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How to Choose the Best Location for Your Real Estate Office
There are many important decisions that must be made when
opening your own real estate office. Perhaps one of the most underrated
decisions is that of location. There is no doubt that everyone wants to have a
great location for their office, but the question is, what makes for a great
Each year several real estate offices close for a variety of
reasons. In many cases, the office is simply unable to attract real estate
agents to join. Often times the location of the office it deters agents from
joining. So if location is so important, why do so many brokers make the
mistake of placing their office in such a bad location?
You May Not Know What
You Think You Know
You’re a top producing agent that’s ready for the next step.
You are going to go out on your own and open a real estate office. You know
location is key so you start to think about all the great places in the city
that you can open. You know that you want to avoid the areas that are already
over populated by real estate companies, you would like a spot with excellent
visibility and parking and you also would like to get something with a
reasonable rent. With an eye for the future you look towards a developing area
of the city where expensive house is going up that is only a few minutes away
from your home. Perfect!
Here’s the trouble with your selection. You have already
placed your office in a difficult area to grow. While the logic and though
process that went into your selection seems sound it actually has some major
Real Estate Agents Do
Not Like To Move
The first major mistake that was made was to avoid the area
with all of the other real estate companies. Not only do you not want to avoid
this area but this is probably the one biggest clue as to where you do want to
place your new real estate office.
While the idea to avoid the competition seems like it makes
sense, if you think about it, it really doesn’t. You are going to be competing
with these companies regardless of where you are located so placing your office
further away will not do you any favors. The agents that you are hoping to add
to your company already work for these other companies in these existing
locations. Trying to convince them to move to a new area of the city that may
be further away from their home is not going to be easy. Real Estate Agents do
not like to move so the easier the transition the more likely you are to
persuade them to join.
You see this with other industries. Think of fast food. Most
of the large successful fast food chains are all located in the same general
area as the others. This is because the concentrated area is the prime location
for traffic. Placing your real estate office should be no different.
Transactions Are The
Lifeblood of a Real Estate Office
The other major mistake done in the up and coming area with
higher end homes is that higher end homes are often harder to move than are the
lower cost homes. Your office will survive on number of transactions as opposed
to large ones. By nature, your agents will try to capture the higher end
listings, but what you want to make sure is that your office will be located in
an area where there will be lots of volume, not necessarily higher prices.
Agents Don’t Care
Where You Live
Finally, we constantly see brokers make the mistake of
trying to keep an office close to their home. While this may be advantageous to
avoid the afternoon rush hour traffic, it is not a good strategy when trying to
entice others to join your company. You must think of the other agents first.
By choosing a location that is in an area saturated by other
real estate companies you know you will be in a good spot as far as agents are
concerned and you will have a better chance of recruiting agents. The best part
is, the other companies have done the hard work for you.
Control Your Cost
While everyone agrees that good visibility and great parking
are ideal for a real estate company it is also important to control your costs
when opening a new office. Two major mistakes new brokers make are to grab a
location with ridiculously high rent and to grab way too much square footage so
that they will be prepared for future expansion.
The high rent is pretty self-explanatory. Make sure you shop
what’s available and be sure that your lease is reasonable and that the terms
going forward are also reasonable. We have seen many instances where lease are
extremely bias for the landlord and often times force offices to move due to
rising costs upon renewal. You do not want to get into that situation as moving
a real estate office is an expensive process that will cost you agents.
The second issue of leasing too much square footage is also
extremely common. The thought is that while you don’t need the space today, you
may wish you had it a couple of years from now. This is something that requires
some thought. While you may be all excited to grow your business you must
remember that you aren’t ready for expansion yet. In fact you are just opening
the doors, never mind expanding them.
A much better technique is to take a reasonable amount of
space that will work for you now and for the foreseeable future. If and when
you go to expand you may find that you are more inclined to open a second
location in a different area of town instead of trying to grab the unit next
door to add to your existing office. Controlling your expenses on your location
is something that many brokers do not do and unfortunately end up paying the
price because of it.
While you may have some great and unique ideas as to where
to place your new office it is important to remember that your decisions must
be based on what’s best for the agents you plan to hire. By selecting a
location in an area that is saturated with other real estate offices you will
have already avoided the biggest hurdle. From there the key is to choose a
location with reasonable rent and avoid taking too much square footage.
If you can follow these simple tips, you will find that you
have a much greater chance at success. While the ideas seem straightforward,
remember, these techniques are proven and used by some of the most successful
real estate brokers of today!