2014 NAR Profile of Real Estate Firms

7/29/2019 2014 NAR Profile of Real Estate Firms

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2014 Profile of Real Estate Firms

2014 OFFICERS

President

Steve Brown, ABR, CIPS, CRS, GREEN

President-Elect

Chris Polychron, CRS, GRI

First Vice President

Tom Salomone

Treasurer

Michael McGrew, CRB, CRS

Immediate Past President

Gary Thomas

Vice President

Beth L. Peerce

Vice President

JoAnne Poole, GRI, CRS

Chief Executive Officer

Dale Stinton, CAE, CPA, CMA, RCE

NAR RESEARCH STAFF

Office of the Chief Economist

Lawrence Yun, Ph.D., Chief Economist and

Senior Vice President

Caroline Van Hollen, Senior Research and

Strategic Planning Coordinator

Survey and Market Research

Paul C. Bishop, Ph.D., Vice President

Stephanie Davis, Administrative Coordinator

Nadia Evangelou, Research Economist

Ken Fears, Director, Regional Economics and

Housing Finance

Danielle Hale, Director of Housing Statistics

Jessica Lautz, Director, Member and Consumer

Survey Research

Quantitative Research

Jed Smith, Ph.D., Managing Director,

Quantitative Research

Scholastica Cororaton, Research Economist

Michael Hyman, Research Assistant

George Ratiu, Director, Quantitative and

Commercial Research

Hua Zhong, Data Analyst

Business Operations and Communications

Thomas Doyle, Director of Research Marketing

and Communications

Meredith Dunn, Research Communications

Representative


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Highlights

Characteristics of Real Estate Firms

Eighty-one percent of real estate firms have a single office, typically with two full-time

real estate licensees.

Eighty-four percent of firms are independent non-franchised firms, and 14 percent are

independent franchised firms.

Eighty-one percent of firms specialize in residential brokerage.

34 percent of firms are LLCs, 28 percent are sole proprietorship, 26 percent are S-Corps,

and nine percent are C-Corps.

The typical residential firm has been operating for 12 years, while the typical

commercial firm has been operating for 17 years.

Business Activity of Firms

Firms with only one office had a median brokerage sales volume of $3.9 million in 2013,while firms with four or more offices had a median brokerage sales volume of $187.5

million in 2013.

Firms with one office had a total of 18 real estate transaction sides in 2013, while firms

with four or more offices typically had 710 real estate transaction sides in 2013.

Firms typically had 30 percent of their customer inquiries from past client referrals, 25

percent from repeat business from past clients, 11 percent from their website, five

percent through social media, and one percent through open houses.

Firms typically had 35 percent of their sales volume from past client referrals, 30

percent from repeat business from past clients, 10 percent from their website, and fivepercent through social media.

Many firms have the capability to offer in-house ancillary services to real estate clients.

The most common in-house service is business brokerage.

Benefits

The most common benefit that firms offer to licensed independent contractor agents is

errors and omissions/liability insurance at 81 percent.

While this is also the most common benefit for salaried licensees and agents, only 38

percent have this benefit.

Among administrative staff, 38 percent have errors and omissions/liability insurance, 35


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percent have vacation/sick days and 25 percent have health insurance.

Fifty-three percent of senior management have errors and omissions/liability insurance,

28 percent have health insurance, and 23 percent have vacation/sick days.

Future Outlook of Firms

Forty-five percent of firms reported they are actively recruiting sales agents in 2014.

Sixty-four percent of firms expect profitability (net income) from all real estate activities

to increase in the next year.

Forty-eight percent of firms expect competition to increase from non-traditional market

participants, 41 percent of firms expect competition to increase from virtual firms in the

next year, and 16 percent of firms expect competition to increase from traditional brick

and mortar firms.

Profitability, keeping up with technology, maintaining sufficient inventory, and local or

regional economic conditions are among the biggest challenges cited by firms in the

next two years.


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Summary

Eighty-one percent of real estate firms have a single office, typically with two full-time real

estate licensees, and 81 percent specialize in residential brokerage. Thirty-four percent of firms

are LLCs, 28 percent are sole proprietorships, 26 percent are S-Corps, and 9 percent are C-

Corps. Fifty-nine percent of firms cover a geographic market area of a metropolitan area or

region, 29 percent cover a rural area or small town, seven percent cover a resort area or small

town, and four percent cover a multi-state area. Only one percent are nationwide firms.

Eighty-four percent of firms are independent, non-franchised companies, and 14 percent are

independent franchised companies. The typical residential firm has been operating for 12 years,

while the typical commercial firm has been operating for 17 years. Franchised firms are typically

larger companies, thus 45 percent of firms with four or more offices are franchised companies.

Franchised firms are also more common among residential real estate firms, as 18 percent of

residential firms are franchised compared to only five percent of commercial real estate firms.

Eighty-eighty percent of firms reported mergers and acquisitions of the firm; this figure has

remained the same from 2003 to 2008 to 2009 to 2014. However, eight percent of firms did

indicate that mergers and acquisitions have increased during that time period.

While the typical firm has two full-time real estate licensees, larger firms reported having a

median of 92 full-time real estate licensees, three part-time licenses who work less than 30

hours a week, seven non-licensee full-time staff, and one non-licensee part-time staff. The

typical firm did not have a new licensee or a licensee who left the firm, but for those firms who

had four or more offices, they typically had 12 new licensees join their firm in 2013 and fivelicensees who left their firm in 2013. Firms with four or more offices also saw a gain in staff who

are not licenseestypically one staff member.

The typical residential real estate firmsbrokerage sales volume was $4.7 million in 2013, while

the typical commercial real estate firms brokerage sales volume was $4.3 million in 2013.

There was a wide range for the median brokerage sales volume by the number of offices at a

firm. Those with only one office had a median brokerage sales volume of $3.9 million in 2013,

while those with four or more offices had a median brokerage sales volume of $187.5 million in

2013. Similarly, those with one office had a total of 18 real estate transaction sides in 2013,


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while those with four or more offices typically had 710 real estate transaction sides in 2013.

Many firms have the capability to offer in-house ancillary services to real estate clients. The

most common in-house service is business brokerage, followed by relocation services, and

home improvement. Among firms with four or more offices, 55 percent offer relocation

services, 43 percent offer business brokerage, 26 percent offer mortgage lending, and 23

percent offer title or escrow services in-house. The typical firm makes less than one percent of

their net revenue from ancillary services. However, those with four or more offices typically

make 10 percent of their net revenue from these services.

Firms typically had 30 percent of their customer inquiries from past client referrals, 25 percent

from repeat business from past clients, 11 percent from their website, five percent through

social media and one percent through open houses. Firms typically had 35 percent of their sales

volume from past client referrals, 30 percent from repeat business from past clients, 10 percent

from their website, and five percent through social media. Firms report their currentcompetition is most likely to come from traditional brick and mortar firms, followed by non-

traditional market participants, and finally, virtual firms.

The most common feature on firmswebsites are property listings, agent/staff profiles,

mortgage/financial calculators, information about the home buying and selling process, and

community information/demographics. Firms provide or encourage the use of specific

software. The most common software that is provided or encouraged for use by agents/brokers

is multiple listing services, comparative market analysis, electronic contracts/forms, and e-

signature.

The most common benefit that firms offer to licensed independent contractor agents is errors

and omissions/liability insurance, at 81 percent. However, many share the cost of the insurance

with their employees. Only 21 percent of firms offer their licensed independent contractor

agents health insurance and in most cases the employee pays for the benefit. Among salaried

licensees and agents, administrative staff, and senior management there are a larger share of

firms who pay for errors and omissions/liability insurance, vacation/sick days, and health

insurance.

Forty-five percent of firms reported they are actively recruiting sales agents in 2014. This is

more common among residential firms (49 percent) than commercial firms (34 percent) and


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more common among firms with four offices or more (87 percent) than firms with one office

(40 percent). Eighty-seven percent of firms reported the reason for recruitment is growth in

primary business followed by the desire for younger agents, at 36 percent. Larger firms are

much more likely to recruit for the desire for younger agents and to replace agents who are

leaving the firm.

Sixty-four percent of firms expect profitability (net income) from all real estate activities to

increase in the next year. Commercial real estate firms are more optimistic as 71 percent

expect profitability to improve, as well as large firms with four or more offices69 percent

expect profitability to improve.

Forty-eight percent of firms expect competition to increase in the next year (mid-2014 to mid-

2015) from non-traditional market participants. Forty-one percent of firms expect competition

during the same time period to increase from virtual firms, while only 16 percent expect

competition will increase from traditional brick and mortar firms.

Profitability, keeping up with technology, maintaining sufficient inventory, and local or regional

economic conditions are among the biggest challenges cited by firms in the next two years.

Commercial firms are more likely than residential firms to site state and local economic

conditions, while residential firms are more likely to cite recruiting younger agents, competition

from non-traditional market participants, and agent retention.

When firms are asked to predict the effect of generations on the industry for the next two

years, the most common concern was Generation Ys ability to buy a home due to stagnant

wage growth, a slow job market, and their debt-to-income ratios59 percent of firms cited thisas a concern. This was followed by Baby Boomers retiring from the real estate industry and

conversely the recruitment of Generation Y and Generation X into the real estate profession.

Firms with four or more offices were most concerned with Baby Boomers retiring and the

recruitment of Generation Y and Generation X into the industry.


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CHARACTERISTICS OF REAL ESTATE FIRMS

Exhibit 1-1 YEARS IN REAL ESTATE BUSINESS

Exhibit 1-2 YEARS IN REAL ESTATE BUSINESS

Exhibit 1-3 NUMBER OF OFFICES

Exhibit 1-4 NUMBER OF OFFICESExhibit 1-5 OFFICE OPENINGS AND CLOSINGS

Exhibit 1-6 CHANGE IN MERGERS/ACQUISITIONS FOR FIRM FROM 2003-2008 TO 2009-2014

Exhibit 1-7 SHARE OF INDEPENDENT AND FRANCHISED FIRMS

Exhibit 1-8 FIRM TYPE BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 1-9 FIRM TYPE BY NUMBER OF OFFICES AT FIRM

Exhibit 1-10 LEGAL ORGANIZATION OF REAL ESTATE FIRMS

Exhibit 1-11 STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM

Exhibit 1-12 CHANGE IN STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM

Exhibit 1-13 FIRM'S PRIMARY SPECIALTY AREA

Exhibit 1-14 PERCENT OF FIRM'S REVENUE FROM PRIMARY REAL ESTATE BUSINESS ACTIVITY

Exhibit 1-15 OTHER REAL ESTATE BUSINESS ACTIVITIES AMONG FIRM

Exhibit 1-16 GEOGRAPHIC MARKET AREA OF FIRM

2014 National Association of Realtors Profile of Real Estate Firms


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Exhibit 1-1

YEARS IN REAL ESTATE BUSINESS

(Percentage Distribution)

All Firms

One year or less 6%

2 to 3 years 9

4 to 5 years 9

6 to 7 years 8

8 to 10 years 13

11 to 14 years 9

15 years or more 46

One year or less

6%2 to 3 years

9%

4 to 5 years

9%

6 to 7 years

8%

8 to 10 years

13%11 to 14 years

9%

15 years or more

46%



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Exhibit 1-2

YEARS IN REAL ESTATE BUSINESS


All Firms Residential Firms Commercial Firms

One year or less 6% 7% 2%

2 to 3 years 9 10 8

4 to 5 years 9 10 8

6 to 7 years 8 8 10

8 to 10 years 13 13 8

11 to 14 years 9 9 6

15 years or more 46 43 59

Median (years) 13 12 17



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Exhibit 1-3

NUMBER OF OFFICES


All Firms

1 office 81%

2 offices 9

3 offices 3

4 or more offices 7

1 office

81%

2 offices

9%

3 offices

3%

4 or more offices

7%



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Exhibit 1-4

NUMBER OF OFFICES



1 office 81% 79% 87%

2 offices 9 9 8

3 offices 3 3 4

4 or more offices 7 9 2

Median (offices) 1 1 1



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Exhibit 1-5

OFFICE OPENINGS AND CLOSINGS

(Medians)


Number of offices affiliated with your firm at year-

end in 2012 1 1 1

Number of new offices opened in 2013 0 0 0

Number of offices acquired through purchase or

merger with another firm in 2013 0 0 0

Number of offices acquired through purchase or

merger with another firm from 2012-2007 0 0 0

Number of offices closed in 2013 0 0 0



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Exhibit 1-6

CHANGE IN MERGERS/ACQUISITIONS FOR FIRM FROM 2003-2008 TO 2009-2014


All Firms

Increased 8%

Decreased 4

Stayed the same 88

Increased

8% Decreased

4%

Stayed the same

88%



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Exhibit 1-7

SHARE OF INDEPENDENT AND FRANCHISED FIRMS


All Firms

Independent, non-franchised company 84%

Independent, franchised company 14

Subsidiary of a national or regional

corporation, franchised company 1Subsidiary of a national or regional

corporation, non-franchised company 1

Independent, non-

franchised company

84%

Independent,

franchised company

14%

Subsidiary of a national

or regional corporation,

franchised company

2%

Subsidiary of a

national or regional

corporation, non-

franchised company

1%



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Exhibit 1-8

FIRM TYPE BY RESIDENTIAL AND COMMERCIAL FIRMS



Independent, non-franchised company 84% 82% 94%

Independent, franchised company 14 16 4


corporation, franchised company 1 2 1


corporation, non-franchised company 1 1 1

* Less than 1 percent



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Exhibit 1-9

FIRM TYPE BY NUMBER OF OFFICES AT FIRM


All Firms One office Two offices Three offices Four or more offices

Independent, non-franchised company 84% 89% 67% 63% 48%

Independent, franchised company 14 10 27 31 40


corporation, franchised company 1 * 1 * 5


corporation, non-franchised company 1 1 2 7 6


Number of Offices at Firm



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Exhibit 1-10

LEGAL ORGANIZATION OF REAL ESTATE FIRMS


All Firms

LLC 34%

Sole proprietorship 28

S-Corp 26

C-Corp 9

Partnership 3

LLC

34%

Sole proprietorship

28%

S-Corp

26%

C-Corp

9%

Partnership

3%



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Exhibit 1-11

STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM

(Medians)


Number of full-time real estate licensees 2 2 8 20 92Number of full-time licensees who are

independent contractors 2 2 7 22 92

Number of part-time real estate

licensees (work fewer than 30 hours a

week) who are salaried 0 0 0 0 0Number of part-time licensees (work

fewer than 30 hours a week) who are

independent contractors 0 0 2 2 3

Number of full-time staff (non-licensees) 0 0 1 3 7

Number of part-time staff (non-

licensees) 0 0 0 0 1Number of part-time staff (non-

licensees) who work fewer than 30

hours a week 0 0 0 0 1




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Exhibit 1-12

CHANGE IN STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM

(Medians)


Number of licensees who joined firm

in 2013 0 0 2 5 12

Number of licensees who left firm in

2013 0 0 1 2 5

Number of staff (non-licensees) who

joined firm in 2013 0 0 0 0 1

Number of staff (non-licensees) who

left firm in 2013 0 0 0 0 0




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Exhibit 1-13

FIRM'S PRIMARY SPECIALTY AREA


All Firms

Auction *

International *

Counseling 1

Relocation 1

Commercial Appraisal 1

Commercial Property Management 1

Land/Development 1

Residential Appraisal 3

Commercial Brokerage 4

Residential Property Management 7

Residential Brokerage 81%

0 10 20 30 40 50 60 70 80 90

Auction

International

Counseling

Relocation

Commercial Appraisal

Commercial Property Management

Land/Development

Residential Appraisal

Commercial Brokerage

Residential Property Management

Residential Brokerage

0

0

1

1

1

1

1

3

4

7

81%



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Exhibit 1-14

PERCENT OF FIRM'S REVENUE FROM PRIMARY REAL ESTATE BUSINESS ACTIVITY


All Firms

None 1%

1 to 4 percent *

5 to 10 percent 1

11 to 20 percent 1

21 thru 50 percent 4



Median (percent) 99%




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Exhibit 1-15

OTHER REAL ESTATE BUSINESS ACTIVITIES AMONG FIRM

(Percent of Respondents)

All Firms

Commercial Appraisal 2

Auction 4

International 5

Residential Appraisal 6

Counseling 11

Commercial Property Management 11

Land/Development 15

Relocation 18

Residential Brokerage 29

Residential Property Management 38Commercial Brokerage 39%

0 5 10 15 20 25 30 35 40

Commercial Appraisal

Auction

International

Residential Appraisal

Counseling

Commercial Property Management

Land/Development

Relocation

Residential Brokerage

Residential Property Management

Commercial Brokerage

2

4

5

6

11

11

15

18

29

38

39%



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Exhibit 1-16

GEOGRAPHIC MARKET AREA OF FIRM


All Firms

Metropolitan area or region 59%

Rural area/Small town 29

Resort/Recreation area 7Multi-state area 4

Nationwide 1

Metropolitan area

or region

59%

Rural area/Small

town

29%

Resort/

Recreation area

7%

Multi-state area

4% Nationwide

1%



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BUSINESS ACTIVITY OF FIRMS

Exhibit 2-1 FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013

Exhibit 2-2 FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY NUMBER OF OFFICES AT FIRM, 2013

Exhibit 2-3 FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013

Exhibit 2-4 FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY NUMBER OF OFFICES AT FIRM, 2013

Exhibit 2-5 ANCILLARY SERVICES OFFERED AT FIRMS BY NUMBER OF OFFICES AT FIRM

Exhibit 2-6 ANCILLARY SERVICES OFFERED AT FIRMS TO TYPES OF CLIENTS

Exhibit 2-7 PERCENT OF NET REVENUE OF FIRM MADE ON ANCILLARY SERVICES BY NUMBER OF OFFICES AT FIRM

Exhibit 2-8 PERCENT OF CUSTOMER INQUIRIES GENERATED FROM SOURCES

Exhibit 2-9 PERCENT OF FIRM'S SALES VOLUME WAS GENERATED BY SOURCE

Exhibit 2-10 WHERE DOES CURRENT COMPETITION COME FROM

Exhibit 2-11 FEATURES ON FIRM'S WEBSITE BY RESIDENTIAL AND COMMERICAL FIRMS

Exhibit 2-12 FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 2-13 FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY NUMBER OF OFFICES AT FIRM



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Exhibit 2-1

FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013


Residential Firms Commercial Firms

No transactions 4% 2%

Less than $5 million 49 56

$5 million to under $10 million 16 21






$500 million to under $1 billion 1 *

$1 billion or more 2 1

Median (millions) $4.7 $4.3




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Exhibit 2-2

FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY NUMBER OF OFFICES AT FIRM, 2013


One office Two offices Three offices Four or more offices

No transactions 7% 1% 3% 1%

Less than $5 million 55 32 12 12

$5 million to under $10 million 16 14 15 8






$500 million to under $1 billion * 1 5 14

$1 billion or more * * 1 18

Median (millions) $3.9 $12.8 $34.1 $187.5





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Exhibit 2-3

FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013


Residential Firms Commercial Firms

No transactions 6% 6%

1 to 10 24 38

11 to 20 16 29

21 to 30 10 7

31 to 40 6 5

41 to 50 5 5

51 to 100 11 4

101 to 250 10 5

251 to 500 5 1

501 to 1000 4 1

1001 or more * *

Median 25 12



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Exhibit 2-4

FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY NUMBER OF OFFICES AT FIRM, 2013


One office Two offices Three offices Four or more offices

No transactions 9% 3% 4% 3%

1 to 10 29 11 8 5

11 to 20 17 9 2 5

21 to 30 10 8 5 3

31 to 40 6 5 1 2

41 to 50 5 6 5 4

51 to 100 11 14 11 4

101 to 250 8 19 21 10

251 to 500 3 12 14 9

501 to 1000 2 10 16 14

1001 or more 1 4 14 42

Median 18 82 200 710





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Exhibit 2-5

ANCILLARY SERVICES OFFERED AT FIRMS BY NUMBER OF OFFICES AT FIRM


Offer this service

in-house

Offer this service

outsourced or with a

business relationship

Do not currently

offer this service

Do not currently

offer this service, but

plan to in the future

Business brokerage 32% 8% 54% 6%

Relocation services 17 16 58 9

Home improvement 6 25 62 8

Mortgage lending 5 39 49 7

Home warranty 5 44 46 6

Title or escrow services 4 36 53 7

Homeowners insurance 3 29 61 7

Settlement services 3 27 63 7

Other insurance 2 20 71 8

Home inspection 2 36 56 6

Moving services 1 22 69 8

Securities services * 7 84 9

One office





Home warranty 4 42 48 6Title or escrow services 3 35 56 7





Moving services 1 22 69 8Securities services * 7 84 9

Two offices




Mortgage lending 7 42 47 4Home warranty 7 43 46 4






Moving services 1 23 69 7Securities services 1 8 85 7



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Three offices






Title or escrow services 9 32 54 6Homeowners insurance 2 30 61 7




Moving services 2 21 69 9Securities services 1 5 86 9

Four or more offices










Home inspection * 32 64 5

Moving services 2 30 64 5Securities services * 6 87 7




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Exhibit 2-6

ANCILLARY SERVICES OFFERED AT FIRMS TO TYPES OF CLIENTS


Offer this service in-

house to current clients

Offer this service in-

house to past clients

Do not currently

offer this service

Business brokerage 24% 11% 70%

Relocation services 14 11 77

Home improvement 9 11 81

Mortgage lending 11 12 78

Home warranty 11 11 78

Title or escrow services 9 11 79

Homeowners insurance 7 9 83

Settlement services 7 8 82

Other insurance 4 7 86

Home inspection 7 9 82

Moving services 4 8 85

Securities services 1 4 90



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Exhibit 2-7

PERCENT OF NET REVENUE OF FIRM MADE ON ANCILLARY SERVICES BY NUMBER OF OFFICES AT FIRM



None 56% 60% 46% 44% 20%

1 to 4 percent 8 7 14 11 11

5 to 10 percent 17 16 21 27 32

11 to 20 percent 6 5 7 7 14

21 to 50 percent 6 5 6 10 19

51 to 75 percent 1 1 2 * 1

76 to 100 percent 7 7 4 * 3

Median (percent) * * 1% 2% 10%





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Exhibit 2-8

PERCENT OF CUSTOMER INQUIRIES GENERATED FROM SOURCES

(Medians)


Past client referrals 30% 30% 30% 30% 30%

Repeat business from past clients 25 25 25 25 30

Website 11 10 20 18 15

Social Media 5 5 5 5 5

Open house 1 * 5 5 5

Other 8 10 5 5 7





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Exhibit 2-9

PERCENT OF FIRM'S SALES VOLUME WAS GENERATED BY SOURCE

(Medians)


Past client referrals 35% 35% 30% 30% 30%

Repeat business from past clients 30 30 30 30 30

Website 10 10 15 15 15

Social Media 5 5 5 5 5

Open house * * 4 5 5

Other 5 8 5 5 7





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Exhibit 2-10

WHERE DOES CURRENT COMPETITION COME FROM

(Medians)

All Firms One office Two offices Three offices more offices

Traditional brick and mortal firms 90% 90% 90% 90% 90%

Non traditional market participants 10 10 10 10 5

Virtual firms 5 5 5 7 5



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Exhibit 2-11

FEATURES ON FIRM'S WEBSITE BY RESIDENTIAL AND COMMERICAL FIRMS


All Firms Residential Firms Commercial FirmsProperty listings 93% 96% 88%

Agent/staff profiles 77 79 63

Mortgage/financial calculators 61 67 27

Information about the home buying and selling process 58 64 16

Community information/demographics 58 62 32

School reports 46 51 14

Customer reviews/testimonials 44 47 37

Virtual tours 44 48 21

Links to state/local government websites 36 38 21

Links to mortgage lenders' websites 29 32 12

Home valuation/comparative market analysis tools 27 29 9

Current mortgage rates 20 22 6

Links to real estate service providers 19 21 10

Appointment scheduler 16 17 9

Live agent chat 6 6 2

Link to commercial information exchange (CIE) 5 5 23



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Exhibit 2-12

FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY RESIDENTIAL AND COMMERCIAL FIRMS



Multiple listing 86% 88% 76%

Comparative market analysis 80 83 71

Electronic contracts/form 75 78 69

E-signature 65 69 44

Contact management 54 57 46

Document preparation/Management 50 51 49

Transaction management 36 38 29

Social media management tools 35 37 30

Graphics/Presentation 34 35 44

Home visualization (e.g. virtual tours or virtual staging) 32 35 12

Customer relationship management 31 33 26

Property management 28 23 34

Video 26 28 18

QR Code 24 26 14

Marketing automation 20 21 19Loan analysis 17 17 25

Agent rating 9 10 6



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Exhibit 2-13

FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY NUMBER OF OFFICES AT FIRM



Multiple listing 86% 85% 88% 94% 91%

Comparative market analysis 80 79 85 83 89

Electronic contracts/form 75 74 83 87 85

E-signature 65 62 78 80 85

Contact management 54 52 67 76 78

Document preparation/Management 50 48 60 67 69

Transaction management 36 33 46 55 58

Social media management tools 35 31 48 55 64

Graphics/Presentation 34 31 44 51 65

Home visualization (e.g. virtual tours or virtual staging) 32 28 42 62 59

Customer relationship management 31 29 37 49 56

Property management 28 27 31 34 35

Video 26 22 38 54 62

QR Code 24 22 32 49 46

Marketing automation 20 17 26 40 44

Loan analysis 17 16 22 26 27

Agent rating 9 8 15 20 20




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BENEFITS

Exhibit 3-1 BENEFITS RECEIVED BY INDEPENDENT CONTRACTORS/LICENSEES/AGENTS

Exhibit 3-2 BENEFITS RECEIVED BY SALARIED LICENSEES/AGENTS

Exhibit 3-3 BENEFITS RECEIVED BY ADMINISTRATIVE STAFF

Exhibit 3-4 BENEFITS RECEIVED BY SENIOR MANAGEMENT



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BENEFITS

Exhibit 3-1

BENEFITS RECEIVED BY INDEPENDENT CONTRACTORS/LICENSEES/AGENTS


Employee Pays Firms Pays Both Pay Not Offered

Errors and Omissions (E&O)

Insurance/Liability Insurance 25% 37% 19% 20%

Health insurance 18 2 1 79

Vacation/sick days 10 2 * 89

Disability insurance 9 2 * 89

Dental care 11 1 1 88

Vision care 10 1 * 89

Long-term care insurance 10 * * 90

Life insurance 10 1 * 90

Pension plan/401(k)/SEP 9 1 1 90

*Less than 1 percent



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BENEFITS

Exhibit 3-2

BENEFITS RECEIVED BY SALARIED LICENSEES/AGENTS





Vacation/sick days 4 9 1 86


Disability insurance 5 3 1 92

Life insurance 5 1 1 93


Vision care 5 1 2 92


Long-term care insurance 5 1 1 93



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BENEFITS

Exhibit 3-3

BENEFITS RECEIVED BY ADMINISTRATIVE STAFF















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BENEFITS

Exhibit 3-4

BENEFITS RECEIVED BY SENIOR MANAGEMENT















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FUTURE OUTLOOK OF FIRMS

Exhibit 4-1 FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 4-2 FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY NUMBER OF OFFICES AT FIRM

Exhibit 4-3 REASON FOR FIRM TO ACTIVELY RECRUIT SALES AGENTS BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 4-4 REASON FOR FIRM TO ACTIVELY RECRUIT SALES AGENTS BY NUMBER OF OFFICES AT FIRM

Exhibit 4-5

EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-2013 TO MID-

2014 BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 4-6

EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-2013 TO MID-

2014 BY NUMBER OF OFFICES AT FIRM

Exhibit 4-7 EXPECTATION OF LEVEL OF COMPETITION IN THE NEXT YEAR (MID-2014 TO MID-2015)

Exhibit 4-8 BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 4-9 BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY NUMBER OF OFFICES AT FIRM

Exhibit 4-10 PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY RESIDENTIAL AND COMMERCIAL FIRMS

Exhibit 4-11 PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY NUMBER OF OFFICES AT FIRM



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Exhibit 4-1

FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY RESIDENTIAL AND COMMERCIAL FIRMS



Firm is recruiting 45% 49% 34%

Firm is not recruiting 55 51 66



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Exhibit 4-2

FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY NUMBER OF OFFICES AT FIRM



Firm is recruiting 45% 40% 67% 74% 87%

Firm is not recruiting 55 60 33 26 13




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Exhibit 4-3

REASON FOR FIRM TO ACTIVELY RECRUIT SALES AGENTS BY RESIDENTIAL AND COMMERCIAL FIRMS



Growth in primary business 87% 87% 86%

Desire for younger agents 36 37 39

Expand into new markets 31 31 32

Replace agents leaving firm 29 31 22

Expand into new lines of business/specialty areas 16 15 26



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Exhibit 4-4

REASON FOR FIRM TO ACTIVELY RECRUIT SALES AGENTS BY NUMBER OF OFFICES AT FIRM



Growth in primary business 87% 85% 88% 93% 89%

Desire for younger agents 36 31 38 56 57

Expand into new markets 31 25 35 40 48

Replace agents leaving firm 29 23 30 47 58Expand into new lines of

business/specialty areas 16 15 15 17 19




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Exhibit 4-5

EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-

2014TO MID-2015BY RESIDENTIAL AND COMMERCIAL FIRMS



Increase 64% 66% 71%

Stay the same 28 26 23

Decrease 8 8 6



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Exhibit 4-6

EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-2014

TO MID-2015BY NUMBER OF OFFICES AT FIRM



Increase 64% 63% 67% 69% 69%

Stay the same 28 29 24 26 25

Decrease 8 8 9 5 6




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Exhibit 4-7


Traditional brick and

mortal firms Virtual firms

Non-traditional

market participants

Increase 16% 41% 48%

Stay the Same 69 55 49

Decrease 15 4 3

EXPECTATION OF LEVEL OF COMPETITION IN THE NEXT YEAR (MID-2014 TO MID-

2015)



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Exhibit 4-8

BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY RESIDENTIAL AND COMMERCIAL FIRMS



Profitability 54% 54% 48%

Keeping up with technology 46 47 40

Maintaining sufficient inventory 44 46 42

Local or regional economic conditions 41 40 53

Competition from nontraditional market participants 35 38 23

Recruiting younger agents 32 36 25

Competition from traditional brick and mortar firms 30 31 35

State and local legislation and regulation 28 26 26

Agent retention 21 23 11

Competition from new virtual firms 19 20 12

Off market listings (pocket listings) 18 19 9Liability in a digital world (contracts, signatures, etc.) 16 16 12

Listing data security 11 12 6

Piracy/scraping 10 11 4

Protecting client data 10 10 5

Industry consolidation 8 8 4

Drones and regulation of drones 4 4 5



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Exhibit 4-9

BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY NUMBER OF OFFICES AT FIRM



Profitability 54% 52% 54% 56% 67%

Keeping up with technology 46 46 43 46 52

Maintaining sufficient inventory 44 43 47 52 46

Local or regional economic conditions 41 41 39 49 43

Competition from nontraditional market participants 35 34 37 40 49

Recruiting younger agents 32 28 44 61 67

Competition from traditional brick and mortar firms 30 30 28 33 39

State and local legislation and regulation 28 28 33 35 27

Agent retention 21 17 30 43 50

Competition from new virtual firms 19 18 17 21 25

Off market listings (pocket listings) 18 17 15 22 24

Liability in a digital world (contracts, signatures, etc.) 16 16 15 17 19

Listing data security 11 10 10 7 21

Piracy/scraping 10 9 12 10 20

Protecting client data 10 9 8 10 18

Industry consolidation 8 7 11 10 13

Drones and regulation of drones 4 3 5 7 8




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Exhibit 4-10



Gen Y ability to buy a home (stagnant wages, slow job

market, debt load, etc. ) 59% 61% 42%

Baby Boomers retiring from real estate as a profession 44 43 46

Recruitment of Gen Y and Gen X real estate professionals 40 42 41

Gen Y view of homeowership (sharing generation) 39 40 24

Baby Boomers relocating to other states in retirement 28 28 24

Retention of Gen Y and Gen X real estate professionals 25 27 24

PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY RESIDENTIAL AND COMMERCIAL

FIRMS



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Exhibit 4-11

PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY NUMBER OF OFFICES AT FIRM


All Firms One office Two offices Three offices Four or more officesGen Y ability to buy a home (stagnant wages, slow job

market, debt load, etc. ) 59% 60% 53% 60% 52%

Baby Boomers retiring from real estate as a profession 44 43 43 46 58

Recruitment of Gen Y and Gen X real estate professionals 40 37 48 61 70

Gen Y view of homeowership (sharing generation) 39 39 40 46 40

Baby Boomers relocating to other states in retirement 28 27 26 28 26

Retention of Gen Y and Gen X real estate professionals 25 23 33 40 41




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Methodology

In August 2014, NAR invited a random sample of 134,108 REALTORS who are executives at real

estate firms to fill out an on-line survey. A total of 7,081 useable responses were received for an

overall response rate of 5.8 percent. All information in this report is representative of member

characteristics in 2014 while sales and lease transaction values and other statistics where notedare from calendar year 2013.

The primary measure of central tendency used throughout this report is the median the

middle point in the distribution of responses to a particular question or, equivalently, the point

at which half of the responses are above and below a particular value.


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2014 NAR Profile of Real Estate Firms

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