RISMedia's Real Estate Magazine

NOV 2014

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/402040

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Page 17 of 142

RISMedia's REAL ESTATE November 2014 13 {Policy Matters} W hile the typical firm profile is similar to pre- vious years, the future expectations of firms change as the real estate market evolves over time, as seen in the results from NAR's 2014 Profile of Real Estate Firms. In examining frm characteristics, this year's report fnds that 81 percent of real estate frms have a single offce, typically with two full-time real estate licensees, and 81 percent of frms specialize in residential brokerage. Eighty-four percent of frms are inde- pendent, non-franchised companies and 14 percent are independent franchised companies. In terms of frms' business opera- tions, the typical residential real es- tate frm's brokerage sales volume was $4.7 million in 2013, while the typical commercial real estate frm's brokerage sales volume was $4.3 million in 2013. Those with only one offce had a median brokerage sales volume of $3.9 million in 2013, while those with four or more offces had a median brokerage sales volume of $187.5 million in 2013. Similarly, those with one offce had a total of 18 real estate transaction sides in 2013, while those with four or more offces typically had 710 real estate transaction sides in 2013. Firms typically had 30 percent of their customer inquiries from past client referrals, 25 percent from re- peat business from past clients, 11 percent from their website, 5 percent through social media and 1 percent through open houses. Firms typically had 35 percent of their sales volume from past client referrals, 30 percent from repeat business from past cli- ents, 10 percent from their website and 5 percent through social media. Firms report their current compe- tition is most likely to come from traditional brick-and-mortar frms, followed by non-traditional market participants, and fnally virtual frms. In looking to the future, this year's profle fnds that 45 percent of frms reported they are actively recruiting sales agents in 2014. This is more common among residential frms (49 percent) than commercial frms (34 percent) and more common among frms with four offces or more (87 percent) than frms with one offce (40 percent). Eighty-seven percent of frms reported the reason for recruit- ment is growth in primary business, followed by the desire for younger agents at 36 percent. Larger frms are much more likely to recruit for the desire for younger agents and to replace agents who are leaving the frm. Refecting a housing market show- ing signs of recovery, 64 percent of frms expect proftability (net income) from all real estate activities to in- crease in the next year. Commercial real estate frms are more optimistic as 71 percent expect proftability to improve, as well as large frms with four or more offces—69 percent ex- pect proftability to improve. Forty-eight percent of frms expect competition to increase in the next year (mid-2014 to mid-2015) from non-traditional market participants. Forty-one percent of frms expect competition during the same time period to increase from virtual frms, while only 16 percent expect compe- tition will increase from traditional brick-and-mortar frms. Proftability, keeping up with tech- nology, maintaining suffcient inven- tory, and local or regional economic conditions are among the biggest challenges sited for frms in the next two years. Commercial frms are more likely than residential frms to site state and local economic con- ditions, while residential frms are more likely to site recruiting younger agents, competition from non-tradi- tional market participants, and agent retention. When frms are asked to predict the effect of generations on the in- dustry for the next two years, the most common concern was Genera- tion Y's ability to buy a home due to stagnant wage growth, a slow job market, and their debt-to-income ra- tios—59 percent of frms cited this as a concern. This was followed by baby boomers retiring from the real estate industry, and conversely, the recruitment of Generation Y and Generation X into the real estate profession. Firms with four or more offces were most concerned with baby boomers retiring and the re- cruitment of Gen Y and Gen X into the industry. RE For more information on this new report, visit http:// www.realtor.org/reports/profle-of-real-estate-frms. Jessica Lautz is the director of Member and Con- sumer Survey Research for the National Association of REALTORS®. Brokers Concerned about Generation Y but Expect a Better 2015 This column is brought to you by the NAR Real Estate Services group. by Jessica Lautz

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