15 Ways Real Estate Agents Make Profits You Never Knew About
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Perhaps you think real estate agents just make money selling houses and being paid a commission. While that’s often the case, they actually have many other income streams they use to increase their profits. Many of these strategies are common knowledge in the industry, but not so with the average person.
Regardless of whether you’re an agent looking for a career in real estate or simply curious, you’ll be surprised at how creative agents can be when it comes to earning.
Referrals
Agents make one of their most lucrative sources of income through referral fees. They often take a cut of the other agent’s commission when they connect clients with another agent in another region or field. Connections are everything in real estate, and a smart agent knows that sometimes they can’t help the client themselves, but connecting them to someone who can is valuable. And that means that if your cousin in another state gets a recommendation, the referring agent may be pocketing a nice referral bonus.
Property Management
In hot rental markets, agents will often act as a property manager. They screen tenants, fix things, and even collect rent for a monthly fee. It is fairly profitable when managing multiple properties, and having a steady income stream. Also, since they have managed properties in the past, they know all the market trends and so they are ahead of the game whenever they want to buy or sell.
Home Staging Services
In real estate, first impressions count, and agents know it. These agents either do the home staging themselves, or work with a staging expert. Homeowners pay them to make their home as appealing as possible. A National Association of Realtors study shows that staged homes sell more quickly and for more money — a double bonus for both the seller and the agent.
Real Estate Investment
There are some agents who take a more active role, and invest in real estate themselves. They know the ins and outs of the market, can work out the good deals, buy strategically, and even flip the properties. This isn’t your run of the mill side hustle, this is how Agents can really make serious money off of their expertise.
Teach Real Estate Classes or Workshops
Hosting classes or workshops is a great way to earn some extra money as well as build a reputation as many agents have found. They charge attendees a fee and offer insights on buying, selling and investing. These types of sessions will often have first time homebuyers, or even local real estate investors, or other real estate agents looking to fine tune their skills. They can teach and earn, and become local experts.
Rental Arbitrage
Some agents are using rental arbitrage as a clever way to make money out of short term rentals. They lease properties and rent them out on Airbnb or VRBO, making a margin between the rent they pay and the money they take in. In order to do this, you need a solid understanding of local rental laws, but profits can be sizable in popular tourist destinations.
Broker Price Opinions (BPOs)
Just as an appraiser will write an opinion on a property’s value, an agent will create a Broker Price Opinion (BPO) to attempt to determine the worth of a home. BPOs are requested by banks and lenders during refinancing or foreclosure process. They’re usually cheaper than full appraisals, but they pay agents a decent fee and help build their valuation expertise.
Corporate Relocation Services
Companies that move employees often ask agents to help with housing transitions. The transferees are helped by agents to find new homes to live in, to sell their current ones, or get connected to rentals. These services are a rewarding niche for agents who like working with relocating families, and corporations usually pay a premium.
Real Estate Blogging or Real Estate Content Creation
With so much stress put on digital marketing, it’s no surprise that some agents monetize that knowledge by creating content, such as blogs, videos, or social media posts. You can earn from ads, sponsorships or partnership on platforms like YouTube, Instagram and even TikTok. Besides, it increases their visibility and may even draw new clients.
Real Estate Developer Consulting
Often real estate developers use the services of agents who have extensive experience in local markets. They deliver insights on the target buyer, where the market is, and property features that will appeal to the market. These are insights that developers value and they are more than happy to pay handsomely for expert advice on how to make projects successful.
Land Sales
Although many people think of agents selling houses, land sales can be extremely lucrative if you are in a location where development is increasing. Agents assist landowners to find a buyer who wants to develop a commercial complex or residential properties. The price tag of these transactions is quite high, which means that the agents broker these deals are well compensated.
Real Estate Photography
Visuals sell homes, and some of those agents have gone so far as to invest in their own professional photography skills. They can also sell photography services to other agents, or by offering high quality photos or drone footage as a service, add value to their listings. Photos are so vital to online listings that it has become a profitable niche in the industry.
Real Estate Software and App Development
A few agents have dipped their toes into technology with the development of real estate apps or software. Property management, client management or market data may be the focus of these tools. If they make something good and useful, they can become a source of passive income through subscriptions or one time sales.
Title Insurance Services
Title insurance companies sometimes partner with agents, who earn commissions. Buyers and lenders need title insurance to protect against potential ownership problems with property. Agents can bring another income stream to the table, while also helping to make their clients’ closings smoother, by working with title firms.
Offering Concierge Services
High end agents offer concierge services that go way beyond just buying and selling. They help clients with moving, setting utilities up, making repairs, and even suggest local service providers. It’s a high touch approach that works for busy or out of town clients who appreciate the additional hand holding – and are willing to pay for it.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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