The vast majority of real estate agents and brokers work with three major property types accounting for most of the real estate ownership transfers. As a new agent or broker, you may want to narrow your focus and specialize in one or more property types. A study of the number of properties of each type in your area, and their relative values, would indicate the possible financial rewards of working with each type.
Niche marketing in today’s online world has informed niche decision making a bit though. While in the past an agent might specialize in just condominiums or just farms and ranches, the Internet has made it possible to effectively market in more than one niche and also in niches focuses less related to property type than demographic appeal.
It’s nearly as common now to see agents specializing in the Baby Boomer niche or the Millennial niche, or even the Hispanic market niche as a property type focus. Even more interesting is the agent working multiple markets successfully. Websites can be constructed and published at low cost with each exclusively covering a specific focus. Because that niche is only covered in the site content, more targeted SEO is the result.
Farm and ranch specialists have long been quite successful in this business. It is important to understand the specific buying requirements and motivations of prospective buyers and sellers. Generally, the property size and price is quite large, with corresponding commissions.
In rapidly growing areas, specializing in building lots for properties can be lucrative for an agent. Just know that, as long as the spread continues, the area you have to cover will inevitably move further out from the city and possibly your office.
Vacant land in some areas actually commands a higher commission percentage, though with less frequency as demand and prospecting habits change. As land prices and values have increased, few validations exist for higher commissions. The listing and transaction process is actually significantly simpler and there are no structural inspections, floor plans or insurance issues to attend, so commissions have largely levelized with other property transaction commissions.
Residential property is by far the most popular with both new and experienced agents. That’s no surprise—since the year 2000, US Census shows more than 105 million occupied housing units.
Real estate agents then further specialize in types of homes including new construction, condominiums, separate homes, duplexes, rental properties, Real Estate Owned properties (REOS) which are properties generally owned by a bank, lender, government agency or loan insurer as result of foreclosure and failure to sell at foreclosure auction) or high value homes, vacations homes, etc. There’s plenty to go around.
Whatever focus(es) they choose, most agents start in this niche and remain in it, as they can do quite well income-wise.
There are even sub-niches, mostly based on price ranges. Like multi-generational properties. Some agents only work with luxury properties with high dollar prices, while others work in the less expensive entry level home markets.
The trick is to do what you like and what holds your interest. You’re going to deliver better customer service if you’re excited about your niche and especially if you make an effort to be an expert.
Commercial property can be empty land zoned for commercial use, or an existing business building or buildings.
Commercial property valuation requires a more complex accounting method including income potential of the property, historical revenue, cash flow with owner perks removed and much more. Without extensive business valuation experience, it’s better to enter this specialization carefully after time in the business in land or residential property markets.
For this discussion, commercial includes multi-family and apartments. That’s because lenders, buyers and sellers use different methods of valuation and qualifying for funding is handled much differently than in normal residential.
As far as office buildings, supermarkets, shopping malls, industrial, gas stations and other commercial property types, it’s a more complex business, but incomes are better if you’re good at it. Sub-niches, such as only working with strip malls and shopping centers are also common.