Writing a Real Estate Business Plan in 2021

How to develop an actionable business plan that gets your new company off the ground

The first step when starting in real estate isn’t to write a business plan. Instead, your first step should be to develop a business plan. 

This is a subtle but significant difference. Let us explain.

If you’re just starting your own real estate company you’ve probably already searched online for help. 

What you most likely found was a ton of blogs and articles proclaiming the importance of writing a real estate business plan. They tell you to: 

  • Create SMART objectives
  • Write a mission statement
  • Choose a good name 
  • Identify how much money you want to make

It sounds good, but it’s mostly fluff and doesn’t help you get money coming in quickly. 

The fact is, new brokerages have one mission—to start selling real estate as quickly as possible—and much of the advice out here won’t get them any closer to it.  

In such a competitive industry it’s vital to start marketing your business and bring in clients as quickly as possible. 

Achieving sales is an ongoing process that requires you to regularly reassess and adapt your approach. 

So… instead of writing a business plan with a mission statement and a whole chapter on how to pick a domain name, create an actionable business plan that focuses on doing the things that matter, at the time they matter most. 

This article features the sales and marketing activities you should regularly undertake to get your brokerage off the ground. We’ve broken this guide down into five steps:

Get the Basics

Before you start, there’s some essential equipment that you’ll need to start looking for clients.

Ensure you have a dedicated smartphone, laptop, and a website, as well as some marketing materials such as flyers and a few Google ad placements. This is all you need to start selling.

More details can be found in the Marketing Your Business section of this guide. 

Conduct Market Analysis

It’s important to understand how you will achieve sales in a crowded market.

The real estate industry is already full of long-established household names, as well as exciting new companies that offer innovative services.

You need to answer the question: why would clients choose to buy or sell with me and not one of these other companies?

It’s essential to look at what your competitors are doing on a weekly basis. This allows you to find ideas that you can easily replicate and gaps in the market that you can fill.

Understand the Market 

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

This doesn’t have to be too onerous—for example, you could check listings several times a day or read real estate magazines. This will help you spot sales opportunities and understand market trends.

Your brokerage will most likely be able to compete by operating on a local level. You should regularly research these local factors: 

  • Types of properties
  • Average house price
  • Average time on the market
  • Commission rates for agents
  • Potential buyers
  • Property demand

You should also research the market at state or national level and not limit your business to local opportunities. For example, if you get a chance to sell a property two counties away you should embrace it. Just make sure that it’s realistic and that you can do a good job.

It’s also important to hear people’s experiences of buying and selling. This helps you understand where customer pain points are and spot ways that you could help address them. 

One of the best ways to do this (especially during a pandemic) is to join online forums and monitor the conversations taking place.

For example, this recent thread on a real estate investment forum shows that risk of a market slowdown may put investors off buying or selling properties in southern California. In response you might offer a free market analysis service, allowing clients to weigh the risk before investing in a property.

Analyze Your Competition

Next you need to understand what your competitors are doing.

Analyzing your competition helps you see where the market is saturated and how you can carve out your unique proposition. 

At this point most other guides will tell you to take multiple steps, like conducting an in-depth SWOT analysis or spending time researching and committing to a specific niche.

This guidance is vague, time-consuming and won’t help you make sales.

That’s why the advice in this section of our guide is intentionally short and to the point. We only touch upon the steps you need to regularly take to achieve sales.

As a new brokerage, you will go up against industry juggernauts that operate on a national level, well-established local players and innovative companies offering a unique proposition. There are lessons to be learned from each of these types of business.

Get Ideas from Industry Juggernauts

Companies like RE/MAX and Coldwell Banker are household names, with thousands of agents and extensive resources. You won’t be able to compete with them directly, but what you can do is cherry-pick ideas that are effective and easy to implement. 

You can also look at what they’re doing poorly. See these as opportunities to fulfill a gap in the market.

A good example is spotting customer pain points. Take note of what is being written on review sites about your competitors, and think about how you will address such issues.

Customer pain points are often easy to find on review sites like Yelp or even just on a company’s Facebook page. Simply type in the competitor’s name and you’ll quickly find reviews, both positive and negative.

Find Ways to Compete with Established Local Players

Businesses at this level are the ones that you are most likely to compete with. You will need to convince clients that they should choose you instead of the other smaller players.

Find ways to differentiate your business and stand out. There are two main approaches to doing this.

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

Alternatively, you can take them on in their own niche. This will be tough and you’ll need to identify a tangible benefit that you can offer to draw customers away—for example, lower commission rates.

Get Inspiration from Innovative Realtors

Some real estate brokerages make a name for themselves by disrupting the market with innovative propositions—research what others are doing and find inspiration for your own unique offer.

Examples include undercutting the market with cheaper agent rates or 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 their clients. They offer 2% commission and a 50% rebate of the buyer’s agent commission in certain circumstances.

This sets them apart from the standard total 6% commission paid by the client to traditional agents.

When considering a unique angle, don’t just try to be different—also think about what the market is looking for. A community that is already getting low agent rates won’t be interested in a 1% reduction, so be smart about how you improve on your competitors.

Plan Your Business Structure

The structure of your business will define how it operates on a day-to-day basis.

In this section we look at some of the critical decisions to make for your business’s structure. 

Most of these are one-time decisions, with far-reaching consequences for your business that should be taken seriously.

However, this also means that you won’t need to consider them on a daily basis. Instead, you should regularly review your business structure a few times per year—for example, when reporting quarterly figures.

The only exception is finding agents, which you should make time for every week, especially in the early days of your brokerage. 

Franchise or Independent?

One of the first questions you need to ask yourself is whether you want to be completely independent or buy into a franchise.

The real estate sector is home to many large and successful franchises. That’s because they can give brokers brand recognition and help them attract clients quicker.

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

The downside is that you’ll give up a certain level of freedom and you’ll 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, this doesn’t come cheap. According to Franchise Direct, RE/MAX’s total franchise fees can cost up to $221,000. This covers:

  • Initial franchise fee
  • Office set up
  • Exterior signage
  • Furniture and equipment
  • Inventory and supplies
  • Training and expenses
  • Opening costs

Some of these are optional and some will not be relevant if you decide to operate remotely. In these cases the license cost will decrease accordingly and the initial investment can be as low as $34,500.

Remote or Physical Store?

You could decide to run a remote brokerage. This is cheaper to operate and allows you to sell properties almost anywhere.

The move to remote offices has increased in the last year due to the pandemic. In the real estate business, this hasn’t hampered sales. Sales volume in 2020 stayed high, albeit slightly down on 2019.

To begin with, all you’ll need is a phone and laptop. In the long run, you’ll need to have the right software and technology in place to offer clients a great service.

For example, Matterport provides 3D technology that allows you to create virtual tours of properties. They make it simple to upload videos to your site and you can even include measurements of the space.  

A brick and mortar brokerage, on the other hand, provides presence and visibility in busy areas. This means that people are more likely to think of you when it comes to selling their home. You’ll also pick up passing trade and enquiries from people who want to deal with an agent face-to-face.  

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

We recommend that all new brokerages start remote and only open a brick and mortar office if they can afford it. 

Find Great Agents

A real estate business cannot function without impressive agents. Top-tier agents bring in leads that help grow your business and get your name out there.

However, finding suitable agents is a balancing act. As a business starting out, it might not be possible to afford extremely talented agents because they come with higher demands and commission expectations.

Therefore, finding promising agents who are still trying to make their name is a smart way to gain talent at a lower cost.

Network with Local Agents

Whichever option you choose, you’ll need to get out there and start networking so that you can meet potential agents and understand what they are looking for. 

Go to local industry events, listen to their concerns and frustrations and figure out how you can provide them with a better offer.

Invite successful local agents out for lunch and find out what would make them switch to your business. You can also ask them if they know other agents who are looking to change brokerages.

Offer a Better Package

A good question to ask yourself is why these agents will switch to your brokerage and how you will retain this talent once you have it.

You need to offer an enticing commission structure that still allows your business to make a profit.

A great example of this is EXIT Realty. This business is known for attracting top agents through a commission structure that rewards good performance. Agents who recruit other agents receive a bonus, and all agents receive training to keep them up to date with the industry.

EXIT Realty is a large company with extensive resources. However, you can apply the same underlying principles of training and incentives to your recruitment strategy.

Consider Your Commission Structure

Your commission structure is the main factor in attracting agents.

While commission is typically between 5-6%, the way it is split between broker and agent can be agreed in different ways. The three most common are:

Traditional commission split: Total commission is divided between the agent and the broker. This offers the agent a limited incentive.

Commission threshold: The percentage the agent pays to the broker changes once they pass an agreed-upon target. This is a great motivational tool for agents and keeps business profits growing.

Flat fee structure: The agent keeps 100% of the commission but pays a regular flat fee to the brokerage. This is a better option for a brokerage with high turnover, but doesn’t serve to grow a smaller business’s profits.

Offer Client Incentives

Client incentives help your brokerage stand out. You’ll need to make sure that your buyer and seller incentives fit with your commission structure and niche.

For example, offering a flat fee would not be an essential factor for sellers in the luxury property market and would limit your profits if you pay high commission rates.

 The most common incentives include:

1% fee: This is a lower fee than the average of 3%. You earn less per sale, but it incentivizes sellers to choose your brokerage. 

Flat fee brokerage: Offering to work for a flat fee ensures the client knows exactly what they’re paying for, no matter what the final sale price is.

Minimum service flat fee: This model removes the agent, leaving the seller to find the buyer. For a flat fee, it offers minimal services such as listing the property on an MLS.

Charitable donation: Providing a percentage of your commission as a charitable donation is an unusual option that can impress clients without costing the brokerage much.

Express sale: The brokerage gives the seller a fast cash offer to buy the property from them before selling the property themselves.

Get Your First Sale

The sales and marketing techniques listed in this section are crucial to making your first sale. When you first start out no one will have heard of your business, so it’s essential to get your name out there and start to build a reputation.

Here are some of the ways you can market your brokerage:

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 personal and professional connections.

To begin with, you should be calling your contacts in local real estate on a daily basis and asking if there are any opportunities available. 

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

This is simple and doesn’t require much effort on their part. As they care about you, they will likely be more than happy to put your name out there.

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 presence and video content about your work 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 listings template, and almost all brokerages use these platforms and focus on this feature.

However, these businesses are getting it wrong.

Think of it from a buyer’s perspective. When they look for a property, they visit listings aggregators such as Zillow–very few visit local brokerage websites.

Instead of listings, clients want to know that they can trust your company to buy or sell with. Very few will be familiar with the buying or selling process and will need expert advice. Many will be frustrated because they have struggled to buy or sell with another agent. 

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

The key elements to include in your website are:

  • An overview of your brokerage:  explain your value proposition for buyers and sellers.
  •  An “about us” section: introduce the agents your clients will work with and highlight their experience, expertise, any big companies they have worked at or awards they have won.
  • Contact section: ensure potential clients can speak to an agent. Include an instant messenger option to encourage them to get in touch immediately.
  • Real estate blog: push your website up the search engine results pages and provide clients with helpful information by regularly posting a blog. You should do this at least on a monthly basis.

Design for Free

There are many easy-to-use website builders that allow you to design your website for free.

Most builders will then charge for purchasing a domain name or accessing higher-level customization options.

We recommend designing your website in the free version and then switching to the paid-for option once you start selling. This saves you spending money on your website until it is published.

Get a Good Domain Name

The domain name is the business card of your company. A simple, easy-to-remember address that someone can type into their search bar is important.

A good domain name could allude to what your company does, where it is based, who runs it or all of the above.

Ensure you get a paid domain name from day one. Free domain names incorporate elements from the host site, making them difficult to search for. They also make your business seem less credible.

Conduct Search Engine Optimization

Good search engine optimization is vital for modern brokerages.

If your website isn’t appearing high enough on the search engine results pages (SERPs), it won’t be value for money as fewer people will visit it. You’ll also miss out on a huge segment of incidental searches and prospective clients.

SEO is all about gaming the system to increase organic clicks to your site through internet searches.

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

Appearing on the first page of the SERPs 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 continues to perform well on the SERPs.

Do It Yourself or Find an Expert

You can either optimize your own website or hire an agency to do it for you.

Doing it yourself is time-consuming and requires some specialist software—however, it is possible to have success with DIY SEO. This beginner’s tutorial from Ahrefs provides a step-by-step guide.

Using an agency, on the other hand, will cost you more money but will achieve better results.

When starting out in real estate, local SEO is critical as you’ll usually work with specific neighborhoods and communities.

Here are a few ways to improve your local SEO:

Create Quality Local Content

Populating your website with content will help it rank on Google. Consider questions local buyers and sellers may be asking and write content that speaks to them.

For example, suppose you want to target the search term: “what is the average property value in Spokane.” In that case, you may choose to write an article about the city’s property market and how sellers can maximize their asking price.

Write blog posts that link to local stories. For example, you can create hyperlocal content around property news or changes in the local real estate market.

It’s crucial to ensure that your blog posts are of high quality. The better they are, the higher your chances of ranking. Quality is much more important than quantity, so your articles should be well researched, well written and relevant.

Find Local Keywords

Local keywords are search terms that are relevant to the area you service.

The aim is to feature these keywords wherever they are relevant to the content on your site. For example, if “Spokane County” is an important search term for your business, you could use the heading “Spokane County Real Estate Agents” and include content on the property market in Spokane County.

It’s also important to target long-tail keywords. These are a collection of search words that may be phrased as a question or sentence. For example: “How do I find a real estate agent in Spokane?”

Your content needs to anticipate the questions relevant to your brokerage and area and respond to them well enough to become the top answer on your area’s Google search.

A great resource is Google’s Keyword Planner. You can filter searches by location to build a list of keywords that you should focus on.

Get onto Local Business Directories

Making sure you’re on large sites like Yelp and smaller local directories not only helps people find you through another avenue, it also helps boost your local SEO ranking.

Google’s crawl function uses these sites to verify the information listed in its own index, so the more your business shows up on other sites the more value is placed on its listing.

Create a Google My Business Profile

Google My Business is a free online tool that helps you market your business on Google’s search page. It is a crucial function of good local SEO.

It boosts your brokerage’s visibility by giving you a free profile that appears on popular Google products such as Google Maps and Google Search.

The first step is to sign up and create the card that appears on the right-hand side of Google when someone searches for your brokerage.

This holds critical information like your website, location, and contact details. This way, if someone is interested in your brokerage they can get in touch immediately.

Google My Business will also highlight your company on Google Maps if you add your address. When your location icon on the map is clicked, it brings up your card. This is helpful if someone is searching for a business near to them.  Watch how to set it up here.

Google My Business is also an analytics tool that lets you see how people engage with your posts.

According to research by Bright Local in 2019, real estate businesses listed on Google My Business saw an average of 429 discovery searches per month. Of these, there was a 4% action rate per view.

Google My Business can identify which keywords lead users to your site. This allows you to see which of your SEO strategies are working.

Create an Email List

Email blasts and newsletters have been around for a long time and can be your most effective marketing channel.

Unfortunately, most realtors don’t do email campaigns well.

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

This is great news for realtors, who benefit from high demand. However, buyers struggling to find a home will find it frustrating and demoralizing.

If you’re not giving customers useful information, your email campaigns are a waste of time and money.

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 for genuinely useful marketing email content:

Buying and Selling Tips

Most people only buy or sell a property a handful of times in their life. This means they only have a basic understanding of how the market and the process 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, your guides can be published in blog posts on your website and linked to via an enticing email campaign.

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

Listing Alerts

Many brokerages send out monthly round-ups or listings that are usually out of date by the time clients read them.

You can provide a more valuable service by offering customers the chance to sign up to daily alerts. 

Scan your local market every morning. If a new property becomes available let subscribers to your daily alert mailing list know immediately. This way, you become a reliable source of new opportunities for struggling buyers.

Setting Up Your Email Campaign

Setting up a newsletter or email campaign is simple. There are many software options, but the most trusted include MailChimp, Sendinblue and Active Campaign.

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

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

Cold Calling

Cold calling isn’t fun, but it is an effective way to achieve your first sale. Data from the Keller Centre into the effectiveness of real estate agent cold calls found considerable positive outcomes for successful cold calls.

And cold calling isn’t just limited to finding clients. You’ll also need to regularly ring top-producing agents in order to build relationships with them and entice them to come and work for you.

To begin with, you’ll have to make cold calls on a daily basis to sell your first property or get your first agents onboard. However, even after that you’ll still need to make regular sales calls to ensure that your business continues to grow. 

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

Make a Prospects List

To start off with, you’re going to need a list of prospects—people who may be interested in your services.

Building a list requires some research, and an excellent place to start is with expired listings. These people already want to sell their home but have failed with another agent.

Another source is “For Sale By Owners” listings on large property websites. These sellers may be apprehensive about working with an agent but the effort of selling a house could be becoming inconvenient, making you the perfect alternative.

You can also use services that generate leads for you.

Make 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 allows you to 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, your aim is to move them along the sales pipeline.

Here’s an example of a simple real estate sales pipeline:

  • Awareness: Get on the client’s radar, introduce your business, and 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 who 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 are looking for. Ensure you get all the information you need from the customer. Ask buyers to let you suggest suitable properties that are for sale. Provide sellers with a proposal explaining why they should sell with you.
  • Make an offer: Provide buyers with a range of 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 essentially becomes your client. Your aim here 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 if you can get a quote from them to use in marketing materials and even take a photograph of them at their new home. Consider sending Christmas cards and other personal messages to ensure that you stay on the client’s radar for future property deals.

Stay Motivated

Cold calling is tough. If you’re not succeeding after five calls, you should change up your script. Try a new tactic and consider where the client lost interest during the unsuccessful calls.

Researchers from the Keller Centre found that motivation is critical for cold calling agents. Keeping up momentum and not becoming despondent improve outcomes when an unreceptive person answers the phone.

Build on Success

In this article we’ve explained how focusing on actionable steps and ignoring the fluff from other guides will get your business off the ground quicker.

We’ve demonstrated that getting your first sale is critical to new brokerages and that selling is the best way to do this. Writing a business plan is a waste of time.

Our final piece of advice is not to let perfection hold you back. Making things as good as you can is important, but delaying critical steps to work on insignificant elements will hamper your business.

Remember—done is better than perfect. Make quick decisions, implement them and continue to focus on selling.

Related Articles:

🚀 How to Start a Real Estate Brokerage — The complete guide to starting your own successful real estate brokerage in 2021.

🏠 The Complete Real Estate Transaction Guide – Real estate transactions from start to finish. Learn about the people involved, what needs to happen, and how to make it simpler.

👨‍💼👩‍💼 The Complete Guide to Recruiting Real Estate Agents – Learn how to successfully recruit and retain the very best real estate agents.