Real Estate Firms Reveal Biggest Challenges Over Next 2 Years
Real estate firms saw business activity increase over the past year as the housing market surged across the country. 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 in 2018, according to the National Association of REALTORS®’ newly released 2021 Profile of Real Estate Firms. The biennial survey reflects responses from more than 6,000 REALTOR® executives and senior managers about business activity.
Firms with four or more offices posted a median brokerage sales volume of $146.2 million and 571 transaction sides in 2020, an increase from $100 million and 478 sides two years ago, according to the report.
Nearly three out of five real estate firms expect profitability or net income from all real estate activities to increase this year too, the survey shows.
But they do expect headwinds could undercut some of that growth over the next year. Real estate firms noted the biggest challenges over the next two years that has them most concerned are:
- Maintaining sufficient housing inventory
- Housing affordability constraints
- Competition from nontraditional market participants
Real estate firms also had some generational concerns over housing’s future outlook, such as young adults’ ability to buy a home (58%); young adults’ view of homeownership (33%); and baby boomers retiring from real estate (26%), according to the NAR survey.
Characteristics of Real Estate Firms
The report also revealed several common characteristics among real estate firms. For example, the majority of real estate firms—80%—operated from a single office and usually had three full-time real estate licensees, according to the NAR study. Nearly nine out of 10 were independent and non-franchised.
“Most REALTORS® are small businesses and work closely with small-business clients in their communities,” says NAR President Charlie Oppler. “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.”
Real estate firms tended to generate about 30% of their sales volume from past client referrals; 30% from repeat business from past clients; 10% from their website; and 10% through social media, according to the report.
The top benefits real estate firms provide to agents and staff, according to the survey: errors and omissions/liability insurance; e-signature platform; comparative market analysis; electronic contracts/forms; and multiple listing. Further, a quarter of all firms offered a virtual office space for their agents and staff and 7% offered a virtual assistant.