(That you might not have thought about!)
If you’re in the real estate industry, you know that the traditional way brokers get paid is through a percentage commission for brokerage services, whether they represented the buyer or the seller. But beyond what’s expected, what are some other ways brokers can grow their income?
Broker and Touchstone Group Business Development Manager Michael Fanelli gives us five different tactics that every broker should consider.
1. Networking Events
This might sound basic, but we think it’s something we all take for granted. Real estate networking events are great, but the key is to find connections outside of the industry and be able to talk about your work in a meaningful, unobtrusive way. Get more involved in your local Chamber of Commerce, join a Young Professionals Organization, or attend a popular business networking event. Not only can you win potential new clients this way (and we have!), but it’s also a great way meet new people, if you’re new to the area or city.
2. Referral Partnerships
Clients appreciate word-of-mouth recommendations. Why not make it work for you? Look to partner with companies that have services that are tangential to your brokerage that will add value to your clients, such as construction, property management, interior design, or even other brokerages with services beyond your scope. Set up a partnership that will allow you to earn referral fees for recommending their services to your client in need. Your brokerage might already do this with lenders and attorneys, but don’t forget about other services, too.
For example, Touchstone Group offers referral opportunities to other brokers and brokerages for referring our construction services to their clients who are looking to rehab their newly purchased property, refreshing their property to bring it up to listing standards, or flipping a distressed property. We even offer similar referral opportunities for our property management services, which is popular with brokers who work with investors or multifamily/multi-use/commercial property owners.
Want to work with us? Email/call us today to learn more about earning referral fees for our construction and/or property management services: firstname.lastname@example.org or 224-442-0686
3. Embrace the Full Customer Lifecycle
The average home buyer purchases a house once every seven years. Seven years! They might have had a great experience with you as an agent, but the likelihood of them remembering your name after seven years is relatively low. Don’t let it happen to you — create meaningful touchpoints that allow you to engage with your clients continuously. For example, for the buyer whose new kitchen is usable but not to their taste, reach out with recommendations for a general contractor in one year, when they are ready to tackle a renovation project. Not only are you adding value to your client relationship, but if you’ve set up a partnership (like Touchstone’s above in #2), you can also double down on the benefit! With regular touchpoints, you’ll stay top of mind for your client the next time they want to buy, sell, or make a referral to a friend.
4. Take on Leasing Agreements
Although the commission is significantly less than what you’d make from a purchase or sale transaction, this can be a good way to add quick and reliable income to your cash flow. Typically, renters take less time to make a decision than home buyers (since they’re only renting temporarily), which can equate to faster commission payouts and less time managing the client relationship. Caveat: Some renters can take the property search less “seriously,” because it’s not as big of a step as purchasing a home. So be careful to weigh the benefits against potential clients who might not follow through on a lease, despite your best services.
5. FSBO Services
Ah, For Sale by Owner properties. Many of these owners choose to sell their own homes to avoid paying commission to brokers. Although you might never convince them to list with you instead of tackling their own sale, they might be willing to pay a broker a flat fee of $500-$1,000 to deal with the paperwork as a transactional agent. Or, some might be willing to pay a flat fee or commission if you bring them a ready and willing buyer — if you ask. After all, they’re still saving money on paying a listing agent commission.
Brokers: Are you looking to grow your business? Reach out to see how Touchstone Group can help.