Brandon Doyle, ABR, e-PRO, is a second-generation real estate pro with RE/MAX Results in the Twin Cities. He is also coauthor of the book M3—Mindset, Methods & Metrics: Winning as a Modern Real Estate Agent. Learn more about Doyle at www.doylerealestateteam.com.
Does Your Brand Really Matter?
Find out whether company size or brand awareness in a specific market correlates to higher sales volume.
February 9, 2018
I often hear agents compare the merits of different real estate brands, and it makes me wonder how much a brokerage’s brand matters. Would an agent achieve fewer closings if he or she worked with a lesser-known company? Or do the agent’s relationships have the biggest impact on sales performance?
To answer this question, we need to have something quantifiable to measure. For this article, I’ve chosen average agent productivity in my market of Minneapolis-St. Paul. This allows us to compare companies of all sizes, whereas overall volume or transaction sides would favor large companies.
I could have used brand awareness, but that would have required a very large sample size. Plus, as others in the industry have pointed out, there is no correlation between awareness and reputation. For example, I’m very aware of my local cable provider, but it’s certainly not known for its customer service.
It’s not uncommon for companies to cite only the statistics that support their narrative. I can think of three local companies that all claim to be number one in our market. Technically, they’re all correct. But they each base their claim on metrics according to specific geographical boundaries and classification of franchised offices. Combining sales numbers across each of a national brand’s franchises in a specific area will give you a very different result than going by the individual broker of record. I could make the argument that consumers do not differentiate between independently owned offices any more than they know the difference between the McDonald’s franchises.
To determine per-agent productivity in my market, I manually divided the number of transaction sides reported in our local MLS (Northstar MLS) for 2016 by the number of agents that had one or more sales per company. I found that agents at the 10 brokerages with the highest agent count in the Twin Cities did 30 percent more transactions than average. Additionally, all except one of the companies had close to double the average annual sales volume per agent. But smaller offices with fewer agents who are affiliated with national franchise brands also had higher-than-average transaction sides per active agent. This would suggest that they’re receiving the benefit of brand awareness, systems, and processes.
Yet, there are plenty of great examples of independent brokerages that are considerably outpacing the market in sales per agent. Downtown Resource Group, which specializes in downtown Minneapolis condo sales, had an average of 25.7 sides per agent and $9 million average volume in 2016, based on information from the Regional Multiple Listing Service of Minnesota Inc.
"What has separated DRG from others over the years is all about focus. We’re not trying to be everything to everyone, and, in fact, customers deserve to be working with experts," says Joe Grunnet, broker-owner and founder of DRG.
Claire Killen, independent broker-owner of Emerald Real Estate in Minneapolis, did 28 sides totaling more than $8 million in sales volume in 2016. She attributes her success to focusing on building referral and networking opportunities. Killen is the National Association of REALTORS®’ President’s Liaison to Ireland and has her CIPS designation. In 2016, she led a trade mission to Ireland, and helped organize a CIPS event in Ireland in 2017.
Brands with a strong local presence also had higher-than-average per-agent productivity and overall market share, including Hometown Realty in Hutchinson, Minn., and RedWingHomesForSale.com in Red Wing, Minn.
Each brand’s market presence varies greatly by region. For example, Century 21 claims every year to be the most recognized national real estate brand. But all the company’s franchises combined only have 2 percent market share in the Twin Cities, based on 2016 sales data. Meanwhile, just four brands, including Edina Realty (a local brand owned by Home Services of America), RE/MAX, Keller Williams Realty, and Coldwell Banker have claimed 64 percent of all sales. Brand awareness is really just a result of agent count, market share, and advertising dollars spent in a market area. Each listing sign and every agent’s individual marketing adds to a brokerage, boosting consumer awareness.
It’s not possible to say that one brand is better than another. Agents choose brokerages that meet their individual needs. And agents tend to stick with a brokerage when the company’s vision and culture aligns with their own. They feel they’re receiving a fair value in exchange for the portion of commission they’re giving up.
Brokers should focus on providing systems and support in order to make their agents successful and allow them to focus on building relationships, which will, in turn, help the company thrive. According to NAR’s annual Profile of Home Buyers and Sellers, about 60 percent of an agent’s business will come from their sphere of influence—friends, family, referrals, and repeat customers. These are people who already know, like, and trust their agent, regardless of the brokerage. Any broker who provides agent websites, a CRM, transaction management systems, automated marketing for listings, monthly e-newsletters, and training opportunities will give agents the opportunity to flourish.