Real estate industry

Introduction

What do we mean by real estate?

The real estate sector has historically been characterized as an activity of intermediation between who offers a property for sale or rent and between who wants to acquire such property. However, the professionalization of the sector and its close contact with the development and construction sector have generated constant growth, as well as the need to reinvent itself from the point of view of marketing and sales.

The purchase, sale or rental of a property is an activity of considerable consideration that involves large investments of money. Who makes the decision to acquire a property, does so thinking of numerous variables and looking to deposit the money saved for a long time in reliable professionals.

The real estate sector is heavily dependent on factors such as economic conditions and legal provisions, which create obstacles and inconvenience. In addition, the work of the real estate agent is subject to different realities depending on the area in which it is located.

In Latin America, the real estate market is coming new trends such as cryptocurrencies and blockchain, as well as the so-called real estate marketing.

However, there are some problems in the sector that will be analyzed below, formulated after exhaustive meetings with their referents.

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Main problems in real estate

From our experience working with the real estate industry, we were able to recognize the existence of key problems, which in turn trigger other problems within companies. All of them need to be studied in detail in order to find the definitive solution.

Formalize and professionalize the business

In the real estate sector, it is not estimated to work with defined and formalized processes: most operations fall to the director of the company, carrying the majority of responsibilities.

Although most real estate companies have different departments (sales, administration, accounting) there is still a strong dependence on the figure of the director, who controls totally the accounting, financial and legal processes.

Knowing the stages that customers and documents go through

As for traceability, in the real estate industry the problem of a lack of follow-up of documentation and operations is glimpsed, since there are no formalized processes.

Closely related to the previous point, this is linked to the dependence of all processes towards a figure, that of the owner of the real estate. This means that all the important documentation and the follow-up of the procedures fall on a single person and not on a work team.

Business opportunity management

Selling a property is a considered sale, so it is essential to have business skills to advise the customer. In many cases, the real estate professional should guide someone who comes to their services without having a clear idea of the desired property. When selling, you must know your customer’s needs and habits to offer you the property that best suits your lifestyle.

Also, in the case of the real estate managers, it is also important to care for the owner or tenant as well as the monitoring of the same once you have already acquired the property.

technology adoption In the real estate industry, processes are mostly manual. There is still a precariousness in the use of sophisticated software, limiting itself to recording sales and accounting in Excel templates and notebooks. While there is a growth of CRM specialized in real estate, the industry is still reluctant to adopt some technologies.

Long-term vision of the business

The above points lead us to talk about planning: in the real estate industry, there are problems when planning for the medium and long term.

Often, they take economic and monetary instability as factors that make planning difficult. Other times, the argument is that a property has an indefinite time of sale, which can be in two months or in two years.

The truth is that there is still no clear direction on how to plan in the real estate industry.

Accurate information for strategic decision-making

As a consequence, if there are no processes, no indicators can be obtained: in this way, it is not possible to make a measurement to know if the industry is on the right track or what factors need to be improved. These data are often collected unprofessionally and unsystematically.

Our analysis

1. Business model.
Within the real estate industry, different business models are contemplated: the first of them is real estate as an intermediary between who seeks to buy and who seeks to sell a property, as well as rent. On the other hand, there is the real estate that, in addition to selling and renting, is responsible for the administration and maintenance of the property, as is the case with building consortia. A third model is that of real estate that is also developmentalist, that is, it intervenes from end to end in the value chain, financing the buildings, counting on an architecture and design team, to then market the properties and take care of their maintenance.

In each of these types, the activity is very different, so there are big differences in their work processes. In this report, we focus the analysis particularly on real estate that is only responsible for intermediation and the process of buying and selling, or rent.

2. Customers.
There are different types of clients who come to a real estate agency: those who are looking for a home to settle with their family, who want to acquire a land or property as a form of investment or who are looking for their first home or apartment. Whether for sale or rent, this is a customer who needs advice. As indicated by industry workers, the client is rarely sure what he is looking for in a property and although he has a vague idea, he needs the real estate consultant to know his needs to indicate the best option.

The client is conditioned by numerous variables, especially the economic one. Moreover, not everyone has the same intention when acquiring a property. As investigated, often the problem of the real estate sector is the lack of a good quality of information from customers.

There are two instances where the real estate agent can take information from the client: in the initial conversation, to find out their needs, and when the transaction closes, to know the sales profile that resorts to their services.

It is not the same profile of who seeks an apartment to rent for his son who begins his university studies, who seeks a large house with certain amenities in an exclusive neighborhood to consolidate his family life there. Therefore, being attentive to certain characteristics is fundamental in terms of the sales sector.

Are you looking for a property to live alone, in couple or with family? What life project do you want to build there? If you tell information about your family composition, interests, lifestyle and work, you can get more information from customers that will serve to discover the needs of the same.

3. Planning.

Determining planning becomes one of the most important challenges for the real estate sector: without planning, real estate becomes little scalable. According to the information collected, the real estate industries that are also developers have a certain stock (they themselves produce the properties they sell) that allows them to know how long the demand will extend. On the other hand, in realtors that are exclusively intermediaries, it is not yet clear how they execute their planning. In these cases, planning becomes paramount to know how many homes you intend to sell or rent in a certain period of time.

For this reason, it is important to set goals, especially in an industry as demanding as real estate. Based on our analysis, this is an environment conducive to planning, so it is important to set goals that allow us to determine the direction and mark where the real estate agency wants to go in the next three years.

Even in environments with unstable context, where planning does not seem an option, it is necessary and should be done to have a way to go. In addition, it allows the mapping of actions that will lead to the achievement of the objectives. Consolidated real estate, which have several departments, can work with an operational plan: marketing will bring qualified leads to whom to sell those properties, sales will be responsible for managing those contacts to manage business.

Planning gives predictability of how much property will need to be sold or rented, and when. Having a goal is useful as long as realistic and achievable goals are set according to each property.

4. Reliance on referrals.

In the real estate industry, even more than in other areas, customers arrive by recommendations and references. This is a common practice: although social networks and online real estate virtual portals also traccionan large number of customers, the truth is that the "word of mouth" remains the main channel.

Many workers in the sector establish a close link with some of their clients, so that, if they have to do such a transaction again, they do not hesitate to trust this property again and recommend it to their relatives.

This entails problems, such as relying entirely on being recommended and, on the other hand, the lack of measurement and rigour of this method. This is true even if it is a channel with a high conversion rate, since it cannot be guaranteed that the person we ask you to really recommend does it: our business is at the mercy of a group of people.

Therefore, this is a channel with a high rate of saturation since someday, referrals are exhausted. Realtors who have an ambitious goal and want to become scalable cannot rely on referrals. While this is a great tool, total reliance on this practice is not useful in the long run: at some point, this network of contacts does not allow growth so marketing strategies become necessary.

5. Indicators.

The real estate industry rarely has a general systematization of its indicators. They tend to be the number of properties sold and rented at a certain time, but how do they measure the effectiveness and profitability of these transactions?

Without defined processes, the real estate industry cannot determine the key indicators for each activity. If measured, it is done through hand tools. Therefore, it is advisable that this industry can, once its processes are defined, work on the construction of a map of indicators.

Some key indicators (KPIs) that can be obtained in this category are: number of homes sold/rented per month, number of qualified leads, location of properties sold/rented. In this way, it is more feasible to know if it is approaching the realization of the objective.

However, the indicators are only one figure: the important thing is how the real estate company makes decisions from obtaining them. With accurate information provided by indicators, it is easier to cope with the tasks that enable the strategic objective to be met.

6. Real estate marketing.When

prospecting clients, real estate agencies use different channels: although the classic form of referrals (as mentioned above) and signage is still used, today they realize that they cannot exist without a presence on the Internet.

According to the information collected, real estate marketing is a reality in companies with more collaborators and that have more experience, while in smaller companies its uses are more manual and do not have a specialized marketing department.

Although in most cases they have a website, it is rather an institutional presentation and not a feedback space with potential customers. On the contrary, regardless of the size of the company, social networks have become an important channel of capture: the Facebook marketplace and Instagram queries stand out. Many of the sales and rentals made came through consultations through these channels.

In addition, the use of online portals, becomes an interesting window for the buyer, which also facilitates the task of the real estate by granting some metrics of display of properties published. With ad payment, properties have more reach. Representatives of the real estate industry agree that paying this figure is necessary, because it helps them to concretize more operations.

However, marketing in this area is still very much based on branding. That is, it is oriented to the company’s trajectory. There is no comprehensive strategy to drive qualified leads and a nutrition system that gives commercial teams constant demand. There are no deliberate actions to consolidate a marketing area.

In this particular industry, it is useful to apply the inbound strategy, as it sells high-value goods and is an unsatisfactory market. This would generate valuable content to track people as well as achieve demand control. Attracting, delighting and engaging customers are the three stages of this strategy.

Together at every step

How do we help since Drew?

From our 5 years of experience working with real estate companies in Argentina and Latin America, we were able to recognize the problems mentioned above as the most common in this area, although we are clear that they are not the only ones that exist.

The main mission of our company is to provide the necessary tools to help solve the organizational needs that our clients present.

The proposal we make is that the real estate industry could work on its business model, so as to show a different perspective of work.

In the real estate industry, there is little room for differentiation. Therefore, from Drew would work the formalization of the company to then move to technology and thus know a map of behavior patterns and in this way, know what factors are repeated among customers.

In this way, data is generated that allows anticipating market behavior. For example, being able to predict different patterns such as the age range in which people look for a house that allows them to have the space necessary to start a family, or the age range in which they stop needing that house to move to a smaller environment.

When a real estate company comes to Drew with a certain need, from our company we propose to generate primary instances of approach to it, through meetings that allow us to know the organization and its ways of working. From these meetings, we generate a diagnosis with the main problems or needs that we identify and after that, once we validate all the information collected with the company, we present a project of work together, with objectives and goals that will allow us to recognize the improvement process.
After validating the improvement process, we move on to its implementation through actions to restructure, or formalize, processes that are deficient, combined with actions to make the most of the digital tool that the company uses or chooses to start using (if the implementation of a new software is decided).

It is important to stress that the use of a technological tool according to the needs of the organization is a dundamental asset for management to work correctly but not the only one. From Drew, we recognize the challenge of being a company that must adapt to technology and this is why we become strategic allies of our customers, offering them the most comprehensive tools so that this challenge can be overcome and become a competitive advantage that drives growth.

If necessary, we provide training so that the implementation of the changes can take place in the best way and that the resistance to change is the least impactful possible.

At Drew we do not sell packaged solutions but we adapt to each customer, being the connection between the world of business and technology, since we are certain that no company is equal to another.

Work methodology

Specially designed to add value.

Exploration

Every company is unique and your company is no exception. In our first meetings we must discover what factors affect the competitiveness of your company, its business model, the way its employees work, as well as the situations that could be threatening the business continuity. At this stage we seek to understand if there is an opportunity to provide genuine value to your company, understanding it as the fundamental factor to build a long-term relationship.

Survey

It is time to determine the scope of our work together. At this stage we delve into the distance that currently separates your company from where it wants to go. What is preventing it?. We understand that the more information we get, the more real and comprehensive our report will be.
This is why we will ask all the necessary questions, and even question those answers, the aim is to bring value to your company.

improvement proposal

In the final stage we collect all the information obtained so far to determine how do we get your company to where it wants to be? We developed a project on all the actions that are necessary to achieve this objective, from the improvement of processes to the implementation of technological tools that improve management.
We seek to bring genuine value to businesses to improve the way people work by returning to your scalable enterprise.

Implementation

It’s time to start the project. Our operations team will take control at this stage, so that through weekly meetings we can achieve the change you need in your company. Together we will work to take your business to the next level.