{"id":234,"date":"2020-09-03T07:00:00","date_gmt":"2020-09-03T07:00:00","guid":{"rendered":"https:\/\/www.realtrends.com\/blog\/2020\/09\/03\/the-future-of-small-brokerage-firms\/"},"modified":"2025-03-13T02:00:31","modified_gmt":"2025-03-13T02:00:31","slug":"the-future-of-small-brokerage-firms","status":"publish","type":"post","link":"https:\/\/www.realtrends.com\/blog\/2020\/09\/03\/the-future-of-small-brokerage-firms\/","title":{"rendered":"The Future of Small Brokerage Firms"},"content":{"rendered":"<p style=\"vertical-align: middle;\"><em><span style=\"font-size: 13.0pt; color: #445b63;\">Are you stuck in no-man\u2019s land between being a selling\/managing broker or just a managing broker? Here\u2019s some interesting insight.<\/span><\/em><\/p>\n<p><!--more--><\/p>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">In our past research, we found that approximately two-thirds of the National<\/span><span style=\"font-size: 10.0pt; color: black;\"> Association of Realtors<sup>\u00ae<\/sup> member broker-<br \/>age firms have fewer than 10 agents. Depending on how the numbers of brokerage firms are counted, this could mean there are approximately 60,000 residential brokerage firms that fit into this category (90,000 brokerage firms times .67). <\/span><\/p>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">&nbsp;<\/span><span style=\"font-size: 10.0pt; color: black;\">Clearly, there\u2019s a strong desire among real estate professionals to own one\u2019s firm. <\/span><span style=\"font-size: 10.0pt; color: black;\">Further, this segmentation has been in evidence for many years. The percentage of firms with fewer than 10 agents has been mostly consistent with prior years.<\/span><\/p>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">&nbsp;<\/span><span style=\"font-size: 10.0pt; color: black;\">We\u2019ve consulted with a number of these <\/span><span style=\"font-size: 10.0pt; color: black;\">firms over the past 30+ years. We\u2019ve found:<\/span><\/p>\n<ol>\n<li style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\"> The firms all had the same dream of having a brokerage that would be their own, with a culture they desired, and respect from their agents and the community.<\/span><\/li>\n<li style=\"vertical-align: middle;\"><span style=\"font-size: 13px;\">They dreamed that their firms would grow to an extent that would produce additional income (in addition to their sales income), develop into a business that had value (equity), and would become a satisfying investment of their time and capital.<\/span><\/li>\n<\/ol>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">What happens is that even though brokers have the same goals, they all reach them in different ways. This is what we\u2019ve found:<\/span><\/p>\n<ul>\n<li style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\"> There were those who loved what they built, were satisfied owning and running a smallish boutique-type firm and were generally feeling good about what they had done.<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\"> We found another group that was still planning to grow large enough to provide both additional income and potential equity in their firm but had not come to grips with the transition required to get that goal accomplished.<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\"> The last group was composed of owners who had grown tired of having two jobs\u2014dealing with the challenges of owning a brokerage, yet still listing and selling to pay both corporate bills and personal bills.<\/span><\/li>\n<\/ul>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">The last two groups were the ones that came to us for the most help. We were not the first to share with them that few people can master two different jobs at the same time. Being an owner of a brokerage, whether 10, 100, or 1,000 agents, <\/span><span style=\"font-size: 10.0pt; color: black;\">is a full-time job. Being a highly productive<\/span> <span style=\"font-size: 10.0pt; color: black;\">agent or team is also a full-time occupation<\/span><span style=\"font-size: 10.0pt; color: black;\"> and requires intense effort to stay produc<\/span><span style=\"font-size: 10.0pt; color: black;\">tive. When we counseled them about the steps to decide which course they would take, which job they would focus on, the majority flinched, unable to choose. This is where most of them remain stuck.<\/span><\/p>\n<h4 style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: #e55111;\">Why Go Out on Your Own?<\/span><\/h4>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">Several years ago, we ran focus groups with<\/span><span style=\"font-size: 10.0pt; color: black;\"> two sets of eight top-producing agents who left a large, mainstream brokerage to open their own firm\u2014and also got stuck in the 10- to 20-agent size. They all wanted to run their own firm, develop a separate <\/span><span style=\"font-size: 10.0pt; color: black;\">identity, and build an income stream separate from their produc<\/span><span style=\"font-size: 10.0pt; color: black;\">tion while also build<\/span><span style=\"font-size: 10.0pt; color: black;\">ing something of value. We asked one basic <\/span><span style=\"font-size: 10.0pt; color: black;\">question: Why can\u2019t you do that while un<\/span><span style=\"font-size: 10.0pt; color: black;\">der a larger, mainstream brokerage firm?<\/span><span style=\"font-size: 10.0pt; color: black;\">&nbsp;<\/span><\/p>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">After all, over 95% of the top-producing agents and teams in the country reside within a larger mainstream brokerage firm, and many are accomplishing all of those key objectives. <\/span><\/p>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">Independent contractor agents and teams <\/span><span style=\"font-size: 10.0pt; color: black;\">are just that\u2014independent. They\u2019re buying a set of services and tools from a brokerage firm that they would have to reproduce if they had their own firm. You either pay for these support services with a check to a brokerage firm, or you pay for it yourself. One path is a fixed cost, and one path is variable.<\/span><\/p>\n<p style=\"vertical-align: middle;\"><span style=\"font-size: 10.0pt; color: black;\">In other studies, top teams stated that the most valuable services provided by a brokerage are <\/span><em><span style=\"font-size: 10.0pt; color: black;\">legal and regulatory assistance<\/span><\/em><span style=\"font-size: 10.0pt; color: black;\"> and <\/span><em><span style=\"font-size: 10.0pt; color: black;\">having a strong local or national brand name.<\/span><\/em><span style=\"font-size: 10.0pt; color: black;\"> When asked what more a brokerage could do to add value, survey respondents mentioned <\/span><em><span style=\"font-size: 10.0pt; color: black;\">more legal and regulatory assistance<\/span><\/em><span style=\"font-size: 10.0pt; color: black;\"> and <\/span><em><span style=\"font-size: 10.0pt; color: black;\">business coaching<\/span><\/em><span style=\"font-size: 10.0pt; color: black;\">\u2014not <\/span><em><span style=\"font-size: 10.0pt; color: black;\">sales coaching.<\/span><\/em><span style=\"font-size: 10.0pt; color: black;\">&nbsp;<\/span><\/p>\n<p><span style=\"font-size: 10.0pt; color: black;\">Given the intense level of competition among agents and teams, we truly feel for those pioneers who want to own their firm, try their hand at building a sustainable brokerage firm and accomplish the income and equity goals of their dreams. Absent a true assessment of how willing these top agents and teams are to leave behind their sales careers, and the willingness to want to build others\u2019 <\/span><span style=\"font-size: 10.0pt; color: black;\">careers, most firms will never get to where<\/span> <span style=\"font-size: 10.0pt; color: black;\">they want to be. When we visit those firms,<\/span><span style=\"font-size: 10.0pt; color: black;\"> we often remind them that, in most cases, they can accomplish those goals within an existing brokerage firm. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are you stuck in no-man\u2019s land between being a selling\/managing broker or just a managing broker? Here\u2019s some interesting insight.<\/p>\n","protected":false},"author":15802,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[],"class_list":["post-234","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.4 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The Future of Small Brokerage Firms<\/title>\n<meta name=\"description\" content=\"Are you stuck in no man&#039;s land between being a selling\/managing broker or just a managing broker? 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