What do you want to be paid? How hard do you want to work? With what kind of client do you wish to work? These are important questions in determining how you organize your business.

The real estate transaction has become so complex from so many directions that more and more practitioners are choosing to specialize in a "niche." Seniors, non-traditional couples, transferees, singles have taken the place of the nuclear family and each group has a unique list of needs and desires. Homes are offered in a wide range from farmhouses to inner city co-ops, from suburban two-stories to condominiums, and each comes with its own set of considerations. Conventional loans have given way to creative jumbo financing, government sponsored programs, VA loans, and loans with piggy-back second mortgages and PMI payments, all designed to help homebuyers buy the home of their dreams.

Realtors, like everyone else in the nation are on information overload. If a person is absorbing more information in the last 30 years than in the past 5000, it is easy to imagine the effect on Realtors with the advent of the Internet, information software, and other technologies.

Developing a niche could be the only answer to survival. The problem is that once niches have been established, Realtors may not be as comfortable helping those outside of their circle. It takes time and money to develop a niche. Not only does having a special expertise in the marketplace make it easier for a Realtor to market services, it also means they can reduce the learning curve, expense and time they would otherwise devote to capturing a little bit of a lot of different markets.

Every Realtor has had experiences with hooking up with the wrong kind of client - someone who for some reason manages to cost you more than you can earn or reduces your earnings to well below your usual average. And this kind of client often wears an innocent face. It could be a first-time home buyer who calls your office after seeing a home on the Internet, but the home in question is miles away from your "niche" area. Educating this buyer, learning about the distant neighborhood and its amenities, and driving miles and miles to show homes will combine to reduce your commission to far less than your usual take home pay. Is it worth it?

It can be if you are set up to help first time buyers efficiently and effectively. Many Realtors make an extremely lucrative living assisting the first time homebuyer and helping them to their first and second move-up homes down the road. But the reason they can is that they have arranged their businesses to run smooth interference on the first home transaction. They have it all together from assembling the right information packets to keeping toys on hand for young families' little tots in the trunks of their cars.

But if you are firmly entrenched in a different "niche" such as the luxury move-up market, or empty nest vacation home market, helping a first time buyer can not only be awkward, it can be costly. A small home commission will hardly pay for the outward trappings of success that are necessary to attract the luxury market.

The same can be said of some listings that may come your way. Is the home in shape to market? How much does the family owe on the mortgage? Are the sellers unreasonable in their asking price expectation? All of these factors and others will determine whether you will have a listing that will prove profitable or drain your time and energy.

As a Realtor, you have to worry about what your time and marketing efforts cost as well as your profits. Each transaction can be reduced to a dollar per hour basis. Some will make more money for you per hour than others, but some transactions are hardly worth getting into in the first place, unless you need the experience, wish to please whomever gave you the referral, or simply can't say no.

"If you understand your value per hour and how it relates to your average commission check, you can determine the type of people you should be willing to work with," says Realtor Dirk Zeller, president and head coach of Real Estate Champions. "You may not be able to help people in a certain price range or with certain types of housing, but you can refer the customer to someone else who can better meet their needs."

No one wants to walk away from a referral or an easy listing, but you have to ask yourself, are you really the right match for this customer's needs? And is the customer right for your business goals?

First time home buyers do require special attention. Sellers who don't understand the market will take patience. Are you up to the task? If you are, you may have a customer for life.

Sticking to a niche can be profitable. It works well when you are working with your niche clients, but what about those stray clients that end up on your doorstep who don't fit the profile? Is it the right thing to do to help them or refer them to someone who can offer them the specialized services they need? Only you can make that determination by looking to your heart and your bottom line. You may find that you can help more people more effectively by determining from the outset if you are the right person for a particular client.

Adds Zeller, "Realtors need to understand that they don't have to help everyone. It is OK to have a niche market and to specialize in that market. By knowing what kind of client your are looking for, you will invoke the "law of attraction." You will start to see the client you want everywhere."

Published: December 18, 1998

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