Real Estate Services - Business Immune To Internet?
Real estate services business is one of those verticals with an overwhelming number of websites. There are thousands of websites with apartments and villa listings. But does it really mean that this internet model of business generate a proportionate amount of revenue? Well, not really!
By many ways Commercial real estate mount kisco is one of those businesses that are ideally suited for a net based model. On one side you have a seller who wants to sell his property and other side you have a buyer who wants to buy a similar property. The seller lists the property for sale on a website. Prospective buyers finds it on the site and if found suitable, the buyer and seller come to an agreement for sale. No searching for agent, no commission. It all looks so simple. But it seldom happens that way.
The sale of a property incurs an agent commission of 2.5 to 6% (depending on your country, region, agreement with agent etc) of the sale price. The above described scenario means only a small listing fee to be spent by the seller. Consider the online recruitment business where a similar situation exists. It has done very well unlike real estate websites and sites and have a high brand recall. But a similar success is not found for real estate services websites. Spare a few which has found success in the commercial real estate sector. The truth of the matter is that the real estate multiple listing service (MLS) and agents tightly guard the seller data and other information. However, some other reasons also exist.
A real estate listing, unlike a job listing, needs to provide more information to look credible for the buyer. Collecting the required data, pictures of the property, (even videos some times) recent sales data, above all removing outdated data from the database, all this needs money to be spent.
Not all those who buy and sell property are negotiators. The agent claims to be one and normally takes such a role. But on most cases, they just make both the buyer and seller feel good about the deal. Both parties feel they negotiated and got the best deal. Also, not everybody wants to publicize that their property is up for sale, especially for commercial properties. An agent is entrusted to find buyers for the property.
There can be a solution for most of these issues. A real estate website can still provide the first level of information to seller. At least it can narrow down the search to a few properties of ones choice. With a little effort one can get additional information necessary for deciding the suitability of that property against your requirements and budget. As for confidential listing of property, this can be incorporated in a website. For examplea property marketing company hides the seller data and other traceable information from a property listing if tagged 'confidential' by the seller. This listing appears in search results for the given parameters and the prospective buyer can email the seller of his interest in the property.
As real estate websites adopt steps, to provide information which is updated and verified, this business model will gradually pick up. Though the cost of maintaining such sites is slightly more, this should gradually increase public trust on this model. Even with all this, the cost of property transaction can reduced considerably. Not to mention about the time saved for finding a property.
Commercial Real Estate, A Career - How Do You Get Into It?
1. WHAT IS IT AND HOW DO YOU GET INTO IT?
Several years ago, I was attending a Society of Industrial Realtors Annual Spring Conference in Maui. My wife had accompanied me on the trip so that we could also do a lot of sightseeing. Colliers International, a 241 office worldwide firm, sponsored its own company cocktail party the night before the Conference officially began and my wife and I attended the party.
A short while into introductions, a fellow came in from the golf course and he sat down at our table. Andrew Friedlander introduced himself an we discussed our home in Philadelphia, his original home in Brooklyn and his new home in Honolulu. As to how he ended up in Hawaii, Andrew told us that on R&R during his tours in the Army in Vietnam, he decided to take a break in Hawaii after he was finished his last duty tour. He rented an apartment, waited tables, washed cars, etc. to have some extra cash. He said that he paid his apartment rent to an older man who came around once a month and he finally asked the man whether that was his business. Andrew said that he never thought about property management as a business, but the more he spoke to the man the more that he realized how diverse a business commercial real estate could be, particularly in Hawaii. The rental agent began to show Andrew the basics of the business and Andrew decided not to return to Brooklyn.
Forty years later, Andrew is the manager of approximately six Colliers International offices in Hawaii with over 40 brokers and salespeople as his responsibility. Aside from selling and leasing commercial real estate and traditional brokerage transactions through the islands, Andrew's team is involved in all of the other aspects of commercial and industrial real estate.
As one concierge person told my wife and I while we were touring there, "Yes, it is a great place, now where would you ever think of moving to once you are here."
In the past year, a young Army Captain and friend called me from Hawaii. He and his wife were taking in some R&R after his last duty tour and he called to ask me for some advice on commercial real estate firms. I gave him Andrews phone number after I checked with Andrew on his availability. Andrew treated my friend to lunch and introduced him to Colliers' business in the islands. As it turned out, my friend and his wife decided later to relocate to Florida to be closer to their parents. Our Colliers office in Ft. Lauderdale was anxious to interview him and did so. He found a better fit for a concentration in office brokerage with another firm, but I think that it is clear that opportunities do exist with major firms for someone who has an interest, who can demonstrate that they are self motivated and whose comportment (manners, speech, personal grooming, business attire) are all positive. A long time friend told me one night after we and our wives checked in, very late, at a hotel owned by a well known hotel group, "That desk clerk is the person representing this hotel company to its customers and I know the CEO. That clerk's slight rudeness toward us does not at all represent what their CEO wants his company to be known for in their business. He will need to learn that if he is going to be more than the late night clerk."
I mention this because a company such as Colliers or any of its competitors must ensure that a salesperson or broker first meeting a potential customer properly represents the company's image. So much money is spent defining that image to the business community that each person, including all staff, must reflect that effort. Otherwise, a potential customer will choose to hire a competitor whose act is together. My understanding is that customer relation training at Wal-Mart is quite strong for all personnel. I would think that any major restaurant chain has in place a thorough program for staff training and it may pay to observe whether if the customer is not always right at an establishment how the staff person handles a customer who is being a bit particular.
I use Andrew's story as an example of the opportunity that commercial real estate offers. A senior business mentor and good friend of mine told me in Florida in 1971, just at the beginning of that recession, that commercial real estate offered an opportunity to enter a business without having my own capital to invest other than my time and energy, and, with no limit on the size of transactions that could be put together. We discussed this in relation to my going back to law school. His opinion was that it was almost a "sky is the limit" approach, but with some basic sense to it. I had done a few financial reports on potential deals offered to him. I also handed over that year, at my mentor's instruction, a $300k commission check to a broker who he had employed to buy a property that he had settled on the year prior to that. The next year, at the same time, I handed over the same check to that broker as the second half of that commission to that broker. Please realize that in 1972 that commission amount in the onset of that recession was a significant amount of money for any transaction.
Each state has its own regulations for licensure. Florida required a person to take a sales licensing course, pass that, then work in a licensed real estate broker's office for a minimum of two years before being eligible to take a state broker's exam. The sales course is offered by numerous private firms and colleges, evening courses in particular. The cost of the course is minimal. The basic skills for reading, writing and math portions are not difficult. Depending upon your educational qualifications, commercial real estate firms may often offer to provide the course. Smaller, more generalized, brokerage firms may also do the same in order to gain a salesperson.
There typically is a recognized "culture" or business reputation known for a real estate firm in any community, The community can be local, regional or national. It pays to do your homework as to which firm appears to suit your style. The internet is definitely one of the most productive sources for finding a firm's history, its areas of expertise, personnel, and its successes. Recognize that major metropolitan commercial firms often outsource client needs in an outlying area to a smaller commercial firm in that area rather than requiring one of their main office brokers to commit to travel time. Consequently, if you are in a rural market outside or between major metropolitan markets, you should investigate which real estate firms have those relationships for the larger deals.
Your time for success starting in commercial real estate (particularly without capital) will be the result of what you put into it. I had the option in the early '70's of returning to law school and finishing. What I realized most was that I liked being out of an office and "on the street." My attorney friends in Ft. Lauderdale were spending innumerable hours, as needed, in their offices to write briefs, draft documents, etc., all of which that profession requires. My decision was to put in the same hours on commercial real estate that I would have to put in for any law practice. If it worked, then fine, if not I would go back to school.
Considering that the early '70's recession in Florida hit every occupation with almost equal damage, many attorneys had practices with slim billings and clients whose businesses were suffering economically. Several real estate brokers who I met were having very difficult times because the banks were not lending money for deals. Florida had a usury cap of 14% at that time. Deposits were down and when interest rates in California started to go above 14% that is where the money went.
Weekdays in those years, I was knocking on the doors of businesses in the West Palm to Miami corridor. Weekends, I was often painting a house or captaining a motor sailer owned by a friend's corporation. Weekday evenings after dinner, I was at the office reviewing property information, ownerships, tax data, etc. for the next day's driving or phone calls. I found that it was possible to earn a living while getting into the commercial real estate field. I later found out after moving back to Philadelphia, that several of the commercial real estate firms did not mind their starting salespeople to moonlight as bartenders, waiters, or whatever until they had enough experience to close transactions. That has changed somewhat in the larger cities due to the financial strength of the larger firms and their ability to either offer a base salary or draw to new salespersons.
Gender in today's commercial real estate world is not an issue as it was in the '70's. At that time, men only eating clubs were often the norm and women were not often able to match that type of selling locale. The number of women who have joined commercial real estate organizations such as SIOR, CCIM, etc. (which I will discuss later) has increased dramatically over the past 15 years. The commercial real estate courses offered today provide an excellent means of obtaining knowledge that once was taught generally "in house" by senior brokerage personnel responsible for a new salesperson's progress.
Therefore, in considering commercial real estate the aspect of having minimal capital has not changed. Gender is not an issue and many women who have chosen to specialize in industrial or office real estate have done very well. You
can choose your hours, choose your area of specialty(s), choose your market area(s), and choose who you want to approach as a firm to join. Most commercial real estate involes the standard business week, not including late Saturday or Sunday hours (vs. residential Sunday open houses). These are several of the positive aspects of working in commercial real estate. The competition is keen, your competitors respect a good work effort and, most importantly, they respect a strong reputation for any individual.
You should investigate both larger commercial firms and smaller real estate brokerage firms. There are advantages and disadvantages to both.
A). Larger firms may be willing to offer a base salary or a draw against commissions. They may prefer prior business experience, but not necessarily prior real estate brokerage experience that may conflict with what their "culture" is and what their in-house training entails. Typically, a new salesperson would be assigned to a senior broker or brokers to do cold calling, marketing materials, marketing reports for any existing client's property and probably handle property inspections by other competing brokers with their prospects.
A few points on Larger Firms:
Future ownership potential for you in the company may be limited or non-existent.
Control over what market, territory or discipline that you work in may not be your choice. If you are hired for one department, such as retail, that may change if they need personnel support in another department, such as office. You may find that they prefer a new person to rotate through each department and possible each regional office if they have multiple offices.
Depending upon whether the firm is privately held or a public company it could be sold or merged without you being involved in the discussion. There is no real "safety blanket" for any position in a larger firm. If a primary, large, client is lost to a competitor, cuts may be relatively fast to absorb the lack of revenues.
Senior brokers who are successful occasionally leave to join another firm or to start their own competing firm. Clients usually follow those brokers and that could disrupt your potential income if you are in that department and the rain makers leave.