A recent report by IBISWorld indicates revenue in the real estate agents industry is stabilising as property demand strengthens after three “difficult” years.
“The real estate agents industry stabilised in 2010-11, in line with improvements in economic conditions and growth in residential property prices in much of Australia,” IBISWorld says.
“Growth in demand for commercial property strengthened property investment. However, this was offset by weakening residential demand since the beginning of 2011.”
As a result, IBISWorld estimates that revenue for the industry will increase by about 0.9% in 2011-12 to reach $9 billion.
So is this a good time to start-up in the sector? StartupSmart goes to auction to determine what’s involved in starting up a real estate agency.
What is it and who is it suited to?
A real estate agent acts as an intermediary between buyers and sellers of real estate. Some agents specialise in the residential market while others specalise in commercial property.
Others deal specifically with property management, which involves leasing property and dealing with all aspects of the lease.
Some agents extend their service by offering the specialised skills and knowledge needed to carry out property auctions.
One of the essential skills of an estate agent is good communication. Real estate is a “people” business, so agents must be able to communicate with potential buyers, sellers and solicitors.
A house sale and purchase is usually the single largest purchase that the average person makes, and is therefore high up on the list of stressful situations.
Good communication on the part of the agent can reduce stress, make a sale go through more quickly and efficiently, and ensure that customers return to the agency in the future.
Rules and regulations
Real estate agents need to understand the laws that are relevant to the industry.
Commercial agents need a wide range of business skills to understand the aims and objectives of a client. A thorough knowledge of planning law, landlord and tenant law is essential.
As mentioned earlier, property management involves leasing property to a chosen tenant and dealing with all aspects of the lease from then on, including the legal and financial implications.
Leasing agents therefore need to keep up with any changes in legislation relevant to the market, and be thorough in the preparation of important documents, such as tenancy agreements.
There are plenty of industry associations to keep you up to scratch, including the Real Estate Employers’ Association, designed to help business owners deal with relevant legislation.
Research and competition
While academic qualifications are always helpful, personal qualities and abilities are the most important aspects of working as a real estate agent. You also need to be literate and numerate.
You need to identify the market you’re in, and remain true to that market. You also need to hire good staff. There’s nothing worse than a real estate agent with no passion for property.
Costs and earnings
Probably the most expensive part of setting up a real estate agency is the office. If you want to be a successful agent, you need to invest in a good location in order to maximise your exposure.
The next biggest cost is publicity. An agent should advertise their properties in the local property pages and/or online. Additional publicity costs are printing, mailing and phone costs.
Real estate agents can earn more than $100,000 a year, providing they have the right experience.
An average day
Owning a real estate agency can be challenging and rewarding, but there are also times when you’ll find it frustrating and even infuriating.
After you have done the bulk of your work, and the process of legally transferring land and/or property begins, long protracted delays can ensue. Cancellations can also occur.
Property management is slightly different. Your role will involve selecting responsible and reliable tenants, maintaining ongoing communication with them, and handling any problems.
You will therefore need to liaise with a wide range of people including solicitors, plumbers, cleaners, gardeners and builders.
Real Estate Employers’ Association
Real Estate Institute of Australia
02 6282 4277
Australian Chamber of Commerce and Industry
02 6273 2311
03 9668 9950
Australian Government Small Business Support Line
1800 777 275