Business planning for real estate agents
The real estate industry is one of the least regulated in Nigeria. Unlike most professions, there is literally no entry barrier for those working in this industry and seeking to make a sustained livelihood. There is no licensing or training requirement to meet before registering a real estate business or opening a real estate agency office. The industry is a mix of professionals, partial professionals, non-professionals and outright novices. Many have confused this ease of entry with the ease of making money in the business. Unfortunately this is not so.
Many of those rushing into real estate as a profession or business are lured by the prospect of sudden wealth. This is fueled by the numerous tales of a few individuals who struck their breakthrough commission after a few weeks of opening their offices. However, many have discovered to their surprise that there are many things that are hidden or unknown to them about the industry, which they are learning through hard-earned experiences. If you are new to this business or you are intending to work in this industry, there are a few things you need to learn about planning.
The real estate industry has lots of opportunities but it is a highly unpredictable sector. Business planning is extremely important for you to survive and thrive in this sector. Competition is fierce and income can be irregular except you work on a salary basis in an established real estate agency. If you are self-employed, you are probably going to experience working for a few months without any significant income. You are going to experience a few sudden breakthroughs followed by a period of dryness. You are also going to experience a few businesses that will not deliver the commissions promised even though you worked hard for them. All these call for a need to prepare and plan.
Business planning means that you need to remove many of the wrong notions that you have and set objective criteria for your business. It means that you need to find out what you need to do based on the experience of others and the peculiarity of the market. It helps you to prepare for the rainy days and take steps to maximise your opportunities. Those who view real estate as a business and hold themselves to professional standards of operation are likely to grow their business over time with the reward of a consistent income.
A good business plan must cover some basic issues. It should give an overview of the industry, an analysis of the market, the ownership or legal structure that you want to operate with, management plan, staffing plan, marketing and financial plan. Most real estate agents are self-employed. They generally do not start with a member of staff. In this instance, it is always better to register a business name and open a bank account in that name rather than operating in your personal capacity without any legal structure. This singular move will force you to think about your primary place of business and simple things like stationeries. These are fundamental to having a professional look.
If you have done an analysis of the industry, you won’t be surprised by the fluctuating nature of income in this industry. This means that you should have some funds to cover your expenses in the initial months of operation. Some agents try to minimise this risk by asking prospective clients to pay some amount in advance before rendering any form of service. While this appears financially rewarding, the fact is that most clients are not going to agree to this and most of your competitors do not make such a demand. In this industry, you cannot entirely remove investing in things such as telephone calls and transportation while working to meet a client’s need. You only get compensated if the deal goes through.
For you to be in business, you need listings. A listing is simply a property given to you or another agent for sale or lease. You can work on the listings of others but having your own listings is the best way to position yourself for a secured commission. Advertising and marketing is one of those things you have to budget for. You need to get the word out there that you have something to sell or you are looking for something to buy on behalf of a client. The social media has made this a lot easier through affordable mass messaging systems. Depending on the amount that you have budgeted for this, you might consider using magazines dedicated to listing properties. Working with a clear goal, budget and plan gives you the best chance to aim for success in a highly competitive market.
Abiodun Doherty (Excerpts from Punch Newspaper published on 18 April 2017)