Transaction coordinators provide a valuable service that utilizes their exceptional interpersonal and technical skills. In this blog, we give you great tips on how to start your transaction coordinator business.
Real estate sales is a people business where you must build trust, rapport, and mutual respect with your clients on an ongoing basis. You communicate via telephone, email, or in-person; you are the conduit of information between the home seller, buyer, and real estate agent.
Transaction coordinator business in real estate sales can be highly profitable, but it is not for everyone. The following are some tips to help you start your transaction coordinator business.
Education and Training
Transaction coordinators should have a thorough knowledge of real estate contracts, forms, and property laws. In addition to your sales experience in the real estate industry, you should also be familiar with internet marketing and electronic communications such as email, texting, and social media.
People expect almost instant communication from their real estate agents about new listings, price changes, and new incentives in this technological age.
The first thing you must do is to train with a real estate transaction coordinator mentor. A home study course will provide the basic training, but it does not replace face-to-face training with your mentors.
Real estate mentors who are successful in their own business seldom have clients that don’t take action or fail to go to settlement. You need someone who can provide you with feedback on your selling style and help you develop a unique selling proposition.
Find a mentor who has been in business for at least five years managing their own transaction coordinator business. Finding a mentor is the only reliable way to determine if this type of business operates successfully in your local market.
The most successful transaction coordinators have a firm grasp of local real estate laws, contracts, and forms which take time to learn because the laws are very complex, with many exceptions.
If you are not familiar with your local real estate selling process, you will be at a severe disadvantage when working with real estate agents or experienced home sellers.
Write a Business Plan
If you want to start a business or become self-employed, you need a business plan that includes a mission statement and detailed step-by-step instructions on how you will provide your service to the real estate industry.
Your transaction coordinator business plan should consist of all aspects of your business, but you must tailor it to the real estate community. You need experienced mentors who are willing to help you establish the necessary contacts in their local market.
The cost of establishing these contacts is typically much less than you would expect.
Come up with a business name that is an essential part of your business. The name of your business should reflect the critical benefit you provide to your clients. Your business plan must be a working document covering all aspects of starting and operating a successful transaction coordinator business.
You must have an excellent reputation in the real estate sales community, so they will be more willing to use your services.
Choose a business entity or structure for your business, for example, an LLC or sole proprietorship. Decide whether you want a home-based or office space to operate your business.
You may choose a hybrid structure, but both options have pros and cons, which you should discuss with your small business legal advisor.
Also read: Hire the best business plan writer in 2021
Legalities of Transaction Coordination
As a real estate transaction coordinator, the role is similar to that of a property manager because you are responsible for managing another person’s real estate listing.
The relationship is direct with the seller but indirect because you are contracting your services to the agent or buyer’s agent representing them in the transaction.
You will need to create a contractual agreement that protects you and your clients, as well as a non-disclosure agreement for your business.
Other legal aspects of a real estate transaction coordinator include filing your taxes as an independent contractor, which will be different from filing taxes as a real estate consultant because you are not liable for the tax on the commissions of the property transactions you handle for your clients.
You can also form business relationships with lawyers, escrow companies, title companies, and other related service providers who share the same office space with you.
Get a License
You must be licensed to become a real estate transaction coordinator in most states. The requirements for licensing vary from state to state, so it is best to check with your local Real Estate Division or Board of Realtors for clarification.
Some states, such as California, Hawaii, and Rhode Island, do not require a license if you are only performing clerical tasks meaning that you would not be authorized to write offers, counteroffers, or accept earnest money.
A license is only required in states such as California and Hawaii if you represent the seller’s interests directly or engage in listing activities. You can still be a transaction coordinator for your clients in these two states, but it must be clearly stated in the transaction coordinator contract.
A few states will have to meet educational requirements to get a license or become a registered real estates agent, such as Florida and Nevada. In these two states, you must also train at an approved school which can be expensive. You will also need to get your fingerprints on file with the state for background checks.
Market Your Business
Create a marketing strategy that highlights the benefits of working with you. You can provide services related to organizing documents, scheduling inspections, arranging for final walk-throughs, and closing the transaction with the escrow officer.
Next, you need to make contacts in your local real estate community by attending meetings, making phone calls, and providing samples of your reports which you will provide to the listing agent. Build a website for your company and post articles on blogs related to real estate investing.
Your marketing strategy should also include other outreach sources, including partnering with foreclosure prevention companies or credit counselors who have access to homeowners in distress.
You can provide educational workshops on how foreclosures happen, the best practices for dealing with a lender, and the benefits of having an agent represent them in the transaction.
In summary, it is essential to know the laws, licensing, and related procedures in your state before starting a small business. The best way to begin building relationships with real estate agents and investors is by going to seminars, workshops, or conventions held in your area.
You should also look into getting a website where you can highlight testimonials from satisfied clients who will post reviews about their experiences.