The riches are in the niches!

I’m not sure who was the first to come up with that expression, but I first heard it from Pat Flynn, a great resource for small business people and online entrepreneurs (his book “Will It Fly” is a good one for new agents!).

This isn’t a list of how or why to choose a real estate niche. You can check out other resources here, here, and here on the value of niching down.

Instead, I want to list the major real estate niches and point you in the right direction to start targeting your business for each!

List of Niches

By Type of Property

• Luxury
• Multi-Families
• Commercial
• Condos
• Age Restricted
• New Construction
• Farm and Ranch
• Vacation Home
• Environmentally Friendly
• Waterfront Properties
• Historic Districts

By Type of People

• Foreign Language / International
• Investors
• Veterans
• Social Groups
• College Kids
• Physical Disability

By Type of Situation

• Short Sales
• Bank REO / Foreclosures
• Corporate Relocation
• Probates

By Geography

Real estate is naturally a niche on account of being all about location, location, location! A New York agent is not competing for your customers in Tyler, TX. But chances are you aren’t the only agent in your town, so you may benefit from getting even more hyperlocal. Farming a specific geographic area, or focusing on one of the smaller satellite towns in your market can pay dividends as you become known as a neighborhood expert. There’s really no shortage of geographic niches.

By Type of Property

Luxury

There are different tiers of what a “luxury” agent might mean. In my own market, the top 10% percentile of homes sold begins at $263,000. That’s barely over the national average home sale price. Agents in my market who target the $300,000s and $400,000s are “luxury agents” but our standards, but probably not anyone else’s. Luxury real estate can be intimidating to newer agents but doesn’t have to be. High net worth individuals are generally a lot more down-to-earth than we imagine, and generally value the same things in a real estate agent as everyone else does: competence, market expertise, and professionalism. If you have those qualities, there is no reason to be bashful about targeting higher-end listings. Here’s a great video series of interviews on how some top luxury agents broke into their space.

Example: Anthony Marguleas

Pros:

• Larger commissions per transaction.
• Fewer clients allowing for more personal attention and involvement.
• “Celebrity” opportunities, even if just as a local celebrity
• More likely to survive disruption by new models like the iBuyers or discount brokerages.

Cons:

• Stiff competition not just for other renowned and well-heeled luxury agents, but also other luxury business models like Concierge Auctions.
• Higher expectations regarding the smoothness of the process and marketing production quality.
• Significantly longer days-on-market (DOM) delaying your payday.

Multi-families

Not quite residential and not quite commercial is the world of the 2-4 family residential homes. Duplexes, triplexes, and fourplexes. These are properties that can still be bought with favorable owner-occupant/residential financing instead of commercial financing, while enjoying some of the benefits of real estate rental investing. I strongly recommend building a presence on BiggerPockets if you want to start courting multi-family investors. There are numerous investors looking to “house-hack” a home and ready to buy but not quite at the apartment complex level of investing. Read other BP content. Get engaged in the forums and do some guest posts about multi-families in your area. You’ll get attention in no time.

Example: The 2-4 Unit Specialists

Pros:

• Oftentimes sales are higher than the local area’s median price point.
• Is a natural place to eventually migrate to bigger deals like apartments.

Cons:

• A decent volume of duplexes and fourplexes isn’t available in every market.

Commercial

Commercial real estate isn’t really a niche. It’s an entire career. In my experience, it requires a full commitment and dedication both to get established and to learn the craft. I wouldn’t consider it a “niche” unless you are in a very small market or are trying to transition into commercial real estate entirely. The NAR Certified Commerical Investment Member (CCIM) designation may be a good place to look for education on commercial properties and getting started.

Example: Peloton

Pros:

• Very high price points and commissions per transaction.
• Less likely to face significant competition in the near term from new business model disruptors.
• Often don’t have to be a Realtor to do your job.

Cons:

• Very long multi-year sales cycles meaning a distant payday awaits, if you ever close at all.

Condos

Depending on your market, condos may be your bread and butter whether you elected it or not. Focusing on condos is really similar to farming. Instead of picking a neighborhood to farm, you’re picking a single building. Unlike a suburban subdivision with heterogeneous homes, condos are often very similar – same floor plans and features. Selling a condo is all about acquainting yourself with the amenities. Here’s a good article about what to expect in the condo niche.

Example: The Condo Kings

Pros:

• In larger cities, you can super niche down into a single building or few buildings for all your business.
• Condos often target businesspersons and young professionals, a high turnover demographic.

Cons:

• Depending on the building, it might be ideal to live in the condo you are selling

Age-Restricted

You are not allowed to discriminate based on age! Unless you are in an age-restricted neighborhood for homeowners aged 55+. If working with that demographic appeals to you, then go find your nearest Sun City The Seniors Real Estate Specialist designation is available and advisable!

Example: Brian Rugg

Pros:

• Higher median price points

Cons:

• Low turnover. Most of your buyers and sellers are buying their forever home, and with the wonders of modern medicine, that could be a long time!
• Competition. Age-restricted niche agents are notoriously territorial. Some prospects may prefer you live in the neighborhood as well.

New Construction

Niching into new construction might mean either representing new construction buyers, or representing the builders themselves. There are different levels of involvement you can pursue. Many tract builders may just need a listing agent to get their homes in the MLS and your reward is a sign in the yard and flat fee. Other builders may be opportunities to be much more involved, helping walk buyers through contracts, selections, and more. The top producing agent in America, Ben Caballero, gets his business from builders. Here is his advice for working with them!

Example: HomesUSA.

Pros:

• High price points
• Homes in pristine condition meaning there should be nothing falling out of inspection.
• Free advertising getting your sign in front of homes on the listing side

Cons:

• Oftentimes more selective buyers that require an agent with sharp attention to detail.
• Long sales cycles mean you may be 6-12 months or more before closing a commission.
• Builders can be a time hog on the listing side, often for discounted commissions.

Farm and Ranch

The complete opposite of condos, and not just because one is urban versus rural: no two farm and ranch deals are alike. Including horses, agriculture, and just anywhere rural! You’ll want to become an expert on ag exemptions, capital gains taxes and exclusions, farm equipment, irrigation, and more. Get started at the Realtors Land Institute.

Example: Hill Country Pros

Pros:

• Generally high or very high price points.

Cons:

• Deals can be complicated.

Vacation Home

Similar to luxury properties are vacation homes, but an emphasis on timeshares. Including ski resorts, oceanfront property, cabins in the mountains, and anywhere people often visit! You’ll want to become an expert on timeshares, home security, and short term rentals. NAR has the Resort and Second-Home Property Specialist designation available.

Example: Sato Real Estate

Pros:

• Growing related niche of Airbnb rentals

Cons:

• Long days on market
• Oftentimes working with out of state clients

Environmentally Friendly

Green living can be a rewarding niche not just financially but personally. With modern technology, energy efficient and eco-friendly homes are becoming more accessible and prominent, especially in markets like California. Folks interested in this niche should start with NAR’s Green REsource Council designation.

Example: Pet Planet Realty

Pros:

• Growing market of environmentally conscious Millennial buyers.
• Buyers tend to be higher price points.

Cons:

• Areas where this is popular also tend to be highly regulated and difficult to do business in, e.g. California

Waterfront Properties

Again overlapping the luxury home and vacation home niches is the waterfront niche. You’ll want to brush up on intercoastal waterways, flood insurance, and advising homeowners on water level fluctuations.

Example: Waterfront Realty Group

Pros:

• Higher median prices.

Cons:

• Significantly longer days-on-market (DOM) delaying your payday.

Historic Districts

Different states treat historic districts differently, but most states have areas designated as historic and impose additional rules on home sales in the area. Acquainting yourself with those rules and helping homeowner navigate them is a great way to set yourself apart.

Example: Circa Old Houses

Pros:

• Lower competition as there aren’t many agents distinguishing themselves this way.
• Often higher price points.

Cons:

• May have to have a wide geographic footprint beyond a single city
• Often more difficult deals.

By Type of People

Foreign Language / International

It’s unfortunate how few Americans are multilingual, but all the more advantage to you if you are! Note, you don’t have to speak a language other than English. Many international buyers in Western Europe, for example, speak English just fine if that is the part of the world you want to cater to. If your focus is international clients, you should consider getting the Certified International Property Specialist (CIPS) designation.

Example: NYC Chinese Speaking Agent

Pros:

• Difficult niche for non-native speakers to compete with you.
• Can be a countercyclical income source when the domestic economy is slowing
• Usually higher price points

Cons:

• More complicated tax and transaction rules to navigate concerning the buyer/seller’s foreign status

Investors

Working with investors takes a certain kind of agent – a hustler. Find deals, do CMAs, work the numbers, sniff out foreclosures (literally, unfortunately). There are numerous kinds of investors, including in the multi-family and commercial categories discussed above. Single family landlords, flippers, or “house hackers” are some categories to consider. You’ll want to learn about cap rates, 1031 exchanges, and how to dispassionately assess a property’s income potential. I recommend hanging out on BiggerPockets to learn about investing and connect with local investors in the forums.

Example: Dana Bull

Pros:

• Exposure to real estate investing for yourself.
• Repeat deals when working with successful investors.
• Can grow into commercial real estate or other opportunities.

Cons:

• Successful investors often end up bringing the real estate operations in house.
• Often low or very low price points.
• Investors can be very demanding.

Veterans

Veteran communities have a few special needs (and acronyms) that are worth learning about. BAH, PCS, DITY, DD-214s, COE, and, of course, VA loans. If you’ve never done a VA loan, they really aren’t difficult with the right lender. In fact, they are easy. NAR has the Military Relocation Professional (MRP) designation you should absolutely nab. Example: Soldiers of Real Estate

Pros:

• Very stable income buyers with favorable VA financing available.
• A close-knit and highly transient population that can produce a significant volume of repeat and referral business.

Cons:

• Tough competition from agent referral programs like USAA Movers Advantage and Veterans United

Social Groups

Having trouble with work-family balance? Are you passionate about a hobby outside of real estate? Marry the two! Church, school, clubs, hobbies, fantasy football – you can dive into these social groups and connect with customers not on a real estate level but on a completely separate field. Sometimes, the hobby can translate into special real estate needs, like if you are in a boating community. Another example like church is a religion like Islam, which has a specific type of mortgage financing that is consistent with their faith.

Example: Steel Horse Realtor

Pros:

• Combine your passions and make money doing it.
• Close relationships with clients can turn into referrals.

Cons:

• There can be tripwires when mixing work and friends

College Kids

If you are in a college town, there’s a chance that niching into college housing might be worth your while. Many of these kids have parents paying for housing, or splitting the bills between themselves for shared housing. Establishing yourself as an expert in the college housing market during a turbulent time can bring in many rewards!

Example: West Campus Living

Pros:

• Lots of turnover and transaction volume

Cons:

• Most business is working with renters which generally is a significantly smaller payday
• Competition with apartments and campus dormitory housing
• Highly seasonal

Physical Disability

The Americans with Disabilities Act (ADA) includes numerous real estate provisions that the average agent needs to be familiar with. But you can take it a step further and really learn about the needs of our disabled. Things like a real estate website for the blind, learning housing needs for different types of disabilities, and becoming an advocate for this underserved population can be a very rewarding niche, both financially and personally.

Example: Karen Barbour

Pros:

• Often higher price points if it’s a buyer who needs, for example, a custom home for their accommodation

Cons:

• Deals, homes, and buyers/sellers’ needs can get very specific and complicated

By Type of Situation

Short sales

“Short sales” is a dirty word in real estate, conjuring for most agents an interminable morass of haggling with a mercurial bank on a deal that may or may not go through. But if you can get good at it, not only will other agents bless you with their referrals, but you are doing some real good for homeowners who are in difficult circumstances. Consider the NAR Short Sales and Foreclosure Resource designation.

Example: Oyezz Real Estate

Pros:

• Lots of referral opportunities as many agents don’t want to work with short sales
• Extremely difficult niche for the big industry trendsetters like iBuyers to disintermediate because homeowners don’t have the equity necessary to indulge those programs

Cons:

• Extremely long transactions that don’t always close
• Often working with below-median market values

Bank owned / Foreclosures / REO

Are the good times coming to an end and a recession finally due? Still have PTSD from the 2008 crash? Cozying up with a bank as their listing agent can be the solution for you. As an REO specialist, you conduct BPOs for the asset manager and then list and manage the properties for sale. Guaranteed listings and quick turnover, but the small price points and commissions are a negative.

Example: Bluebonnet Realty

Pros:

• Guaranteed and steady listings with a motivated seller.
• Counter-cyclical business that thrives during market downturns.
• Properties often sell quickly meaning a short turnaround.
• Work with the same seller/asset manager.

Cons:

• Low price points.
• Often involves lower commissions.
• Broker participation is required; an individual agent generally cannot be an REO agent.
• Potential to be disrupted if banks choose to use auction services or sell their properties directly to third parties like institutional investors

Corporate Relocation

When companies are moving their employees, they often don’t want those employees distracted by the hassle of the move. That is why they have relocation benefits and take care of the buying and selling of their homes for them. That means they need an agent! If interested in this niche, you may want to consider the Certified Relocation Professional (CRP) Designation.

Example: Moderna Relocation

Pros:

• Steady source of leads for buyers and sellers
• Often higher than market median prices

Cons:

• Involves chunky referral fees or discounted commissions, meaning you are relying on the volume from a relo service.
• Must get into corporate networks or offices to earn business

Probates

Probates are the legal mechanism for the disposal of a person’s property after they’ve passed away. If a person owns real property like a home, that home will go through the probate process, at the end of which the property is often sold. There are numerous legal nuances to the probate process and an agent familiar with the process can help it go smoother and be an invaluable resource during a difficult time.

Example: Sanborn Team

Pros:

• Easy lead generation
• Listing leads.
• Estate executors are usually very motivated sellers.

Cons:

• Working with grieving families and familial squabbles concerning the estate can be emotionally demanding.
• Increased competition from iBuyers promising hassle-free and instant offers at a relatively modest premium.
• Long sales cycle while the estate executor gets everything legally required complete before listing and selling the home.
• Higher potential for title and estate obstacles during the transaction.

Designations

In case you didn’t detect a theme, there exist quite a few designations and certifications based on prominent niches. It’s worth your time looking through those to brainstorm, and potentially start your journey in your chosen niche!

Conclusion

I think I’ve covered the top niche markets that can sustain a real estate business. No doubt there are more. If you know a successful niche real estate agent, please comment and share below!