“Most agents nationally are generalists, but they make significantly less money than specialists per NAR research," says Greg Schenk of The Schenk Company. “You need to pick an area that you are passionate about and be the expert in that area to excel."
Schenk’s comment caught our eye, so we asked ourselves, “Is it really better to be a specialist?” If specialists earn more money, should we be encouraging all brokers—or at least our readers—to build depth in one specific area? And how does it vary by market?
The case for specialization is compelling, although it can feel counterintuitive. There’s a feeling of safety that comes from being a generalist. After all, if you specialize, the thinking goes, wouldn’t you significantly reduce your opportunities? If you’re trying to build your business, why would you narrow your options?
But here’s what’s interesting: on a psychological level, people love working with specialists.
Think about the way this plays out in your own life. If a strange rash appeared on your skin, would you prefer to have it looked at by a general practitioner or head straight to a dermatologist?
We turn to specialists because we expect them to have more extensive knowledge in exactly the area we need. This is a very real psychological phenomenon.
Take the case of Google versus Yahoo. Yahoo built a search engine, and then found all these other ways to add value: with sports scores, news, weather, and so on. They thought they would do well by offering people a variety of services. They thought—as we often do—that more was better.
Google intuited something very different about human psychology. So they just focused on building a good search engine. Today, nobody says they’re going to “Yahoo” something, but they “Google” it all the time.
Ogilvy & Mather’s Rory Sutherland talked about this in his TEDxAthens talk, “People believe something that only does one thing is better at that thing than something that does that thing and something else. Google understood that if you’re just a search engine, people assume you’re a very, very good search engine."
Now extend that insight to your CRE career. You may feel safer as a generalist, but look at things from your potential client’s perspective. If they're looking for a top-notch broker in the emerging data center specialty, do you think they’re more likely to go with a broker who handles a little bit of everything or a broker with a deep understanding of data centers? It’s no contest.
Then there’s the changing nature of the broker job description and value proposition. Brokers aren’t just competing with each other anymore, but with new technology and self-service platforms. Clients can find some information on their own, and they want someone who understands the complexity of their individual needs, as well as relevant microtrends and pricing benchmarks. They want someone who can teach them something they can’t learn anywhere else.
The beauty of having a specialty is that it gives clients the added assurance that you know exactly what you’re talking about when it comes to that specialty, and the feeling that nobody else can approach the depth of knowledge and value you can deliver.
There are other advantages to being a specialist. You can:
- Quickly master the ins and outs of your chosen specialty, instead of diluting your learning over several areas at once.
- Gain a much deeper understanding of that specialty, which means you can offer more valuable, in-depth data and insights to clients.
- Make your marketing more powerful by honing in on very specific selling points you offer clients.
That said, we’ll concede that the specialist versus generalist debate may never be truly settled—because there are real merits to both. Generalists have a different edge over specialists, including:
- The ability to serve clients whose needs transcend a single specialty, like multi-property owners and investors. “There is great value and longevity in being able to serve such clients however and wherever they might have needs,” says Geoffrey Kasselman of Op2mize LLC. “I realized that my clients’ needs extended far beyond a single property type or location."
- Flexibility in the face of market volatility. When the office market was down after the recession, Stan Kurzweil of Weichert Commercial Brokerage, Inc. says, “I couldn’t just say ‘my specialty is office’ and keep plugging away.” He had to adapt and serve other areas.
We mention this because if you decide to specialize, you should understand what you stand to gain as well as what you stand to lose (like the generalist’s ability to cover a variety of deals for a single client, or bounce back in volatile times).
How to choose a CRE specialtyAs CRE evolves so do the opportunities to specialize. For example, specialties that didn’t exist when you were growing up now include experiential retail, marijuana-friendly retail and warehouse space, fulfillment centers, data centers, and co-working spaces.
Whichever specialty you choose, you should ask yourself these questions:
- Can the current economy support this? How are these specific property types performing in this market? Brandy Quick of Calico Marketing suggests doing a Google search for “specialty” + “your city” as a way to get a sense of your chosen specialty’s viability.
- Is this area already saturated? If a number of brokers are already covering a particular specialty, consider those that are less well-represented or just emerging. Noah Birk of Kiser Group did this well when he focused on Chicago’s South Side, a beautiful area that a lot of brokers had ignored.
- Do you enjoy working on these types of deals? Sometimes what you enjoy the most leads you to your specialty. Think about the clients and deals you currently work with. Which ones are consistently the most enjoyable, profitable, and rewarding?
After you build up your reputation around a specialty people value, you can start adding more breadth to round it out and regain some of the benefits of being a generalist.
“The professionals who develop into really great client advisors are deep generalists,” author Andrew Sobel recounts Warren Bennis once telling him. “They develop a unique blend of knowledge depth and knowledge breadth.”
Becoming a deep generalist, the next step up from specialist, can offer a buffer against market volatility and make you a more valuable client advisor because of your ability to see connections between market trends and put their portfolio in context.
Once you specialize, you can always go back and generalize—without losing the value that came from specialization.