The market is always shifting, and building diverse revenue streams means your bottom line can withstand fewer sales.<\/p>\n\n\n\n
In today\u2019s market, some brokerages are finding themselves at a crossroads. \u201cOur margins have nearly evaporated,\u201d says Florida-based Ben Schachter, broker and president at The Signature Real Estate Companies. Sellers are negotiating for lower compensation and real estate professionals are optimizing their commission structures. Though it\u2019s always been important, brokers are finding that creating additional revenue streams and reducing expenses are more important than ever. <\/p>\n\n\n\n
Schachter and other brokers aren\u2019t new to the need for diverse revenue streams, though, and their experience is proving useful in the current market. The following are broker-tested options for building new revenue sources to support the bottom line.<\/p>\n\n\n\n
Twelve years ago in South Florida, the market was slow. Noting how often businesses who relied on agent referrals were soliciting his brokerage, Schachter guessed many would pay to get in front of agents. So, he created the South Florida Realty Expo to convene as many as possible, keeping the branding generic and making admission free. Then he kept his costs low. Since country clubs depend on real estate professionals to bring them new members, one quickly agreed to host the event for free. To spread the word, Schachter bartered booth space for ad space with local newspapers. Then, he tasked a few of his agents with selling sponsorships, booths and speaking slots (they received commissions on sales).<\/p>\n\n\n\n
In the end, 250 practitioners attended, 45 companies bought booths and the expo earned $15,000 in revenue. Since then, Schachter has hosted three more expos. The most recent one drew 3000 agents, 150 companies bought booths, and the expo generated $100,000 in revenue. Along with making money, these events have built Signature\u2019s relationships with vendors.<\/p>\n\n\n\n
Following the same logic, Schachter realized companies would pay to pitch his 1400 agents, beyond just bringing them breakfast or lunch. So, he established an annual \u201cpreferred vendor\u201d subscription program. To participate, they\u2019re first vetted by Schachter. If they pass the test, they pay his brokerage an annual fee. In return, they receive the full Signature agent contact list, access to all Signature events and the chance to visit Signature offices to pitch his agents (they can pay an extra fee for a premium speaking slot at the company\u2019s annual meeting). Plus, they\u2019re listed as a \u201cpreferred vendor\u201d on the Signature homepage. About 60 companies currently participate.<\/p>\n\n\n\n
Schachter devised another way to earn income from businesses: he offered some vendors the chance to \u201cgraduate\u201d from preferred vendor to exclusive vendor partnership status, where they\u2019d become Signature affiliates. His arrangement with each company is different, and he’s careful to adhere to the Real Estate Settlement Procedures Act (RESPA)\u2014regulations protecting consumers during real estate transactions.<\/p>\n\n\n\n
But a common model is a licensing partnership where each vendor carries the Signature name and benefits from the company\u2019s marketing expertise. Over time, Signature has grown its network of affiliate companies to a dozen, one in each category, including title insurance, pools and construction. In 2024, proceeds from these affiliate businesses accounted for about 50% of Signature\u2019s net income.<\/p>\n\n\n\n
Last February, Florida-based Steve Snider, managing broker at One Sotheby\u2019s Realty, closed one of his offices, even though it was profitable and home to 10 of his agents. The space was costing him \u201ca few hundred thousand dollars\u201d a year and Snider was particularly keen on making changes to keep costs low. With $20,000 of the money he saved, Snider upgraded the conference room in one of his other offices to help his brokerage land a developer client. The developer was shopping for a real estate firm with an appealing space that could be used as a sales office. Swapping out the furniture, framing the TV and adding a chandelier and drapes did the trick, and Snider\u2019s brokerage signed the developer.<\/p>\n\n\n\n
During a downturn a few years ago, Rhode Island-based Ron Phipps, owner of Phipps Consulting LLC, assessed his expenses. He was disappointed to learn that annually, his brokerage was generating $40,000 in revenue from leads it was purchasing for $60,000. So, he refocused his marketing efforts on the clientele his brokerage had served for the past three decades.<\/p>\n\n\n\n
In one campaign, he and his agents sent emails and snail mail to residents of a 35-home neighborhood where they\u2019d been involved in 25 of the sales. In hand-written \u201cthank you\u201d notes, they recognized the area as one of their success stories and invited residents to reach out if they or their contacts were ready to make a move. Then they called to follow up. Within 36 months, they\u2019d secured five listings from this effort.<\/p>\n\n\n\n
\u201cWe real estate professionals keep thinking we need to spend a lot of money to get tangible outcomes,\u201d Phipps says. \u201cBut we already have the relationships and need to lean into them, to remind legacy customers how hard we work and the value we bring. Focus on the people who know, love and trust you, and scale that.\u201d <\/p>\n\n\n\n
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National Association of REALTORS\u00ae
Reprinted with permission<\/p>\n","protected":false},"excerpt":{"rendered":"
The market is always shifting, and building diverse revenue streams means your bottom line can withstand fewer sales. In today\u2019s market, some brokerages are finding themselves at a crossroads. \u201cOur margins have nearly evaporated,\u201d says Florida-based Ben Schachter, broker and president at The Signature Real Estate Companies. Sellers are negotiating for lower compensation and real … <\/p>\n