How Brokers Can Create A Business Plan For Real Estate In 3 Steps

A well-crafted business plan is essential for success, and 25% of businesses without one fail within their first two years. 

At the very least, your business plan should include the following key elements:

• An executive summary.
• A mission statement.
• Your vision statement.
• Financial projections.
• A profit and loss statement.
• A SWOT analysis that evaluates your business’s strengths and weaknesses.
• Growth strategies.
• An operations plan.

However, a real estate business plan should go beyond these elements. It should also guide attracting clients, building your team, promoting your brand, and adapting to changing market conditions.

In this article, we’ll unpack three important steps for creating a real estate business plan to help your new business thrive in a competitive industry.

Step One: Conduct a Local Market Analysis

The market you’re entering is likely crowded. Your real estate business plan must outline how you will compete within your niche. To do this, you can conduct market analysis:

➡️ Understand your target market

You’ll need in-depth knowledge of the real estate market to grow your brokerage. Keeping your finger on the pulse of this fast-moving industry requires you to conduct market research. 

This will help you understand factors that impact your pricing strategy for long-term success, such as your pricing strategy.

For example, you could check listings or read real estate newsletters several times a week. This will help you understand market trends and find new ways to generate leads for your own business. This may also help you lower lead generation costs.

When developing your real estate business plan and understanding your target audience, you should research:

• The types of properties in your area.
• The average sales prices for these properties.
• The average time on the market.
• Typical commission rates for agents
• What potential buyers are looking for.
• The current property market demand.

➡️ Analyze your competition

Analyzing the competition helps you see where the market is saturated and how you can create a unique value proposition.  

➡️ Find ways to compete with established local players

Your Realtor business plan must include how you’ll convince prospective clients to choose you over competitors.

Find ways to differentiate your real estate business from the rest. There are two main approaches to doing this.

The first is to avoid competing directly. Look at your competitors’ listings and see which properties they are good at selling. You can then target a different kind of property or customer and begin building a niche for your business.

Alternatively, you can challenge competitors in your own niche. This will be tough, and you’ll need to identify a tangible benefit you can offer to draw customers away, such as lower commission rates.

➡️ Get inspiration from innovative realtors

Some real estate brokerages make a name for themselves by disrupting their target market with innovative propositions. You need to do the same within your business plan writing.

Examples include undercutting the market with cheaper real estate agent rates, offering to buy houses below market value, and selling on the customer’s behalf.

For example, Rex’s unique proposition is based on savings for its clients. In certain circumstances, it offers a 2% commission and a 50% rebate of the buyer’s agent commission. This sets them apart from the standard 6% commission paid by the client to traditional agents.

Step Two: Plan Your Real Estate Business Structure

Your real estate business’s organizational structure will define its day-to-day operations. Your real estate business plan allows you to make informed decisions about your company and eventual business expansion.

Your structure is essential to scaling your operations later on and should include cash flow statements, income statements, a break-even analysis, and your financial goals.

Remember to review your initial business structure a few times per year. For example, when reporting quarterly figures or financial health. Regular reviews allow you to make changes to your legal structure without being stuck in one model for a full year.

Here’s how to get step two right:

➡️ Choose between a franchise or an independent business model 

One of the first decisions to make is whether you want to be completely independent or buy into a franchise, which will significantly impact your financial plan.

The real estate sector has many extensive and successful franchises, which can give brokers brand recognition and help them attract clients quickly.

Franchises also offer a range of advanced tools, including software for lead tracking, email marketing efforts, deal management, and commission calculating.

The downside is that you’ll give up a certain level of freedom and have to pay a license fee.

Well-known franchise RE/MAX provides extensive support options for its franchisees, including a toll-free line, a grand opening, online support, proprietary software, and a franchisee intranet platform.

However, these benefits don’t come cheap. RE/MAX’s total franchise fees can cost up to $239,500. This is what the fees cover:

➡️ Choose between a remote or on-site office location

Your real estate business plan must define how you and your team will work, as this will impact your business expenses. You could decide to run a remote brokerage, which is more affordable and allows you to sell residential or commercial properties almost anywhere.

You’ll need a phone and a laptop to begin with. In the long run, however, you’ll need the right software and technology to offer clients great service.

For example, Matterport provides 3D technology for creating virtual tours of properties. It simplifies uploading videos to your site, and you can even include space measurements.  

On the other hand, physical office space provides presence and visibility in busy areas. This means that people are more likely to think of you when it comes to selling their homes. You’ll also pick up passing trade and inquiries from people who want to deal with a real estate agent face-to-face.  

However, it also means covering overheads such as electricity and rent, which can significantly increase your operating and startup costs.

➡️ Find great real estate agents

A real estate business can’t function without good agents. A top-tier real estate agent will generate leads that help grow your business, get your name out there, and help you meet key performance indicators (KPIs), and may even be able to assist with property management.

When your real estate business starts out, it may not be possible to afford more experienced industry professionals because they come with higher demands and commission expectations.

So, finding a promising real estate agent who is still trying to make a name for themselves is a smart way to gain talent at a lower cost. 

🏆 How to Recruit Top Agents We’ve compiled the ultimate playbook on how to recruit agents, even if you’re just starting out. Backed by expert insight and years of experience in the real estate industry, this resource is the perfect place to start when seeking out top talent.

Step Three: Planning for Your First Sale

While developing your real estate business plan, you need to consider how you will market your business, build your brand, and what marketing materials you’ll need.

Here are some ideas for your brokerage’s marketing plan:

➡️ Use your existing connections

The real estate industry is all about person-to-person interaction, so the easiest way to make your first sale is by networking and using your current connections.

To begin with, you should call your contacts in local real estate and ask whether there are any market opportunities available. 

Regularly remind friends and family to keep their ears to the ground and recommend you to anyone looking to sell or buy property.

You can gradually reduce the frequency of using personal contacts as your brokerage grows and starts to draw business through marketing and word of mouth. 

➡️ Build an online presence

An easy-to-use website, social media marketing, and video content will all help you make your first sale.

Different parts of your website will need to be revisited at different times. For example, you’ll want to update your blog at least monthly, while your “About us” section may only change every few years.

Many companies offer website packages with a listing template, and almost all brokerages use these platforms and focus on this feature.

Your website should highlight your expertise and explain how you can help them successfully buy or sell property.

➡️ Get a good domain name

Your domain name is your real estate company’s business card. It is important to have a simple, easy-to-remember address that people can type into their search bar.

A good domain name could include what your real estate business does, where it is based, who runs it, or all of the above. Good examples include:

• [Your Brokerage Name].com
• [Your Brokerage Area].realestate
• [Target Area Real Estate].com

➡️ Conduct search engine optimization (SEO)

Good search engine optimization (SEO) is vital for modern brokerages. If your website isn’t appearing high enough on search engine results pages, it’s unlikely that people would discover your brand when they search for it. 

SEO is all about working to increase organic traffic to your site through online searches.

The ultimate aim is to get Google to list your website on the first page of results for specific relevant keywords, such as “real estate agents in Spokane.”

Appearing on the first page of the search results is vital, as few people look further than that.

Good SEO is an ongoing process, and you’ll need to monitor your website’s ranking at least monthly to ensure that your content marketing continues to perform well on the SERPs.

Spokane REALTORS® have done an excellent job of landing the number one spot in Google’s SERPs for the keyword “Spokane realtors”.

Source

➡️ Create an email list 

Email blasts and newsletters are highly effective marketing strategies that you shouldn’t leave out of your business plan. The average return on investment (ROI) for email marketing ranges from $36 to $40 for every dollar spent. Unfortunately, most Realtors don’t do email campaigns well.

Many customers repeatedly receive the same email content from several brokerages, each providing outdated listings and telling them that the market is “hot”.

A hot market might be great news for realtors who benefit from high demand. However, buyers struggling to find a home may be frustrated by this.

Email campaigns waste time and money if you’re not giving customers useful information.

Put yourself in the client’s position when creating email content. What will help them buy or sell their property?

Here are a couple of ideas to create useful marketing email content:

💸 Buying and selling tips

Most people buy or sell a property only a handful of times in their lives, which means they might only have a basic understanding of how the market and processes work.

Providing buying and selling tips helps them understand the process and sets you up as a trusted partner who understands their challenges.

According to Campaign Monitor, research shows that the perfect newsletter text is a maximum of 200 words, which is far too short to include useful information.

Instead, publish your guides as blog posts on your website and link to them via an enticing email campaign.

You could publish these blog posts weekly and round them up in an email newsletter at the end of each month. 

This real estate brokerage regularly publishes blog posts with helpful tips on the buying and selling process, which it could then share in an informative newsletter:

Source

🏠 Listing alerts

Many brokerages send out monthly roundups or listings that are usually outdated when clients read them. You can provide a more valuable service by allowing customers to sign up for daily alerts.  

Scan your target market every morning. If a new property becomes available, immediately notify subscribers to your daily alert mailing list. This way, you become a reliable source of new opportunities for buyers who may be struggling.

📧 Setting up your email campaign

Setting up a newsletter or email campaign is simple. Many software options are available, but the most trusted include MailChimp, Sendinblue, and ActiveCampaign.

All three offer a free plan and have varying levels of customization to meet your needs.

Each allows you to easily import your own images and content into a template. Alternatively, you can build your newsletter from scratch.

➡️ Cold calling

Cold calling is an effective way to make your first sale. Data from the Keller Center on the effectiveness of real estate agent cold calls found significant positive outcomes for successful cold calls.

Additionally, cold calling isn’t just limited to finding clients. You’ll also need to regularly call top-producing real estate professionals to build relationships with them and entice them to come and work for you.

To begin with, you’ll have to make cold calls daily to sell your first property or get your first real estate agent on board. However, even after that, you’ll still need to make regular property sales calls to ensure your real estate business continues growing. 

Here is our step-by-step guide to cold calling:

📞 Create a prospects list

To start, you’ll need a list of prospects who may be interested in your services.

Building a list requires some research, and an excellent place to start is with expired listings. These will alert you to people who want to sell their homes but have failed with other agents.

Another source is “For Sale By Owners” listings on large property websites. These sellers may be apprehensive about working with a real estate agent. Still, the effort of selling a house could have become inconvenient by the time you contact them, making you the perfect alternative.

📞 Develop a sales pipeline

Once you have your list, you need to start making phone calls. Your aim shouldn’t be to immediately get the person to buy or sell property with you. After all, you’ve just called out of nowhere, and they don’t know who you are.

Create a sales pipeline that lets you gradually develop trust with the prospect and get them to buy into your services. Instead of getting the person to buy or sell with you, you aim to move them along the sales pipeline.

Here’s an example of a simple real estate sales pipeline, which is a crucial element of your business plan:

• Awareness: Get on the client’s radar, introduce your real estate business, and try to understand their needs. Ask them to commit to a short, no-obligation meeting or phone call to discuss how you could help them. Remove any leads that are genuinely not interested from your list.

• Engage: Meet in person or hold a call. Ideally, view the seller’s property or ask buyers what they want. Ensure you get all the information you need from the customer. Ask buyers to let you suggest suitable properties for sale. Provide sellers with a proposal explaining why they should sell with you.

• Make an offer: Provide buyers with various property options and ask them to choose two or three to view with you. Present your proposal to sellers and ask for their feedback. If the feedback is negative, adjust your offer. If it’s positive, ask the client to sell with you.

• Qualify: At this stage, the buyer or seller becomes your client. Your aim is to close a deal and have a happy, satisfied customer.

• Recommend: Ask your client to write a favorable review online and to recommend you to their friends and family. Ask whether you can get a quote from them to use in your marketing efforts, and ask their permission to feature a photograph of them at their new home.

📞 Stay motivated

Cold calling is tough. If you’re not succeeding after five calls, change your script. Try a new tactic, for example, one based on where clients lost interest during unsuccessful calls.

Researchers from the Keller Center found that motivation is critical for cold-calling agents. Focusing on keeping up the momentum and not becoming despondent improves outcomes when an unreceptive person answers the phone.

Boost Your New Business with Software for Real Estate Success

Developing a comprehensive business plan that considers all the factors above is a surefire way to achieve success in your new real estate venture. 

One crucial part of your business plan to consider is the tools and systems you’ll use to run your company effectively. Paperless Pipeline is an example of a tool that can truly elevate your business.

Our software automates the entire real estate transaction process, which means you don’t have to spend valuable time trying to stay on top of your transactions. 

Instead, you can focus on growing your new business while letting Paperless Pipeline handle transactions, document management, compliance, and agent commissions.

If you’d like to try Paperless Pipeline out yourself with a 14-day free trial, visit our website. We can’t wait to show you how successful your new real estate business can be with our software.