The “Profile of Real Estate Firms” is among the most interesting annual surveys from the National Association of Realtors. Conducted among its executive members, the profile offers an in-depth look at the higher echelons of the industry, as well as glimmers of where the industry is heading in the next year.
Below are the most important findings from the report:
10. An Industry of Veterans – Nearly a full majority of real estate firms (48 percent) have been in business for 15 years or more, while an additional 11 percent have been around for 11 to 14 years; by contrast, only 7 percent have existed for a year or less.
9. The Non-Franchise Model – A full 83 percent of firms are independent, non-franchised companies, while 15 percent are franchised, 2 percent are subsidiaries of franchises, and 1 percent are subsidiaries of non-franchises.
8. Legal Eagles – In terms of the legal organization of real estate firms, the market is fairly mixed. At 36 percent, the LLC option is the most common, though S-Corp (27 percent), sole proprietorship (24 percent) and C-Corp (10 percent) are also prevalent.
7. Narrow Specialties – An overwhelming share of firms (85 percent, in fact) specialize in residential brokerage, with all other specialties trailing far behind: residential property management (6 percent); commercial brokerage (4 percent); residential appraisal (2 percent); land/development (1 percent); and commercial property management (1 percent).
That said, many firms do diversify their business: 42 percent also work in commercial; 39 percent work in residential properties management; and interestingly, 29 percent work secondarily in residential.
6. Customer Inquiry Funnel – For all firms, 30 percent of all their customer inquiries derive from past client referrals, and 30 percent more are from repeat business; meanwhile, 10 percent are from websites, 7 percent are from social media, and only 2 percent are from open houses.
5. Website Features – There is a fascinating divergence among residential firms in the online services they offer. While 97 percent offer property listings and 80 percent show agent/staff profiles, only 47 percent link to social media accounts, and only 47 percent offer virtual tours. Similarly, while 62 percent include mortgage calculators and 60 percent offer information about the buying/selling prices, only 30 percent have CMA tools.
4. Friends with No Benefits – The vast majority of real estate firms do not offer their agents benefits. Although 37 percent offer E&O/liability insurance, the remaining options are scant: 79 percent do not offer health insurance; 89 percent do not offer dental care; 90 percent do not offer vision care; 89 percent do not offer disability; 91 percent do not offer a pension/401(k) plan; and 89 percent do not offer vacation/sick days. Even among salaried agents and administrative staff, benefits are rarely offered.
3. Recruitment Strategies – Fifty-one percent of residential firms are actively recruiting new agents, though the reasons for that recruitment vary. For instance, 87 percent of those recruiting firms are doing so because their business is growing, but 41 percent have a desire for younger agents, while 32 percent are expanding into new markets and 34 percent are replacing departing agents.
2. Profitably Optimistic – In perhaps the best finding of the whole survey, 65 percent of residential firms expect their profit to increase over the next 12 months, while only 6 percent expect profits to fall.
1. Bracing for Competition – Fascinatingly, real estate firms are preparing themselves for competition over the next year, but not from conventional arenas. Only 17 percent of firms, in fact, expect competition from brick and mortar firms to increase; by contrast, 46 percent expect virtual firms to grow more competitive, and 43 percent expect non-traditional participants to grow in prominence.