4-minute read Updated on December 1, 2023 Published on June 22, 2023

It’s no secret that running a brokerage is hard work. If it were easy, everyone would do it! This is especially true for broker/owners, who are facing a fast-changing, unpredictable landscape with interest rate uncertainty, low inventory, and the rise of AI. But broker/owners, you aren’t powerless! There are 3 profit levers you can start to pull now to help you pad your margins, improve the customer experience, increase your revenue, and even grow your team in the months to comeall while setting yourself up for long-term success. Read on to learn more.

Boosting brokerage profitability

On day 2 of the recent T3 Leadership Summit, a panel of T3 Sixty VPs discussed how small tweaks can have a big impact on long-term profitability (and success). Let’s take a look at what levers they recommended that brokers pull, and how you can take the first steps toward leveraging each one to increase your margins and make your business more resilient in the face of uncertainty.

Top tips to improve brokerage margins

  1. Optimize technology spending
  2. Add new revenue lines
  3. Recruit more agents

Optimize your technology spend

Technology is becoming an increasingly important element in our lives. Broker/owners who fail to successfully integrate technology into their business will be increasingly edged out by those who do. This economic reality means that to a certain extent, most brokerages have started to embrace technology. But as Michael Phelan, VP of Technology Consulting at T3 Sixty pointed out during the panel:

“Companies are great at buying tech and terrible at supporting tech.”

What does he mean?

In many cases, brokerages have invested in dozens of shiny new toys that do not provide a good return on investment. We’ve discussed how to measure real ROI (and even shared several unconventional ways to determine your ROI) and provided tips on maximizing brokerage ROI, too. But too many brokerages are investing heavily in areas that aren’t necessarily providing the return they’re seeking. These include middle-of-funnel solutions (like client communication platforms, listing presentation, showing solutions, etc.) that only account for a comparative sliver of revenue. Don’t get us wrong, these platforms are important for brokerages, but if you could spend $1 elsewhere and get $2 back, wouldn’t you want to spend more there?

So, where should broker/owners invest their tech budgets?

Broker/owners should consider where a minimum investment will have a maximum ROI. This means looking at the following to identify where a little money would go a long way:

  • Most time-consuming (read: time-wasting) processes
  • Top-of-funnel solutions (e.g., lead gen) that create more business
  • Workflows or tasks that are primed for money-saving automation

Sometimes, it can be helpful to have an outside opinion. If you’d like a little help, consider scheduling a free, no-obligation tech stack audit to see what’s working, what could use an update, and what you can eliminate.

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Add new revenue lines

It’s as simple as that: find ways to add more revenue while minimizing added costs, and you’ll find that your margins are more comfortable. Adding additional services can also help you provide a more seamless, end-to-end customer experience. But which kinds of services could you add? Here are a few ideas:

Add ancillary services, like mortgage or title

There is a major opportunity to add services to your offering that home buyers and sellers needsimply by partnering with providers of those services. These include:

  • Mortgage
  • Title
  • Home warranty
  • Home insurance
  • Inspections
  • Staging
  • Photography and videography

Refer value-added service providers for before and after the transaction

Everyone has a hard time finding people they like to help them maintain their most precious investment: their home. You and your team are in a unique position to help refer the best in the business and potentially earn a finder’s fee or commission:

  • Interior designers
  • Plumbers
  • Roofers
  • General contractors
  • Landscapers
  • Movers
  • Property management

Monetize your website

With the right website, you can create opportunities to cross-sell the aforementioned services organically through ads. You can also partner with third-party ad providers to place relevant ads that augment the user experience, rather than detract from it. ValleyMLS was able to do just that with their website. To learn how, read more in our customer story.

Want help maximizing the ROI of your brokerage website?

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Recruit new agents

It might sound counterintuitive, but adding new agents to your team is one of the best ways to improve your margins. Why? Commission compression is one of the biggest reasons broker margins are razor thin. And the more experienced the agent, the likelier their commission split will be in their favor, since brokers usually need to make a tradeoff: top performers bring in more sales, so to promote retention, they get to keep a higher fixed split (or move to a graduated split).

Everything you’ve ever wanted to know
about real estate commission splits

Read Our Essential Commissions Guide

The advantage of hiring newer agents is that they need more support, and since they have less experience, will accept a split that is more advantageous for the brokerage. However, in exchange, brokers should be prepared to provide incentives to attract and retain them that can be rolled into their overhead (so they don’t create more added costs):

  • Agent websites and CRM
  • Free leads
  • Coaching
  • Digital marketing tools

Real estate commission split management made easy

With agents at your brokerage on different splits, plus the potential for desk fees and more, you’ll have a lot to keep track of. To take the hassle out of managing your splits, ditch your spreadsheets and consider using the most flexible and customizable commissions solution in the industry, with a virtually infinite number of different splits you can configure for individual agents, agent teams, and more. With two-way TMS and QuickBooks integrations, you can add it seamlessly to whatever tools you’re already using.


Download the Feature Sheet

Action these profit levers today with help from Constellation1

If you’re looking for a true partner that’s in the business of maximizing your business, you’ve come to the right place. We pride ourselves on finding the best solutions for our clients. A free tech stack audit is the perfect way to have one of our tech experts look at your tools and offer actionable recommendations you can start leveraging right away. To learn more and request your audit, click below.


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