Ancillary services are brokerage business lines that make money separate from commissions. The most common ancillary services are mortgage, title, and escrow. This is because they are so closely attached to each completed transaction. Other ancillary services include property management, coaching, and real estate education.
Many brokerages use ancillary services to increase their profits. But they are often limited by a law called RESPA. This law prevents clients from being forced to use ancillary services. Many brokerages spend a lot of time figuring out how to get more clients to use their ancillary services while being compliant.
Attach rate is the percentage of clients of a brokerage that use ancillary services.
Brokerages that rely on ancillary services target a high attach rate. Tracking attach rate is a good measure of how attractive ancillary services are to future clients. A higher attach rate also means that each transaction may be more profitable. It can also be a helpful metric for determining how profitable a brokerage is relative to competitors.
The industry average for attach rate on title and mortgage services is around 15%. Attach rates can vary significantly by brokerage and product offerings. In 2019, Redfin said their target for attach rates for title services is above 50%. But their mortgage attach rates are significantly lower. Some experts estimate that 20-30% of HomeServices of America's clients also use the brokerage's other services.