How To Grow Your Brokerage Amidst Looming Uncertainty
While the real estate industry as a whole has managed to either avoid, or recover from, many of the most severe economic impacts of COVID-19, the whipsawing of our greater economy has left countless real estate brokerages uneasy. Bright spots in an unprecedented environment include purchase loan applications on the rebound, mortgage rates predicted to remain low and refinance originations showing little signs of slowing. The housing market is clearly recovering faster than expected, however social distancing efforts and unemployment spikes potentially continue to loom. Industry experts are cautiously optimistic, but there’s much uncertainty as we head into the fall and winter months, even after a successful summer of sales.
This uncertainty has necessitated creativity in differentiation for real estate professionals. In today’s highly competitive market, where inventory is limited and interest rates have reached historic lows, expanding opportunity and streamlining client services is essential. More and more real estate brokerages are now choosing to adopt ancillary services – whether mortgage, property management, title or insurance to stand out from the crowd. Bringing ancillary offerings in-house can set your brokerage apart, enhance your clients’ experience and expand your business this fall and beyond.
Differentiation
With 106,548 real estate brokerage firms operating in the United States (NAR.Realtor, 2020), any opportunity to differentiate your organization could potentially benefit your business. Plenty of brokerages offer similar discounts and perks, and many boast the best service in town. Unless the client already has a personal relationship with you, it can be difficult to prove just how you differ from the rest. COVID-19 hasn’t changed the fact that consumers have plenty of options to choose from, and any discernible difference can help make their choice.
Adding mortgage, property management, title or insurance services can give real estate businesses that added competitive advantage. The usual promise of excellent service will certainly help attract some buyers, but it won’t necessarily help your brokerage stand out from the crowd. Offering ancillary services can help provide more opportunity for positive reviews and referrals from buyers already in the pipeline, while simultaneously drawing in potential new business.
One-stop shopping
With so many choices in the real estate and mortgage spheres, adaptable businesses could benefit from streamlining and simplifying the homebuying process for their clients. Are you delivering a total solution, conveniently combining real estate, tile, insurance, or mortgage services? Your real estate brokerage is a wealth of potential referral business. Capitalizing on this factor, paired with proximity to other ancillary professionals, could win you more transactions.
In fact, in 2019, 86% of consumers reported that knowing an agent’s firm offered one-stop shopping had a positive impact on their selection of an agent (National Association of Realtors (NAR), The Harris Poll, 2019). Homebuyers don’t want to research ancillary businesses, so the one-stop-shop has become a powerful and coveted tool in today’s highly competitive marketplace. For many consumers, the buying process is already mystifying enough and, the fact is, homebuyers trust their real estate brokerage.
Recruiting and retaining
By offering ancillary services, you can also provide both real estate agents and loan originators (LOs) with educational opportunities across industry lines. This easy access to knowledgeable professionals in the related field, as well as the potential for synergistic work, can benefit both. Real estate agents can feel confident in their referral, having a close relationship and knowing the work of their ancillary mortgage brokerage. LOs, who may be accustomed to days of cold calling, can potentially tap into a consistent stream of clients, referred by their agent counterparts.
Plus, adding a pool of established LOs to your overall business could draw in outside real estate agents, thereby enhancing recruiting for brokerage growth. Winning over talented agents, and then keeping them around, is no easy task. Ancillary professionals provide a valuable endorsement by joining your overall business, and may be able to fast-track introductions to stellar agents. Claiming more pieces of each transaction can help your existing agents facilitate a dynamic homebuying process while also attracting new agents and LOs.
Customer experience
Establishing ancillary services can provide real estate broker owners with more oversight throughout the entire homebuying process. By streamlining multiple services under one roof, transactions may be completed more smoothly and swiftly. Without the complication of an unrelated third party, you could also have much more control over the level of care your customers receive. Providing additional touchpoints of knowledge and expertise adds value every step of the way.
Bringing ancillary services under one roof can benefit consumers, real estate agents and broker owners alike through increased opportunity, ease of access and additional oversight. At the end of the day, the agent and ancillary professional have the same goals anyway. They both want to secure a deal that gets the buyer into a home, and it’s no secret that the best deals are generally achieved when all homebuying professionals are in sync and client experience is at the forefront of the transaction. Ancillary services allow the potential for this symbiosis in each transaction.
Earning potential
Ancillary services may lead to additional revenue opportunities. By capturing more of the homebuying transaction, whether mortgage, property management, title or insurance, brokerages may be able to grow their business. Most buyers have to get their mortgage loan somewhere – why not from you?
By adding additional revenue streams, brokerages may also be able to offset potential commission losses during real estate down turns. Many traditional brokerages profit primarily from commissions and agent dues. Although experts are cautiously optimistic when it comes to predictions for the post-COVID future, tapping into additional revenue streams can help ensure dips aren’t devastating.
In addition, a mortgage business can operate independently of home sales. As we’ve seen recently, borrowers seek refinances for many reasons. They may be after a lower interest rate, looking to reduce their monthly payment, planning to pay off their home sooner or utilizing funds for a home renovation through a cash-out refinance. This variety of refinance drivers enables the potential for a more diversified revenue stream, even in times of a sluggish real estate market. More importantly, real estate agents often recommend that their house-hunting clients get a mortgage pre-qualification before starting their home search. Having an ancillary mortgage business presents a unique opportunity to retain more business transactions and to streamline the homebuyer experience.
Adding ancillary services may provide welcome opportunity in an uncertain real estate market. Balancing historic-low interest rates and the six-foot distance between buyers and sellers, creative brokerages are adopting and implementing complementary offerings and new potential revenue sources. Embracing ancillary services may mean differentiating your team from the competition, exceeding client expectations and growing your business all at once. It can mean delivering a total solution!
Interested in adding a mortgage business to your real estate brokerage? Motto® Mortgage is the ancillary service franchise in-a-box that helps make business expansion easier.