Real estate leaders surveyed for the RealTrends Q4 BrokerPulse are increasing pessimistic about the market through the end of the year and into 2023, with 66% of all respondents predicting that home sales will be down more than 5% and 48% noting that home prices will be down more than 5%, as well.
However, regardless of what happens in the market, brokerage owners are looking to beef up market share, hone in on providing value and increase agent training to boost productivity.
RealTrends BrokerPulse requests surveys from some 19,000+ real estate brokerage leaders around the nation on market trends and brokerage opportunities and challenges. Of the 175 completed surveys, 29% were from the Southeast, 21% from the Southwest, 23% from the Midwest, 17% form the Northeast and 10% from the Northwest. RealTrends BrokerPulse is a forward-looking, quarterly survey.
Recruiting high producers and increasing productivity remain key
Despite the pessimism about home prices and sales, some 37% of all those surveyed were neutral about the next three months and 33% were optimistic.
That optimism is likely from leaders who immediately made changes to operating budgets and clearly outlined how they would find success in today’s market.
As part of that business outline, increasing per-agent productivity is key for many brokers, who also mentioned it as their greatest challenge in the survey. RE/MAX and eXp Realty both cited recruiting more productive agents and helping current agents boost their transactions were key initiatives in 2023.
“We’re training our agents on dialogue regarding the actual stats in our community, which we’ve extracted from our MLS for each town by month and quarter this year,” says Doris LaBeau, broker of RE/MAX Masters in Flat Rock, Michigan.
“Months ago, we updated social media, web pages, and marketing materials to handle today’s changing market. We’re also training agents on how to ask for referrals from past clients and customers with thank-you notes and well wishes, which is something we do annually.”
Ready to capitalize on today’s market
And, many of the leaders surveyed are excited about the potential that comes with a slower market. When asked what opportunities brokers planned to leverage, comments such as, “Reducing fees to squeeze out competitors,” “recruiting agents from traditional models,” “increasing mid-tier agents into higher producers,” “supporting and growing teams from $50 million and up, ” and “creating a second referral company for agents to hang their license without incurring MLS and other fees.”
Aggressive recruiting, rolling in smaller brokerages (aka walkovers), expanding globally and developing a company lead program for higher margins per deal were other strategies mentioned by leaders to capture marketshare.
Challenges for brokerage owners
When it comes to challenges, this survey reveals that increasing per-agent productivity is the biggest challenge brokers have over the next three months, with 32% saying it’s their No. 1 challenge.
That hasn’t changed from last quarter; however, in Q4 2022, the challenges that moved up the list include keeping agents motivated, reducing operational expenses and competing with new business models, likely the low-fee and flat-fee model.
In a National Association of Realtors broker’s forum in Orlando, a brokerage owner with 50 agents questioned how he can retain agents who choose to leave for a less expensive business model. “People stay because they feel there is value,” says Cindy Ariosa, senior vice president and regional manager for Long & Foster Real Estate in Maryland.
Christina Pappas, vice president of The Keyes Company in Florida, agreed. “We ask our most loyal agents, what is most valuable to you today? And, we ask this frequently. What do they like and what do they value?”
In the forum, she told the audience how she met with one agent who told her he was leaving for more money. “But, they were actually lowering his split but giving him a bonus. So, I did the math with him and he would actually be making less at that other firm, so he stayed.” That’s because, she notes, it’s not always about the money, but when it is, you must be able to articulate the intangibles that you offer and not just split.
Other challenges include:
- Increased regulation, interest rates and Inflation: 23%
- Keeping agents motivated: 14%
- Pressure on net/gross margins: 11%
- Reducing operational expenses: 9%
- Difficulty recruiting: 5%
- Competing with new business models: 5%
- Retaining agents amid increased competition: 5%
- Restructuring office space: 3%
- Increasing market share through M&A: 2%
- Increasing capture rates on ancillary services: .71%
RealTrends recently added an AgentPulse survey which will help brokerage leaders gauge what agents understand about the services brokerage’s offer and offer agents a temperature of the market.
If you have questions about BrokerPulse, email RealTrends Editorial Director Tracey Velt at tracey@hwmedia.com. Also, be sure to sign up for the new RealTrends Daily, a roundup of news, tips and strategies for success. Each Tuesday, we release a brokerage-focused issue.
