CONSUMER TRENDS
Real Estate follows a 'pure competition' market model, with many independent firms producing highly similar products (home listings).
Office Type
According to the 2017 NAR Firm Profile Survey
84% - Independent
79% - Single Office
Sales Activity
5.5 M
Home sales in 2017
2.0 M
Active Licensed Professionals
$4.3M
Median Gross Sales Volume
20
Median Transaction Sides per Broker
Exposure
$20K - lost commission if non-traditional brokers gain ~15% of market share (assumes 3% commission)
Revenue Drivers
Real estate agents are sales professionals, and as such must diversify their brand exposure to attract and retain clients.
The 2017 NAR Firm Profile Survey sheds light on what sources drive leads and ultimately sales. Not surprisingly, an agent's reputation is their best friend, demonstrated by referrals and repeat business.
Primary Sales Drivers
| Source | Leads | Sales |
|---|---|---|
| Client Referrals | 30% | 35% |
| Repeat Customers | 30% | 30% |
| Website / MLS | 10% | 10% |
| Social Media | 10% | 5% |
| *Open House | 1% | 1% |
| Other | 19% | 19% |
*Open houses are highly inefficient
“Other” omitted to illustratate key sources
A 'Pure Competition' market model encourages new ideas and strategies to gain a competitive advantage. Accordingly, such innovation can quickly pull market share from other firms. This is not new, and more firms are beginning to recognize this.
50% of firms expect competition to increase from non-traditional brokerages as well as overall (NAR-2017 Firm Profile Survey)
Today, new startups are offering unique ways to benefit home buyers and sellers through specialized business models.
Strategic Advantages (Non-Traditional Firms)
Below is an abstract of the 2018 National Association of Realtors: Generational Trends Survey, highlighting key opportunities for real estate professionals.
Selecting an Agent
Consistent with historical trends, home owners and buyers continue to engage agents when buying or selling a home.
Primary Goals
| Home Buyers |
|---|
| 52% - Identify the right home |
| 13% - Negotiate terms of sale |
| 11% - Help with Price Talks |
| 15% - Locale/affordability info |
| 9% - Admin and other |
| Home Sellers |
|---|
| 21% - Market the Home |
| 20% - Sell by a deadline |
| 18% - Price competitively |
| 15% - Improve market value |
| 27% - Admin and other |
Finding the Perfect Home
Information Resources
The table to the right shows the top research tools and which led to a decision.
*Only a small portion of people located their home through an open house*
Research Sources vs. How Found
| Source | Research | Purchase |
|---|---|---|
| Internet | 95% | 49% |
| Agent | 89% | 31% |
| Open House | 50% | 7% |
Distance Moved
The coresponding graphic illustrates distribution of distance moved.
| Proximity | % Sellers |
|---|---|
| Same State | 73% |
| Same Region | 12% |
| New Region | 15% |
*Nearly 30% of buyers moved out of state*
Consumer Sentiment
- Satisfaction / Retention / Referral -
As discussed above, over 60% of sales are driven by past or repeat clients.
Here we analyze customer satisfaction with the home buying/selling process alongside customer retention and referral rates.
- Satisfaction & Retention -
Overall, there is room for improvement with the home buying and selling process. Generally speaking, only about 60% of consumers were 'very satisfied' with their experience.
- Referral Rate -
Buyers generally felt positive about their overall experience.
Sellers however were somewhat less satisified with their agent experiences with fewer than 70% citing a definite recommendation and nearly 40% having not recommended the agent since their sale.
National Association of Realtors
2017 Profile of Real Estate Firms / 2018 Generational Trends Report
