. And host happy hours and networking events that will get your name out in the community.
Read on for even more tips on building your personal brand and lead generation engine.
How to Grow Your Real Estate Business
- Leverage your Sphere of Influence.
- Start networking.
- Learn how to use sites such as Zillow to your advantage.
- Check the cost for Google Ads in your area.
- Run Facebook ads.
- Optimize your website for organic search.
- Start blogging.
1. Leverage your Sphere of Influence.
When you're just starting out, you won't have much of a lead generation engine outside of your SOI, so make sure that your sphere knows that you're in the industry if they need anything. Many real estate agents worry about being too pushy with family, friends, and acquaintances, but if you avoid spamming and only work your profession into conversations organically, you won't have an issue. This is a big part of your life, and they should know about it.
2. Start networking.
Your sphere is as powerful as its size, and you don't want to draw from the same well over and over again. One way to widen your SOI is by going to networking events and interacting with other business owners in the community. After all, they might also be potential home buyers.
Just keep in mind the Law of Reciprocity, making sure to give in these situations just as much as you take. The more you interact and engage, the more your name will stick in their minds. You definitely want that should they ever need you in the future.
3. Learn how to use sites such as Zillow to your advantage.
Zillow and similar sites have more authority and larger audiences than you, so it only makes sense to use them as tools in growing your business. Many of these sites allow you to create an account, connect your listings, and add contact information and more. Should someone stumble on one of your listings or your profile, they'll be able to connect with you.
4. Check the cost for Google Ads in your area.
Because real estate is such a competitive industry, especially in metro areas, Google Ads may not be a cost-effective strategy. However, it doesn't hurt to check the cost for Google Ads and at least try it out, especially when you consider that people are taking to Google at the beginning of their home buying journey. Google Ads is one of the quickest ways to drive traffic to your website, so if the cost per click isn't too high for your target keywords, it is a viable option.
5. Run Facebook ads.
Sixty-nine percent of adults in the U.S. use Facebook. Chances are that your audience is on this platform. By running location-based ads, you can increase your brand awareness in your area and get highly targeted views on your ads.
6. Optimize your website for organic search.
Search engine optimization takes a while to work, especially in competitive industries, but if you're going to have a website, it should be optimized for search. Make sure that each page has a purpose, is crawlable by Google, and contains keywords you'd like to be found for.
7. Start blogging.
Since Google ranks pages, not websites, one way to get more search engine visibility is by blogging. Choose topics that your target audience wants to read, and be sure to also promote each post on social media.
Once you’ve leveraged business and marketing strategies to your advantage, you’ll begin to see the fruits of your efforts in the form of leads, sales, and revenue.
Originally published Apr 14, 2020 12:30:00 PM, updated April 15 2020