The real estate market in Canada is strong, but as rising house prices and fat commissions entice more and more entrepreneurs, the sector is becoming crowded.
However, gone are the days of homeowners having no choice but to sign away 5% or more on the sale of their house. Savvy sellers are seeking other competitively-priced brokers, which means traditional estate agencies may need a new game plan.
Understanding the market
The Canadian Real Estate Association has more than 100,000 real estate brokers, agents and salespeople. While the Toronto Real Estate Board (TREB) claims the title for the largest local association, with more than 40,000 members, a rise of almost 30% over four years. During that time, however, home sales have experienced a mere 4% growth.
Entrepreneurs should have a clear understanding of the market before breaking into any type of business, and that could not be truer of the real estate industry.
Many businesspersons believe it is a sure-fire way of raking in big money, especially as housing prices in Canada continue to rise, causing more entrepreneurs to buy an estate agency business.
However, despite home sales worth more than $1 million growing in Canada’s big cities, clients are less willing to pay unreasonable commission fees. The traditional realty industry is currently experiencing a shake-up, as flat-fee marketing services are spiking in popularity.
Many proprietors are also choosing the 'For Sale by Owner' route, which essentially means homeowners manage the sale of the property entirely by themselves. This includes any marketing, staging of the home, viewings and negotiating with prospective buyers.
Aside from other real estate agents in the area, the main competition facing realtors are discount brokers. Since flat-fee listings have been allowed to appear on Multiple Listing Services (MLS), which is where 90% of houses are bought and sold, more and more vendors are choosing to use their services when selling their property.
Discount brokers help homeowners list and market their home but charge a commission that is lower than the standard rates.
Despite many sellers and buyers still opting to use a traditional estate agents, services like PropertyGuys.com – who
The company has more than 120 franchise locations nationwide, and for an upfront fee ranging from $400 to $2,000, homeowners can choose from a list of sales services, depending on their requirements.
It is very common for real estate agents to overestimate their income when first starting out in the business. Be realistic about your expectations from the get-go, and remember that although you can expect some referrals from family and friends, you can’t solely rely on your connections to keep the business afloat.
To be successful in the real estate business you do not have to be a sales gun. Being proficient in selling is useful but remember, you are the proprietor, and you can run a successful estate agency without any sales experience.
You will need to possess great communication and interpersonal skills in order to assess your clients’ needs and build a level of trust. Experience in marketing will be vital as, essentially, your company will be marketing your client’s properties.
Rising house prices should not always result in rising commission. The realty industry has become competitive, and with increasing numbers of agents vying for business, many are dropping their prices or setting a fixed rate.
Increasing numbers of realtors are taking to social media to increase their success rates in selling properties. An ‘Instagram-worthy’ photo of a staged house can increase the value of original offers more than 50% of the time, according to the National Association of Realtors.
No one wants a pushy agent giving them a hard sell; selling techniques have evolved from the Wolf of Wall
If you can get a real estate listing to trend on Twitter, it means you can reach a lot of people in a specific area or demographic. However, don’t limit your business to just a couple of social media profiles, embrace them all; Pinterest (175 million monthly users), Facebook (2 billion monthly users) and LinkedIn can be used to share photos, build up your contacts list and showcase eye-catching videos by using features such as Boomerang and Hyperlapse.
It is important for your website to look professional and be regularly updated, turnkey websites, which can be maintained independently from the original site developer, can be costly. Pay Per Click and Google AdWords marketing tools are also costs you should consider within your marketing budget.
Every entrepreneur should have a five-year business plan that accounts for monthly cash flow and identifies your expenses, A fatal mistake many business owners make in the real estate industry is underestimating their costs.
Depending on the location of your agency, rent will be one of the biggest expenses of the business. Others will include employee salaries, vehicle expenses, office supplies, advertising and printing costs, and website maintenance fees.
It is important for realtors to maintain a manageable marketing budget; you should allocate a base budget amount that is realistic, as well as 10% of your commission income towards your marketing strategies.
As the sector is poised for change and with property sales data becoming more readily available, estate agents need to offer clients a fair commission structure that will also maintain healthy profit margins for the business.