What matters most is
- Starting a real estate company in South Africa requires balancing compliance, cash flow and credibility.
- All property practitioners must register with the PPRA, hold a Fidelity Fund Certificate, and meet other legal and SARS requirements.
- Going independent comes with higher risk, slower brand recognition and significant administrative and technology burdens.
- Franchisees benefit from a global brand that accelerates credibility, trust and agent attraction and with a road map to success.
- South African franchises have a relatively low failure rate, so a REMAX franchise is a strong option for someone wanting to start a real estate business in South Africa.
From the get-go, the road to opening a real estate company in South Africa is a journey that involves balancing compliance, cash flow and credibility. You can either build your own, independent brand from scratch or plug into a proven franchise system. REMAX is a case in point: you start your real estate company with a roadmap, technology and critically, as part of a recognised international brand.
This guide walks you through the key steps to opening a real estate company and shows where the REMAX franchise model strips away some of the biggest stumbling blocks that new agencies face.
Registrations and qualifications
Firstly, all real estate agents, also known as property practitioners, must be registered with the Property Practitioners Regulatory Authority (PPRA) and hold a Fidelity Fund Certificate. Secondly, every real estate agency must have a principal property practitioner. They have overall and legal responsibility for both the business and how it complies with the relevant laws and regulations that govern business generally and the property business in particular.
To be a principal real estate agent, you must do a 12-month internship as a property practitioner and study for both the NQF4 and NQF5 qualifications in real estate. In addition, you will have to pass two Professional Designation Examinations (PDE) when you have completed each qualification. You can, however, sit for the PDE5 exam when you are already trading as a principal estate agent.
That’s not all: you will also have to comply with the Protection of Personal Information (POPIA) and Financial Intelligence Centre (FICA) acts. This involves knowing your customer (KYC), data protection (clients’ personal information) and keeping proper records.
While joining a franchise like REMAX doesn’t mean that you escape all the PPRA’s requirements, POPIA or FICA, the upside is that you get guidance, training and templates that ensure you and your business are compliant. From day one.
Do you go it alone or join a big brand franchise?
That really is the question. Below, we outline what is involved in both.
Independent real estate business
Starting a new business is tough, and if you go it alone, you’ll have to do everything from scratch: from creating and building a brand to marketing and managing, including those tedious admin tasks that take up so much time.
But that’s not all: you’ll have to create and manage all your own IT systems – from the website, online listings and customer relationship management (CRM), as well as generating leads and building relationships with suppliers. Then, when you take on agents so that you can grow your business – and footprint – you’ll need to develop a commission structure as well as manage and motivate your team.
While you will be in total control, building these relationships and the business can take years of costly trial and error before you’ve established a recognised, trusted property brand. The risk is yours alone: there’s no one to support you.
Big brand franchise
On the other hand, if you choose the franchise route, you own and operate your office, but you trade under the global REMAX brand, which comes with tried and trusted systems and support. And a lot less risk.
Adrian Goslett, Regional Director and CEO of REMAX of Southern Africa, explains it this way, “Each of our over 170 offices is independently owned and operated, which gives Broker/Owners the freedom to run their own office with the support of a global brand behind them… In both instances, the Broker/Owner or independent contractor receives all the benefits of running his/her own business and saves some of the administrative headaches and marketing expenses of establishing a brand from scratch.”
Buying a REMAX franchise streamlines the journey to owning your own real estate business. It has team models and commission structures that work. On top of that, they are also supported by clear positioning frameworks for area dominance and agent branding.
Whether we like it or not, tech is a thing: we can’t get away from it. It makes life easier for our clients and customers, but can be a costly problem for business owners and is often a significant stumbling block for aspiring real estate entrepreneurs. A REMAX franchise removes that huge roadblock because it comes with access to a suite of bespoke technology and tools, including a design hub, resource centre, advanced billing system, CRM and listing management.
Global brand
Equally, if not more important, you have access to the power of a global brand, which makes you instantly credible in the market with the added benefit of attracting other top agents: with REMAX, you are in business for yourself, but not by yourself.
From groundwork to lift-off
Like most things built to last, a new business must have a firm foundation. This is more than just sticking to the rules. It begins with a plan.
Real estate business plan
Your estate agency business plan is also an operational checklist. As a minimum, it should answer the following questions:
- Who owns the business, and how is it structured? This will deliver an overview of the business.
- What is the target area, and who are the competitors that operate in that space? This market analysis is essential to identifying challenges and opportunities.
- What property services will you offer? Will it be a mixed or single offering, i.e. sales, residential and/or commercial or a combination of all of these? Do you have a unique selling point or niche property focus that sets you apart from your competitors?
- How will the estate agency be marketed? Will your strategy be online, offline or through word of mouth (referral)? Perhaps you’ll frame the business in a combination of these.
- How will the finances be structured? This will obviously include start-up costs, projections of monthly overheads, revenue from sales and rentals, and cash flow projections.
- Last but not least, how and where will your business operate? Where will the estate agency’s office be? Who will run it, i.e. staff and their roles. As the principal, you will have to consider the processes involved, set, monitor and motivate performance (KPIs).
Word to the wise: Franchise systems, like REMAX, usually provide prospective franchisees with all the tools that they need, including business planning templates and benchmarks based on existing offices’ performance, which can make your projections more realistic, especially through the help of your own Business Development Consultant which all REMAX Offices gain access to at no extra cost.
The legalities
We have already discussed the compliance requirements that go with owning and running an estate agent’s business, but that is only part of it. You will also have to -
- Register your business as a legal entity with the Companies and Intellectual Property Commission (CIPC). It’s often useful to get professional advice on the best choice of entity, e.g., a company or close corporation.
- Register with SARS: as an employer, as a business and if appropriate, for VAT
- Open a trust account – in the name of the business - into which you pay client funds like deposits, and which is a prerequisite for your Fidelity Fund Certificate.
More legal stuff
Buying and selling real estate is grounded in the law of contract. You’ll need to have all of these contracts in place ahead of opening your doors. To do this, you could either work with your own property attorney or take advantage of the documents and contract templates that are integral to a franchise arrangement. These include sales mandate agreements, offer to purchase templates, lease agreements, as well as commission and referral agreements.
The big decision: go it alone or join a global network?
Clearly, starting an independent real estate company in South Africa is possible, but it is complex and risky if you are building it from the ground up. A franchise like REMAX offers:
- A clear, well-signposted roadmap to help you on your journey to starting and owning your own real estate business. And you are supported with training, systems and support.
- Operational templates and technology that reduce administrative and IT roadblocks.
- Local and global brand recognition that significantly reduces the time it takes to build trust and recognition among your clients, service providers and colleagues: nobody in the world sells more real estate than REMAX.
- A supportive community of Broker/Owners and managers who have already walked the journey which you are just starting.
If you want to be in business for yourself, but not by yourself, investing in a REMAX franchise may be the most realistic and efficient way to open a compliant, scalable real estate company in South Africa.
Have more unanswered questions? Here are some related questions – and answers – that might help…
What is a real estate franchise?
A real estate franchise is essentially an agreement between a brand owner or parent company, in terms of which, the franchisee – the franchise owner – is granted the right to operate using the brand’s name, logo (trademarks), as well as its systems and processes. Depending on the type of agreement, the franchisor could also offer business and other support to franchisees.
How is a franchise an “almost” independent business?
When you buy a franchise, you buy an existing business that is part of a bigger organisation that is governed by its own rules and requirements. This means that although you own the asset and can sell it, you will have to follow those rules and pay fees which will cover things like marketing, training, branding and support.
What is the failure rate of a franchise?
In South Africa, the franchise failure rate is around 10%, making it an excellent business model for budding entrepreneurs to consider.
