What Is a Good Ancillary Revenue Stream for Brokers?

In a challenging real estate market, brokers are finding many benefits adding one or more ancillary revenue streams to their core business. From mortgage, title, or escrow services to insurance and property management, creative brokers are combining complementary business activities and finding new income sources. Such a tactic makes sense in an increasingly competitive market, where margins are tight and home prices are on the rise. Woman with couple at business meeting

The idea of offering extra services to generate an ancillary revenue stream is not a new one. Movie theaters, airlines, and other service industries have been tapping into these income sources for years. A few examples include selling drinks and concessions, offering memberships and upgrades, and more on top of ticket price options like baggage fees or trip insurance. In the real estate industry, ancillary revenue streams usually comprise add-on services closely related to buying and selling real estate. While not all brokerages have the necessary size or resources to branch out into an additional service area, many have still been able to apply their sales expertise in new, creative ways.

For some brokers, offering their clients both professional real estate sales services and other related services makes a lot of sense. For example, the vast majority of residential real estate clients require mortgage financing to buy a home. By providing both pre-qualification and buyer’s agent services, a broker can streamline the buying process for their clients. When done well, bringing both of these necessary pieces of the process together under the same corporate umbrella can enhance communication and provide a better service experience.

Another ancillary service that can complement real estate sales is property management. It is estimated that in any market in the United States, approximately 35% to 40% of the people rent their homes rather than own. That is one-third of the population who will benefit from the assistance of a full service property management company. Investors also need quality property management services as well as brokerage services, and may be drawn to a company which can offer both.

Adding property management as an ancillary service is a good option for many brokers because it relies upon many of the same skills and training required to be a real estate agent. At the same time, property management adds a new dimension to the role of a real estate broker, requiring a broader application of skills such as project management, tenant relations, and client communication.Woman with elderly couple at a business meeting

But perhaps the most important benefit that comes from combining a brokerage with property management is the stability of the revenue stream. Income from real estate sales fluctuates month to month, wholly dependent on a fickle market and a complex, drawn-out buying and selling process. In contrast, property management fees are consistent month to month, providing a solid influx of cash that can be used to supplement and stabilize market ups and downs.

The one caveat to adding property management services to a brokerage as an ancillary revenue stream is that property management is a challenging business, especially if you’re trying to build it from the ground up. The solution for this is to consider buying a property management franchise, one that offers the systems and training brokers need to get their new ancillary services up and running in a relatively short amount of time. Franchises like Real Property Management can offer brokers a turn-key business that is designed to generate a consistent income month after month, year after year. When you choose a Real Property Management franchise, you are choosing to expand your earning potential with a proven business model that is nationally recognized as one of the best in the industry.


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