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Public perception plays a crucial role in determining if an industry is heading toward a market correction. Mergers and acquisitions are a big tell, and the biggest brokerage firms in New York City have been quickly acquiring the smaller ones. What does it mean for real estate agents?
More Mergers And Acquisitions
Mergers and acquisitions are a reflection on how the market is doing and a concrete action a brokerage can take toward avoiding the worst-case scenario for when/if its properties stale. The market correction within the real estate industry doesn’t necessarily mean that we’re entering a recession. Still, global economic tension coupled with an election year may create a situation in which properties on sale take more time to sell.
In this context, a market correction means a balance of the number of people working in the industry versus the available demand. Any real estate agent who is focused and stays up to date in terms of the real estate market should be able to excel.
Too Many Licensed Real Estate Agents
There are an estimated 1.4 licensees nationwide and only 5.5 million transactions per year. The enormous number of real estate agents is not necessary to fulfill today’s demand — especially when the top 100,000 brokers are responsible for almost half of the transactions.
The average consumer is also more educated than ever, which means that the role of agents/brokers is rapidly evolving. My prediction is that in the near future, there will be fewer licensed agents/brokers, but the ones who survive will be the ones who are on top of their game, who know the market and are working in real estate full time. If you’re a veteran agent and have seen a decrease in the number of clients, now is the time to try out new technologies.
The Most Prominent Real Estate Firms Will Get Bigger
The most significant trend we’ve seen in New York City is the big real estate firms acquiring the smaller ones, and it makes sense if you think about it: They already have large offices, and their agents often earn solely on commission, which means only the strongest survive.
More prominent firms also have more resources for marketing and advertising, and offer valuable connections with landlords and new developments. Because of this, agents may find it more attractive to have bigger firms back them up when it comes to reputation and resources. In times of distress, many agents think safety comes first, and big agencies sometimes represent safety in terms of job security.
For real estate firms, acquisitions often translate into saving expenses by sharing resources. With more agents producing, they can share marketing teams, office space and other essential costs that usually keep smaller firms operating on razor-thin profits.
The new generation of renters and homebuyers is here, so agents need to ask themselves if their marketing and advertising tools are geared toward the right audience. New technological innovations allow today’s potential buyers and renters access to virtually any property’s history and information. Because of this, real estate agents should focus on finding the right tools to be more efficient at work and to be able to create a meaningful connection with their clients. And always remember that in times of uncertainty, significant opportunities arise.