The real estate business reinvents itself to attract new entrepreneurs.
Money always calls money. For this reason, the fact that during 2018 the barrier of half a million home sales was surpassed for the first time may encourage entrepreneurs to bet on this business and decide to open a real estate agency.
How to set it up, what investment is needed and whether it is better to do it independently or through a franchise may be some of the questions asked by those who consider this possibility.
Oscar Villanueva, manager of Inmogesco, a company specializing in web pages and marketing campaigns for blue world city islamabad, thinks it is a good time to enter the business given the transaction data for 2018 and the number of agencies that have been opened this year. Above all, because it detects “joy in business”.
Villanueva points out that once the decision to start in this professional world has been made, you have to decide whether to do it independently, creating your own brand, or through a franchise. He emphasizes that although “there are those who want to open their business to be their own boss, if they do not have real estate experience it may be convenient to rely on a teaching not to have to start from scratch”.
This alternative has the disadvantages of the costs and requirements that the franchisor impose on the franchisee and in favor of being a well-known and experienced brand that facilitates all procedures, as well as a real estate exchange to market and the advantage of operating on a network.
And finally, you must choose between an online and face-to-face agency, an important decision, since the financing necessary to set up the business will depend on it.
“The sector demands greater professionalism than during the boom because the consumer is becoming more and more demanding”.
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Franchises brandish their numbers in the real estate sector to show that they are having a good time. Eduardo Abadía, executive director of the Association of Franchisors (AEF) , recalls that in 2017 the sector increased its turnover by 15%, since it obtained a business volume of 331.2 million euros.
For the 287.7 million that accounted for in 2016. For its part, the number of chains in franchises grew by 2.9% and that of stores, by 28%, with an increase in employment of 15% compared to the previous year.
Another issue to keep in mind is that opening a real estate franchise now requires greater professionalism. Abadía highlights that unlike what happened during the boom, a period in which “anyone opened an agency”.
Now the sector has become more professional, and franchisors demand greater knowledge not only of the business, but also of new technologies. “Since it is going to deal with a consumer who is increasingly demanding “.
This does not mean that the profession is banned from those who do not come from the real estate world, although it recognizes that it is an “added value”.
It clarifies that what is needed is commercial experience and public relations capacity for a sector that is changing and growing “very fast”, offering new professional possibilities, since new firms appear every day.
New business niches
The general director of this consulting firm specializing in franchises explains that before the crisis there were only two agency segments: the traditional ones (with medium-profile homes and a very high range of properties) and an incipient segment that was dedicated to marketing high-rise properties. standing.
Now things have started to change. Not only have firms that sell luxury homes increased, but two other models have been added: online agencies, in which I can work from home and save the premises, and others in which it works with a kind of ” coworking ‘.
Several franchisees who share the office of another franchisee, a formula that Kiwi Bricks uses, for example, and that allows to greatly cut the initial investment of entrepreneurs.
Tormo indicates that you cannot give closed figures regarding the investment that should be made by anyone who wants to open a real estate agency like nova islamabad , although he provides some numbers to get an idea.
The luxury housing segment would require an initial investment of between 100,000 and 120,000 euros, since very well located and more expensive premises are needed; the most traditional segment would entail an average investment of between 40,000 and 60,000 euros.
While brand licenses or smaller offices would involve around 20,000 euros of investment and working from home or having an entry channel to a company that operates under the regime of coworking about 3,000 euros.
Information and precautions
Juan Cortes, legal advisor to the Association of Franchisees (AEDEF), emphasizes that although the most obvious advantage of “opting for a franchise is to duplicate a business that already works and is making money”, that does not mean lowering your guard.
For this reason, he not only recommends choosing an established and experienced brand, which provides adequate information in the real estate sector in case of lack of it, but before signing anything, he advises the interested party to inform himself thoroughly.
For example by addressing AEDEF, since it is a non-profit association that will advise you for free. Juan Ramón Montero, director of the Legal Department of AEDEF, asks not to forget that as in everything “there are good, bad and regular franchises”, so he advises to be properly informed before taking a step.
The representative of this association, who defends the rights of franchisees, explains that the first advice he would give would be to consult the Registry of Franchisors, but clarifies that this can no longer be done because the Government eliminated it on December 8, 2018 with a Royal Decree, therefore that there is no longer any official census of companies operating in the franchise transfer sector.
Therefore, those interested in opening a franchise should contact the franchisor and request that they send them the pre-contractual information. to know all the conditions and have them in writing before signing any contract or making any payment.
Then, he suggests contacting other franchisees, different from those proposed by the show, to really see how things are going and find out the number of franchises that exist in the area to find out about the competition.
And finally, review the contract with a lawyer paying special attention to the renewal links and whether it has territorial exclusivity, to avoid that soon after another agency of the same brand opens door to door that “stays with your clients”.
In addition, it is necessary to be very clear about what fees we must pay, since together with the entry fee and another that is a percentage of sales or profits , there are some brands that impose a canon for advertising .
Montero acknowledges that the majority of real estate franchises work very well and that the litigation that existed during this boom has been reduced due to a lack of professionalism, which is why there is currently a stage “without too many conflicts. ”
But what do you ask for to open an agency?. As an example, from the Look & Find Network they assure that “it is not necessary to have experience”, since “that is precisely what franchises are for, but they specify that“it is necessary to receive initial training in all areas that a professional requires real estate (Legal, Commercial skills, Human Resources, Marketing, Social networks and new technologies …) ”
The franchisees respond to two main profiles, depending on the brand: entrepreneurs with a commercial profile, who see in the current situation a moment of opportunity to start a real estate business; and real estate professionals , who know the sector and have worked independently or under their own brands and now want to take advantage of the synergies that networking offers.
Look & Find explains that to become one of their franchises, they require a premises with a minimum surface area of 60m2”on the street level in a population of more than 10,000 inhabitants, an entry fee of 15,000 euros, the payment of a royalty from 750 euros depending on the area and a minimum necessary investment of 40,000 euros,
A location on the street level is also required to open a RE / MAX franchise, according to Javier Sierra, its president, who adds that the office must be located in an area with visibility and traffic of people.
The minimum area is 70 m2. The investment necessary for the opening of an office and its development during the first year is between 70,000 and 100,000 euros depending on the type of market ”and“ said investment includes; cost of the license, conditioning of the premises and working capital for the first 12 months of operation of the office ”.