For the past decade, we’ve largely been a victim of circumstance, whether it was riding the crest of the boom years or scrambling for firm footing during the housing crash. As we move further into 2015, however, a clear distinction is emerging—Power Brokers are taking back control.
The results of RISMedia’s 2015 Power Broker Survey reveal the kind of steady success pattern that makes for a prosperous longevity. This year’s top 1,000 survey* respondents report a collective 3,203,736 transactions resulting in an impressive $972,888,910,471 in sales volume for 2014—a more than $76 billion increase over 2013. And 2015, while not without obstacle, is expected to be an even stronger year for most. See the Power Broker Top 500 (ranked by sales volume for 2014) here.
While lingering issues like inventory shortage continue to stymie real estate sales, several market dynamics are converging to make for an optimistic take on 2015 according to the 2015 Power Broker Report, sponsored by Homes.com, Leading Real Estate Companies of the World®, Pillar To Post Home Inspectors and HSA Home Warranty. “The market continues to adjust in an upward trend,” reports Jean Rawls, operating partner of Atlanta’s Rawls Group—Keller Williams. “As we head into Q2, we are experiencing some of the lowest levels of inventory in years, and the supply/demand relationship is still to the seller’s advantage. We are seeing an increase in multiple offers and a renewed excitement in the return of new construction. Fannie Mae and Freddie Mac are offering 3 percent down-payment options, making homeownership even more attainable for first-time homebuyers. Homeownership has become more affordable than renting in most instances, and we look forward to another strong spring selling season.”
The inventory shortfall is leading to a new-construction windfall for many. “With increasing buyer demand and concerns over inventory, we are fortunate to represent several amazing builders,” says Bruce Tucker, principle broker and CEO of Prudential Utah Elite Real Estate. “We feel that new-construction inventory will be our greatest opportunity for the next several years.”
Another factor contributing to an advantageous home-buying climate is the rise in rental prices. In fact, in the vast majority of U.S. markets, owning a home has become less expensive than renting, according to RealtyTrac data. “In the Greater Washington, D.C. area, consumers are very aware of the benefits of homeownership,” says Brian Block, managing broker and branch vice president of RE/MAX Allegiance. “Rental prices are very high and have continued to trend higher. Real estate is in the news constantly and our market has remained one of the strongest in the country.”
Meanwhile, in many locations around the country, business in the upper-end of the market remains on an incline. “We see tremendous opportunity in the luxury and second-home market in 2015,” reports Robert Bailey, co-broker and co-owner of Bailey Properties in Northern California. “With stable interest rates and our proximity to Silicon Valley, the quality-of-life choices offered by Santa Cruz County are immense. We see the changing brokerage landscape as a great platform for company growth.”
Fueled by this positive outlook for real estate, many Power Brokers are once again poised for growth—smart, controlled growth. “Growing the salesforce will always be a focus, but selecting the right sales associates is the biggest challenge. A company commits time and resources into the development and success of a sales associate. The wrong selection results in lost resources and a dissatisfied sales associate,” explains Gary Rabon, president and CEO of North Carolina’s Coldwell Banker Advantage. “Another significant challenge is identifying companies that are candidates for mergers and acquisitions. There is tremendous competition for those companies as other companies attempt to grow and expand.”
Of course, success in 2015 and well beyond will focus more and more on how brokers and their agents are keeping up with consumers. “Our company is very forward-thinking, our brand is very forward-thinking, and that results in a force multiplier effect,” says Chris Masiello, president and CEO of New Hampshire’s Better Homes and Gardens The Masiello Group. “Last year, we had a fall-through rate of 19 percent, so every two out of 10 contracts we wrote failed. The industry average is a third, so we’re well below that, but this year, we’re putting emphasis on better contract structure, contract training, and revising some of our marketing materials to better explain the home-buying process. We’re looking at customer satisfaction surveys, getting customer ratings and encouraging customers to log on to third-party sites. The industry is moving in that direction.
“We say to our agents, ‘You guys already work hard, so having two out of 10 contracts fall through means you have to work harder. Let’s truncate that, starting with education on the agent side and then education for the consumer.’”
And the education process must happen at the broker level as well. “Keeping up with market changes is more important today than ever before,” says Scott MacDonald, president of RE/MAX Gateway in Northern Virginia. “Networking masterminds and attendance at conferences is paramount to keep our company and agents up-to-date, and relevant to our clients.”
RISMedia Editors Paige Tepping, Nick Caruso, Zoe Eisenberg and Suzanne De Vita contributed to this report.
*RISMedia’s 27th Annual Power Broker Report & Survey is based on the top 1,000 respondents to a survey distributed via email and available online at rismedia.com. The survey ranks residential real estate brokerage firms according to closed transaction numbers and closed sales volume for the year 2014. The Top 500 list in this section is ranked by sales volume. To see firms ranked by transaction, please reference the full Power Broker Report, coming soon at rismedia.com. All sales and transaction data is submitted directly by brokerage firms and verified by the firm’s financial executives, outside accounting firms and/or corporate franchise headquarters.