Definition of "Ancillary"
The term ancillary in relation to the real estate industry can serve various purposes. As the ancillary definition describes something that works in a supporting or supplementary role for something else, the term finds different applications within the real estate industry, both for commercial real estate and residential properties. It can even be applied to services, businesses, and income. In areas related to decedent’s estates, we have the term ancillary probate. In the following sections, we’ll see precisely how the ancillary meaning works for each of these sectors. Ancillary services and businesses are often used because it’s easier for a company to hire a company that is already specialized in a field than to train and hire employees to cover that function within their company.
Ancillary Services
We can refer to services as ancillary services if they offer support to other services. In the healthcare industry, we have diagnostics and other supporting services that provide help for physicians, doctors, dentists, and nurses. Ancillary services are x-rays, ultrasounds, lab tests, and so on.
Ancillary services can be seen in most industries, and in the real estate industry, they take the form of the cleaning services a rental uses to keep the units clean. Another example would be the landscaping services contracted by a commercial property manager to maintain the office building’s aesthetic appeal.
Ancillary Businesses
Ancillary businesses are mostly considered non-essential because they don’t provide the end product or service purchased by the consumer. Still, they are necessary for the businesses that provide those services and products. Big companies stripped themselves of ancillary services, and they outsource these services to other companies known as ancillary businesses. Functions like human resources, accountancy, payroll, or call centers are outsourced to ancillary businesses all the time. The one thing that is important to the company that outsources services to ancillary businesses is that business’s reputation.
In the real estate industry, these ancillary businesses would be the cleaning business or the landscaping company by following the example above. Accountancy is also a function that is often outsourced by a brokerage agency, human resources, and training as well.
Ancillary Income
Rental properties gather income for the rental management company from their housing services. However, other services produce income for rental properties, and that income can be referred to as ancillary income. These ancillary income sources include early termination fee, late fee, pet fee, dry cleaning and laundry, storage space fee, parking fee, and so on.
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