Enclosed is an article on growing your real estate office that I was interviewed by Tiffany Stochell and other esteemed CRB colleagues Al Mayer and Cliff Perotti gave their great wisdom to share with other Council of Real Esate Brokerage Managers.
There are always areas of grow to be considered in whatever market you are in though many times it means a large change. If you business was "buggy whips" when the automobile was being introduced, it was wised to reinvent you transportation parts department.
Hope you find the enclosed article helpful.
Growing your office isn’t just a numbers game these days; it’s a focus on people and education According to the USC Lusk Center for Real Estate, there will likely be no growth in the real estate industry until late 2010.
“A lack of liquidity remains the major obstacle to a recovery in the commercial real estate markets at least until the end of this year,” says real estate finance expert Stan Ross, chair of the USC Lusk Center. Ross doesn’t see commercial or residential real estate markets starting to recover — and then only slightly — until the fourth quarter of 2009, with another full year before they grow again.
Even with those predictions staring you in the face — along with thoughts of downsizing or even closing — there are ways to transition, or even grow, your business, though it may be in ways other than adding more agents or offices.
A plan for success
“To grow your office — you must start with a plan,” says Steve Westmark, CRB, CRS, e-PRO, GRI, SRES, and realtor® partner with Counselor Realty in Wayzata, Minn. “You don’t open a franchise without figuring out how you will do it. If you don’t have a plan, you’re probably destined for failure.”
The first thing an owner or broker should do before growing or opening an office is take a look at the current marketplace, according to Westmark.
Al Mayer, CRB, CRS, GRI, owner of Standing Ovations and senior vice president of Real Estate Champions, provides coaching and consulting to residential and commercial real estate agents, broker/owners and managers in Tucson, Ariz. He agrees with Westmark on a market focus. “I think a lot of brokers miss the boat when they talk about expanding an office because they never actually look at and examine the marketplace,” he says.
“Brokers and managers need to look at today’s very distraught market, examine it over the past 12 months and find out how many sides and transactions occurred,” Mayer says. “‘What is the average productive agent doing in the market? Do I have the time and the resources to train new agents?’ These are all questions to ask before transitioning, expanding or opening an office.”
Westmark also believes in three areas that need to be in place before starting to grow an office: proper capital, proper people and proper plan.
“In today’s market, there are choices of business models, whether it be a traditional brokerage, discount brokerage, virtual or another,” he continues. “For a person looking to open, expand or transition an office, the right business model must be chosen. That person must ask themselves, ‘Will that business model succeed? Can I get enough market share?’”
“The best business model to use when expanding from a single-to multiple-office company is best determined by the current culture of your firm,” says Cliff Perotti, CRB, e-PRO, GRI, president and CEO of The Perotti Group, a national real estate development and investment company in Corte Madera, Calif. “If you are a full-service model, stay with it; if you are a virtual company, stay with it. Be who you are and live true to the culture and image you have already created. The key is preparation before launch.”
Location, location, location
“In the old days, it was all about location, location, location,” Mayer says. “We used to talk to businesses about the outward flow of when people are driving home from work and the best place to be located and on which side of the road. Now, location has become almost inconsequential — because few customers ever come into the office.”
Perotti says that location is just one element of an office facility — other elements must also be considered.
“I have had consulting clients spend hundreds of thousands of dollars on strategic mall locations, only to close them within a year or two,” Perotti says. “If the broker is going to attempt to get walk-in traffic from their location selection, then the office needs to be in a walking area and not a shopping area.
“The other location issue that frequently arises is whether to use an office building or a retail-type space,” Perotti says. “Again, it depends on the marketplace, but if a broker starts a company in a high-rise office with no signage on the building and parking that is a 10-minute walk from the office, they are creating some barriers to success without even thinking about it.”
“Typically for residential offices, a more retail-type frontage or free-standing pad environment is more attractive to both the agent and public, with easy in-and-out parking,” Perotti continues. “A commercial company can get away with a more office-type environment — in fact, it is suggested.”
The traditional approach
“As far as the traditional facility goes, the amount of space for an office depends on the type of business model being used,” Perotti says. “If it’s a full-service company, there will need to be a mix of bullpen space along with private and semi-private offices. A full-service model requires more space than a virtual office, though the support and work areas need to be fully equipped for either.”
“Too many real estate offices are much too large in square footage,” Mayer says. “The old idea was that you needed 100 to 150 square feet per agent, but that is no longer true. I would keep square footage minimal in the traditional office — have a conference room, manager’s office and administration space.”
According to Westmark, in traditional brokerages, it may also make sense for agents to have to earn their right to a desk.
“Managers should review the amount of transactions that each agent brings in and ‘reward’ them with a desk space- if appropriate,” he says. “That gives agents the motivation to produce.”
“Agents need to bring money into the company first,” Mayer adds. “Agents should earn a desk when they make enough money to make the company profitable. This also gives urgency to managers to go out and recruit the most profitable agents available.”
Another way to grow the traditional office environment is through attrition.
“When you hear that an office might be closing or letting agents go, managers should start making proactive phone calls to those agents and investing some personal time in getting to know them and letting them know what your office has to offer them,” Westmark says. “Keep your ear to the ground and know what’s going on around you — this is still a people-to-people business, and when you show an interest in them as people and offer them support, you are more likely to gain their interest and trust.”
And if the traditional approach isn’t the most ideal business model, there are other options. “Many times, the combination of a conventional and virtual office existence is most popular,” Mayer says.
Moving toward virtual
“I suggest having an office location but operating mostly on a virtual basis,” Mayer says. “And with the money you are saving on the virtual office, you can afford to have the traditional office located in a prime area that will hopefully bring in more customers.”
“People today start their search for a home on the Internet and get all the information they need there,” Mayer continues. “They don’t have to interface with an agent until they want to. Therefore, the move toward a virtual office just makes sense.”
Although Westmark says he hardly knows of any market where offices aren’t closing, he does know of several instances where offices are growing in the sense of virtual space.
“Having a virtual office allows the agents to come and go at their need and convenience,” he says. “It also saves space in the onsite office setting, where agents who are no longer in the office all day can share a desk.”
“Operating virtually means an owner doesn’t have to have a traditional office in every little suburb,” Mayer says. “If the business has a good presence regionally, instead of opening an office in one neighborhood and then moving on to the next, an owner or manager can now recruit agents in a target area and have them set up an office virtually.”
“I like virtual offices because they reduce fixed overhead,” Mayer adds. “And if things are successful virtually, I can proceed further by opening up a traditional office in the area.”
Press the right key: Technology
“Technology definitely has a huge presence when it comes to real estate and just business in general,” Westmark says. “And it will continue to grow that presence — through a company’s Web site, the development of individual agent Web pages, virtual home tours and so on.”
“At this point, we are beyond faxes and are now moving toward e-faxes,” Westmark says. “Printers are turning into printer-scanner combinations and the Internet has taken on a whole new role as an important addition to the agent toolbox.”
Perotti agrees that the idea of a real estate office being completely electronic is on the way — but not here quite yet.
“The challenge is that our customers are not yet completely electronic,” he says. “So it is a current reality that, while e-faxing services are available and used, the fax machine is still a necessary evil of the industry.”
“Everyone is trying to go almost paperless,” Westmark says. “For years, we would end up throwing out a whole bunch of forms that we didn’t use and that had expired — only to buy a whole new bunch of forms for the next year. Now we can simply use forms taken from the Internet, which is much more efficient.”
When purchasing any new office equipment, Perotti does recommend one machine for any office — the ScanSnap high-speed scanner. “I have one on my desk and in common computer areas,” he says. “This machine scans any document quickly into a pdf and allows saving or e-mailing the file immediately.”
“Look at today’s technology and start embracing it,” Westmark says. “Not only are you helping to control your expenses — but contributing to less abuse and misuse of paper, and therefore, the environment. You are also giving something of real value back to your agents with new technological devices and ideas — helping them to succeed.”
Looking for the right stuff
“Think about a busy office — the phone is ringing, people are coming in and out of the office, agents are visible and sales meetings are well-attended,” Perotti says. “The type of office furniture is not nearly as important as the leadership presence and the energy in the office.”
Perotti adds that the right staff selection is critical to a new or growing office.
“A broker needs to pay enough salary to get the right talent to handle the jobs needed, or any financial savings will be lost in the constant training of someone,” he says.
“Managers should look for agents with a sales background and those that are highly disciplined and understand the value of prospecting,” Mayer says. “The right people to work in this industry are those who realize that they need to get out of the real estate business and get into the business of real estate.”
Plus, a positive attitude is always an asset.
“Staff personnel need to be positive people who can shut down negative gossip in the office,” Perotti says. “Since staff personnel typically make the first impression for the company, they need to be upbeat and smile. Nothing is worse for a broker than to have a negative voice answer their phones.”
Training the mind
“Education is essential to growing your office and the minds of your employees,” Westmark says. “Whether it’s through books, taking CRB courses, attending the NAR conference every year, or just Googling information that you need or are interested in — it all adds to the depth and skills your office can offer.”
“The most important thing about starting an office or adding an additional facility is leadership talent,” Perotti says. “A great way to get started is attending CRB classes and, while there, find those who have launched their firms in recent years and ask them lots of questions.”
The broker, owner or manager should also offer additional training for agents, Westmark says, including bringing in speakers who are experts in different areas to help train agents on the relevance of what’s going on in the marketplace.
“Another step that should be taken is hiring a coach or consultant to help add the experience that a broker owner or manager may be missing,” Perotti says. “By the time it’s all said and done, the coach or consultant will save the broker two to three times the amount they cost, in mistakes and time.”
“Know what your customer’s needs and wants are,” Westmark says. “Giving agents the availability of coaching programs and offering them resources to cater to the customers are a must.”
“And while you are training your agents, you should also be training yourself as a manager,” Westmark continues. “Continue to put educational materials and opportunities in front of your agents, but also turn the tables and make sure you, as a manager, have the skill set to be the best coach possible to your agents.”
Every person in the company needs to be involved in constant personal growth, Perotti says.
“This means that brokers should also be attending training programs to challenge themselves,” he says. “Managers and assistant managers should be put into a leadership development program. Staff should attend occasional in-house training and external programs on becoming a better support person. Make it a point to stop talking about what isn’t working and get moving forward. Focus on successes, not challenges.”
For future growth: Notice the trends
“Know your market and where it’s going,” Westmark says. “Notice the trends — like transportation and big business.”
“With the transportation trend, there might be a new freeway being constructed — and will that new freeway cut down drive time for people and therefore open up a marketplace that wasn’t there before?” Westmark says.
“Also, a major company might be moving in,” Westmark says. “A lot of job openings will become available, and that will change what’s going on in the surrounding neighborhoods.”
“Before I would consider opening an office from scratch in this market, I might approach offices in the target market and see if a merger or acquisition might be possible,” Perotti says. “I would also talk with someone outside of the area that has opened a second facility about what surprises they experienced that couldn’t be planned for.”
“Treat the real estate business for what it is — a business, not a hope,” Mayer says. “Even though you may hope for certain things, they may not be in your best interest from a business standpoint. Do market analysis and find out if an opportunity for growth is really there.”
“Starting or growing a business is like an exotic car,” Mayer says. “I’d love to have one, but would I be wise to go out and buy one before I figure out my budget and how I’m going to pay for it?”
Perotti’s final advice: “Go forward — with passion and focus.”
