If you’ve ever bought or sold a house and thought ‘I could do that’, you aren’t alone. Google searches of how to start an estate agency are on the rise with more people considering selling homes as a viable business opportunity.
But don’t make the mistake of thinking it’s an easy path to riches; the chance to pull in lucrative commission as houses sell themselves. Growing an estate agency business involves plenty of hard graft and demands skills in communication, negotiation, and keeping a fair few spinning plates in the air!
Don’t expect it to make you too many friends either. A recent Ipsos Mori poll of the UK’s best trusted professions puts estate agents fifth from bottom with just 27% of people surveyed believing they can be trusted to tell the truth – compared to 90+% when it comes to nurses and doctors.
If none of this has put you off, here are a few of the things you should know before you decide to set up an estate agency.
If you’re thinking of setting up as an estate agent, you probably have a fair idea about what the role involves. Estate agents sell and rent out property on behalf of clients – homes for people to live in, in the case of residential estate agents, or business premises in the case of the commercial sector.
Whatever their image problem, estate agents are providing a valuable service, helping people in all kinds of ways; whether they are fulfilling their property buying dreams, selling a much-loved family home in difficult circumstances or launching a new business enterprise with their first premises. To do this they are providing services that most ordinary people couldn’t manage alone.
As we’ve said, successful agents need a particular skill set. They need to be confident communicators with the ability to get on with a whole range of people, putting them at ease and getting their attention. They need the steely nerves to negotiate on clients’ behalf and cope with a crisis – because there will be several.
Anyone thinking of setting up an estate agency should also have an interest in the business – including the economic forces that impact on the housing market.
Residential estate agents should have a nose for property; what sells well and what will be harder to shift as well as the strategies for maximising its chances.
To become an estate agent in the UK, there is no formal requirement for specific qualifications, making it an accessible career path for many. However, having GCSEs in English and Maths can be advantageous, and some agencies may prefer candidates with A-levels or equivalent qualifications.
Gaining experience in sales, customer service, or a related field is often beneficial. Aspiring estate agents can also pursue industry-recognised qualifications, such as those offered by the National Association of Estate Agents (NAEA) Propertymark, to enhance their credibility and knowledge. Strong communication skills, a proactive attitude, and a genuine interest in property are key attributes for success in this dynamic profession.
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Unlike with other professions there are no formal qualifications needed before you set up as an estate agent, though there are moves within the industry to change that.
Some areas of education could put you at a distinct advantage, such as business studies, surveying and structural engineering. With marketing strategies key to how homes are presented for sale or rent, a background in marketing – particularly digital – would definitely help.
Industry organisations, such as NAEA Propertymark, the professional body for estate agents, offer training in specific areas of the work, which can develop your skills and enhance your credibility.
These will depend upon the type of agency you wish to establish. Most people still sell and rent homes through a high street agent with a physical branch. If you’re looking at this route, your premises will be your biggest outlay – particularly as you will need a good, prominent location to get yourself noticed. You’ll also need to account for staffing costs and business rates.
However, the market share of online agents is growing and it’s definitely an area to consider. Setting up an online estate agency requires only a spare room, at least to begin with.
There are four big costs to consider:
Staff employment can obviously be expensive, though this depends upon the size of the team you intend to work with, any outsourcing you plan to do, and how many roles you want to encompass yourself.
Example overhead costs: You’ll probably need a sales negotiator who handles clients (£28k salary on average), an administrator to handle the paperwork (£20-24k) and a property manager (£24-28k) for any rental properties you might have.
Additionally, you’ll need to consider these specific costs, which are more generally related to employees.
You will likely need tools to help you manage your properties and clients. In an increasingly digital age, this means keeping up to date with some of the latest proptech tools, apps and management systems. For example:
Example overhead costs: You may pay £1,200 per year for the basic CRM package, a basic (high-quality) DSLR camera to take property photos is £500 on average, while virtual tour software can also have annual costs between £300-500. Meanwhile, website development and hosting can range from several hundred to several thousand pounds depending upon your requirements, so it is difficult to predict.
TIP: Check out the Best Estate Agents & Letting Agents Website Designs To Use For Inspiration.
This will likely be one of your largest costs, and is highly dependent upon where you intend to base your business. Equally, this cost is evaded if you are intending to set up an online estate agent business. However, the money you don’t spend on the premises will be needed to be directed towards marketing costs instead.
Here are some of the costs associated with running an estate agent’s premises.
Marketing is another cost which is highly dependent upon your budget, specific goals and whether you want to focus on online or offline advertising. If you are starting an estate agent business, then it is likely you will need to invest in your marketing to develop your brand and become known in the community. Digital marketing is arguably the most important investment for an online estate agency business where there is a great need to gain exposure and establish your reputation online.
Here are some of the costs you should consider as you think about marketing.
There are various pros and cons of the online versus traditional model to consider, as well as your specific situation and business plan.
The online estate agency model is dominated by a number of big players and offers lower costs and greater flexibility as its main selling points. Those types of estate agencies tend to offer a more basic service than you’d receive from a high-street agent and, as a result, they charge lower (often fixed) fees. They also require the seller to do some or most of the work themselves, such as conducting the viewings or taking the photos.
Here are some advantages to setting up an online estate agency.
There are also several cons to consider:
On the other hand, a traditional-model estate agency will have one or multiple physical locations, either on the high street or in a serviced office. Their fees are typically on a commission basis and calculated as a percentage of the price paid by the buyer. The commission is usually between 1-3%.
Here are some pros to the traditional agency model:
And the cons?
If you’re adept at online marketing, or have the budget to spend on your website and any associated promotion, then beginning an online agency may be an excellent choice. There is no problem transitioning to a physical office in the future either. However, if you want to create a bespoke and personal service, then it is more difficult to do so remotely because you are not as visible to clients.
If you go down the residential agent route, you’ll help people buy and sell houses. You’ll conduct valuations, list properties and conduct viewings before negotiating on your clients’ behalf.
You’ll need a good understanding of the property market in your area to be able to advise your seller when offers come in. You’ll also need to guide your customers through the sale process, ensuring everything happens at the right stage.
If you offer residential lettings, and most agents do, you’ll need to manage properties on behalf of landlords, advertising rentals, screening tenants, and looking after the day–to–day running of the properties in some cases.
If you decide to work in commercial property, you will rent out and sell everything from shops and offices to warehouses, factories and pieces of land. It’s a specialised field and you’ll need to get to grips with many complex areas of law, including freehold, leasehold and planning.
Again, there are advantages and disadvantages to attaching yourself to a franchise. It depends on a variety of factors, not least the specific terms of your enfranchisement. However, there are some basic benefits which you should expect to find if you choose to become a franchise.
Inevitably, there are also disadvantages to setting yourself up as a franchise. This depends from franchise to franchise, but there are some common issues that franchises run into.
It can be a good way to get started in the industry and learn the ropes, but it’s important to do your research and ensure that the franchise is a good fit for you and your business goals. You need to consider what motivates you to start an estate agency.
If you want to make a unique impact or build your own brand of estate agency services, then enfranchisement will restrict your ability to do this. However, if your intention is to learn more about the industry in partnership with a more experienced partner, then enfranchisement could be an excellent option for you.
Like any other new venture your fledgling estate agency will need a plan – particularly if you’re looking for financial support. You’ll need to do your research, understand your costs and income projections and honestly lay down all the strengths, weakness, opportunities and threats to the business in the market where you’re operating, before putting these all down in a clear plan. Read more about how to write a business plan here.
As we’ve said, these are likely to be your biggest area of cost, so choose wisely – this shouldn’t be difficult, as it is your area of expertise. Make sure you do your research into footfall, and that the rent is affordable.
There are plenty of agents out there and you need to stand out from the crowd so don’t scrimp on branding and design. You’ll need to be methodical in planning your marketing strategy using digital, social media and traditional methods. Digital marketing is crucial for your estate agency. Remember, this is a fast-moving area and you’ll need to keep on top of trends to stay ahead of the competition.
It’s advisable to be insured against claims by clients if things go wrong. The main types of insurance to be aware of are:
Public liability insurance: for compensation claims if a third party is injured at your business premises.
Professional indemnity insurance: in case of allegations of inadequate advice or services by a client.
Employers’ liability insurance: if you employ staff, you’re required by law to take out this insurance.
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