Last month, Lee Nelson wrote a great article for REALTOR® Magazine on how to build office culture in a virtual world, and it made me wonder…is a physical real estate office still necessary in 2017?
So, I decided to dive into the pros and cons of having a physical real estate office.
Let’s Start With The Pros:
A Place To Meet Consumers like (and somewhat expect) to have a place to meet—and a brick and mortar office gives agents a professional office space to do just that. This means less time spent commuting since you’re likely already working from the office, and it’s a safe space where clients will come meet you for an initial consultation. The nice part about having clients come to you is that you can weed out the tire kickers who “just want to see a home” without sacrificing much time.
Having physical space helps provide a natural venue for building a company culture and positive atmosphere. Creating a contagious, hard-working environment can be one of the largest benefits of any brokerage, especially when that brokerage cares about providing their agents with tools to be successful. But there can be cons to this point, too. What can be an opportunity for a positive environment can turn into a negative environment if you aren’t paying attention. The warning signs will be there, so if you’re a designated broker, make sure you mind the type of company culture your office is producing.
Foot Traffic Think about how many offices you travel by daily: Which ones stand out and why? It’s not always easy to measure what type of ROI foot traffic can offer a real estate firm by having an office in a great location. But having people drive or walk past your office offers your business a “branding play.” The more you can engage the people who are traveling by your office, the better that strategy will be. Free events to the public are a great way to gain attention and create a feeling of reciprocity. If you’re able to host outdoor barbecues or host community events during busy traffic hours, people won’t just drive or walk by, they’ll start paying attention.
Cons of a Physical Real Estate Office:
Let’s start with the absolute killer, the number one reason why someone would not have a real estate office: the expense.
Expense The expense of operating a physical real estate office will immediately become the largest expense you have as a broker-owner. The number one reason businesses fail is the overhead. In addition to the lease, don’t forget about the furniture, phone system, internet, utilities, etc., because a physical office requires much more than just that monthly leasing fee. And, if you’re going to jump into a several-year-long lease for an office, it’s going to limit your ability to grow in other ways and could even cause the business to fail if not managed correctly. Calculate your annual earnings minus your expenses, the result is your profit. By adding a real estate office to your expenses, you’re cutting into your profits, as well as cutting into your time and efforts.
Maintenance If you have a physical office you’re going to have maintenance issues that come with it as well. You have to spend fixing things that are broken. You have to make sure the sign out front and the windows are clean. The office needs to be cleaned as well, likely by a janitorial staff, which isn’t cheap. There are also staff and maintenance people needed to operate an office who will constantly be knocking on your door to help them put out fires when you’re trying to finish your own projects.
ROI Sometimes you have to spend money to make money, but does having a physical real estate office really offer you the ROI that online marketing can? This is one is hard to measure—like a billboard or a sign on a bus—though, instinctively you should be able to tell. When you spend 20 to 30 percent of your profits on a real estate office, this prevents you from being able to spend money on other things, such as online marketing. For instance, we are opening a real estate company in Charlotte, N.C. in 2018 using only a website. Right now, we have a template set up to let people know we are coming, and in the next few weeks we will be live. If we had a physical office, we couldn’t spend money on things like this because our expenses wouldn’t allow for it.
For a few dollars a day, you can reach thousands of people on social media. You can take this a step further and reach only the people who are likely to buy by tailoring your online ads through retargeting pixels. We use retargeting to send a powerful message about what our clients are saying about their experience with Raleigh Realty by using this “natural” video below:
What do you think? Are there other pros and cons to a physical real estate office? Let us know in the comments section below.