Sure, we learn from our mistakes. Experience and learning by doing can be fabulous teachers and the knowledge gained through making and correcting mistakes is invaluable. However, when it comes to business, knowing what the common mistakes are and how to avoid them is far better than finding out for yourself – and far less costly. We have compiled the top 8 mistakes made by new real estate professionals each year to help you save time and money while expanding your clientele.
Not having a business plan to attract potential real estate clients and listings
Every new business, regardless of what it is, needs a business plan. A good business plan should include short and long term goals, projected financial goals, predicted expenses, and detailed methods of acquiring the capital necessary to start and maintain the business. If writing a real estate business plan is outside your scope of knowledge, don’t wing it. Find someone, be it a fellow professional or a financial advisor, who can help you create and set the right business plan for you. Without it, you don’t have the proper foundation to start and grow a successful business and career.
Adequate funding to build your real estate business
You need to have more than just money–you need to have the right amount of money at the right times. You should have at least three months of expenses built up in savings as a safety net, in addition to the capital you will need to start and support your growing business. Many people acquire this capital through savings, while others seek business loans. Whichever works for you, make sure that you budget that seed money not just for the beginning of the business, but throughout the entire first year and beyond.
It is vitally important to manage both your financial and emotional expectations, especially since real estate success doesn’t happen overnight. In keeping with the business plan and adequate funding, you have to be prepared to work through the beginning stages of your business where profit isn’t immediately available.
On average, a new real estate agent won’t have a sale in the first two months of business.
Accept that fact now, so you can plan ahead for it.
You can’t just hang a shingle and hope that people will walk in off the street. Starting a new real estate business means being keenly aware of who your target customers are. When sitting down to write your business plan, draw up a marketing plan as well. Some new businesses find that the best way to go about this is to hire a marketing agency. Before securing funding, find out if this is the route you would like to go and if you will need to budget for it.
When outlining your marketing plan, include what unique position you will take among local competitors (what makes you different or stand out), how you will advertise to prospective clients, where will you network, what tools or resources will you need to purchase or learn to use, etc?
Aligning yourself with the wrong real estate team
Choose your allies wisely. Too many new real estate professionals and mortgage brokers get excited in the beginning of a new business and don’t do the leg work to determine if the people they are going to be working with are right for them. This includes everyone from the secretary on through other agents, brokers, loan agents, and appraisers. Starting a new business with someone is a lot like a marriage. Get to know the people you will be working with and depending on. Make sure you know their strengths, weakness, professional history, and personality long before the going gets tough.
Not continuing your education
Just because you are now a business owner does not make you anywhere close to being done with your education. Classes, seminars, and professional development courses are all things you should be continuing to seek out once you add business owner to your title. There is a laundry list of titles, certifications, and even master’s degrees you can earn. For more information, visit the Education page at the NAR by going to http://www.realtor.org/education.
Being ill-equipped for the job
Having the right tools to do the job of a real estate professional involves more than just a nice car. Most would probably agree that a great phone with excellent memory and a robust data plan, a tablet for showing clients listings, and a secure internal workflow server are important. But you never know what you don’t know—talk to a fellow professional you respect to find out what tools they recommend the most.
Is there something you have learned through starting your own real estate business? Do you have a question about any of the common mistakes we have listed above? We want to hear from you! Let us know in the comments section below.
Skimping on real estate E&O insurance coverage
Yes, it can be expensive to start a new business. But not having great E&O coverage? That can be career crushing. All it takes is one claim to sink you, your business, and your dreams. Don’t put all your hard work at risk by not protecting yourself.
Know what coverage you need, how much it will cost, and what it will cover before you start your first day of business or take on your first client. Look carefully at coverage options to ensure they cover all of the activities you might perform. Check out our Essential E&O Checklist for help on understanding your personal coverage needs