In a competitive market like real estate, it pays to think strategically about your career. One of the most fundamental tactics you should consider is finding a niche or a specialty that suits you, your region, and your business goals.
What Are the Primary Categories in Real Estate?
Before we get into various specialties and niches, let's talk about the broad categories real estate professionals typically fall into:
- Residential sales
- Commercial sales
- Property management
These categories are too broad to be considered a true specialty or niche; they're more like areas of practice. Since each area requires a relatively different skill set, most real estate professionals choose one area to focus on. Some certainly make a transition between areas, but it's rare to do more than one at a time.
Residential Real Estate Specialty
Residential Sales Agents (or Brokers) facilitate the sale of single-family homes between individuals or families. Residential real estate is the largest area of practice. It also has the lowest barrier of entry. No college degree required, just real estate pre-license courses.
Commercial Real Estate Specialty
Commercial Sales Agents (or Brokers) facilitate the sale of office buildings, retail centers, and other commercial properties between businesses or real estate investors. The deals are bigger but take longer, and commercial agents are usually expected to have at least a four-year degree in business, finance, or a similar field.
Property Management Specialty
Property Managers aren't in the sales game at all. Instead, they handle the day-to-day business of rental properties on behalf of the property owner. They protect the property owner's investment and manage the financial return.
These properties could be commercial (like stores in a mall) or residential (like apartments in a complex). Property management requires a broker's license in most states. The path to becoming a property manager varies, but most property managers earn a degree and/or special certifications.
Why Choose a Niche?
Each major area of real estate covers a broad range of property types, so agents tend to narrow their focus to a particular specialty or niche. "Niching down" allows you to become an expert in one area. You're also able to conserve marketing resources.
You can target specific keywords for web marketing or focus your mailers on a neighborhood, for example. Specializing also increases referrals by focusing your brand. You'll become known as the go-to for your specialty.
How to Choose a Profitable Niche in Real Estate
You can concentrate on a particular type of property or a particular type of client. Unless you're in a sparsely populated area, you'll probably end up doing both. If your property- or client-based niche is abundant enough, you might consider narrowing your focus geographically.
A geographic niche is when you "farm" a particular neighborhood, development, or part of town by focusing all your marketing in that area. Choosing a specialty isn't like marriage—your focus can (and probably will) change over time. A few things to consider:
- What do you find interesting? What can you get excited about?
- What's geographically appropriate? What exists in your area?
- What exists in your area that no one is marketing to? What are the empty niches?
Examples of Property-Based Real Estate Specialties
A common approach to specializing is to focus on a particular type of property. Here are some examples.
1. New Construction Specialty
New construction homes present a unique set of challenges and considerations in residential real estate. You'll face different problems and pitfalls than resale homes, so it's an area rich in opportunities to become an expert. New construction can also be its own specialty in commercial property, for the same reasons.
2. Luxury Property Specialty
The rich really are different—and so is their real estate. Whether we're talking about residential or commercial property, the luxury market is infinitely, but just as difficult to break into. It requires an entirely different approach to networking, marketing, and mortgaging.
3. Land & Development Specialty
In order to broker sales of raw or developable land, you need to understand a broad range of issues that impact development value, from politics to ecology.
4. Farms, Ranches, or Equestrian Properties
Sometimes commercial (as a land subspecialty) and sometimes residential (for small family operations), properties used for agriculture and/or horse stabling require specialized knowledge to value and market them properly.
5. Green Real Estate Specialty
Green real estate is growing all the time, both in residential and commercial sectors. It requires understanding and enthusiasm for cutting edge green technologies.
Other Examples of Residential Real Estate Specialties
There are many other residential specialties based on property use or unique features. Single-family homes are a popular specialty that often requires niching down. Condos, townhouses, and duplexes present their own challenges, as do mobile homes and parks. Vacation homes or second homes require a unique approach to sales and marketing. Or, you could focus on becoming knowledgeable about special elements like waterfront property, historic value, or smart homes.
Other Examples of Commercial Real Estate Specialties
In commercial real estate, you have specialties like office buildings, industrial property, retail space or shopping centers. Multifamily residences (like apartment buildings or complexes) fall under commercial real estate.
Hotels and various types of short-term rentals present other niches. Then you've got oddballs like self-storage properties, medical complexes, parking lots and garages, or mineral, air, and water rights. There's also business brokerage, which involves selling not just real estate but all the business assets that go with it.
Examples of Client-Based Real Estate Specialties
Another way to focus your practice is to specialize in a particular type of client.
1. Seller Representative Specialty
Agents who focus on clients selling property are known as "listing agents," seller's agents, or seller representatives. Seller representatives exist on both the residential and commercial sides of real estate.
It's a very popular approach. And since not all buyers hire their own agent, you may end up the only agent on the sale—that means more money for you. That's only one of the advantages of being a seller's agent.
3. Buyer Representative Specialty
As a buyer's agent or buyer representative, you're an advocate for the buyer alone. On the upside, that means less engagement time, since buyers are ready to close a deal much faster. On the downside, being a buyer's agent means splitting the commission with a seller's agent, always.
A buyer representative specialty can be residential or commercial. Representing buyers can be a big specialty, depending on your market. You might choose to niche down further. For example, you could choose to specialize in first-time home buyers.
4. Investor Client Specialty
If you specialize in real estate investors, you're dealing with clients who buy, sell, and own property for financial gain rather than an interest in using the property themselves.
Investors may be interested in residential property, commercial property, or both; regardless of the property type, investors will probably prefer a commercial agent educated in business and finance. There are multiple approaches to real estate investing, which provide opportunities to niche down.
5. Demographic Specialties
As Baby Boomers downsize their homes, many agents have focused successfully on their particular needs. You'll also hear buzz about specializing in the particular needs and marketing tactics for Millennials as many of that generation step into homeownership. These tactics seem innocuous enough but beware the legal ramifications of marketing to particular demographics.
Specialization and The Fair Housing Act
When marketing towards any niche, you need to be very careful to avoid violating The Fair Housing Act (FHA), which prevents discrimination based on race, color, religion, national origin, sex, handicap, and family status.
Some states, like California, have their own legislation that protects additional classes. Complying with the FHA can be more complicated than it appears on its face.
Many things that seem like smart marketing (advertising a listing as "family-friendly" or perfect for "empty nesters," for example) are actually against the law. So is trumpeting crime statistics, racial demographics, or potentially even school district rankings.
Accidentally violating the FHA is just as illegal, so you should be conscious of the do's and don'ts. Any method of specialization – whether based on geography, client type, or property characteristics – has potential pitfalls for violating the FHA.
Knowledge is Power
Before you can pick a specialty, you have to tackle your pre-license courses and pass your licensing exam. If you've cleared that hurdle, there's always continuing education requirements.
Our real estate packages let you complete your requirements online and at your convenience. Plus, you'll learn more about fair housing and dip your toe in various specialty topics to see what catches your interest. Start today!
Written and Published by: VanEd