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The Residential Real Estate Brokerage Industry: An Overview of Past Performance and Future Prospects

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Abstract

This study examines the developments in the residential real estate brokerage market over the last decade. In particular, the study focuses on how technological and structural changes in the market have impacted firm revenues, costs and profitability. The analysis is conducted using four national data sets provided by the National Association of Realtors. The results reveal that brokerage performance begins suffering with the recession of 1990, which triggered a period of consolidations and failures that show no sign of letting up. Further, the results suggest that firm size is a significant factor in determining performance. Small firms suffer due to their inability to take advantage of economies of scale, while large firms incurred significant costs attempting to maintain and/or increase market share.

Suggested Citation

  • Leonard V. Zumpano & Harold W. Elder & Randy I. Anderson, 2000. "The Residential Real Estate Brokerage Industry: An Overview of Past Performance and Future Prospects," Journal of Real Estate Research, American Real Estate Society, vol. 19(2), pages 189-208.
    • Handle: RePEc:jre:issued:v:19:n:2:2000:p:189-208
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    References listed on IDEAS

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    1. Randy I. Anderson & Robert Fok & Leonard V. Zumpano & Harold W. Elder, 1998. "Measuring the Efficiency of Residential Real Estate Brokerage Firms," Journal of Real Estate Research, American Real Estate Society, vol. 16(2), pages 139-158.
    2. Anderson, Randy I & Lewis, Danielle & Zumpano, Leonard V, 2000. "Residential Real Estate Brokerage Efficiency from a Cost and Profit Perspective," The Journal of Real Estate Finance and Economics, Springer, vol. 20(3), pages 295-310, May.
    3. Lewis, Danielle & Anderson, Randy I. & Zumpano, Leonard V., 1999. "An analysis of affinity programs: the case of real estate brokerage participation," Financial Services Review, Elsevier, vol. 8(3), pages 183-197.
    4. Leonard V. Zumpano & Harold W. Elder, 1994. "Economies of Scope and Density in the Market for Real Estate Brokerage Services," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(3), pages 497-513, September.
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    Cited by:

    1. Carow, Kenneth A. & Kane, Edward J., 2002. "Event-study evidence of the value of relaxing long-standing regulatory restraints on banks, 1970-2000," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(3), pages 439-463.
    2. Sean P. Salter & Ernest W. King, 2009. "Price Adjustment and Liquidity in a Residential Real Estate Market with an Accelerated Information Cascade," Journal of Real Estate Research, American Real Estate Society, vol. 31(4), pages 421-454.
    3. John Benjamin & Peter Chinloy & Daniel Winkler, 2007. "Sorting, Franchising and Real Estate Brokerage Firms," The Journal of Real Estate Finance and Economics, Springer, vol. 34(2), pages 189-206, February.
    4. Jonathan Wiley & Justin Benefield & Marcus Allen, 2014. "Cyclical Determinants of Brokerage Commission Rates," The Journal of Real Estate Finance and Economics, Springer, vol. 48(1), pages 196-219, January.

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    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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