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Making a Risk Management Plan for Your Business
It’s impossible to eliminate all business risk. Therefore, it’s essential for having a plan for its management. You’ll be developing one covering compliance, environmental, financial, operational and reputation risk management. These guidelines are for making a risk management plan for your business.
Developing Your Executive Summary
When you start the risk management plan with an executive summary, you’re breaking apart what it will be compromised of into easy to understand chunks. Even though this summary is the project’s high-level overview, the goal is describing the risk management plan’s approach and scope. In doing so, you’re informing all stakeholders regarding what to expect when they’re reviewing these plans so that they can set their expectations appropriately.
Who Are the Stakeholders and What Potential Problems Need Identifying?
During this phase of making the risk management plan, you’re going to need to have a team meeting. Every member of the team must be vocal regarding what they believe could be potential problems or risks. Stakeholders should also be involved in this meeting as well to help you collect ideas regarding what could become a potential risk. All who are participating should look at past projects, what went wrong, what is going wrong in current projects and what everyone hopes to achieve from what they learned from these experiences. During this session, you’ll be creating a sample risk management plan that begins to outline risk management standards and risk management strategies.
Evaluate the Potential Risks Identified
A myriad of internal and external sources can pose as risks including commercial, management and technical, for example. When you’re identifying what these potential risks are and have your list complete, the next step is organizing it according to importance and likelihood. Categorize each risk according to how it could impact your project. For example, does the risk threaten to throw off timelines or budgets? Using a risk breakdown structure is an effective way to help ensure all potential risks are effectively categorized and considered. Use of this risk management plan template keeps everything organized and paints a clear picture of everything you’re identifying.
Assign Ownership and Create Responses
It’s essential to ensure a team member is overseeing each potential risk. That way, they can jump into action should an issue occur. Those who are assigned a risk, as well as the project manager, should work as a team to develop responses before problems arise. That way, if there are issues, the person overseeing the risk can refer to the response that was predetermined.
Have a System for Monitoring
Having effective risk management companies plans includes having a system for monitoring. It’s not wise to develop a security risk management or compliance risk management plan, for example, without having a system for monitoring. What this means is there’s a system for monitoring in place to ensure risk doesn’t occur until the project is finished. In doing so, you’re ensuring no new risks will potentially surface. If one does, like during the IT risk management process, for example, your team will know how to react.
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Writing a Business Plan
While it may be tempting to put off, creating a business plan is an essential part of starting your own business. Plans and proposals should be put in a clear format making it easy for potential investors to understand. Because every company has a different goal and product or service to offer, there are business plan templates readily available to help you get on the right track. Many of these templates can be adapted for any company. In general, a business plan writing guide will recommend that the following sections be incorporated into your plan.
The executive summary is the first section that business plans open with, but is often the last section to actually be written as it’s the most difficult to write. The executive summary is a summary of the overall plan that highlights the key points and gives the reader an idea of what lies ahead in the document. It should include areas such as the business opportunity, target market, marketing and sales strategy, competition, the summary of the financial plan, staff members and a summary of how the plan will be implemented. This section needs to be extremely clear, concise and engaging as you don’t want the reader to push your hard work aside.
The company description follows the executive summary and should cover all the details about the company itself. For example, if you are writing a business plan for an internet café, you would want to include the name of the company, where the café would be located, who the main team members involved are and why, how large the company is, who the target market for the internet cafe is, what type of business structure the café is, such as LLC, sole proprietorship, partnership, or corporation, what the internet café business mission and vision statements are, and what the business’s short-term objectives are.
Services and Products
This is the exciting part of the plan where you get to explain what new and improved services or products you are offering. On top of describing the product or service itself, include in the plan what is currently in the market in this area, what problems there are in this area and how your product is the solution. For example, in a business plan for a food truck, perhaps there are numerous other food trucks in the area, but they are all fast –food style and unhealthy so, you want to introduce fast food that serves only organic and fresh ingredients every day. This is where you can also list your price points and future products or services you anticipate.
The market analysis section will take time to write and research as a lot of effort and research need to go into it. Here is where you have the opportunity to describe what trends are showing up, what the growth rate in this sector looks like, what the current size of this industry is and who your target audience is. A cleaning business plan, for example, may include how this sector has been growing by 10% every year due to an increase in large businesses being built in the city.
Organization and Management
Marketing and sales are the part of the business plan where you explain how you will attract and retain clients. How are you reaching your target customers and what incentives do you offer that will keep them coming back? For a dry cleaner business plan, perhaps if they refer customers, they will get 10% off their next visit. In addition, you may want to explain what needs to be done in order for the business to be profitable. This is a great way of showing that you are conscious about what clear steps need to be taken to make a business successful.
Financial Projections & Appendix
The financial business plan section can be a tricky one to write as it is based on projections. Usually what is included is the short-term projection, which is a year broken down by month and should include start-up permits, equipment, and licenses that are required. This is followed by a three-year projection broken down by year and many often write a five-year projection, but this does not need to be included in the business plan.
The appendix is the last section and contains all the supporting documents and/or required material. This often includes resumes of those involved in the company, letters of reference, product pictures and credit histories. Keep in mind that your business plan is always in development and should be adjusted regularly as your business grows and changes.
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Premier Agent Toolkit
How to create a real estate marketing plan.
In this article:
Determine the vision for your business
Delegate your team’s responsibilities, identify your target client.
- Identify your overall goals
Craft a unique selling proposition
Complete a swot analysis.
- Perform a competitive analysis
- Use all effective marketing strategies
- Create a marketing calendar
Calculate the return on lead generation
Document ways to convert leads, project yearly sales forecasts, measure client experience.
- Calculate your marketing plan performance
Free real estate marketing plan template
A real estate marketing plan is a document that outlines your sales goals for the year by establishing a detailed budget, your target audience, marketing and advertising plans, and other strategies to grow your business.
Bret Calltharp, a real estate agent trainer, says “a real estate marketing plan reinforces your unique value proposition and helps determine what tangible actions you’re taking that other agents in your market are not.” It allows you to differentiate yourself from the competition, track what works best and see where you can improve . A marketing plan will identify:
- The right tools and messages to effectively reach your audience
- Ways to better serve your clients
- Where you want your business to be and how you’ll get there
- How to measure the performance of your marketing efforts
- How to recognize when and where you need to make a course correction
Let’s look at what goes into a marketing plan and why each item is important to your success.
This is the backbone of your entire real estate marketing plan. What do you want to achieve in the short term and in the long term? Create a brief statement describing the service you’ll provide to make clients eager to work with you.
Understanding your audience is vital to developing a successful marketing strategy. Is your target client a first-time home buyer, a home seller or a renter? Or are you targeting a more specific subset like relocators, retirees or investors?
What is your target client’s persona?
Once you know who you’re targeting, you can further develop their persona. These important details will make your real estate marketing strategy effective and efficient (remember to follow all applicable fair housing laws in your area). Here are some questions to help establish your client’s persona:
- Where do they want to live?
- How old are they?
- What is their annual household income?
- What is the household makeup?
- What do they want from their home?
- What are their feelings and concerns about searching for and purchasing their home?
What do you want your target client to think of you?
After a client receives your marketing message, how do you want them to perceive your business? Draft a sentence or two describing the ideal scenario.
How do you want your target client to act?
Do you want them to schedule an appointment? Call for more information? Knowing the desired action in advance can save you time, money and effort when forming and implementing a marketing strategy.
Identify your overall goals
There are three types of real estate marketing goals: Business, strategic and tactical.
What does success look like for the business? Is it establishing a number of new clients? Obtaining a number of referrals from past/present clients? Hitting a certain sales figure? Make sure your goals are realistic and achievable.
What differentiates you from your competition?
What steps do you take to maintain your differentiation?
Use the analysis results to your advantage
Perform a competitive analysis
Monitor your competitors’ performance
Observe what they do and how they’re doing it. You may also want to look at their past performance, including:
- How many closing sales they have per year
- The average list price they work with
- Their percentage of the market (from the MLS)
Evaluate competitors’ marketing efforts
How are they advertising and branding themselves? Look closely at their efforts — especially those within your farm area :
How is their website structured? Check whether it’s driving leads and what types of ads they’re using.
How are their listings formatted? Look on Zillow and see what images and words they use to attract buyers.
Are they a Zillow Premier Agent? They’ll have a distinct advantage if so — because Zillow Premier Agents are automatically connected with active buyers and sellers.
Are they using print ads? Read the ad section in your paper and flip through local real estate books to see what they’re doing and who they’re targeting.
How are they marketing on social media? See if they’re advertising on Facebook and what groups they’re targeting. Familiarize yourself with their posts, topics and how they brand themselves — and pay attention to how many followers they have.
Are they using Google Ads? Find out what keywords they’re using and the demographics or interests they’re targeting.
What branding are they using? Go around town — look at billboards, flyers and other marketing tactics. Do they have a theme or catchy slogan? Are people talking about them?
Capitalize on your competitors’ weaknesses
Use all effective marketing strategies
Create a marketing calendar
Organization and consistency are key when creating a marketing plan for real estate. A marketing calendar keeps you on track and ensures you’re meeting deadlines. Your calendar should include your marketing strategy, cadence and target audience.
Blog posts: Content should be published three times per week and always be relevant to your local area. Topics can include nearby attractions and market updates.
Cold calling: Set aside time each day to reach out about for-sale-by-owner properties, expired listings and other prospects — and have a phone script ready to ensure you’re being as effective as possible.
Email campaigns: Send an email to your target clients once or twice a month . Track which days of the week you receive the best response rates and adjust accordingly.
Social media posts: Use Facebook and Twitter to share local market updates. Instagram is useful to showcase walkthroughs of new properties.
Assign a marketing calendar lead
You can manage the marketing creation yourself or delegate the responsibility to someone on your team. The marketing lead needs to consistently update the calendar and ensure that real estate marketing goals are met.
Develop marketing milestones
These can be monthly, bimonthly or yearly goals depending on the channel and the goal. For example:
- Generate a 50% increase in website traffic for the year.
- Generate a 33% increase in leads through online methods each quarter.
Lead generation is the process of identifying and cultivating potential clients. Determine your most effective methods of lead generation and what kind of return you expect from them.
You can calculate the return using this formula:
The return on online lead generation is calculated using the close rate, which ranges from 0.02% to 0.04%. In the example above, we use a close rate on the low end of the range (0.025), 360 for the number of leads generated in a year, $250,000 for the average selling price and 3% for the average commission rate.
Lead conversion is when you turn leads into clients. This is typically achieved through your marketing efforts. Keep track of your real estate marketing ideas and document which ones work and which ones can be improved — and then create a strategy for capitalizing on leads.
Calculate your marketing plan performance
Use our free customizable template to create a road map to your most successful year yet! Determine your business goals , identify your customers and competition, outline a plan for generating leads and more.
Download the sample real estate marketing plan and start filling out the template today. Simply select a highlighted field and enter the information. After you populate your template, remember to update it regularly — your real estate marketing plan is a living document and your goals, tactics and measurements should be adjusted over time.
How to Create a Real Estate Agent Business Plan
Learn how to create a real estate business plan that measures your performance and helps you get where you want to go.
Real Estate Flyer Template
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Business Model Canvas Examples
Zillow business model.
Zillow Group Inc. owns the world’s number one online real-estate marketplace where homeowners, agents, and people seeking to rent or buy houses can meet and transact business. Zillow business model is based on the use of technology to advance sales of advertising spaces and leads and coordinate the buying, selling, and renting of houses to earn commissions/interests. A multimillion-dollar real estate company, Zillow offers most of its services free to its website and app users.
Today, Zillow is the proud owner of a database with information on approximately 110 million homes scattered all over the United States. And with revenue of $8.1 billion at the close of 2021, and a projected revenue of $5 billion, Zillow is by far the most viable online real estate company.
A Brief History of Zillow:
Though Zillow was registered as a corporate organization in December 2004, it was not until February 2006 before its tech-enabled website was launched. Within the first three days of its existence, the website received over 1 million unique visitors, achieving far beyond the founders’ expectations. Despite this uphill achievement, Zillow never relented. Later that same year, the website became a marketplace for posting homes for sale and went into collaboration with Microsoft. The deal gave Zillow the right to use Microsoft Virtual Earth’s aerial photographs, which offered potential buyers unobstructed views of listed properties.
Later on, in December 2013, Zillow started listing rental homes. And with that addition, Zillow built an online tool that serves as a database for prospective renters. This tool accepts applications from renters and gives landlords access to information about every prospective tenant. The main objective of this tool is to help landlords make intelligent decisions. In addition, renters can submit details in their application that expedite actions on credit and background checks.
Between 2013 and 2022, Zillow had a string of real estate outlets’ takeovers, from the AOL Real Estate acquisition in 2013 to the purchase of Trulia in 2015 and ShowingTime in 2021.
In recent times, Zillow has faced some hard times, especially during the COVID-19 crisis. This has most probably culminated in the shuttering of one of its key platforms, Zillow Offers, in November 2021. But Zillow had weathered the fallout perfectly well. Just after the closure, its stock jumped by about 17%, marking its biggest intraday gain.
Who Owns Zillow?
Zillow Group, the parent company of Zillow, is owned by Rich Barton and Lloyd Frink, both former staff at Microsoft.
Zillow Mission Statement:
The mission statement of Zillow is to ‘give people the power to unlock life’s next chapter.’
How Zillow Makes Money
Zillow makes money through three primary sources. They are the Homes, Mortgages and IMT .
Zillow rakes in the bulk of its income through sales of homes. Through Zillow Offers, the company bought properties and sold them within a short time. It was a win-win for the sellers and Zillow. Considering the stress that usually surrounds selling a house, Zillow’s almost instant cash offer was a massive temptation to sellers.
And when Zillow buys a property from a seller, it charges a 6% fee as transaction costs. It also sets a fee of between 3.5% and 4.5% to cover taxes and other miscellaneous expenses.
In 2020, this sector brought a whopping $1.7 billion in income.
Zillow, in 2018, became an authorized lender with its purchase of Mortgage Lenders of America. Zillow reengineered the money lending instruments in its now characteristic manner and came up with Zillow Home Loans. The facility allows borrowers to secure a new loan or refinance their loans.
Zillow charges interests of different degrees, depending on the loan terms. To still broaden its sources of income, Zillow collaborates with more than 50 other lenders via its mortgage platform. When a lender is connected to a prospective borrower through Zillow’s platform, a certain amount is paid to Zillow. Besides, Zillow charges lenders to use its Connect Service tool to enhance their chances of being located by lenders.
At the close of 2021, Zillow’s mortgage services have generated $246 million in revenue, a massive leap from the $174 million in 2020.
3. Internet Media and Technology (IMT)
Internet and technology are at the core of Zillow’s business model . Thus, they, understandably, are part of the forces the company uses to bring in money. In fact, Zillow started in 2006 with ready-to-use software and marketing services made available to real estate professionals and homeowners.
Zillow’s Premier Agents and Premier Brokers programs earn Zillow money through lead generation for real estate professionals. Zillow also sells advertising services to landlords, builders, photographers, etc.
$1.9 was declared as income from IMT in 2021, as against $1.45 billion announced in 2020.
Zillow Business Model Canvas
Let’s take a look at the Zillow Business Model Canvas below:
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Zillow Customer Segments
Driven by the mission to make available to the people quality services in real estate, Zillow has two complementary customer segments :
Service/Content Consumers: A significant part of Zillow’s customer segment is their platforms’ over 3 million users: The renters, the homebuyers, and the sellers.
Service Providers: These are, on one side, homeowners that list their properties on Zillow’s platforms for sale or rent; and, on the other side, professionals such as real estate agents, property managers, real estate agents, home improvement professionals, inspectors, photographers who place adverts and subscribe to, etc.
Zillow Value Propositions
Zillow’s value propositions align with the main goals of the organization. They are offered from three distinct yet interwoven perspectives: Ease of Access, Personalized Experience, and Endorsement.
Ease of Access: Before Zillow, information about real estate was strewn across archives and databases; therefore, it was difficult for people to access needed information. Zillow has changed all of this. It championed a real estate information revolution. Zillow’s Zestimate, for example, renders an estimated market value of properties using publicly available data. Homeowners can use this information to know what their properties are worth on the market.
In the same vein, buyers can explore Zillow’s over 110 million listed houses strewn across the US and Canada and save favorites that they can keep close tabs on.
Personalized Experience: Zillow’s website and apps incorporate a high level of flexibility that allows users to enjoy a personalized experience.
Homeowners, buyers, and renters can explore Zillow’s web tools and apps to meet their personal goals. They can pick a location and set their budget using Zillow’s affordability calculator.
Buyers have three options: they can purchase directly from owners, via foreclosure, or with the assistance of a Zillow Premier Agent. They can access house loans for financing their home.
Renters can submit a comprehensive proposition through Zillow to fast-track the background and credit checks. This process can tremendously improve renters’ chances of moving to the place they love.
Endorsement: Zillow offers Real estate professionals its brand to promote their overall success. Zillow’s brand is already synonymous with wins in the real estate industry. Thus, its endorsement almost automatically raises the status of agents registered under its Premier Agent program.
- Mobile apps (android/Ios)
- TV and Print media ads
- Social media
Zillow Customer Relationships
Zillow builds relationships with its teeming customers primarily through its website. However, the brand also uses social media platforms such as Youtube, Twitter, and Facebook.
Zillow Revenue Streams
Now that Zillow has closed down its home-flipping operation, Zillow Offer, which used to account for about 60% of its annual income , its revenue streams are now.
- Revenue from Ads
- Interest from mortgage
- Commissions earned from Agent partners
- Revenue from Zillow Closing Services
- Income from Zillow 360 Bundled Services
- Revenue from rentals
- Income from other services such as New Construction, StreetEasy, etc.
Zillow Key Resources
- Most of Zillow’s resources are web-based, and apps mainly there are:
- Hosing Super App (Soon to be launched)
Zillow Key Activities
- Arrangement of Physical Touring
- Home Acquisition Finance
- Bridge Real Estate Information Gaps
- Generation of Leads
Zillow key partners
- Real Estate Agents and other Real Estate Professionals
Zillow Cost Structure
- Technological Innovations and Maintenance costs
- Coldwell Bankers
Zillow’s SWOT Analysis
This SWOT analysis x-rays the strengths, weaknesses, opportunities and threats abound in Zillow’s business model.
- World-Class Management Team
- Skilled Workforce/workplace
- Brand recognition
- Strong Financial Foundation
- Diverse product portfolio
- Topnotch Customer satisfaction
- Vast and complicated inventory
- Comparatively steep transaction cost
- Lopsided lead generations
- Innovative techs
- Growth prospects for real estate
- First-class financial Performance
- Neck breaking competition
- Unpredictability associated with real estate
- Possible online security breach
Zillow Group Inc. is arguably the number online real estate marketplace in the US. Zillow’s business model is built on a tripod of homeowners/landlords, homebuyers/renters, and agents’ business relationships, where Zillow serves as the umpire.
Though the competition in the industry is growing stiffer by the second, Zillow still has the advantage of financial strength and public trust to remain on top of the situation.
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The Zillow Business Model – How Does Zillow Make Money?
Zillow is a real estate company that offers various products targeted at both home buyers and sellers. Its services include, amongst other, advertising tools for agents and other real estate professionals, a home-buying business, or marketplace to advertise homes for sale and rent.
Zillow makes money by flipping homes (and charging a sales fee), collecting fees for leads, as well as the interest it charges for its home loans. The business model of Zillow is comprised of three distinct segments, namely Homes, IMT, and Mortgages.
Founded in 2005 and headquartered in Seattle, Zillow has become America’s leading online real estate site. Zillow went public in 2011. Nowadays, over 236 million people visit the company’s various web properties every month.
What Is Zillow?
Zillow is an online real estate marketplace that offers various services for both home buyers and sellers.
Its platform comprises anything related to the purchase, sale, rental, and loan financing of a home. The company’s goal is to equip consumers with the necessary data and knowledge about anything related to homes.
For buyers , the company previously offered homes directly sold by Zillow through its Zillow Offers program. The program was shuttered in November 2021, though.
Alternatively, buyers can buy homes directly from the owner, through foreclosures, or with the help of an agent (through the Zillow Premier Agent program).
On the rentals side, Zillow offers an array of features that aid its users to find a new place to stay. Apart from browsing rental listings, users, for instance, can submit an application through Zillow to speed up the credit and background check process, use its affordability calculator to determine their budget, or pay online on the Zillow platform instead of using checks.
For sellers , Zillow offers three primary options. They can:
- List their homes directly on the company’s website. Its famous Zestimates tool allows home sellers to assess the value of their home so that they don’t miss out on any profits
- Work with an agent vetted by Zillow to help them sell their property. Zillow’s Agent Finder feature allows them to search for real estate agents, home improvement professionals, property managers, inspectors, photographers, or any other service they need.
- Sell their house directly to Zillow through its Zillow Offers program (shut down in November 2021). Sellers receive quasi-instant offers (often within a few hours), can choose their move-out date, while having the repair covered by Zillow.
Lastly, on the side of the borrowers , multiple options are provided. In 2018, Zillow acquired Mortgage Lender of America to become part of its platform. Zillow, therefore, offers mortgages directly to consumers. Furthermore, the firm partners up with other lenders to offer loans on its mortgage marketplace. Lastly, it also provides various tools such as a mortgage calculator to aid borrowers during the loan application process.
Apart from its own set of products and services, Zillow has acquired over 12 businesses in its company history. Some of these companies remain to be standalone entities, which simply complement Zillow’s portfolio of real estate products. Examples include HotPads, Naked Apartments, StreetEasy, Out East, or Trulia.
Zillow Company History
Zillow, based out of Seattle, Washington, was founded in 2005 by Rich Barton (CEO) as well as Lloyd Frink.
Barton is one of the most-accomplished tech entrepreneurs of our time. After graduating from Stanford in the late 1980s and working for two years in consulting, he moved to Seattle to join Microsoft in 1991.
In 1994, the tech giant planned to enter the travel industry by creating a travel guide, which’d be distributed via CD-ROM. That is until Barton chipped in.
At the time, HTML-based services specifically designed for travel agents were beginning to take off. They allowed them to essentially work from home while expanding their sales reach. Barton felt that this would be a much larger opportunity for Microsoft.
He pitched his idea to Bill Gates and Steve Ballmer. The duo agreed to fund his project, which launched to the web in 1996 as Expedia.com.
Expedia became an instant success. Two years later, in 1998, the company was spun off from Microsoft in response to the internet craze of the late 1990s. This allowed them to go public as a separate company, which it ultimately did in 1999.
Barton, who led the company through IPO, was only 27 years of age at the time. He stayed on for another four years. In 2003, IAC/InterActiveCorp paid $3.6 billion to acquire a 100 percent stake of the company, making Barton rich overnight.
That same year, he’d end up leaving Expedia and be replaced by Dara Khosrowshahi, who led the company as CEO for the next 14 years and went on to become Uber’s CEO in 2017.
Barton, after a year’s break, was ready to tackle the next opportunity. Over the past few years, he often cited the two features he looks at when starting or investing in a business:
- Information asymmetry in the market, such as a lack of transparency or hardly accessible and unreliable data
- The ability to have users generate the content themselves, which accelerates the company’s flywheel effect
He used this mantra when he first started Expedia (prices for trips were highly untransparent with travel agents pocketing high markup fees) and became one of the main investors in companies like Glassdoor or Nextdoor .
And that very same ethos would serve him when him and Frink would go on to launch Zillow in 2005. In the year prior, both Barton and Frink were trying to shop for a new house in Seattle.
What they encountered was a high level of frustration and insecurity. Public housing data was hard to come by, often stored in various archives and databases across both the web and bureaus. Realtors were trying to maximize their profits, often leaving them with different offers for the same property.
With that problem set in mind, the team got to work. They hired Stan Humphries, who was spearheading Expedia’s analytics division, to lead its algorithm teams. His team spent months collecting housing data from various data sources, digitizing it, and making it publicly available on Zillow’s website.
Another key hire became Spencer Rascoff, a Harvard grad who co-founded Hotwire in 1999 and sold it to IAC, the very same company Expedia got acquired by. Hotwire was merged into the Expedia Group, and Rascoff stayed there for close to two years, becoming acquainted with Barton in the process.
To get a nice head start, Barton and team received $32 million in backing from two venture-capital firms, Benchmark Capital and Technology Crossover Ventures. This allowed them to hire 75 employees and refining the product, which launched into beta in February 2006.
Users immediately stormed the startup’s website. In fact, over two million people visited Zillow.com within the first two days, which even caused the site to crash. The reason? An unprecedented feature called Zestimate , which allowed users to assess how much a given house is worth.
It helps to understand that the American housing market of the mid 2000s was at its all-time peak. Homeowners saw their houses double in value every couple of years, which created the craze of home buying that ultimately led to the financial crisis of 2008.
Zillow launched right into that mania with a $32 million war chest and an extraordinary management team. But access to capital and reputation weren’t the only factors driving the company’s growth.
First and foremost, the team’s intention was for the Zestimates feature to be as controversial as possible to spark word-of-mouth and ultimately drive growth. The feature initiated debates with homeowners, since their home values were publicly visible.
Second, the company operates in product-related silos, which allowed them to quickly react to changes in market demands.
One example is the launch of Zillow’s iPhone app one year after the first iPhone was introduced. The company hired a completely new development team that was solely focused on the app. Its iOS app launched in 2009 and in that very same year was already responsible for 20 percent of its user base.
Third, Zillow realized early on how important its data was. It partnered with various media outlets across the country to develop insights on housing prices in a given city and other real estate related data. This helped the startup gain valuable links as well as consistent media coverage across the country.
Fourth, Zillow closed partnerships with other large websites to display its housing data. For instance, the company announced in 2008 that it would power all for-sale listings on Yahoo Real Estate, which was the most visited real estate website at that time.
Even the 2008 recession did not have a lasting impact on the company. While the company had to initially lay-off 25 percent of its workforce (35 out of 155 employees), it quickly recovered.
In the years prior, people were flocking to the website to see their home prices go up. During the crisis, users would visit Zillow to get a reliable estimate to quickly sell off their homes. In the years that followed, the company continued to grow at exponential rates.
The continued growth led to Zillow’s IPO in 2011, which allowed them to raise another $69 million at a valuation of $540 million. By that time, Zillow was already the third-most visited real estate website in the United States, counting over 20 million monthly visitors.
Meanwhile, Barton was enjoying the party from the outside. He stepped down from his CEO role in 2010 and handed over the reins to Rascoff. Prior to becoming CEO, Rascoff was serving the company as COO, overseeing marketing, finance, partner relations, legal, and human resources.
Unfortunately for Zillow, its continuous growth came with a whole set of new problems. The company was sued multiple times over the years, both by its own employees, competitors, and homeowner associations.
Former associate Rachel Kramer alleged that a sales manager in the company’s Irvine office had sexually harassed her. In May 2017, homeowners sued Zillow, stating that the company undervalued their homes, which made them harder to sell.
Its biggest legal battle came in 2016 when competitor Move Inc. (which operates Realtor.com and is owned by Rupert Murdoch) alleged that Zillow hired two of its executives to gain access to its rival’s trade secrets and other confidential information. The case was settled for $130 million while Zillow admitted no wrongdoing.
Zillow also had its fair share of business battles over the years, fighting for a chunk of the $16 trillion American real estate industry. Apart from the previously mentioned Realtor.com, Redfin, or upstarts like Opendoor and Offerpad , its biggest battles were fought with Trulia.
Founded just a year after Zillow and based out of San Francisco, Trulia, for the most part, was Zillow’s fiercest rival in the online real estate space. Trulia’s former CEO and co-founder Pete Flint took multiple shots at Zillow over the years, claiming that his service was far superior while attracting more customers.
Zillow, on the other hand, hit Trulia with a patent infringement lawsuit in 2012 when it claimed that the company ripped off its Zestimates tool when it launched Trulia Estimates in 2011.
It, therefore, came at somewhat of a surprise when, in 2014, Zillow announced it’d acquire Trulia for $3.5 billion in an all-stock deal. The primary goal of the acquisition was to tap into Trulia’s user base while decreasing its marketing spend that is used to fight it. Zillow had made similar acquisitions in the past when it bought StreetEasy (focused on New York apartments) and HotPads (tailored at rentals).
In 2019, after almost a decade at the helm of Zillow, Rascoff stepped down from his position as CEO and handed over the keys to Rich Barton once again. During the same year, the company began moving from being a pure online player towards investing in real estate themselves.
Zillow began buying and flipping homes in the Phoenix and Las Vegas area. The company followed the so-called iBuyer model, which got populated by other startups like Opendoor.
2020 became a particularly successful year for the company. Work-from-home orders forced employees across the world to reconsider their living situations and find something more accommodating. Furthermore, low interest rates and government stimulus checks gave an even greater amount of consumers access to cheap capital.
To boost efficiency within its home buying business, Zillow (in September 2020) announced that it would open a licensed brokerage. Zillow’s said it plans to hire licensed real estate agents which will help buyers and sellers.
The move sparked a great amount of controversy among real estate professionals, many of whom pointed to the firm’s hypocrisy. In the past, Zillow mentioned that it would never consider becoming a brokerage since that would put the company in direct competition with the third-party agents it serves.
That business eventually came back to haunt them. In November 2021, Zillow announced that it would shut down its home buying division (alongside a write-down of $540 million) while laying off 2,000 employees.
Weeks prior, the company had already stopped purchasing additional homes due to a massive labor shortage that created a massive backlog of outstanding repairs and inspections.
Today, Zillow’s business entities, in combination, are the most frequented real estate websites in North America. The company employs over 5,000 people across 35 offices in the United States and Canada.
How Does Zillow Make Money?
Zillow makes money by flipping homes (and charging a sales fee), collecting fees for leads, as well as the interest it charges for its home loans.
Zillow breaks down its income into three distinct segments: Homes, IMT, and Mortgages. When the company launched in 2005, its business model was based solely on generating advertising revenue.
The belief was that because the company was focused on one user segment, it could serve advertisers better by providing them with better engaged and targeted customers (compared, for instance, to Google).
That bet has certainly panned out and helped the Zillow Group to become America’s leading online real estate business.
Let’s dive deeper into each of the three segments below to understand how Zillow generates returns for its shareholders.
By now, you’re probably sick and tired of hearing that ‘data is the new oil’. Nevertheless, it has become a major competitive advantage in today’s business world. And Zillow, as you may have guessed, has a ton of it.
In fact, the company’s database is comprised of over 110 million American homes. With 128 million registered households in 2019, Zillow essentially has data on almost every home in the United States.
It began to fully utilize this data with the launch of Zillow Offers in 2018. The service is based on the iBuyer model , which has been popularized by companies like Redfin or Opendoor.
So-called iBuyers (or Instant Buyers) utilize computer-generated analysis, taking into account broads sets of market data, seller information, or inputs by real estate agents, to make near-instant cash offers to sellers.
The convenience and speed of the sales process oftentimes allows them to buy houses under market value, especially if sellers must load off a property fast. Furthermore, the algorithms get better with every purchase they make, thus allowing the iBuyer to make better buying decisions over time.
Zillow Offers, which initially launched in Phoenix and Las Vegas, essentially does that. The company makes money whenever it sells a home for more than it paid for it, plus other costs associated with the sales process.
Furthermore, Zillow charges various fees when buying homes from sellers. It commands a selling cost fee of 6 percent, which covers the transaction cost of buying the home. This is in line with traditional sales fees, in which agents charge 6 to 7 percent on average.
Additionally, closing costs of 1 to 2 percent are applied, which covers title, escrow, and transfer tax. Lastly, the company demands a service charge of, on average, 2.5 percent, which makes up for taxes, maintenance work, and utilities.
The home selling process can be completed within a few hours, with offers being made almost instantly. After submitting a survey about the home, a Zestimate is sent to the seller that gives an estimated sale price. In February 2021, Zillow announced that Zestimate would now be used not only as an estimate but to represent an actual cash offer.
Afterward the offer is made, a free in-person valuation is organized to check on potential repairs and the accuracy of the information provided. Soon thereafter, a cash offer is sent out.
With the move to becoming a true real estate company, Zillow has effectively been able to tap into a much larger market opportunity. Borrell Associates reports that the market for real estate advertising is worth $19 billion, while U.S. real estate transactions in 2019 amounted to $1.9 trillion.
Its Homes segment generated $1.7 billion in 2020. However, in November 2021, Zillow announced that it would shut down the home buying division as it became a major loss maker for the company. The company will sell off its existing inventory throughout 2021 and 2022.
Within its IMT (short for Internet, Media, and Technology ), Zillow generates revenue from the sale of marketing services as well as software and other technology solutions. The business is split up into Premier Agent, Rentals, and Other.
Premier Agent revenue is derived from the company’s Premier Agent and Premier Broker programs. Both are SaaS tools , which allow agents, brokers, and other real estate professionals to organize their work, track leads, or advertise their services on Zillow’s platform.
Zillow generates revenue from a cost-per-leads basis. The price per lead depends on the market that the agent serves and can range anywhere from $20 to over $100 for properties above $500,000. Agents can reach customers not only on Zillow’s website, but its other platforms, including Trulia, StreetEasy, or HotPads.
Rentals as well as Other revenue is generated from the sale of advertising services to rental professionals and landlords (for Rentals) or inspectors, photographers, builders, and home improvement professionals (for Other).
Similar to Premier Agent, Zillow gets paid on a per-lead basis. The fee, again, depends on the competitiveness of the market.
For the fiscal year 2020, the company posted revenues of $1.45 billion for its IMT segment. The majority of that income was generated from the Premier Agent program, which amounted to more than $1 billion.
In October 2018, Zillow acquired Mortgage Lenders of America, which essentially allowed them to become a licensed lender. The service was later rebranded to Zillow Home Loans . Borrowers can either take on loans or refinance their homes.
Within its Home Loans section, Zillow makes money on the interest that it charges for the mortgages. The interest rate is dependent upon the loan amount, duration, as well as the down payment used to cover the loan.
Furthermore, Zillow works together with other lenders on its platform. The company has essentially built a marketplace on top of its platform in which it works together with over 50 lenders nationwide.
These lenders pay Zillow on a cost-per-lead basis. That means for every potential borrower they are connected with, a fixed fee has to be paid. That fee is dependent upon the agreement Zillow has made with the lender.
Lastly, Zillow charges a subscription fee for its so-called Connect services. These allow lenders and agents to use special tools created by Zillow to better advertise their services on the platform.
The company posted Mortgage revenues of $174 million in 2020, up 73 percent from 2019 ($100 million). The majority of its revenue is generated through the Home Loans business while a small portion comes from the other lending partners that advertise on its platform as well as the subscription revenue.
Zillow Funding, Valuation & Revenue
According to Crunchbase , Zillow has raised a total of $96.6 in five rounds of venture capital funding during its startup life. Notable investors include the likes of Benchmark Capital, TCV, Legg Mason, or PAR Capital Management.
Zillow was valued at $540 million when the company went public in July 2011, raising another $69 million in the process. Nowadays, the company has a combined market cap of $38.6 billion, which represents an almost 80-fold increase during the 10 years since it has been a public enterprise.
For the fiscal year 2020, Zillow reported revenues of $3.4 billion, which represents a 22 percent increase from the year prior. The company reported a net loss of $162 million over the same time period.
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How Does Zillow Make Money? Zillow Business model In A Nutshell
Zillow is an online real estate marketplace matching buyers, sellers, renters, and landlords through a massive platform with personalized search and discovery experiences and simple UI for both buying/renting and selling/listing. The company makes money by charging a fee for sales and additional services like premium agents and mortgage services for buyers.
Zillow is an online real estate marketplace founded in 2006 by Rich Barton, Lloyd Frink, Spencer Rascoff, David Beitel, and Kristin Acker.
It was former Microsoft employee and Expedia founder Rich Barton who would have the most profound impact on the formation of the company.
Barton noted that the real estate industry suffered from a high degree of information asymmetry.
Public housing data was difficult to access, locked away in various databases and archives. With this lack of transparency, realtors were able to maximize their profits at the expense of the consumer.
In the following years, Zillow would spend months collecting and digitizing housing data to make it publicly available on its website.
A feature allowing consumers to determine how much a property was worth caused the website to crash during the beta launch, attracting over 2 million hits in the first two days.
Zillow value model
Zillow is a massive online real estate website which leverages its platform to connects millions of potential buyers/renters and sellers/landlords.
Its technology is used to enable a massive listings, easily filtered and discovered by millions of users each month, and a mobile app that delivers the same kind of experience.
As a real estate company, value is enhanced also via real estate services, like premium, dedicated agents, home loans and more.
Zillow mission and vision
Zillow’s mission is “to give people the power to unlock life’s next chapter.”
Thus its vision consists of “empowering consumers with data, inspiration, and knowledge around the place they call home and connecting them with the best local professionals who can help.”
Zillow value propositions
The primary value proposition for buyers and renters is a platform with a wide variety of listings (with over a hundred thirty-five million homes as of 2021) for both buying and renting.
And the ease of searching, discovering, and finding the properties that most fit the renter and buyer criteria.
For sellers, the platform enjoys a massive amount of traffic, with over two hundred million unique users each month and among the most known real estate websites in the US.
Over the years Zillow also launched various services.
Zillow technological model
The primary use of technology within Zillow is to power search and discover homes.
For instance, the engineering team uses advanced NLP models to create better recommendation systems for users:
Other technological applications comprise the development of models to build solid floorplans based on the house pictures uploaded by sellers/landlords:
Other models yet, are used to refine search based on some contextual information related to the place/city of the search:
Starting in 2018, Zillow also started to model 3D homes based on the pictures uploaded by users on the platform. With a dedicated app, users can easily create 3D models of the house and upload them on the platform:
Zillow distribution model
Zillow’s distribution strategy consists of organic (continuous traffic on the website and mobile app) and paid advertising. Distribution is also enhanced by agreements with real estate agents using the platform.
To gain a bit of context, by 2020, Zillow recorded over 200 million unique users, that led to more than five thousand homes sold via the platform.
Precisely, these 5,337 homes got sold at an average selling price of $320K per home.
Zillow financial model
Zillow revenue generation.
When Zillow launched in 2006, the company collected advertising revenue as the sole source of income .
Since then, Zillow has diversified into many income streams. We will take a look at some of these in more detail below.
Zillow has data on approximately 86% of the 128.5 million homes in the United States.
This data was incorporated into the Zillow Offers service in 2018. The service allows so-called “iBuyers” (instant buyers) to evaluate complex datasets to make near-instant cash offers to property sellers.
With speed and convenience a priority of most sellers, Zillow often purchases a property below market value . At some future point, it sells the property for a profit .
During the transaction process, Zillow also charges:
- A selling fee of 6% to cover the transactional cost of purchasing the home.
- A closing fee of 1-2% to cover expenses such as transfer tax, escrow, and title.
- An average service charge of 2.5% covering maintenance work, utilities, and so forth.
IMT is an acronym for Internet, Media, and Technology. To bolster its business model , Zillow offers marketing services and other products for real estate professionals.
IMT can be divided into three core components:
- Premier Agent – encompassing the two SaaS products in Premier Agent and Premier Broker. These products allow agents and brokers to track leads or advertise their services on the Zillow platform. Here, Zillow makes money on a cost-per-lead basis which is determined by the services offered and the property price.
- Rentals – where Zillow sell advertising services to landlords and associated rental professionals
- Other – where Zillow sells similar services to individuals who play a role in the renovation or re-sale process. These include photographers, builders, home improvement professionals, and housing inspectors.
For the Rentals and Other components, Zillow is paid on a per-lead basis.
Through its Zillow Home Loans service, the company also makes money on mortgage interest.
The company also works with more than 50 other lenders who pay Zillow every time a customer is referred to them. This is usually a fixed fee depending on the nature of the agreement between both parties.
The cost structure is primarily skewed toward the resources to make both the desktop and mobile platforms (websites, and mobile applications) run smoothly. Together with part of the acquisition costs, that are critical to sell the homes in the first place (things like repairs and updates.
Cash flow generation
The company generated operating cash flows in 2020 primarily due to “ cash received from real estate professionals, rental professionals, mortgage professionals, and brand advertisers, as well as cash received from customers for sales of homes through Zillow Offers and sales of mortgages originated by Zillow Home Loans.”
When it comes to investing activities, the use of cash primarily relates to “purchase and sale or maturity of investments, the purchase of property and equipment and intangible assets and cash paid in connection with acquisitions.
Instead of financing activities, incoming cash resulted from net proceeds from the issuance of convertible notes, net proceeds from and repayments of borrowings on for Zillow Offers, and proceeds from the borrowing of Zillow Home Loans.
- Zillow is an online real estate marketplace founded in 2006. Former Microsoft employee Rich Barton created the platform in response to a lack of transparency and disgruntled customers in the real estate sector.
- Zillow began with a simple business model , generating income solely from advertising. With data on 86% of all United States homes, the company has since progressed to allow a free and open transaction experience for buyers and sellers.
- Zillow also generates an income through its Zillow Home Loans service. It also works closely with more than 50 lenders who pay the company a commission whenever it refers a customer.
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Zillow 3.0: back to basics.
Zillow's new strategy has the company going back to its roots, doubling down on agent lead gen, and extracting more revenue from real estate commissions. Go deeper: The biggest growth driver is Zillow's premier agent business, which it plans to double by 2025. That's an additional $1.5 billion paid by real estate agents to Zillow.
These are aggressive targets and a step-change from past growth rates, which reflect the audaciousness of the strategy -- and a clear signal of intent.
By the numbers : Zillow's core business is stronger, and more profitable, than ever, giving the company a rock-solid foundation and plenty of cash for future growth.
Earnings in Zillow's IMT business, which includes premier agent, more than tripled over the past three years. It's the profitable engine room of Zillow 3.0.
Premier Agent saw an acceleration in revenue growth driven by unprecedented demand during the pandemic.
But quarterly revenue growth just dropped for the first time in 18 months. The pandemic bump won't continue indefinitely.
Zillow Home Loans , its mortgage play, is another key component of Zillow 3.0.
Like Premier Agent, revenue surged during the pandemic, but has slowed down significantly in the most recent quarter.
The pressing issue is that Zillow Home Loans is consistently unprofitable (net loss of $50 million in FY21).
Zillow is managing to lose a lot of money in a business that others can operate quite profitably.
The best case is that Zillow is smartly investing for the future. The worst case is that Zillow Home Loans is another Zillow Offers, beset by executional issues and overextension.
The bottom line: Zillow's 3.0 plan is centered around creating more transactions for premier agents and selling consumers adjacent services (mortgage and title).
Creating more transactions comes down to connecting consumers and agents in such a way that Zillow earns a commission.
That's a huge inflow of new business for premier agents, and it comes at the expense of non-premier agents.
About the author: Mike DelPrete ( email me )
Mike is a global real estate tech strategist, and a scholar-in-residence at the University of Colorado Boulder. He is internationally recognized as an expert and thought-leader in real estate tech. His evidence-based analysis is widely read by global leaders, and he is a sought-after strategy and new ventures consultant. His research and insights have featured in the New York Times, Wall Street Journal, Financial Times, and The Economist.
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How To Write A Real Estate Business Plan
If you’re thinking about starting a real estate business, one of the first things you need to do is create a business plan. This document will outline your business goals, strategies, and how you plan on achieving them. While a business plan can be a helpful tool, it’s not required in order to start a real estate business. However, having a plan can give you a roadmap to follow and help you stay on track as you grow your business. Plus, if you’re looking for funding from investors or lenders, they’ll likely want to see a business plan before they provide any money. To write a real estate business plan, start by creating a executive summary that outlines your goals and objectives. Then, write a section that describes your target market and your marketing strategy. Next, include a section on your business finances, including your start-up costs and your projected income. Finally, wrap up your business plan with a section on your long-term goals and exit strategy. If you need help writing your business plan, there are plenty of resources available, including templates and software that can make the process easier. Once you have a draft of your plan, you can also work with a professional business planner to make sure it’s complete and error-free.
Get Started With a Real Estate Business Plan Here: Elements, Examples, and a Free Template It is critical to have a real estate business plan in order to develop income goals, marketing strategies, goal setting, lead generation, and a competitive landscape understanding. You’ll learn how to write a realtor business plan as well as review business plan examples . External factors influence the opportunities and threats you face, and they can be a useful tool for your business. When developing strategies to achieve your objectives, a strategic analysis of your business’s strengths and weaknesses will assist you. Agents can use the agent finder on Zillow’s website to find additional brokerages. You can motivate yourself by determining your company’s objectives and goals. Goals can be divided into two categories: short-term and long-term.
The overall goal of your marketing strategy can be defined in the marketing strategy. These tactics are designed to assist you in meeting those individual objectives. These tactics should have been used to develop performance indicators (KPIs). Your lead generation strategy can keep your company on track. Organic lead generation can be achieved as well as paid advertising. Systems must be in place for agents to manage, nurture, and engage contacts. Even if they do not convert immediately, every lead has a chance to make a difference.
Real estate agents should review their business plans on a monthly basis to see if they are meeting objectives and making necessary changes. You can determine which strategies are most effective, as well as which resources are required to carry them out, by reviewing your business plan. When you review your business plan, using sales software like Pipedrive will allow you to keep track of your overall performance. Lead generation is at the heart of Market Leader’s business plan. It enables agents to understand their lead sources, average sales price, and commission received over a certain period of time. The lead products purchased by agents guarantee that they will receive a certain number of leads each month. Upmetrics’ business plans are geared toward agents who want to enter the real estate development business . These key sections are important to the developer, such as the location of the building, demand for housing, and the cost of the construction. A broker who has a larger team will be in a better position to lead operational changes.
What Is A Business Plan Realtor?
A business plan realtor is a professional who helps clients create a business plan. This may include creating a budget, researching the market, and developing a marketing strategy. A business plan realtor can also provide guidance on how to implement the plan and make it successful.
You can use a business plan to implement a comprehensive strategy for expanding your real estate business. It is critical to have a written plan in order to decide what you want to accomplish and to keep your commitments to that goal. A plan will help you identify issues you will encounter in your daily life, as well as what you can do to address them. It is critical to have a clear vision and an operational checklist in place so that you can determine your goals and objectives. Identifying who your prospective clients are, where you intend to focus your efforts, and any sales opportunities that may arise should be included. In your executive summary of a real estate business plan, you will lay out your dreams and hopes for the future. It is not a bad thing to have multiple weaknesses; it is the result of identifying potential problems and how to solve them.
To keep your marketing and branding from being too aggressive, you should identify your market niche so that you don’t devote too much energy to something and hope that something sticks. If you don’t have leads, you won’t have sales – which means you won’t be able to make money. A financial plan does not rely on a rough estimate or a rough interpretation of the facts. You will be able to see how much money you will be spending in this section. Taking a look at your local competition will go far beyond your SWOT analysis. The first step toward writing a successful real estate business plan is to understand your customers. Taking specific steps toward achieving your goal is part of an action plan. A plan will help you reach your goal if you want to add ten new leads per month, for example. Taking a fresh look at and refining your plan is an excellent way to avoid common pitfalls that new agents face.
What Would A Broker Want To Include In A Business Plan?
A broker would want to include a description of the business, the products or services offered, the target market, the competition, the business’s strengths and weaknesses, the financial projections, and the risks involved in the venture.
The Importance Of A Business Blueprint For Real Estate Professionals
To create a business blueprint, it is critical to understand the goals of the real estate business in advance. A business strategy should assist agents and brokers in developing a high-performance team that can help them meet their objectives. Furthermore, a business blueprint should include strategies and methods for achieving these goals. A business blueprint should also contain a glimpse into the current state of the company and a plan of attack for the future.
How Do You Write An Executive Summary For Real Estate?
An executive summary for real estate should include a brief description of the property, its location, and its potential value. It should also highlight the key points of the real estate market analysis and the conclusions drawn from it.
The purpose of this report is to provide an executive summary of findings from a recent study on the impact of e-commerce on small businesses. The report contains an objective, market analysis, products and services, competitive analysis, financial analysis, and implementation details. According to the study, e-commerce has a positive impact on small businesses by increasing sales and lowering costs. Small businesses, in addition to reaping the benefits of e-commerce, should take steps to maximize its potential, according to the report.
Real Estate Business Plan Template Word
A real estate business plan template word can be a great resource when you are planning your business. It can help you organize your thoughts and get a clear picture of what you need to do to succeed. The template can also give you an idea of the financial aspects of your business.
The real estate business plan templates provide one of the most effective formats to allow you to create a business plan that is both effective and profitable. The user can easily download this format from the internet, where word documents and PDF files are available. You can use this template to navigate quickly and easily thanks to its highly responsive design. It is simple to download this template layout using only the most basic resources. The goal of the real estate project is described in a variety of segments within the template. If you need all of the essential elements in your real estate business plan, you can use templates that are not only designed specifically to address the issue but also available for free download. PDF Templates will help you understand how to develop this business, what the specific requirements are, how viable it is, and how you expect to achieve a profit throughout the venture’s entire life cycle. The real estate organization that can initiate and complete large-scale real estate projects is a good audience for template layouts.
Commercial Real Estate Business Plan
A commercial real estate business plan is a document that outlines the goals, strategies, and tactics of a company or individual involved in the commercial real estate industry. The plan should be created with the specific goals of the company or individual in mind, and should be tailored to the specific needs of the commercial real estate market. A well-crafted business plan will help a company or individual to identify and achieve their goals, and to stay ahead of the competition.
The majority of the plan’s objectives are to provide a comprehensive evaluation of the property. A development project can describe the proposed renovations or additions as well as the existing site. Furthermore, a detailed breakdown of the costs will be provided so that the company can proceed with phase-in investments at various phases in accordance with the construction schedule. Commercial real estate projections have a higher level of certainty than before. The best way to calculate the financial projections is to base them on the current state of the real estate project. Pro Business Plans is a team of professionals who create business plans by analyzing research, writing, designing, and analyzing financial data.
Realtor Business Plan
A realtor business plan is a document that outlines the goals, strategies, and methods of a real estate agent or brokerage. It should include a market analysis, target market, and a marketing plan . The business plan should also include a financial plan and projected income and expenses.
Bret Calltharp’s agents saw an average 27% increase in their business after implementing his Zillow business plan . A real estate business plan can help you stay ahead of the competition by staying current with market trends. By using this tool, you can track results over time, test lead generation strategies, and come up with new marketing ideas. Make a strategy for your clients based on their responses to specific questions. Keep track of real estate market trends in your business plan by using a table to list possible outcomes on the left and right. Make a projection of how much growth you anticipate in your market and how many new clients you anticipate in the coming years. Every business plan should include a framework for analyzing your company’s strengths, weaknesses, opportunities, and threats.
You must first understand your clients’ experiences and form a strong relationship with them. Use real estate marketing strategies and market growth trends to forecast your sales volume for the upcoming year. Begin by outlining your personnel costs, which will aid in determining your breakeven point. When you become a Zillow Premier Agent, you can use a CRM to manage all of your leads and connections. Ascertain that leads are actively looking, submitting offers, and under contract are prioritized. Assess your real estate goals , identify your current financial situation, profile your prospective customers, and keep track of other data points.
A business plan is a formal written document containing the goals of a business, the methods for achieving those goals, and the time frame for doing so. It also encompasses the company’s marketing plan, financial plan, and staffing plan.
The business plan is a document that outlines the firm’s marketing, financial, and operational strategies. For example, a business plan is used to entice investment before the company has a track record. Every decision a company makes should be presented in a business plan that outlines all of the costs and possible pitfalls. A business plan assists businesses in identifying their objectives and in maintaining their goal-setting activities. Companies can manage themselves, grow, and begin operations with them thanks to cloud computing. Business plans can be classified into two types: good and bad. A business plan has a wide range of dimensions and lengths.
In lean startup business plans , key points are highlighted in an abbreviated format. If an investor or lender requests such a plan, the company should provide them with more information. When it first started, Tesla’s electric car business was simply a business plan. An entrepreneur or group of owners can update the plan or evaluate the company’s performance in an annual review of the plan. The purpose of this process is to assess the plan’s ability to assist the company in growing. When a company prefers to present its business in a quick and clear manner, lean startups are an option.
What Is In A Business Plan?
A business plan is the document that describes a company’s goals, operations, industry status, marketing objectives, and financial projections in plain English. It contains valuable information that can be useful in the management of a business.
Monitoring the constant real estate market fluctuation.
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9 Steps to Writing a Real Estate Business Plan (+ Templates)
Chris is a writer, coach, speaker, and technology analyst specializing in marketing, lead generation, transactional best practices, and everything in between. See full bio
- Real Estate Business Plan Templates
- How to Write a Real Estate Business Plan
- Improving Your Real Estate Business Plan
A real estate business plan is an essential strategy document that every agent, team, and broker needs to ensure that their business is equipped to grow. Having a well-defined real estate business plan ensures that your time, energy, and cash are being spent efficiently in pursuit of your goals.
However, unless you went to business school or are an experienced entrepreneur, it can be hard to know where to begin writing your business plan. To assist you, we developed three detailed real estate business plan templates—one for new agents, one for team leaders, and one for brokers—which you can adapt to start crushing your goals.
Our 3 Free Real Estate Business Plan Templates
Ready to get started? Each of our three plans has all the essentials you’ll need to set your business up for success in 2022 and beyond. Read on for more information about each version and to download our single agent, team, and brokerage real estate business plan templates.
We’ll provide space for a thorough self-assessment, a chance to nail down exactly what services you offer, and identify exactly who your customers are and how your business will serve them.
1. Individual Agent Real Estate Business Plan
You’ve probably heard coaches and brokers throw around the old adage “All real estate agents are small business owners,” and guess what—it’s totally true. Whether you’re brand-new to the industry or have been buying and selling as a solo agent for years, you need a solid business plan.
Our business plan template is the perfect launchpad and a necessary step to take your real estate business to the next level.
2. Real Estate Team Business Plan Template
Launching a team? Maybe you’re already running a group of agents within your brokerage and you need to get more organized. Either way, you’re not just a small business owner—you’re also a leader. Having a plan in place to help you achieve your goals, as well the goals of those you lead, is a must-have.
As the leader of your team, you should head up the crafting of this plan, but don’t forget to involve your team members where possible. Get started mapping out your team’s makeup, direction, and goals with this real estate business plan template today.
3. Real Estate Brokerage Business Plan Template
If you’re considering founding a brokerage , you know that there’s a lot that goes into this process. You’ll be spending tons of time and investing considerable resources to make this dream come true. Unless you are sitting on a mountain of cash, you’re going to need a solid plan to make sure you get momentum from the starting line.
Open our business plan template and start to determine exactly what it will take from a space, spending, and support perspective to make your plan of opening a real estate brokerage viable.
Looking for more resources to get your business planning off the ground?
Make sure to check out our real estate business successful launch kit, including our real estate branding guide, lead generation strategy planner, and our ultimate new agent checklist.
Download Our Free Real Estate Business Launch Kit
Writing a Real Estate Business Plan in 9 Easy Steps
1. identify who you are as a real estate agent.
The first step to successful real estate business planning is always self-evaluation. Who are you, why are you in the real estate business, and maybe most importantly, what do you do?
In The Close’s Business Plan Templates, we call this section “Who You Are,” and ask you to develop your:
- Mission Statement (your “reason for being in real estate”)
- Executive Summary (one to two sentences that summarize what you do)
If you’re a part of a real estate team, you’ll also use this section to define the roles of each member of your crew. Putting on paper what everybody brings to the table is a big part of understanding how to meet your goals.
For brokerages, when crafting your executive summary, keep in mind the type of business you want to run as well as the types of agents you want to attract . Remember, you’re the captain of the ship—who do you want to go to sea with?
THE CLOSE RECOMMENDATION: If you’re looking for a leg up when it comes to understanding who you are as a real estate professional and building out your personal brand, check out Ryan Serhant’s course called How to Build Your Personal Brand. This in-depth walk-through from one of real estate’s most savvy brand marketers is thorough, provides you with tons of great tools, and has been personally reviewed by our team . It’s the real deal.
Visit Sell It Like Serhant
2. Analyze Your Target Real Estate Market
Knowing the haps in the real estate market is critical to success. In this section, you’ll examine every corner of the market, which sections are hot, which sections have slowed down, and most importantly, where the opportunities lie. We suggest taking your time here and really digging into the MLS and figuring out exactly what the numbers tell you.
Though they’re fun to look at, don’t spend too much time examining numbers on the national or even state-wide levels. Real estate is a local pursuit, and while those macro numbers may have some small effects, what matters most is what is happening on the street level of your community.
In The Close’s Business Plan Templates, we ask you to examine and record your local market’s:
- General Trends (average days on market, typical commission rate, average sold price, etc.)
- Market Opportunities (any observed imbalances in supply and demand)
- Market Saturations (where is there too much and of what)
[Related article: How to Do a Comparative Market Analysis: A Step-by-Step Guide ]
3. Analyze Your Local Competition
Just like the market, you’ve also got to understand the landscape of your competition.
Knowing who is doing what and how well they’re doing it will help you identify niches that are currently going unfulfilled, as well as what sectors of service are saturated with agents all scrambling to get a piece of the pie.
In our templates, we want you to look for:
- Underserved Niches (what sorts of property don’t have enough Realtors paying attention to them?)
- Competition Saturation (where are there too many cooks in the kitchen?)
If you need some help with this, try following your competitors on social media. Does their target demographic align with their business?
This section is all about understanding what the rest of the field is doing, and pointing out where the market is underserved. Once you do that, you can move in and fulfill a need.
[Related article: How to Compete With Cash Offers: 10 Ways to Write Winning Offers ]
4. Decide What Services You’ll Provide
You might think to yourself, “What do you mean ‘services’? Don’t I just provide, ya know, REAL ESTATE services?” But, this is a question from a person without a plan. That is no longer you.
Yes, you provide real estate services, but which ones? Where is your greatest opportunity? What niche does your market need filled? Perhaps you’ll be a condo specialist? Maybe you’ll focus on first-time homebuyers? What about the vacant land game?
In our templates, we want you to identify your:
- Primary Offering (where you’re most skilled and can offer the most value)
- Potential Offering (where you see opportunity and where you could grow professionally)
You don’t have to pick just one, but failing to choose anything is missing an opportunity. Think long and hard about what you (and your team, if you have one) are good at, what you are passionate about, and what the market needs. The overlap of these categories is your answer.
5. Identify Who Your Ideal Customers Are
Once you have an idea of what services you provide in your market, you have a good idea of who your customers are.
For instance, if there’s a need for a real estate agent (or brokerage) that specializes in first-time homebuyers, you know that your average customer is likely to be younger, which means they are more apt to communicate via social media, which means advertising to them in the newspaper is a waste of money.
On the other hand, if your ideal customers are older retirees, their mailbox and United States Postal Service may still be important ways to communicate with them.
In our templates, we ask you to describe:
- Your Likely Typical Buyer
- Your Likely Typical Seller
Important: Remember, this is not a place to discriminate. In no way, shape, or form are we suggesting that you should use this section to profile or write-off certain groups of people based on their gender, race, color, national origin, sexual orientation, disability, or more.
Rather, this is the section of your business plan where you will describe the business attributes of your customers.
[Related article: How to Get (& Keep) Qualified Real Estate Clients in 2022 ]
6. Conduct a SWOT Analysis
SWOT—or Strengths , Weaknesses , Opportunities, and Threats —is a common tool in business plans, and is especially important in our real estate business plan templates.
Here, you evaluate each of these categories using what you’ve discovered about yourself and your business as you’ve been writing. Think of it as a summary-thus-far.
Then, combine that knowledge with what you know about yourself and how you work. For instance, maybe you are strong in analysis but weak in cold calling? Maybe there is no brokerage that focuses primarily on millennials (opportunity)? Maybe your target market is new construction and there’s a construction slowdown forecasted (threat)?
The SWOT analysis is a great thing to keep nearby even after your real estate business plan is complete. In fact, we’ve spoken to a couple of agents who actually make a copy of this section and tack it on the bulletin board in their office, just so it is top of mind every day.
7. Determine Your Financial, Personal & Growth Goals
All your hard work on your real estate business plan has culminated here: your goals. In this section, you’re going to lay out what your different goals are for your business: financial, growth, and otherwise. Use the research and analysis you’ve completed to solidify your goals into measurable statements you can come back to and evaluate periodically.
Here are some goals you might want to think about:
- A specific gross commission income (GCI)
- A specific number of transactions
- A specific number of leads in a given time
- Hiring an inside sales agent or assistant
- Adding new agents to your team
- Spending a certain amount of time working vs home with the family
8. Analyze Your Starting & Ongoing Financial Needs
The penultimate section of your real estate business plan involves getting the math behind all your plans. While financial planning is not everybody’s strong suit, most of the work has already been done for you thanks to the careful investigation you’ve done in the previous sections of your real estate business plan, so have no fear.
In this section of our templates, you’ll do things like:
- Take account of all your operating expenses, including all your marketing and lead generation costs
- Account for all of your monthly outreach and new client generation efforts, like Zillow Premier Agent , your customer relationship manager (CRM) expenses, and the cost of postcards from a company like ProspectsPLUS!
9. Make a Plan to Revisit Your Business Plan
Finally, don’t forget to complete your follow-up section. It may be tempting to get started right away on the plans you’ve made, but you need to know when you are revisiting your strategy.
Your real estate business plan is a living document, not something carved in stone. We suggest a quarterly check-in to see if the strategies you chose are advancing you toward your goals.
Chris’ Tips: 4 Strategies for Improving Your Real Estate Business Plan Chris Linsell, Senior Real Estate Writer , The Close
Writing a real estate business plan isn’t complicated, but if this is your first time creating a roadmap like this, it can be a little intimidating. To help you settle your nerves and get you off on the right foot, here’s a step-by-step walk-through of how to get started planning a successful real estate business—no matter what shape or size yours will take.
You’ve got your real estate business plan template, and we’ve walked you through exactly what you should expect, every step of the way. But, before you start putting pen to paper, we’ve got four tips you should remember when building out your plan of attack.
📌 Pro Tip Your Short-term Strategies Need to Support Your Long-term Goals
Your real estate business plan is, in large part, about setting goals for yourself and your career. But you’ll never reach those goals if your short-term, day-to-day habits don’t support them.
So, as you’re planning for your future in your real estate business plan, make sure you’re setting goals that your time, talent, and resources will support. There’s nothing wrong with being aspirational and setting yourself up to reach beyond your grasp, but don’t set yourself up for failure by creating goals you don’t have the resources to reach.
📌 Pro Tip Structure Your Business Around Customer Needs FIRST and Your Abilities SECOND
A common misstep in real estate business planning happens when Realtors build their business around a specific skill, resource, or talent they have without first understanding whether their community has a need that approach will serve.
For instance, if you identify in your SWOT analysis that you’re fantastic at face-to-face, cold lead interaction (you LOVE to door-knock), but you’re working a community almost exclusively made up of partially occupied vacation homes, you’re likely not going to get the success you desire.
Start by identifying the needs of your real estate community FIRST, then examine how your skills will meet those needs.
📌 Pro Tip Focus on Differentiating Yourself
Creating a business model that looks like everybody else’s is a recipe for mediocrity. That’s not to say you should ignore the tried-and-true tenets of a successful real estate business, but those shouldn’t be your focus.
Spend time thinking about what you do better than anyone else. The better you explain your unique value to your potential clients, the more of them you’ll wind up turning into actual buyers and sellers.
📌 Pro Tip If You’re on a Team, Know Who the Decision-Maker Is
This tip primarily applies to real estate teams and to people starting a brokerage, but is a helpful thought experiment for all. Think about all the resources for your business (your time, your talent, your budget): who is the final decision-maker on how those resources are dedicated? Does it depend on the situation?
Knowing who has the final say in business and strategic decisions makes getting to the right answer faster and more efficient. And, for those of you running solo operations, ask yourself, “Are there decisions in my business for which I would need approval from my broker? My spouse?”
We want to hear from you. How is your real estate business plan coming together? Let us know in the comments, and let’s keep the conversation going.
Chris is a writer, coach, speaker, and technology analyst specializing in marketing, lead generation, transactional best practices, and everything in between.
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