Why Ancillary Services Are Essential for Brokerages
Real estate brokerages are facing a margin crisis. Industry-wide profit margins have steadily eroded during the past five years, with some estimates suggesting average net margins have dropped to below 3% for full-service brokerages. The culprit? A combination of commission compression, agent-centric splits, rising operating costs, and intensified competition from new entrants and models.
To survive — let alone thrive — in this environment, brokerages must move beyond relying solely on commission income from sales for profitability. The strategic imperative is clear: ancillary services are no longer optional — they are foundational.
The Math Behind the Mandate
Every home transaction represents a bundle of services: financing, title and escrow, homeowner’s insurance and, increasingly, property management, warranty and moving support. Yet, many brokerages leave this value on the table. The average brokerage captures just a fraction of the available revenue from a real estate transaction — often missing out on thousands of dollars in potential margin per deal.
We hear from large, national brokers that mortgage attachment rates can range from the abysmal (<5%) to the 40% range. If a brokerage can increase capture of mortgage, title and insurance, they can add hundreds of dollars of gross profit per transaction. Multiplied over hundreds or thousands of transactions, this can swing a brokerage from break-even to healthy profitability.
The message is simple: brokerages already generate the demand. By structuring and optimizing their in-house or affiliated service offerings, they can finally capitalize on it.
Why Most Brokerages Fail at Ancillary
Despite the compelling business case, the vast majority of brokerages are falling short. Even those with joint ventures or affiliated business arrangements in place are failing to achieve consistent referral, attachment and conversion rates. Why?
Lack of leadership alignment. Core services are often treated as an afterthought, delegated to a siloed department or external partner, rather than being embedded in the brokerage’s strategic vision.
Poor agent engagement. Agents remain unconvinced of the value, don’t understand how to introduce the services, or fear running afoul of RESPA compliance. Many don’t feel culturally or financially incentivized to participate.
Operational disconnects. There are no standardized workflows to guide when and how clients are introduced to service partners. Lenders, title reps, and insurance providers often operate outside the brokerage’s daily rhythm, resulting in missed opportunities.
Inadequate performance tracking. Brokerages rarely have the systems to track capture rates, lost opportunities or service performance at the agent or office level. If you can’t see it, you can’t manage it.
A Bifurcated Blueprint: Launch vs. Optimize
At T3 Sixty, we’ve developed a consultative framework tailored to the two major categories of brokerages we encounter:
The Launchers: Brokerages that currently do not offer core services but know they must.
The Optimizers: Brokerages with existing services in place — joint ventures, franchises or wholly owned subsidiaries — but with low attachment rates and poor ROI.
Each path demands a distinct approach, but the end goal is the same: driving capture and improving profit per transaction.
It’s Not Ancillary — It’s Essential
One of the key mindset shifts required is to stop thinking of these services as “ancillary.” When embedded correctly, they are core to the consumer experience and central to the brokerage’s long-term sustainability.
As the industry continues to evolve, brokerages that control more of the transaction ecosystem will not only generate more revenue — they will deliver a smoother, more reliable experience for the consumer and the agent. In today’s market, that’s a strategic advantage no one can afford to overlook.
The Technology Gap
Even when the intention is there, many brokerages lack the tools to track how ancillary services are performing. That’s why we advocate for the implementation (or optimization) of tech solutions that centralize visibility:
Referral tracking tools
Agent dashboards with attach rate and referral metrics
Alerts for unconverted referrals or stalled transactions
Real-time status views for agents on mortgage/title/insurance progress
Without visibility, accountability is impossible. And without accountability, improvement is elusive.
A Call to Action for 2025
The market has spoken. Brokerages can no longer depend solely on sales volume or rising home prices to carry their margins. With transactions down, commissions compressed and agents demanding more, the old model no longer holds.
Ancillary services — when launched and optimized correctly — offer a proven and scalable way to regain profitability and deepen consumer relationships.
At T3 Sixty, we’re working with brokerages every day to build the next generation of integrated, high-performing, margin-strong real estate businesses. If your brokerage is ready to stop leaking margin and start capturing opportunity, we’re ready to help.