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)?
By most estimates, 87% of 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.
Plan Like a Boss
You know the old adage about failing to plan, right?
The vast majority of real estate agents find it much easier to work in their business, as opposed to on it.
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 Realtor salary ($45,990 per year or roughly $25 per hour at last check), you need to start thinking like a business owner -- and that means planning.
1. 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 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.
2. 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.
3. 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.
In the following sections, we're going to help you get crystal clear on how to maintain your growth trajectory, regardless of your marketing weapon of choice.
Surviving Growth as a Solo Agent
Once you've created your personal vision, business plan, and unique value prop, it's time to get down to brass tacks -- and the execution phase can be rough.
If you're coming from a team, you're used to spending most of your time with your clients. The marketing, administration, lead generation, and nitty-gritty details were likely handled by someone else.
Now, it's all on you.
Your survival depends on your ability to manage the minutiae of a living, breathing business -- while consistently generating and closing leads. Luckily, there's no shortage of great resources on the various ways agents can get those leads.
You know where to find leads when you need them. The trick at this stage is to maximize your ROI on every lead, avoid expensive mistakes, and make your business-building journey as pain-free as possible.
Here's what you’ll need to do.
4. Have 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 an web presence to attract and engage online leads. It may cost a little money up front, 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.
5. 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.
"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.
6. 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 that's always there and you'll automatically beat the herd.
7. Get organized
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. He walks leads through relevant nurture campaigns based on lead source and automates the entire transaction process.
This kind of 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.
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 expert automaters like Barry, the desire to win back time for both himself and his team was a key motivation. "I had to find a way to add so much value for my agents that they wouldn't leave and in the process, figure out a way to free up some time so that I could focus on my family."
This is where automation can make all the difference.
When you get to the point where you're responsible, not only for your own success, but also for the success of your team, it's incredibly important to give them every chance to win. Let automation take on some of the grunt work so everyone can focus on what matters most.
Originally published Jun 27, 2018 7:30:00 AM, updated October 29 2018