How to Pivot from Real Estate Sales to Property Management

Earlier this spring, NAR made headlines nationwide when it announced a $418 million antitrust settlement. The settlement may vary well change how Americans buy and sell homes, but experts also believe it will dramatically impact the 5-6% commission structure that’s largely accepted as the industry standard.

The ripple effects of the settlement likely won’t be fully evident for the next fear years, but industry experts are all predicting a seismic shift in the way Realtors make a living. If you’re a Realtor worried about the future of your business, is it time to consider making a shift from real estate sales to property management?

First, let’s explore what the NAR settlement covers and how it is projected to impact agents.

Understanding the Proposed NAR Settlement

In theory, Realtor commissions between brokers and clients have always been fully negotiable. In actual practice, NAR members have long been bound by stipulations that required commissions to be split between the buyer and seller’s agents. This is largely what brought about the industry norm of a 6% commission paid by the home seller, with 3% going to each broker in the deal.

The proposed terms of the settlement do away with those stipulations, blocking selling agents from making commission offers to buyer agents. This will also encourage both buyers and sellers to negotiate the commission they’re paying to an agent as part of the sales transaction.

What Impact Will the NAR Settlement Have on Realtors?

The million dollar question: what impact will the NAR settlement have on Realtors and the real estate industry when it comes into effect in summer 2024? It impossible to know exactly what impact the proposed changes will have, but experts agree to expect the following:

1. Increased Competition

   According to NAR statistics, there are currently 1.5 million Realtors in the United States, with 10% of those agents representing 90% of all sales transactions annually. And that’s not taking into account any independent real estate agents who aren’t NAR members. In other words, there is already a lot of competition in the industry, with many real estate agents struggling to make enough sales to cover their expenses. The NAR settlement will increase competition further, potentially edging some agents out.

2. Potentially Lower Commissions

   Empowering home buyers and sellers to more aggressively negotiate their commissions could have serious repercussions. A single percentage point of negotiated commission represents thousands in lost earnings; Realtors engaging in a bidding war with equally qualified agents, however, may feel like they have no choice but to accept a lower commission rate in order to keep the client.

3. Higher Demands

   Agents who do manage to keep their clients will likely see client expectations soar. You want 3% of the sale price as your commission? Demonstrate your value to me. Jump through the hoops. Show me why you can outperform somebody else in this role. That additional pressure and noise cause numerous challenges for agents.

Future Proofing Your Business By Pivoting to Property Management

Worried about what the NAR settlement will mean for you? Rather than putting all of your eggs in the real estate basket, why not consider expanding into property management? There’s nothing preventing you from doing both property management and real estate, after all, and property management and real estate sales often have a yin and yang relationship.

In other words, when the sales market tightens, rentals become more popular. And conversely, when industry levels rise, rental rates often dip, sending potential tenants running for more permanent digs.

Building a property management business as a Realtor will allow you to capitalize on your existing real estate expertise, while also helping to protect your business in a rapidly evolving market.

Starting Your Property Management Business

Ready to pivot from real estate sales to property management? Although there are many similarities between the two, property management will require you to take a number of steps to set your business up for success. Consider the roadmap below as you start your property management journey.

1. Check for Licensing Requirements

   First, you’ll want to get your ducks in a row. Check what your local requirements are for being a property manager. In most cases, your real estate license will open the necessary doors to begin managing rental properties, but there many be jurisdiction specific licensing requirements for your area.

2. Establish a Brand Identity

   You’ve likely spent years building up your reputation as a real estate agent. Now, you’ll need to start again, this time marketing your property management business. If you want to obtain real results, offering property management shouldn’t be an aside on your website or a little asterisk you mention on your marketing materials. Treat the property management side of your business as a fully fledged operation, giving you the opportunity to grow dramatically. Don’t know the first thing about branding your business? Consider scheduling a free kickstart call to see how we can help or check out the DoorGrow Foundations course!

3. Create a Web Presence

   As a Realtor, you already know how important it is to get your face in front of as many potential clients as possible. The same is true as a property manager. Building out a website that incorporates property listings, property management pricing, and portals for tenants to pay rent and request repairs is essential for getting your business off the ground.

4. Market, Market, Market

   In the same way that you’ve worked hard to build a loyal following for real estate sales, you’ll need to market your services to the masses. Tools like marketing flyers, postcards, and tri-fold brochures, combined with digital marketing initiatives, can help you to capture as much market share as possible.

5. Build Referral Relationships

   Don’t forget to leverage the working relationships you’ve already built with fellow Realtors. We share all of the resources you need to get started with a Realtor referral program with our clients in the Growth Accelerator course, while also covering the simple ways to generate explosive leads without spending a single penny.

Ready to take your real estate business to the next level? Transitioning from being a real estate agent to a property manager is a strategic move that will significantly boost your career. Property management not only offers a steady income stream through management fees but also deepens your market expertise and client relationships. You’ll be helping clients grow their investment portfolios while securing your financial future.

Learn more about how DoorGrow can help! Check out the Rapid Revamp now or schedule a free consult call to learn more.