WASHINGTON – Oct. 3, 2014 – Real estate firms are confident about the future growth and profitability of their industry, according to the 2014 National Association of Realtors® Profile of Real Estate Firms.

"Despite continued challenges, real estate firms expect market growth in tandem with the ongoing recovery," says NAR President Steve Brown

Most residential firms have a positive view of the future, with 66 percent of firms expecting to see profit from all their activities to increase in the next year. "Commercial real estate firms are even more optimistic, with 71 percent expecting profitability to improve," says Lawrence Yun, NAR's chief economist.

According to the survey:

  • 81 percent of firms specialize in residential brokerage, with commercial brokerages and residential property management as the most popular secondary functions.
  • 84 percent of firms are independent, non-franchised firms, while 14 percent are independent, franchised firms. The remainders are subsidiaries of a national or regional corporation.
  • The typical residential real estate firm's brokerage sales volume was $4.7 million in 2013, while the typical commercial real estate firm's brokerage sales volume was $4.3 million.
  • 35 percent of sales volume typically comes from past client referrals; 30 percent from repeat business from past clients; 10 percent from their website; and five percent through social media.
  • The average residential firm has been in business for 12 years, and the average commercial firm has been operating for 17 years.
  • 81 percent of all brokerages have one office and two full-time real estate licensees, while seven percent have four or more offices with 92 full-time real estate licensees.
  • The most common concern cited by firms (59 percent) was Millennials' ability to buy a home due to stagnant wage growth, a slow job market and their debt-to-income ratios. Profitability, keeping up with technology, maintaining sufficient inventory, and local or regional economic conditions are the next most reported concerns firms see themselves facing in the next two years.
  • Growth has not slowed: 45 percent of firms are currently recruiting sales agents, with 87 percent of those firms reporting business growth as their primary reason.
  • 48 percent predict industry competition will increase from non-traditional market participants; 41 percent say it will come from virtual firms, and 16 percent expect it from traditional brick-and-mortar firms.
  • 81 percent of firms offer errors and omissions/liability insurance to independent contractors, licensees and agents, making it the most common benefit firms offer their employees. However, many firms share the cost of the insurance with their employees: 21 percent offer independent contractors, licensees and agents health insurance. In most cases, the employee pays for the benefit.

The 2014 National Association of Realtors® Profile of Real Estate Firms was based on a questionnaire mailed in August of this year to a national sample of 134,108 executives at real estate firms with 7,081 usable responses.

The 2014 National Association of Realtors® Profile of Real Estate Firms is free online (password protected) for members or ordered by calling 800-874-6500. For nonmembers, the study costs $149.95.

© 2014 Florida Realtors®