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.
Farm and ranch specialists have long been quite successful in the real estate business. It is important to understand the specific buying requirements and motivations of prospective buyers and sellers. Generally, the property size and price are 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 building pace continues, the area you have to cover will inevitably move further out from the city and possibly your office.
Vacant land in some areas commands a higher commission percentage, though this is decreasing in frequency. As land prices and values have increased, few validations exist for higher commissions. The listing and transaction process is significantly simpler and there are no structural inspections, floor plans, or insurance issues to address. So commissions have largely leveled off with other property transaction commissions.
Residential property is by far the most popular with both new and experienced agents. That’s no surprise—given the 2010 US Census shows more than 116 million occupied housing units.
Real estate agents further specialize in types of homes. These include new construction, condominiums, separate homes, duplexes, rental properties. Then there are Real Estate Owned properties (REOS) which are properties generally owned by a bank, lender, government agency or loan insurer as a result of foreclosure and failure to sell at foreclosure auction. Rounding the types out are high-value homes, vacations homes, and more. There’s plenty to go around.
Whatever route 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. Multi-generational properties are growing in popularity. 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 hone your expertise.
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 valuationexperience, it’s better to enter this specialization carefully and after building experience in the undeveloped land or residential property sectors.
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 transactions.
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.