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Is the surge in Realtor members warping brokerage business models?

Is the explosion of Realtor members hurting per-agent productivity?

Today’s RealTrending podcast features Steve Murray, senior advisor to RealTrends discussing Realtor Association membership and the correlation with agent productivity, real estate industry innovation and the dangers.

Here is a small preview of today’s podcast. The transcript below has been lightly edited for length and clarity:

Steve Murray: Realtor membership, meaning real estate professionals who are members of the National Association of Realtors, last I looked, was well above 1.5 million and headed for 1.6 million with no end in sight. This is up almost 700,000 Realtor members since 2011. We’ve gone from a little over 900,000 to just about 1.6 million.

Thus, industry productivity is down on a per-agent basis (or a per-member basis.) There are all kinds of Realtors out there scrambling for a piece of a business pie that hasn’t grown that much. The number of transactions done both existing and new homes has not grown at the same rate that Realtor membership has for the past several years. And, we don’t expect that to change in the next few years. Who’s going to train these people? Who’s going to supervise these people? Which brokerages are they going to associate with? Where will they have the most success?

When the numbers of Realtors go up and the number of listings goes down, our historical data shows that is the No. 1 cause of a decline in commission rates. Scarcity of listings, abundance of Realtors, probably the biggest impact on the business. More agents are competing for lower volumes of business. When Realtors compete on the price of the services they offer, which they do frequently, the result is commission compression and commission competition. So it’s a big, big question.

RealTrending features the brightest minds in real estate. Twice a month, brokerage leaders, top agents, team leaders, and industry experts share their success secrets, trends, and lessons learned navigating this ever-changing industry. Hosted by Tracey Velt and produced by Elissa Branch