3 Ways to Make More Money Without Selling More Homes - [Part 3]
Strategy to increase income through transaction processing fees. ✓
Strategy to increase income through negotiating your commission. ✓
That leaves us here in the third and final part of this blog series about the 3 ways to make more money without selling more homes - generating vendor income for your business.
Now, before you start chewing off all your nails and worry about doing something illegal, immoral or unethical, please know that there is a proper way to set up vendor relationships.
What I can tell, though, is real estate brokers and agents must comply with RESPA, which prohibits receiving anything of value in return for the referral of settlement service business.
RESPA, however, includes an exception that allows brokers and agents to receive reasonable payments in return for goods provided or services performed by brokers and agents.
As a result, marketing services agreements, desk rental agreements, and co-marketing activities may be lawful under RESPA if carefully structured to comply with the Act.
That said, the purpose of this blog is not to give you the legal requirements for doing that.
Check with your real estate attorney to make sure any relationship you establish with a vendor is done by the books and absolutely RESPA compliant.
Once you’ve done that, here’s what you need to do next:
Create your hit list
The first thing you need to do is make a list of everyone you do business with that benefits when you make a sale.
Mortgage lender, title company, insurance agent, plumber, locksmith, handyman...everyone.
If one of your vendors makes money when you make a sale, they need to make this list.
Don’t disqualify anyone, just put the list together. You need to have a hit list that you can target to build what I call “host-beneficiary” relationships to help both parties build their business.
Determine how much business you send to each of them
Working with the understanding that you can’t give anyone a kick back or any type of remuneration based upon how much business you do with them and vice versa, it’s key to know how much business you do with each of your vendors.
The more money they make from working with you, the more your vendors will be willing to invest in setting up a legal arrangement to generate more leads for both of you to benefit from.
Plus, it’s helpful to know if you give a vendor a lot of business so that you can 1) strengthen your relationship with them based upon the results you get working together or 2) discontinue your relationship with them if you’re the one doing all the giving and they’re the one doing all the taking.
You should always track how much business you give everyone...period.
Approach them with goal of doing more business
Everyone’s radio is tuned to their favorite radio station, WIIFM: What’s In It For Me?
When you approach your vendors to ask them to invest money to offset your marketing and advertising costs in such a way that it resonates with them as a way to make more money and not as you becoming another line item in their budget.
To accomplish this, you’re going to position your request in this way:
“Mr. Vendor, I’ve decided to limit the number of vendors I work with so I can do more business with a smaller amount of people. That way, I can give my clients better service and create stronger, more profitable relationships with a core group of like-minded business people. If I can show you how we can both do more business over the next year, would you be willing to meet with me for (lunch, dinner, coffee, 30-minutes) so I can show you how that can happen?”
Positioned properly, you should be able to get virtually all your vendors to join you to discuss how having them help you invest in more marketing, advertising and lead generation can benefit the both of you.
Once you meet with them, share your marketing and advertising plan as well as any lead generation platforms or services you currently use.
Help them understand that the more leads you can both generate, the more leads you’ll both have to convert.
And it will cost you both less money to do so.
Also, let them know that you’ll both be able to refer more business to each other going forward, which is a huge, win-win.
Keep this in mind, there are ALWAYS vendors out there looking to do business with success-minded, hardworking real estate agents.
You may not get thousands of dollars a month to start, but even if you could get a $100 to $200 per month, that could represent 20 to 30 leads, or more, that you didn’t have coming in prior to creating this relationship.
Plus, as you do more business, you can circle back with your vendors on a quarterly cycle to see if it makes sense to increase their investment.
I can’t stress this enough: do it all by the book and if you have any doubts, please check with an attorney.
In fact, even if you don’t have doubts, check with an attorney anyway.
Ben Franklin said it best: “An ounce of prevention is worth a pound of cure.”
I hope you’ve enjoyed this three-part series on how to make more money without selling more homes.
If you sold 12 homes last year, you could easily add another $15,000 (or more) to your bottom line if you sold only 12 homes this year, simply by implementing the strategies I’ve shared with you over these last three posts.
Take the time to review what I’ve shared, then dive in, head first, to putting these strategies to work.
Best of luck