- Since 2003, REALTOR® Magazine has been providing readers with a report on residential real estate franchisors; 31 franchisors participated in this year’s report.
- Franchisors saw slight growth in their share of the residential franchise market, compared with 2019, while the percentage of NAR members affiliated with a franchise, 42%, remained the same.
- Brokers who’ve made the decision to affiliate with a franchise say they looked for not only great systems but also a business model that prioritized their profitability and that of their agents.
Affiliating your brokerage with a franchise is a decision not to be made lightly. Brokers make the financial outlay with the expectation that they’ll benefit from name recognition, marketing and technology support, and education and networking opportunities. For those considering such a move, every two years REALTOR® Magazine gathers basic data about residential real estate franchises and talks with broker-owners and franchisors about what makes their brand special.
Brokers say when they considered affiliating, they looked for not only great systems but also a business model that prioritized their profitability and that of their agents.
Stephanie Sandoval has grown her company from 17 agents to 250 since joining HomeSmart in 2017. Sandoval, broker-owner of HomeSmart Lifestyles in Fountain Hills, Ariz., was drawn to the company’s Real Smart Agent and Real Smart Broker platforms, which are “really nice for a seamless transaction,” she says. “The support of having a large franchise and the platforms to make growth easier has been amazing.”
When Kansas broker Steven Burch, EPRO, MRP, took over the reins of his grandmother’s company, he knew he didn’t want to operate it as an independent company. “I wanted help with my personal and professional growth; tools, tech, and training; and recruitment.” His affiliation with NextHome “has surpassed every expectation,” he says. “In 2016,we had 4 agents and sold 67 units with $7.5 million in volume. Last year, we had 25 agents, sold 408 units, and did $69 million in volume.”
Overall, since 2019, franchisors have grown their share of residential real estate brokerages slightly. The just-released 2021 National Association of REALTORS®’ Profile of Real Estate Firms shows 12% of real estate companies are independently owned franchise companies, up from 11% in 2019. Another 2% are subsidiaries of a national or regional corporation that operates a franchise, up from 1% in 2019. NAR’s 2021 Member Profile shows individual member affiliation has remained constant: 42% of REALTORS® are affiliated with a franchise, the same as in 2019.
The fastest-growing franchises in this year’s report, seeing double-digit growth in the number of U.S. offices since 2019, were Nest Realty, Flat Rate Realty, and NextHome. United Real Estate, HomeSmart, and NextHome—all relative newcomers—saw big gains in the number of U.S. agents and brokers. Among the big brands, Keller Williams stayed fairly steady in terms of number of offices but added more than 13,000 brokers and agents, nearly a 9% gain from 2019.
“The support of having a large franchise and the platforms to make growth easier has been amazing.” — Stephanie Sandoval, broker-owner of HomeSmart Lifestyles
“Our culture is the core differentiation,” says KW President Marc King. The company is focused on providing a great experience for new agents and barrier- free growth for top-producing agents and teams, King says. “We have a culture of abundance, and we freely share best practices and lessons learned.”
Culture fit is a critical element in the decision to affiliate. “Since its inception in 2014, NextHome has focused on growing with the right people,” says CEO James Dwiggins. “Being selective is how we ensure that we’re continuing to grow with real estate professionals who are living and breathing the ‘Humans Over Houses’ mindset—a movement, a mantra, a belief that if we take care of the humans, then the selling of the houses will take care of itself.”
During the early, dark days of the COVID-19 pandemic, agent care became a watchword for franchisors. Exit Realty, for example, rolled out a “Take Action Stimulus Package” in April 2020 that included a wide range of educational opportunities, including yoga, meditation, and the teachings of self-help author Eckhart Tolle. CEO Tami Bonnell calls her company “the ‘uncola’ of the industry, dedicated to providing a quality of life for our agents.” Exit sold 50 franchises in 2020 and had already matched that number by August 2021, Bonnell says.
Ultimately, the bottom line for brokers is this: How well does the franchise help you attract and retain quality agents? “The best retention tools we have are rooted in two areas,” says Rick Haase, president of United Real Estate. “All of our operating units have fully committed brokers available round the clock for hands-on support, and our compensation programs drive nearly 100% of the gross commission income generated on sales right back to the agents.”