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Boost Your Real Estate ROI With Ancillary Revenue

Updated: Dec 19, 2023

Adding vertical business lines can increase ROI, improve customer experience and revitalize your real estate business in challenging times

downtown with skyscrapers overlooking the ocean

October 02, 2023

Certainly, a trend in the real estate space in recent years has been the quest to generate ancillary revenues alongside our core business, thus retaining more revenue internally from existing business.

Adding new revenue streams is definitely a way to grow your business in a difficult environment where transaction volume is down significantly, and margins and ROI have followed downward. One great way to increase ROI and/or margin is to introduce a tangential but closely related vertical business line.

In the wake of a challenging 2022 and 2023, now is a perfect time to re-imagine your businesses and consider those future ancillary revenue streams. For those that have the capacity, the resources and the wherewithal to focus and capitalize on these opportunities, the rewards can be substantial Are you today adding as much ancillary revenue capability to boost the profitability of each of your deals while being prepared to benefit in an even bigger way when the markets regain balance and stability? Especially if those ancillary revenues/services also serve to give your transactions or your customers a better overall experience and make for a more efficient overall transaction?

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You have spent a lot of time, money and energy building a customer base or a transaction stream in your core business. Customers and customer service are the lifeblood of your business. And yet, there are certain points in the transaction when the process and customer experience are out of your hands. One of those points is the title and closing process. Do all of your title partners provide your clients the same customer service experience that you do? Wouldn’t your business transactions be better and more robust if YOU could provide an enhanced level of customer service to your client through the title and closing portion of your deals? Wouldn’t it make your business more comprehensive, providing a stronger ROI per deal, if you were able to recapture at least some of those fees? Wouldn’t it also potentially make the transaction faster or more efficient if you could have better control over those aspects of the transaction? And finally, wouldn’t these ancillary revenues make even more sense to pursue if it were not too difficult to obtain them in a legal and compliant manner? Of course, they would.

In 2019, a Harris Poll commissioned by the National Association of Realtors questioned consumers regarding homebuyer preferences. That poll found a number of pertinent items:

  • 95 percent of homebuyers would consider a “One Stop Shopping” model (OSS)

  • 50 percent of homebuyers used an OSS model in 2019

  • Homebuyer satisfaction was higher with OSS

  • A majority of homebuyers say OSS makes buying a home easier

  • 77 percent said that OSS saves money

  • 79 percent said that it makes the process more efficient and manageable

  • Nearly 3 out of 4 said that they would be willing to pay more if OSS made the experience better

While I am not advocating either way regarding the OSS model for real estate, what I do believe is clear is that simplifying the process for ourselves, and our customers, has some of the very same and clear benefits that the Harris Poll highlighted. It just makes business sense to be able to streamline your business and your customers’ experience by offering ancillary services. That better and more efficient customer experience inevitably leads to better customer retention and a more efficient process. This will also lead to better margins and ROI for your core business.

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