Consolidation, rising costs of technology, the way brokers and agents do business, and regulatory impacts are the most likely changes that will drive the real estate industry in the next three to five years, according to a provocative new study completed by the National Association of Realtors’ Research Division.
“The Future of Real Estate Brokerage: Challenges and Opportunities for Realtors” presents an overview of business models and strategies — old and new. In-depth data analysis provides perspective on the drivers of change in the real estate business to help broker-owners and firm managers make long-range plans.
The report includes a comparison of three major business models in the industry and concludes that each model has characteristics that enable them to succeed, but that change will affect all models.
The 30,000 traditional brokerages represent the largest number of firms. The vertically expanded brokerages are those with more than 200 agents that have broadened operations to include ancillary services. Agent service bureaus are a form of traditional brokerage that offers a 100 percent commission to agents.
The NAR study also explores how growth opportunities spawned by the Internet and potential changes in regulatory policy have given rise to three emerging models:
• Unbundled service providers that present an a-la-carte menu to consumers.
• Market makers that employ varying electronic platforms that may include auctioning, with the real estate professional adding value through new services during the process.
• Corporate ownership of residential real estate brokerages firms owned by non-brokerage companies; this model has the potential to change the competitive landscape of the industry most quickly by acquisition of existing brokerages with great market share.
This study builds on established NAR research on firms, members, homebuyers and sellers, and creates a picture of past, present and future changes in the real estate industry. The report also looks at how firms adapt to developments in technology and economic and regulatory environments, and how those developments have influenced the evolution of business models that may become dominant in the future.
For example, in the area of consolidation, the study notes that concentration is low in real estate brokerage, but the market share of the top firms is increasing, and that by 2001, the top 250 companies represented 24 percent of all agents and one in six home sales.
“This is a think-piece with a long shelf life that will serve broker-owners and managers for a long time to come. It examines the deeper issues facing today’s real estate brokerages and suggests models based on what business strategies a broker decides to embrace, and how to be successful in every business model,” said David Lereah, NAR’s chief economist.
“Brokers pondering long-range planning can use this study to guide their choices: Do I want to add services or sell my business? Do I want to take on a partnership? Which of the present trends will survive and prove most profitable? The study also speaks to real estate agents, pointing out what their options are in the long term in whatever strategy or model their broker chooses, and helps to answer questions about ‘where do I go, what do I do?,’” said Ellen Roche, vice president of Research.
“This is a must read for anyone in our business. This summary describes the real estate business as it is today and then provides provocative scenarios that are likely to occur in the near future. Not only are present practices identified, defined and evaluated with anecdotal references, but also future events likely to impact our present practices are examined. I am particularly pleased with the depth of information provided by the Research team,” said Hal Kahn, broker-owner of Kahn Realtors of Newburgh, N.Y., and 2002 chair of the NAR Research Committee.
“The Future of Real Estate Brokerage: Challenges and Opportunities for Realtors” is available from NAR’s Customer Service. To order, call 800-874-6500 and ask for item No. 186-72-LN. For more information, visit http://www.Realtor.org/research and click on Business Research Products.
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The National Association of Realtors radio ad aimed at keeping banking conglomerates out of the real estate business recently received a prestigious Pollie Award from the American Association of Political Consultants (AAPC).
Created and produced by the Stevens & Schriefer Group, the 60-second radio spot won second place honors among a crowded field of contestants in the Pollie Awards’ Independent Expenditure Campaign/Issue Advocacy – Legislative or Municipal category.
The ad, which aired last spring in about 40 congressional districts, was part of NAR’s multimillion dollar advertising campaign to encourage members of Congress to cosponsor the Community Choice in Real Estate Act, which would prevent large banking conglomerates from taking over locally owned and operated real estate companies.
Entitled “Phone Tree,” the ad featured a bank customer dialing into an automated phone system that instructs the caller to press a number on their phone to check their savings account balance, buy a house, rent an apartment, find a condo, purchase securities or buy insurance.
“If you want to buy a house in Alabama press 1, Alaska press 2, Arizona press 3,” the ad says. “Let’s stop the big bank takeover of local real estate.”
“We’re delighted that the American Association of Political Consultants has honored our radio campaign educating consumers and elected officials about the dangers of allowing big banks to enter real estate with a Pollie Award. This a testament to the strength of our argument that if banking conglomerates were allowed to enter real estate, home buyers and sellers would be left with fewer choices, higher loan fees and reduced customer service,” said NAR President Cathy Whatley of Jacksonville.
Every year the American Association of Political Consultants presents the prestigious Pollie Awards program rotating between political and public affairs. The Pollie Awards honor the very best in political and issue advocacy advertising and expertise. Winners are chosen from over 70 different categories.
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Through its newest exhibition, “Within These Walls…” the Smithsonian’s National Museum of American History will showcase 200 years of American history as seen from the doorstep of one house that stood from colonial days through the mid-1960s in Ipswich, Mass. Opening May 16, the 4,200-square-foot exhibition will highlight five ordinary families whose lives within the walls of the house became part of the great changes and events of the nation’s past.
The exhibit is sponsored by NAR.
The largest single artifact in the museum, the Georgian-style, two-and-a-half story timber-framed house was built in the 1760s, just 30 miles north of Boston and stood at 16 Elm Street until 1963 when efforts by Ipswich citizens saved it from the bulldozer. Today, the house is the centerpiece of “Within These Walls…” and visitors will be able to peer through its walls, windows and doors to view settings played out against the backdrop of colonial America, the American Revolution, the abolitionist movement, the industrial era and World War II.
The National Museum of American History traces American heritage through cultural, social, scientific and technical exhibitions. The museum is located at 14th Street and Constitution Avenue, N.W., and is open daily from 10 a.m. to 5:30 p.m.
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A publication to help educate consumers about why mold develops in the home and what to do about it is being offered by the National Association of Realtors.
“A Guide to Mold, Moisture and Your Home” is an information guide created by the Environmental Protection Agency and offered by NAR that contains recommendations for how to remove mold and prevent it from returning.
Targeted at real estate practitioners, consumers, and association executives, the guide focuses on raising awareness about mold, describes why mold grows in a home, and offers tips and techniques for cleaning up mold. The booklet recommends not only what a homeowner can do to clean up mold, but also when a professional might better handle cleanup.
The guide discusses testing for mold in the home, and reviews hidden mold and what to do about it. It also provides recommendations on controlling moisture in the home and how to prevent further mold damage.
The guide is available now. To order, call 800-874-6500, fax 312-329-5960, or go online at www.realtor.org/realtorVIP, and ask for item 141-24.
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A work group of the National Association of Realtors has completed a draft policy governing the display of Multiple Listing Service data on Virtual Office Websites (VOWs), through which real estate brokers provide real estate brokerage services to consumers over the Internet. The draft policy is available to Realtors on Realtor.org at
http://www.realtor.org/mempolweb.nsf/pages/vowreport.
The proposed policy will be reviewed by NAR’s Committee on Multiple Listing Issues and Policies when it meets during the association’s Midyear Legislative Meetings in Washington, May 13-17. The NAR Board of Directors will consider the policy at its meeting in Washington on May 17.