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Real estate and SWOT analysis.

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SWOT analysis (acronym for strengths, weaknesses, opportunities, and threats) is a very useful model for the development of the real estate in the business and organizational level.

At the beginning of the 60s this analysis appeared as a methodologic resource for the internal and external analysis of organizations and it has represented since then an authentic revolution for the business and strategic sector.

SWOT´s main target for a real estate is to manage to define the company´s advantages and the general strategies which should be introduced according to the specific necessities of the real estate.

This is an analysis which should take into consideration the real estate´s specific characteristics and act according to the market´s characteristics for the area where the real estate is visible.

In the field of Real Estate Coaching, SWOT analysis is constantly used in order to cure those points that the real estate lacks both internally as externally. It is also an excellent tool for creating a methodologic research for the real estate or for its members.

As an analysis methodology, SWOT model is efficient when we need to define clearly the weaknesses and the strengths of a real estate and also for detecting the threats and opportunities of it.

The real estate´s weaknesses and strengths are considered factors and internal characteristics, while the threats and opportunities are the external factors.

With the passing of the years, SWOT analysis has suffered some conceptual modifications derived from its own necessities in the business sector. However, the steps to follow when realizing such analysis for a real estate are still the same.

For example, the external analysis has been modified in order to adapt to the business´ necessities, but it has also been criticized because it was most of the time based on the well-known Porter Model (know as well as a model for the five forces).

Porter Model has some well-established bases, but it presents some deficits linked to the actual organizational necessities.

This model is clearly highlighted and it is used for the analysis of the real estate.

There are still some professionals in the sector of Real Estate Coaching that start from the Porter Model in order to establish the standards of the external SWOT analysis. In my opinion, that is a strategic error taking into consideration these arguments:

– Is a model based on the strategies of individual business, which can be easily adaptable to a strategic model for a real estate agent, but not for a real estate.

For a real estate agent who uses the SWOT analysis, to start from the Porter Model when realizing external analysis becomes counter-producer because this is not flexible at all and does not provide the changes that are constantly producing in a real estate market.

– In the same time, this model does not consider the possibility of the opening of new markets and nowadays, the real estate must implement a real estate international strategy, focusing on the potential foreign clients that might appear from all over the world.

– If we realize a strategic analysis in a systematic way starting from that model in order to determine the profitability of the real estate sector, we should take into consideration that this has the intention to evaluate the real estate prediction linked to its closest competence and not the global one.

Nowadays, the real estate market in Spain determines that this is actually a lie, because the reality says that the real estate will find more potential buyers overseas.

In any of the cases and dependent of the previous arguments, SWOT is a model which bases on the clearly well-defined strategy where the following areas of analysis are established through a table of double entry (also known as a SWOT Matrix):

– Internal analysis of the real estate:

  • Strengths (positive points).
  • Weaknesses (negative points).

– External analysis of the real estate:

  • Opportunities (positive elements).
  • Threats (negative elements).

It is highly important that the real estate take into consideration the variables when applying an analysis methodology. These variables are determined by the real estate market (national and international market) and by the segment in which the real estate acts.

At the strategic level of the real estate, those variables are also known as critical factors of success and the real estate should pay a lot of attention on their importance.

If the real estate modifies the variables or the critical factors of success, the result of the analysis will be different.

SWOT analysis applied to a real estate.

The following model should be considered as an example, because every real estate should value its own necessities and variables.

However, this following example might reflect (just as an orientation) its applicability to the real estate or to the real estate field in general:

Internal analysis of the real estate.

– Strengths (positive points):
  • Valuation of the different capacities.
  • Individual abilities reflected in a group.
  • Higher level of available resources.
  • Good levels of proactivity, assertiveness and resilience.
  • Well-defined individual competences.
  • Well-defined action conventions.
  • An effective and productive real estate team.
– Weaknesses (negative points):
  • High level of resistance and adaptability to changes.
  • Gaps in the organizational leadership.
  • Motivational problems of the staff.
  • Limited levels of the individual abilities.
  • The stress and the difficulties to process them.
  • Lacks in the social abilities and training.
  • Absence of organizational policies.

External analysis of the real estate.

– Opportunities (positive elements):
  • Implement the new technologies in an effective way.
  • Weakening of the competition.
  • Strategic real estate visibility.
  • An effective use of the new ways of communication.
  • International real estate strategy.
– Threats (negative elements):
  • Take on high levels of risk.
  • Changes of the real estate positioning environment.
  • Changes in the real estate market.
  • Changes of the potential buyers´ preferences.
  • Eventual legal modifications.

Based on the SWOT model, the real estate´s potential and the potential of its real estate team is the result of the combinations between the strengths and opportunities. Once determined these two, we can detect the strategical lines of action in order to get the best results.

In the same time, the limits of the real estate as an organization will be determined by the combination between the weaknesses and threats that the applicable model reflects.

It is highly important that the real estate clears the aspect of the risks that it should assume in the organization and the risks will always be determined by the combination between its strengths and threats.

On the other hand, the challenges that the real estate has to confront are determined by the result of the combination between the weaknesses and opportunities.

What can a real estate analyze with the help of the SWOT Model.

The several possibilities that the SWOT model offers to a real estate are complex, because there are like dozens of uses and applications of it inside the real estate sector.

This strategic model is not only useful when applied generally by the real estate (if used generally, it proves to be positive), but it allows us to expand its applicability to different areas and particular situations.

The applicability of this model will depend on the particular necessities of every real estate, but it can also be used for:

  • Exploring possible solutions to different problems.
  • Detecting which are the weaknesses of the real estate.
  • Increasing the individual and collective level of productivity.
  • Taking more accurate decisions.
  • Modifying strategies.
  • Discovering new opportunities of this business.
  • Strengthening individual and collective abilities.
  • Managing the real estate´s resources in a better way.
  • Speeding up the internal and external managing processes.
  • Getting to the potential clients in a more effective way.
  • Generating positive synergies (internal + external).
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