Real Estate Firms Expect Rising Profitability

Washington, DC, Sept. 12, 2013 -- Most real estate firms are small, independent businesses that specialize in residential brokerage, with 69% of all firms expecting profitability to increase over the next year, according to the 2013 National Association of Realtors Profile of Real Estate Firms.

Paul Bishop, NAR vice president of research, said the industry sees greater competition in tandem with the housing market recovery.

“Two out of three real estate firms expect competition in the marketplace to increase, both among firms and nontraditional market participants,” he said.

“Because real estate is an entrepreneurial field, some experimentation in business models is likely when the market is in a recovery phase.”

Eighty-four percent of real estate firms are independent, non-franchised companies, while 13% are independent franchises; the rest are subsidiaries of a national or regional corporation. Independent firms generally have fewer agents and lower sales volumes.

Eight out of 10 firms specialize in residential brokerage, with commercial brokerage and residential property management the most common secondary functions, each offered by nearly four in 10 residential brokerages.

Other primary business specialties at real estate firms include residential property management, 6%; and commercial brokerage and residential appraisal, 5% each.  Smaller shares of real estate firms focus on land development, commercial property management, commercial appraisal, relocation, counseling, international and auction.

The typical real estate firm has been in business for 13 years; 80% of firms operate out of a single office and have a median of two licensees.  Only 8% of firms have four or more offices, but have a median of 100 licensees.  Larger firms were more likely to have increased staffing; firms with four or more offices added a median of 10 licensees during 2012.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, California, said a sizeable number of firms are expanding.

“Although conditions vary around the country, 45% of real estate firms are actively recruiting agents, largely due to growth in their primary business,” he said.

“As for challenges over the next two years, six in 10 firms cite profitability, 44% identified local or regional economic conditions, and 42% are concerned about both maintaining sufficient inventory and keeping up with technology.”

The typical residential real estate firm handled a median of 25 transaction sides in 2012, representing a dollar volume of $4.4 million.  Ten percent of a firm’s median sales volume was generated by a website, but less than 1% came from social media; however, firms with three or more offices obtained 5% of their business through social media.  The vast majority of sales were from prior relationships with clients and from referrals.



Other Archived Articles

Armstrong Top Execs Offered Retention Award to Stay Through Spinoff   Full Article
Lancaster, PA, March 11, 2015—Armstrong World Industries is giving three of its top executives an incentive to stay at the company through the spinoff of its flooring business into a new, independent company next year, reports Lancaster Online.

Small Business Optimism Edges Upward   Full Article
New York, NY, March 11, 2015—U.S. small business optimism edged up in February amid signs of tightening labor market conditions, bolstering the view that a recent slowdown in economic activity will be temporary, reports Reuters.

LL Class Action Lawsuits Extend Beyond Formaldehyde Issue   Full Article
Toana, VA, March 11, 2015—Lumber Liquidators is currently facing at least 12 class action lawsuits.

Foreclosure Inventory Fell 33.2% Year Over Year   Full Article
Irvine, CA, March 11, 2015—CoreLogic's January 2015 National Foreclosure Report reveals U.S. foreclosure inventory declined 33.2% from January 2014, and completed foreclosures declined 22.5%, reports World Property Journal.

The Floor Store Earns Sixth Armstrong Elite Retailer Recognition   Full Article
Lancaster, PA, March 10, 2015—The Floor Store’s new San Francisco, California showroom has been named an Elite Retailer by Armstrong, the chain’s sixth location to earn the distinction.

Wholesale Inventories Up Slightly   Full Article
Washington, DC, March 10, 2015—Wholesale inventories were up 0.3% to $548.7 at the end of January, says the U.S. Census Bureau.

Job Openings Figure Virtually Flat   Full Article
Washington, DC, March 10, 2015—There were 5.0 million job openings on the last business day of January, little changed from 4.9 million in December, the U.S. Bureau of Labor Statistics reports.

NWFA's Wood Flooring Expo Recognized for Growth   Full Article
St. Louis, MO, March 10, 2015—The National Wood Flooring Association’s Wood Flooring Expo has been recognized as one of the 50 fastest-growing shows in the U.S. by Trade Show Executive magazine.

Milliken Recognized As Ethical Company for 9th Consecutive Year   Full Article
Spartanburg, SC, March 10, 2015—Milliken has once again been recognized as a 2015 World’s Most Ethical Company by the Ethisphere Institute.

LL Schedules First Investor Call Following 60 Minutes Broadcast   Full Article
Toano, VA, March 10, 2015—Lumber Liquidators has announced that it will host an investor call on Thursday, March 12 at 10:00 a.m. EST.

Armstrong LVT with I-Set Wins ADEX Platinum   Full Article
Lancaster, PA, March 10, 2015—Armstrong Commercial Flooring's Natural Creations Luxury Vinyl Tile with the I-Set Installation System recently received the Platinum Award for Design Excellence (ADEX).

J+J Announces Facilities Workshop at Kent State   Full Article
Dalton, GA, March 10, 2015—J+J Flooring Group is partnering with APPA to present a Facilities Drive-In Workshop Tuesday, March 31, from 10 a.m. to 2 p.m. on the campus of Kent State University in Kent, Ohio.

Building Service Contractors Association Announces New Officers   Full Article
Chicago, IL, March 9, 2015—Building Service Contractors Association International (BSCAI) recently announced the installation of its newly elected officers and directors.

Warren Buffett Speaking at Nebraska Furniture Mart Benefit   Full Article
Dallas, TX, March 9, 2015—Nebraska Furniture Mart will the host the Live Big Benefit on April 8 at its new store in The Colony, Texas, and Warren Buffett will be the special guest speaker for the event.

Middle Class Occupations Disappearing   Full Article
New York, NY, March 9, 2015—Although the economy has regained all 8.7 million jobs lost during the recession—which lasted December 2007 until March 2010—many traditionally middle class occupations are in the process of disappearing, reports USA Today.

Surfaces Still Accepting Proposals for Show Topics   Full Article
Irving, Texas, March 9, 2015—The International Surface Event is still accepting proposals covering “…new and innovative ideas and topics…” for its 2016 show to be held January 19 through 22 at the Mandalay Bay Convention Center in Las Vegas, NV.

Planned Job Cuts Decline in February   Full Article
New York, NY, March 6, 2015—Planned job cuts declined slightly in February, according to the report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc., says StreetInsider.

Factory Orders Fell in February   Full Article
WASHINGTON, DC, March 6, 2015—Orders to U.S. factories fell again in January but a key investment category showed a gain, reports the Associated Press.

2015 Top 100 Design Firm Giants List Released   Full Article
New York, NY, March 6, 2015—Interior Design has released its 2015 Top 100 Giants list, which rates U.S. firms according to the design fees.

Stallings Tapped As Antron Product Designer   Full Article
Kennesaw, GA, March 6, 2015—Invista Commercial has hired Kristin Stallings as product designer for the Antron brand.