What is the real estate industry?

In Brief:

      • The real estate franchise industry currently produces $53 billion in revenue, which is the highest output real estate has delivered in the last ten years
      • The industry’s sectors include leasing, management, and brokerage.
      • The industry produces roughly $25 billion dollars in revenue each year
      • Since 2010, the industry has gained about 18 million jobs and it is projected to continue to rise

The real estate industry is among the most popular and highest-grossing industries, bringing in billions of dollars each year. Real estate involves buying and selling, leasing, or renting land.  According to Statista, the real estate franchising industry is currently producing about $53 billion in revenue, which is the highest output real estate has delivered in the last ten years.

The industry is currently putting out about $53 Billion, which is the highest output in the last 10 years.

There are four different types of real estate that contribute to this industry:

  1. Residential real estate: This form of real estate includes both new construction and resale homes.
  2. Commercial real estate: This form can be shopping centers or strip malls, for instance. Often, apartment buildings also fall into the category of commercial real estate.
  3. Industrial real estate: This type of real estate includes manufacturing buildings and warehouses. Often these buildings are used for production or storage.
  4. Land: Land real estate involves any vacant land or working farms.

The real estate industry depends highly on trends such as population growth or economic strength. As the economy rose and fell from the booming post-WWII period of the 1950s to the drop of the great depression, the real estate industry directly reacted to the economic climate. Nevertheless, throughout history, the real estate industry has remained a potent source of potential for entrepreneurs.

Mutually, while real estate depends on macroeconomic factors, it also dictates economic outlook, too. For instance, the construction of new buildings contributes to the country’s gross domestic product. In 2017 alone, the construction of new residential and industrial buildings added $1.03 trillion (7 percent) to the US economy, according to The Balance.

Industry sectors include leasing, management, and brokerage.

The real estate industry can be broken down into three different sectors: leasing, management, and brokerage. 

Leasing agents frequently work with a management company and are tasked with finding tenants for properties. Companies that employ leasing agents are responsible for upkeeping the buildings or properties they own, whether it be directly or through the use of a third party such as a super. It is the responsibility of the management company to ensure that buildings are fully occupied with payments submitted in a timely fashion.

Brokers work to ensure a timely and mutually beneficial exchange between those looking to buy and those looking to sell properties. This task involves facilitating price agreements and managing the money given at the closing. Typically the broker is paid a commission for their work, which is often split between the brokers in the arrangement.

Real Estate Agents, Sellers’ Agents, Buyers’ Agents, & Realtors

Real estate agents are those that help families, businesses, or large investors purchase or invest in all types of properties, whether it be residential, commercial, industrial, or land. Not all real estate agents specialize in each type of land. For this reason, real estate agents have different specialties.

Sellers’ agents use listing services or personal contacts to assist clients in selling their properties. These agents provide price estimates on the property and can help clients improve their property to ensure a quick sale.

Buyers’ agents are extremely savvy regarding the local market and can help clients find the property they seek. They compare prices and guide clients to properties that best fit their needs and budgetary restrictions.

Realtors are real estate agents who are members of the National Association of Realtors and abide by the association’s standards and ethical codes.

Factors that contribute to the industry.

The success of the real estate industry depends highly on outside economic conditions. The real estate market rises and falls according to the current economic state. More simply, if the economy is in bad condition, people are less likely to buy or invest in new real estate ventures.

Furthermore, depending on the type of real estate, the market changes according to the number of other properties. If there is a large number of new properties built in a certain area, the demand for one specific building or property falls. This also forces the price to drop in order to stay competitive.

Change in demand is another factor that plays a key role in affecting the real estate industry. As different locations rise and fall in popularity, demand for real estate in those areas grows and plummets. An area that was once extremely popular can quickly lose its flair and thus the real estate potential, too.

Is the industry right for you?

The real estate industry can be an extremely profitable venture. The industry produces roughly $25 billion dollars in revenue each year, according to Ibis World. Not to mention, the real estate unemployment rate has dropped steadily over the past eight years, according to the National Association of Realtors, and is currently at only 3.9 percent. Since 2010, the industry has gained about 18 million jobs and it is projected to continue to rise.

Source: National Association of Realtors
Source: National Association of Realtors

Given the current success of the industry and anticipated growth, real estate may be a good fit for you. Not only is it filled with diverse potential, but it gives you the opportunity to assist people in some of the largest decisions in their lives. With a typically flexible working schedule, working with or investing in a real estate franchise has a lot of potential for success.

Some of the most popular real estate franchises include:

Re/Max: A global real estate franchise that has more than 3,700 franchises in the US and more than 3,800 franchises in foreign countries. Re/Max is the highest-ranked real estate franchise on the Entrepreneur Magazine 2018 Franchise 500 list.

Keller Williams: This franchise is the second-highest-ranking real estate franchisor on the 2018 Franchise 500 list after Re/Max. This is a huge leap for Keller Williams, which was previously ranked 77th in 2017. With over 741 units in the US and 144 abroad, Keller Williams is among the most popular franchises in the industry.

HomeVestors of America Inc.: This franchise has a unique “we buy homes for cash,” model, which has helped the company steadily gain new franchises over the past several years.

Weichert Real Estate Affiliates Inc.: This business was started in the late 1960s but didn’t begin franchising until 2000. Since Weichert Real Estate Affiliates Inc. began franchising, it has established more than 300 new franchises.

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