But they are challenged by technology-driven disruptors
The future for real estate firms is bright with most executives who are members of the NAR saying they expect rising profits.
The association’s 2019 Profile of Real Estate Firms says that most have an optimistic outlook with almost 60% of firms expecting profitability (net income) from all real estate activities to increase in the next year.
But despite the positivity respondents are concerned about challenges ahead with residential-focused firms expecting increased competition from non-traditional participants (44%) and virtual firms (43%); with 50% of current competition from traditional bricks and mortar firms.
Executives from commercial firms are most concerned about local or regional economic factors.
Respondents were also concerned about the ability of Millennials to buy homes (58%) and that generation’s view of homeownership (46%).
"It is clear that the real estate industry is rapidly changing, and with that comes growing competition in the market," said NAR CEO Bob Goldberg. "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."
Where firms get their business
The report shows that 30% of firms of their sales volume from repeat business from past clients, while those clients’ referrals added another 30%.
Over 80% of real estate firms had a single office, typically with two full-time real estate licensees, down from three licensees in the 2017 report.
86% of firms were independent non-franchised firms, 11% were independent franchised firms and 82% of firms specialized in residential brokerage.
32% of brokers of record were CEOs, presidents or owners, and 64% were regional managers or regional vice presidents.
Firms with only one office had a median brokerage sales volume of $4.2 million in 2018 (down from $4.3 million in 2016), while firms with four or more offices had a median brokerage sales volume of $100 million in 2018 (down from $235.0 million in 2016).
13% of all firms had real estate teams, with a median of three people per team.
The most common benefit that firms offered to independent contractors, licensees, and agents was errors and omissions/liability insurance (40%); while 35% of senior management received errors and omissions/liability insurance, 15% vacation/sick days, and 10% received health insurance.
