Real Estate Agency Tips and Advice
Buying an existing business – as part of an installation project or to develop through external growth leverage – may seem simpler, and less risky, than creating an agency from scratch .
Nevertheless, the process of taking over a real estate agency must be carefully prepared , and the various steps rigorously followed. Finding the right candidate for the takeover, background checks, customer and business analysis, negotiation… These are all points of vigilance that will require your attention, in order to ensure that you are making the right decision.
Moreover, beyond the commercial, legal and financial aspects, attention must be paid to the question of marketing and communication . Because this agency, once bought, will have to bring you clients – and your strategy must be considered from the dawn of your project.
Together, let’s discover the key points of an agency takeover project!
Define the outlines of your real estate agency takeover project
For what purpose do you plan to buy an existing agency? Your current situation and the objectives you set for yourself constitute the foundation of your project, on which you will build your entire edifice. This base must therefore be solid.
It could be…
A first installation: you have just obtained your professional card and wish to run your own agency, by opting for the take-back option . Commercial, legal, financial and business aspects come into play in making the right choice.
- An external growth project: you already have at least one agency and aim to develop yourself by buying an existing brand (external growth). To the usual aspects that determine the smooth running of the process of taking over a real estate agency, we must add a dimension of integration, that is to say, think about how you will integrate this new brand into yours, in regarding the team, business methods, organization and management. This is a significant additional workload that must be taken into account.
In addition to the important differences that exist in terms of organization, these two projects diverge on one essential point: communication. In the first case, you will have to ask yourself the question of continuing the existing strategy or breaking away from what your predecessors did. In the second case, you will have to try to integrate the new brand into an existing marketing strategy. It is not at all the same optics – as we will see later in detail.
Determine the “right” target agency
The success of a real estate agency takeover project depends on the choice of the brand that will be the subject of the takeover . It is undoubtedly obvious, but it deserves to be remembered.
The question of the “right” target agency arises from the beginnings of your project. In particular, you must ask yourself what types of activities you want to resume , between the transaction (sale / purchase), the management and the trustee.
This is important on two levels:
- Because the different activities require different skills , indicated by a specific mention on the professional card.
- Because not all activities have the same value . For example, asset management benefits by convention from a higher valuation coefficient than the transaction (of the order of 2.5 compared to 0.3), although there are many parameters likely to weigh these coefficients.
It is therefore necessary to take into account the activities carried out and the potential of the targeted agency with regard to your project. For example, you can only take over a management portfolio in order to add rental management to the list of services offered by your existing brand.
Check the good health and commercial potential of the real estate agency concerned
It is certainly the most important and the most complex step. To avoid going into the legal and commercial details specific to a real estate agency takeover project, we will focus on the essential points to check.
- The financial performance of the agency. This is what makes it possible to objectively assess the profitability promised by a brand whose takeover you are considering. It involves looking closely at the turnover and its evolution over time, over a period long enough to make sense (ideally the last five years), and comparing these figures with the increase in the market at the same time. We also need to look at the cost structure and gross operating surplus.
- The clientele of the agency. A real estate agency takeover project must go through an in-depth analysis of the clientele. This gives an idea of the types of goods most often sold, their average value, and the cyclicality of the offer. For example, the frequency of sale of residential goods is higher than that of professional goods, but the prices are more modest (and therefore the remuneration too).
- The composition of the team. Once the agency is bought, you will have the opportunity to keep all or part of the negotiating team and real estate agents. It is therefore necessary to take stock of their status, their experience, their skills, their qualities and their weaknesses, their team spirit, their dedication. A quality team can make all the difference in a real estate agency takeover: you may well have very little integration to do, and therefore allow the ship to reach cruising speed faster.
- The physical room. By buying a business, you also have the possibility of taking over an existing premises. This requires evaluating several parameters: the quality of the premises as such (surface area, layout, general condition), the rental conditions (terms of the lease contract, amount of the rent, renewal conditions, etc.), and the location (type of district – residential, commercial or business -, accessibility, frequency of passage, parking possibilities for prospects and customers, etc.).
- Competition. It is determined by the number of real estate agencies located within a limited radius around the targeted brand, but also by their positioning in the market, their size, and their commercial performance. In short, you need to assess the impact that these competitors might have on your post-buyout business.
- The motivations of the seller. They are anything but anecdotal. The reason for this sales project is very important: the seller’s motive must be legitimate and not hide an underlying problem or show a fear of a future deterioration in profitability. A retirement, a move, a retraining are legitimate reasons. It’s up to you to investigate and ask the right questions.
Finally, you should carefully check the terms of the sales contract and ensure its validity: mandatory information (sale price, circumstances surrounding the acquisition of the land, etc.), elements of the commercial lease, various clauses, etc. We strongly recommend that you be accompanied by a chartered accountant and / or a lawyer so as not to take any risk, and to guarantee the success of your real estate agency takeover project.
Study the commercial strategy of the targeted agency and develop your own communication plan
Let’s come to a crucial point of your real estate agency/buy-To-Let mortgage company takeover project: the commercial and communication strategy .
It should be understood that an existing agency already has a commercial strategy and specific tools, and enjoys a certain reputation. This can be a huge benefit… or a poisonous gift! Let’s explore these three points in detail.
- The agency’s business strategy. It is important to carefully analyze the existing strategy in order to choose the best solution for the future: continue with this strategy, or modify the marketing plan to conform to your objectives and the way you operate. It is necessary to be interested in all the aspects of the communication, such as the media of diffusion of the announcements and the levers of increase of notoriety; check the customer database to ensure that it is up to date and complies with the requirements for the protection of personal information ( GDPR); and examine the digital communication media, such as the website (who owns it? is it suitable for SEO? is there a back-to-back blog, with published content?) and social networks of the agency (will you be able to recover them as they are and continue to communicate through them? is there a loyal community?).
- The reputation of the agency. As soon as you take over an existing brand, it already enjoys a certain popularity in the district; the problem is that his image can be positive… or negative! Take the time to audit its reputation, assess the quality of word of mouth, interview local customers and traders, read reviews on the web, etc. Compile content that speaks of the agency, for good and bad, on the Web as in print publications. From there, you have the option of surfing the brand’s good reputation – if it has a strong brand , that’s a big plus – or wipes out the past and start all over again your way. .
- Communication tools. Another essential check in the context of a real estate agency takeover project: the quality of the tools used by the employees. Does the agency have the essential tools to communicate and launch marketing actions ? Can you get some of these tools back, or will the manager leave with his licenses? Will it be possible to easily migrate the data to your own tools, if necessary, for example to your transaction software or your CRM?
Pay attention to the specific case of a franchise agency , whose communication strategy and tools may be imposed by the group, which would leave you only limited room for maneuver.
On this basis, you can then develop your own communication plan , by taking up some of the levers of your predecessor or, on the contrary, by erasing everything that was done before your arrival. But that is another story!
We hope you enjoyed this blog on Taking over a real estate agency: the points to check before starting. For additional tips, be sure to check out our post 5 Steps to Wholesale Real Estate
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