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Brokerage executives are optimistic about profitability, even as they contend with disruptors, pressured sales and shifting technology, new research shows.

Fifty-eight percent of broker executives are expecting to increase their profitability in the upcoming year, according to the 2019 Profile of Real Estate Firms by the National Association of REALTORS®—even with more than 40 percent of brokerages facing “nontraditional market participants” and/or “virtual firms,” such as discounted-fee firms or iBuyers, and many more concerned about millennials and their ability to afford a home. Others are contending with an exodus of older practitioners into retirement (26 percent) and/or maintaining sufficient supply (39 percent).

To compete, it’s become essential for firms to reinforce their value, both to agents and the homebuyers and sellers they serve. Among the common offerings, 40 percent of brokerages offer errors and omissions insurance to their salespeople; 25 percent are encrypting emails to prevent wire fraud; and 21 percent have a virtual office option for their sales team.

Fifteen percent of executive leaders, meanwhile, are offered vacation/sick time, and 10 percent are given health insurance.

Looking at production, the average brokerage with one office completed 18 transactions in 2018, earning a median $4.2 million in sales volume. On the flip side, brokerages with four or more offices garnered a median $100 million in sales volume, with 478 transactions.

Both metrics have scaled back some—in 2016, one-office firms did $4.3 million in sales volume with 20 transactions, while firms with four or more offices did $235 million in sales volume, with 550 transactions.

Where business is coming from hasn’t deviated from the norm, with brokerages crediting referrals and repeats, attributing each to 30 percent of their sales volume. Thirty percent of customer inquiries originated from referrals, 25 percent from repeats, 10 percent from the firm’s website, 10 percent from social media, and 2 percent from an outside referral source.

With these indicators largely unchanged, the outlook remains sunny, even against changing tech trends, according to NAR President John Smaby.

“Real estate firms continue to look optimistically toward the future, with a majority expecting profits to increase in the next two years,” says Smaby. “These trends are positive signs, particularly in our constantly evolving industry.”

“It is clear that the real estate industry is rapidly changing, and with that comes growing competition in the market,” adds Bob Goldberg, CEO of NAR. “NAR continues to stay ahead of the evolving trends in technology as we work with market disruptors to best serve our members and ensure they have the resources needed to be successful.”

For more information, please visit www.nar.realtor.  

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

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