What’s trending in the real estate industry
In our quest to keep our finger on the pulse of real estate and brokerage business, we regularly reach out to brokers, real estate professionals, coaches and tech companies about their challenges and successes, as well as observations about the industry. Here are some of the recent trends we uncovered. Some aren’t new but may be picking up steam; others are morphing into a new trend. Here’s the list:
• Increased share for top producers. While obviously not new to real estate, research indicates that top-producing agents and teams are picking up more share of the business, more so than ever before. On the listing side of transactions, examination of MLS data shows that indeed the top 20 percent of agents have or are nearing an 80 percent market share. While this is not true on the buy side yet, the trend is clear that the most productive agents are garnering larger shares year after year.
• Consumers use ratings and reviews. Research also shows that all age groups of buyers and sellers are using rating and review sites to check agent performance data, even when agents have been referred to them. While Millennials use ratings more than any other age group, all age groups are using such resources and are being influenced by what they find. Anecdotal research from agent interviews confirms that consumers enjoy having access to ratings on agents and are influenced by those who have the most robust information from past customers and clients.
• Data mining helps recruiting. Several national and large regional firms are adding new agents to their ranks through comprehensive data mining and outreach programs. For example, while NAR reported that their membership grew approximately 4 to 5 percent in 2014, two of the national networks grew by more than 20,000 agents last year. Like top agents, they are getting smarter about using online tools, data analytics and focused efforts to grow their shares of the business in the United States.
• Brokers still aren’t using systems. Historically, only a fraction of agents, teams, brokerage firms and national networks use a systematic approach to the core functions of attracting and retaining new clients, customers and/or sales agents. Most of these activities are informal and did not rely on data analytics or systematic approaches. For the most part, when the market grew, then the business of agents and brokerage firms grew. For example, we know that most of the brokerage firms ranked on the REAL Trends 500 and Up-and-Comers grew only slightly above the national growth rates.
• Gain more market share through technology systems. Much has been written and said about consumer facing technology and transaction processing in the industry. Much less has been said about the advent of data analytics and emerging evidence that those agents, teams, brokerage firms and national networks that apply rigorous systems in recruiting customers and/or agents will gain more share, consistently, than those that don’t.
This is not to imply that personal relationships and culture don’t top the list of the attributes of the most successful realty firms and sales professionals. It is that those who develop both strong systematic approaches to growth and a strong culture are likely to have a brighter future than those who lack one or the other.
This article appeared in REAL Trends Newsletter and is being reprinted with permission of REAL Trends, Copyright 2015.