SWOT analysis in the real estate agency.

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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).
• Weaknesses (negative points).

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).
• Threats (negative elements).

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).

Examples of SWOT analysis in a real estate.

We should not forgive the scheme of implementing the SWOT analysis in a real estate:

Internal analysis of the real estate.

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

External analysis of the real estate.

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

Internal SWOT analysis of the real estate.

Real estate strengths.

• Example 1 applied to strengths.

A real estate´s main strength is its real estate team. The individual part of each member is the source from where the level of competence of the entire team evolves. In other words, a real estate that counts with a professional real estate team will always achieve its objectives, while a real estate with non-qualified real estate agents will receive difficulties.

The members of a productive real estate team are those that bring good levels of assertiveness, proactivity and resilience. In the same time, regarding the qualification and competence, this is also applied to the leader of the real estate and other members who occupy jobs related to responsibilities.

It is so simple- there is no real estate team that could be effective or productive if it not led by a qualified and competent person.

On the other hand, both the leader and the manager of the real estate team should become models of organizational references and they should reflect very high levels of resilience, assertiveness and proactivity.

• Example 2 applied to strengths.

The capacity of adaptability to changes is one of the biggest strengths that a real estate could count on. It is also true that generally, we can detect a high level of conscience in the necessity of reloading inside this sector, although there are some people slower than others and they do not understand this as a critical and survival aspect in this business.

The real estate that does not take into consideration the necessity of adapting to changes as a very important aspect might get to very low levels of productivity which will lead the real estate to a huge business failure. Nowadays, the changes inside a real estate sector have received a dizzying rhythm.

There are constant changes in the real estate sector on different levels: new fiscal and legal laws, modifications in the potential clients´ behavior, markets that today are working and tomorrow might collapse, devalued currencies and closed markets, all these are consequences of the political instabilities of the region.

We should add the endless variables that might create radical changes in the real estate sector.

Weaknesses of the real estate.

• Example 1 applied to weaknesses.

The lack of training in the real estate sector is probably one of its mostly-known weaknesses and we are not referring here to the lack of education, but to the well-known scarcities in the development of individual abilities.

We here remind of the individual lacks inside the real estate which will be another element that affects the real estate in a negative way.

When we refer to the collective performance or to the productivity of the whole real estate team, we should never forget that everything starts from the individual level and every time, no matter the way, the individual parts of each of us will affect the collective performance affecting it.

In the real estate sector, it is frequent to find companies that pretend alleviate those lacks of training trying the self-training, although this is not sufficient, because self-training might partially alleviate those lacks but they will never solve them for the whole collective.

• Example 2 applied to weaknesses.

The absence of the real estate leader and the competencies that are not well implemented are pure weaknesses for the whole real estate.

The figure of the leader should be created according to the necessities and limitations of the real estate, considering the importance of an organization pyramid which determines the competencies and responsibilities inside the company.

The figure of the real estate leader should not be related only with the owners of the real estate, although we know there is a high trend to do that inside a small and medium real estate in Spain.

This has an explication based on its economic limitations of the training of all the responsible persons in the company.

Anyway, it is highly important that the figure of the real leader in a real estate not to be assigned to a non-qualified or competent individual.

External SWOT analysis of the real estate.

Opportunities for the real estate.

• Example 1 applied to opportunities.

If correctly used, new technologies could result into an excellent opportunity of development for any real estate. Among the new technologies that a real estate might use in order to increase its productivity, we can find the management programs as CRM to new personal communication systems.

A CRM for real estate might become an opportunity to increase the level of productivity of the real estate.

The new technological elements might also influence the individual productivity of it. Also the use of professional programs for computers could increase the productivity of the members of the real estate. But for all these, a minimum level of knowledge and training in typing is needed.

A real estate might count with the best CRM on the market, last generation computers and a good connection of Internet, but if the members of the real estate type badly, it is better to invest in their training.

This technology might be achieved by the real estate, but if the members of the company do not have any knowledge of its use, the productivity level will be low for sure.

The new technologies are a good tool for any real estate. In order to get high levels of productivity a specific training is needed.

• Example 2 applied to opportunities.

The new ways of communication through Internet open a long list of possibilities for the real estate: starting with the social networks up to the new systems of communication. These are all development opportunities for the real estate.

Regarding the marketing level, there was never before so simple to achieve a brand development for a real estate. For example, for the adding of social media marketing for the real estate Branding, the actual real estate uses a huge number (millions) of potential clients.

The range of the Internet nowadays is unimaginable and the limits the real estate will have are those that it imposes. If a real estate in Spain decides to open a new market to achieve potential clients, it needs only to plan a geographic strategy on Internet and start to find more clients who might be kilometers far from their main office.

Internet has changed the play rule and highlighted the necessity to introduce new strategies. The real estate which knows how to benefit from it will win in a really effective way. Nowadays, for a real estate its webpage, real estate blog and its social media are its main values.

The real estate that does not understand the importance of the Internet nowadays for our personal lives is taken out from the game, because in a way or another, the new technologies have marked a huge difference in the communication and of this century.

Threats for the real estate.

• Example 1 applied to threats.

The non-regulation of the real estate market in Spain could be seen as a threat because the lack of economic regulation damages the professionalism of this sector.

In the same time, the lack of regulation of the real estate sector in Spain is converted in opportunities for others, especially for the persons that benefit from the profit generated by the opportunity.

There are also specific situations in which the real estate has a profit from the lack of regulations, when it includes non-qualified persons in its team.

This is not a heritage of the real estate sector in Spain, because there are many countries of the UE that does not count with a legal regulating frame for the practice of a profession inside a real estate sector.

On the other hand, the lack of regulation of the real estate sector in Spain (and any other country) brings another negative factor- the suspicion of the possible buyer clients.

• Example 2 applied to threats.

A threat frequently detected in the real estate sector is the lack of standard criteria from the real estate portals, especially the international one.

Right from the beginning, each real estate portal has the right to implement a particular management system, the most effective one or one that attends better to the business´ necessities.

The problem comes from the lack of a standard in the management of the real estate portals.

For the international real estate, the lack of a standard management of the portals is a threat because it negatively affects its organizational resources.

When the processes of management are different (and here we refer to the real estate portals) this means that the person in charge of advertising the properties on the portals might confront with a series of difficulties at the practical level.

When the processes of management are so different and each counts with its particular characteristics, this brings as consequence the fact that the person in charge of the advertising should use the time differently.

This damages the person´s time management. A standard has as goal to simplify the processes.

When we speak of managing a high number of real estate portals with different systems, this might become a negative loss of resources for any real estate.