Closing The Deal - The Unseen Dangers Of Running A Real Estate Business

Real estate is a great business to get into, everybody needs somewhere to live, right? Also property, land, and homes are big ticket items. That means they sell for large amounts of money so it can seem as if there is plenty of cash to be made on a commission basis for those that are selling them. In fact, this alone is enough to make it seem like the perfect field to get into? But, wait, running a successful real estate business isn't as easy as all that, or everyone would be doing it. There are in fact, some pretty significant pitfalls that you need to watch out for in this industry. So read on to find out what they are and what to do when you do come across them. Something that should allow you to keep closing as many deals as possible, and ensure that your real estate business thrives.

Location, location, location

OK, so the first rule of property is location, location location, but most folks think that applies only to the homes that you are selling. While it is important to get the right sort of houses, in the right area for the maximum profit, the location of your own office is vital as well.


It's all about footfall in the right areas. If people have to go out of their way to find your office or see your listings, it's not good. This is because you aren't going to get as much interest as you would if you are located on the high street, or at another popular location.

It can really help to be located next to, or near other real estate agents as well. Then your location becomes a destination for people interested in the property market. Meaning that they are much more likely to come and see you as all the info they need is there in front of them.

Remember too, that moving for many people is an aspirational activity. That means they are always looking at new properties even if they don't plan on buying or selling right there a then. But seeing the perfect place in the window of a realtor can give them the nudge to get things moving. Providing you with a possible sale and the chance to represent them in their home sale as well.


Something that not many folks outside the industry realize is that the perception of real estate agents can be a bit iffy. That means that many folks see them not as professionals that understand the market, but as greedy salespeople!

Of course, there are some real estate agents that are like this, as you find with salespeople in any industry. But that doesn't mean that we are all the same, and they can tile us with the same brush.


If you do come across a particularly hostile client that has this view then, it's best to approach them with caution. They will want to feel like they are 100% in control of their decision on whether to buy or not, and it's vital that you give them their space to build their trust.


Another often unseen issue in real estate is keeping the cash flow of the business running in a satisfactory way. This may seem rather odd, as you expect to be dealing with large commission figures, but hear me out. The problems come because sales are not guaranteed. But the wages that you have to pay, the fee son your premises, and your other business costs are.

That means you may get to the end of a month when it's time to pay wages and not have had a recent sale go through. Meaning that there is not enough to cover all the outgoing costs that you have. Remember clients, the market, and legal issue can all hold up sales and put you in the difficult position of being short when it comes to paying bills.


In an ideal world, you would deal with this by covering all of your costs from your first, second, or third sales within the month. This should ensure that you always have the money put aside to deal with them. However, this isn't always possible.

It could be that you have made any sales this month? The market could be down? Or a particular client is dragging their feet?

In this case, it can be helpful to use a service that provides commission advance for real estate agents and brokers. As they will give you the money that you are due on your commission now, and you can pay it by when the sale actually goes through. Meaning you have the cash flow to keep everything in your business afloat.

Of course, it's also worth mentioning here that the lower you can keep you overhead the less, you will have problems in this area. That is why many realtors are moving to completely online services.

This is where they eschew having a physical office and only offer information on the property that they are selling online. This seems to be working well for many as the internet is the first place many folks look now when they decide to browse properties.


Although it is worth noting that the commissions are often fixed, and a lot smaller. Also, some folks are going to be reluctant to deal with such a big issue like selling a house in a situation where they can't speak face to face with someone.


Only real estate agents know the pain of the chain. For the uninitiated a property chain can seem like something that is a minor inconvenience, that can be cleared up quickly and simply. If only this were the case!


In fact, chains can not only ruin a sale buy a whole line of them. A property chain is where the sale of one home is dependent on the sale of the one that the new owners of the first have and so on. It means you can only close a sale once all of the other properties in the chain, which can be a substantial amount, are lined up to exchange. That means if one falls through for whatever reasons the rest of the chain is broken, and your commissions are lost.

But what can be done from the realtor perspective to stop with chain breaking? Well, it's difficult because there are so many variables that they are not in control of. For example, it could be that one seller has changed their mind, lost their job, or had an illness in the family.


That means the best thing you can do is to keep in contact as much as possible. This can help you build up a good relationship with the representatives of the people in the chain. Meaning you will hear of there are any problems in good time and that gives you more time in which to effect damage control.

The best damage control in the situation is to get the home back on the market. To do this, follow up on leads that were interested and either didn't put an offer in, or their offer was rejected. As often times, once people have begun the moving process they will take a lower offer to ensure that everything keeps moving. As they will want to avoid the inconvenience of having to unpack and change their plans.

Legal work

Obviously, part of real estate is the legal documentation that needs to be completed when a sale goes through. One of the biggest dangers to closing a deal is if there is a problem with this. Unfortunately, legal property documents are known for taking a long time to get signed by the relevant people and be completed.


This can be incredibly annoying if you are trying to close a deal quickly, and both parties are waiting for the law firm to rubber stamp things.

Obviously, having a good relationship with the law firm can help. As they will not want to inconvenience someone that is putting a lot of business their way. It can also help to ensure that all of their invoices are paid promptly and correctly to keep things moving.

The market

Lastly, what real estate advice post could be complete without mentioning the market? This, of course, refers to both the financial market in general and the property market specifically. Although they are intrinsically linked.

When the market is good, sales come easier and quicker. Buyers think less about moving, and the financial risk of the situation seem downplayed. Allowing you to sell more expensive properties with the proviso of a mortgage.


However, when the market is down, selling homes can feel like pulling teeth. Everyone is far keener to sit in the investment that they have made, scared to lose money by selling now, and hoping they can get a better price in the future.

Of course, you can't control the market so the best thing is to learn how to navigate it as best you can. That may mean employing more people when the market it up to maximize your returns. Or branching out into a rental property when the selling market is poor. As this area is often much better when folks are selling less and moving more.

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