Surprising Stats about Brokerage Owners

Curious to find out what makes real estate brokerages tick? The 2018 Real Estate Brokerage Industry Insight Report, published in August, reveals surprising statistics. For example, how many broker/owners are still involved in daily production? How many agents do most brokerages have employed? Are agents provided leads from their office? What are the biggest challenges faced by the companies? And the hot topic of required education and training. 

The survey, designed to discover the needs and motivations of real estate brokerage firms in North America, received interesting results. The top 5 take-aways from this report involve brokerage owner demographics, company demographics, and industry outlook. The following survey results are based upon the answers received from approximately 200 brokerage owner/manager respondents. 

Broker/Owner Involvement in Production 

Most brokerage owners are “competing brokers” still selling real estate every day. Some agents prefer to have an actively selling broker because the agents can receive training from a good role model, while other agents are leery of a broker heavily involved in their own sales. Sixty-six percent of the respondents actively sell real estate and advertise themselves to gain business personally. Twenty-eight percent sell real estate but do not advertise, serving only family members, past clients, and personal referrals. And six percent of respondents do not sell real estate at all, presumably using their time to lead and manage the organization, and often being available to advise their agents full time. 

Agents Employed by Brokerage Firm 

A minimum of 30 agents per office is typically viewed as desirable for efficiency of scale in operations. The survey found that most brokerages employ only 2 agents (the mode), which was the most common answer. The median number of agents per office is 7, with 82 percent of small brokerages having with fewer than 30 agents. Twenty-one percent of firms are mid-size brokerages with 30 to 100 agents. Only five percent of firms are large brokerages with 100+ agents, with only one percent employing 1,000 or more agents. 

Leads Provided to Agents 

Most real estate brokerages (84%) provide leads to their agents, whether the leads are paid, actively generated, or passively generated. Those who pass on the costs to their agents charge either a flat fee or an increased transaction cost. Some brokerages indicated they both collect passive leads and actively pay for leads for their agents. 

Eighty-four percent of responding brokerage owners collect/purchase leads and distribute to their agents. Of those, 41 percent passively collect leads and forward inquiries from prospective clients to their agents, 37 percent actively pay for leads and charge their agents for them (either per lead or higher commission split), and four percent pay for leads (or actively generate leads) but do not charge their agents. Only 16 percent of the brokerages are not involved in any type of lead generation activities. 

“We actively pay for leads and either charge agents or give them leads freely, depending on the level of involvement leadership has in the development and transaction process,” commented one brokerage owner. Another said, “The leads are shared but not promised.” 

Biggest Challenge for Company 

It is interesting to note that brokers experienced a bigger challenge with finding qualified agents than locating top producing agents. Of the 10 challenges listed, the average respondent selected 3 of the issues. The majority of agents, 56 percent, identified their biggest challenge as hiring qualified agents, while 46 percent selected hiring top producing agents. Ongoing lead generation for agents was chosen by 41 percent, training system for agents was 36 percent, and low industry standards for licensees, 25 percent. Other answers about 12 percent included high / increasing overhead costs, too many competitors, retaining good agents, and low / declining profit margins. 

Should More Comprehensive Education and Training be Required? 

Respondents decidedly believe that real estate licensees need more comprehensive education and training. Ninety-one percent agree there should be more comprehensive education and training for licensees, and only nine percent disagreed. Comments included philosophies and thoughts across the board, such as: 

• “A 4-year degree in Real Estate should be required.” 
• “Agents should be required to take extensive training on both contracts and ethics before they are allowed to work on their own.” 
• “Training and education should be encouraged and incentivized. There is a plethora of training already available. It is not the failure to get the education, it is the failure to create the support and systems to use what is learned and to leverage it.” 
• “There is a wealth of training and education provided throughout our marketplace. However, getting the agents to actually attend, utilize, and put this training to use is the problem. Implementation is key.” 
• “Training is already promoted. Unfortunately, the perception of the industry by outsiders wanting in is skewed, and thus more poor talent enters.” 

Hopefully this helps answer some controversial questions about real estate brokerages. Yes, most brokerage owners are involved in sales production, and many agents find those brokerages a right fit. Most brokerages are micro-firms with only about 2 or 3 agents. Surprisingly, in spite of agents who complain about lack of leads, most brokerage firms do supply their agents with leads (most at a cost). The biggest challenge for brokers is recruiting agents, which is probably not so surprising. And lastly, everyone wants more comprehensive education and training.