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According to SmallBizGenius, a whopping 87% of homebuyers turn first to a real estate agent; but only 68% of these individuals choose the first real estate professional they interview.
Real estate remains a highly competitive sector. As of 2020, over 2 million real estate agents serve the US alone. To have the edge over this increasingly growing competition, you cannot target every home buyer and seller. The bucks are in the real estate niches – specific locations, properties, and audiences that agents target lead generation.
This guide is about why and how to choose the best real estate niche for your passion, skillset, and business goals. It also features a rundown of the eight most profitable real estate agent specialties you can harness in 2021. That said, let's dive in.
Benefits of Niche Marketing for Real Estate Agents
Minimizes Competition
Focusing on a small real estate subset helps you to stand out from the hordes of other agents. You learn more about your target customers and effective ways to address their needs. In doing so, it becomes easy for your prospects to resonate and self-identify with your brand.
Sharpens Your Focus
Being a jack of all real estate trades exposes you to many alternatives that stifle progress. You struggle with setting priorities, finding it hard to choose among the several options available to you.
By niching down, you define your target audience effortlessly. And business-growing decisions fall into place more quickly. Rather than wondering where to get started, you'll be drafting a plan to connect with the specific clients.
Smoothens Your Real Estate Marketing Strategy
As mentioned earlier, niching down in real estate gives you a solid understanding of your ideal clients. This allows you to create an avatar of these clients – what digital marketers commonly refer to as buyer persona. A buyer persona defines your target's income, most prominent concerns, age, dreams and aspirations, and other life aspects. With this understanding, real estate marketing ceases to be a burden because you know the prospects to target and the right message to send to them.
Reduces Marketing Costs
Specialization in real estate helps shave an incredible amount of money from your promotional budget. You stop wasting your money advertising to unqualified leads or uninterested subjects. And instead, you spend less and increase your return on investment by focusing your efforts on a small group of high-intent prospects.
Also, note that some online advertising channels, such as Google Adwords and Facebook ads, require you to get as granular as possible. Otherwise, you get penalized with higher costs per click.
Elevates Your Perceived Value
You become unique to no one when you try to reach everyone. Generalists are common in any industry but are making less money than specialists. Think about professionals like lawyers, engineers, doctors, and contractors. The most successful ones typically focus on a particular field. Real estate professionals are no different.
Targeting a particular real estate subset, you focus on every aspect of it and become an expert over time. Your expertise easily shines through when people consult you, and clients will not hesitate to trust and hire you.
How to Choose Your Real Estate Niche in 2021
A common question that crosses the mind of an agent thinking about niching down is, “How do I find my real estate niche?” Take it easy. Here's a rundown of practical tips for picking a profitable real estate specialty.
Harness the Potential of Underserved Areas
There are plenty of real estate niches in the US and an immense number of real estate professionals competing for the market share. Regardless, there will always be a part of the population or a location that is currently underserved. If you can identify and fill a void in the market, rest assured that customers will keep knocking on your doors.
Discover Your Passion
What are you passionate about in real estate? With what are you conversant? What part of your job do you enjoy discussing? Perhaps, you love home flipping. Or modern, energy-efficient models. The real estate field that crosses your mind when answering these questions is most likely your ideal niche.
Prove Your Knowledge
Your passion is not enough to instill trust and confidence in your prospects. Delve into your community to learn about the people, the area's layout, amenities, safety levels, local businesses, and more.
Focus on becoming a local expert in your niche choice. And distinguish yourself as a trusted information fountain for your target customers. This way, you encourage more prospects to join your discussion and consider your proposals.
Get Local Demographics Right
Analyzing demographic trends is another effective way to discover your real estate niche in 2021. For instance, a surge in millennials, baby boomers, or Gen X in your locality presents an enviable opportunity to develop a profitable niche.
Demographic analysis can also reveal underserved groups in the market. Once you are sure about your findings, focus your marketing on that particular group you'd love to serve.
Determine Your Favorite Client Type
Top-rated real estate agents know that working with clients that best match their skillsets is critical to success. For instance, some agents only serve buyers and do not list properties at all. But still, there are seller agents who list exclusively. If you hate working with buyers, it could indicate that you are happier and more successful working only with sellers. The opposite could be true.
Keep Networking
Shrewd agents don't stop at determining their niches and focusing their online marketing on those specialties. They also connect with people to drive more referrals to their business. As such, take every person you meet or any conversation you engage in as an opportunity to grow connections critical to your career and business growth.
Don't forget to get involved in your community. Participate in donation drives, sports clubs, community support groups, local festivals, and fill your site with information about the neighborhood. By doing so, you cultivate relationships with the community members and market yourself and your business without coming off as being too salesy.
8 Most Profitable Real Estate Niches of 2021
Luxury Homes
The luxury real estate niche looks inviting, with high-end homes typically generating correspondingly generous commissions to agents. Still, fewer customers allow for more personal attention and involvement.
You'll need to find a small, highly targeted demographic with enough capital to purchase or rent mansions, luxury apartments, and other premium properties. Luxury properties also demand a unique marketing strategy, which typically requires more investment by the brokerage agency. But this doesn't have to be intimidating. Wealthy individuals are generally a lot more down-to-earth than you can imagine. And are typically looking for the same qualities in a real estate professional as every client does- professionalism, market expertise, and competence.
Senior Housing
The senior real estate niche has to be the most profitable yet incredibly underserved specialty. There are three critical reasons you should focus on this niche:
- Retirees are likely to be wealthier than young adults, having had decades to settle debts and accumulate personal wealth and assets.
- Seniors make excellent tenants. They don't host rowdy parties and are less likely to maintain a zoo of pets. You also expect minor wear and tear in their homes, meaning maintenance costs are lower.
- Retirees rarely move, which translates to lower costs and higher returns.
Keep in mind that retirees come with unique requirements for safety, convenience, and comfort. They can only resonate with your brand if you can uniquely address these needs. Still, you must be conversant with the federal restrictions governing senior housing in your service area.
First-Time Buyers
Buying a home for the first time is undoubtedly among the scariest life ventures. Being new to the process, first-time buyers come with concerns over virtually every aspect of the transaction. From property conditions, inspections to financing. For this reason, working with these buyers requires excellent communication skills, deep understanding, and a lot of patience. But it's incredibly fulfilling to see the clients' excitement and sense of victory when they receive the keys to their first home.
To excel in this real estate niche, compile transaction and marketing informational materials to help your prospects understand the home-buying process. In the process, see you as their trusted real estate agent.
Historic Districts
Historic homes rank among the most unusual real estate niches. But they reward agents with less competition and higher price points. If you have a passion for or background in architectural designs, this niche is sure to highlight your interest and experience.
To optimize success, find a neighborhood with a large volume of historic homes, and position yourself as an expert in the designs. This goes a long way to help you land significant listings and draw buyers interested in these kinds of homes.
Note that most states have designated historic areas and may impose rules governing home sales in the regions. Walk the extra mile to familiarize yourself with these regulations and help potential homebuyers navigate them to establish credibility and trust for your business.
Vacation Rentals
Vacation rentals can be a successful real estate niche if you are fortunate enough to serve a neighborhood that appeals to vacationers and those looking for getaway properties. Or individuals on temporary assignments. To maximize your opportunity in this niche, you'll need to implement a superb online marketing strategy and offer helpful information to out-of-the-area prospects. You may also need to obtain the NAR's Resort and Second-Home Property Specialist (RSPS) Certification.
For Sale By Owner Properties(FSBOs)
Focusing on FSBOs may seem illogical because you invest your resources in homeowners who have decided not to engage a real estate professional. Even so, this strategy pays off when the sellers struggle with marketing their homes and eventually decide to list with a real estate expert.
Determine if there are enough FSBOs to support a niche in your area of interest. Then call the sellers directly or mail them brochures with tips for marketing their homes. You'll likely be their first call when they see the process's complexity and decide to involve an agent.
Corporate Relocation Properties
Corporate relocation can be a lucrative niche for real estate agents because clients often sell and buy executive-level properties. Moving to an entirely new area, city, or even nation, comes with its share of inconveniences, constantly getting the employees stressed and exhausted. A real estate expert comes in here.
Your job is to educate these clients about the local area and find homes specific to their needs and budget limits. Undoubtedly, you get rewarded incredibly for the extra efforts, taking home over $90,000 a year. Still, corporate relocation is among the few real estate niches that guarantee agents fast turn-over and referrals.
Commercial Properties
Commercial properties serve business purposes. Think about offices, shops, groceries, and malls. Choosing the commercial real estate niche is a prospect that can pay off immensely both financially and personally. It guarantees a steady income flow, longer leases, and a higher return on investment.
But note that commercial properties' prices and demand are heavily reliant on a location's economic activity. You will, therefore, want to pick your service location wisely to ensure profitability.
Specialize in a Real Estate Niche and Generate More Leads for Your Business Today
Focusing on a particular real estate niche in 2021 and becoming an expert can help you build a relatively competition-free career. Choose any of the above specialties using the earlier tips to get an edge and generate more qualified leads for your business.
Need more local marketing tips? Check out The Essential Marketing Guide for Real Estate Professionals
