Should independent brokers expand their base to increase profits?

[ecis2016.org] Even though it might be monetarily stressful in the beginning, it may be a good idea for brokers to take chances and spread their business outside of their comfort zone

For nearly a decade now, Yogesh Singh, a broker based out of Greater Noida West, has dealt with both, buying and selling, as well as renting of properties. As the given micro-market is predominantly an affordable destination, his earning remained less than satisfactory. The story of Singh is no different from that of other independent brokers across the country. In the affordable markets, unlike luxury destinations, one has to close many more deals each month, to make the ends meet.

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The predicament of Dushyant Sharma, another broker in IP Extension, Delhi, is also shared by many others in the business. Over the years, he managed to establish a strong bond with his buyers. While many of his clients refer him to friends and families, some even seek his help to upgrade to a lifestyle apartment in Noida or Gurgaon. He well understands that saying ‘no’ would be the end of the relationship in any given business.

Then there are property agents like Dheeraj Jha, who have a strong affinity with a couple of builders, to sell out their projects. His problem is that the projects of these builders are spread out across the NCR market. Hence, it is practically impossible for him to serve various clients on their site visits across Noida and Gurgaon.

It is imperative to note that the broker registration for a given micro-market or city is not mandatory in this region. Even the RERA guidelines for the registration of property agents is a mandate that only exists on paper.

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How brokers can deal with saturated markets

A chance meeting with a US-based property agent, at an industry exhibition, however, changed Singh’ outlook. “Our problem is that we cannot serve competing builders in the same micro-market. The ticket size in this part of the world is too small and with the limitation of working only with a few builders’ projects, it is hard to expand the business to earning a decent living. A meeting with a global property agent, helped me broaden my horizon and explore new areas of growth, with alliances and collaborations,” admits Singh.

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He realised that it is no longer wise or financially viable for him to keep operating from one nondescript affordable micro market. So, he started exploring ways and means to spread out across the market and add more business to his brokerage. Soon, he was able to list the options available to him.

Option 1: Should he join a large broker firm?

Choice: As a professional choice, he did not want to lose his independence and become an employee.

Option 2: Should he become a sub-broker for large brokerage firms?

Choice: He had explored this option in the past but the returns were too little for him to accept such a deal.

Option 3: Should he hire sub-brokers and spread out across the city?

Choice: He did not have the financial luxury to spend money and explore any such potential business risk.

Option 4: Should he look for alliances with similar independent brokers in other parts of the city?

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Choice: This option needed some work on the ground but was feasible to be worked out. It was a low risk and high reward option that only needed him to come out of his comfort zone and spend more time on networking.

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Advantage of focusing on a specific micro-market

• Strong knowledge about the market demography and its potential.
• Understanding of the budget and buyer behavior in that given market.
• Better client service and ability to pay attention to clients personally.
• Identity linked with properties to sell.
• Competitive knowledge advantage over property brokers operating out of many locations.

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Advantages of spreading out to other micro markets 

• More builders and properties in the sales pipeline.
• Hedge against encroaching competitors and changing demand.
• Scalability of the business revenue.
• Wider net of sales leads and referral clients.
• Not all home buyers are fixated on specific locations of the city.

How real estate agents can increase their business base

Singh subsequently started working on the opportunity map of potentially lucrative hotspots across the Delhi NCR. With the help of some broker friends, he started scouting for possible alliances to pass on the leads and share the brokerage. He soon realised that through this network marketing of properties, he was adding to his wealth of knowledge about other micro-markets and properties.

The arrangement through this network of alliances, though only 50% successful in the highly competitive and cut-throat business like property brokerage, helped him to expand his footprint across the NCR market over the next couple of years. Today, this broker is more of a real estate consultant with knowledge of multiple micro-markets of north India, through his chain of broker fraternity.

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As real estate markets are prone to saturation, it becomes imperative for brokers to explore new pockets of growth. While some independent brokers prefer to join large and organised brokerage firms, those who do not wish to lose their independent practice also have a way out through the case study of this broker.

FAQ

(The writer is CEO, Track2Realty)

Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle