Listen to this article now
Few sectors have as many different job titles as real estate. From lawyers to agents to brokers, distinct skill sets are required to succeed in an often cutthroat industry. And yet it’s an area built on reputation, where knowledge and client service frequently lose out to name value. As a result, only the handful of industry players with experience on both sides can truly claim to understand property as a whole.
Even fewer can claim to have taken the plunge from corporate security to go-it-alone entrepreneurship. Eric Webster, a co-founder of FTW Appraisal, made that transition just under two years ago. During that time, he and others have learned key lessons about independently embarking on a property journey as they formed a business in the appraisal space. The vital universal truths that bind all startup property endeavours have now been revealed.
Don’t expect immediate profits
Profit margins vary significantly between different property markets. Substantial commission rates may be typical of large, corporate real estate firms working with luxury properties, but they are in the minority. A range of companies operates in real estate, including agents and appraisers. Each has different upsides, but none is a money-printing scheme.
“People’s expectations of how lucrative property is are not necessarily true,” Webster said. “Up until recently, everybody wanted to become an appraiser, but they may not understand the challenges involved. You have to be very self-motivated and driven to succeed.”
Some appraisal firms operate under a fee-split model, where trainees receive a percentage of each job instead of a salary. Financial returns are therefore wholly dependent on the amount of work completed. Others adopt a salaried structure, where there can be a tighter cap on earning potential in favour of more security.
Connect with clients, but don’t forget your job
Regardless of whether you start a business in appraisal, agency, or conveyancing, the property sector invariably involves personal change. That change could be as simple as relocation for work, or it could involve a relationship breakdown or worse. Wherever in the chain, you start, an awareness of the fine line between empathy and business is necessary.
“You don’t have to say anything and, a lot of the time, you shouldn’t say anything because it’s not your role. At the same time, you should act with some compassion for your client because not doing so could impact the trust in your relationship.”
The appraisal area suffers a notable amount of false representation and dishonesty. Awareness of your client’s situation while maintaining emotional distance can help ensure that your judgment is objectively evaluated.
Build trust from the get-go
It’s the elephant in the room, and the critical factor left undiscussed: trust. Honesty, credibility, and trust are essential in many spheres as more avenues for exploitation open up online and offline. What startups lack in their reputation, they should make up for in trust. Doing so could define whether a new real estate company floats or sinks in light of rising interest rates.
“If you have built trust with a client before you have even drawn up an appraisal, they are less likely to rip into your report,” Webster explained. “For example, you could say there are two fireplaces in a house due to inadvertently missing the third. If you haven’t built sufficient trust with them, the client may not believe it was an accident, and you could lose that relationship.”
Trust is also an aspect intertwined with those previously mentioned. Compassion is a crucial mechanism for building it, while a less money-centric approach can give a property startup a more human feel. Beyond the rest, appraisals are an area that relies almost wholly on trust due to its basis on individual, transparent opinion. Mastering it and acting with decency could be your unique selling point in an increasingly saturated market.