Two factors impacting brokers in 2024
With last year in the rearview mirror, most brokers are looking forward to 2024. I especially appreciate the observation of real estate author, philosopher and mentor to many, Mathew Ferrara, who said, “If last year had a theme, it was “caution ahead.”
As always, most industry observers state cautious optimism for the coming year, however there are two key agent stats from 2023 which will have an impact on you in the new year and beyond:
- For the first time in a dozen years NAR membership has declined; and
- 49% of surveyed agents sold only one or less homes last year
Point #1 – It’s probably not a big surprise that embattled NAR has seen a decline with an exodus of 26,367
members marking the first decrease since 2012. Face it, with 1.5 million agents competing for just over 4 
million transactions in 2023, it’s been a challenge for most agents, especially those who are struggling.
NAR hasn’t helped itself by raising its dues mid-year and then adding an additional advertising fee. Plus, there’s the high-profile ongoing litigation that has rocked the industry and the NAR sexual harassment scandal which have all combined to take its toll on the organization’s membership.
While we all hate to see negative reflections on our industry, the reality is that the decline in the number of agents is actually a positive and most have been saying it’s long overdue. But… when it’s primarily the agents who aren’t productive that are departing; it leads directly to the second point.
Point #2 – I have written on the significance of agent Per Person Productivity (PPP) for years and it’s interesting how impactful it has become.
The Consumer Federation of America issued a brutal report entitled, “A Surfeit of Real Estate Agents” in which four geographic areas that are representative of the U.S. housing market were studied. Amazingly, almost half of the agents (49%) in the studied group sold one or less (meaning zero) homes last year. Click here to see the eye-opening study.
Brokers tend to hang on to their agents, even when they fail to produce. While countless brokers have said to me over the years, “well, the non-producers don’t cost me anything”; I still cringe every time someone makes that statement.
Unless your non-productive agents are paying fees for the privilege of hanging their licenses with you, they can become the single largest drain on a company’s profitability, growth and culture. The agent who does zero to 0ne transactions a year almost never has the skillset to negotiate and win the best listings, which in turn are lost to your competition. When they lose the war at the kitchen table to the “other agent” it is actual hard dollars out of your pocket. In turn, it hurts all of the other agents under your roof who desperately need access to more inventory. The non-productive agents waste leads, they reflect badly on your company and often clash with your culture.
By contrast, it is your producing agents who directly impact your brokerage’s recruiting and retention success.
When your agent productivity exceeds the market’s average PPP, it becomes your best recruiting and retention tool. As your agents complete more sides and win more of the listings than the competition, the recruiting gets easier, and agents jump ship less often. It’s also where the agents and brokers want to call home. Agents are like professional athletes; the successful ones always want to be on the winning team.
As someone who ran his own brokerage for eighteen years, my suggestion is to make this year all about building your firm’s overall PPP. Your agents’ success truly becomes your success. As a reminder, in my brokerage office, I kept a small, framed placard on the wall that read, “The best way to get your needs met is to meet the needs of another.
Let’s make it a Happy New Year!
This article was written by Rick Ellis and originally published in RealtyNewsBiz
M&A activity picking up?
Mergers and acquisitions activity across most industries slumped considerably from the highs reached during the pandemic as companies grapple with inflation, an uncertain economic outlook, high interest rates and 
increased regulatory scrutiny. Residential real estate M&A was no exception as activity dropped over the past eighteen months from what was a previously brisk level.
One of the biggest sticking points for many would-be transactions is that buyers and sellers had a tough time agreeing on price. CFOs on both sides of the equations are looking for opportunities, but coming off record industry volume, observers see a disconnect as sellers naturally want top dollar and buyers still seek bargains. The difference in expectations in many instances was significant enough that we’ve seen many companies walk away from deals.
For some, the industry turbulence has created openings for opportunity, and many are weighing M&A for growth or as a planned exit strategy. However, sellers generally aren’t too eager to lower their expectations and sell at what may be the bottom of the market. Currently, both sides of the table are looking at considerations and deal structures in which price is only part of what could be a lucrative relationship for all parties.
With increased motivation for well-funded buyers and would-be sellers considering strategies and opportunities again, this year could prove interesting. If you are contemplating a strategic plan that may include either buying, selling or merging, there are three elements of success needed to see your deal through:
Good communication – Effective communication is essential to successful mergers and acquisitions. Research in M&As has shown that a driver of successful transactions is a solid communication strategy that is openly transparent.
A significant contributor to success or failure is to listen well. Questions need to be answered early on such as, what will be the most effective communication between the parties; how often; and what is the plan to stick with agreed upon timelines. Empathy and understanding are two of the most important skillsets for effective M&A communication.
High level of trust – Creating a trust foundation early-on sets the tone throughout the various stages of a transaction. Just as transparency is key to good communications, it’s also vital in establishing and maintaining essential trust.
Following timelines and agreed upon actions can avoid broken trust caused when one or both parties don’t stick to the plan. Understanding and working through the process collectively toward shared goals builds trust which helps avoid a process that ends up being focused solely on price.
Risk acceptance – Acceptance of risk is a key consideration for not just buyers and sellers, but for all of the stakeholders involved. This means understanding the scope, concerns and impact of the risks involved in the deal from everyone’s perspective. Each party wants the other to have the greater risk, but the reality is all stakeholders typically have their share of the downside.
Having an understanding of the risk and its implications to the other side often enables the parties to work through the fly/abort sticking points that often arise in a transaction. The best deal makers typically work toward helping those across the table solve their problems.
One of my favorite quotes that is pertinent in all phases of the M&A process comes from Ronald Reagan, who famously said, “Trust; but verify.”
Corcoran expands in two states
The Corcoran Group is excited to announce a major expansion in New Jersey and Pennsylvania as Corcoran Sawyer Smith acquires Weidel Real Estate, adding seven offices and an additional 180 agents. This marks the brand’s first entry into Pennsylvania.
Corcoran Sawyer Smith partnered with Corcoran in July of 2022 and has grown dramatically. The acquisition of the 100+ year old Weidel Real Estate has expanded the firm to 250+ agents and ten offices.
. Click here for details: https://bit.ly/47saFt5
The Hidden Force Pushing Mortgage Rates Down
The 30-year mortgage rate has fallen by more than a percentage point recently to 6.62%, according to data released Thursday by mortgage giant Freddie Mac. The shrinking spread between that and the 10-year Treasury yield amounts to roughly one-sixth of the decline. Read article.
‘Silver tsunami’ could have a bigger impact on 2024’s housing market: analyst (insert graphic active older couple)
The “silver tsunami” – a colloquialism referring to aging Americans changing their housing arrangements to accommodate aging – could have more of an impact on the housing market this year, according to analyst Meredith Whitney in a conversation with Yahoo Finance. Read more on Housingwire.
Looking Ahead: Will the 2024 Housing Market Slowly Unfreeze?
In turn, the lowest inventory of existing homes for sale in decades helped propel a dramatic shift favoring new home builders and the incentives they could offer in the form of mortgage rate buydowns – against which most willing sellers of existing homes had little ammunition. Learn More.
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