On average, 69% of American entrepreneurs will start their businesses at home. It’s much easier to set up a home office than a brick-and-mortar operation. Plus, most jobs can be performed with a computer, including real estate transactions and home-based marketing.
That’s why building a real estate transaction coordinator business is well within your reach, provided you take the steps to apply for your EIN, the appropriate licenses, among other things.
7 Steps to Building Your Own Real Estate Transaction Company
Whether you’ve worked for a broker in the past or you’re looking to switch your career or job title, starting your own real estate transaction company is possible by following these steps.
Step 1: Write a comprehensive business plan
A business plan will help you understand the individual, small steps you need to take before truly becoming a company. A good business plan should include an executive summary, which states information about the company’s leadership, operations, employees, and location.
You should also write up what services you’re providing. A transaction coordinator’s job is pretty involved, and their services range depending on what company, broker, or agents you work for. But, you’ll typically handle administrative duties and all aspects of a home transaction.
Transaction coordinators should also conduct market analysis because this can help their agents sell homes. A marketing strategy, financial plan, and budget are primarily for your own business needs. These sections can help you receive funding from banks and investors.
Step 2: Get your EIN and required licenses
If you plan on being a sole proprietor, you don’t have to get an Employer Identification Number (EIN), but if you want to become an LLC and hire employees, you’ll have to take that step. Getting an EIN is simple, and you can apply for free on the IRS’s website in minutes.
To facilitate real estate transactions, you don’t have to be licensed in some cases. However, states like Texas do require transaction coordinators to be licensed. Always check the requirements of your state before starting your business, or you could be subjected to fines.
Step 3: Business bank accounts and insurance
Whether you’re an LLC or a sole proprietor, it’s a good idea to separate your business and personal accounts. As an independent, you have to keep track of all of your expenses for tax purposes. Plus, the IRS is less likely to audit you if this separation is clearly present.
Becoming a business entity leaves you vulnerable to more risks beyond high taxes and a potential audit. That’s why you should look into home-based small business insurance that can protect you and your business assets in case of a home invasion or weather damage.
Step 4: Find the right transaction coordinator software
As mentioned, a real estate transaction coordinator is responsible for administration and all aspects of a home’s transaction. To complete these duties, you’ll need software that can:
- Coordinate open houses with buyers and sellers
- Handle contracts, escrow, and title exchanges
- Manage home and company-based listings
- Expedite the loan and appraisal approval process
- Organize appointments and inspections
- Speak to contractors for repairs or installations
- Assist with negotiations and/or sales
- Communicate with agents, brokers, and customers
While that sounds like a lot for one software to accomplish, and it is, there are platforms like Paperless Pipeline that can help you with all of these tasks and much, much more.
You won’t need to use multiple types of software to manage your time either. Some platforms will automate checklists, create customized workflows for your agents and brokers, and allow numerous transaction coordinators to work in the same system under one streamlined inbox.
It’s essential to take your time when choosing the right software for your business because you’ll be using it day after day to keep your clients up-to-date with the latest information.
Step 5: Set your rates based on experience/expertise
A real estate transaction coordinator that can handle their duties while offering superior customer service to clients is hard to find, and agents know that. That’s why it’s okay to set your rates higher than the national average if you have the experience and expertise to back it up.
On average, transaction coordinators make $38,792 a year, but rates can range from $20,500 to $59,000. However, different states and cities will offer more or less based on living standards.
Remember that you’re an independent, so you probably won’t get health insurance from your employer. You also must fulfill a self-employment tax rate of 15.3% plus income tax. Depending on your income, you could be paying 30-40% or more before deductions in taxes.
Freelancer real estate coordinators may charge a flat fee or per translation, which could range from $350-$500 or more. If you service a dual agency, $800 is typically the going rate. With this fee structure, you become more affordable, especially if the company is small.
In the end, there’s no ceiling to the amount you could make. If you hire more freelancers under your business, or you sell your services to multiple agencies, you can make a pretty penny.
Step 6: Come up with a marketing plan
Marketing is crucial for building a successful business, but too many startup owners go into it without a plan. To market your real estate transaction business properly, do the following:
- Set up your marketing goals.
- Create a description of your target customer/market.
- Make a timeline of tasks to complete.
- Track business metrics, like income and leads.
- Spend money on PPC ads and Google ads.
- Create a website and social media profiles.
- Network with real estate agents on Facebook and Reddit groups.
- Frequent real estate trade shows and conferences.
- Speak to the Chamber of Commerce for opportunities.
- Market heavily on LinkedIn, especially if you sell office space.
This list is by no means comprehensive, but it can get your business out there when you start.
Step 7: Ask for testimonials and reviews
Without testimonials and reviews from your customer, it’ll be harder to secure more work later on. New businesses lack credibility, even if you’re experienced or have worked in the real estate industry for several years. To earn respect from prospective clients, you need a good reputation.
If you’ve worked for a brokerage or other agents before creating your business, ask them to leave reviews or video testimonials for your services. Then, ask if you can use them as a referral. You should have at least 3-6 reviews/testimonials/referrals before going live.