An estate agent needs a well-structured strategic plan and a fair dose of logic when considering such a bold move. A willingness for extra responsibility and a taste for the challenges that will ‘intimately' confront every business is important, according to Certified Practising Real Estate Agent chairman Geoff Baldwin.
Mr Baldwin said salespeople who have not yet been exposed to the inner workings of an agency are often guilty of thinking the boss takes home half of their commission without doing a lot to earn that slice, but nothing could be further from the truth.
“There is no argument that opening a real estate office can be hugely profitable but the chances of its success will be significantly enhanced by good planning, knowledge and a mind that is armed with facts rather than clouded by emotion,” Mr Baldwin said.
“The worst way to find out how a real estate business runs is by opening one without proper consideration for the financial and human realities that will inevitably effect its success or otherwise.”
Mr Baldwin said the two critical components found in any successful business are the "two ships": ownership and leadership; adding that ownership relates to the willingness to welcome and take responsibility for eventual challenges.
The potential principal has to ask themselves a number of questions relating to whether or not they are, or can become, a successful leader.
“A legitimate question to ask oneself when considering opening an office is ‘Am I a person who can influence, motivate, instruct, manage, placate, lead and support a team of human beings?’, and if the answer isn’t an emphatic 'Yes' then it’s time to reconsider your plans,” Mr Baldwin said.
“There are also other realities such as the fact that according to regular surveys, the average retention of commission to profit across all Australian real estate agencies over the past decade is around seven per cent, with the more successful agencies retaining up to around 22 per cent.”