2014 NAR Profile of Real Estate Firms

2014 Profile of Real Estate Firms
2014 OFFICERS
President
Steve Brown, ABR, CIPS, CRS, GREEN
President-Elect
Chris Polychron, CRS, GRI
First 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
Tom Salomone
Ken Fears, Director, Regional Economics and

Housing Finance
Treasurer
Danielle Hale, Director of Housing Statistics
Michael McGrew, CRB, CRS
Jessica Lautz, Director, Member and Consumer

Survey Research
Immediate Past President

Gary Thomas
Vice President
Beth L. Peerce
Vice President
JoAnne Poole, GRI, CRS
Quantitative Research
Jed Smith, Ph.D., Managing Director,
Quantitative Research
Scholastica Cororaton, Research Economist
Michael Hyman, Research Assistant
Chief Executive Officer
George Ratiu, Director, Quantitative and

Commercial Research
Dale Stinton, CAE, CPA, CMA, RCE
Hua Zhong, Data Analyst

Business Operations and Communications
NAR RESEARCH STAFF

Office of the Chief Economist
Lawrence Yun, Ph.D., Chief Economist and
Senior Vice President
Thomas Doyle, Director of Research Marketing

and Communications
Meredith Dunn, Research Communications
Representative
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 five
percent 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
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.
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 CCorps. 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 five
licensees 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 firms brokerage 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,
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 current
competition is most likely to come from traditional brick and mortar firms, followed by nontraditional market participants, and finally, virtual firms.
The most common feature on firms websites 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 esignature.
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
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 mid2015) 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 this
as 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.
CHARACTERISTICS OF REAL ESTATE FIRMS
Exhibit 1-1
Exhibit 1-2
Exhibit 1-3
Exhibit 1-4
Exhibit 1-5
Exhibit 1-6
Exhibit 1-7
Exhibit 1-8
Exhibit 1-9
Exhibit 1-10
Exhibit 1-11
Exhibit 1-12
Exhibit 1-13
Exhibit 1-14
Exhibit 1-15
Exhibit 1-16
YEARS IN REAL ESTATE BUSINESS

NUMBER OF OFFICES
NUMBER OF OFFICES
OFFICE OPENINGS AND CLOSINGS
CHANGE IN MERGERS/ACQUISITIONS FOR FIRM FROM 2003-2008 TO 2009-2014
SHARE OF INDEPENDENT AND FRANCHISED FIRMS
FIRM TYPE BY RESIDENTIAL AND COMMERCIAL FIRMS
FIRM TYPE BY NUMBER OF OFFICES AT FIRM
LEGAL ORGANIZATION OF REAL ESTATE FIRMS
STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM
CHANGE IN STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM
FIRM'S PRIMARY SPECIALTY AREA
PERCENT OF FIRM'S REVENUE FROM PRIMARY REAL ESTATE BUSINESS ACTIVITY
OTHER REAL ESTATE BUSINESS ACTIVITIES AMONG FIRM
GEOGRAPHIC MARKET AREA OF FIRM
2014 National Association of Realtors Profile of Real Estate Firms

Exhibit 1-1
(Percentage Distribution)
15 years or more
One year or
less
46%
2 to 3 years
4 to 5 years
6 to 7 years
8 to 10 years
11 to 14 years
15 years or more
All Firms
One year or less

6%
6%
9
9
8
13
9
46
2 to 3 years
9%
4 to 5 years
9%
6 to 7 years
8%
11 to 14 years
9%
8 to 10 years
13%

Exhibit 1-2
One year or less

2 to 3 years
4 to 5 years
6 to 7 years
8 to 10 years
11 to 14 years
15 years or more
Median (years)
All Firms
6%
9
9
8
13
9
46
13
Residential Firms
7%
10
10
8
13
9
43
12
Commercial Firms
2%
8
8
10
8
6
59
17

Exhibit 1-3
NUMBER OF OFFICES
1 office
2 offices
3 offices2 offices
4 or more9%
offices
3 offices
3%
All Firms
4 or more offices
81%
7%
9
3
7
1 office
81%

Exhibit 1-4
NUMBER OF OFFICES
1 office
2 offices
3 offices
4 or more offices
Median (offices)
All Firms
81%
9
3
7
1
Residential Firms
79%
9
3
9
1
Commercial Firms
87%
8
4
2
1

Exhibit 1-5
OFFICE OPENINGS AND CLOSINGS
(Medians)
All Firms
Residential Firms
Commercial Firms
Number of offices affiliated with your firm at yearend in 2012

Number of new offices opened in 2013
1
0
1
0
1
0
Number of offices acquired through purchase or

merger with another firm in 2013
Number of offices acquired through purchase or

merger with another firm from 2012-2007
Number of offices closed in 2013
0
0
0
0
0
0

Exhibit 1-6
CHANGE IN MERGERS/ACQUISITIONS FOR FIRM FROM 2003-2008 TO 2009-2014
Increased
Decreased
Stayed the same
All Firms
8%
4
88
Increased
8%
Stayed the same

88%
Decreased
4%

Exhibit 1-7
SHARE OF INDEPENDENT AND FRANCHISED FIRMS
All Firms
Subsidiary of a national 84%
Independent, non-franchised company
Independent, franchised company or regional corporation, 14
franchised company
Subsidiary of a national or regional
2%
corporation, franchised company
1
corporation,
non-franchised company
Independent,
1
franchised company
14%
Subsidiary of a
national or regional
corporation, nonfranchised company
1%
Independent, nonfranchised company

84%

Exhibit 1-8
FIRM TYPE BY RESIDENTIAL AND COMMERCIAL FIRMS

Independent, franchised company
corporation, non-franchised company
All Firms
84%
14
Residential Firms
82%
16
Commercial Firms
94%
4
* Less than 1 percent

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

Independent, franchised company
corporation, non-franchised company
All Firms One office

84%
89%
Number of Offices at Firm

Two offices
Three offices Four or more offices
67%
63%
48%
14
10
27
31
40

Exhibit 1-10
LEGAL ORGANIZATION OF REAL ESTATE FIRMS
LLC
Sole proprietorship
S-Corp S-Corp
26%
C-Corp
Partnership
C-Corp
9%
All Firms
34%
28
26
9
3
Partnership
3%
LLC
34%
Sole proprietorship
28%

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

All Firms
One office Two offices
Three offices
Four or more offices
Number of full-time real estate licensees

Number of full-time licensees who are
independent contractors
Number of part-time real estate
licensees (work fewer than 30 hours a
week) who are salaried
Number of part-time licensees (work
fewer than 30 hours a week) who are
independent contractors
20
92
22
92
Number of full-time staff (non-licensees)

Number of part-time staff (nonlicensees)
Number of part-time staff (nonlicensees) who work fewer than 30
hours a week

Exhibit 1-12
CHANGE IN STAFF AT FIRMS BY NUMBER OF OFFICES AT FIRM
(Medians)
Number of licensees who joined firm

in 2013
Number of licensees who left firm in
2013
Number of staff (non-licensees) who
joined firm in 2013
Number of staff (non-licensees) who
left firm in 2013

Two offices
Three offices
All Firms
One office
12

Exhibit 1-13
FIRM'S PRIMARY SPECIALTY AREA
Auction
International Residential Brokerage
Counseling
Relocation
Residential Property Management
Commercial Appraisal
Commercial Property Management
Commercial Brokerage
Land/Development
Residential Appraisal
Residential Brokerage
Land/Development
Relocation
Counseling
International
Auction
7
4
3
10
All Firms
*
*
1
1
1
1
1
3
4
7
81%
20
30
81%
40
50
60
70
80
90

Exhibit 1-14
PERCENT OF FIRM'S REVENUE FROM PRIMARY REAL ESTATE BUSINESS ACTIVITY
None
1 to 4 percent
5 to 10 percent
11 to 20 percent
21 thru 50 percent
51 thru 75 percent
76 thru 100 percent
Median (percent)
All Firms
1%
*
1
1
4
10
83
99%

Exhibit 1-15
OTHER REAL ESTATE BUSINESS ACTIVITIES AMONG FIRM
(Percent of Respondents)
All Firms
2
4
5
6
11
11
15
18
29
38
39%
Auction
International Commercial Brokerage
Counseling
Land/Development
Relocation
Relocation
39%
38
29
18
15
Land/Development
11
Counseling
11
6
5
International
4
Auction
2
0
10
15
20
25
30
35
40

Exhibit 1-16
GEOGRAPHIC MARKET AREA OF FIRM
All Firms
59%
29
7
4
1
Metropolitan area or region

Rural area/Small town
Resort/Recreation area
Multi-state area
Nationwide
Resort/
Recreation area
7%
Multi-state area
4%
Nationwide
1%
Rural area/Small
town
29%
Metropolitan area
or region
59%
BUSINESS ACTIVITY OF FIRMS

Exhibit 2-1
Exhibit 2-2
Exhibit 2-3
Exhibit 2-4
Exhibit 2-5
Exhibit 2-6
Exhibit 2-7
Exhibit 2-8
Exhibit 2-9
Exhibit 2-10
Exhibit 2-11
Exhibit 2-12
Exhibit 2-13
FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013
FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY NUMBER OF OFFICES AT FIRM, 2013
FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013
FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY NUMBER OF OFFICES AT FIRM, 2013
ANCILLARY SERVICES OFFERED AT FIRMS BY NUMBER OF OFFICES AT FIRM
ANCILLARY SERVICES OFFERED AT FIRMS TO TYPES OF CLIENTS
PERCENT OF NET REVENUE OF FIRM MADE ON ANCILLARY SERVICES BY NUMBER OF OFFICES AT FIRM
PERCENT OF CUSTOMER INQUIRIES GENERATED FROM SOURCES
PERCENT OF FIRM'S SALES VOLUME WAS GENERATED BY SOURCE
WHERE DOES CURRENT COMPETITION COME FROM
FEATURES ON FIRM'S WEBSITE BY RESIDENTIAL AND COMMERICAL FIRMS
FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY RESIDENTIAL AND COMMERCIAL FIRMS
FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY NUMBER OF OFFICES AT FIRM

Exhibit 2-1
FIRM'S REAL ESTATE BROKERAGE SALES VOLUME BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013
No transactions
Less than $5 million
$5 million to under $10 million
$500 million to under $1 billion
$1 billion or more
Median (millions)
Residential Firms
4%
49
16
12
6
4
4
2
1
2
$4.7
Commercial Firms
2%
56
21
11
3
3
2
1
*
1
$4.3

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

No transactions
Less than $5 million
$500 million to under $1 billion
$1 billion or more
Median (millions)
One office
Two offices
Three offices
7%
55
16
11
5
2
2
1
*
*
$3.9
1%
32
14
16
11
11
10
3
1
*
$12.8
3%
12
15
16
11
13
14
10
5
1
$34.1
1%
12
8
7
7
8
12
14
14
18
$187.5

Exhibit 2-3
FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY RESIDENTIAL AND COMMERCIAL FIRMS, 2013
No transactions
1 to 10
11 to 20
21 to 30
31 to 40
41 to 50
51 to 100
101 to 250
251 to 500
501 to 1000
1001 or more
Median
Residential Firms
6%
24
16
10
6
5
11
10
5
4
*
25
Commercial Firms
6%
38
29
7
5
5
4
5
1
1
*
12

Exhibit 2-4
FIRM'S TOTAL REAL ESTATE TRANSACTION SIDES BY NUMBER OF OFFICES AT FIRM, 2013
No transactions
1 to 10
11 to 20
21 to 30
31 to 40
41 to 50
51 to 100
101 to 250
251 to 500
501 to 1000
1001 or more
Median
One office
9%
29
17
10
6
5
11
8
3
2
1
18

Two offices
Three offices
3%
4%
11
8
9
2
8
5
5
1
6
5
14
11
19
21
12
14
10
16
4
14
82
200

3%
5
5
3
2
4
4
10
9
14
42
710

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
Business brokerage
32%
8%
54%
6%
Relocation services
17
16
58
Home improvement
25
62
Mortgage lending
39
49
Home warranty
44
46
Title or escrow services
36
53
Homeowners insurance
29
61
Settlement services
27
63
Other insurance
20
71
Home inspection
36
56
Moving services
Securities services
1
*
22
7
69
84
8
9
30%
13
6
3
4
3
2
2
1
2
1
*
7%
16
25
38
42
35
29
26
19
36
22
7
57%
62
62
52
48
56
62
65
72
55
69
84
7%
9
8
7
6
7
7
7
8
7
8
9
39%
21
6
7
7
4
4
4
3
1
1
1
10%
21
27
42
43
38
28
31
21
39
23
8
46%
52
62
47
46
51
63
59
70
57
69
85
5%
7
5
4
4
6
5
6
6
4
7
7
One office
Business brokerage
Relocation services
Home improvement
Mortgage lending
Home warranty
Settlement services
Other insurance
Home inspection
Moving services
Securities services
Two offices
Business brokerage
Relocation services
Home improvement
Mortgage lending
Home warranty
Settlement services
Other insurance
Home inspection
Moving services
Securities services
Do not currently
Do not currently offer this service, but
offer this service plan to in the future
Three offices
Business brokerage
Relocation services
Home improvement
Mortgage lending
Home warranty
Settlement services
Other insurance
Home inspection
Moving services
Securities services
Business brokerage
Relocation services
Home improvement
Mortgage lending
Home warranty
Settlement services
Other insurance
Home inspection
Moving services
Securities services
39%
31
5
10
5
9
2
7
3
3
2
1
8%
15
23
40
53
32
30
27
22
33
21
5
49%
45
64
43
39
54
61
60
66
58
69
86
4%
9
8
6
3
6
7
6
9
6
9
9
43%
55
4
26
9
23
13
16
6
*
2
*
10%
14
19
51
60
42
30
32
23
32
30
6
43%
27
69
20
28
30
48
45
62
64
64
87
4%
4
8
3
4
5
9
7
9
5
5
7

Exhibit 2-6
ANCILLARY SERVICES OFFERED AT FIRMS TO TYPES OF CLIENTS
Offer this service inhouse to current clients
Offer this service inhouse to past clients
Do not currently
offer this service
Business brokerage
24%
11%
70%
Relocation services
14
11
77
Home improvement
11
81
Mortgage lending
11
12
78
Home warranty
11
11
78
11
79
83
Settlement services
82
Other insurance
86
Home inspection
82
Moving services
Securities services
4
1
8
4
85
90

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

None
1 to 4 percent
5 to 10 percent
11 to 20 percent
21 to 50 percent
51 to 75 percent
76 to 100 percent
Median (percent)
All Firms
56%
8
17
6
6
1
7
*
One office
60%
7
16
5
5
1
7
*
Two offices
46%
14
21
7
6
2
4
1%
Three offices
44%
11
27
7
10
*
*
2%

20%
11
32
14
19
1
3
10%

Exhibit 2-8
PERCENT OF CUSTOMER INQUIRIES GENERATED FROM SOURCES
(Medians)
Past client referrals

Repeat business from past clients
Website
Social Media
Open house
Other
All Firms
30%
25
11
5
1
8
One office
30%
25
10
5
*
10

Two offices
Three offices
30%
30%
25
25
20
18
5
5
5
5
5
5

30%
30
15
5
5
7

Exhibit 2-9
PERCENT OF FIRM'S SALES VOLUME WAS GENERATED BY SOURCE
(Medians)
Past client referrals

Repeat business from past clients
Website
Social Media
Open house
Other
All Firms
35%
30
10
5
*
5
One office
35%
30
10
5
*
8

Two offices
Three offices
30%
30%
30
30
15
15
5
5
4
5
5
5

30%
30
15
5
5
7

Exhibit 2-10
WHERE DOES CURRENT COMPETITION COME FROM
(Medians)
Traditional brick and mortal firms

Non traditional market participants
Virtual firms

All Firms One office Two offices
Three offices
90%
90%
90%
90%
90%
10
10
10
10
5
5
5
5
7
5

Exhibit 2-11
FEATURES ON FIRM'S WEBSITE BY RESIDENTIAL AND COMMERICAL FIRMS
Property listings
Agent/staff profiles
Mortgage/financial calculators
Information about the home buying and selling process
Community information/demographics
School reports
Customer reviews/testimonials
Virtual tours
Links to state/local government websites
Links to mortgage lenders' websites
Home valuation/comparative market analysis tools
Current mortgage rates
Links to real estate service providers
Appointment scheduler
Live agent chat
Link to commercial information exchange (CIE)
All Firms
93%
77
61
58
58
46
44
44
36
29
27
20
19
16
6
5
Residential Firms
96%
79
67
64
62
51
47
48
38
32
29
22
21
17
6
5
Commercial Firms
88%
63
27
16
32
14
37
21
21
12
9
6
10
9
2
23

Exhibit 2-12
FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY RESIDENTIAL AND COMMERCIAL FIRMS
Multiple listing
Comparative market analysis
Electronic contracts/form
E-signature
Contact management
Document preparation/Management
Transaction management
Social media management tools
Graphics/Presentation
Home visualization (e.g. virtual tours or virtual staging)
Customer relationship management
Property management
Video
QR Code
Marketing automation
Loan analysis
Agent rating
All Firms
86%
80
75
65
54
50
36
35
34
32
31
28
26
24
20
17
9
Residential Firms
88%
83
78
69
57
51
38
37
35
35
33
23
28
26
21
17
10
Commercial Firms
76%
71
69
44
46
49
29
30
44
12
26
34
18
14
19
25
6

Exhibit 2-13
FIRM PROVIDES OR ENCOURAGES AGENT/BROKER USE OF SPECIFIC SOFTWARE, BY NUMBER OF OFFICES AT FIRM
Multiple listing
Comparative market analysis
Electronic contracts/form
E-signature
Contact management
Document preparation/Management
Transaction management
Social media management tools
Graphics/Presentation
Home visualization (e.g. virtual tours or virtual staging)
Customer relationship management
Property management
Video
QR Code
Marketing automation
Loan analysis
Agent rating
All Firms
86%
80
75
65
54
50
36
35
34
32
31
28
26
24
20
17
9
One office
85%
79
74
62
52
48
33
31
31
28
29
27
22
22
17
16
8

Two offices
Three offices
88%
94%
85
83
83
87
78
80
67
76
60
67
46
55
48
55
44
51
42
62
37
49
31
34
38
54
32
49
26
40
22
26
15
20

91%
89
85
85
78
69
58
64
65
59
56
35
62
46
44
27
20
BENEFITS
Exhibit 3-1
Exhibit 3-2
Exhibit 3-3
Exhibit 3-4
BENEFITS RECEIVED BY INDEPENDENT CONTRACTORS/LICENSEES/AGENTS

BENEFITS RECEIVED BY SALARIED LICENSEES/AGENTS
BENEFITS RECEIVED BY ADMINISTRATIVE STAFF
BENEFITS RECEIVED BY SENIOR MANAGEMENT
BENEFITS
Exhibit 3-1
BENEFITS RECEIVED BY INDEPENDENT CONTRACTORS/LICENSEES/AGENTS
Employee Pays
Errors and Omissions (E&O)
Insurance/Liability Insurance
Health insurance
Vacation/sick days
Disability insurance
Dental care
Vision care
Long-term care insurance
Life insurance
Pension plan/401(k)/SEP
25%
18
10
9
11
10
10
10
9
*Less than 1 percent
Firms Pays
37%
2
2
2
1
1
*
1
1
Both Pay
19%
1
*
*
1
*
*
*
1
Not Offered
20%
79
89
89
88
89
90
90
90
BENEFITS
Exhibit 3-2
BENEFITS RECEIVED BY SALARIED LICENSEES/AGENTS
Employee Pays
Vacation/sick days
Health insurance
Life insurance
Dental care
Vision care
Firms Pays
9%
4
7
5
5
5
5
5
5
23%
9
4
3
1
2
1
1
1
Both Pay
6%
1
3
1
1
2
2
2
1
Not Offered
62%
86
86
92
93
91
92
92
93
BENEFITS
Exhibit 3-3
BENEFITS RECEIVED BY ADMINISTRATIVE STAFF
Employee Pays
Vacation/sick days
Health insurance
Dental care
Life insurance
Vision care
Firms Pays
4%
3
7
6
6
6
6
6
6
31%
30
10
5
3
3
3
3
2
Both Pay
3%
2
8
2
4
1
4
6
2
Not Offered
61%
65
75
87
86
90
87
86
91
BENEFITS
Exhibit 3-4
BENEFITS RECEIVED BY SENIOR MANAGEMENT
Employee Pays
Vacation/sick days
Health insurance
Life insurance
Dental care
Vision care
8%
4
8
7
6
7
6
6
6
Firms Pays
39%
18
14
7
6
5
5
4
4
Both Pay
Not Offered
6%
1
6
1
2
4
3
5
2
47%
77
72
85
87
84
86
85
89
FUTURE OUTLOOK OF FIRMS
Exhibit 4-1
Exhibit 4-2
Exhibit 4-3
Exhibit 4-4
Exhibit 4-5
Exhibit 4-6
Exhibit 4-7
Exhibit 4-8
Exhibit 4-9
Exhibit 4-10
Exhibit 4-11
FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY RESIDENTIAL AND COMMERCIAL FIRMS
FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY NUMBER OF OFFICES AT FIRM
REASON FOR FIRM TO ACTIVELY RECRUIT SALES AGENTS BY RESIDENTIAL AND COMMERCIAL FIRMS
REASON FOR FIRM TO ACTIVELY RECRUIT SALES AGENTS BY NUMBER OF OFFICES AT FIRM
EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-2013 TO MID2014 BY RESIDENTIAL AND COMMERCIAL FIRMS
EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-2013 TO MID2014 BY NUMBER OF OFFICES AT FIRM
EXPECTATION OF LEVEL OF COMPETITION IN THE NEXT YEAR (MID-2014 TO MID-2015)
BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY RESIDENTIAL AND COMMERCIAL FIRMS
BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY NUMBER OF OFFICES AT FIRM
PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY RESIDENTIAL AND COMMERCIAL FIRMS
PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY NUMBER OF OFFICES AT FIRM

Exhibit 4-1
FIRM ACTIVELY RECRUITING SALES AGENTS IN 2014 BY RESIDENTIAL AND COMMERCIAL FIRMS
Firm is recruiting
Firm is not recruiting
All Firms
45%
55
Residential Firms
49%
51
Commercial Firms
34%
66

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

Firm is recruiting
Firm is not recruiting
All Firms
45%
55
One office
40%
60
Two offices
67%
33
Three offices
74%
26

87%
13

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

Desire for younger agents
Expand into new markets
Replace agents leaving firm
Expand into new lines of business/specialty areas
All Firms
87%
36
31
29
16
Residential Firms
87%
37
31
31
15
Commercial Firms
86%
39
32
22
26

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

Growth in primary business
Desire for younger agents
Expand into new markets
Replace agents leaving firm
Expand into new lines of
business/specialty areas
All Firms
87%
36
31
29
One office
85%
31
25
23
Two offices
88%
38
35
30
Three offices
93%
56
40
47

89%
57
48
58
16
15
15
17
19

Exhibit 4-5
EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID2014 TO MID-2015 BY RESIDENTIAL AND COMMERCIAL FIRMS
Increase
Stay the same
Decrease
All Firms
64%
28
8
Residential Firms
66%
26
8
Commercial Firms
71%
23
6

Exhibit 4-6
EXPECTATION ON PROFITABILITY (NET INCOME) FROM ALL REAL ESTATE ACTIVITIES FROM MID-2014
TO MID-2015 BY NUMBER OF OFFICES AT FIRM
Increase
Stay the same
Decrease
All Firms
64%
28
8
One office
63%
29
8

Two offices
Three offices Four or more offices
67%
69%
69%
24
26
25
9
5
6

Exhibit 4-7
EXPECTATION OF LEVEL OF COMPETITION IN THE NEXT YEAR (MID-2014 TO MID2015)
Increase
Stay the Same
Decrease
Traditional brick and

mortal firms
16%
69
15
Virtual firms
41%
55
4
Non-traditional
market participants
48%
49
3

Exhibit 4-8
BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY RESIDENTIAL AND COMMERCIAL FIRMS
Profitability
Keeping up with technology
Maintaining sufficient inventory
Local or regional economic conditions
Competition from nontraditional market participants
Recruiting younger agents
Competition from traditional brick and mortar firms
State and local legislation and regulation
Agent retention
Competition from new virtual firms
Off market listings (pocket listings)
Liability in a digital world (contracts, signatures, etc.)
Listing data security
Piracy/scraping
Protecting client data
Industry consolidation
Drones and regulation of drones
All Firms
54%
46
44
41
35
32
30
28
21
19
18
16
11
10
10
8
4
Residential Firms
54%
47
46
40
38
36
31
26
23
20
19
16
12
11
10
8
4
Commercial Firms
48%
40
42
53
23
25
35
26
11
12
9
12
6
4
5
4
5

Exhibit 4-9
BIGGEST CHALLENGES FACING FIRM IN NEXT TWO YEARS BY NUMBER OF OFFICES AT FIRM
Profitability
Keeping up with technology
Maintaining sufficient inventory
Local or regional economic conditions
Competition from nontraditional market participants
Recruiting younger agents
Competition from traditional brick and mortar firms
State and local legislation and regulation
Agent retention
Competition from new virtual firms
Off market listings (pocket listings)
Liability in a digital world (contracts, signatures, etc.)
Listing data security
Piracy/scraping
Protecting client data
Industry consolidation
Drones and regulation of drones
All Firms
54%
46
44
41
35
32
30
28
21
19
18
16
11
10
10
8
4

One office Two offices Three offices Four or more offices
52%
54%
56%
67%
46
43
46
52
43
47
52
46
41
39
49
43
34
37
40
49
28
44
61
67
30
28
33
39
28
33
35
27
17
30
43
50
18
17
21
25
17
15
22
24
16
15
17
19
10
10
7
21
9
12
10
20
9
8
10
18
7
11
10
13
3
5
7
8

Exhibit 4-10
PREDICTION OF GENERATIONS EFFECT ON THE INDUSTRY IN THE NEXT 2 YEARS BY RESIDENTIAL AND COMMERCIAL
FIRMS
Gen Y ability to buy a home (stagnant wages, slow job

market, debt load, etc. )
Baby Boomers retiring from real estate as a profession
Recruitment of Gen Y and Gen X real estate professionals
Gen Y view of homeowership (sharing generation)
Baby Boomers relocating to other states in retirement
Retention of Gen Y and Gen X real estate professionals
All Firms
Residential Firms
Commercial Firms
59%
44
40
39
28
25
61%
43
42
40
28
27
42%
46
41
24
24
24

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 offices
Gen Y ability to buy a home (stagnant wages, slow job
market, debt load, etc. )
Baby Boomers retiring from real estate as a profession
Recruitment of Gen Y and Gen X real estate professionals
Gen Y view of homeowership (sharing generation)
Baby Boomers relocating to other states in retirement
Retention of Gen Y and Gen X real estate professionals
59%
44
40
39
28
25
60%
43
37
39
27
23
53%
43
48
40
26
33
60%
46
61
46
28
40
52%
58
70
40
26
41
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 noted
are 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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2014 Profile of Real Estate Firms

Caroline Van Hollen, Senior Research and

Ken Fears, Director, Regional Economics and

Danielle Hale, Director of Housing Statistics

Michael McGrew, CRB, CRS

Jessica Lautz, Director, Member and Consumer

Immediate Past President

Chief Executive Officer

George Ratiu, Director, Quantitative and

Dale Stinton, CAE, CPA, CMA, RCE

Hua Zhong, Data Analyst

NAR RESEARCH STAFF

Thomas Doyle, Director of Research Marketing

2014 Profile of Real Estate Firms

2014 Profile of Real Estate Firms

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

Future Outlook of Firms

2014 Profile of Real Estate Firms

2014 Profile of Real Estate Firms

2014 Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

YEARS IN REAL ESTATE BUSINESS

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

One year or less

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

One year or less

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Number of offices affiliated with your firm at yearend in 2012

Number of offices acquired through purchase or

Number of offices acquired through purchase or

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Stayed the same

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Independent, nonfranchised company

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Independent, non-franchised company

* Less than 1 percent

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Independent, non-franchised company

All Firms One office

Number of Offices at Firm

* Less than 1 percent

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Number of Offices at Firm

One office Two offices

Four or more offices

Number of full-time real estate licensees

Number of full-time staff (non-licensees)

2014 National Association of Realtors Profile of Real Estate Firms

CHARACTERISTICS OF REAL ESTATE FIRMS

Number of licensees who joined firm

Number of Offices at Firm

2014 National Association of Realtors Profile of Real Estate Firms