Ask any full-time agent working in the trenches how to make money as a real estate agent, and I bet you’ll get answers like, “I work my sphere of influence.”
That’s all well and good for experienced agents with a large database of quality contacts, but what if you’re just starting out? Or, what if your sphere is tapped out and your business is starting to plateau?
Let’s review some tried and true ways to make money as a real estate agent, so you can grow your GCI and build a thriving real estate business.
9 Ways To Make Money As a Real Estate Agent
If you’re sitting around your broker’s office waiting for them to hand you leads, I’ve got some news for you. The days of disco and the fax machine are long gone; the business doesn’t work like that anymore. In an age of self-promotion, when real estate agents are expecting to be marketers too, we’ve all become responsible for our own bottom line.
Here are nine strategies that you can use to boost your GCI and take-home pay this year:
1. Boost Your Sphere of Influence’s Productivity With Regular, Automated Communication
Closing a real estate transaction for a client is great, but closing more than one is even better. Your previous clients know you, and they already know that you’re the expert who can get them what they want. Chances are these are people who will buy or sell again, so keeping in close contact with them and staying top of mind is key.
According to the National Association of Realtors, 39% of home sellers found their agent through a referral by friends or family, and almost 70% of home sellers say they would use their previous agent again.
Stay top of mind by maintaining regular communication with them, even if that communication is automated. A great customer relationship management tool (CRM) will allow you to schedule regular email communication (and even texts), and remind you periodically that a phone call is in order.
If you’re looking for a robust and affordable CRM, check out Top Producer. Top Producer connects directly with your MLS to offer value using all the data your MLS possesses. They also make it easy to nurture leads with custom market snapshot reports. There’s a lot to love about this CRM.
2. Use Technology to Get More Leads
Real estate lead generation is all about attracting new clients to your business. This is often done by running advertisements in the places that your clients are already spending their time. Lead generation is a popular way to grow your business because it’s a relatively hands-off way to build your client base.
The downside of this strategy is it’s competitive and can be expensive. However, statistics clearly demonstrate the importance of having a lead generation presence if you want to make money as a real agent.
On average, buyers spend two weeks looking at homes online before ever contacting an agent. Also, more than 90% of homebuyers in 2018 reported using the internet to either find the home they wanted to purchase or the agent they wanted to represent them, so being present in this space is a must.
We suggest a couple of different methods for bolstering your lead generation efforts.
Zillow is the No. 1 real estate website in the world. In the month of June 2019, they were just shy of 180 million visitors to the site, more than 96% of that from the U.S. The average length of time a visitor stays on-site is over seven minutes, and on average, visitors view nearly 27 pages per session.
The Zillow Premier Agent program provides a platform for agents to advertise in the ZIP codes of their choice, placing their information next to property listings that buyers are looking for. When someone has a question about a property or wants to schedule a showing, they can click on one of the agents whose ad is visible, and bam, you’ve got yourself a lead.
We did an in-depth analysis of the Zillow Premier Agent program if you’d like to get more information on how the program can work for you.
If Zillow Premier Agent isn’t your cup of tea, there’s a different direction to go when it comes to lead generation.
Rather than placing ads for you and your services on a real estate focused site like Zillow, Real Geeks lets you create lead capture landing pages that offer exclusive content like a free home valuation, then drives traffic to those landing pages with ads on Facebook and on Google.
The upside to the Real Geeks strategy is you aren’t competing with other agents who are advertising in the same place (like on Zillow).
The downside is that your audience on a place like Zillow is focused and has at least some buyer (or seller) intent, whereas the focus and intent from search ads or social media tends to be a little lower.
Either way, Real Geeks and other lead generation engines like them provide a solid alternative to Zillow Premier Agent if you’re looking for another option.
3. Use Prospecting to Start Reaching Out To Potential Clients
While real estate lead generation is an attractive strategy because the phone calls, emails, and texts you get are from buyers and sellers who are ready to talk about doing business together, it has one major shortfall: If nobody is calling, emailing, or texting, what do you do?
Real estate prospecting flips that script. Instead of waiting for potential clients to reach out to you, you actually reach out to them.
We know, the idea of cold calling potential clients sends many into anxiety mode, but there’s proof that this strategy works. The Keller Center at Baylor University conducted research on the effectiveness of cold calling in real estate, and found that agents who consistently prospected on the phone for an hour a day, seven days a week would get a listing appointment or a referral for every 209 calls they made.
90 minutes a day, five days a week to get an extra listing appointment or referral? Not a bad exchange.
In order to establish a relationship with the prospects you are working and turn them into clients, you have to communicate with them. Whether you’re working on prospecting expired listings, FSBOs or building a real estate farming operation, you’ve got to have a way to contact the property owners you’d like to represent. For this, we recommend a platform called REDX.
REDX offers tools that link with an agent’s MLS to provide an up-to-date list of all the expired listings and FSBO listings in your area, along with names and telephone numbers for the property owners.
Their GeoLeads tool provides the same great contact information, but for neighborhoods, you can select with their custom mapping tool.
Taking charge of your lead development by prospecting is a great way to take control of your own success as a real estate agent. REDX provides some great tools to get that job done. We’ve done a deep dive into the REDX systems, check out our full platform review.
4. Identify an Underserved Niche In Your Market And Focus On It
We all know that real estate is a hyper-local venture. What works in Los Angeles doesn’t necessarily work in Los Alamos, so knowing more than just the number of properties that change hands each month gives you a leg up on your competition.
Not sure where to start? Here are some questions you can ask yourself to help identify some areas of opportunity in your market.
Does your community have a college or university? Housing in a college town can be a very lucrative niche for agents who know how to work it. Students who aren’t living on campus will need rental agents to help them secure rental housing for the year. Though the fee for this service is considerably less than a commission for a residential sale, these transactions are much simpler and faster, so the income earned per hour invested is roughly the same.
Are short-term rentals popular in your town? Short-term, or vacation rentals are quickly dominating the real estate investing landscape. Helping investors find properties they can turn into AirBnB hotspots is a great way to secure yourself buyer clients for life. Learn what makes a great rental, get an understanding of the sort of risks that exist and the factors that dictate them. The better your recommendations are to your clients, the more likely they are to use you again and refer you to others.
Is there a housing shortage in your community? When less housing than necessary exists, smart real estate agents start boning up on vacant land. Housing shortages can throttle the growth and health of a community quickly, so oftentimes community governments will authorize tax incentives and other programs to encourage builders to create more housing.
Those builders are going to need to buy land, be an expert in it.
Is there distress in your housing market? Despite the fact that the national housing market has all but recovered from the correction of 2008, there are still many local markets that are slow to see a full recovery. If your housing market is still seeing a lot of homeowners underwater or nearing foreclosure, establish yourself as a short-sale specialist.
Short sales help sellers avoid the disastrous impact a foreclosure can have on a credit score, while at the same helping the bank avoid losing money on an investment, something they often do when a property is foreclosed on and auctioned off or sold later.
Learn the ins and outs of short sales and how they can be a lifeline for sellers; establish yourself as the expert in the field.
5. Become a Property Manager
Many small time income property owners act as their own property managers. After all, if you own one or two units, interacting with tenants, collecting rents, and facilitating new leases is relatively easy.
But, if you’re the owner of 20 or even just 10 units, property management can quickly become a full-time job. In most states, in order to facilitate real estate transactions involving the securing and enforcing of a lease on a residential or commercial property, the property manager must either own the property themselves or hold a real estate license.
Many full-time property management positions are salaried, and according to Salary.com, fall between $50,448 and $65,351. However, many real estate agents act as part-time property managers, often for their real estate investor clients, and typically earn between $20,000 and $32,000 a year.
In markets where short-term vacation rentals are popular, it is not uncommon for real estate agents to work with an investor to purchase a property, then act as the property manager after the transaction is complete.
Property management takes time and effort, so make sure the juice is worth the squeeze, but it can be a helpful supplement to your commission-based income. Having a real estate agent salary that is partly based on commissions and partly guaranteed is the sort of safety net that a lot of agents (especially new to the industry) are after, and property management can be a great option for getting there.
6. Focus on Representing Rental Clients
In major metropolitan cities, breaking into the listing market for residential real estate is challenging because competition among agents and brokers is so fierce. However, there is usually no shortage of people looking for a rental, so the option of working as a rental agent is a great place to start.
As mentioned before, the typical rental commission is a month’s rent (or a little less), and you’ve still got to split that with your broker, but oftentimes the work needed from you can be done in a day or less, so if you have a good sphere of clients and potential clients looking for rentals, you can rack up a number of these in a week.
Also, when you represent a renter, you can also flip them into buyers and use them as a source of referrals. Transactions are short in the rental world, so it’s easy to impress.
7. Perform Third-Party Price Analysis
Banks, insurance companies, and even municipal governments will often need a market assessment of value for a property, and when they can’t get that number internally, they turn to agents in the marketplace.
For instance, if a property owner has defaulted on their mortgage and the property will be sold by the bank, the bank will often seek multiple opinions on market value in order to set an appropriate price. You can get in on this work by speaking to the mortgage lending supervisor at your local bank to let them know you offer these services.
If you need some help brushing up on your comparative market analysis skills, we’ve written a step-by-step guide that you can use to make sure you’re getting the most accurate number for your listings and your third-party clients too.
8. Offer Construction Development Consultation
When property developers are considering a new project, the first two questions they always ask are “How much is it going to cost?” and “How much can we sell it for?” The problem with these questions is that the developer is only an expert in answering one of them.
That’s where you come in.
Research the major developers in town, get familiar with the sorts of projects they take on. Just like any other type of cold outreach, develop a strategy for reaching out to these developers and start to build a relationship with them.
When it comes time to strategically plan their next project, get yourself in at the planning level. In addition to your consultation fees, you can advocate to be the listing agent of the new properties as well.
Ben Caballero, the most successful real estate agent in the world for the last nine years running, works exclusively with developers on new construction projects. If you still aren’t sure that this strategy is effective, consider the following: Last year, Caballero closed 5,801 homes, totaling $2.27 billion.
Caballero has been quoted as saying the only way that he can handle that level of volume with a bang-up support team and the strategy of looking to sell multi-unit buildings in bulk, rather than focusing on individual homes one at a time.
9. Become a Real Estate Investor
If you’re a real estate agent, you know that a purchase of property isn’t just securing a place to call home, it’s also an investment. Given your expertise in what’s hot and what’s not, you’ve got a golden opportunity to translate that knowledge into investment profit.
The easiest way to get started in real estate investing is to join or form an investment club. Rather than putting up all the money yourself to invest in a property, find four or five other people who are interested in doing the same thing and mitigate your risk.
Don’t just throw in with anybody though. When you consider the amount of legal work, maintenance, property management and the like that will be required when you form an investment team, it makes perfect sense to gather a squad with distributed skills. Ideally, your team would have a real estate agent, an attorney, a contractor, and a banker. That way you’ve got an expert in the first of just about every dice plan you could encounter in real estate.
Sure, you share in the profits, but you have a support group of people all interested in the same thing you are, and after some successful initial investments, you’ll have the confidence (and the capital) to start making investments with a single partner or as a solo investor.
In addition to making you money from your investments, this practice gives you real-world experience when it comes to what your real estate investor clients are looking for and dealing with, making you better equipped to have intelligent conversations with them and to serve their needs better.
Bringing It All Together
If you’re wondering how to make money as a real estate agent remember that the most successful agents are the ones that diversify. The real estate agent salary isn’t a single source of income, but rather a multi-stream effort with money coming in from all across the real estate industry.
Are there income opportunities for real estate agents that we’ve missed? Tell is in the comments below.