How To Start & Grow a Real Estate Business in 2024

Is it a good idea to start a real estate business now? With the inflation rate easing, the Federal Open Market Committee voted unanimously in their December 2023 meeting to keep interest rates steady. They also indicated the high probability of three rate cuts in 2024. Mortgage rates in 2023 hit the highest level in more than 25 years. As rates begin to decline in 2024, this translates into a higher volume of sales in real estate and an increase in the value of properties. Ideal conditions to start and grow a real estate business. These conditions, along with a solid real estate business plan, will ensure the continued success and growth of your real estate business. In this guide, we’ll teach you how to start and grow a real estate business in the coming year.

What Is a Real Estate Business?

The most common type of real estate business is working as an independent contractor or sales associate. This is where the majority of people in the real estate business start their careers. As a sales associate, you must think of yourself as self-employed. Nobody is forcing you to make any sales; you must be self-motivated. You decide how much to spend on advertising and how to use your time. You will receive suggestions from your broker and any mentors you may have, but you will make the final decision on how to allocate your marketing dollars, how many open houses to hold, how many doors to knock on, and how many telemarketing calls to make. The primary motivation you will have is that as an independent contractor, you will not receive a paycheck until you close a sale. Most real estate agents stay as sales associates for their entire career. 

After a few years of experience, some sales associates get their broker licenses and open their own offices. If you decide to go this route, you will be responsible for supervising sales associates working under you. In exchange for that responsibility, the broker shares in the gross commission generated by the sales associates. The decision to stay a sales associate or become a broker is based on the individual’s desire to help their clients with their sales goals and aspirations or to become a supervisor and motivator of other sales associates.

How to Become a Real Estate Agent >>

Why Should You Start a Real Estate Business?

If you truly enjoy helping others and improving people’s lives, starting a residential real estate business is a good choice for you. When you help your client buy a home, you are helping them with what is likely the largest purchase of their lives. You are also helping them buy the asset that will increase their wealth over their lifetime more than any other asset they possess. There is a great wealth disparity between those who own a home and those who rent. LinkedIn states that 90% of millionaires attribute their wealth in part to real estate holdings. With the proper guidance and support, as a residential real estate agent, you will be creating many of these millionaires. And no size commission check can match the satisfaction of knowing that handing the keys to their new home to one of your clients greatly improves their lives.

Is Starting a Real Estate Business Profitable?

Like any other business, you may not see an immediate profit when starting a real estate business. Launching a new business requires start-up costs and time to build a client base and become profitable. Unlike starting a new business like a restaurant or retail store, which may require hundreds of thousands of dollars, a new real estate business will require minimum start-up capital. 

• First, you must meet your state’s educational requirements, which, depending on what option you choose (live, video, book education), can be anywhere between $500 to $1500, including state testing fees.

•  Once licensed, you must become a member of your local, state, and national association or board of real estate agents. This will be an expense of about $600. This is pretty much it for hard costs.

• Other costs can be delayed until you receive your first commission check. For example, you don’t need to spend hundreds of dollars on fancy open house signs with your name and cell phone number. You may be able to borrow some generic open house signs from your broker until you can have some personalized ones made. And don’t worry about lacking marketing dollars at first. Knocking on doors does not cost a cent, and neither does telemarketing. 

Once you build your business and start receiving steady commission checks, then you can allocate a certain amount to marketing efforts such as mailers, ads, gifts, client management programs, email services, etc. Most important is the fact that you may not see a commission check for the first few months. But expenses like housing, food, and gas continue. You could hold a part-time job when you first start your business to cover those expenses or, better yet, if you have reserves available to cover those expenses while you focus full-time on starting your business. It is recommended that new agents without an additional source of income have six months of savings, enough savings to cover your expenses while you wait for your business to become profitable.

What is the Salary of a Real Estate Agent? >>

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Different Types of Real Estate Businesses

A real estate business can take many forms. Real estate sales are the most common. Within sales, there are different types of real estate you can sell. Some popular categories include:

• Residential real estate

• Commercial real estate

• New construction

• Timeshares 

Which area to focus on should be based on who your contacts are and what skill set you possess. If you enjoy aggressive sales, look into the timeshare field. If marketing is not a strength you possess, consider new construction sales. In this field, the developer takes care of marketing, while you handle prospects walking into your office. If you have many contacts in the commercial field, then I would definitely recommend you consider a commercial real estate business. And finally, residential real estate business being the most common form since we all have friends, family, neighbors, and coworkers that are all possible clients or sources of referrals. 

If you are not sales-oriented, consider a property management real estate business. As a property manager, you will be responsible for managing your clients’ rental properties. Responsibilities will include marketing available rentals, showing the property to potential tenants, completing lease agreements, collecting rents, ordering repairs, and evicting non-compliant tenants.

Is a Career in Real Estate Right for You? >>

How to Start a Real Estate Business in 3 Steps

Learn how to start your real estate business in three steps.

Step 1: Identify Your Circle of Influence

A common question of newly licensed real estate agents is, “How am I going to get my first sale?” It’s easier than you think. For most new agents, their first sale is someone they already know. For someone to do business with you, they must like and trust you. And who are the people that are most likely to like and trust you? Look down at your phone and go to your Contacts. I bet the list is at least 500 names long, and that is what is called your “Circle of Influence.” Now, how many people do those 500 contacts know? Being conservative, let’s say another 200 contacts each. Do the math; that’s 10,000 possible clients without having knocked on a single door or made a single telemarketing call.

Step 2: Stay Top of Mind With Your Circle of Influence

You don’t know when the need for a real estate agent might come up with your Circle of Influence, or any of their possible referrals; therefore, it’s wise to do what’s necessary to make sure that when the need does come up, they think of you first. Nothing is worse than learning after the fact that one of your friends or family bought a house and did not use your services. It’s not that they did not want to use you; they simply forgot that you were an agent. My old broker used to say, “Be any kind of agent, but don’t be a Secret Agent (like 007).” Stay in touch with your circle of influence so you don’t miss opportunities that come up.

Step 3: Receive Proper Training

When deciding on a broker to sign up with, be sure to find out what their training schedule looks like. A good broker who supports new agents starting their real estate business will conduct training at least once per week. Every week will be a different topic of interest to new agents. Examples are sales role-playing, using scripts in sales presentations, overcoming objections, how to conduct an open house, the listing presentation, updates on real estate law, how to prepare the most common real estate forms, and others. The proper training will give you the confidence necessary to get your real estate business off to a good start.

Tips to Grow Your Real Estate Business

How can you expand your real estate business? Work hard. In real estate, your profit is a direct result of your effort. There is no steady salaried paycheck, but the profit potential is limitless.  The top agent in my office makes over $600,000 per year because she is the hardest working salesperson I have. The question you have to ask yourself is, “How badly do I want to grow my real estate business?” With working hard as the foundation to growing your real estate business, let me offer you some specific advice that will lead to steady growth.

Tip #1: Conduct open houses every weekend.

Open houses are a great way to have prospects come to you rather than you having to look for them. Put up as many directional signs saying “Open House This Way”  as possible, mostly on main streets. This will drive more potential buyers and sellers to your open house more than any other marketing effort. You also want to advertise your open house. Print flyers with information on the property and the date and time of the open house. The week prior to the open house, knock on doors around the house’s neighborhood. This gives you a perfect excuse to start a conversation with possible prospects in the neighborhood. You might ask, “How can I have an open house if I don’t have any listings?” No problem; Ask other agents in your office that do have listings. Most will be more than willing to let you hold open houses on their listings. 

Tip #2: Consistently market to your Circle of Influence.

Staying connected with your Circle of Influence is critical, and checking in periodically will help you stay top of mind when they need a real estate agent or have the opportunity to make a referral. We have holidays throughout the year, which gives us a good reason to say, “Hey it’s me, your friendly real estate agent. Happy...!” This can be in email or mailer form, depending on your marketing budget. Reaching out to your Circle of Influence is more natural since these are the people you already know. Just make sure you are the first person they think of when they hear someone say, “I’ve been thinking about buying/selling real estate.”

Tip #3: Grow your Book of Business.

Your Book of Business is an accumulation of the people most likely to use you or refer you as a real estate agent. You want to make it a part of your daily activities to reach out to at least 10-20 of your contacts and to grow your Book of Business by at least two people per day. Provide your contacts with Evidence of Success by letting them know when you have closed a sale, listed a new property, or obtained a new interested buyer. It is a good reason to reach out to your contacts and to let them know of your progress and successes. For example, “Just Sold 636 Hartford St at top price in only 16 days,” or “New listing on the market at 685 East J St asking price $685,000,” or “Buyer interested in 3-bedroom condo in zip code 91915 max price $595,000.”

Tip #4: Have specific activity goals to reach daily.

Sure, we all want to make $100,000, so we set that as a goal for this year. But to achieve that goal, you must first complete certain daily activities. Top sales agents focus on sales activities and outsource the administrative and transactional activities. They realize that it’s these sales activities that will lead to the growth of their business. For example, reach out to 15 contacts, add two contacts to your Book of Business, knock on 30 doors, make 75 telemarketing calls, send out 30 emails, and mail out 20 flyers. Hold open houses on Saturdays and Sundays. Oh yeah, and don’t forget to take a day off! You are more productive when you are well-rested and thinking clearly.

4 Reasons Real Estate Businesses Fail

Unfortunately, it’s not uncommon for new real estate businesses to fail, especially during their first year. There are many reasons why a real estate business might fail, but some common pitfalls include:

• Forgetting the most important part of your business: your clients. Real Estate is a relationship business, not a transactional business. If all an agent wants to do is close the transaction and move on to the next one, pretty soon there won’t be a next one. Stay in touch with your clients and build relationships with them. You will see repeat business and a steady source of referrals.

• Not spending enough time marketing and prospecting. In our business, clients do not walk in the door. You must continually prospect for new clients. Achieve your goal of daily sales activities, and that will lead to a steady flow of prospects and referrals.

• Not understanding the current and changing market conditions. In 1969, Sears was the largest retailer in the world. Its famous printed catalog, where you could buy just about anything, even a house, was over 600 pages thick. However, they failed to adjust to the increasing dominance of e-commerce and eventually went out of business. The same could happen to a real estate business. Is it a seller’s market? Is it a buyer’s market? Are property values increasing or decreasing? Are interest rates increasing or decreasing? You must be aware of current and possible future conditions and adjust your business strategy accordingly.
  

• Partaking in illegal (or unethical) real estate practices. When we are helping people with the largest purchase of their lives, you can be sure that there will be many laws and regulations that govern our activities. Among them are Fair Housing, disclosure, landlord/tenant, truth in lending, settlement procedures, and consumer protection. Agents that break any of these laws will find their real estate business in failure and the possibility of fines and even jail time. Stay up to date on real estate laws and regulations, and you will avoid this pitfall.