The overwhelming majority of real estate firms – 80% – operated from a single office and typically with three full-time real estate licensees in 2020, according to a new survey by the National Association of Realtors. Nearly nine out of 10 firms – 86% – were independent and non-franchised.
As part of National Small Business Week, NAR released its 2021 Profile of Real Estate Firms, which surveyed Realtor® executives and senior managers to learn about firm demographics, composition, benefits offered to staff, business activity, and market forecasts.
“Most Realtors are small businesses and work closely with small-business clients in their communities,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty in a news release. “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.”
Business Activity of Real Estate Firms
In 2020, single-office firms had a median brokerage sales volume of $4.5 million and 19 real estate transaction sides, up from $4.2 million and 18, respectively, in 2018. Firms with four or more offices had a median brokerage sales volume of $146.2 million and 571 transaction sides in 2020, an increase from $100 million and 478 two years ago.
The typical firm generated 30% of its sales volume from past client referrals, 30% from repeat business from past clients, 10% from their website, and 10% through social media.
Benefits Real Estate Firms Provide to Agents and Staff
Errors and omissions/liability insurance were cited as the most common benefit – 42% – that firms offered to independent contractors, licensees, and agents. E-signature, comparative market analysis, electronic contracts/forms, and multiple listing were the most common tools provided or encouraged by firms. A quarter of all firms offered virtual office space for agents and staff, while 7% offered a virtual assistant.
Future Outlook of Real Estate Firms
Nearly three out of five firms – 58% – expect profitability or net income from all real estate activities to increase this year.
Maintaining sufficient inventory, housing affordability constraints, and competition from nontraditional market participants were noted as the biggest challenges firms expect to face over the next two years, the news release added.
When asked about generational effects on the real estate industry in the next two years, the top concerns for firms were young adults’ ability to buy a home (58%), young adults’ view of homeownership (33%), and baby boomers retiring from real estate (26%).
Characteristics of Real Estate Firms
More than a third of brokers of record – 34% – were CEOs, COOs, presidents, or owners of a multi-office firm. Approximately three out of five – 62% – were managers or owners of a single-office firm, according to the news release.
In July 2021, NAR invited a random sample of Realtors who were executives and senior management at real estate firms to fill out an online survey. A total of 6,253 responses were received. All information in this report was representative of member characteristics, sales and lease transaction values, and other statistics from the calendar year of 2020.