Over my two decades in real estate, I have performed a lot of strategic analysis on enterprise real estate brokerages. These brokerages are the ones that offer residential, commercial, property management, mortgage, title, insurance, home warranty, relocation, new home development, moving, and land sales. What often amazes me is that every broker does not endeavor to balance their business portfolio with centers of excellence in each area. Together these businesses compliment each other–and more often than not, when one industry segment is underperforming, another is overperforming.
Obviously, Howard Hanna is the largest example of brokers with this diversified business model. They also do an outstanding job of blending services across their business units to create some interesting consumer offers. For example, they invented a concept called Buy Before You Sell. The program name is pretty self explanatory, but they put your home under a listing contract and get you all set up with a mortgage for your new home. You move in and your old home gets sold.
Imagine if your brokerage thought more deeply about homeowners under management. Nationwide, homeowners spend $6,000 on repairs. In higher-end housing markets like California, they spend over $16,000. When you have a customer, how can you help them with everything they need?
The champion of homeowners under management is Watson Realty Corp based in Jacksonville, Florida. Like Howard Hanna, they offer every real estate service, but they have gone further by developing Watson Construction Group – a one stop shop for construction, renovation and repairs. Need HVAC, Plumbing, Electrical, or whatever, better call Watson. Buying or selling a home that needs repairs before inspection? Watson can handle that. Watson has been representing clients since 1965, and represents between 7,000 and 13,000 homes per year. They have trucks and service providers rolling though every neighborhood, engaging with homeowners every day.
The most difficult challenge for any business is lead generation. The cost for customer lead generation varies by industry. HVAC or Electric is about $60. Plumbing is higher at $150. Lead conversion is pretty high, and these service providers build trust relationships quickly. Real estate brokers already have customers with trust relationships. Imagine if you brought all of your consumer services into one client portal and started creating referrals.
Let’s put this into perspective with some back-of-the-napkin math. If you have 10,000 real estate customers and they spend $10,000 a year on home repairs – that is an addressable business opportunity of $100 million by itself. Brokers already know the best service providers in their market. If a consumer needs a landscaper, painter, roofer, driveway, HVAC, plumber, electrician, or other service provider, brokers do not send them to Angie’s List. Every broker has a list of trusted service providers. Imagine getting a small referral fee, or acquiring/merging some of those service providers? Have you ever examined the revenue opportunities for setting up internet, TV, moving, home security, solar, rental insurance, rental applications? Brokers are leaving so much money on the table. By simply providing your customers with a homeownership portal, you begin the process of developing this business opportunity.
This is the imagination of Homeowner.ai. Every brokerage needs this software right now. We have been covering the growth of this company since they came out of stealth mode. It is the only comprehensive homeowner hub that we have ever evaluated. Many software companies have parts of what Homeowner.ai offers, but they lead the pack. Here is a Homeowner.ai business summary that we did earlier this year (BTW–the company went by Milestones previously, before rebranding).
The brokerage business is stuck in a lull right now. It is time to realize the many opportunities for additional revenue growth with your existing clients that lies just below the surface. When you look at broker-dollar per transaction, the median puts you at a couple thousand before expenses. What if you start by getting a few hundred-dollars more by investing in serving your customer with a broader band of services through referrals to trusted service providers.
