RISMEDIA, May 8, 2006—With the first glimpse of the 2006 Power Broker Report just featured in the April edition of RIS Media’s Real Estate Magazine, we decided to sit down with Stefan Swanepoel, thirteen time author and see what he had to say about big brokers and industry consolidation.
“The real estate industry has always had large companies, many as a matter of fact,” Swanepoel. “We now however are experiencing the creation of ‘mega companies’ that dwarf those previously characterized as big brokers. There is no question that we entered a new era of ‘big brokers’ and we will continue over the next few years to see large companies expand even further and garnish exceptionally large sales volumes and subsequent market share,” he said.
NRT, Inc., the Cendant-owned brokerage-holding company, has already eclipsed a size previously considered unattainable, demonstrating that the ability to actually manage company-owned stores across state lines is not only possible, but practical. A steady diet of acquisitions began in 1998, and apparently has not yet seen an end.
For example before NRT, large was 10,000 transactions per year and a $1billion in sales volume. With 25,000 annual transactions you would be a top 10 company. $10 billion in sales volume would guarantee you a ranking in the nation’s top ten out of more than 100,000 real estate firms. Today’s #1 real estate brokerage company in the nation, NRT, closes almost 500,000 transactions per year, totaling more than $230+ billion in closed sales volume. This is as large as the sum total of the second to 20th largest real estate brokerage companies combined
According to the Swanepoel TRENDS Report what makes size such an interesting phenomenon is that industry leadership seems to change hands as a result of acquisition in an industry that has historically been dominated by “mom and pop” businesses. Therefore, the opportunity to gain dominance in the industry has been minimal, as no single acquisition would be meaningful enough. However, with the advent of national double digit market share being owned or controlled by one entity, a door has been opened for anyone to enter the real estate brokerage business and find profitable success. The Report also identifies companies that have not followed the acquisition path and yet built huge real estate powerhouses. A great example would be RE/MAX, started by Dave and Gail Liniger 33 years ago, which has now grown to include 5,800 franchises and 113,000 agents.
Swanepoel states in his Report that larger companies and larger offices are not just US trends but a global phenomena. For example ERA Singapore operates a 16,000-square-foot office in the town of Toa Payoh, with 1,300 real estate sales professionals. With a sales volume exceeding $3 billion USD, this is no small feat for a country half the size of Texas. This office boasts the title of the “World’s Largest Real Estate Office”.
“In an industry that has always fought its battles on a local, face-to-face, one-on-one level, the global reach of the Internet, coupled with the size and power of corporate America, ‘mega brokers’ represent a whole new dimension to the residential real estate brokerage industry,” Swanepoel says.
For more information about what could be impacting your real estate business, do yourself a favor and get the 114-page Swanepoel TRENDS Report. It provides a balanced and objective evaluation of the Top 15 trends transforming our industry. It is available exclusively at www.RealtyUBookstore.com
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