From razor-thin margins to part-time agents, there is good reason for the consolidation currently underway in residential real estate. The question is, will the players left standing be the right ones?
As private-equity and Wall Street money extend their tendrils further into the real estate landscape, concerns regarding their intention, integrity and capability to properly serve agents and their consumers are justifiably rising. At the same time, big brands argue that they are able to offer better protection and education in a fast-evolving regulatory environment, and argue scale doesn’t necessarily undermine service.
RISMedia spoke to four independent brokerage operators regarding their positioning and strategy in the face of consolidation. Their take? Even though it can feel destabilizing, consolidation is necessary, and, in many cases, plays to their advantage. Here’s how.
Michael Nourmand: Boutique over big box
In the competitive LA luxury market, Michael Nourmand, the second-generation leader of the 50-year-old Nourmand & Associates, is seeing the effects of the Compass/Anywhere acquisition, from an increase in double-ended, off-market deals to an uptick in recruiting—although the floodgates have yet to open.
“Compass has done a good job of selling the story that Coldwell Banker is Coldwell Banker, Sotheby’s is Sotheby’s and they’re going to operate exactly the same way—nothing’s going to change,” he says.
In time, however, agents will take a closer look at who they’re working for.
“I would be saying to myself as an agent, ‘Do I like the way Compass operates?’ And if I’m okay with their business philosophy and their ethics and the way that they go about things, then the agent should stay where they are. But if what they’re saying is, ‘I didn’t want to work for Compass. I made a conscious decision not to go there and now they own the company that I’m at,’ they should probably be weighing their options.”
Nourmand & Associates, conversely, has and will remain true to what Nourmand calls the “spirit of brokerage,” where agents are there by desire, not by binding contract.
“At my company, every single day my agents decide if they want to be here, not because they’re in a contract. They choose to be here,” he says.
Consolidation in his market has elevated Nourmand’s advantage as a boutique firm, he believes, allowing the company to stand out among a growing “sea of conformity.”
“If I’m a big agent at a large company, I may not be able to use the marketing that the company provides because it’s too boring, it’s too generic. It all feels the same,” he explains. “Our marketing looks better, feels better, feels more boutique, feels more customized.”
Nourmand also sees an advantage in his firm’s ability to deliver the personal touch on a regular basis. An experienced manager is in place at each of the firm’s three branches, and being locally based allows Nourmand to take a hands-on role with agents, forging deeper connections and stepping in to troubleshoot transaction issues.
“Some of these large companies, the people running them never sold a house,” he says. “They’re removed from the market.”
In terms of competing against big-brand name recognition, Nourmand is confident in the strength of his firm’s deep, local roots.
“People know us,” he says. “We’ve been in the market for 50 years—I live in this town, I grew up in this town, I’m involved in the community. So that part of it isn’t a challenge.”
While Nourmand is pragmatic and believes that consolidation is necessary to restore margins, he believes the real estate landscape of the future will continue to support boutique firms and provide them with a greater advantage.
“I think that there’s definitely a market for both, just like I think that there’s a market for chains and there’s a market for boutique shops,” he says. “I think that boots-on-the-ground has an advantage. You know the market, you know the people, you’re there. We’ve recruited on value and relationships, and some of the Wall Street firms have recruited on money.”
Christina Pappas: The power of partnerships
According to Keyes Company President Christina Pappas, the Florida market landscape in which the firm’s 60-plus offices operate has split into two camps.
“On one side, national brands—and the private equity capital behind much of the consolidation—are buying scale and making moves built to appeal to Wall Street,” she says. “On the other, locally-led independents and boutiques like us.”
The reaction to consolidation has been a benefit to her family’s 100-year-old firm, she explains. “We’ve had more independents come to us wanting to combine forces and stay locally-owned rather than sell into a national platform. They are looking for a steward, not an exit, which tells you a lot about where confidence actually is right now.”
Pappas has also seen a boost in terms of recruiting.
“When a brokerage gets acquired or grows beyond critical mass, agents feel it,” says Pappas. “Decisions slow down, the culture flattens, and the things that made it feel like home disappear. It leads agents to take stock of whether they’re somewhere they can grow long-term.”
Even though Keyes is home to more than 4,000 agents, Pappas says the company still has the advantage of being nimble and quick to action.
“We win on the things that scale can’t compete on: speed, flexibility and local connection,” she says. “We can change a policy or launch a pilot for a new initiative in days, while a national platform is still routing it through committees and red tape. The best ideas in this business come from the street, not the boardroom, and we spend a lot of time listening to our community.”
Also critical to Keyes’ indie game plan is leaning heavily into partnerships, says Pappas.
“Partnerships are how an independent gets capabilities that rival the largest players without compromising its identity,” she says. “Our global memberships and expanding tech partners give us referral and marketing capabilities, economies of scale and training that match any national or global firm, while we stay fully Keyes. But the same partner can look completely different from one firm to the next; what matters is the implementation. We white-label and build partners into our ecosystem so they feel like Keyes, not like someone else’s product or a bolt-on solution. The point of a partnership is to add value, not to commoditize who we are.”
When it comes to the consumer, Pappas says big-brand recognition isn’t as much of a factor as some may think.
“A misconception is that consumers trust the bigger brands, which makes them ‘better.’ The deeper truth is that buyers and sellers have a relationship with an agent they trust, not the brokerage,” she explains. “For agents, the myth is that the financial package at a mega-brokerage is the whole story, and independent means ill-equipped. A split only matters multiplied against the deals you actually close, and what drives that is support that gets contracts to the finish line, leadership that lets you move fast and a foundation that lets you maximize the relationships you already have.”
Boomer Foster: Filling a widening gap
This April, the new independent firm Paul Wesley Real Estate began onboarding its first agents. The first employee meeting, however, was held on March 10—the day Boomer Foster’s non-compete with Long & Foster was up.
The startup was developed during the three years Foster spent after his “involuntary departure” from Long & Foster Real Estate in March of 2023, a side effect of the firm’s acquisition by HomeServices of America in 2017. Shortly thereafter, Foster’s uncle and company Co-Founder, Wes Foster, passed away at the age of 89.
“My uncle passed away five days after I got fired,” Foster recalls. “I really felt like one of my roles at the company was to make sure I protected his legacy and how we took care of the people who meant so much to him. So it was difficult.”
In the aftermath of these two monumental losses, Foster had time to think about his next chapter. During this time, Foster received calls from interested leaders at some of the industry’s biggest firms, which proved to be a valuable learning experience.
“In talking to those people, one of the things I realized was that, at the enterprise level, there aren’t many companies out there right now that share my family’s values,” he said. “I’m talking about character and integrity and hard work and love of people and obsession over the consumer experience and always putting people first. It seems like everybody that I talked to, what they were worried about is how much money we could make together.”
According to Foster, these conversations shone a light on a growing gap in today’s residential real estate landscape.
“It seems like a lot of these big companies are taking relationships and service out of a relationships and service business. So I started feeling drawn toward getting back into the real estate industry and maybe filling that gap.”
Foster describes Paul Wesley Real Estate as something “smaller and more deliberate,” a home for agents who prioritize character and integrity.
“We’re intentional and very protective about who we add,” says Foster. “At first I thought maybe I was naive and everybody out there is just chasing the bag and all they care about is how much money they can make. And what I’m finding is, the real estate community is chock-full of great people who want to go out and do good every single day, and a great side effect of that is that they make money doing it.”
Foster hopes to help real estate get back to the goals championed by the “lions of the industry,” like his uncle.
“They were doing this business for the right reasons,” he says. “These were high integrity, high honor people and at the enterprise level of a lot of companies nowadays, they’re not run by real estate people. They’re run by Wall Street people, they’re run by accountants and lawyers and they see the industry as a huge piggy bank—how do we make as much money as we possibly can? But also, how do we get so big that we can monetize the data?”
“I want to bring back a company that is predominantly focused on the consumer,” he says. “You can look at companies out there right now that are making decisions that are not in their client’s best interest, but are in their own best interest.”
According to Foster, the value proposition for agents is the opportunity to work at a firm they get to help build, a place where they’re not just a number.”
“I think there’s a lot of people out there that want to trust their leadership, that want to have leaders that actually are real estate people,” he adds.
That’s why Foster believes launching a new indie firm amid massive consolidation is a huge advantage.
“I think we were all built for fellowship and relationship with other people, and I think that a lot of consumers out there would really love to have a family-owned, values-based company that they can trust to work with versus some big corporate giant who is based out of somewhere else and doesn’t really care about anything other than how much money they’re going to make.”
Julie Dudum Del Santo: Understanding the numbers
According to Julie Dudum Del Santo, founder of Dudum Real Estate Group, serving San Francisco’s East Bay region, challenging market conditions combined with a consolidating playing field is a “double whammy” for many independent brokers. That’s why she relies on the numbers to help get the real story out to agents and consumers.
“I am often the No. 2 or 3 ranked company in a given city, and I don’t mind being that because I have a fourth of the agents or a third of the agents,” Del Santo explains. “So if you multiply my numbers by three or four or five to compete with who’s above us, we beat them—we far surpass them. We’re the No. 1 independent, and when you pull the whole county, we’re usually in the top five against the big guns.”
Getting granular about the numbers allows agents to compare apples to apples during a listing presentation, demonstrating that Dudum Real Estate is competing at the same level as the big brands. Explaining the math to agents is also critical as many are tempted by signing bonuses from a big firm. While the allure of a big check can be powerful, Del Santo explains that the long-term financial equation usually doesn’t pay off.
“I’m not buying agents,” she says. “And so, as a result, agents might choose another big name who can buy their agents, and then they call me months later with golden handcuffs saying, ‘Shoot, it’s not what I thought.'”
According to Del Santo, many agents are caught up in the buzz about high splits offered by a big brand, but “10% of a watermelon is much more than 100% of a grape.”
“They want to go for the high split and the big check, but at the end of the day, when I run the numbers, if they would’ve come to me instead, a lot of them would’ve made more.”
While understanding and clearly articulating financial scenarios is an essential part of her indie game plan, culture is king, says Del Santo, whose firm has won a Top Workplaces award for more than 10 consecutive years. She believes agents will eventually become disillusioned at big brand firms.
“They’re going to start feeling like a number,” she says. “They’re going to start feeling disconnected. Unless you’re part of the top three or four, you are going to be templated.
“Instead of going wider, we intentionally go deeper with our knowledge, our customization, our agent connection, client connection, community connection,” she adds.
That said, Dudum also has the power of a national network through Leading Real Estate Companies of the World®, where Del Santo leads a CEO group of some 20 independent brokerages.
“The partnership…allows us to have the global connections, the global mindset,” she says. “We’re locally grown, but internationally known and it allows us to be a global thinker without diluting our local brand and our local culture. And that’s a huge strategy.”
As consolidation plays out, will there be room for both the big consolidated brand and the indie? Del Santo says yes, because, ultimately, it’s all about the agent.
“(Consumers) don’t want to hire an agent just because you’re with this company and you might have access to a certain property,” she says. “I want to hire you because you’re good. If you don’t have the expertise and the heart to sell, and the integrity and the knowledge and the deep roots to sell, I don’t care what exclusive you have.”
