There is no question that if you're a real estate broker, then purchasing a a real estate franchise will enable you to hit the ground running.
Nine of out ten business fail in the former year, even mores-over the next five years. However, with a franchise, over 80 percent of the businesses are successful. Why? Because you'll be purchasing a proven system.
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The real estate industry is dominated with numerous regulations, rules and high fees that 'reinventing the wheel' is a great waste of time and money.
Unfortunately, in the past few years there's been an onslaught of new franchised real estate companies that are carbon copies of one another. There are numerous companies to evaluate when choosing a brokerage but more importantly there are numerous fees to evaluate as well.
Land brokerage in Friendswood must definitely be handled with utmost knowledge and credibility. Land brokerage in Friendswood isn't an easy job. You need to weigh your options first before you decide who to tap for your real estate concerns. Land brokerage in Friendswood is certainly helpful for your real estate needs.
A word of caution. The below material isn't meant to scare you, merely educate you. This brief article will prepare you immensely when deciding on which real estate franchise to purchase.
To allow you to fully examine a company you already have in mind and reinforce or eliminate this company on the basis of below criteria.
All franchises have renewal terms. Approximately 60% of real estate companies require their franchisees to pay renewal fees to renew these terms. These renewal fees are typically a few thousand dollars and are necessary every year or every few years.
These franchisors claim these fees are for administrative costs, technology fees or other support related costs. This is basically a junk fee. Do not choose a real estate franchise that charges renewal fees. These fees should be part of the costs that are collected during the ordinary course of business. Companies that charge renewal fees are not concerned with their franchisees financial independence.
Real estate companies make their money by zoning small territories for their franchisees. Zoning by zip code is the most frequent type of territory to offer. Several real estate franchises only give territories by the mile! Paying a high initial franchise fee and part of your profits for exclusivity to only one zip code, or one mile, is unacceptable. Avoid any real estate franchise that offers exclusivity to a territory based on mileage.
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The best value by far is the ability to acquire a franchise by population, not mileage. People move and populations change. If you purchase a particular zip code and over time over half of the population migrate elsewhere, you'll be left with half the business you originally thought you would have. Take Hurricane Katrina for example. That storm left thousands of families displaced in New Orleans and to date many of those families have never returned.
It goes without saying that when you purchase a real estate franchise you'll want your franchise to grow. Growth should be in the interests of the franchisee, not the franchisor. However, many franchisors charge an extra fee for branch offices. If you have plans for owning a small brokerage of 6 or less agents, then this fee will not count to you. However, if you want a franchise with unlimited potential this fee will have an enormous impact on your bottom line.
When considering a real estate franchise, always ask the franchisor about additional fees for branch offices.
Statistics overwhelming show that clients do not like going to real estate offices. They would much rather meet in their house or a neutral location (as a local coffee shop). Statistics also indicate that most agents prefer to work out of their house. This can easily be accomplished with a computer and printer.
A brick and mortars office is large expense for a broker. The broker must then pass that expense onto the agents in the shape of higher commission splits. This makes everything more expensive. A real estate franchisor should have the technology available for a franchisee to work out of their house.
Any company that requires the franchisee to maintain an office should be avoided at all costs. This is a large, expensive and unnecessary expense with an old-school mentality. Your real estate franchise will never reach your desired level of success within the limits of a brick and mortar office.
Franchised real estate companies are dominated by one out-dated type of business model perhaps by a lack of imagination or a shortage of leadership. This business model calls for a percentage of sales on gross profits (typically between 4 and 6%).
Do not buy a real estate franchise that collects fees on a percentage of gross profits. At first, this might seem like an acceptable form of payment. However, you want your real estate franchise to be large and successful or else you would not be spending thousands of dollars and hours investing in one.
The first rule of business is to always think big. If you truly believe in yourself and your abilities you must realize that building a large successful real estate brokerage is well within your capabilities. With your franchisor collecting a percentage of gross profits, you're paying a higher fee the most successful you become, when in fact that opposite should occur. This type of fee constantly drags down your profit margin and returns your success rate back to normalcy.
Always look for a company that charges their franchisees a monthly fee per agent. This type of fee structure is much better for franchisees that plan on growing a successful brokerage.