Six Most Common Mistakes Almost Every Broker Makes When Opening A Real Estate Office
Opening a real estate office is not an easy task. There are
several things that must be considered and unfortunately often times we see
several crucial mistakes made by nearly every broker which cause the office
great difficulties. Below is a list of some of the more common mistakes that
are made by almost every broker when opening a real estate offices.
No Focus on
Focusing on recruiting might seem like a pretty
straightforward thing to do when opening a real estate office yet often times
we see it as a low to no priority task. Recruiting is the lifeblood of your
company as without agents working with you, you will be required to produce all
of the income yourself which is likely not why you decided to open an office.
What tends to end up happening in many cases is that the new
broker spends all of their time trying to “prepare” the office for the arrival
of agents and no time actually trying to acquire new agents. We often hear
brokers tell us that their office isn’t ready for agents yet. It still needs
more furniture, upgraded software, more leads to distribute or even something
as obscure as the printer isn’t functioning property. While all of these issues
are certainly things that you will need to address, none of them should prevent
you from growing the business.
Spending Too Much
Money on Too Much Office Space
When opening a real estate office many brokers have the
aspirations of becoming one of the largest offices in the city and they should.
The trouble is that these brokers tend to lease office space as if they are
already one of the largest offices in the city. Yes it is true that you want to
avoid moving a real estate office when possible but to lease too much space
because you might need it a few years down the road is just an unneeded
A better approach is to lease a good amount of space that
will satisfy all of your current and near future needs. This will give you
flexibility down the road should you choose to remain small or should you
choose to expand. With a proper layout, a 2,500 – 3,000 square foot office
space can accommodate roughly 100 real estate agents. Down the road if you
reach your goals and require more space, it is often advantageous to seek a new
location in a different area of town and replicate what you did in the new
Many brokers get themselves too much overhead without the
revenues to cover the expenses. This is a very common mistake we see brokers
Hiring Too Much Staff
This is another area that may seem straightforward but yet
many brokers make the mistake of hiring staff for the office they anticipate
having as oppose to the office they actually have. We have seen brokers hire
multiple front desk administrators, appointment setters, in house IT, managers,
recruiters and so forth.
While some of those positions may be needed from day one,
such as a front desk administrator, it does not make sense to hire a small army
when you may only have a few agents. Instead evaluate which positions are
absolutely necessary and lay out a plan to bring on more staff as you reach
certain growth levels. With proper systems in place, an office with a good
manager and front desk administrator may property support 100 real estate agents.
Purchasing Too Much
When opening a new office brokers often get caught up in all
the technology that seems to be offered by competitors. As a reaction to this
they go out and purchase obscene amounts of equipment trying to have the most
technology in the area. In most cases real estate offices don’t require nearly
as much equipment as one would think. Here are some pointers to avoid spending
too much on office equipment:
Printers – lease or purchase a single commercial copier and
have all the computers networked into it. We see too often brokers attempting
to have a personal printer at each desk. The cost is great and personal
printers in a commercial environment need to be replace far more frequently
than do commercial copiers.
Computers – New offices tend to be filled with personal
computers. Every desk has its own computer waiting for an agent to come and
use. While this might seem like an ideal situation, buying 20 computers for
agents that you will have is expensive and unnecessary. Not to mention the
longer it takes to hire agents to use those computers the more outdated they
Servers –For some strange reason every real estate office
seems to believe they need one or more servers running. This one's a mystery
to us as more often than not the servers only act as a remote hard drive and
often cause the entire office network to slow down. With cloud computing and
storage and fast personal computers, having a server on the network makes
little to no sense. Commercial copiers can be connected directly to the network
and if need be a network hard drive may be added to your office.
Phone Systems – This is a bit tricky as depending on how you
setup your office will determine how much of a phone system you need. What you
likely do not need is a $50,000 system. In today’s world of smart phones and
VOIP systems, what you want to do is shop around and find something that truly
makes sense for your office. Do not just buy the first system that a company
offers because they tell you that it is the common system among real estate
offices. We have seen offices able to get setup on a state of the art system
for a few thousand dollars.
Not Setting Up the
While we don’t want you to sit around waiting for each
corner of the office to be completely furnished to start recruiting, it is
important that a potential recruit feels as though your office is open for
business. In the past we have seen many brokers lease tremendous space with
great visibility, lots of parking in a prime location and yet fail to attract
any agents. One of the main reasons for this was that once you walked in their
front door you couldn’t tell if they were just opening or just closing.
If you have no front desk administrator, no conference room
furniture and no office furniture then you will have a very difficult time
attracting agents to work for you. We often hear brokers tell us that as soon
as they hire an agent they will add a desk for their office and once they have
a few agents they will add conference room furniture and a front desk
The trouble with this is that upon first impression an agent
coming from a well-established office is going to feel as though they are
taking a step backwards by joining an office that isn’t prepared to do business
that day. Even if they like what you have to offer they will likely prefer to
wait to join until others are there and your office is up and running.
Blowing Their Entire Budget on Advertising
While advertising can certainly lead to revenues too many
brokers spend way too much money advertising the upcoming opening of their
office or that they have just opened. Before they know it they are out of
operating funds and the office struggles to remain open. Be smart about your
advertising and remember that although you are excited to open, just because
you advertise that you will be opening soon does not mean that other real
estate agents will be as excited to join you.
Instead, use a well-planned out advertising budget focusing
on recruiting agents. If you aren’t comfortable with that, then often times
it’s better to wait until your office is up and running and hire agents before
you begin to spend money advertising.
Most of these topics may come across as straight forward but
it is important to realize that it is extremely easy to get caught up in the
excitement of opening a real estate office and fall into these traps.
One of the best ways to avoid these pitfalls is to take the
time to lay out a plan for setting up your office, getting started, short term
and long term expansions. By doing this you will keep things under control and
be much better positioned to enjoy the benefits that come from opening your own
real estate office.