Real Estate Industry Overview 101 & Customer Life Cycle (09/23)
This document provides a general knowledge of the real estate industry as a whole and provides an overview of who your clients are in the real estate industry.
Audience: 2-10 HBW employees (Internal Use Only)
1. Real Estate Industry Overview
Main Segments
The main segments of the real estate sector are residential real estate, commercial real estate and industrial real estate.
- The residential sector focuses on the buying and selling of properties used as homes or for non-professional purposes. Residential is the segment in which we sell warranties.
- The commercial sector consists of real estate used for business purposes; common types include retail and office space.
- Industrial real estate is comprised of properties used for manufacturing and production: factories, plants, etc.
Residential Real Estate
In residential, we have two main sides of business – New Home and Resale. AEs are primarily involved with the resale business.
What type of homes can we put a home warranty service agreement on? The answer is Resale. The most common category is single-family homes. There are also condominiums, townhouses, duplexes, and quad-plexes.
2. Industry Demographics
The more you know about industry statistics, the more you can focus and adapt your selling style based on the different types of market.
Industry Demographics*
- Over 3 million active real estate licensees in the United States
- Not all licensed sales agents are REALTORS®
- 67% are licensed sales agents, 21% hold broker or associate broker licenses
- Median experience: 8 years
- 79 %of REALTORS® were very certain they will remain active as a real estate professional for the next two years
- Median gross income: $54,330/year (an increase from $43,330 in 2020)
- Median number of transaction sides: 12/year
*Source: NAR Quick Real Estate Statistics
3. 2023 Real Estate Forecast
- 5.64 million homes sold in 2020
- Existing homes sales – down 5.9% from June and 20.2% from 1 year ago
- Median home price home sales price rose at a slower pace compared to the prior quarter (78%)
- 87% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69% in 2001
- First-time buyers made up 34% of all home buyers, an increase from last year's 31%.
- Most recent buyers who purchased new homes were looking to avoid renovations and problems with plumbing or electricity at 36%. Buyers who purchased previously-owned homes were most often considering a better overall value at 38%
4. Overview - Clients and Prospects
At a glance, these are your clients and prospects:
- Real Estate Office Champions/Influencers
- The people in the office that we want to connect with are the receptionist, coaches, trainers, and office manager.
- Real Estate Affiliates
- This list includes Lenders, Home Inspectors, Title Companies, etc.
- Title companies – Title companies are used in many states to close real estate transactions. They are paid fees by the seller and buyer to facilitate the closing of a home and file the proper paperwork with the correct parties in the country, state, etc. Closing is often when a home warranty is paid for by one of the parties of the transaction. In some circumstances, a home warranty may even be added at the closing table. So, having relationships with title representatives is a must for any successful AE.
- Buyers and Sellers
- Buyers and Sellers - Homeowners – Account executives often sell to real estate agents to then sell to their buyers and sellers. At times, an account executive may have conversations directly with the homeowner which could be the buyer of a resale home or a seller of a resale home.
- Real Estate Agents
5. Who Are Your Main Clients?
Account Executives' main clients are real estate agents. Real estate agents are licensed at the state level. Different states may use different terms to refer to real estate agents (See example below). Most states have two levels of licensing. One level being for employing brokers that may sponsor agents and take responsibility/liability for the agents’ actions and their business. The second level that all agents usually start at is for non-employing agents that can only conduct their own business while sponsored by an employing broker.
For example, in the state of Texas, employing brokers are called “Real Estate Brokers” and non-employing agents are called “Real Estate Sales Agents” while in Colorado, employing brokers are called “Brokers” and non-employing are called “Salespeople”. All account executives should learn their local lingo.
It is important to know these two levels and the different issues they may face. Sometimes, it is good to know the employing broker first as they control certain aspects of the day-to-day business of the office and can be connections to making presentations in office. Knowing the non-employing brokers is also important yet a different focus may occur because these are the people that are directly interacting with buyers and sellers to put home warranties on their home.
- FYI… Not all employing brokers sponsor other agents and may even be with a large office where they have chosen to not have the liability of being independent.
Real estate agents of all types usually represent clients in two ways. They are either the listing agent representing the seller of a home OR they are the selling agent representing the buyer of a home. In rare cases, something can be a dual representative and be the agent for both the buyer and seller on a specific transaction. In either case, we can help the agents with our products either by adding a seller warranty or a full warranty for the buyers.
Here is a recap of your clients:
- Real Estate Brokerages
- Real Estate Offices
- Real Estate Agents (Broker and Agent level)
- One level being for employing brokers that may sponsor agents and take responsibility/liability for the agents’ actions and their business. The second level that all agents usually start at is for non-employing agents that can only conduct their own business while sponsored by an employing broker. It is important to know these two levels and the different issues they may face. Sometimes it is good to know the employing broker first as they control certain aspects of the day-to-day business of the office and can be connections to making presentations in office. Knowing the non-employing brokers is also important yet a different focus may occur because these are the people that are directly interacting with buyers and sellers to put home warranties on their homes.
- Listing Agents
- Selling Agents
- Dual Agents
- Real estate agents of all types usually represent clients in two ways. They are either the listing agent representing the seller of a home OR they are the selling agent representing the buyer of a home. In rare cases, something can be a dual representative and be the agent for both the buyer and seller on a specific transaction. In either case, we can help the agents with our products either by adding a seller warranty or a full warranty for the buyers.
- Where can you find out what agents are called in your state? Answer: The local real estate associations or state licensing board.
6. Your Lead Generation Business Strategy (Your Prospect Funnel)
Based on recent National Association of Realtors (NAR) Quick Facts:
- Over 3 million licensed real estate agents in the U.S.
- Average of 8 years experience
- Most REALTORS® worked 35 hours per week in 2021.
- Average agent closed 12 closed transaction sides/year*
- Average annual income - $54,330
- 79% of REALTORS® were very certain they will remain active as a real estate professional for the next two years.
With so many offices, agents and transactions, how do you identify the most vital, successful few ?
It all comes down to your lead generation strategy. Your lead generation strategy should be focused on filling your funnel with those prospects who are real estate leaders and will give you the most ROI.
Here are several questions to help you evaluate your prospects:
- Your Territory – What is the geographic area, serviceable areas?
- What are the Top Brokerages in your territory?
- What are the Top Offices in your territory?
- Which brokerages, offices and agents are your current clients?
- Where are you currently getting most of your business?
- By zip code
- By brokerage/office
- Your current PKC Offices
7. PKC Offices - Office Scoring Sales Strategy
Once you've done your evaluation, it's time to categorize your offices as one of the four below:
- C = Committed = Formal Relationship (AP = Advertising Program).
- K = Key = Solid relationship and support with office leadership.
- Consistent group presentations and training.
- Provides roster, Limited warranty partners.
- P = Penetrate = Potential for a relationship with leadership.
- Occasional group presentations and trainings.
- Warranty potential worth investing in.
- Full access to display service agreement and visit the office.
8. Top Producer Market Share Report
Be sure to review the Top Producer Market Share Report, available through your local MLS/Board of Realtors. Ask yourself these questions:
- Which of these agents are currently giving you business?
- Which will you target for future business?
9. Office Market Share Report
Also review the Office Market Share Report, available through your local MLS/Board of Realtors. For the last 12 months, it displays the total closed units. Ask yourself these questions:
- Which of these offices are currently giving you business?
- Which will you target for future business?
10. Residential Real Estate Market Trends
Where can you find out information about the real estate industry, market stats and recent articles you can use in your sales discussions?
- Local Realtor Boards and Associations
- Women’s Council of Realtors (WCR)
- Local Board (MLS, Real Estate Association)
- National Association of Realtors (NAR - https://www.nar.realtor/)
- America's largest trade association, representing 1.3 million members, including NAR's institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries.
- Our membership is composed of residential and commercial brokers, salespeople, property managers, appraisers, counselors, and others engaged in the real estate industry. Members belong to one or more of approximately 1,200 local associations/boards and 54 state and territory associations of REALTORS®.
- The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
11. Our Three Channels of Business
2-10 Home Buyers Warranty has three “channels” to which we advertise to gain business. All three channels of business feed our Homeowner Sales Extended & Renewals teams.
- New Home – Builders.
- All questions regarding new home sales can be directed to NHSalesRequests@2-10.com.
- Resale – Real Estate Agents, Buyers, and Sellers at the time a home is purchased.
- DTC – Existing homeowners.
- This channel focuses on homeowners through DTC and renewals.
- There is a group that contacts your buyers after a year to encourage them to renew.
- Also, we have a whole group that reaches out directly to homeowners found online through leads.
12. Customer Life Cycle
The Resale Customer Life Cycle helps connect the dots and learn about 2-10 HBW as well as the warranty service agreement business. Every department at 2-10 HBW plays a role in helping support real estate professionals service their buyers and sellers.
Product to enrollment - The image below represents the part of the customer life cycle that starts with product and takes it through enrollment.
After enrollment (claims side) and through renewal - The image below represents the part of the customer life cycle that starts after enrollment (claims side) and through renewal.
Disclaimer: This information intended to be solely informative in nature, and does not modify, alter, amend or otherwise affect in any way the terms of any Service Agreement or Warranty Coverage. Please refer to the Home Warranty Service Agreement and/or New Home Builder Warranty Booklet applicable to your specific home for all coverage details, procedures, rights and obligations. 2-10 Home Buyers Warranty is a family of companies with a mission to improve the experience of homeownership. As a Provider of Home Warranty Service Contracts, 2-10 Home Buyers Warranty is: 2-10 HBW Warranty of California Inc. in California; Home Buyers Warranty Corporation VI in Florida; 2-10 Home Buyers Warranty of Virginia, Inc. in Virginia; 2-10 Home Buyers Warranty of Oklahoma, Inc. in Oklahoma and Home Buyers Resale Warranty Corporation in all other states (OR Lic # 202003). As the Warranty Administrator for New Home Builder Warranties, 2-10 Home Buyers Warranty is Home Buyers Warranty Corporation III in New Jersey and Home Buyers Warranty Corporation in all other states.