Some Real Estate Agencies Are Scrambling To Find Alternative Sources Of Revenue

In an effort to boost its revenue, real estate listings giant Zillow Group Inc. started a home-flipping business that it believed would create an alternative revenue stream to just marketing properties online. 

That strategy didn’t last long after Zillow lost a ton of advertising revenue from agents and agencies who saw it as a competitor.

Amid a slumping market, real estate agencies are expanding beyond their purview to find alternative revenue streams as rising interest rates result in plummeting home sales.

For example, agency franchise giant Keller Wiliams Realty is training some of its 190,000 agents in 1,100 offices around the world to provide real estate planning and wealth management services to their customers.

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Under the banner of KW Wealth, the company is touting its services as “an exclusive community dedicated to helping you build better profits by leveraging your current real estate business, grow your business, create passive income and build a better future for you and your family.”

The Austin, Texas-based agency is providing what it refers to as its KW Real Estate Planner class to provide training, certifications and the networking necessary for agents to give financial advice to homeowners.

KW views the move as a means of capitalizing on an existing relationship of trust that real estate agents build with their clients by broadening the services they provide. More than 200 KW agents have been approved and accepted into the class so far. 

If you think that a real estate agent taking a quick class to manage your finances might not be the best idea, you aren’t alone.

Jim Crider, CEO of San Antonio, Texas-based financial planning firm Intentional Living FP, told the Texas Real Estate News, “Frankly, this industry is a really easy industry to get in — debatably too easy.” 

He said the danger is that insufficiently trained “real estate planners” may squander the trust they built as agents if they overreach in their new role as financial planners. 

“You’re going to have to equally marry that trust with good communication,” Crider said. “Make sure they don’t get over their skis.” 

Other ideas to fund struggling real estate brokerages also have emerged. For example, Douglas Elliman’s New Valley Ventures investment company allows brokers to borrow up to 75% of a pending commission and charging a 3% to 5% fee every 30 days. 

Residential real estate companies aren’t just trying to counter a lack of houses on the market but also a predicted substantial drop in prices. The chief economist at Pantheon Macroeconomics told the New York Post that home prices could fall by 20% through mid-2023. 

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Featured photo by Austin Distel on Unsplash