Posts Tagged ‘real estate’
The Best Way to Form a Real Estate Brokerage Firm
The real estate brokerage firm is a cornerstone business in most American neighborhoods. Its cyclical business relates directly to the ups and downs of the housing market, which in turn mirrors the overall economy. Real estate brokerage firms earn their commissions only when their real estate transactions are ratified. Forming such an enterprise is therefore an amalgam of business savvy coupled with trade knowledge.
Planning The Business
1. Unfortunately the U.S. Small Business Administration (SBA) states that approximately half of all businesses started, fail within the first five years of operation. Reasons for failure include lack of experience, lack of money, intense competition, poor location as well as a myriad of other unforeseen obstacles.
Forming a real estate brokerage firm is thus best begun with the development of a formal, written business plan. It will focus the entrepreneur’s vision of the business, and will be necessary for securing the operational funding from investors and lenders.
An early decision will be whether to start an independent real estate brokerage firm or whether to buy into the proven business model of a franchise. In a recent Member Profile, the National Association of Realtors (NAR) published that 51 percent of its member Realtors® were affiliated with independent, non-franchised real estate brokerage firms.
According to Franchise Direct, an Internet-based franchising clearinghouse, smaller real estate brokerage firms can align themselves with larger real estate companies through franchising. The advantages of doing so will include brand name recognition, operational support, business training, and a host of other proven business and trade techniques. Possible disadvantages to franchising include the loss of business independence and the recurring, sizeable, non-negotiable franchise fees. Read the rest of this entry »