Forget the Hype

From the Editor: If you want to see a microcosm of the real estate industry, you couldn’t do better than to look at REALTOR® Magazine’s “Top 100 Companies.”

July 1, 2006

Each year, we produce a list of the 100 U.S. brokerages with the most residential transaction sides and the 100 U.S. brokerages with the greatest residential sales volume closed nationally.

True, these companies are larger than most—in some cases much larger—but their successes and setbacks track well with the market nationally. And their strategies for continuing success in a cooling market provide lessons for companies of any size.

In our coverage this year, we looked at some of the ways the list itself, and the companies on it, have changed since we started ranking brokerages in 2000. The year 2000 holds the distinction of having been the dead center of a decade-long boom in existing-home sales.

NATIONAL ASSOCIATION OF REALTORS® figures show a strong annual increase in sales in the decade from 1996 to 2005, with a slight dip in 2000, the year the dot-com bubble burst.

Certainly, the housing boom is reflected in the numbers of the nation’s top companies. Over the six years since 2000 (when we reported 1999 numbers), the nation’s largest brokerage, NRT Incorporated, of Parsippany, N.J., had a 36 percent increase in transaction sides. The largest independent brokerage—The Long & Foster Cos. of Fairfax, N.J.—did even better, racking up an 83 percent increase in sides.

But this year’s list also reflects the transitional market many real estate brokerages are seeing. A full one-third of the top companies on this year’s transaction sides list experienced a decline in sides closed between 2004 and 2005.

That downward trend is far from universal, though. Many companies on the list saw significant growth in 2005. And company chiefs we interviewed for the feature were cautiously optimistic about how 2006 would turn out. They told us they were watching their advertising dollars and looking for new ways to bring in revenue by cross-selling ancillary services and expanding into new markets.

During the years when real estate was heating up, there was a lot of hype about the business. News stories about bidding wars proliferated, and real estate replaced tech stocks as the topic of cocktail-party conversations. There’s been some hype about the market cooling, too.

But if there’s anything to be learned from our Top 100, it’s that if you want to succeed in business over the long term, you can’t listen to hype; instead, you have to gauge conditions and act accordingly, searching for new opportunities and cutting spending when necessary.

We’ll do our part by pointing out the opportunities and trends we spot. To all of you, we wish you the best in your quest to make it to the top.

Stacey Moncrieff

Stacey is executive editor of publications for the National Association of REALTORS® and editor in chief of REALTOR® Magazine.