Editor’s note: This is Part 4 in a series of stories based on an Inman News survey of nearly 200 real estate brokers. Part 4, below, details areas in which brokers have made cutbacks to survive the downturn, as well as areas where they continue to maintain or even increase investment. Part 1 explored brokers’ views of the government’s role in the industry; Part 2 examined brokers’ attitudes about rules and policies established by the industry itself; and Part 3 focused on market segments where brokerages have been gaining or losing business. The series will conclude with Part 5, in which brokers discuss what gives their firms a competitive advantage.
Real estate brokers are cutting office staff and reducing marketing and advertising expenses to survive the downturn, but most have still managed to beef up spending on technology and agent recruitment and training in the past year, according to a broker survey conducted by Inman News.
The survey shows most brokers haven’t pushed to increase their share of commission splits with agents in the past year, either — or the fees they charge to agents for services. Working with distressed properties was also seen as crucial, with 77 percent of brokers surveyed reporting additions to that area of their business in the past year.
To manage costs, three out of four brokers participating in the online survey said that in the past year, they’ve either decreased (53 percent) or left unchanged (23 percent) their marketing and advertising expenses.
The online survey captured the views of 179 brokers doing business in 37 states and Washington, D.C., plus two responses from Canada and one from India, from Oct. 16, 2009, to Jan. 12, 2010. States with the greatest representation in the survey were California (31 responses), New York (22 responses), Colorado (13 responses), Massachusetts (10 responses), Washington (nine responses), and Arizona (eight responses).
An average of 96 agents were employed at the brokerages surveyed, with companies employing fewer than 1,000 agents averaging 53 sales positions.
Among those respondents who have reduced marketing and advertising expenses, only about one in four reduced them "substantially" — the rest said they had reduced those expenses only "somewhat."
Office staffing was another area where most brokers felt comfortable either cutting back (48 percent) or leaving unchanged (44 percent). Spending on office equipment also fell at 37 percent of brokerages surveyed and was flat at 46 percent of companies.
Only 8 percent of brokerages reported increased office staffing, and 16 percent boosted spending on office equipment.
While 25 percent of brokers reported increasing expenditures for marketing and advertising in the past year, only 6 percent reported increasing them substantially.
But investment in new technology was seen as vital — 79 percent boosted spending in that area, including 28 percent of brokerages reporting "substantial" increases.
Even among companies that didn’t increase technology spending, most tried to maintain the status quo (16 percent) rather than try to achieve savings by cutting costs in that area (5 percent). Only one broker out of 162 responding to that question reported a "substantial" reduction in technology investment.
If technology was viewed as a place to put more rather than less resources, few brokers were willing to cut back on agent recruitment and training, either.
Nearly-two thirds of 164 brokers surveyed (62 percent) said they increased agent recruitment in the past year, although most said they had increased recruiting only "somewhat." Agent recruitment was unchanged at 21 percent of brokerages, and 18 percent said they’d made cutbacks in the area.
There was an even greater emphasis on agent training and education, with 68 percent of brokerages reporting increases in the past year. Among the 112 brokerages reporting increases in training and education, 53 percent said they had increased those efforts "substantially." …CONTINUED
Only 8 percent of brokerages said they reduced agent training and education, while 24 percent reported toeing the line for the past year.
While many brokers felt the need to cut costs or boost spending in critical areas, there were others where most were content to leave the status quo in place.
These areas included the broker’s share of commission splits with agents (unchanged at 66 percent of companies during the past year) and fees charged to agents for broker services (unchanged at 71.2 percent of brokerages).
Most brokers (57 percent) also left unchanged the size of their office, the use of outside vendors to support general operations (unchanged at 57 percent of brokerages), and affiliated business relationships and ancillary real estate services (unchanged at 58 percent of companies).
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