This month’s National Association of REALTORS® Power Broker Roundtable discusses maximizing revenue, and adopting creative profit strategies.
Jim Imhoff, Chairman, First Weber, Madison, Wis., Liaison for Large Firms & Industry Relations, National Association of REALTORS® (NAR)
Joan Docktor, President, Berkshire Hathaway Home Services Fox & Roach REALTORS®, Devon, Pa.
Robert Bailey, Broker/Owner, Bailey Properties, Santa Cruz, Calif.
Matt Deuitch, Designated Broker, DPR Realty, Scottsdale, Ariz.
Lennox Scott, Chairman & CEO, John L. Scott Real Estate, Seattle, Wash.
Jeff Detwiler, President & CEO, The Long & Foster Companies, Chantilly, Va.
Jim Imhoff: Industry-wide, over the past few decades, brokers who’ve seen net revenues drop have been meeting the challenge in diverse ways, developing innovative revenue streams that may stray a bit from their core business but remain closely aligned. More important, perhaps, is that these ancillary enterprises are meeting the needs of buyers and sellers and benefitting their agents to boot. In our company, our home warranty business has grown to be the biggest in Wisconsin. When we put the question “How are you producing new revenue?” to the broker community, the response was quick and enthusiastic. So with no further ado, let’s hear what our colleagues are doing. I think, Joan, that Fox & Roach’s Trident affiliate was among the earliest forays into the one-stop shop.
Joan Docktor: Well, we’ve been at it for a long time, Jim, providing mortgage, title and insurance services for our customers since the late ’80s. It isn’t sexy by today’s standards, but our focus has always been on what works for us and our customers, and we recognized early on the win-win value of the one-stop-shopping experience. It’s a captive business, used by more and more of our agents because we don’t charge them a fee, and it’s at a point now where we can meet or beat the terms for even those customers who were pre-qualified with another company—and we give them a $100 gift card as a bonus for using our services.
Robert Bailey: What’s important, I think, is that the revenue source you choose is a natural fit for your business. We segued into property management back in 1982, focusing initially on vacation rentals in our beach-close communities. But as my partner and I looked ahead at housing trends and affordability, we began to expand, over the last 10 years especially, into the value of rentals to small investors. Our agents have a touch point, they have a place to park investors, and investors become sellers. It’s a value-add for our associates, a source of direct revenue, and it is brand reinforcement for our company.
Matt Deuitch: The brand umbrella is important. Another option is a real estate school for pre-licensing, continuing education or both, where you can write and license materials and/or collect attendance fees. You can also operate official pay-to-join coaching programs run by associate brokers. The brokerage takes a percentage of program production and the program gets in-house marketing assistance.
Lennox Scott: Most recently, we initiated a franchise network that currently has 77 offices and 1,600 broker associates—about half of our total agent count. We started franchising in our core states of Washington, Idaho and Oregon, and we’re expanding now into California. It’s controlled growth, and we take care to be sure our new affiliates, many of them teams, are a good fit with our culture and core values. We see this as a natural way to produce revenue and expand our market presence. It really is a win-win.
Jeff Detwiler: We focus on being solution providers, so the best new revenue streams come directly from asking, “What do our customers need and want, and how can we do it better?” In May of this year, we rolled out a moving services company, which I’m pleased to report already has a 35 percent capture rate. As always, our goal is excellent service, with options not available from traditional sources, and the moves that have so far been completed are getting exceptional reviews.
JI: You’ve put your finger on it, Jeff. What does the customer want—and what are we good at? How can we deliver a better consumer experience?
Joan D.: For us, it comes down to excellent service. We want to be the best at what we do.
RB: Agreed—and we want that reputation for excellence. Our property management side is a great resource for customers and a great referral resource for our agents. We want that under our brand umbrella.
Jeff D: There’s no question, in today’s competitive arena, providing a portfolio of innovative services is the only way to distinguish yourself and to meet and exceed the expectations of both your customers and your agents.
MD: Speaking of agents, another option is a referral-only entity, where agents, maybe semi-retired agents, can park their licenses, do no deals, but get paid for referrals only.
LS: One more thing: relocation. It’s big business. Our relocation group, established fairly recently, is already doing 1,200 transactions a year.
JI: Just goes to prove there’s no one formula for increasing profitability. Whatever path you choose, I sense a consensus from what we’ve heard here today: It starts with a passion for doing what you do better than anyone else on the planet.
For more information, please visit www.nar.realtor.