What does it take to achieve success as a real estate franchisee? Domini Stuart reports
The world of real estate is changing – and fast. “The majority of property searches now happen online via a computer or mobile device,” says Georg Chmiel, CEO of LJ Hooker [pictured below].
“And, in just one year, the number of LJ Hooker offices actively using Facebook has soared from five percent to 55 percent. In fact, many offices now receive more web traffic from Facebook than from traditional real estate portals.”
It may not be a coincidence that a growing number of would-be franchisees are in their 20s or 30s.
“Most are technology-savvy and many have tertiary qualifications,” says Angus Raine, CEO of Raine & Horne. “We’re also seeing a move towards franchisees opening up more than one office or employing 20 or more staff.”
People who are looking for flexibility in their career – particularly women with families – are also starting to see real estate as a viable option.
“Most of our franchisees work from home,” says Cameron Fisher, managing director of Changing Places. “Some are working on their own, full or part time, while others prefer to work with their partner, a family member or a friend.”
Commissions have also been changing, and it was this that inspired Fisher to start his own business after 30 years in the industry.
“House values have virtually doubled in the last seven years and so, effectively, have agents’ fees,” he says. “I believed that commissions would come down and thought it best to lead the way, so I set out to develop a commission structure that would achieve three things – savings for the vendor, the same or a higher income for the agents and enough profit to create a sustainable business model.
“I achieved that by centralising all of our administration, which reduces costs dramatically. It also enables us to take the $20-30 an hour tasks away from our franchisees so they can focus on the ones that make good money – face to face appointments for listing and selling real estate.”
GETTING TO KNOW THE BUSINESS
So what does it take to become a successful real estate agent? According to Leanne Pilkington [pictured below], general manager of Laing+Simmons, more than many people realise.
“We are often approached by people who think ‘I like people and I like houses so I’d make a great real estate agent’,” she says. “Or they’ve bought a house, seen what the agent did and think they can do a better job. But it’s really not that simple.
“It is possible to open an agency with no experience, though I would never recommend it; it’s one of those businesses that looks very different when you’re on the inside. I suggest getting a certificate of registration, which can take less than a week, so you’re qualified to act as a property manager or a sales person. That way you can spend some time working in an office to see if it really is right for you.”
If you decide to go ahead, you can study for a full real estate license full time, part time and online. LJ Hooker also offers licensing through one of its subsidiaries, Property Training Solutions.
Another way to join a franchise is to rebrand an existing business – straightforward on a practical level, though Fisher believes there can be such a thing as too much experience.
“Some people who have been working in a very different model might find it hard to let that go and start doing things in a different way,” he says.
KEYS TO SUCCESS
Demographics can vary enormously, often from suburb to suburb. You’re most likely to succeed when you’re working in an area you know and where you feel comfortable.
“We like all of our franchisees to have strong ties to the community, including local sponsorship and market knowledge,” says Raine [pictured left].
And, while real estate can be very lucrative, it generally takes a while for the income to build.
“Even if you got your first listing and sold the property on the day that you opened your doors, which is highly unlikely, you wouldn’t get any income until settlement two or three months later,” says Pilkington.
“Unless you’re already an established agent you should have the financial resources to run your business for 12 months without having too much money coming in.”
As with any other concern, success grows out of enthusiasm, passion and a willingness to work hard.
“You must be self-motivated – willing to get out there and talk to people, to be enthusiastic,” says Fisher. “Most of all, you must really love real estate.”
It will also pay to research all of the available alternatives.
“Different brands work for different people,” says Pilkington. “It takes time and research to find the one which will work best for you.”
FRANCHISE DETAILS
Laing+Simmons
Laing+Simmons started franchising in 1980 and now has 42 franchisees, predominantly in the Sydney metro area. A new owner, the Independent Property Group, has plans to expand. There is no upfront fee; franchisees pay a six percent fee on gross sales income and a one percent marketing levy.
“Laing+Simmons now offers both a traditional franchise model and a partnership model – a partnership between the corporate office and the franchisee where they are shareholders in each-others businesses,” says Leanne Pilkington. “This is an ideal opportunity for people who want to be part of something bigger, and for people who feel they need the expertise and back-end support they can get from a bigger organisation.”
Raine & Horne
Established in 1883, Raine & Horne started franchising in 1976 and now has hundreds of offices Australia-wide and overseas. There is zero cost of entry but applicants must have a proven track record in an agency.
“Each Raine & Horne office is visited regularly by field support staff and receives periodic business reviews to help drive profitability while regional meetings help facilitate communication between offices and maximise the benefits of the network,” says Angus Raine.
“Our application suite is an all-encompassing interactive solution incorporating all aspects of real estate technology. We also have a suite of products and services designed to help franchise offices generate sales and property management leads.
LJ Hooker
When LJ Hooker started franchising in 1967 it was the first Australian real estate company to do so; there are now over 700 offices across Australasia.
“We believe that dedication to self-improvement is fundamental to success,” says Georg Chmiel. “That’s why we’ve made a strong commitment to ensuring every team member is offered a clear path towards personal and professional achievement.
“At the LJ Hooker Institute, our franchisees can gain formal qualifications in real estate licensing and business management and also a full range of skills to help them succeed in our profession. We also have a strong focus on developing sales and marketing tools that will help franchisees – and their customers – to stay one step ahead in terms of technology.”
Changing Places
Changing Places started franchising in 2003 and now has 30 franchisees around Australia. The entry fee is $18,000 + GST.
“One really important difference is that our people have the protection of being able to list and sell in their own area,” says Cameron Fisher.
“In most agencies you don’t get the commission unless you make the sale and, as there could be 10 or 15 agents pitched against each other, you can get a dog-eat-dog mentality. I’ve worked in places where there has been a commission dispute every day; we haven’t had a single dispute in nine years.”
Slider image: kimcorealty.com