Brokerages vary in size, leadership style, business model, tech offerings and more. To get an idea of how real estate brokerages are doing business, we take a look at the National Association of REALTORS’® (NAR) new “2021 Profile of Real Estate Firms.”
“Most REALTORS® are small businesses and work closely with small-business clients in their communities,” said NAR President Charlie Oppler, in a statement. “The ingenuity, perseverance and tireless efforts of our members are the lifeblood of local economies, and this has been especially evident during the many challenges brought forth by the COVID-19 pandemic.”
Over 100,000 real estate firms were operating in the U.S in 2020. The typical broker of record was a manager or owner for a single office firm and identified as a broker/owner, and the typical firm had been operating for 16 years (up from last year’s 14 years).
Of all brokers of record, 34% were CEOs, COOs, presidents or owners, and 79% identified as broker/owners while 11% as broker managers. Eighty percent of brokerages had a single office with three full-time real estate licensees (up from two licensees in 2019).
In terms of business structure, 37% were LLCs, 28% are S-Corps, 25% were sole proprietors and 8% were C-Corps.
Transactions and Sales
2020 saw higher sales and transactions activity than NAR’s previous study, released in 2018. For firms with just one office, the median sales volume was $4.5 million, while brokerages with four or more offices raked in a media volume of $146.2 million. Transaction-wise, single-office firms closed 19 while those with four or more offices closed 571.
Where did the business come from? Referrals (30%) and repeat business (30%) take the lead, with 10% coming from website traffic.
When it comes to brokerage offerings, 42% offered their agents errors and omissions/liability insurance, and the most common tools offered were e-signature, comparative market analysis, electronic contracts and forms, and MLSs accessibly.
The Future of Brokerages
Competition from non-traditional and virtual firms will likely increase, according to 50% and 47% of firms, respectively. Fifty-eight percent believed that the competition level was going to stay the same for larger, more traditional brick-and-mortar firms.
Regarding future business, affordability was a major concern, with 58% of firms concerned with young adults’ ability to purchase a home.
For more information, please visit www.nar.realtor.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to email@example.com.