How many times have you asked yourself, "What's the key to starting my real estate business?" Starting a real estate business can be a very exciting endeavor, but one that requires careful study, research and a commitment to helping you clients. Many people consider the entrepreneurial route, but it is a risky road to take, especially if you don't set yourself up for success. You don't have to sell a unique product, but you should offer a one-of-a-kind service.

Anyone can start a business with the right attitude and financial backing. Competition will be fierce. You can't expect to put your feet up because it's your own business. On the contrary, you should expect to work very hard in the beginning. Before quitting your full time job to launch a real estate business in the hopes of becoming your own boss, ask yourself the following:

1. Are you committed? It takes more than just a good idea to develop a real estate business. It takes time, money and hard work.

2. If applicable, do you have the right partners? Friends are not always good business partners. Vet potential collaborators as objectively as possible.

3. Have you done your research to make sure there's demand for your services? You may have a great idea, but how many others have the same idea?

Action Steps
The best contacts and resources to help you get it done

Launch a real estate business with credibility and get licensed

All businesses are legally required to obtain some kind of government licensing. Your state may regulate real estate businesses through seller's permits, zoning and land use permits, federal and state employer tax ID numbers, and a business name certificate. Regulations vary from state to state, as do the state agencies that do the regulating. There are online resources that can help you navigate your way through the paperwork.

I recommend: Business Licenses is a fee-based online resource that offers information on statewide permits, including a real estate license. Business.gov can assist you in obtaining the necessary federal, state and local permits, licenses and registrations for starting your business successfully. Use its “Permit Me” tool for efficiency.

Join an association and build industry credibility when you own a real estate business

As a new business owner, you don't have to go it completely alone. Consider joining an industry association for support. Organizations bring together professionals with the same goals and challenges. As a member you have access to certification and educational opportunities, in addition to networking events, so you can meet industry peers, vendors and suppliers.

I recommend: The National Association of Realtors and the National Association of Industrial & Office Properties both organize events for educational and networking opportunities. They also offer access to publications and other tools to assist you toward business success.

Become licensed in a variety of areas and expand the services of your real estate business

Real estate licensing does vary from state to state, so check the requirements in all the states that you plan on doing business. There are many online resources that can assist you in obtaining your licenses. If possible, you should become licensed in many areas so you can accommodate a variety of your client's needs.

I recommend: At RealEstateExpress.com, you can get a specialty certification in financing and property management. Allied Schools provides a wide variety of courses for licenses, renewals and USPAP updates, including sales, appraisals, and brokers.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When starting a real estate business, you may decide to balance your own finances. But as your business grows, consider partnering with an accountant who can help you with tax issues, and help you build a financially sound company.

Considering starting your own real estate agency? If you're fascinated with houses, enjoy meeting people, and know your local area well, you're well-positioned to get started. You have a choice to make up front, however, regarding your business' structure. Will you:

1. Start an independent office
2. Buy a franchise
3. Partner or merge with an established operation

Whether you're already working as a real estate agent or not, make sure you've tackled these steps before you make that decision.

Action Steps
The best contacts and resources to help you get it done

Earn your real estate license

To run a real estate company, you either need to be a broker or hire one to manage the real estate transactions. But if you're starting solo, you'll need to have your own license.

I recommend: Study online for your licensing exam or sign up for an online course that guarantees you'll pass on your first try, no matter which state you're in.

Research the pros and cons of real estate company ownership

While the appeal of owning your own agency is the potential to earn more money, there are downsides, too, such as liability, higher costs and increased administrative activities.

I recommend: Learn more about the business startup process, get advice on running a successful agency, and participate in discussions like Agents Online or Point2Agent to learn more about running your own show.

Consider if a franchise is the way to go

Although it requires a cash outlay to become a franchisee, becoming part of an established real estate brand could be a smart idea if you have no real estate reputation of your own.

I recommend: Carefully compare the various real estate franchises, such as RE/MAX, Century 21, Coldwell Banker, ERA, LampPost and Help-U-Sell before signing on the dotted line and writing a check.

Develop your business plan

Whether you need financing or not to set out your own shingle, preparing a business plan to map out how you'll start and run your company will significantly increase your odds of success.

I recommend: Familiarize yourself with a business plan outline and take a look at what the experts have to say. Real estate guru Mike Ferry offers a complimentary business plan as a guide to developing your own.

Study your local market

Learn more about real estate conditions in your area, gain an understanding of what's selling and what's not, and for how much. That kind of knowledge will make you a sought-after resource to clients and colleagues.

I recommend: Carefully read your local real estate listings and MLS listings and stay current with blogs on real estate market conditions such as Ziprealty.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Join the National Association of Realtors in your area to gain access to home listings and necessary real estate forms to run your business.
• •  Buy errors and omissions insurance to protect your company from lawsuits.
• •  Work hard to systematize your company's operations to make it more efficient and profitable for you.
• •  Place an ad with the National Referral Roster, a directory of national real estate firms, and earn priority status in receiving referrals from out-of-town colleagues.

Anyone who is starting a real estate business should be aware of the many terms that people in the field use. For example, it's important to know what type of real estate business you want to start. Do you want to be a real estate agent, broker or appraiser? Are you willing to work with owners of distressed homes? Will you know how to perform loan modifications when the time comes? Knowing these terms will help ensure your success in the field.

Action Steps
The best contacts and resources to help you get it done

MLS listings

The MLS service, or Multiple Listing Service, is the way that real estate agents are able to share information about available homes. Both agents and consumers can search the MLS listings to find a home that suits their needs.

I recommend: Real Estate Calgary describes MLS listings.

Real estate franchise

Some real estate companies offer franchise opportunities to interested and qualified people. Someone who purchases a real estate franchise can gain instant credibility through the use of the company's brand.

I recommend: RE/MAX is a real estate company that offers franchise opportunities. Check out its site for a description and other information to help you determine if a real estate franchise is right for you.

Agent, broker or appraiser

There are different types of careers within real estate, and a potential business owner should decide which type of real estate business he or she wants to own. A real estate agent is able to sell homes. A broker can also sell homes, but may work with other agents. A real estate appraiser is able to appraise the value of a home. All require licensure.

I recommend: Visit the Bureau of Labor Statistics for detailed information on all three jobs.

Remnant ads

Remnant ads are the advertising spaces that a media company has not been able to sell. If a business waits until the last minute to purchase advertising in a newspaper, for example, it may be able to get the space at a steep discount. Small real estate businesses can use this technique to save money on advertising costs.

I recommend: RIS Media offers techniques for purchasing remnant ad space, including preparing your ad in advance and staying in contact with the advertising manager.

Loan modification

A loan modification is a change to the terms of a mortgage. Realtors use this in order to help buyers afford a mortgage.

I recommend: The U.S. Department of Housing and Urban Development offers answers to frequently asked questions about loan modification.

Distressed property

A distressed property is one that needs repairs before the property is in a usable condition. These properties can be harder to sell. Often they are in foreclosure and looking to sell quickly.

I recommend: The Boji Team at RE/MAX Classic offers a good description of the different types of distressed properties.