5 Things to Know Before You Get Into the Real Estate Business
Working with family members can have many perks. They’re people you can trust to have the company’s best interests in mind, and when you find success, you can share it with the people you value most. It has practical value, too — if one family member falls ill, someone else can help pick up the slack.
However, working with family can have some challenges, particularly in the real estate business. Differences of opinion, sibling rivalries and financial stressors can damage both your careers and your relationships.
Real estate agents should think ahead and create contingencies for common sources of conflict before joining up with relatives. Here are five things to consider before entering into business with your family.
1. Company Culture
When you work with family, you get into a certain rhythm. There may be unspoken values you were all raised with, such as loyalty to family or frankness in conversation. This is great for communicating among yourselves, but this type of clan culture can make it hard for outside employees to thrive if you’re expanding your business to hire new people.
Make sure you’re communicating your values to all employees, both related and non-related. Continue to review these values to help non-related workers feel included.
Here are tips to implement for making every employee feel valued:
- Choose the right communication tools
- Give employees the authority to make crucial decisions
- Encourage workers to speak up during meetings
- Foster workplace friendships
- Recognize each employee’s contribution
2. Separate Work and Family
When working with family, personal emotions can get involved. So, you should only focus on business aspects when making work-related decisions. Also, you want to leave personal disagreements outside the workplace. Internal fighting can make non-related colleagues feel uncomfortable.
To help with tension, give each other space at the office. Keep it professional by addressing each other on a first-name basis. Also, leave work talk for business hours only. Once you’re enjoying time as family, focus on that private time to help avoid business-related burnout.
Working with family can also lead to special treatment. Make it clear that family members have the same expectations as non-relatives. So, if a sibling is late, they should face the same consequences as any other employee.
Here are some tips for balancing work and family to keep in mind:
- Have clear legal agreements
- Define your goals
- Be as fair as possible
- Think reasonably and leave out emotions
- Put everything in writing
3. Prepare for Financial Conflict
Finances can cause tensions between even the most close-knit relatives. Compensation, benefits and financial struggles can drive a wedge between business relationships, which is all the more complicated when you work with family. Fortunately, real estate agents have a built-in guard against this conflict with commission-based work — representing clients well will correlate to how well-paid you are.
However, when you do need to manage perks and compensation within the business, keep matters transparent. Determine employees’ compensation based on their work ethic and not personal relationships. You’ll want to have an annual meeting to discuss salary and benefits. Make sure to be open and honest during these talks.
Then, there’s the matter of financing your real estate business. Especially in the beginning, your real estate team might need to lean on existing stores of wealth to get rolling. Household members may ask for cash to finance business projects or personal expenses. But borrowing from family members can cause potential issues if there isn’t accountability.
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It’s best not to let personal money get mixed up in your business. If you do need to deal with borrowing, you want to request updates on the situation that led to them borrowing money in the first place. Along with that, here are some other tips to help get back your money:
- Offer gentle reminders
- Give deadlines
- Express urgency
- Suggest payment installments
- Offer to help them manage their money
4. Generational Problems
Having different generations within a family business can offer fresh perspectives, but it can also create problems. Older generations may be reluctant to adapt their views if they have a set way of doing things. Younger real estate agents might be resistant to feedback based on their relative lack of experience.
Respect needs to be a two-way street when you’re working real estate with your family. To help with this issue, be sure to listen to each family member actively. Here are some tips for active listening to try out:
- Make eye contact
- Let them speak
- Paraphrase what has been said
- Be mindful of your body language
- Ask questions
When making business decisions, focus on the business impact of your perspectives rather than framing it generationally. The older generation may not be as familiar with social media marketing, so demonstrate its lead generation potential. Younger agents may not have the networking chops experienced parents or relatives do, so highlight how professional relationships can benefit agents.
Work together to pinpoint areas of growth, listen to concerns and find common ground where these conflicts pop up.
5. Planning for Succession
Some family businesses are passed down from second or even third generations. Deciding who to pass on the organization can be stressful. There may be heightened emotions involved. However, your family has to determine what is best for you and the company.
When passing a business down to younger relatives, make sure they are prepared to take over. Review all the responsibilities with them — cover financial obligations, such as taxes. Then allow them to serve as apprentices so they can get a leg up in the real estate industry before they start their professional careers.
You want to have a clear plan of action and enlist a business advisor for any disputes. Clarity and communication are key to keep your company running smoothly. Here are some ways to create a successful succession plan:
- Be proactive
- Pinpoint succession candidates and let them know
- Step up your professional development efforts
- Do a trial run of your plan
- Integrate your plan into your hiring strategy
Things to Consider Before Entering Into a Family Business
Building a family business is a great way to bond with your relatives and find success with a team you can truly trust. These relationships can give real estate agents an edge as they communicate challenges and find opportunities in the market.
However, working with your family comes with its own set of challenges. Keep in mind the above points to help your family real estate business thrive!
