One of the best things about being in real estate is the option to run an office from home. Whether a real estate office is open at home or in a commercial space, there are some required steps that are identical to opening an office in either place. Home spaces and commercial spaces have some additional considerations as well when getting ready to open a real estate office.
Items you will need
- Real estate broker's license or branch authorization
- Office location
- Office sign
- Standard office equipment
- Dedicated escrow bank account
Be licensed. Real estate and the rules of running a real estate office are heavily influenced by state law. Please consult your attorney for state specific information. Only licensed real estate brokers may legally open a real estate office or branch. Operating as a real estate sales agent without the appropriate state license is a felony in most states. Real estate agents may be named as an office manager for a branch that has an overseeing broker, but that must be confirmed by the laws before assuming the legality of that in your state. To obtain a real estate broker license, most states require that you hold a real estate sales agent credential for at least 1 year before sitting the broker's exam. Contact the local education providers in your area for information on becoming licensed as a real estate broker in your state.
Form a legal status. Real estate offices have many opportunities for legal entanglements. Forming a corporation or LLC is a wise way to go and may even be a requirement in your state to open a real estate office. Check with the Division of Corporations and the National Association of Realtors for more information on the minimum legal corporate status required in your state.
Decide on the office location or space. Working from home is a benefit of being in real estate. However, real estate is primarily a sales function with lots of client interaction, therefore, if you plan to operate an office from home, the real estate office space should be defined, private, and professional. At the very minimum, the ability to offer privacy in your office space is a legal requirement because of the nature of the discussions and documents that may be on your desk. Commercial or professional space requires contracts, a larger budget, and at least one assistant or additional employee. The location of this space may be determined for easy drive by access, target market, space, price, or a combination of all these.
Write a business plan or proposal. Even if you do not need a loan, a business plan outlines the mission and method of the real estate office. Do not overlook this step. Professional help can be obtained to craft a solid business plan, and this step is even more crucial if that proposal is to be used to obtain investment funding.
Set up the office. Most states require a sign be publicly displayed to indicate a real estate business is established in a location, even if that location is your home. This sign may have specific requirements by the state and usually includes the Broker's full legal name, license number and so on. A Fair Housing sign must also be publicly displayed. This sign must follow HUD guidelines, and for more on that visit the HUD Resources link. There is a difference between real estate brokers and realtor brokers, and that is the affiliation with the National Association of Realtors (NAR). Check if your state also requires the new office have an affiliation with a governing board.
The standard office setup of administrative space and tools apply here. A real estate office must be equipped with a computer, Internet, and fax machine due to how information moves within the industry. In addition, other industry equipment may need to be acquired such as property lock boxes and a special key that opens these real estate lock boxes. Real estate offices also need to consider including a comfortable seating area and/or conference area to handle document signings and sales presentations.
Escrow it. Down payments to secure real estate contracts under consideration is standard business for real estate offices, however, legally, these monies cannot be co-mingled with office administrative funds. Establish a separate escrow account for all funds received by your office. Smaller real estate firms may consider submitting these funds to the attending Title Company to avoid any accounting problems.
Define your "farm" (the area your office intends to market to), and then farm your area. Determine if the real estate office will focus on commercial, residential, waterfront, farm land, or manufacturing property. Consider including a reference to that focus in the name of the office, (for example, Tampa's Waterfront Real Estate office). Establishing a niche may seem to narrow the options for your office, however, being known as an expert in an area can also create a marketing and work flow edge. Do your due diligence and examine the demographics and other relevant information to help to define your farm area.
Tell the world. Real estate brokers need clients, and opening a new office with a grand opening event may just create the buzz needed to let potential clients know your office is now open for business. Website presence is pretty much a mandatory staple of this business. Most real estate boards allow for easy interfacing with web spaces and client search access to real estate listings. Other marketing strategies will be useful and may be found in other articles offered on this site.
Just like selling real estate properties is influenced by location, location, location--then selecting your real estate office space should be influenced by location, location, location. Determine your office location first by your farm area. Then within the farm area, look for the affordable space that meets your criteria. Running a real estate office has a heavy sales component for it to be profitable and to meet operation expenses. The focus therefore has to be on getting the sale as a priority above the administration of the operation.
Remember funds earned from sales must have a portion pumped back into the business if the business is to grow. Real estate brokers need to learn money management skills to distribute sales funds effectively so the business continues to grow.