As the calendar flips to 2023, many housing experts continue to speculate on the state of homebuying and selling. After a record-setting year in 2021, when homes sold within hours of being listed, the market cooled drastically in 2022 as mortgage rates rose.
It can be difficult to predict what’s next in real estate, but one of the best ways real estate agents can protect themselves from dramatic fluctuations in the market is to find a niche. It is time to identify and specialize in a particular type of property or buyer.
There are no guarantees, but finding a niche can help agents gain expertise, which they can leverage into a more lucrative career.
1. Rental and vacation homes
The National Multifamily Housing Council noted that 43 million U.S. households are renters, with 36% living in apartments. In combination with the vacation rental industry, this niche includes standard single-family homes and multifamily apartments, as well as:
- Room rentals
- Full-service apartments
- Student housing
2. Luxury homes
Selling high-end homes to the uppermost tax bracket can be lucrative but difficult to break into. The people with the most money often have the most specific wishlists, and you’ll need a limitless supply of patience, resources and expertise in the luxury space.
It’s also important to note that luxury home sales are just as uncertain as any other type of home. At the end of 2022, sales of the most expensive homes fell more than 38% — the sharpest drop in history.
3. Flipped properties
Property flippers have very specific needs. Their goal is to pay as little as possible in fees and commissions and sell at the highest price so they can invest the profit into another property. For real estate agents, this niche generates steady work if they can help buyers locate distressed homes and sell the flipped properties consistently.
4. First-time homebuyers
If you don’t mind hand-holding and explaining the basic principles of real estate transactions, first-time homebuyers are a great niche for you. With millennials — the largest demographic group in the country — in their prime years for home buying and Generation Z entering the market, there’s a need for real estate agents who can walk these buyers through their first home purchase.
5. Architecturally unique homes
Love Gothic details? Pine for a lovingly kept Craftsman bungalow? Or do you prefer to wander the halls of an old Victorian? These architecturally unique homes need a champion who can find buyers with the same level of appreciation. If you’re planning to specialize in a specific type of architecture, you’ll need to make sure there are plenty of those homes to work with in your area.
6. Specific ZIP codes
In the ’90s, the ZIP code 90210 represented all things luxurious and decadent in California. It showed the power of five numbers to dictate a lifestyle and economic status. Today is no different.
Your niche doesn’t need to be dedicated to the wealthy, though. Consider:
- 14618: Rochester, New York
- 37604: Johnson City, Tennessee
- 02760: North Attleboro, Massachusetts
Homes in these booming markets sold in 10 days or fewer in 2022.
7. Historic homes
Although some buyers romanticize the idea of owning a historic home, the reality can be much different. Many of these homes are protected by specific codes that prevent certain changes to the interior and exterior.
However, there are purists who love the idea of stopping time in their home, and they need a real estate agent who can walk them through the particulars of owning this type of property.
8. Type of buyer
Specializing in a specific type of buyer is another potentially lucrative niche. Agents might want to focus on wealthy buyers or investors in private property or commercial real estate with or without investment property loans.
Another possible niche is buyers who need creative financing, such as rent-to-own financing or owner financing. This is a way to help those who have credit problems afford a home of their own.
9. Foreclosures
Foreclosures and real estate owned properties are owned by the lender after a sale has failed or a borrower has defaulted on the mortgage. Once the bank takes ownership, its goal is to recoup as much of its loss as possible.
This can be a highly competitive and challenging real estate niche, but once you understand the market and property values in the area of a foreclosed home, the return on your time can be considerable.
The best way to get started in this niche is to work with a company that understands this type of real estate and has experience buying and selling.
10. Situational
Situational real estate transactions occur outside of “normal ” sales. These might include short sales, relocation sales or sales of an inherited home.
In some cases, these transactions are sensitive and require a delicate touch and a deep understanding of real estate law and tax codes. Once you gain experience in these areas, your services will be in high demand.
11. Communities
Some communities prefer to have one real estate agent represent every home in that community. That means you’d work with buyers and sellers on transactions in a specific development.
Gated communities and retirement communities are two subspecialties of this niche. Both will typically attract a specific buyer — one who is looking for a set of amenities and doesn’t mind paying a homeowner’s association fee to maintain a certain level of security and aesthetics.
12. Outdoor amenities
If you love to hit the slopes, lace up your hiking shoes or spend long days on the water, there’s a niche for you. Realtors who specialize in the outdoor amenities niche might focus on:
- Lakefront homes
- Mountain homes
- Oceanfront property
- Farms
- Vacant land
Some of these homes have different property tax, zoning and development rules. If you decide to focus on a specific outdoor feature, it’s critical that you understand the unique requirements of each.
Luke Babich is the Co-Founder and COO at Clever Real Estate, the nation’s leading real estate education platform for home buyers, sellers and investors.