Need to Generate More Revenue? 7 Ancillary Services Brokerages Should Consider
Running a real estate brokerage is rarely a wildly profitable enterprise, but the current environment has been exceedingly tough for even many experienced brokerages. High mortgage interest rates and inflation have combined to put a big damper on would-be buyers' ability to purchase a home, and the lack of inventory means that many would-be sellers are reluctant to leave a good-enough home for the wilds of the unknown. So how can brokerages help to push back against shrinking margins and find new areas of profitability in their businesses? It's not the easiest thing to do, but it's far from impossible. If you haven't yet considered adding one of these ancillary services to your business, then it might be time to ask yourself if it could generate the revenue you've been missing. 1. Mortgage loans Just about everyone who's interested in buying a house — and many people who are interested in selling — are going to need to apply for a mortgage loan. Most buyers need to secure a mortgage loan in order to buy a house, as very few people have the cash on hand to purchase a home outright. And sellers will almost certainly need to move after selling, unless they plan on negotiating some kind of rent-back deal. Instead of referring borrowers to an outside mortgage lender, why not offer your own mortgage loans through your brokerage? Even if only a segment of buyers decide to go with your mortgage loan, the additional revenue could make a big difference for your bottom line. Companies like HomeLendia provide franchise opportunities that can allow brokerages to offer these kinds of products and services without an unreasonable upfront investment. (On Tuesday, October 24, HomeLendia is hosting a webinar to explain how its mortgage franchise works; register now to learn more.) 2. Rental services Another potential area of expansion and growth is helping landlords or investors find qualified tenants for their rental properties. While some rental owners prefer to do this on their own, if they don't live locally or if they only have one or two properties to rent, they may not have a very robust network of people who would make high-quality tenants. As a brokerage, it's almost certain that you have access to a network of aspiring buyers, move-out sellers, and young adults moving out of the house for the first time. If you can leverage that to help landlords and investors fill their properties quickly and seamlessly (and charge a fee for it), that could be a decent amount of extra revenue for a relatively small lift. 3. Property management Both long-term and short-term rentals, especially single-family homes, will require some kind of property management oversight. Short-term rentals like vacation rentals need to be cleaned in between each visit, and if something breaks at a rental property, owners will typically have to call someone to fix it as opposed to fixing it themselves. Many real estate brokerages have existing relationships with house cleaners, general contractors, plumbers, electricians, and other problem-solvers that a property management company might call up to help with a rental. Property managers can charge either flat fees or collect a portion of the rental money, but either way, it's some additional revenue for your balance sheet. 4. Title and escrow To move a real estate transaction from offer to close, title and escrow companies must become involved in order to handle any earnest money deposits, review the home's title and provide title insurance, and serve as notaries on closing day, among many other duties. These tasks are typically outsourced to title and escrow firms, which charge to fulfill them. Offering these services in-house as part of your brokerage can be a good way to increase your bottom line. 5. Relocation help Here's a fact: While people might enjoy shopping for a new home, almost nobody enjoys the process of moving itself. Providing services around moving, from packing to loading to hauling, can generate more business for your brokerage (people love full-service options) as well as potentially create a new revenue stream. 6. Staging and photography services Sellers who want their homes to capture the best possible price are usually going to be interested in professional cleaning, staging, and photography. If you can find the experts and create a suite of products around home staging and selling that cater to this need, you could even consider outsourcing the offerings to other real estate firms. 7. Investing advice and opportunities Many people would like to get their foot in the door of a real estate investment property, so to speak, but they have no idea where to start. As the expert on real estate in your area, providing advice and data to aspiring investors can be another way brokers can increase their baseline sales business while also generating new income in a new way. The market might be tough, but you have options! Remember to register for the HomeLendia webinar to learn more about adding mortgage ancillary services to your brokerage.