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Survey Highlights Real Estate Firm’s Top Challenges, Expectations

In August, the National Association of Realtors® released the 2017 Profile of Real Estate Firms, which provides insight into the business characteristics and activity of real estate firms, the benefits and education provided to agents, and an outlook for the future.

The report’s findings are based on a survey of firm executives who are members of NAR, and found that keeping up with technology, maintaining sufficient inventory, competition from nontraditional market participants and profitability are among the biggest challenges for real estate firms.

Nationally, real estate firms are sensing strengthened competition this year, as 50 percent of firms expect competition to increase in the next year from non-traditional market participants, up from 43 percent a year ago. Half of firms expect competition during the same period to increase from virtual firms, an increase of 3 percent since 2016. Only 15 percent expect competition will increase from traditional brick-and-mortar firms.

According to the survey, 60 percent of commercial firms expect profitability from all real estate activities to increase in the next year, compared to 64 percent in 2016. Residential real estate firms are more optimistic compared to commercial firms; 62 percent of firms expect profitability to improve, compared to 65 percent in 2016.

For a third year in a row, the vast majority of firms have an optimistic outlook for the future of the industry’s growth. Although expectations have slightly decreased from last year’s survey, firms remain confident and expect profitability from all real estate activities to increase or stay the same over the next year.

Nationally, the typical residential real estate firm’s brokerage sales volume was $6.2 million in 2016, down from $6.3 in 2015, while the typical commercial real estate firm’s brokerage sales volume was $4.0 million in 2016.

The survey found that the size of the firm has an impact on sales volume. Firms with only one office, typically with two full-time licensed agents, had a median brokerage sales volume of $4.3 million in 2016, compared to $4.5 million in 2015. Large firms, those with four or more offices and typically with 81 full-time licensed agents, had a median brokerage sales volume of $235.0 million in 2016, compared to $203.8 million in 2015.

The report also predicts the effect different generations of homebuyers will have on the industry. Fifty-two percent of firms are concerned with Gen Y/millennials’ ability to buy a home, 34 percent of firms are concerned with millennials’ view of homeownership, and 32 percent of firms are concerned about the recruitment of millennial and Gen X real estate professionals.