Property and Estate Agent Franchises UK – the TOP 10 MUST KNOWS about finding and running a successful UK Property and Estate Agent Franchise.
The property and estate market may go up and down – but it’s never going to go away. If you’ve got the necessary skills, a property and estate franchise can be a great source of additional income.
2008 was, in more ways than one, the global equivalent of the great American depression.
Bad loans, poor money management from top banks and questionable decisions – it had every classic symptom of systemic abuse. But what stood out from this upheaval was one thing – the property sector in the UK holds our strings. If it’s doing well, the economy does well, and if it’s in a slump, we’re all in for some trouble.
Now, keeping all the bad memories of the past decade aside, let’s look at the positives. Things are changing fast. The money will eventually come into all property sectors (if it hasn’t already).
What this also means is this: there is always going to be a new wave of demand for knowledgeable, experienced and skilled estate agents, property managers and brokers. In this environment, being a local representative of a well-known estate agency is not just a possibility, it’s a full-blown chance to run your own estate agency franchise business.
In this post, we’ll see what property and estate agency franchises are, how they work and how you can leverage your experience and free time to establish a stream of reliable income.
Property, Estate Agency and Letting Franchises: Riding the Wave
As of writing this post, the future looks quite shaky and turbulent. Most of us haven’t seen a deal more roundabout and love-hate-driven than Brexit; the homeowners are in a state of confusion; businesses don’t know whether to swoop in on the opportunity or play the waiting game; the landlords aren’t sure why they can’t sell their properties.
Here are some bad angles to this chaos:
- The prices are just too high. Commercial as well as residential properties are continually attached to higher asking prices than the buyers are willing to shell out. Not surprisingly – quite a few properties now sit idle on property and estate agencies’ books.
- The stamp duty reforms have not been received well by the housing market. The stamp duty revenues are already going down, with fewer properties being transacted. The whole idea may have been to encourage first time buyers to invest, but it has definitely put speculators, high-net worth individuals and businesses from investing.
- The doom and gloom surrounding Brexit (and, more appropriately, the way it has been handled so far) has already impacted the commercial property market. The Investment Property Forum forecasts a flat 50% slashing down for the commercial property returns (from 6.2% in 2018 to 3% in 2019). The good news is, experts are still optimistic about the market to get back on track in a couple of years, regardless of the way Brexit swings.
- Retail property sector is already going through a turmoil, thanks to various reasons (including the prominent e-commerce trends). Retail properties are expected to sharply decline in prices, following an expected closure of over 23,000 high-street businesses in 2019.
What Does All This Mean for Estate and Property Franchises in the UK?
Quite honestly, it’s hard to say.
Assuming the market course-corrects, this could only be a brief testing period. On the other hand, if things go further south, we could be in for even more shocks.
Regardless of those outcomes, it’s important to note one thing. Property and estate agencies generally tend to do well in all economies except the stagnant ones. As long as there are people willing to sell and buy properties, there’s money to be made. It also helps that foreign investors are already trying to exploit the market conditions, investing heavily in the UK housing sector.
“The point we are trying to make is straightforward – if you’ve got the right skill set and you’re willing to tough it out, buying a property and estate agency franchise could be a business worth investing in.”
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What Are Property and Estate Agent Franchises? How Do They Work?
Estate agent and property franchises are licenced divisions for large estate agencies.
As an estate agent franchise, you will helm the operations for the company in your territory. It is quite similar to being an estate agent yourself, the only difference being the branding, the additional trust and ease of doing business that come with franchising.
Here’s how a typical estate agency franchise works:
- The franchisor prepares a franchise model and advertises.
- Interested franchisees invest.
- The franchisor allocates a territory to the investor, trains them in running the franchise unit. Both parties arrive at a franchise agreement that decides how the revenue will be shared.
- The franchisee lists properties and onboards clients in the territory, brings in revenue and helps the franchisor expand their business while earning a fair share via commissions.
What Does It Take to Buy and Run a Property and Estate Agency Franchise in the UK?
Throughout our blog posts, we talk about various franchising sectors and who they are best suited to. If you are a regular reader, you’d have noticed a recurring theme – most franchising sectors do not require you, as a franchisee, to be intimately familiar with the industry. Take fitness franchises, for example. It helps if you are a certified trainer, but it’s not at all necessary for you to be one in order to buy and run a gym franchise.
The same cannot, however, be said about estate and property franchises.
This is a unique franchise business sector that resembles more closely to a regular job than a business. Don’t get us wrong – it’ll still be your business, but you will be expected to run the show yourself. You can, of course, think about bringing on board other estate agents as your employees, but that certainly wouldn’t be possible in the first few years of the business, given the relatively high salaries of the trade.
In short, estate agent franchises are best suited to those who have prior experience in the field. Here are a few factors that franchisors would expect you to have in your favour:
You Know the Local Property Market.
If you are new to the local property market, you’ll have a tough time making profitable deals for your clients. In fact, most buyers and sellers choose to work with estate agents that have been referred to them through their network of colleagues and friends. This is also where having a brand name of the franchisor on your side helps.
Property deals are roundabout, complex and full of uncertainties. You need to know the prices, the localities, the trends and the opportunities inside out to be able to consistently stay profitable.
You Are A Good Communicator and Negotiator.
If there’s one trade that requires you to be an extremely good communicator and negotiator, this is it.
You will never be able to make a sale or strike a lease deal for your clients if you don’t have these soft skills. Quite understandably, you learn these on-the-job, and hence, being an experienced estate agent gives you a significant edge over others who aren’t.
You Have A Strong Local Network.
As we mentioned earlier, people like to work with estate agents who are recommended to them by others.
So, having a strong local network of peers, colleagues, clients, businesses and professionals helps a lot. It will help you find opportunities before they even surface, and close down deals that may otherwise seem impossible to crack.
You’re Willing to Persevere.
No, we aren’t talking about the generic you-need-to-work-hard quality.
Property and estate business often has you handle long-winding deals. It may take months for you to close a deal from the date you first started working on it. To be able to stay on top of a dozen such deals that are in various stages of development takes a great deal of perseverance. If you have it, you’ve got a good chance of becoming a successful estate agent franchise.
A Common Question We Get A Lot: Do I Need Any Certifications to Run an Estate Agent Franchise?
No, you don’t.
Being an estate agent essentially means you’ll be facilitating property transactions. You don’t require educational or professional certifications to do that. That said, it always adds more credibility to your profile if you have memberships and certifications from industry-related associations.
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How Much Does It Cost to Buy an Estate Agent and Property Franchise in the UK?
Estate agent franchises don’t cost a lot in franchise fees. In most areas, you can get started for an initial investment of £25,000 to £40,000.
But that’s only the tip of the iceberg.
Running a real estate franchise business has enormous potential – and such opportunities rarely come cheap.
You’ll need to invest heavily in marketing, networking and client acquisition each year. Depending on the state of the market, you’ll also need to invest in educating clients to some degree. Making phone calls and arranging business lunches is just one part of the job – you’ll need to put a lot more in online and local advertising.
Most franchisors share the marketing expenses with their franchisees. Moreover, many franchisees choose to run additional marketing campaigns over and above the ones set up by the franchisor.
If you’re operating in a large territory, you may also need to hire staff for office operations, sales and scheduling. As operations expand, you may think about hiring independent estate agents to help expand your business.
All things considered, a property and estate agency franchise will cost you upwards of £100,000 to £150,000 in the first year. You will need to pump in cash on a regular basis into the business, especially while you get the word out. Many estate agents agree that if you can turn your business cashflow-positive by the end of your first year, you can assume a greater control over the unpredictability that surrounds this business.
Recommended: Here’s All You Need to Know About Raising Funds to Start Your First Franchise Business.
How Much Can You Expect To Earn Running an Estate Agent Franchise?
It depends entirely on the territory you’re operating in, the state of the market and the investments you have made.
Typically, a new estate agency franchise can expect to earn £20,000 to £50,000 in profits in the first year. If your estate agent business is home-based, it can save you a good deal on overheads, bolstering your bottom line further.
Top Property and Estate Agency Franchises in the UK
Although there exist dozens of estate agent and property franchises in the UK, there are only a handful that well-and-truly make their mark. Here are some of the popular candidates*:
- Minimum Initial Investment: £45,000 (plus VAT)
- USP: Letting and property franchise
- 20+ years in business
- Valuable brand name
- 170+ franchise units in operation
- Three-week training
- Ongoing support
- Full BFA Member
- Minimum Initial Investment: £35,000 (plus VAT)
- USP: Leading multi-brand lettings and estate agency
- Office-based franchises
- Sales training
- Networking training
- Ongoing support
- 100+ units in operation, 60% of which are in business for over 5 years
- Full BFA Member
- Minimum Initial Investment: £50,000 (plus VAT)
- USP: Affordable property and estate management franchise
- Exclusive territories
- International presence
- Full training provided
4. The Good Estate Agent
- Minimum Initial Investment: Monthly recurring fees (contact the franchisor for more information)
- USP: Affordable, local, hybrid estate agency
- Online lead generation
- Full access to bespoke online portal
- Ongoing support
- Marketing support
- Home-based estate agency franchise
- Admin support
- Minimum Initial Investment: £25,000 (plus VAT)
- USP: Estate and letting agency
- Reputed brand name
- 50+ units in operation
- Full sales and networking training provided
- Full BFA Member
*The information provided in this section is merely indicative in nature. Please contact the respective franchisor for more information.
Property, Estate and Letting Franchises UK: The Takeaways
- Choose a reliable franchisor with an established track record.
- Explore additional revenue streams by working with local landlords, associations and businesses.
- Put the brand and perception of the franchisor’s business to good use and to your benefit.
- Be aware of the unpredictable nature of the sector.
- Invest if and only when you have alternative sources of income to rely on (especially in the first two years).
Related: Property & Estate Agency Franchises – Search Franchise Reviews Directory
If you’re an experienced estate agent, we would love to hear from you. Do write to us here, letting us know of your experiences in the industry. We choose select entries to feature on our popular franchise success stories page.