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BrokerPulse Q1 2022: Optimism abounds for housing market Q2 2022

76% of brokerage leaders surveyed are optimistic about the next three months, compared to only 70% last quarter.

Inflation and higher prices aren’t impacting the optimistic outlook of the real estate leaders surveyed in the Q 1 2022 BrokerPulse survey. There was a slight increase in the percentage of respondents who expect sales to be up 5% or more (48% compared to 47.3% in last quarter’s survey.) And, a whopping 76% of brokerage leaders are optimistic about the next three months, compared to only 70% last quarter.

While last quarter, brokerage leaders are preparing for a slower market, this quarter, those fears have been assuaged, with some 43% (down from 46% las quarter) of brokers surveyed predicting the market would be flat during the second quarter of 2022, another 13% (down from 26% in Q4 2021) said the market would be down 5% or less.

RealTrends BrokerPulse requests surveys from some 6,000+ real estate brokerage leaders around the nation on market trends and brokerage opportunities and challenges. Of the 126 completed surveys, 26% were from the Southeast, 21% from the Southwest, 21% from the Midwest, 19% form the Northeast and 12% from the Northwest.

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While brokerage leaders are optimistic about housing sales for the short-term, many are concerned about the risks in the long term. “Lack of inventory continues, but with higher interest rates, that could cause a major change in our business,” says Alan Hayes, broker/owner of Coldwell Banker Haynes in Michigan.

For a New Hampshire broker, “Inflation and poor government policies may have a long-term impact on the market. The current administration may continue to drive the economy in a negative direction, slowing down the real estate transaction.”

Challenges in the industry

When it comes to challenges, about a third of the brokers surveyed mentioned venture capital and the “endless supply of money from Wall Street,” as continued issues when it comes to competition.

In addition, increasing per-agent productivity and pressure on net and gross margins as their top two challenges in the next three months. Close behind is competing with new business models and difficulty in recruiting. These have been the top four challenges in 2021 and carry over to 2022.

However, the brokers surveyed have specific plans on how to boost that productivity, including more training on listings, annual goal setting, one-on-one monthly meetings, letting go of low producers and providing more lead generation to agents.

In the recent RealTrends Team Profitability Study, found that teams retained an average gross margin of 61.8%, while the brokerage companies that RealTrends benchmarks (of all different business models), had an average gross margin of 13.8%.

While smaller teams had higher margins, the difference between the smallest teams and the large teams was Infinitesimal.  “As teams get larger, margins tend to shrink, but only a little,” says Steve Murray, senior advisor for RealTrends.

More than just numbers, this new study shows the power of lead generation and the provision of client and customer business opportunities in terms of value to real estate agents. It offers a powerful benchmark for teams to gauge performance against and brokers to determine value-added services to offer their agents.

Opportunities for growth and profits in 2022

When it comes to the industry, Q1 2022 BrokerPulse found that brokers see a lot of opportunity for their businesses in the first quarter of 2022. The one most mentioned is the plethora of new consumer services that their agents can offer buyers and sellers.

This includes concierge services, such as MooveGuru and alternative financing models (instant sales, iBuyers, bridge loans, cash offers) offered by companies such as Knock.com, Easyknock, Ribbon and more.

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. While the results are out yet, there is one interesting nugget to note.

In the survey, the following question was asked: “Are you offering consumers buying and selling options such as iBuying or alternative financing through companies such as Knock.com or Ribbon?” and I was shocked when about a majority answered with “No.”

Most of those also said they’ve never heard of Knock.com, Ribbon or others. Now, I realize that these services aren’t offered in every market, so that accounts for some of the disconnect. There is a huge opportunity for brokerage leaders to train their agents on the use of these services to provide options to consumers.

Other opportunities include boosting capture rates on core services and implementing core services, as well as mergers and acquisitions and increasing market share through recruiting. Brokers also mentioned attracting teams, offering more value to teams and increasing the adoption rate of technology tools.

If you have questions about BrokerPulse, email RealTrends Editorial Director Tracey Velt at tvelt@realtrends.com. Also, be sure to sign up for my bi-weekly broker newsletter, called BrokerSource.

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