To start a commercial real estate business an agent or broker needs a large degree of motivation and a good understanding of the property market. Commercial property is significantly different than residential property in so many ways, and on that basis specialised knowledge is required. Remember that you are dealing with a different type of property investor, or business owner, or purchaser, or tenant; the motivations in each case are quite different.
Before I go too much further here I will emphasise the point of motivation at a personal level. Most agents and brokers think that they have the motivation, and they will do whatever it takes when it comes to growing their business; but when the choice comes to taking specific action every day they invariably look for excuses not to act.
Only a few agents make it to the top levels of the industry in each location, and that will be due largely and entirely to their personal efforts and systemised business processes. They will have driven themselves through the pressures of the market to find new people, properties, and clients to work with for the long term.
Make the Right Real Estate Choices
Every agent and every broker has choices to make when it comes to business opportunity and activity. Make the right choices, and take the correct action as part of your business model. In any property market and at any time there are plenty of opportunities to be seized and acted upon.
So let’s go back to the factors that should be considered when it comes to starting up a commercial real estate business. Here are some of the significant points to consider as part of your initial strategy and plan. You can add to the list based on your location and property type:
- Location – Consider the location for your new business carefully and selectively. Understand how the future growth of the town or city may impact your marketing, commission, and listing opportunities. If you are to start your enterprise individually and perhaps work as a single real estate operator then the decisions will be relatively easy and direct. Assess the business community diversity locally, and the growth activities that may evolve. Look at the specialised property or business precincts containing industrial premises, office buildings, and retail zones. Those buildings and locations will be the breeding grounds for listing opportunities, tenancy movement, and new clients. As part of reviewing the location, check out the number of agents and brokers already working within the area. Understand those agents and brokers that are more successful than others and the reasons for that being the case. Will there be enough business for you when it comes to the number of existing agents and the size of the market?
- Commission – The commission that you earn will largely be driven by the frequency of transactions created and the size of the deal in each case. To achieve the pipeline of activity that you need, it is best to focus in selected zones or areas so that you can drill down into property ownership and property occupation. In talking to the right people you will find the right opportunities. The important message here is to understand the necessity of talking to new people each and every day. Over time that single business practice will help you build a better market share. If you are going to work for another broker, then have a serious look at the commission payment arrangements, and the rules that apply to territory control.
- Specialisation – You will need to make some choices when it comes to type of property, and type of transaction. Whilst property size may have a bit to do with the level of commission earned, there are differences in commission payment when you consider sales verses leasing. Can you work within sales and leasing given a particular property type? Do you have the knowledge and the skill to do so successfully? Over time would your bias be towards sales or leasing? How will that shift occur? When you address these questions, you have the basic foundations of a business plan at a personal level.
- Business planning – You will need a business strategy or plan to help you develop signboard and market presence. Initially any listing will be a good listing simply to get your name into the marketplace. On that basis you will be inclined to take on any listing at any price simply to create opportunity and connect with new people. Over time you will find that your focus will need to change towards exclusive listings and specific marketing processes. Essentially to be successful in this industry you do need to control your clients, properties, negotiations, and listings. You can only do that through the exclusive listing process. Most top agents in the market today will decline an open listing opportunity unless they have an immediate property enquiry to suit. Remember the exclusive listing rule and make the right decisions when it comes to listing type.
- Marketing strategies – The marketing alternatives available to us today are very diverse, offering a lot of variation when it comes to specific property types and target markets. Every quality listing should have a dedicated marketing process that specifically generates enquiry and inspections. As part of your listing pitch or sales presentation process make sure that you are focusing on the correct features of the property and the right marketing strategy to attract enquiry. You can drill down into the marketing approach as part of the presentational process with a new client. That can then help them see your relevance as a property specialist to solving their problem.
So there are some decisions to be made when it comes to establishing yourself as a top commercial real estate agent and starting your new business. Set the rules when it comes to each of these five factors within the local property market. Drive yourself towards the opportunity in each case by taking direct action and tracking the results that you achieve.