Why are so many brokers exiting the business?

Real estate brokerage M&A guru Steve Murray says the market has never been hotter for buying and selling brokerages
  • Valuations for brokerages are as high as they have ever been.
  • Standard valuations today are five to six times trailing EBITDA (earnings before interest, taxes, depreciation and amortization).
  • NRT, Realogy and HomeServices are very active acquiring brokerages. Regional franchisors, like Howard Hanna, are also doing deals on the buy side.
  • There are two buckets of sellers: older broker-owners and younger companies who need capital to “go to the next level.”
  • The brokerage business is getting more complex, with new technology that creates uncertainty.
  • Brokers are feeling downward pressure on margins, higher splits to agents and regulators like CFPB over marketing services agreements.
  • Teams that act like businesses are creating asset values that may be saleable in the future.

Brad Inman talks to Steve Murray, who owns Real Trends Consulting and has handled over 2,250 client assignments for realty firms over the past 28 years, with more than 660 merger and acquisition assignments, totaling $11.8 billion in aggregate value.