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A Sure Fire Method To Rapidly Increase Your Income!

Gift As the holiday season approaches, many in the real estate community have two head bangers to deal with. The prospect of having to buy gifts and other holiday fare at a time when there's traditionally a slow down in home sales AND the spectre of looming tax bills around the corner just after the holiday season winds down. This can definitely put a damper on enjoying the festivities.

It was these thoughts which were meandering through my mind as I ate a late lunch sequestered with the most recent issue of Time Magazine.

The title of this article written by Justin Fox, "How Dumb is Your Bank" was irresistible for a real estate broker who has viewed the widening mess in the lending industry with increasing dismay. While the jist of the article involved the usual finger pointing, one statement by the CEO of Wells Fargo was intriguing:

Justin Fox states that according to Kovacevich, Wells Fargo CEO, the company had an OK quarter and has also had the best long run stock performance of all five of the major banks.

In fact, Richard Kovacevichindicates that "while several mortgage firms have gone under, the banking industry is on track for what Kovacevich guesses will be its third or fourth biggest profit year ever." He credits this extraordinary outcome to diversification, noting that "Banks that used to be pinned down in one state, doing nothing but taking deposits and making loans, can now operate coast-to-coast selling everything from stocks to insurance."

This got me to thinking about what banks intend for the real estate industry. If you've ever wondered if banks are absolutely dead serious about venturing into real estate...wonder no more. They ARE! It's a part of the growth and diversification strategy which will ensure their continued prosperity and posterity for the future. Because taking deposits and making loans is no longer the most profitable way to make money.

While this battle between NAR and the banking system is being engaged at the national level, I wonder if real estate agents could take a lesson from bankers. Perhaps, diversification is the key to being profitable. As we consider shrinking commissions for more work and fewer viable buyers for an increasingly large cache of homes, perhaps increasing the number of income streams might be a way to offset these losses.

Here are some examples of how this might work:

You're already moving pictures and furniture around to get decent pictures to post on line...why not provide a Value Added Staging & Moving Service and charge for it.
Create a rebate or barter referral system for services that you are referring clients to. If you're using a title company, make sure you enter into their free drawings to win a prize. Suggest this rebate system to other service providers whom you use or refer on a routine basis.
If you originate a loan, you can be paid for it. Take classes to learn how to originate loans and market yourself as a real estate loan specialist.
Arrange to assist clients with lawn-care in the summer and the services of your leaf blower in fall and snow plowing in the winter. Voila, a new income stream....Landscape artist!

I'm looking at my list...and I'm not too excited. Perhaps, this may be a viable route, but we risk loosing our status as experts when we become jacks of all trades. You know, I got into real estate to provide specialized unique services and counsel to clients who are looking for an experienced professional. But then again, I'm not too thrilled with the prospect of a banking system that feels that the real money is outside what is perceived to be their area of expertise...making loans and providing financial services either.

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Lola Audu, CRS, GRI e-Pro ~ Audu Real Estate

Lola Audu, is the Designated Broker & Owner of Audu Real Estate. Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area. We've had the privilege of helping hundreds of clients succeed in their goals of purchasing and selling property including demonstrated success in the negotiation of Short Sale Transactions. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511.

Posted by Lola Audu~Real Estate Broker/Owner Grand Rapids, Michigan Real Estate on 10/31/2007 08:21 PM

Comments (36)

real estate agent, transaction management, outsourcing, audu real estate

Originally posted at: Inspired Real Estate For Today: A Sure Fire Method To Rapidly Increase Your Income!

36 Comments on A Sure Fire Method To Rapidly Increase Your Income!

OCT

2007

I'm curious...what are your thoughts about "multiple streams of income" by banks OR real estate agents?

Umm... I think the rebate program is illegal. Maybe that is state by state. Sorry.

Lola,

The beautiful thing about offering ancillary services or at least facilitating them for your clients is not only can and will it make you money but it will increase the overall satisfaction for your clients if you choose the right vendors for these services and will also lead to greater retention and more repeat business as the one stop shop experience is a required part of a truly consumer centric business model, the consumer perceives more value and in most case is even willing to pay a premium for the services or products.

Fortunately for me i am part of an organization that provides these opportunities and more and standard packages, we also have a great home rewards program that offers discount to the consumers from a wide array of national vendors. www.gmacrealestate.com in the US and www.gmacrealestate.ca in Canada

Sarah...rebates are allowed in Michigan as long as they're disclosed....however, I don't think any of these solutions are a great option. I'd rather that real estate agents be able to make a living by practising in their areas of expertise.

This is a great idea, Lola! Everyone should be able to do everything. If we can figure out enough services to sell, maybe all we will have to do is find one customer at a time who will wait patiently while we figure out what we are doing.

Hi Scott, Thanks for your comment. It will be interesting to see how this process transpires. Banks make more money with ancillary services than their primary lines of business. As real estate companies move in that direction, will it be possible for us to argue with any legitimacy that banks should NOT be in the real estate business as well?

Peter...Thanks for your comment. It's given me the first serious chuckle of the evening. :) And while we're figuring out what we're selling...we should fervently hope that the customer does not wander away.

Evening Lola, Another well written post. SOme excellent material and I suspect you are right about the banks and their intentionn to enter into our business.

It may be interesting to look at things that property management -- or perhaps investing with others in real estate --

In many aspects of my life I always steer away from the jack of all trades, master of none types. I would much rather be an expert and use experts.

Thanks for stopping by Bill. It was a little amazing to see it stated so clearly in the article today. I've never read a quote which indicated the reason why banks are diversifying...to keep afloat financially! While it makes sense, it is also clear that the persistent drive to enter into the real estate industry as brokers will most likely intensify.

Hi Joan, I would definitely consider investing with others in real estate or a REIT as a viable way to generate another stream of income. This requires real estate expertise. So does property management, but as you may know from my previous acknowledgement in the "Confessions of a Reluctant Landlord" post, I'm not very good at the landlording bit. :)

Lisa, Thanks for your comment. I'm in agreement with your take on this one. I don't see doctors advertising their services as pharmacists or accountants letting people know that they are capable of doing data entry.

Lola, I'm all for making money whichever way you need to in a slow market - but I'm still convinced that the people who make the most are the ones who are very good in a niche specialty, not the ones who spread themselves around...

I can understand the idea behind it, but it is difficult for me to take this route. It sort of defeats the purpose. There is a risk of becoming a mediocre real estate agent, but there is absolutely no guarantee that we are any good at things like landscaping, staging, designing, etc.

Is it worth to go with lower commissions and earnings because we diminish the value of our core service and then try to pick pennies on the stuff, where we are not professionals?

I think that maybe the opposite would work for us. Concentrating on the real estate, on technology as it pertains to real estate, to become more knowledgeable in tax matters, investment matters, and get the expertise and narrow even our core to either a smaller area to be a better professional or to a niche market, or both of these things. Could it be a reasonable approach?

I love your blogs, this one gives food for thought, so, thank you.

Lola - I will be back, this is a very interesting post. I'll be back to chime in....

Lola - I understand the theory behind your post, but I must say I don't want to be a stager, a landscaper, a loan originator or a moving service. I prefer to leave those things to the respective professionals - and I would much prefer that the banks leave Real Estate to me (us) - the professionals.

The idea of walking into a bank and inquiring about a piece of property makes as much sense as walking into a auto repair shop and asking about fresh pies.

Thanks for another one of your wonderful posts.

NOV

2007

On any given day I am a stager, a psychologist, a window washer...the list could go on and on. But these are brief services that I provide if needed. (Example: Grabbing the windex for last minute touch up to a door before a showing). I could never advertise myself as being all of those services and oh, by the way, I'm a REALTOR.

This reminds me of gas stations. Do you remember when all they sold was gas and had bays for mechanics? Now the bulk of their profits come from the convenience store that by the way, has gas pumps. Now we have to scratch our heads and figure out where to take our car for repairs, because Mr. Trusty Mechanic no longer has a bay, but has pop & chips in its place.

I would rather NOT have to stage, etc... I work with professionals in that specialize in that industry. Of course banks want in real estate, we will be fighting that battle for a long time. But, who would go to a bank? The bottom feeders......the good, productive agents would not.

Brian, Thanks for sharing your insights. It's interesting to note that specialization is the key to advancement in most other professional occupations. A general family practitioner will not make as much money as a cardiologist. I think that instead of trying to be a jack of all trades, real estate agents might want to consider specialization as an avenue to generating more profits. Right now, even our most popular designations...GRI, CRS are not specialist designations.

Hi Jon, Thanks for stopping by to read and add your insights to this discussion. It seems to me that most real estate agents have not begun to scratch the surface of their service potential to clients. Increasing our expertise in contract negotiation and real estate market trend analysis are two areas which are wide open for improvement.

Jason, Jason, Jason...where art thou? :)

Hi Carol, Thanks for stopping by to read and comment. The analogy of banks selling real estate being equivalent to the auto repair shop selling apple pie is interesting. However, I don't think that's how it's going to look. It is more likely that the Apple Pie company will be a subsidiary of the bank under entirely different branding so the customer does not make the uncomfortable association which you alluded to.

Kris...love your witty insights. :) Good mechanics are becoming more difficult to locate. The comment you made absolutely illustrates the dilemma of the topic discussed in this post and dialogue. Our choices as consumers have become somewhat more limited from the days in which mechanics repaired cars and stores sold potato chips.

Hi Missy, Thanks for asking a great question! "Who would go and work for the bank?" Remember the seminar we went to in Grand Rapids, MI? The presenter made a very interesting statement...he noted that real estate agents in the future will most likely be employees NOT independent contractors. There were groans in the audience...but he told us to get used to the idea. With that in mind...the question of who would work for the banks is wide open...

Hi Lola, I have found that if you try to diversify into to many different areas it is much to difficult to be very good at anything, you are spread to thin and then not taken seriously. Finding your area to specialize in, branching our from there and being the best at what you do....is the Key.

All the Best,

Hi Therese, thanks for sharing your insights. One thing that may contribute to the "jack of all trades" syndrome is a lack of training. Sometimes, agents may not understand all they CAN do or are SUPPOSED to be doing. As a result, opportunities are not grasped. I would definitely encourage people to figure out what they want to do and then concentrate on learning how to do that in the best way possible. I'd agree with you heartily that this IS the key!

Banks do indeed want a piece of the pie!!!! And the more they get, the more they will want!

Lola, With the WaMu news tonight your post really hits home. At one time, I owned my own landscape company. Right now, I'm worse off than the guy in the RE/MAX commercial that couldn't run past his yard. Perhaps being a Landscape Artist would help.

So I went to my subscriber list to find you, and couldn't. I thought for sure we did that some time ago. We've corrected that mistake right now. And feeling dumb that we thought we did, but didn't.

We've had a good year, and it will be even better if we have a good weekend, this one. Nevertheless, in addition to being grateful and lucky, we think about what's next most of the time. It's not with fear, but with caution. d

Have made a decent living as a writer, graphic designer and marketing consultant before, and could again if need be. There are brokers and agents out there who would love for us to do what we do for them. Doubt if it will ever get to that though.

Thanks again for commenting on things we've been doing. Means a lot to us.

NOV

2007

Hi Lola: There are so many Realtors around who are hurting. Diversification might be an answer. If only working smarter rather than working harder would actually work !

Thou right here Lola! Diversification vs. Specialization.....hmmmm. It's tough, there are Realtors out there hurting, as there are Mortgage Brokers in the same proverbial boat. The survival mechanism naturally kicks in asking, "What else can we do to make a dime in this world?" It's a shame that even comes up....as I firmly believe there are only so many seconds in a day and that each part of Real Estate is so specialized....that one needs to be on top of their specific game. The fact of the matter is I echo Peter Thompson's comment above.

One more thing, as far as Banks having their hands in such an array of services, if we don't watch out....it could be crippling for us all (especially the consumer).

NOV

2007

Thanks for stopping by to read & comment Bill & Barbara Jo.

Hi Gary, your comment was very thought provoking. As a result of what you said and some of the other discussion on this post, I've written a follow-up post. Truly appreciate your stopping by Gary.

Thank you for adding me as an Associate Gary! That means a lot to me. I appreciate the value and expertise that you provide to your community through your real estate blog and enjoy reading from the sidelines. You are experts in your community and I know that this will continue to serve you very well. :)

Jason...Thou Art Welcomed Back! :) Always appreciate your insights whether in a comment or on your blog. This discussion has really provoked some serious thinking...infact, it got another post out of me. Thanks for adding to it through your comment.

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