When it comes to starting your real estate business, there are multiple options and lots of choices to weigh up. Area Specialist founder Michael Choi breaks down the key factors to consider before you dive in.
When considering which approach to take when starting your real estate business, think about it like the perpetual private sale vs auction debate; it has people split because there is no one right answer.
There are things to take into account though, to help you make the best decision for your circumstances.
Firstly, let’s look at what many offices provide their agents. There are the obvious things, like a place to work, internet, water, and electricity, not to mention a desk, computer and stationery.Â
There’s also all the office support staff, marketing support, community networking and the camaraderie that comes with a team environment.
Of course, many people also welcome the retainer and phone or car allowance.
An agent’s commission is split with their office, which then helps fund all of the above.
Why go it alone?
Given the above, why is there a growing trend of agents starting their own business or moving to Mobile Agent models?
Times have changed and prospective vendors often list based on skills and relationships; they don’t prioritise which brand someone works for as they are listing with a person, not a logo.
Many top performers feel that starting their agency is the next logical step in their career. There’s usually a multitude of reasons why salespeople want to start their own business, including:
• Keep all of your commission
• Grow your own rent-roll
• Ability to be more innovative
• Work when and how you want
• Grow a team to create time leverage
• Personal satisfaction
• Ability to earn more income.
But there are disadvantages too, such as:
• Time, energy and resource investment
• Costly if it doesn’t succeed
• Managing employees can be frustrating, timely and expensive.
Don’t be part of the cycle
Many salespeople start their own business because they are exhausted from feeling as though they do all the work, then have to split their commission with the office.
They envisage starting their own business as a way for them to keep 100 per cent of the profit – life would be great!
To grow the business, you recruit salespeople. Then, to ensure as much cash flow and profit for the business as possible, they are put on a similar pay structure as you were in your previous office.
Problem is, if you take this approach, you’re then becoming part of a system that left you disillusioned in the first place.
The irony – if you leave an office for a particular set of reasons, what makes you think agents won’t leave your office?
It’s a matter of time, so make sure you provide value, and have key points of difference to retain your team. They are your most important clients.
Legal requirements
In Australia to run your own real estate agency you need someone to be a Licensed Estate Agent, this person will be the Officer In Effective Control (OIEC) and will hold all legal responsibilities.
When fitting out an office, you may require a DA from your local council. You should also check with the council over its signage policies.
Your business name should be registered with the Australian Securities and Investments Commission (ASIC), which is an independent Australian government body that acts as Australia’s corporate regulator.
ASIC’s role is to enforce and regulate company and financial services laws to protect Australian consumers, investors and creditors.
Registering with ASIC will protect your ownership of the name and ensure nobody else is already using it.
In Australia, you must have an Australian Business Number (ABN) which you can obtain online. The several insurances to take out include Professional Indemnity Insurance (PI), Public Liability and contents.
Done right, opening your own business is a worthy pursuit
Opening a real estate business is only for the committed and I’d highly suggest this path for salespeople that are already top performing agents.
Done correctly, it’s very rewarding, fun and is the only way to create true income while you’re not physically working.
It’s the logical progression for those with a strong local reputation and steady flow of pipeline sellers.
For an alternative way to start your own business go to beyourboss.com.au
