One of the oldest professions in the world has been that of the real estate agent. From time immemorial, properties have changed hands all over the world thanks to agents and brokers.
They are usually quick with a list of properties being offered for sale, arrange for inspections and often they may get directly engaged in the price negotiations as well.
States have enacted laws giving real estate agents a framework to operate and be of assistance to the sellers and buyers of properties. Some of the larger firms in the real estate business offer their services through franchise arrangements.
For any real estate company, the dilemma they face is whether to operate independently or join a franchise. The debate on which one is better is loaded with merits and flaws on both sides.
Commercial Real Estate Is Larger and Pays More
Within the overall real estate sector, the types and sizes of property transactions vary. Each type can throw up its own sets of challenges and benefits.
Commercial real estate can be loosely described as a B2B model of real estate business. The buyers are businesses ranging from small ones looking for office space in a business district, to large conglomerates seeking to invest in acres of real estate.
This is where a CRE franchise such as Alliance Commercial Real Estate can play a crucial part. Dealing with large organizations means you need to have a brand, the technology to swiftly deliver the information the buyer needs and so on. That kind of a muscle is difficult to display for an independent real estate agent.
Transnational Appeal Is a Great Asset
Businesses have gone global now and a certain amount of decentralization has taken place. However, modern communications and connectivity tools have made it possible for large corporations to control areas like properties and real estate from the headquarters.
A large CRE franchise offers these companies the option of dealing through a single entity across countries. If you operate an independent real estate agency, such large deals will be out of your grasp.
Don’t Worry about the Earnings; They will be Made Up
One argument put forth by the ‘independent’ lobby is that you don’t have to be paying any franchise fees or to split the earnings.
This is true, but in a typical commercial real estate transaction, the size of the deal will be large enough to offset whatever you may feel has been ‘lost’ while sharing within the CRE franchise arrangement.
Selling Your Brand is a Huge Challenge
In the modern business world, the ‘trust’ factor has emerged as an important one. Companies don’t want to waste their resources in trying to deal with unknown entities. An established firm with its brand equity and reputation built over the years, gains preference over an unknown real estate broker/agent operating independently.
The companies know that the CRE franchise will have to take care of their own reputation in all the markets they operate in and follow all legal procedures. There will be no undesirable complications for the corporate buyers of properties later.
Investments in Technology
Operating any business in today’s context is practically impossible without having to invest adequately in technology. Each business has its unique need for technology.
In the real estate sector, large data, data analytics and similar technologies play a very important role. These technologies don’t come cheap. As an independent real estate agency, you may find it difficult to justify the kinds of investments needed to be at the cutting edge of the business.
As a CRE franchisee on the other hand, you will have immediate access to these technologies, and they will be part of the package you agree to. The franchise fee will cover this as well. This gives you that extra power while approaching prospective customers and impressing them with the information in your possession.
Typically, these might include the market reports on various locations; how the real estate will grow there and if it is for investment purposes, what kind of value appreciation and returns can be expected and so on.
Normal CRE franchise arrangements come with facilities for training – something you will need in the day to day operations.
In the final analysis, you would think joining up a CRE franchise is always a better option, than to go independent. The benefits overweigh the drawbacks by a huge margin.
