Most Real Estate Firms Confident About Profits

September 20, 2016

The majority of real estate firms say they're confident about profitability next year, and many plan on continuing recruitment efforts to keep up with the growth of their competition, a new report shows.

The National Association of REALTORS® 2016 Profile of Real Estate Firms surveyed real estate firm executives and NAR members about the business makeup and activity of firms, as well as their outlook for the future.

"For a second year in a row, a majority of real estate firms have a positive outlook on profitability, with 91 percent of all firms expecting their net income to increase or remain the same over the next year," says Tom Salomone, NAR President and broker-owner of Real Estate II, Inc. in Coral Springs, Fla. "Although there is an overwhelmingly positive outlook, low inventory and high prices have led to an overall decrease in real estate firm’s sales volume since last year’s report."

Here are some highlights from the real estate firms report:

Sales Expectations: While real estate firms expect slightly less profitability, overall they remain confident in seeing an increase in net income next year. 

  • Sixty-four percent of real estate firms surveyed say they expect their net income to increase in the next year.
  • Sixty-seven percent of commercial real estate firms expect their profitability to improve.

Recruitment and Competition: According to the report, a perception of increased competition from traditional and virtual firms will up their recruitment efforts in the future.

  • Forty-seven percent of firms reported they are actively recruiting sales agents in 2016, up from 44 percent in 2015.
  • Forty-three percent of real estate firms expect to see more competition next year from non-traditional firms.
  • Forty-six percent of firms think competition from virtual firms will increase next year, which is up from 41 percent who answered this way in 2015.

Biggest Challenges: Real estate firms continue to worry about adapting new technology and the general status of the housing market, and also expressed concern over working with the Gen Y demographic.

  • The top three concerns for firms right now are: Profitability (49 percent), keeping up with technology (48 percent), and the current state of housing inventory (48 percent).
  • Nearly half of firms are concerned with Generation Y’s ability to buy a home.
  • Forty-six percent of firms are concerned about the recruitment of Gen Y and Gen X real estate professionals.

Source: NAR