Marrying standard retail real estate practices with those of an investment brokerage can pay big dividends all around.
Real estate brokers face the daily challenge of searching for ways to maintain growth and profitability.
It can include contracting with new agents, flooding the market with direct mail and sports schedules, and boosting advertising expenditures on television, radio and print publications—many times with questionable results.
Agencies might be better off if they tried a different strategy: adding property investment to their offerings.
This approach is a win-win for both property investors and agents. It marries standard retail real estate practices with those of an investment brokerage. By working with real estate agencies, investors can gain access to home sellers through licensed real estate professionals. They can expand their investment portfolio to new neighborhoods, new cities and new states.
Meantime, agencies will interface with both motivated home sellers and property investors. They can determine if there is a strong current market for the property and if the home can be sold quickly or listed through traditional methods. Often the agency can purchase the property itself at a reasonable price, with the help of its investment arm, understanding buyers will pay a premium for a home in that area. The end result is a substantial profit for the agency without incurring extravagant costs for marketing and other expenses.
The addition of the investment option creates a three-pronged approach to agency operations that I call The Trifecta Model.
The Trifecta Model trains and educates agents to serve as consultants rather than aggressive over-the-top salespeople. It encourages them to meet with prospective home sellers in person and eliminate long and often wasted time spent with telephone surveys and negotiations.
Agents are encouraged to schedule appointments with prospective clients. They do an analysis and help consumers or sellers determine the right course of action to meet their needs. This can include helping them ascertain pricing and home staging, contracting the property with the agency as a traditional listing or simply offering them a reasonable purchase price to relieve them of the burden and time to sell the home.
This approach can have an immediate positive impact on revenues. A solid example of an agency benefiting from the Trifecta Model is Yates Estates, a fast-growing real estate agency in Atlanta. The firm has been using the strategy for more than a year and has grown from one superstar-type agent to more than 30. The firm has participated in dozens of actual property purchases and sales. Overall, the firm is on target for well over 250 transactions in the current year and continues to add not only to the team but also to the bottom line.
Adding to the success of Yates Estates is a strong internal marketing effort. This includes generating qualified appointments for agents so they can spend more time face-to-face with clients. It also involves providing them with the proper type of signage and marketing materials to assist with the execution of the Trifecta strategy.
Another example is agent Seth Choate with PMZ Real Estate in California, the premier real estate company in the Central Valley. Choate and his team work out of the Turlock-Fulkerth office. Choate has been utilizing the Trifecta approach for some five months. In that short period of time, the team has secured 10 wholesale deals where buyers have taken the cash offer. The firm has also secured five listings.
“It is a completely different model with a lot of opportunity,” Choate says. “I can advise the seller on the best course of action. We can discuss how they can analyze the property for price evaluation, or agree to list it for them through standard methods or make an offer to purchase the home on the spot for an immediate sale. We are finding many buyers appreciate the fast sale option as they are relieved of the burden of listing and showing the home.”
Education is, of course, a strong part of this process. This will require an investment and some time to learn this three-pronged strategy. Many veteran agents may be forced to eliminate old habits as they learn the rudiments of property valuation while newer agents welcome the opportunity to add this to their sales offerings as a way to differentiate themselves from the rest of the real estate pack.
Consider that a typical agent struggles to meet the average of four to five deals per year, the addition of the property investment option can double or triple his or her production. Multiply this by five, 10 or 50 agents and an agency can easily double or triple profitability as it strongly differentiates itself from the competition.