The problem of housing in many African cities and the lure of lucrative real estate investment deals have created a multi-billion dollar real estate agency business in Africa.
These agents and brokers are earning enviable incomes by helping people find the right homes and connecting investors to profitable real estate investment deals.
Compared to the rest of the world, Africa’s real estate market is largely young and under-explored. And as real estate investment grows on the continent and more people join Africa’s middle class, the real estate agent’s business is bound to explode.
Let’s take a look at this opportunity and how you can become a real estate agent…
Who is a real estate agent and why has this service become so important?
A real estate agent or broker (or Realtor) is a person who acts as a middleman or intermediary between real estate buyers (investors, prospective tenants etc) and sellers (landowners, landlords etc.).
The agent earns a healthy commission by helping people find accommodation or office space that meets their needs at a price that is agreeable to the seller.
In most cases, there are separate agents representing the interests of buyers and sellers.
The rapidly growing population of African cities has led to rising demand for residential and commercial accommodation.
The number of people living in African cities is forecast to exceed 500 million by 2020. This rapid urbanization is a direct consequence of Africa’s booming population, impressive economic growth, and massive migration of people from rural areas and foreign countries to African cities.
New local businesses and foreign companies looking to set up shop in Africa are contributing to the rising demand for office space. As more people continue to look for ready housing or undeveloped land to build their own houses for residential and commercial use, the asking prices for accommodation and vacant land in many African cities are currently at record highs.
In the middle of all this overwhelming demand and limited supply of accommodation, there is no formal structure or marketplace for landlords, prospective tenants, buyers, sellers and investors, to meet and transact in the multi-billion dollar African real estate business.
By becoming the vital link between property owners and prospective buyers and tenants, real estate agents are providing a very important service to this disorganized market, and making a lot of money in return.
Market Opportunities for the Real Estate Agency business in Africa
In many rapidly developing cities across Africa, the commissions earned by real estate agents can range from 5 to 20 percent of the eventual transaction (rental or sale) value. Agents can earn between several hundred dollars for simple tenancy deals or up to thousands of dollars for facilitating the sale of high-value properties and land.
As property sales values and rent prices continue to rise in line with Africa’s rapid economic development, the commissions that are earned from some of these deals can be staggering.
In addition to the demand by local real estate investors, foreign investors are also looking for lucrative deals for development purposes.
In the absence of a marketplace for buyers and sellers to meet, only enterprising real estate agents can connect these parties and smile to the bank on the commissions they have earned.
Unlike in developed countries where real estate agency is a closely regulated practice, interested African entrepreneurs may not need a license, qualification or registration with the government to act as real estate agents. Anyone with the right information can link buyers and sellers, and earn commissions for their services.
This business may sound like an all-comers affair. However, only agents who distinguish themselves succeed in the long run.
Most successful agents who have built a reputation of trust and fairness with their satisfied clients still make huge commissions from referrals and recommendations.
Poor skills, insufficient knowledge and the threat of fraud makes it difficult for newcomers to make any decent income from this business.
However, once credibility is established from the first few ‘small’ deals, satisfied clients are more likely to refer friends, family and total strangers. This business is almost entirely based on trust and loyalty!
There are several accounts of unemployed Africans and young school leavers who have transformed their financial situation through real estate agency. The most attractive thing about this business is its relatively low risk and little or no startup costs.
However, a personable and professional attitude, very good communication, negotiation and selling skills will be the difference between huge success and predictable failure.
Success tips for aspiring real estate agents in Africa
Starting off in the real estate agency business requires a thorough knowledge of the real estate market, trends and applicable local laws.
Most clients will regard you as the expert and look up to you for sound advice. Depending on whom you will be representing, buyer or seller, your primary goal must always be to help your clients get the right accommodation at the right price.
Most people searching for a suitable accommodation will typically be looking for good neighborhoods that have the basic amenities (electricity, water, good roads etc.) and fair tenancy or lease conditions.
Landlords will be more interested in getting tenants who can afford the rent/lease. Real estate investors will be looking for lucrative property deals in a developed or fast developing part of town to assure good returns on their investment.
It is very essential that you understand the needs and budget of your clients in order to fully satisfy them.
You must learn to distinguish yourself in this very crowded and competitive business by being professional, putting the interest of your clients first and not focusing too much on your commissions.
The ultimate guarantee that you will remain successful in this business is the number of clients who are satisfied with your service and will happily recommend your services to others.
If you can, find a mentor who is experienced in the business and willing to teach you the ropes. A lot of the tools you will need to succeed lie in your people skills, presentation, negotiation and ability to communicate well.
There is no doubt that you will have to read some of the great books on how to become a successful real estate agent to gain the knowledge and skills that will carve out a niche for you in this business. We have made a list of our top 3 recommended books at the end of this article.
How to find customers for your real estate agency business…
- Advertising in the real estate space of local newspapers and magazines can help to widen your exposure and reach potential clients. Most people looking for accommodation visit the pages of these media to find information on what’s available on the market.
- Due to the rising penetration of the internet in Africa, a lot of online forums, blogs and listing websites have become popular with people looking for residential accommodation or office space.
Most of these online services are free and allow you to upload pictures of the property, a summary description and the asking price. OLX and nigeriapropertycentre.com have become popular destinations for real estate agents and people looking to sell, lease or buy real estate in Nigeria.
- Word of mouth never goes out of fashion! Whenever you have a chance with anyone, make sure you share your business cards to both prospects and satisfied customers. You never know if someone you meet knows someone who needs your services. Above all, never forget to ask for referrals from your satisfied customers!
Some things you should consider in the real estate agency business in Africa…
Building a reputation and a loyal clientele is the secret to success in this business, however, achieving this is likely to take time. It may be unrealistic to expect thousands of dollars in commissions in your first or second year of business, unless you learn fast or enjoy the support of a good mentor.
As the income from this business will not be very steady, it is very important that entrepreneurs plan and set aside living expenses for up to six months in advance. Most agents become desperate to close deals due to financial pressure and focus too much on their commissions rather than the interests of their clients.
Most agents also do not invest enough time and energy to improve their knowledge and skills. The tastes of customers and market trends are always changing. Serious agents must be able to anticipate these changes in order to properly serve their clients. This requires focus, dedication and hardwork.
Our Top 3 Recommended Books if you want to succeed in the Real Estate Agency business
Of the hundreds of books written on the subject of real estate agency, these books are our best recommendations for you. They are all best-sellers in their own right and have got a lot of favourable reviews on Amazon’s bookstore. If you intend to succeed in the real estate agency business, these books are a must-read for you.
We would love to hear from you about your successes, challenges, advice and questions. Do not forget to leave a comment in the section below.
To your success!