With the UK property market at an all-time high, real estate is one of the best industries to start a business in right now. Despite the popularity online outlets, the majority of people still use the services of a traditional estate agency to sell or rent their home. However, don’t be fooled by the common misconception an estate agents’ job is easy. A lot of work goes in to learning the subtleties of the market and learning how to source the right tenants.
Is it worth the investment
The biggest expense of your new business will likely be renting office real estate. People tend to favour using local agencies–as they will have a better knowledge of the area–if you’re looking to get it on the high-end of the market, it could be very costly to set up in a prominent London location. However, the end results could be more than worthwhile.
You should expect to receive between 0.75-3.75% of the final value fee plus 20% VAT on any properties you sell. Recent surveys show that London agencies take an average 1.7% fee, which is actually under the national average of 1.8%. This is because firms are willing to lower their fees in order to compete in the more lucrative market. While the average house price in the UK is now £273k, the average price in the capital is just over £500k.
What you’ll need to know
Ultimately, what you’ll need to be good at is sourcing the right tenants for your client’s homes. Your customers are expecting you to put in some of the leg work so that they don’t receive any time wasters, after all. You’ll first need to run a credit check to see if they have a history of paying their bills on time and their income to debt ratio. A general rule of thumb is that their monthly earnings should be around three times that of the monthly rent.
You could also try to contact their current employer to verify their earnings, length of employment, and attendance record. Finding out how stable their employment situation is will help you determine how reliable they’ll be as a long-term tenant. If you can, contact a previous landlord of the potential tenant. Ask them how long did they live in the property, did they pay the rent on time, and did they leave the property in an appropriate manner when they left.
Your clients will appreciate the time you’ve spent in finding them the right tenant. If you need to give them tips on how they can tailor their home to attract more tenants, point them Homelet’s handy guide. Good service will drive good business and keep them coming back to you when they need someone else to fill their property.
What it takes to start an estate agency
The housing market will continue to flourish. Prices maybe slowing down but there are still no signs that buyers are holding back from purchases in anticipation of a big price slump. People will always need places to stay and those who can afford it will still have mortgages in their minds.
You can never be ready enough to start a business, but if you really interested in the property market, do your homework before you take that giant step. Find out how the business works, how targets are set, where and how they gain new instructions. With the right research and understanding of the industry there is a career and a business in the property market to be made.
Getting started may sound easy but the real challenge is staying in business. Getting properties to list with you will take time, probably longer than you think. And you should be able to offer owners the confidence that you will sell their house better and faster than anyone else.
Good communication is a skill you should master. You are expected to inspire trust and confidence. Don’t overestimate the number of sales you’re going to complete on. And always remember, it will take time to win your first client or make your first sale. Closing deals and complete on them will be longer than expected.