Big brokerages are becoming more and more powerful. But indie leaders feel perfectly fine. Inman Intel has identified specific steps the company is taking.
As integration and listing governance issues plague the real estate brokerage industry, some brokerage owners are wondering whether they need to become part of a larger network in order to survive.
But for leaders at independent brokerage firms, it’s mostly business as usual.
In May, independent brokerage owners and executives felt largely insulated from the effects of recent consolidation and pre-marketing efforts and expressed confidence that they could maintain broad access to listings no matter what happens, according to the latest results from the Intel Index survey.
These independent leaders were also more likely than leaders from large brokerage networks to say that industry consolidation will not hurt their competitiveness in the coming years.
Still, there’s a lot of uncertainty in the air as agents and brokers assess the rapidly changing landscape of the industry.
Intel asked more than 100 independent and large brand brokerage leaders how they expect the year ahead to unfold and what practical strategic steps their brokerages are taking in response.
Read the findings in this week’s report.
strategic axis
Many brokerage leaders surveyed said they are adjusting their strategic direction as the industry faces more large brokerage mergers, the launch of pre-marketing partnerships and even some MLS efforts to expand nationally.
But so far their reactions have been divided.
Leaders of large brand networks were four times more likely than independents (21% vs. 5%) to say their strategic response to consolidation and broker-managed public networks includes considering acquiring or merging with another broker in their region. Leaders at large branded brokerages were also nearly three times more likely than leaders at independent brokerages to say their integration efforts include plans to participate in portal pre-marketing platforms like Zillow Preview (19% vs. 7%).
In fact, independent leaders were more likely than other groups to say they would consider joining a larger brokerage network or support their local MLS as it expands nationally.
Independent broker owners were also slightly more likely to say they plan to develop or expand their own private listing or pre-marketing capabilities or join multiple broker alliances for listing access outside of the MLS system.
But more than any other result stood out the determination of independent broker owners to “double down on their independence and brand recognition” in response to the recent wave of consolidation.
62% of respondents from indie brokers chose this option, compared to 33% of respondents from large brand networks.
There was no desire to expand nationally, and loyalty to local MLS was most prevalent among the larger brands Compass competed with.
Forty-four percent of respondents from large brand brokerage firms want a scenario in which residential listings continue to be managed by local MLSs and “no significant national expansion.” This is the highest amount of any group. Meanwhile, only 25% of independent broker owners supported an unchanged local MLS system.
Rather, indies were likely to support a mix of changes to the way the industry manages listings, including the nationwide rollout initiatives announced in recent weeks by MLSs like MRED, BrightMLS and Realtracs.
24% of independent broker owner respondents said they would prefer a system in which existing MLSs launch subscriptions nationwide and partner with brokerages to feed published and pre-marketed listings into the platform. This is more than double the percentage of respondents from major brands who gave the same answer. Indies were also slightly more likely to prefer a national MLS platform run by a federation of brokerages, or a relatively fragmented system in which each brokerage has more control over how its products are marketed and displayed.
As brokerage leaders look at the current moment and the future outlook for their industry, some interesting differences and similarities emerge.
Where are things headed next?
Although most securities industry leaders have not expressed high levels of concern about recent developments in the industry, the Intel Index detected a significant amount of widely shared low-level concerns.
But it’s hard to pinpoint leaders, especially in the indies.
Independent leader respondents were slightly more likely than brand leaders to say they were very concerned about trends in consolidation among large brokerage firms. It was 28% for independent companies and 19% for others. However, independent companies were slightly more likely than big brand leaders to say they were “not at all concerned” about this trend. In contrast, leaders of larger networks were more likely to express mild or moderate concerns about increasing industry consolidation, with 53 percent of this group adopting this more cautious response, compared to 39 percent of independent companies.
When it comes to listing accessibility in the coming years, brokerage leaders affiliated with major networks have a similar outlook to independent brokerages.
In general, there are more optimists than pessimists among brokerage leaders on this issue.
However, there is also significant uncertainty as to whether ongoing changes will help or hurt the competitive position of particular securities firms.
Fifty-eight percent of top respondents from large branded brokerages expect their brokerage’s competitive position to be as good three years from now as it is today, compared to 16% who expect it to be negatively impacted by consolidation. A further 26% of large brand respondents said they were unsure how consolidation would affect their brokerage firm’s competitiveness.
Indian companies were even less likely to endorse a negative outlook on their competitive position.
62% of Indie Leader respondents do not expect their company’s competitive position to be adversely affected over the next three years, but 7% say they will struggle to compete in an industry undergoing consolidation. Thirty-one percent of independent leaders surveyed by Intel said they don’t know how their company’s competitiveness will be affected over the next three years.
After all, most brokerage leaders do not foresee an apocalypse scenario in which consolidation and greater control over listings leaves the industry deeply fragmented and clients unable to access a broad range of listings.
However, the intervening period is likely to see more competition for access to larger networks and stronger partnerships as the industry adapts to new conditions.
Methodology note: This month’s Inman Intel Index survey was conducted from May 19th to May 28th and received 469 responses. The entire Inman reader community was invited to participate, and a rotating selection of randomly selected community members were encouraged to participate via email. Users answered a series of questions about their self-proclaimed niche in the real estate industry, including real estate agents, brokers, financiers, and proptech entrepreneurs. Results reflect the views of our passionate Inman community, but do not necessarily align with the views of the broader real estate industry. This survey is conducted monthly.
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